SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 2005
Sutter Holding Company, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-15733 75-3111137
(State or other (Commission (I.R.S. Employer
jurisdiction of incorporation) File Number) Identification No.)
220 Montgomery Street, Suite 2100, San Francisco CA 94104
(Address of principal executive offices) (zip code)
(415) 788-1441
(Registrant's telephone number,
including area code)
(Former name or former address, if changed since last report.)
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
------------------------------------------------------------
In its Current Report on Form 8-K dated January 26, 2005, the registrant
reported the acquisition of FLF, Inc., doing business as Diversified Risk
Insurance Brokers, Inc. ("DRIB").
Audited financial statements of DRIB for the years ended September 30, 2003 and
2004, and pro forma condensed consolidated financial information for the
registrant as of December 31, 2004 are included in Item 9.01 of this amendment
to the Current Report on Form 8-K dated January 26, 2005.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
-------------------------------------------
(a) Financial Statements of Businesses Acquired
(b) Pro Forma Financial Information
-1-
FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
FLF, INC.
dba
DIVERSIFIED RISK INSURANCE BROKERS
================================================================================
FINANCIAL STATEMENTS
================================================================================
Years Ended September 30, 2004 and 2003
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Financial Statements:
Balance Sheets 2
Statements of Operations 3
Statement of Changes in Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-11
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
FLF, Inc., dba Diversified Risk Insurance Brokers
Emeryville, California
We have audited the accompanying balance sheets of FLF, Inc., dba Diversified
Risk Insurance Brokers, as of September 30, 2004 and 2003, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audits 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 financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FLF, Inc., dba Diversified Risk
Insurance Brokers as of September 30, 2004 and 2003, and the results of its
operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/ MOWAT MACKIE & ANDERSON LLP
Oakland, California
November 22, 2004
1
FLF, INC. dba DIVERSIFIED RISK INSURANCE BROKERS
BALANCE SHEETS
September 30,
--------------------------------
2004 2003
------------- -------------
ASSETS
Current assets:
Cash $ 145,650 $ 355,677
Restricted cash and cash equivalents 1,016,634 1,523,086
Premiums receivable 1,971,085 2,189,088
Prepaid expenses 114,438 82,753
Other current assets 55,253 44,873
------------- -------------
Total current assets 3,303,060 4,195,477
Note receivable - 251,000
Property and equipment 139,554 291,352
Goodwill 285,549 285,549
Other assets 24,725 24,725
------------- -------------
$3,752,888 $5,048,103
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Premiums payable to insurance
companies $2,533,863 $2,980,610
Accrued profit sharing plan
contribution 60,000 250,000
Accrued expenses 222,704 87,691
Customer deposits 163,386 230,983
Current portion of long-term
debt - 121,310
Income taxes payable - 570
------------- -------------
Total current liabilities 2,979,953 3,671,164
Long-term debt - 83,836
Stockholders' equity:
Common stock, no par value;
authorized 2,900,000 shares;
issued and outstanding 28,417
and 28,455 shares 1,000 1,000
Additional paid-in capital 382,788 377,938
Retained earnings 389,147 914,165
------------- -------------
Total stockholders' equity 772,935 1,293,103
------------- -------------
$ 3,752,888 $ 5,048,103
============= =============
See accompanying notes to financial statements
2
FLF, INC. dba DIVERSIFIED RISK INSURANCE BROKERS
STATEMENTS OF OPERATIONS
Years Ended September 30,
--------------------------------
2004 2003
------------- -------------
Revenues:
Commission $ 6,066,393 $ 6,203,398
Interest income 18,299 50,276
------------- -------------
6,084,692 6,253,674
Expenses:
Salaries and wages 2,388,712 2,387,869
Commissions 1,544,663 1,526,811
Payroll taxes 190,322 203,539
Employee benefits 253,126 232,070
Profit sharing plan contribution 69,455 255,382
Outside services 269,434 203,264
Rent 350,451 338,833
Insurance 132,537 131,477
Depreciation and amortization 102,850 132,180
Travel and entertainment 78,767 90,153
Office supplies 77,023 91,927
Telephone 28,027 29,834
Legal and accounting 62,015 21,398
Licenses and taxes 53,355 52,097
Postage 30,643 35,192
Dues and subscriptions 54,218 51,756
Education 22,423 10,092
Auto 26,616 17,777
Interest 13,099 12,822
Repairs and maintenance 39,663 33,665
Automation 29,699 32,967
Bad debt 251,000 44,162
Other 43,899 29,248
Equipment rental 23,528 21,144
Business promotion 659 2,949
Donations 50 100
Utilities 32,996 35,420
------------- -------------
Total expenses 6,169,230 6,024,128
------------- -------------
Income (loss) from operations (84,538) 229,546
Other income (expense):
Rental income 49,027 48,134
Gain (loss) on sale of fixed assets 28,170 (12,869)
------------- -------------
Total other income 77,197 35,265
------------- -------------
Income (loss) before state income taxes (7,341) 264,811
State income taxes 5,500 3,085
------------- -------------
Net income (loss) $ (12,841) $ 261,726
============= =============
See accompanying notes to financial statements
3
FLF, INC. dba DIVERSIFIED RISK INSURANCE BROKERS
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended September 30, 2004 and 2003
Common Stock
------------ Additional
Number Paid-in Retained
of Shares Amount Capital Earnings
------------- ------------- ------------- -------------
Balance at September 30, 2002, as
previously reported 28,638 $ 1,000 $ 197,938 $ 609,970
Prior period adjustments - - - 74,646
------------- ------------- ------------- -------------
Balance at October 1, 2002, as adjusted 28,638 1,000 197,938 684,616
Repurchase of common stock (183) - - (32,177)
Additional paid-in capital - - 180,000 -
Net income - - - 261,726
------------- ------------- ------------- -------------
Balance at September 30, 2003 28,455 1,000 377,938 914,165
Repurchase of common stock (183) - - (32,177)
Additional paid-in capital 145 - 4,850 -
Stockholder distributions - - (480,000)
Net income - - - (12,841)
------------- ------------- ------------- -------------
Balance as of September 30, 2004 28,417 $ 1,000 $ 382,788 $ 389,147
============= ============= ============= =============
See accompanying notes to financial statements
4
FLF, INC. dba DIVERSIFIED RISK INSURANCE BROKERS
STATEMENTS OF CASH FLOWS
Years Ended September 30,
--------------------------------
2004 2003
------------- -------------
Cash flows from operating activities:
Net income (loss) $ (12,841) $ 261,726
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 102,850 132,180
(Gain)/loss on sale of fixed assets (28,170) 12,869
Bad debt 251,000 44,162
Changes in assets and liabilities:
Restricted cash and cash equivalents 506,451 (224,904)
Premiums receivable 218,003 (399,846)
Prepaid expenses (31,685) 46,494
Other current assets (10,380) (24,104)
Premiums payable to insurance companies (446,748) 432,631
Accrued profit sharing plan contribution (190,000) 14,000
Accrued expenses 135,012 13,511
Customer deposits (67,597) 90,024
Income taxes payable (570) (930)
Accrued interest on note receivable - (17,000)
------------- -------------
Total adjustments 438,166 119,087
------------- -------------
Net cash provided by operating activities 425,325 380,813
Cash flows from investing activities:
Capital expenditures (16,361) (44,797)
Proceeds from capital dispositions 93,482 2,900
------------- -------------
Net cash provided by (used in)
investing activities 77,121 (41,897)
Cash flows from financing activities:
Principal repayments on long-term debt (205,146) (125,871)
Capital contributions 4,850 180,000
Distributions to stockholders (480,000) -
Purchase of common stock (32,177) (32,177)
------------- -------------
Net cash provided by (used in)
financing activities (712,473) 21,952
------------- -------------
Net increase (decrease) in cash (210,027) 360,868
Cash at beginning of year 355,677 (5,191)
------------- -------------
Cash at end of year $ 145,650 $ 355,677
============= =============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes $ 5,880 $ 800
Interest 13,099 12,822
See accompanying notes to financial statements
5
FLF, INC. dba DIVERSIFIED RISK INSURANCE BROKERS
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Years Ended September 30, 2004 and 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
FLF, Inc., dba Diversified Risk Insurance Brokers ("The Company"), is a property
and casualty insurance broker located in Emeryville, California. The Company was
incorporated in 1976.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States 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 financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes commission income upon the latter of the effective date
or the billing date of the policy. Policy cancellations, additional premiums,
rate adjustments and related commission adjustments are recorded as they occur
and are billed or credited. Commissions applicable to premiums billed directly
by insurance companies are recorded when received.
Restricted Cash and Cash Equivalents
As an insurance broker or agent, the Company collects premiums from insureds
and, after deducting commissions, remits the premiums to the respective
insurance underwriters. Until remittance, these amounts are held in a fiduciary
capacity. The total amounts held in this capacity are classified as restricted
cash and cash equivalents on the accompanying balance sheets. For purposes of
the statement of cash flows, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents. Related liabilities are included in the financial statements under
the title "Premiums payable to insurance companies." The Company maintains
separate bank and investment accounts to pay the insurance companies' portion of
premiums collected. The use of this cash is restricted by state law.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation.
Depreciation is computed using straight-line over the estimated useful lives of
the related assets. A salvage value of ten percent is used for furniture and
fixtures. Amortization of leasehold improvements is computed using the
straight-line method over the lesser of the remaining term of the lease or
estimated useful lives of the related improvements.
6
FLF, INC. dba DIVERSIFIED RISK INSURANCE BROKERS
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
Years Ended September 30, 2004 and 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Goodwill
In July 2001, the Financial Accounting Standards Board issued SFAS No. 142,
"Accounting for Goodwill and Other Intangible Assets" (SFAS 142). SFAS 142
establishes new guidelines for accounting for goodwill and other intangible
assets. In accordance with SFAS 142, goodwill associated with acquisitions
consummated after June 30, 2001 is not amortized and existing goodwill will no
longer be amortized but instead will be assessed for impairment at least
annually. For the years ended September 30, 2004 and 2003, no impairment was
recognized.
Income Taxes
Effective October 1, 1997, the Company elected to be taxed under the provisions
of Subchapter S of the Internal Revenue Code. Under these provisions the Company
generally does not pay federal corporate income taxes on its taxable income.
Instead, the stockholders are individually liable for federal income taxes on
the Company's taxable income. Generally, the same rules apply for state purposes
except that California imposes a tax on S Corporations equal to 1.5% of
California taxable income.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
2004 2003
------------- -------------
Office equipment $ 646,693 $ 639,744
Software 178,159 169,685
Furniture and fixtures 169,774 168,833
Leasehold improvements 17,958 17,958
Automobiles - 183,156
------------- -------------
1,012,584 1,179,376
Less accumulated depreciation
and amortization (873,030) (888,024)
------------- -------------
$ 139,554 $ 291,352
============= =============
7
FLF, INC. dba DIVERSIFIED RISK INSURANCE BROKERS
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
Years Ended September 30, 2004 and 2003
NOTE 3 - BORROWINGS
The Company has a bank line of credit agreement providing for maximum borrowings
of $350,000 with interest at .25% above the bank's prime rate. The agreement
matured April 30, 2004, and has since been extended to April 30, 2005. At
September 30, 2004 and 2003, there were no outstanding borrowings.
The line of credit agreement requires the Company to comply with various debt
covenants. Outstanding borrowings are secured by Company assets and guaranteed
by the Company's stockholders.
Long-term debt consists of the following:
2004 2003
------------ ------------
Auto loans payable in monthly
installments of $2,711, with
interest ranging from 6.0% to
8.9% through May 2007. The
loans were secured by autos and
guaranteed by the stockholders
of the Company. Repaid in 2004. $ - $ 86,196
Term loan payable in 36 monthly
installments of $8,043, with
interest at 1.5% above the
prime lending rate through
December 2004. The loan was
guaranteed by the Company's
stockholders. Repaid in 2004. - 118,950
------------- -------------
- 205,146
Less current portion - (121,310)
------------- -------------
$ - $ 83,836
============= =============
8
FLF, INC. dba DIVERSIFIED RISK INSURANCE BROKERS
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
Years Ended September 30, 2004 and 2003
NOTE 4 - LEASE COMMITMENTS
The Company leases office space under a lease expiring July 31, 2010 from a
partnership, which is owned by two of the Company's stockholders. Future minimum
lease payments as of September 30, 2004 are as follows.
2005 $ 349,382
2006 359,452
2007 369,821
2008 380,496
2009 391,494
Thereafter 334,069
-------------
$2,184,714
=============
In addition, the Company subleases part of its office space to an unrelated
third party under a month-to-month agreement of $4,160 a month.
Rent paid to related partnership for the years ended September 30, 2004 and 2003
was $350,451 and $338,833, respectively.
NOTE 5 - COMMITMENTS
Effective August 1, 1999, the Company has committed to redeem 1,461 shares of
capital stock from a majority shareholder over eight years. Minimum annual
payments of $32,177 are due for a minimum annual transfer of 183 shares, under
this agreement. Payments may be accelerated at the Company's option or in the
event of certain additional ownership changes. Subsequent to year-end the
stockholders entered into an agreement to sell all of the outstanding stock of
the Company. This agreement terminated as a result.
NOTE 6 - DEFINED CONTRIBUTION PLAN
The Company sponsors a defined contribution pension plan that covers all
eligible employees. Company contributions are discretionary. Contributions to
the plan are based on eligible employee compensation. Plan contributions for the
years ended September 30, 2004 and 2003 were $69,455 and $255,382, respectively.
The Plan has been terminated as of September 30, 2004 by the Company.
9
FLF, INC. dba DIVERSIFIED RISK INSURANCE BROKERS
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
Years Ended September 30, 2004 and 2003
NOTE 7 - CONCENTRATION OF CREDIT RISK
Substantially all of the Company's premiums receivable from clients and premiums
payable to insurance companies are from policies sold on behalf of insurance
companies. The Company typically collects premiums, retains its commission and
remits the balance to the insurance companies. A significant portion of the
business written by the Company is for clients located in California
Accordingly, the occurrence of adverse economic conditions or adverse regulatory
climate in California could have a material effect on the Company's financial
condition or results of operations.
Trade receivables potentially subject the Company to credit risk. This credit
risk is limited due to the large number of customers comprising the Company's
customer base and their breakdown among many different industries and geographic
locations. The Company had three customers who accounted for 68% and one
customer for 11% of outstanding trade receivables as of September 30, 2004 and
2003. No customers accounted for more than 10% of revenues during September 30,
2004 and 2003. Management believes the risk of incurring material losses related
to these credit risks is remote.
NOTE 8 - OTHER RELATED PARTY TRANSACTION
The Company sold certain intellectual and technology rights to an affiliate
limited liability company in return for a note receivable in the amount of
$200,000. The note receivable was secured by the intellectual and property
rights and was payable on or before September 28, 2010 with simple interest at
8.5% per annum. Accrued interest through September 30, 2003 was $51,000. Based
on management's evaluation of the affiliate's ability to repay the note, the
note was determined to be uncollectible and written off in the year ended
September 30, 2004.
NOTE 9 - PRIOR PERIOD ADJUSTMENT
Retained earnings at October 1, 2002 has been adjusted to correct an error in
depreciation calculated on the federal tax method. Depreciation has been
recalculated for fixed assets in service, using the straight-line method over
their useful lives. Had the error not been made the net income for 2002 would
have been decreased by $2,367 and the retained earnings at the beginning of 2002
would have increased by $74,646.
10
FLF, INC. dba DIVERSIFIED RISK INSURANCE BROKERS
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
Years Ended September 30, 2004 and 2003
NOTE 10 - SUBSEQUENT EVENT
On November 22, 2004, the stockholders of the Company entered into an agreement
to sell all of the Company's outstanding stock to a publicly traded company. In
conjunction with the sale, the stockholders of the Company elected to revoke the
Company's S-election effective as of October 1, 2004. Prior to this revocation,
no deferred taxes arising from reporting income for tax purposes on the cash
basis method of accounting have been recorded on the Company's books, since the
Company did not pay federal income taxes on the Company's income. However,
deferred tax liability, arising from this revocation, on deferred income of
approximately $363,000, as of October 1, 2004 is approximately $145,000.
11
PRO FORMA FINANCIAL INFORMATION
SUTTER HOLDING COMPANY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------------------------------------------------
Sutter
Sutter Pro Forma
Condensed Condensed
Consolidated Diversified Risk Consolidated
As of As of As of
December 31, 2004 December 31, 2004 Adjustments December 31, 2004
---------------- --------------- --------------- ----------------
(unaudited) (unaudited) (unaudited)
ASSETS
Cash and cash equivalents $ 193,997 $ 28,776 $ 573,865 (1) $ 796,638
Cash - trust - 1,337,383 - 1,337,383
Accounts receivable 82,795 2,949,333 - 3,032,128
Prepaid expenses 48,142 122,197 - 170,339
Mortgages held for sale 2,618,044 - - 2,618,044
Investments, at cost 237,040 - - 237,040
Property and equipment, net 154,335 132,789 - 287,124
Identifiable intangible and other assets 379,535 - 4,114,286 (2) 4,493,821
Goodwill 4,534,193 285,549 3,861,000 (3) 8,680,742
---------------- --------------- --------------- ----------------
TOTAL ASSETS $ 8,248,081 $ 4,856,027 $ 8,549,151 $ 21,653,259
================ =============== =============== ================
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 759,388 $ 4,120,411 - $ 4,879,799
Mortgage warehouse line of credit 2,597,235 - - 2,597,235
Interest payable 34,195 - - 34,195
Deferred income taxes - 42,000 - 42,000
Debt to unrelated parties 268,926 - 1,731,074 (4) 2,000,000
Debt to related parties 1,661,894 - (757,000) (5) 904,894
Commitments and contingencies
Stockholders' Equity
Preferred Stock, $0.0001 par value - - 148 (6) 148
125,000 authorized; 1,475 issued
and outstanding
Common Stock, $0.0001 par value
4,875,000 authorized; 1,844,739
issued and outstanding 63 - 123 (6) 186
Additional paid-in capital 7,180,528 - 8,560,120 (6) 15,740,648
Treasury stock (959,622) - - (959,622)
Accumulated (deficit) / earnings (3,294,526) 693,616 (985,313) (7) (3,586,223)
---------------- --------------- --------------- ----------------
Total Stockholders' Equity 2,926,443 693,616 7,575,077 11,195,136
---------------- --------------- --------------- ----------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 8,248,081 $ 4,856,027 $ 8,549,151 $ 21,653,259
================ =============== =============== ================
Notes:
In reviewing the financial data provided above, assume that the Diversified Risk transaction was effective January 1, 2004.
Material nonrecurring charges or credits and related tax effects which result directly from the transaction are not included above.
(1) Reflects adjustments to cash for non-recurring expenses unrelated to the transaction, and net additional cash raised for
working capital purposes.
(2) Reflects the amount of identifiable intangible assets acquired in the Diversified Risk transaction, net of amortization expense.
The value for these assets was provided to Sutter by an independent valuation services firm with expertise in purchase price
allocation.
(3) Reflects the net amount of goodwill resulting from the Diversified Risk transaction.
(4) Reflects net additional unrelated party debt incurred to complete the Diversified Risk transaction. The borrower of this debt
is Diversified Risk.
(5) Reflects the repayment of certain related party debt.
(6) Reflects additional preferred and common equity capital raised to complete the Diversified Risk transaction and to provide for
working capital.
(7) Reflects a closing balance adjustment to the tangible net worth of Diversified Risk at the time of the transaction, which was
provided for in the Merger Agreement.
SUTTER HOLDING COMPANY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------------------------------------------------
Sutter
Sutter Pro Forma
Condensed Condensed
Consolidated Diversified Risk Consolidated
For the year ended For the year ended For the year ended
December 31, 2004 December 31, 2004 Adjustments December 31, 2004
---------------- --------------- --------------- ----------------
(unaudited) (unaudited) (unaudited)
Revenues:
Net insurance commissions $ - $ 3,941,902 $ - $ 3,941,902
Net gain on sales of mortgages 1,239,907 - - 1,239,907
Mortgage commissions on brokered loans 1,447,379 - - 1,447,379
Interest income, net 27,588 22,478 - 50,066
---------------- --------------- --------------- ----------------
Total revenues 2,714,874 3,964,380 - 6,679,254
Expenses:
General and administrative 2,969,326 3,657,137 (469,277) (1) 6,157,186
Depreciation and amortization 252,269 96,193 883,221 (2) 1,231,683
Professional fees and other expenses 491,745 306,680 (100,214) (3) 698,211
Other than temporary impairment loss 232,043 - - 232,043
Other expenses 17,777 5,658 - 23,435
---------------- --------------- --------------- ----------------
Total expenses 3,963,160 4,065,668 313,730 8,342,558
---------------- --------------- --------------- ----------------
Net operating loss (1,248,286) (101,288) (313,730) (1,663,304)
Other Income
Realized gain (loss) on sale 24,122 27,870 72,130 (4) 124,122
Interest and dividend income 38,396 - - 38,396
Other interest expense (515,205) (10,766) (110,926) (5) (636,897)
Miscellaneous income - 145,013 - 145,013
Debt forgiveness - (251,000) 251,000 (6) -
Inducement to convert debt to equity (343,512) - - (343,512)
Realized gain on extinguishment of debt 656,987 - - 656,987
---------------- --------------- --------------- ----------------
Total other income (139,212) (88,883) 212,204 (15,891)
---------------- --------------- --------------- ----------------
Loss from continuing operations (1,387,498) (190,171) (101,526) (1,679,195)
Provision for income taxes 850 136,791 (136,791) (7) 850
---------------- --------------- --------------- ----------------
Net loss $ (1,388,348) $ (326,962) $ 35,265 $ (1,680,045)
================ =============== =============== ================
Net income (loss) per share -- basic and diluted $ (3.24) $ (1.03)
Weighted Average Shares Outstanding 428,341 1,210,065 (8) 1,638,406
Notes:
In reviewing the financial data provided above, assume that the acquisition of Diversified Risk was effective January 1, 2004.
Material nonrecurring charges or credits and related tax effects which result directly from the transaction are not included above.
(1) Includes add-backs for profit sharing, former owners' auto expenses, and one-time accounting adjustments arising from a prior
period.
(2) Adjustments for expenses associated with Diversified Risk's former owners' vehicles, which were assets previously owned by
Diversified Risk, and amortization expenses related to previously outstanding funded debt.
(3) Nonrecurring professional fees related to IT/Systems consulting, HR consulting and other corporate services.
(4) One-time gain on the sale of assets.
(5) Adjustments to interest expenses associated with car loans on Diversified Risk's former owners' vehicles, and net adjustments
on interest expenses related to new and retired funded debt.
(6) Debt forgiven by former owners of Diversified on the balance of an outstanding note receivable from a former owner.
(7) The application of accumulated net operating losses ("NOLs") at Sutter which results in no income taxes payable on a
consolidated basis.
(8) Sutter common shares issued pursuant to the acquisition of Diversified Risk.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 7, 2005 SUTTER HOLDING COMPANY, INC
/s/ MICHAEL COLLINS
-------------------------------------
Michael Collins
President and Chief Executive Officer
-2-