Attached files
| file | filename |
|---|---|
| EX-99.3 - EXHIBIT 99.3 - PAR TECHNOLOGY CORP | ex99_3.htm |
| EX-99.2 - EXHIBIT 99.2 - PAR TECHNOLOGY CORP | ex99_2.htm |
| EX-23.1 - EXHIBIT 23.1 - PAR TECHNOLOGY CORP | ex23_1.htm |
| 8-K/A - 8-K/A - PAR TECHNOLOGY CORP | form8ka.htm |
Exhibit 99.1
ACCSYS, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2018
ACCSYS, INC. AND SUBSIDIARY
Table of Contents
December 31, 2018
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Page
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Independent Auditors' Report
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1 |
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Consolidated Financial Statements as of and for the year ended December 31, 2018:
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Balance Sheet
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2- 3
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Statement of Operations and Shareholders' Deficit
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4
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Statement of Cash Flows
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5
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Notes to Consolidated Financial Statements
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6- 13
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Tel: 813-321-6869
Fax: 813-448-1886
www.bdo.com
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501 E Kennedy Blvd, Suite 910
Tampa, FL 33602
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Independent Auditor’s Report
Board of Directors
Accsys, Inc.
Tampa, Florida
We have audited the accompanying consolidated financial statements of Accsys, Inc. and its subsidiary, which comprise the consolidated balance sheet as of December 31, 2018, and the related consolidated
statements of operations and shareholders’ deficit, and cash flows for the year then ended, and the related notes to the consolidated financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and
fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation
of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Accsys, Inc. and its subsidiary as of December 31, 2018, and
the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Certified Public Accountants
December 13, 2019
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent
member firms.
BDO is the brand name for the BDO network and for each of the BDO Member Firms.
ACCSYS, INC. AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 2018
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Assets
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||||
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Current Assets:
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||||
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Cash and cash equivalents
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$
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759,297
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||
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Accounts and unbilled receivables
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109,562
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|||
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Prepaid expenses and other current assets
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109,969
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|||
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Total current assets
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978,828
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|||
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Property and equipment, at cost:
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||||
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Office equipment
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286,792
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|||
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Leasehold improvements
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40,500
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|||
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Furniture and fixtures
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25,246
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|||
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Computer software
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7,249
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|||
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359,787
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||||
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Less accumulated depreciation and amortization
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(293,630
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)
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Net property and equipment
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66,157
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|||
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Total Assets
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$
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1,044,985
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See notes to consolidated financial statements.
Page 2
ACCSYS, INC. AND SUBSIDIARY
Consolidated Balance Sheet - Continued
December 31, 2018
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Liabilities and Shareholders' Deficit
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Current Liabilities:
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Accounts payable
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$
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647,770
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Payroll and payroll related liabilities
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249,103
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Customer deposits
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94,188
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Customer rebates payable
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68,471
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Deferred revenue
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965,759
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Line of credit
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100,000
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|||
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Capital lease obligations - current portion
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20,754
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Shareholder notes payable - current portion
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30,000
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|||
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Total current liabilities
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2,176,045
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Capital lease obligations, net of current portion
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25,724
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|||
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Shareholder notes payable, net of current portion
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4,495,100
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Deferred liabilities - shareholders
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1,734,636
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Total liabilities
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8,431,505
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Commitments (Note 5)
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Shareholders' Deficit:
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Common stock, $1 par value, 1,000 shares authorized; 810 shares issued and outstanding
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1,000
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|||
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Additional paid-in capital
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475,627
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Treasury stock, 190 shares, at cost
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(300,000
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)
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Deficit
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(7,563,147
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)
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Total shareholders' deficit
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(7,386,520
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)
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Total Liabilities and Shareholders' Deficit
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$
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1,044,985
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See notes to consolidated financial statements.
Page 3
ACCSYS, INC. AND SUBSIDIARY
Consolidated Statement of Operations and Shareholders' Deficit
For the Year Ended December 31, 2018
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Revenues, net
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$
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6,118,217
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Costs of revenues
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3,349,103
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Gross profit
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2,769,114
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Operating expenses
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3,158,020
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Operating loss
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(388,906
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)
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Other income (expense):
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Interest income
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232
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Interest expense
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(198,783
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)
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Other expense
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(26,636
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)
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Total other expense, net
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(225,187
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)
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Net loss
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(614,093
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)
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Deficit, beginning of year
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(6,871,054
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)
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Less distributions
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(78,000
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)
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Deficit, end of year
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$
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(7,563,147
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)
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See notes to consolidated financial statements.
Page 4
ACCSYS, INC. AND SUBSIDIARY
Consolidated Statement of Cash Flows
For the Year Ended December 31, 2018
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Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
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||||
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Net loss
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$
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(614,093
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)
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Adjustments to reconcile net loss to net cash provided by operating activities:
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Depreciation and amortization
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23,852
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Forgiveness of employee advances
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250
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Provision for bad debts
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29,297
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Changes in assets and liabilities:
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Accounts receivable
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473,337
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Prepaid expenses and other current assets
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16,431
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Accounts payable
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325,360
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Payroll and payroll related liabilities
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113,678
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Customer deposits
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28,819
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Customer rebate payable
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(1,075
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)
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Deferred revenues
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(201,237
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)
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Net cash provided by operating activities
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194,619
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Cash flows from financing activities:
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Distribution to shareholders
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(78,000
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)
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Payments on capital lease obligations
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(20,268
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)
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Payments on shareholder note payable
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(37,500
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)
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Cash used in financing activities
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(135,768
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)
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Net increase in cash and cash equivalents
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58,851
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Cash and cash equivalents, beginning of year
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700,446
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Cash and cash equivalents, end of year
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$
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759,297
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Supplemental Disclosure of Cash Flow Information:
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Cash paid for interest
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$
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129,207
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Supplemental Disclosure of Noncash Investing and Financing Transactions:
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Capital lease obligations for equipment
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$
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43,790
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See notes to consolidated financial statements.
Page 5
ACCSYS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2018
Note 1 - Description of business and summary of significant accounting policies:
Nature of business
AccSys, Inc. (d/b/a Restaurant Magic Software), ("AccSys") was initially incorporated under the laws of the state of Florida in 1979. In November 2019, AccSys converted to a limited liability company
under the laws of state of Delaware. AccSys's primary product, Data Central, is a suite of back office applications designed to help restaurant managers achieve operational and financial goals. The software integrates information from customers'
existing Point of Sale, inventory, supply, payroll, and accounting platforms to provide a comprehensive view of operations. Data Central is offered as Software as a Service (SaaS) to its customers. The Company is headquartered in Tampa, Florida and
its customers are located throughout the United States.
Basis of presentation
The Company has adopted the Financial Accounting Standards Board (FASB) Codification (Codification). The Codification is the single official source of authoritative accounting principles generally
accepted in the United States of America (U.S. GAAP) recognized by the FASB to be applied by nongovernmental entities, and all of the Codification's content carries the same level of authority.
Basis of consolidation
At December 31, 2018, the accompanying consolidated financial statements include the accounts of AccSys and its wholly-owned subsidiary, AfterWords, Inc. ("AfterWords"). AccSys and Afterwards are
hereinafter collectively referred to as the "Company." In November 2019 the Company's interest in AfterWords was transferred to a separate related entity. All significant intercompany balances and transactions have been eliminated in consolidation.
Liquidity
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate
the realization of assets and liquidation of liabilities in the normal course of business. At December 31, 2018, the Company has working capital and shareholder deficits of approximately $1,197,200 and $7,387,000, respectively. However, a significant
portion of these deficits arose because of investments made in the launch of AfterWords. The entity was spun off to a related entity in November 2019 and the Company does not anticipate that additional investments will be required. Furthermore the
working capital deficit includes approximately $966,000 of deferred revenues which will not require the outlay of cash. The Company generated net income in 2019 and anticipates generating significant net income and cash flow from operations in 2020
and beyond. And in the event such positive results of operations and cash flows do not come to fruition, the shareholders have represented that if necessary, they will infuse adequate capital to meet the Company's obligations, through at a minimum,
one year from the date the financial statements are issued. Accordingly, management believes the Company will have adequate resources to meet its obligations through, at a minimum, one year from the date of these financial statements.
Page 6
ACCSYS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
December 31, 2018
Note 1 - Description of business and summary of significant accounting policies - continued:
Use of estimates in the preparation of financial statements
The preparation of consolidated financial statements in conformity with U.S. GAAP 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 consolidated financial statements. The reported amounts of revenues and expenses during the reporting period may be affected by these estimates. Estimates that are critical to the
accompanying consolidated financial statement relate primarily to management's belief that all of the Company's long-lived asset are recoverable and that the Company will generate adequate cash to meet its obligations through December 13, 2020.
Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period that they are determined to be necessary. Actual results could differ from these estimates.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase to be cash equivalents.
Accounts receivable and credit policies
The Company's payment terms generally require payment within 30 days. Management performs ongoing credit evaluations of the Company's customers and generally does not require collateral as management
believes the Company has collection measures in place to limit the potential for significant losses. The Company maintains allowances for doubtful accounts, when applicable, for estimated losses resulting from the inability of its customers to make
required payments. Management considers the following factors when determining the collectibility of specific customer accounts: customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in
customer payment terms. Balances that remain outstanding after the Company has made reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. Substantially all of the Company's
receivables were recovered subsequent to December 31, 2018; accordingly, no allowance for doubtful accounts was deemed necessary as of such date.
Page 7
ACCSYS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
December 31, 2018
Note 1 - Description of business and summary of significant accounting policies - continued:
Revenue and cost recognition
The Company prepares its consolidated financial statements using the accrual basis of accounting, whereby revenues are recognized when earned and expenses are recognized when incurred. Revenue is
recognized when persuasive evidence of an arrangement exists, delivery has occurred, the price to the customer is fixed or determinable, and collectibility of the receivable is reasonably assured.
The Company enters in contractual relationships with customers to provide back office restaurant management. These services are provided under arrangements that allow for the use of a product or
service over a period of time without taking possession of the Company's software.
Revenues from subscription services are recognized over the subscription period, which is generally on an annual basis, while revenue from professional services are recognized upon the completion of
the services. Cash received from customers in excess of revenue recognized is recorded as deferred revenue. Revenue is recorded net of related discounts, rebates and promotions.
Costs of revenues are comprised primarily of hosting and infrastructure fees, and salaries and employee benefits for employees dedicated to providing customer service. Costs of revenues are
recognized as incurred, which generally matches in the same period in which the corresponding revenues are recognized.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. Repairs and maintenance are expensed as incurred. Depreciation and amortization are determined using the
straight-line method over the shorter of the lease terms or estimated useful lives of the respective assets, which range from 3 to 39 years. Upon the sale, retirement or other disposition of assets, the related cost and accumulated depreciation and
amortization are eliminated from the accounts, and any gain or loss is recognized in operations.
Property and equipment includes leased assets having a cost of $66,097 and net book value of $46,478 at December 31, 2018. Depreciation and amortization in the accompanying consolidated statement of
cash flows is comprised of $18,716 of amortization of leased assets, and depreciation and amortization of other property and equipment of $5,136.
Page 8
ACCSYS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
December 31, 2018
Note 1 - Description of business and summary of significant accounting policies - continued:
Impairment of long-lived assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceeds the fair value of the assets. At December 31, 2018, management believes all of the Company’s long-lived assets are recoverable.
Income taxes
Because AccSys and Afterwards were Subchapter S Corporations as of December 31, 2018, the Company is not subject to income taxes; rather, the results of its operations flow through to the Company’s
shareholders for inclusion in their personal income tax returns. Accordingly, these consolidated financial statements do not include any provision for income taxes.
The Company is required to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. A tax position
includes an entity's status as a pass-through entity and the decision not to file a tax return. Management has evaluated each of the Company’s tax positions and determined that no provision or liability for income taxes is necessary.
Advertising costs
Advertising costs, which are expensed as incurred, totaled $267,969 in 2018.
Internally developed software
The Company charges all product development expenses to operations as they are incurred because management previously determined that the time period during which costs could be capitalized from the
point of reaching technological feasibility until the time of general product release was very short, and consequently, the amounts that could be capitalized would not be material to the Company's consolidated financial position or results of
operations.
Date of management's review
Management has evaluated events and transactions subsequent to December 31, 2018 for potential recognition or disclosure through December 13, 2019, which is the date the consolidated financial
statements were available to be issued, and noted no transactions or events requiring additional disclosure.
Page 9
ACCSYS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
December 31, 2018
Note 2 - Line of credit:
The Company has a revolving line of credit facility with a bank that allows for maximum borrowings of $100,000; no availability under the line remained as of December 31, 2018. Advances under the
line bear interest at the prime rate of the lender plus 4.75% (the interest rate was 10.25% as of December 31, 2018). The line of credit is secured by substantially all of the Company's assets.
Note 3 - Shareholder notes payable:
Shareholder notes payable consist of the following:
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Notes with interest only payments made on an annual basis.
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||||
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The notes, which bear interest at a rate of 4.5%, and are secured by a second interest (see Note 2) in substantially all of the Company's assets and intellectual property, were initially due on demand.
However, in 2019 the notes were modified to have a maturity date subsequent to December 31, 2020. Accordingly, they have been reflected as non-current in the accompanying consolidated balance sheet.
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$
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4,130,000
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||
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Notes with interest only payments made on an annual basis.
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||||
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The note, which bear interest at a rate of 5.0%, and are secured by a second interest (see Note 2) in substantially all of the Company's assets and intellectual property, were initially due on demand.
However, in 2019 the notes were modified to have a maturity date subsequent to December 31, 2020. Accordingly, they have been reflected as non-current in the accompanying consolidated balance sheet.
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215,100
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|||
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Note payable to former shareholder with quarterly principal payments of $7,500 plus interest at a fixed rate of 3.25%.
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||||
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The note matures on December 7, 2024 and is unsecured.
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180,000
|
|||
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Shareholder notes payable
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$
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4,525,100
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||
Interest expensed and paid under the above mentioned notes approximated $194,000 and $129,000, respectively, in 2018. These amounts include $83,152 and $58,608 of interest expensed and paid to the
former shareholder. Accrued interest under the above mentioned notes was $303,736 as of December 31, 2018.
Page 10
ACCSYS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
December 31, 2018
Note 3 - Shareholder notes payable - continued:
Future minimum payments for shareholder notes are as follows:
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Years ending December 31,
|
||||
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2019
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$
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30,000
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||
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2020
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30,000
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|||
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2021
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4,375,100
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|||
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2022
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30,000
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|||
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2023
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30,000
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|||
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Thereafter
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30,000
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|||
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Total shareholder notes payable
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4,525,100
|
|||
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Less current portion
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30,000
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|||
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Shareholder notes payable - non current
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$
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4,495,100
|
||
Note 4 - Capital leases:
The Company has entered into various lease agreements for computer hardware with Dell. These agreements are for a period of 36-60 months with interest rates between 5.00% and 22.92%. Upon termination
ownership transfers to the Company with the payment of a bargain purchase option.
Future minimum payments under the leases are as follows:
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Years ending December 31,
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||||
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2019
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$
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23,713
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||
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2020
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19,106
|
|||
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2021
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7,978
|
|||
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2022
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172
|
|||
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Total future minimum lease payments
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50,969
|
|||
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Less amount representing interest
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4,491
|
|||
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Total present value of minimum lease payments
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46,478
|
|||
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Less current portion
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20,754
|
|||
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Present value of minimum lease payments
|
$
|
25,724
|
||
Page 11
ACCSYS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
December 31, 2018
In April 2019, the Company entered into a capital lease having a term of 36 months whereby the initial present value of the minimum lease payments approximated $302,400.
Note 5 - Commitments
On November 7, 2017 the Company entered into an operating lease that expires October 31, 2021 for office space in Tampa, Florida.
Minimum future lease payments are as follows:
|
Years ending December 31,
|
||||
|
2019
|
$
|
210,906
|
||
|
2020
|
217,233
|
|||
|
2021
|
185,531
|
|||
|
Total
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$
|
613,670
|
||
Rent expense approximated $197,770 for the year December 31, 2018.
Note 6 - Employee benefit plan:
The Company adopted an employee savings plan under the IRS Code Section 401(k). The plan covers substantially all employees of the Company. Each participant may contribute amounts up to 6% of
eligible earnings. The Company made matching contributions of $38,557 in 2018.
Note 7 - Concentrations of credit risk:
Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, and accounts receivable. Bank balances periodically exceed
federally insured limits and therefore the Company is subject to credit risk to the extent that a financial institution may be unable to fulfill its obligation to return the Company's cash held at such financial institution. The Company has not
experienced any losses in its accounts.
Four and three customers accounted for approximately 28% of the Company's accounts receivable and approximately 26% of the Company's revenues, respectively, as of and for the year ended December 31,
2018.
Page 12
ACCSYS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
December 31, 2018
Note 8 - Deferred liabilities - shareholders:
At December 31, 2018, the Company has aggregate deferred compensation and interest payable of approximately $1,211,500 and $523,000, respectively, to two of its shareholders for services rendered and
interest abatements negotiated prior to March 7, 2015. The liabilities are required to be paid within 90 days after (i) the closing of a "Sale of the Company" (as defined in the Shareholders Memorandum and Agreement dated March 7, 2015) and (ii) the
satisfaction of certain related party notes payable. Since management does not anticipate the deferred compensation or deferred interest will be paid before January 1, 2021 the amounts have been reflected as non-current in the accompanying
consolidated balance sheet.
Page 13