Delaware
(State
of incorporation or organization)
|
87-0273300
(I.R.S.
Employer Identification No.)
|
PART
I – FINANCIAL INFORMATION
|
||
Item
1 - Financial Statements
|
||
Condensed
Consolidated Balance Sheets
|
1
|
|
Condensed
Consolidated Statements of Operations
|
2
|
|
Condensed
Consolidated Statements of Cash Flows
|
3
|
|
Notes
to Condensed Consolidated Financial Statements
|
4
|
|
Item
2 - Management’s Discussion and Analysis of Financial Condition and
Results of Operations
|
14
|
|
Item
3 – Quantitative and Qualitative Information About Market
Risk
|
33
|
|
Item
4T – Controls and Procedures
|
34
|
|
PART
II – OTHER INFORMATION
|
||
Item
6 – Exhibits
|
35
|
|
SIGNATURES
|
36
|
May 31, 2008
(Unaudited)
|
August 31, 2007
|
||||||
Assets
|
|||||||
Current
Assets
|
|||||||
Cash
|
$
|
1,268,626
|
$
|
2,251,352
|
|||
Receivables:
|
|||||||
Trade,
less allowance for doubtful accounts
|
19,788,007
|
28,774,286
|
|||||
Others
|
3,690,219
|
2,756,815
|
|||||
Inventories,
net
|
2,411,115
|
5,021,516
|
|||||
Prepaid
expenses
|
501,841
|
331,062
|
|||||
Deferred
tax asset - current
|
685,623
|
653,820
|
|||||
Total
current assets
|
28,345,431
|
39,788,851
|
|||||
Property
and equipment, net
|
1,006,057
|
1,308,582
|
|||||
Other
intangible assets, net
|
8,364,167
|
7,432,776
|
|||||
Goodwill
|
10,718,346
|
9,014,055
|
|||||
Deferred
tax asset - long term
|
147,930
|
—
|
|||||
Restricted
cash
|
150,000
|
150,000
|
|||||
Other
assets
|
108,743
|
112,505
|
|||||
Total
assets
|
$
|
48,840,674
|
$
|
57,806,769
|
|||
Liabilities
and Stockholders' Equity
|
|||||||
Current
Liabilities
|
|||||||
Line
of credit
|
$
|
400,066
|
$
|
5,847,494
|
|||
Accounts
payable
|
22,154,365
|
26,578,127
|
|||||
Current
portion of long term debt - related party
|
2,645,307
|
1,280,660
|
|||||
Income
taxes payable
|
472,722
|
9,255
|
|||||
Accrued
liabilities
|
3,153,225
|
4,172,008
|
|||||
Due
to former stockholders
|
631,415
|
631,415
|
|||||
Customer
deposits
|
47,131
|
183,220
|
|||||
Deferred
revenue
|
1,165,494
|
1,362,333
|
|||||
Total
current liabilities
|
30,669,723
|
40,064,512
|
|||||
Deferred
tax liability
|
2,363,932
|
1,307,155
|
|||||
Accrued
liabilities
|
174,739
|
—
|
|||||
Long
term debt - related party
|
1,159,408
|
2,745,514
|
|||||
Total
liabilities
|
34,367,802
|
44,117,181
|
|||||
Commitments
and contingent liabilities
|
|||||||
Stockholders'
Equity
|
|||||||
Common
stock $0.01 par value; 25,000,000 shares authorized;
17,714,180
and 17,249,875 shares issued and 14,849,591 and 14,385,286, outstanding
at
May 31, 2008 and August 31, 2007, respectively
|
177,142
|
172,499
|
|||||
Additional
paid-in capital
|
20,557,148
|
20,348,736
|
|||||
Accumulated
deficit
|
(665,371
|
)
|
(1,235,600
|
)
|
|||
20,068,919
|
19,285,635
|
||||||
Less:
treasury stock, at cost, 2,864,589 shares
|
(5,596,047
|
)
|
(5,596,047
|
)
|
|||
Total
stockholders' equity
|
14,472,872
|
13,689,588
|
|||||
Total
liabilities and stockholders' equity
|
$
|
48,840,674
|
$
|
57,806,769
|
Three months ended May 31,
|
Nine months ended May 31
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Revenues
|
$
|
38,929,191
|
$
|
44,163,067
|
$
|
157,637,879
|
$
|
150,256,583
|
|||||
Cost
of revenues
|
33,233,642
|
39,493,643
|
138,326,110
|
135,176,544
|
|||||||||
Gross
profit
|
5,695,549
|
4,669,424
|
19,311,769
|
15,080,039
|
|||||||||
Operating
expenses:
|
|||||||||||||
Selling,
general, and administrative expenses
|
5,348,986
|
4,787,338
|
16,025,377
|
15,890,166
|
|||||||||
Management
fee – related party
|
—
|
—
|
—
|
145,834
|
|||||||||
Amended
employment agreements and management agreement charges
|
—
|
—
|
—
|
2,329,800
|
|||||||||
Rent
expense – related party
|
91,439
|
89,325
|
270,089
|
267,975
|
|||||||||
Depreciation
and amortization
|
336,086
|
297,815
|
944,100
|
848,551
|
|||||||||
Total
operating expenses
|
5,776,510
|
5,174,478
|
17,239,565
|
19,482,326
|
|||||||||
Operating
income (loss)
|
(80,961
|
)
|
(505,054
|
)
|
2,072,204
|
(4,402,287
|
)
|
||||||
Other
expense (income):
|
|||||||||||||
Interest
income – other
|
(11,144
|
)
|
(15,995
|
)
|
(77,807
|
)
|
(73,910
|
)
|
|||||
Interest
expense
|
180,276
|
267,120
|
833,018
|
830,718
|
|||||||||
Other
|
(256
|
)
|
(29
|
)
|
(274
|
)
|
(442
|
)
|
|||||
(Loss)
income before income taxes
|
(249,837
|
)
|
(756,150
|
)
|
1,317,267
|
(5,158,653
|
)
|
||||||
Provision
(benefit) for income taxes
|
(98,055
|
)
|
(290,902
|
)
|
614,226
|
|
(2,030,712
|
)
|
|||||
Net
(loss) income
|
$
|
(
151,782
|
)
|
$
|
(
465,248
|
)
|
$
|
703,041
|
$
|
(3,127,941
|
)
|
||
Net
(loss) income per common share
|
|||||||||||||
Basic
and Diluted
|
$
|
(0.01
|
)
|
$
|
(0.03
|
)
|
$
|
0.05
|
$
|
(0.22
|
)
|
||
Weighted
Average Shares Outstanding
|
|||||||||||||
Basic
|
14,519,049
|
14,385,286
|
14,519,049
|
14,385,286
|
|||||||||
Diluted
|
14,519,049
|
14,385,286
|
14,636,249
|
14,385,286
|
|
Nine
months ended May 31,
|
||||||
2008
|
2007
|
||||||
Cash
Flows From Operating Activities
|
|||||||
Net
income (loss)
|
$
|
703,041
|
$
|
(3,127,941
|
)
|
||
Adjustments
to Reconcile Net Income (loss) to Net
|
|||||||
Cash
Provided By (Used In) Operating Activities
|
|||||||
Depreciation
|
475,491
|
413,288
|
|||||
Amortization
related to intangible assets
|
468,609
|
435,263
|
|||||
Deferred
income tax expense (benefit)
|
461,576
|
(2,031,400
|
)
|
||||
Stock-based
compensation
|
213,055
|
291,868
|
|||||
Amended
employment agreements and management agreement charges
|
-
|
2,329,800
|
|||||
Changes
In Operating Assets and Liabilities
|
|||||||
Receivables
|
10,760,434
|
4,096,623
|
|||||
Inventories
|
2,610,401
|
(4,837,664
|
)
|
||||
Prepaid
expenses and other assets
|
(155,753
|
)
|
(341,836
|
)
|
|||
Accounts
payable
|
(4,477,624
|
)
|
4,017,139
|
||||
Deferred
revenue
|
(196,839
|
)
|
(75,920
|
)
|
|||
Customer
deposits
|
(136,089
|
)
|
(572,118
|
)
|
|||
Income
taxes payable
|
19,629
|
(26,424
|
)
|
||||
Accrued
liabilities
|
(3,315,341
|
)
|
(873,500
|
)
|
|||
Deferred
compensation
|
-
|
(272,332
|
)
|
||||
Net
Cash Provided By (Used In) Operating Activities
|
7,430,588
|
(575,154
|
)
|
||||
Cash
Flows From Investing Activities
|
|||||||
Purchases
of property and equipment
|
(172,965
|
)
|
(502,880
|
)
|
|||
Acquisition
of business, net of cash acquired
|
(1,751,461
|
)
|
-
|
||||
Net
Cash Used In Investing Activities
|
(1,924,426
|
)
|
(502,880
|
)
|
|||
Cash
Flows From Financing Activities
|
|||||||
Net
increase (decrease) in line of credit
|
(5,447,428
|
)
|
2,882,124
|
||||
Repayment
of debt
|
(1,041,460
|
)
|
(1,074,643
|
)
|
|||
Net
Cash (Used In) Provided By Financing Activities
|
(6,488,888
|
)
|
1,807,481
|
||||
Net
(decrease) increase in Cash
|
(982,726
|
)
|
729,447
|
||||
Beginning
Cash
|
2,251,352
|
917,683
|
|||||
Ending
Cash
|
$
|
1,268,626
|
$
|
1,647,130
|
|||
Supplemental
Disclosure of Cash Flow Information
|
|||||||
Cash
paid during the period for:
|
|||||||
Income
taxes
|
$
|
934,016
|
$
|
40,457
|
|||
Interest
|
1,198,147
|
550,456
|
|||||
Supplemental
Schedule of Non Cash Investing and Financing
Activities
|
|||||||
Acquisition
of Capital Stock of Luceo
|
$
|
820,000
|
-
|
Cash
|
$
|
215,235
|
||
Trade
receivables
|
2,093,654
|
|||
Other
receivables
|
272,741
|
|||
Prepaid
expenses
|
7,873
|
|||
Customer
relationships
|
1,300,000
|
|||
Noncompete
asset
|
100,000
|
|||
Other
assets
|
3,390
|
|||
Accounts
payable
|
(53,862
|
)
|
||
Other
current liabilities
|
(1,791,282
|
)
|
||
Income
tax payable
|
(443,838
|
)
|
||
Deferred
tax liabilities
|
(656,773
|
)
|
||
Fair
value of net assets acquired
|
$
|
1,047,139
|
||
Purchase
price
|
2,615,000
|
|||
Excess
purchase price
|
$
|
1,567,861
|
For
the Nine Months Ended May 31, 2008
|
Shares
|
Weighted Average
Exercise Price
|
Weighted Average
Remaining Term
|
Aggregate
Intrinsic Value |
|||||||||
Options
Outstanding -September 1, 2007
|
396,500
|
$
|
1.22
|
||||||||||
Options
Granted
|
32,500
|
$
|
0.68
|
||||||||||
Options
Exercised
|
—
|
||||||||||||
Options
Forfeited or Expired
|
(42,500
|
)
|
$
|
1.24
|
|||||||||
Options
Outstanding -May 31, 2008
|
386,500
|
$
|
1.17
|
6.30
years
|
$
|
5,200
|
|||||||
Options
Exercisable -May 31, 2008
|
149,750
|
$
|
1.18
|
7.32
years
|
$
|
5,200
|
Nine Months Ended
|
||||
May 31, 2008
|
||||
Weighted-Average
Fair Value
|
$
|
0.53
|
||
Assumptions
|
||||
Expected
Volatility
|
101
|
%
|
||
Expected
Term
|
4.87
years
|
|||
Expected
Forfeiture Rate
|
0
|
%
|
||
Dividend
Yield
|
0
|
%
|
||
Risk-Free
Interest Rate
|
3.27
|
%
|
For
the Nine Months Ended May 31, 2008
|
Shares
|
Weighted Average
Grant Date Fair Value |
|||||
Nonvested
- September 1, 2007
|
456,974
|
$
|
1.25
|
||||
Granted
|
10,331
|
$
|
1.21
|
||||
Vested
|
(133,763
|
)
|
|||||
Forfeited
|
(3,000
|
)
|
$
|
1.44
|
|||
Nonvested
-May 31, 2008
|
330,542
|
$
|
1.24
|
||||
Vested
-May 31, 2008
|
133,763
|
$
|
1.26
|
For the Three Months Ended
|
|||||||||||||
May 31, 2008
|
% of Total
|
May 31, 2007
|
% of Total
|
||||||||||
Departments
of the United States Government
|
$
|
13,136,567
|
33.7
|
%
|
$
|
19,408,973
|
43.9
|
%
|
|||||
State
and Local Governments
|
2,153,215
|
5.5
|
%
|
2,791,328
|
6.3
|
%
|
|||||||
Commercial
Companies
|
15,624,874
|
40.1
|
%
|
13,579,759
|
30.7
|
%
|
|||||||
Education
and other
|
8,014,535
|
20.6
|
%
|
8,383,007
|
19.0
|
%
|
|||||||
Total
Revenues
|
$
|
38,929,191
|
100.0
|
%
|
$
|
44,163,067
|
100.0
|
%
|
For the Nine Months Ended
|
|||||||||||||
May 31, 2008
|
% of Total
|
May 31, 2007
|
% of Total
|
||||||||||
Departments
of the United States Government
|
$
|
87,990,000
|
55.8
|
%
|
$
|
86,922,169
|
57.8
|
%
|
|||||
State
and Local Governments
|
8,133,825
|
5.2
|
%
|
9,559,667
|
6.4
|
%
|
|||||||
Commercial
Companies
|
40,094,684
|
25.4
|
%
|
37,643,792
|
25.1
|
%
|
|||||||
Education
and other
|
21,419,370
|
13.6
|
%
|
16,130,955
|
10.7
|
%
|
|||||||
Total
Revenues
|
$
|
157,637,879
|
100.0
|
%
|
$
|
150,256,583
|
100.0
|
%
|
May 31,
|
August 31,
|
||||||
2008
|
2007
|
||||||
Trade
receivables
|
$
|
20,179,144
|
$
|
29,165,423
|
|||
Allowance
for doubtful accounts
|
$
|
(391,137
|
)
|
$
|
(391,137
|
)
|
|
Trade
receivables, net
|
$
|
19,788,007
|
$
|
28,774,286
|
May 31, 2008
|
August 31, 2007
|
||||||
Accrued
payroll
|
$
|
912,445
|
$
|
934,517
|
|||
Accrued
commissions
|
413,922
|
507,317
|
|||||
Accrued
state sales taxes
|
165,104
|
286,158
|
|||||
Accrued
third party service fees
|
49,742
|
115,776
|
|||||
Other
accrued expenses
|
1,612,011
|
2,328,240
|
|||||
$
|
3,153,225
|
$
|
4,172,008
|
Accumulated
|
||||
Deficit
|
||||
Balance
at August 31, 2007
|
$
|
(1,235,600
|
)
|
|
Adoption
of FIN 48 -September 1, 2007
( see footnote 2 Income Taxes) |
(132,812
|
)
|
||
Net
income for nine months ended May 31, 2008
|
703,041
|
|||
Balance
at May 31, 2008
|
$
|
(665,371
|
)
|
May 31, 2008
|
August 31,
|
||||||
|
(Unaudited)
|
2007
|
|||||
Identifiable Assets:
|
|||||||
Systems
Division
|
43,299,475
|
57,806,769
|
|||||
Global
Services Division
|
5,541,199
|
—
|
|||||
Total
Assets
|
48,840,674
|
57,806,769
|
Three months ended May 31,
|
Nine month ended May 31,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
(Unaudited)
|
(Unaudited)
|
||||||||||||
Revenues
|
|||||||||||||
Systems
Division
|
36,582,591
|
44,163,067
|
155,291,279
|
150,256,583
|
|||||||||
Global
Services Division
|
2,346,600
|
—
|
2,346,600
|
—
|
|||||||||
Total
Revenue
|
38,929,191
|
44,163,067
|
157,637,879
|
150,256,583
|
|||||||||
Gross
Profit
|
|||||||||||||
Systems
Division
|
5,204,948
|
4,669,424
|
18,821,168
|
15,080,039
|
|||||||||
Global
Services Division
|
490,601
|
—
|
490,601
|
—
|
|||||||||
Gross
Profit
|
5,695,549
|
4,669,424
|
19,311,769
|
15,080,039
|
|||||||||
Operating
Income (Loss)
|
|||||||||||||
Systems
Division
|
(226,688
|
)
|
(505,054
|
)
|
1,926,477
|
(4,402,287
|
)
|
||||||
Global
Services Division
|
145,727
|
—
|
145,727
|
—
|
|||||||||
Operating
Income (Loss)
|
(80,961
|
)
|
(505,054
|
)
|
2,072,204
|
(4,402,287
|
)
|
||||||
Interest
and Other Expense (Income)
|
|||||||||||||
Systems
Division
|
155,576
|
251,496
|
741,637
|
756,366
|
|||||||||
Global
Services Division
|
13,300
|
—
|
13,300
|
—
|
|||||||||
Interest
and Other Expense (Income)
|
168,876
|
251,496
|
754,937
|
756,366
|
|||||||||
Provision
(Benefit) for Income Taxes
|
|||||||||||||
Systems
Division
|
(160,611
|
)
|
(290,902
|
)
|
551,670
|
(2,030,712
|
)
|
||||||
Global
Services Division
|
62,556
|
—
|
62,556
|
—
|
|||||||||
Provision
(Benefit) for Income Taxes
|
(98,055
|
)
|
(290,902
|
)
|
614,226
|
(2,030,712
|
)
|
||||||
Net
Income (Loss)
|
|||||||||||||
Systems
Division
|
(221,653
|
)
|
(465,648
|
)
|
633,170
|
(3,127,941
|
)
|
||||||
Global
Services Division
|
69,871
|
—
|
69,871
|
—
|
|||||||||
Net
Income (Loss)
|
(151,782
|
)
|
(465,648
|
)
|
703,041
|
(3,127,941
|
)
|
2008
|
2007
|
Change
|
%
|
||||||||||
Revenues
|
$
|
38,929,191
|
$
|
44,163,067
|
$
|
(5,233,876
|
)
|
-11.9
|
%
|
||||
Cost
of revenues
|
33,233,642
|
39,493,643
|
(6,260,001
|
)
|
-15.9
|
%
|
|||||||
Gross
profit
|
5,695,549
|
4,669,424
|
1,026,125
|
22.0
|
%
|
||||||||
Percent
of revenues
|
14.6
|
%
|
10.6
|
%
|
|||||||||
Operating
expenses:
|
|||||||||||||
Selling,
general, and administrative expenses
|
5,348,986
|
4,787,338
|
561,648
|
11.7
|
%
|
||||||||
Rent
expense – related party
|
91,439
|
89,325
|
2,114
|
2.4
|
%
|
||||||||
Depreciation
and amortization
|
336,086
|
297,815
|
38,271
|
12.9
|
%
|
||||||||
Total
operating expenses
|
5,776,510
|
5,174,478
|
602,032
|
11.6
|
%
|
||||||||
Pecent
of revenues
|
14.8
|
%
|
11.7
|
%
|
|||||||||
Operating
loss
|
(80,961
|
)
|
(505,054
|
)
|
424,093
|
-84.0
|
%
|
||||||
Percent
of revenues
|
-0.2
|
%
|
-1.1
|
%
|
|||||||||
Other
expense (income):
|
|||||||||||||
Interest
income – other
|
(11,144
|
)
|
(15,995
|
)
|
4,851
|
-30.3
|
%
|
||||||
Interest
expense
|
180,276
|
267,120
|
(86,844
|
)
|
-32.5
|
%
|
|||||||
Other
|
(256
|
)
|
(29
|
)
|
(227
|
)
|
N/A
|
||||||
Loss
before income taxes
|
(249,837
|
)
|
(756,150
|
)
|
506,313
|
-67.0
|
%
|
||||||
Provision
(benefit) for income taxes
|
(98,055
|
)
|
(290,902
|
)
|
192,847
|
66.3
|
%
|
||||||
Net
loss
|
$
|
(151,782
|
)
|
$
|
(465,248
|
)
|
$
|
313,466
|
-67.4
|
%
|
Three months ended May 31,
|
|||||||
2008
|
2007
|
||||||
Revenues
|
|||||||
Systems
Division
|
36,582,591
|
44,163,067
|
|||||
Global
Services Division
|
2,346,600
|
—
|
|||||
Total
Revenue
|
38,929,191
|
44,163,067
|
For the Three Months Ended
|
|||||||||||||
May 31, 2008
|
% of Total
|
May 31, 2007
|
% of Total
|
||||||||||
Departments of
the United States
|
|||||||||||||
Government
|
$
|
13,136,567
|
35.9
|
%
|
$
|
19,408,973
|
43.9
|
%
|
|||||
State
and Local Governments
|
2,153,215
|
5.9
|
%
|
2,791,328
|
6.3
|
%
|
|||||||
Commercial
Companies
|
13,278,274
|
36.3
|
%
|
13,579,759
|
30.7
|
%
|
|||||||
Education
and other
|
8,014,535
|
21.9
|
%
|
8,383,007
|
19.0
|
%
|
|||||||
Total
Revenues
|
$
|
36,582,591
|
100.0
|
%
|
$
|
44,163,067
|
100.0
|
%
|
Three months ended May 31,
|
|||||||
2008
|
2007
|
||||||
Gross
Profit
|
|||||||
Systems
Division
|
5,204,948
|
4,669,424
|
|||||
Global
Services Division
|
490,601
|
—
|
|||||
Gross
Profit
|
5,695,549
|
4,669,424
|
2008
|
2007
|
Change
|
%
|
||||||||||
Revenues
|
$
|
157,637,879
|
$
|
150,256,583
|
$
|
7,381,296
|
4.9
|
%
|
|||||
Cost
of revenues
|
138,326,110
|
135,176,544
|
3,149,566
|
2.3
|
%
|
||||||||
Gross
profit
|
19,311,769
|
15,080,039
|
4,231,730
|
28.1
|
%
|
||||||||
Percent
of revenues
|
12.3
|
%
|
10.0
|
%
|
|||||||||
Operating
expenses:
|
|||||||||||||
Selling,
general, and administrative expenses
|
16,025,377
|
15,890,166
|
135,211
|
0.9
|
%
|
||||||||
Management
fee – related party
|
—
|
145,834
|
(145,834
|
)
|
-100.0
|
%
|
|||||||
Amended
employment agreements and management agreement charges
|
—
|
2,329,800
|
(2,329,800
|
)
|
-100.0
|
%
|
|||||||
Rent
expense – related party
|
270,089
|
267,975
|
2,114
|
0.8
|
%
|
||||||||
Depreciation
and amortization
|
944,100
|
848,551
|
95,549
|
11.3
|
%
|
||||||||
Total
operating expenses
|
17,239,565
|
19,482,326
|
(2,242,761
|
)
|
-11.5
|
%
|
|||||||
Pecent
of revenues
|
10.9
|
%
|
13.0
|
%
|
|||||||||
Operating
income (loss)
|
2,072,204
|
(4,402,287
|
)
|
6,474,491
|
147.1
|
%
|
|||||||
Percent
of revenues
|
1.3
|
%
|
-2.9
|
%
|
|||||||||
Other
expense (income):
|
|||||||||||||
Interest
income – other
|
(77,807
|
)
|
(73,910
|
)
|
(3,897
|
)
|
5.3
|
%
|
|||||
Interest
expense
|
833,018
|
830,718
|
2,300
|
0.3
|
%
|
||||||||
Other
|
(274
|
)
|
(442
|
)
|
168
|
-38.0
|
%
|
||||||
Income
(loss) before income taxes
|
1,317,267
|
(5,158,653
|
)
|
6,475,920
|
125.5
|
%
|
|||||||
Provision
(benefit) for income taxes
|
614,226
|
(2,030,712
|
)
|
2,644,938
|
130.2
|
%
|
|||||||
Net
income (loss)
|
$
|
703,041
|
$
|
(3,127,941
|
)
|
$
|
3,830,982
|
122.5
|
%
|
Nine month ended May 31,
|
|||||||
2008
|
2007
|
||||||
Revenues
|
|||||||
Systems
Division
|
155,291,279
|
150,256,583
|
|||||
Global
Services Division
|
2,346,600
|
—
|
|||||
Total
Revenue
|
157,637,879
|
150,256,583
|
For the Nine Months Ended
|
|||||||||||||
May 31, 2008
|
% of Total
|
May 31, 2007
|
% of Total
|
||||||||||
Departments
of the United States Government
|
$
|
87,990,000
|
56.7
|
%
|
$
|
86,922,166
|
57.8
|
%
|
|||||
State
and Local Governments
|
8,133,825
|
5.2
|
%
|
9,559,668
|
6.4
|
%
|
|||||||
Commercial
Companies
|
37,748,084
|
24.3
|
%
|
37,643,793
|
25.1
|
%
|
|||||||
Education
and other
|
21,419,370
|
13.8
|
%
|
16,130,956
|
10.7
|
%
|
|||||||
Total
Revenues
|
$
|
155,291,279
|
100.0
|
%
|
$
|
150,256,583
|
100.0
|
%
|
Nine month ended May 31,
|
|||||||
2008
|
2007
|
||||||
Gross
Profit
|
|||||||
Systems
Division
|
18,821,168
|
15,080,039
|
|||||
Global
Services Division
|
490,601
|
—
|
|||||
Gross
Profit
|
19,311,769
|
15,080,039
|
§
|
In
some instances, the “set-up” service is performed after date of delivery.
We recognize revenue for the “hardware” component at date of delivery when
the amount of revenue allocable to this component is not contingent
upon
the completion of “set-up” services and, therefore, our client has agreed
that the transaction is complete as to the “hardware” component. In
instances where our client does not accept delivery until “set-up”
services are completed, we defer all revenue in the transaction until
client acceptance occurs.
|
§
|
There
are occasions when a client requests a transaction on a “bill & hold”
basis. We follow the SAB 104 criteria and recognize revenue from
these
sales prior to date of physical delivery only when all the criteria
of SAB
104 are met. We do not modify our normal billing and credit terms
for
these customers. The customer is invoiced at the date of revenue
recognition when all of the criteria have been
met.
|
EMTEC,
INC.
|
|||
By:
|
/s/
|
DINESH
R. DESAI
|
|
Dinesh
R. Desai
|
|||
Chairman
and Chief
|
|||
Executive
Officer
|
|||
(Principal
Executive Officer)
|
|||
By:
|
/s/
|
STEPHEN
C. DONNELLY
|
|
Stephen
C. Donnelly
|
|||
Chief
Financial Officer
|
|||
(Principal
Financial Officer)
|
|||
Date:
July 14, 2008
|