NEVADA
(State
or other jurisdiction of
incorporation
or organization)
|
88-0397234
(I.R.S.
Employer Identification
No.)
|
Page Number
|
||
PART
I. FINANCIAL INFORMATION
|
||
Item
1. Financial Statements
|
||
Condensed
Consolidated Balance Sheets as of September
|
||
30,
2008 (unaudited) and December 31, 2007 (audited)
|
4-5
|
|
Condensed
Consolidated Statements of Income for the
|
||
three
months ended September 30, 2008 and 2007 (unaudited)
|
6
|
|
Condensed
Consolidated Statements of Income for the
|
||
nine
months ended September 30, 2008 and 2007 (unaudited)
|
7
|
|
Condensed
Consolidated Statements of Cash Flows for
|
||
the
nine months ended September 30, 2008 and 2007 (unaudited)
|
8-9
|
|
Notes
to unaudited Condensed Consolidated Financial Statements
|
10-34
|
|
Item
2. Management's Discussion and Analysis
|
34-41
|
|
Item
3. Controls and Procedures
|
42-44
|
|
Part
II. OTHER INFORMATION
|
45
|
|
Item
1. Legal Proceedings
|
45
|
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
45
|
|
Item
3. Defaults Upon Senior Securities
|
45
|
|
Item
4. Submission of Matters to a Vote of Security
Holders
|
45
|
|
Item
5. Other Information
|
45
|
|
Item
6. Exhibits
|
45-46
|
|
SIGNATURES
|
46
|
2008
|
2007
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
Restated
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 289,195 | $ | 232,249 | ||||
Accounts
receivable, net of allowance of $53,690 and
$22,641
|
682,519 | 299,863 | ||||||
Prepaid
expenses
|
1,445 | 16,529 | ||||||
Total
current assets
|
973,159 | 548,641 | ||||||
PROPERTY
AND EQUIPMENT, net
|
237,743 | 236,782 | ||||||
CUSTOMER
LIST, net of accumulated amortization
of $7,279,031 and $5,237,054
|
4,373,981 | 5,480,635 | ||||||
GOODWILL,
net of impairment
|
1,288,559 | 1,288,559 | ||||||
Deferred
tax asset
|
299,150 | - | ||||||
OTHER
ASSETS
|
605,214 | 677,267 | ||||||
TOTAL
ASSETS
|
$ | 7,777,806 | $ | 8,231,884 |
2008
|
2007
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
Restated
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable
|
$ | 22,408 | $ | 78,713 | ||||
Accrued
income taxes
|
254,263 | - | ||||||
Accrued
expenses
|
106,349 | 138,021 | ||||||
Deferred
revenue
|
1,265,030 | 1,361,606 | ||||||
Notes
payable
|
458,879 | 1,268,866 | ||||||
Total
current liabilities
|
2,106,929 | 2,847,206 | ||||||
NOTES
PAYABLE, less current portion
|
990,615 | 1,694,836 | ||||||
NOTES
PAYABLE - STOCKHOLDERS, less current portion
|
539,281 | 686,687 | ||||||
TOTAL
LIABILITIES
|
3,636,825 | 5,228,729 | ||||||
STOCKHOLDERS'
EQUITY
|
||||||||
Preferred
Stock, $.001 par value, 10,000,000 shares authorized, 0 shares
issued and outstanding
|
- | - | ||||||
Common
stock, $.001 par value, 300,000,000 shares authorized, 91,326,463 and
91,326,463 shares issued and outstanding on September 30, 2008 December
31, 2007 respectively
|
91,326 | 91,326 | ||||||
Additional
paid-in capital
|
13,880,947 | 13,880,947 | ||||||
Treasury
stock, at cost, 2,955,147 common shares on June
30, 2008 and December 31, 2007
|
(63,030 | ) | (63,030 | ) | ||||
Accumulated
deficit
|
(9,768,262 | ) | (10,906,088 | ) | ||||
|
||||||||
Total
stockholders’ equity
|
4,140,981 | 3,003,155 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 7,777,806 | $ | 8,231,884 |
2008
|
2007
|
|||||||
Restated
|
||||||||
REVENUE
|
$ | 2,485,294 | $ | 1,481,886 | ||||
COST
OF REVENUE
|
709,708 | 472,842 | ||||||
GROSS
PROFIT
|
1,775,586 | 1,009,044 | ||||||
OPERATING
EXPENSES:
|
||||||||
Selling
general and administrative expenses
|
1,351,087 | 782,606 | ||||||
INCOME
FROM OPERATIONS
|
424,499 | 226,438 | ||||||
OTHER
INCOME (EXPENSES)
|
(32,439 | ) | (41,694 | ) | ||||
INCOME
BEFORE INCOME TAXES
|
392,060 | 184,744 | ||||||
INCOME
TAXES
|
(56,165 | ) | - | |||||
NET
INCOME
|
$ | 448,225 | $ | 184,744 | ||||
BASIC
AND DILUTED EARNINGS PER SHARE
|
$ | 0.00 | $ | 0.00 | ||||
WEIGHTED
AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED
|
91,326,463 | 88,063,305 |
2008
|
2007
|
|||||||
Restated
|
||||||||
REVENUE
|
$ | 7,644,538 | $ | 4,450,600 | ||||
COST
OF REVENUE
|
2,097,509 | 1,403,848 | ||||||
GROSS
PROFIT
|
5,547,029 | 3,046,752 | ||||||
OPERATING
EXPENSES:
|
||||||||
Selling
general and administrative expenses
|
4,335,119 | 2,336,151 | ||||||
INCOME
FROM OPERATIONS
|
1,211,910 | 710,601 | ||||||
OTHER
INCOME (EXPENSES)
|
(118,971 | ) | (127,769 | ) | ||||
INCOME
BEFORE INCOME TAXES
|
1,092,939 | 582,832 | ||||||
INCOME
TAXES
|
(44,888 | ) | - | |||||
NET
INCOME
|
$ | 1,137,827 | $ | 582,832 | ||||
BASIC
AND DILUTED EARNINGS PER SHARE
|
$ | 0.01 | $ | 0.01 | ||||
WEIGHTED
AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED
|
91,326,463 | 88,063,305 |
2008
|
2007
|
|||||||
Restated
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income
|
$ | 1,137,827 | $ | 582,832 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization expense
|
2,223,989 | 1,011,012 | ||||||
Bad
debt expense
|
31,048 | 7,987 | ||||||
(Increase)
decrease in:
|
||||||||
Accounts
receivable
|
(413,704 | ) | (87,599 | ) | ||||
Prepaid
expenses
|
15,084 | (7,836 | ) | |||||
Deferred
tax asset
|
(299,150 | ) | ||||||
Increase
(decrease) in:
|
||||||||
Accounts
payable
|
(56,305 | ) | (60,196 | ) | ||||
Accrued
expenses
|
(31,673 | ) | (256,564 | ) | ||||
Deferred
revenue
|
(96,576 | ) | (40,301 | ) | ||||
Accrued
income taxes
|
254,262 | - | ||||||
Net
cash provided by operating activities
|
2,764,802 | 1,149,335 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Other
assets held for resale
|
1,081 | 36,538 | ||||||
Purchase
of property and equipment
|
(32,000 | ) | (21,033 | ) | ||||
Purchase
of non-compete
|
(80,000 | ) | (40,000 | ) | ||||
Purchase
of customer list
|
(935,322 | ) | (987,585 | ) | ||||
Net
cash (used in) investing activities
|
(1,046,241 | ) | (1,012,080 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net
proceeds from notes payable
|
559,729 | 818,337 | ||||||
Repayment
of notes payable – stockholders
|
(147,406 | ) | (198,506 | ) | ||||
Repayment
of notes payable
|
(2,073,938 | ) | (576,097 | ) | ||||
Net
cash provided by (used in) financing activities
|
(1,661,615 | ) | 43,734 | |||||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
56,946 | 180,989 | ||||||
|
||||||||
CASH
AND CASH EQUIVALENTS –BEGINNING OF PERIOD
|
232,249 | 129,453 | ||||||
CASH
AND CASH EQUIVALENTS -END OF PERIOD
|
$ | 289,195 | $ | 310,442 |
CURRENT
ASSETS
|
Previously
Reported
|
Net
Change
|
Restated
|
|||||||||
Total
current assets
|
$ | 973,159 | $ | $ | 973,159 | |||||||
PROPERTY
AND EQUIPMENT, net
|
237,743 | 237,743 | ||||||||||
CUSTOMER
LIST, net of accumulated amortization of
|
||||||||||||
$6,603,388 and $5,237,054
|
4,373,981 | 4,373,981 | ||||||||||
GOODWILL,
net of impairment
|
1,288,559 | 1,288,559 | ||||||||||
DEFERRED
TAX ASSET
|
- | 299,150 | 299,150 | |||||||||
OTHER
ASSETS
|
605,214 | 605,214 | ||||||||||
TOTAL
ASSETS
|
$ | 7,478,656 | $ | 299,150 | $ | 7,777,806 |
CURRENT
LIABILITIES
|
Previously
Reported
|
Net
Change
|
Restated
|
|||||||||
Accrued
income taxes
|
$ | - | $ | 254,263 | $ | 254,263 | ||||||
Total
current liabilities
|
1,852,666 | 254,263 | 2,106,929 | |||||||||
TOTAL
LIABILITIES
|
3,382,562 | 254,263 | 3,636,825 | |||||||||
STOCKHOLDERS’
EQUITY
|
||||||||||||
Accumulated
deficit
|
(9,813,149 | ) | 44,887 | (9,768,262 | ) | |||||||
Total
stockholders' equity
|
4,096,094 | 44,887 | 4,140,981 | |||||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 7,478,656 | $ | 299,150 | $ | 7,777,806 |
Previously
Reported
|
Net
Change
|
Restated
|
||||||||||
REVENUE
|
$ | 2,485,294 | $ | - | $ | 2,485,294 | ||||||
COST
OF REVENUE
|
709,708 | - | 709,708 | |||||||||
GROSS
PROFIT
|
1,775,586 | - | 1,775,586 | |||||||||
OPERATING
EXPENSE
|
1,351,087 | - | 1,351,087 | |||||||||
INCOME
FROM OPERATIONS
|
424,499 | - | 424,499 | |||||||||
OTHER
INCOME (EXPENSE)
|
(32,439 | ) | - | (32,439 | ) | |||||||
INCOME
BEFORE INCOME TAXES
|
392,060 | - | 392,060 | |||||||||
INCOME
TAXES
|
- | (56,165 | ) | (56,165 | ) | |||||||
NET
INCOME
|
$ | 392,060 | $ | (56,165 | ) | $ | 448,225 | |||||
BASIC
AND DILUTED INCOME PER SHARE
|
$ | 0.00 | $ | - | $ | 0.00 | ||||||
WEIGHTED
AVERAGE SHARES OUTSTANDING – BASIC AND DILUTED
|
91,326,463 | - | 91,326,463 |
Previously
Reported
|
Net
Change
|
Restated
|
||||||||||
REVENUE
|
$ | 7,644,538 | $ | - | $ | 7,644,538 | ||||||
COST
OF REVENUE
|
2,097,509 | - | 2,097,509 | |||||||||
GROSS
PROFIT
|
5,547,029 | - | 5,547,029 | |||||||||
OPERATING
EXPENSE
|
4,335,119 | - | 4,335,119 | |||||||||
INCOME
FROM OPERATIONS
|
1,211,910 | - | 1,211,910 | |||||||||
OTHER
INCOME (EXPENSE)
|
(118,971 | ) | - | (118,971 | ) | |||||||
INCOME
BEFORE INCOME TAXES
|
1,092,939 | - | 1,092,939 | |||||||||
INCOME
TAXES
|
- | 44,888 | 44,888 | |||||||||
NET
INCOME
|
$ | 1,092,939 | $ | 44,888 | $ | 1,137,827 | ||||||
BASIC
AND DILUTED INCOME PER SHARE
|
$ | 0.01 | $ | - | $ | 0.01 | ||||||
WEIGHTED
AVERAGE SHARES OUTSTANDING – BASIC AND DILUTED
|
91,326,463 | - | 91,326,463 |
NOTE 1 – RESTATEMENT OF FINANCIAL STATEMENTS, continued |
Previously
Reported
|
Net
Change
|
Restated
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
income
|
$ | 1,092,939 | $ | (44,888 | ) | $ | 1,137,827 | |||||
(Increase)
decrease in deferred tax asset
|
- | (299,150 | ) | (299,150 | ) | |||||||
Increase
(decrease) in accrued income taxes
|
- | 254,262 | 254,262 | |||||||||
Net
cash provided by operating activities
|
2,764,802 | - | 2,764,802 | |||||||||
Net
cash used in investing activities
|
(1,046,241 | ) | - | (1,046,241 | ) | |||||||
|
||||||||||||
Net
cash used in financing activities
|
(1,661,615 | ) | - | (1,661,615 | ) | |||||||
NET
INCREASE IN CAHS AND CASH EQUIVALENTS
|
56,946 | - | 56,946 | |||||||||
CASH
AND CASH EQUIVALENTS – BEGINNING OF YEAR
|
232,249 | - | 232,249 | |||||||||
CASH
AND CASH EQUIVALENTS – END OF YEAR
|
$ | 289,195 | $ | - | $ | 289,195 |
2008
|
2007
|
|||||||
Net
income available to common shareholders
|
$ | 448,225 | $ | 184,744 | ||||
Weighted
average number of common shares
|
91,326,463 | 88,063,305 | ||||||
Basic
and diluted income per share
|
$ | 0.00 | $ | 0.00 |
2008
|
2007
|
|||||||
Net
income available to common shareholders
|
$ | 1,137,827 | $ | 582,832 | ||||
Weighted
average number of common shares
|
91,326,463 | 88,063,305 | ||||||
Basic
and diluted income per share
|
$ | 0.01 | $ | 0.01 |
September 30,
2008
|
||||||||||||
Corporate
|
Internet
|
Consolidated
|
||||||||||
Revenue
|
$ | - | $ | 2,485,294 | $ | 2,485,294 | ||||||
Operating
Income (loss)
|
$ | (19,185 | ) | $ | 443,684 | $ | 424,499 | |||||
Depreciation
and amortization
|
$ | - | $ | 737,703 | $ | 737,703 | ||||||
Interest
expense
|
$ | - | $ | 34,069 | $ | 34,069 | ||||||
Intangible
assets
|
$ | - | $ | 5,998,095 | $ | 5,998,095 | ||||||
Total
assets
|
$ | - | $ | 7,777,806 | $ | 7,777,806 |
September 30,
2007
|
||||||||||||
Corporate
|
Internet
|
Consolidated
|
||||||||||
Revenue
|
$ | - | $ | 1,481,886 | $ | 1,481,886 | ||||||
Operating
Income (loss)
|
$ | (9,593 | ) | $ | 236,031 | $ | 226,438 | |||||
Depreciation
and amortization
|
$ | - | $ | 351,742 | $ | 351,742 | ||||||
Interest
expense
|
$ | - | $ | 33,768 | $ | 33,768 | ||||||
Intangible
assets
|
$ | - | $ | 3,389,475 | $ | 3,389,475 | ||||||
Total
assets
|
$ | - | $ | 4,314,519 | $ | 4,314,519 |
September 30,
2008
|
||||||||||||
Corporate
|
Internet
|
Consolidated
|
||||||||||
Revenue
|
$ | - | $ | 7,644,538 | $ | 7,644,538 | ||||||
Operating
Income (loss)
|
$ | (88,893 | ) | $ | 1,300,803 | $ | 1,211,910 | |||||
Depreciation
and amortization
|
$ | - | $ | 2,223,989 | $ | 2,223,989 | ||||||
Interest
expense
|
$ | - | $ | 144,587 | $ | 144,587 | ||||||
Intangible
assets
|
$ | - | $ | 5,998,095 | $ | 5,998,095 | ||||||
Total
assets
|
$ | - | $ | 7,777,806 | $ | 7,777,806 |
September 30,
2007
|
||||||||||||
Corporate
|
Internet
|
Consolidated
|
||||||||||
Revenue
|
$ | - | $ | 4,450,600 | $ | 4,450,600 | ||||||
Operating
Income (loss)
|
$ | (53,320 | ) | $ | 763,921 | $ | 710,601 | |||||
Depreciation
and amortization
|
$ | - | $ | 1,011,025 | $ | 1,011,025 | ||||||
Interest
expense
|
$ | - | $ | 118,950 | $ | 118,950 | ||||||
Intangible
assets
|
$ | - | $ | 3,389,475 | $ | 3,389,475 | ||||||
Total
assets
|
$ | - | $ | 4,314,519 | $ | 4,314,519 |
Customer
list
|
$ | 93,992 | ||
Non-compete
agreement
|
10,000 | |||
Equipment
|
10,000 | |||
Deferred
revenue
|
(5,522 | ) | ||
Purchase
price
|
$ | 108,470 |
2007
|
||||
Net
sales
|
$ | 4,529,448 | ||
Gross
profit
|
$ | 3,104,007 | ||
Selling,
general and administrative expenses
|
$ | 2,382,876 | ||
Net
income
|
$ | 593,362 | ||
Basic
income per share
|
$ | 0.00 |
Accounts
receivable
|
$ | (2,098 | ) | |
Customer
list
|
870,680 | |||
Non-compete
agreement
|
25,000 | |||
Equipment
|
10,000 | |||
Deferred
revenue
|
(101,130 | ) | ||
Purchase
price
|
$ | 802,452 |
2007
|
||||
Net
sales
|
$ | 5,209,531 | ||
Gross
profit
|
$ | 3,602,862 | ||
Selling,
general and administrative expenses
|
$ | 2,675,326 | ||
Net
income
|
$ | 799,767 | ||
Basic
income per share
|
$ | 0.01 |
Accounts
receivable
|
$ | 3,880 | ||
Customer
list
|
58,549 | |||
Non-compete
agreement
|
5,000 | |||
Deferred
revenue
|
(21,800 | ) | ||
Purchase
price
|
$ | 45,629 |
2007
|
||||
Net
sales
|
$ | 4,514,803 | ||
Gross
profit
|
$ | 3,093,501 | ||
Selling,
general and administrative expenses
|
$ | 2,366,960 | ||
Net
income
|
$ | 588,201 | ||
Basic
income per share
|
$ | 0.01 |
Customer
list
|
$ | 4,292,656 | ||
Non-compete
agreement
|
350,000 | |||
Deferred
revenue
|
(892,656 | ) | ||
Purchase
price
|
$ | 3,750,000 |
2007
|
||||
Net
sales
|
$ | 7,902,949 | ||
Gross
profit
|
$ | 5,547,936 | ||
Selling,
general and administrative expenses
|
$ | 4,084,383 | ||
Net
income
|
$ | 1,248,993 | ||
Basic
income per share
|
$ | 0.01 |
Customer
list
|
$ | 62,223 | ||
Non-compete
agreement
|
5,000 | |||
Accounts
receivable
|
2,343 | |||
Deferred
revenue
|
(22,858 | ) | ||
Purchase
price
|
$ | 46,708 |
2007
|
||||
Net
sales
|
$ | 4,523,560 | ||
Gross
profit
|
$ | 3,105,172 | ||
Selling,
general and administrative expenses
|
$ | 2,396,973 | ||
Net
income
|
$ | 578,146 | ||
Basic
income per share
|
$ | 0.01 |
Customer
list
|
$ | 40,512 | ||
Non-compete
agreement
|
5,000 | |||
Accounts
receivable
|
2,328 | |||
Equipment
|
10,000 | |||
Deferred
revenue
|
(12,019 | ) | ||
Purchase
price
|
$ | 45,821 |
2007
|
||||
Net
sales
|
$ | 4,539,957 | ||
Gross
profit
|
$ | 3,123,453 | ||
Selling,
general and administrative expenses
|
$ | 2,358,558 | ||
Net
income
|
$ | 635,545 | ||
Basic
income per share
|
$ | 0.01 |
Customer
list
|
$ | 250,000 | ||
Non-compete
agreement
|
5,000 | |||
Deferred
revenue
|
(25,100 | ) | ||
Purchase
price
|
$ | 229,900 |
2007
|
||||
Net
sales
|
$ | 4,559,317 | ||
Gross
profit
|
$ | 3,136,695 | ||
Selling,
general and administrative expenses
|
$ | 2,375,950 | ||
Net
income
|
$ | 630,932 | ||
Basic
income per share
|
$ | 0.01 |
Customer
list
|
$ | 277,965 | ||
Non-compete
agreement
|
50,000 | |||
Deferred
revenue
|
(64,208 | ) | ||
Purchase
price
|
$ | 263,757 |
2007
|
||||
Net
sales
|
$ | 4,736,895 | ||
Gross
profit
|
$ | 3,294,869 | ||
Selling,
general and administrative expenses
|
$ | 2,412,143 | ||
Net
income
|
$ | 754,957 | ||
Basic
income per share
|
$ | 0.01 |
Customer
list
|
$ | 15,428 | ||
Non-compete
agreement
|
5,000 | |||
Accounts
receivable
|
164 | |||
Equipment
|
2,000 | |||
Deferred
revenue
|
(4,050 | ) | ||
Purchase
price
|
$ | 18,542 |
2007
|
||||
Net
sales
|
$ | 4,468,567 | ||
Gross
profit
|
$ | 3,062,688 | ||
Selling,
general and administrative expenses
|
$ | 2,340,661 | ||
Net
income
|
$ | 593,590 | ||
Basic
income per share
|
$ | 0.01 |
Customer
list
|
$ | 400,000 | ||
Non-compete
agreement
|
10,000 | |||
Deferred
revenue
|
(50,000 | ) | ||
Purchase
price
|
$ | 360,000 |
2007
|
||||
Net
sales
|
$ | 4,610,600 | ||
Gross
profit
|
$ | 3,192,871 | ||
Selling,
general and administrative expenses
|
$ | 2,366,598 | ||
Net
income
|
$ | 694,560 | ||
Basic
income per share
|
$ | 0.01 |
Customer
list
|
$ | 530,000 | ||
Non-compete
agreement
|
20,000 | |||
Deferred
revenue
|
(75,000 | ) | ||
Purchase
price
|
$ | 475,000 |
2008
|
2007
|
|||||||
Current
provision:
|
||||||||
Federal
|
$ | 216,123 | $ | - | ||||
State
|
38,139 | - | ||||||
Deferred
provision:
|
||||||||
Federal
|
(254,278 | ) | 316,569 | |||||
State
|
(44,872 | ) | 55,865 | |||||
Valuation allowance | - | (372,434 | ) | |||||
Total
income tax provision
|
$ | (44,888 | ) | $ | - |
2008
|
2007
|
|||||||
Accounts
receivable
|
$
|
21,476
|
9,056
|
|||||
Amortization
of Intangible assets
|
2,830,094
|
$
|
2,177,997
|
|||||
Loss
carry-forward
|
-
|
365,367
|
||||||
Less
valuation allowance
|
2,552,420
|
2,552,420
|
||||||
Deferred
tax asset
|
$
|
299,150
|
$
|
-
|
2008
|
2007
|
|||||||
Bank
note payable in monthly interest and principal payments of $1,784.
Interest is payable prime plus 4.5%, (9.75% as of December 31,
2007). The note is guaranteed by a stockholder of the Company and
secured by a deed of trust against personal residences of three
stockholders. Also, the bank has a blanket lien against all other
current and future assets of Sitestar.net.
|
$ | - | $ | 58,242 | ||||
Bank
line of credit reissued on April 12, 2008 with a principal limit of
$300,000. Interest is payable at an annual rate of prime plus
.25% (7.50% as of December 31, 2007). The note is secured by a
deed of trust on the Company’s building and is personally guaranteed by
officers and directors of the Company.
|
- | 300,000 |
Non-interest
bearing amount due on acquisition of AlaNet Internet Services payable in
eleven monthly installments of $4,276 through April 2008.
|
- | 20,807 | ||||||
Bank
note payable in twelve monthly interest and principal payments of $30,650.
Interest is payable at an annual rate of 9.25%. The note
is guaranteed by officers and directors of the Company and secured by
shares of Company stock owned by the officers and directors of the
Company.
|
- | 322,048 | ||||||
Bank
note payable in twenty four monthly interest and principal payments of
$21,167. Interest is payable at an annual rate of
8.5%. The note is guaranteed by officers and directors of
the Company and secured by shares of Company stock owned by officers and
directors of the Company.
|
- | 438,264 | ||||||
Bank
bridge note originally payable on February 1, 2008. Interest is payable at
an annual rate of 8.5%. The note was refinanced on February 21,
2008 at an annual interest rate of 8.5% and is payable in twelve payments
of $21,760 and is personally guaranteed by officers and directors of the
Company and secured by real estate owned by officers and directors of the
Company.
|
- | 250,000 | ||||||
Non-interest
bearing amount due on acquisition of USA Telephone payable in monthly
installments of $25,000 starting January 2008.
|
1,290,615 | 1,574,341 | ||||||
Non-interest
bearing amount due on acquisition of N2theNet payable in eleven monthly
installments of $4,046 starting May 2008.
|
23,522 | - | ||||||
Non-interest
bearing amount due on acquisition of Dial Assurance payable in six monthly
installments of $21,650 starting June 2008
|
34,141 | - | ||||||
Non-interest
bearing amount due on acquisition of AdaNet payable in five monthly
installments of $3,836 starting July 2008
|
3,866 | - |
Non-interest
bearing amount due on acquisition of USA Telephone payable in 60 days from
closing.
|
50,292 | - | ||||||
Non-interest
bearing amount due on acquisition of Velocity West payable in twelve
monthly installments of $21,667 starting September 2008.
|
47,058 | - | ||||||
Less
current portion
|
(458,879 | ) | (1,268,866 | ) | ||||
Long-term
portion
|
$ | 990,615 | $ | 1,694,836 |
Twelve
months ending September 30, 2009
|
$
|
458,879
|
||
Twelve
months ending September 30, 2010
|
990,615
|
|||
Twelve
months ending September 30, 2011
|
-
|
|||
Twelve
months ending September 30, 2012
|
-
|
|||
Twelve
months ending September 30, 2013
|
-
|
|||
Thereafter
|
-
|
|||
Total
|
$
|
1,449,494
|
For the nine months ended September 30,
2008
(unaudited)
|
||||||||||||
Corporate
|
Internet
|
Total
|
||||||||||
Revenue
|
$ | - | $ | 7,644,538 | $ | 7,644,538 | ||||||
Cost
of revenue
|
- | 2,097,509 | 2,097,509 | |||||||||
Gross
profit
|
- | 5,547,029 | 5,547,029 | |||||||||
Operating
expenses
|
88,893 | 4,246,226 | 4,335,119 | |||||||||
Income
(loss) from operations
|
(88,893 | ) | 1,300,803 | 1,211,910 | ||||||||
Other
income (expense)
|
- | (118,971 | ) | (118,971 | ) | |||||||
Income
before income taxes
|
(88,893 | ) | 1,181,832 | 1,092,939 | ||||||||
Income
taxes
|
(44,888 | ) | - | (44,888 | ) | |||||||
Net
income (loss)
|
$ | (44,005 | ) | $ | 1,181,832 | $ | 1,137,827 |
For the nine months ended September 30,
2007
(unaudited)
|
||||||||||||
Corporate
|
Internet
|
Total
|
||||||||||
Revenue
|
$ | - | $ | 4,450,600 | $ | 4,450,600 | ||||||
Cost
of revenue
|
- | 1,403,848 | 1,403,848 | |||||||||
Gross
profit
|
- | 3,046,752 | 3,046,752 | |||||||||
Operating
expenses
|
53,320 | 2,282,831 | 2,336,151 | |||||||||
Income
(loss) from operations
|
(53,320 | ) | 763,921 | 710,601 | ||||||||
Other
income (expense)
|
- | (127,769 | ) | (127,769 | ) | |||||||
Income
before income taxes
|
(53,320 | 636,152 | 582,832 | |||||||||
Income
taxes
|
- | - | - | |||||||||
Net
income (loss)
|
$ | (53,320 | ) | $ | 636,152 | $ | 582,832 |
For
the nine months ended September 30, 2008
|
||||||||||||
|
Corporate
|
Internet
|
Total
|
|||||||||
EBITDA
|
$ | (88,893 | ) | $ | 3,550,408 | $ | 3,461,515 | |||||
Interest
expense
|
- | (144,587 | ) | (144,587 | ) | |||||||
Taxes
|
44,888 | - | 44,888 | |||||||||
Depreciation
|
- | (31,039 | ) | (31,039 | ) | |||||||
Amortization
|
- | (2,192,950 | ) | (2,192,950 | ) | |||||||
Net
income (loss)
|
$ | (44,005 | ) | $ | 1,181,832 | $ | 1,137,827 |
For
the nine months ended September 30, 2007
|
||||||||||||
Corporate
|
Internet
|
Total
|
||||||||||
EBITDA
|
$ | (53,320 | ) | $ | 1,766,127 | $ | 1,712,807 | |||||
Interest
expense
|
- | (118,950 | ) | (118,950 | ) | |||||||
Taxes
|
- | - | - | |||||||||
Depreciation
|
- | (45,512 | ) | (45,512 | ) | |||||||
Amortization
|
- | (965,513 | ) | (965,513 | ) | |||||||
Net
income (loss)
|
$ | (53,320 | ) | $ | 636,152 | $ | 582,832 |
2008
|
2007
|
|||||||
EBITDA
for the nine months ended September 30,
|
$ | 3,461,515 | $ | 1,712,807 | ||||
Interest
expense
|
(144,587 | ) | (118,950 | ) | ||||
Taxes
|
44,888 | - | ||||||
Depreciation
|
(31,039 | ) | (45,512 | ) | ||||
Amortization
|
(2,192,950 | ) | (965,513 | ) | ||||
Net
income for the nine months ended September 30,
|
$ | 1,137,827 | $ | 582,832 |
2008
|
2007
|
|||||||||||||||
Current
|
$ | 363,882 | 53 | % | $ | 171,446 | 57 | % | ||||||||
30
< 60
|
167,165 | 25 | % | 72,337 | 24 | % | ||||||||||
60
+
|
151,472 | 22 | % | 56,080 | 19 | % | ||||||||||
Total
|
$ | 682,519 | 100 | % | $ | 299,863 | 100 | % |
SITESTAR
CORPORATION
|
||
Date:
October 8, 2009
|
||
By:
|
/s/ Frank Erhartic, Jr.
|
|
Frank
Erhartic, Jr.
|
||
President,
Chief Executive Officer
|
||
(Principal
Executive Officer and
|
||
Principal
Accounting Officer)
|
||
Date:
October 8, 2009
|
||
By:
|
/s/ Daniel A. Judd.
|
|
Daniel
A. Judd
|
||
Chief
Financial Officer
|
||
(Principal
Financial
Officer)
|