MyCFO - April 2002 board presentationonline.wsj.com/public/.../mycfo-boardpresentation... · Recent...
Transcript of MyCFO - April 2002 board presentationonline.wsj.com/public/.../mycfo-boardpresentation... · Recent...
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Copyl:ight myCFO, Inc. 2002
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STARS0029729
Recent IRS Activity / Proposals
myCFO’s Plan
Short-Term Revenue Impact and Q2 STARs Pipeline
Issues- client and myCFO¯ Audit / Penalty¯ Liability¯ PR Impact
Long-Term Strategy and Opportunities¯ STARs¯ myCFO’s Platform and Alliance strategies
Strategic Alternatives
myCFO, Inc. -- Highly Confidential
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IRS Action Specifics myCFO/Legal View
CARDs Notice(issued 3/18/02)
Disclosure Program(filing due 4/23/02)
NPL
no change in law"listed" transaction
¯ no retroactive affecttax treatment questioned
¯ increased focus on penaltiesfor understatement / non-listing
¯ heightened audit risk¯ no clear extension to
individualseliminates penaltyassures IRS audit
¯ accel, tax positionreview/negotiation
significant document disclosure¯ A/C privilege waiver
(scope unclear)
no IRS action/change in law¯ possible future listing /
registration under IRSproposals (see next page)
myCFO, Inc. -- Highly Confidential
strong !egal/economicsupport
¯ clients can rely on originalopinions
¯ low client penalty exposure¯ low myCFO penalty exposure
no new CARDS transactions
disclosure recommended forCARDs clients
¯ 3rd partvdisclosure likely leadto myCFO CARDs clients
¯ audit risk increasedmyCFO to assist
¯consistent disclosures¯conflict waiver requested
NPL still strong / viable¯ no clear benefit from IRS
Disclosure Program
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Proposal Specifics myCFO/Legal ViewTransparency
DisclosureRequirements
Reportable Transactions
Strict Liability
increases taxpayerdisclosure
¯ "who participates"¯ "what transactions"
higher penalties
expands corporate disclosurerules
¯ individuals, trusts, S-corpsand partnerships mustdisclose
expands entities required toreport/list/register transaction
¯ transaction $$ / fee test¯ myCFO required to list
eliminates legal opinions aspenalty "safe harbor"
¯ transactions must stand onbusiness purpose / tax law
myCFO, Inc. -- Highly Confidential
many proposals requireCongressional action
¯ extend regs to individuals¯ increase penalties
uncertain legislative timelineand outcome
¯ no current schedule¯ competing Committee bills
IRS can make unilateralchanges immediately
¯ expand certain reporting,disclosure and listingrequirements
¯ strict liability (unclearability to impose w/oCongress)
significant short-termuncertainty; less long-termimpact
¯ STARs reviewing newofferings not contemplatedby current IRS proposals
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Keep clients informed of events / options¯ Availability of IRS disclosure program
¯ myCFO recommending for CARDsincreased audit risk; increased IRS scrutinycertain penalty avoidance
¯ not recommending for NPL or other transactions- no actual change in law- still viable tax solutions- no increased audit risk- strong economic and legal support; likely penalty avoidance
Address short-term impact on STARs¯ Hit Q2 revenue (shift from Q1 to Q2)
¯ new MD (Randy Bickham) provides potential for short-term revenue pick ¯ current Pipeline of $11M by end of Q2¯ national Alliance w/Greenberg is significant in the current pipeline¯ incentives aligned to meet plan; get Q2 cash and hit firm plan!
¯ Liquidity will be critical issue if transactions close beyond April
Address long-term impact on STARs/myCFO¯ myCFO uniquely positioned for "next generation"¯ shift from third-party tax products to investment products (Transactional to Annuity)¯ myCFO platform & Alliance strategy as significant market opportunities
myCFO, Inc. -- Highly Confidential 5
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FOSIAS
STARS
Q1 Revemue
I Estimated I I Plan I I Over / (Under) I %Diff.5,336 5,170 166 3%1,845 2,767 (922) -33%
491 1,760 (1,269) -72%
I 7,67311 9,69711 (2,024)1 I -21% I
Beginning Cash Balance
14/01-4/15J 14/15-4/30J 15/01-5/151 15/15-5/311 J6/01-6/151 J6/15-6/30J
17500 351 527 1 ~459 2~564 11155
Cash CollectionsFOS 750 750 750 750 750 750IAS - 825 325 400 100 75STARS (Pipeline) 200 831 2,117 2,000 - 5,000
Total Cash Collections
Cash after Collections
Total Cash Payments
Ending Cash Available
Ending Cash W/O STARs
TOTAL
1,500
4,5001,725
10,147
950 2,406 3,192 3,150 850 5,825 17,872
2,450 2,757 3,718 4,609 3,414 6,980
(2,099) (2,230) (2,259) (2,045) (2,259) (1,965)
351 527 1,459 2,564 1,155 5,015
I 151 (504) (1,688) (2,583) (3,992) (5,132)I
(12,857
5,015
myCFO, Inc. -- Highly Confidential
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myCFO Strategic Advisory Services (STARS) - 2002 Pipeline Report
Client IOfficel CSDTrade Size Client’s myCFO Quarterly Revenue I CashNotional Gross Fee Attorneys Fee Act. Q1 411-4/15 ~15~/30 5/1-5/15 5/15-531 611-6115 6115-6130 Total Q2
Signed and Closed Projects
1 Klein LA Nodon $50,000 $0 $50,000 $50,00O2 Elins LA Anderson $25,000, $0 $25,000 $25,000
Signed andWIP Projects
3 Kraft OC Harper $125,0001 $o $125,000’$125,000 $C4 Aslanian LA Anderson $200,000 $o $200,000! $0 $200,000 $200,000
Pipeline - Greater than 75%
5 Douglas OC Sacaccio $5,000,000 $125,000 $o $125,000 $125,000 $125,00C6 Kalikow STARS Groves $21,300,000 $745,500’ ($4o,ooo) $705,500 $705,500 $705,5007 SilvermanSTARS Groves $21,300,000 $745,500 ($40,000) $705,500 $705,500 $705,50O8 Kramer STARS Schaller $21,300,000 $745,500 ($40,000) $705,50O $705,500 $705,5009 Woodner STARS Groves $21,300,000 $745,500 ($40,000) $705,500 $7O5,5OO $705,50C
10 Client 1 STARS Bickham $500,000,000 $5,00O,000 $o $5,000,00O $5,000,000 $5,000,00O11 Client 2 STARS Bickham $100,000,000 $2,000,000 $0 $2,000,000 $2,000,000 $2,000,00O
Totals $690,200,000$10,507,000 ($160,000) $10,347,000$200,000 $200,000 $830,500 $2,116,500 $2,000,000 $0 $5,000,000 $10,147,00(]
myCFO, Inc. -- Highly Confidential 7
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EventsDisclosure Program, CARDs Pre-Events Post-Events
Notice & IRS ProposalsClient Audit "Lottery" Increased (for CARDs)
Tax Law Strong basis and tax Strong basis and tax lawlaw opinions opinions
Penalty Unlikely Unlikely (for CARDs) / uncertain(for NPL & going forward)
myCFO Liability risk (from client) Low Uncertain
Penalty risk Low Low
CSD support Active Uncertain
Cash flow Substantial Short-term:cautious / unpredictableLong-term: substantial
myCFO, Inc. -- Highly Confidential
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Clients¯ increased IRS scrutiny for CARDs (Notice 2002-21)
¯ high audit/medium PR risk
¯ little change for NPL, other transactions¯ normal audit/low PR risk
¯ general confusion /"chill" factor
Company¯ "myCFO" will be disclosed during Disclosure Program¯ likely IRS summons (3-12 mos.)
¯ client names / materials
¯ risk of expanding IRS inquiry (beyond CARDs)¯ possible IRS target (big name / small company)¯ high PR risk
Board¯ PR risk¯ low liability risk
myCFO, Inc. -- Highly Confidential
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Historical focus on identifying third-party, loss-generating tax strategies
¯ most revenue recognized in the 4th quarter
New focus on investment-centric strategies with 2+ year holds
¯ wrap investment programs with embedded tax efficiencies¯ financial derivative monetization strategies for unrecognized tax gains¯ distressed asset partnership strategies for recognized gains¯ transition from FOS to IAS platform - 12 month goal
~Jpfront design and implementation (transaction fees) and managementannuity fees-)
¯ annuity-based revenue not subject to changes in tax shelter/listing requirements¯ inherently less financial risk¯ diversify distribution to 66%+ of deals sourced from outside current client base (e.g., I-Banks)
From tax-specific solutions to long-term wealth advice
Key new hire extensive experience, network and technical skills
¯ excellent compliment to Alliance strategy for asset management at $100M+ level¯ "blueprints" to imbedded tax planning for high-margin annuity revenue
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Long=TermGro~~’th Strategy
Phase 1
Tax/Estates[] High Client
satisfaction[] 90-100% Influence[] Nationwide
Coverage
i lnvestment Advisory Services(IAS) -~ Fully Scalable Investment~..:~ .:-. Platform from HNW.to .~
: Broad Market products
SYARS t
4,AHiance / AppHcatio~ Service
PltOvidelr {ASP} - 3rd party platformdistribution model for technology
applications, FOS and IAS
Phase 2 Phase 3 Phase 4
to Alliances" Alignment
Platform
o Fund of Funds[] Lending[] Cash[] STARs[] Technology
Extended platform throughexternal professionals
[] Independent financialadvisorsLaw firms
o Tax firms
Extended platform
[] Cash management[] Retirement plans
myCFO, Inc. -- Highly Confidential 11
STARS0029739
Go Forward Short-term Sell
Pursue a dual growth strategy¯ build investment platform & next generation
STARs¯ leverage to Alliances
May need cash as soon as April (-$.5M)Alliance as future
Pursue strategic partner¯ move forward current discussions¯ identify alternative interested partners
May still need short-term liquidityAlliance will not happen
RecommendationGo forward; Review in 45 Days
Continue Discussions w/strategic partners
Monitor cash / need for quick infusion
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