8-K/A 1 d57059_8k-a.txt FORM 8-K/A ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 8-K/A Amendment No. 2 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) July 18, 2003 SECURED SERVICES, INC. (Exact name of Registrant as specified in its charter) Delaware 001-12536 11-2964894 (State or other jurisdiction of (Commission File (IRS Employer Identification incorporation) Number) No.) 1175 North Service Road West, Suite 214 Oakville, Ontario, Canada L6M 2W1 (Address Of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code (905) 339-3439 Southern Software Group, Inc. 1598 Whitehall Road, Suite E Annapolis, Maryland 21401 (Former name or former address, if changed since last report) ================================================================================ Item 2. Acquisition or Disposition of Assets This Form 8-K/A amends the Current Report on Form 8-K of SecureD Services, Inc. filed on August 4, 2003 regarding the acquisition of the Vacman Enterprise Line of Business of Vasco Data Security International, Inc. and the assumption of certain related liabilities and of certain assets and the assumption of certain liabilities of Dolfin.com, Inc. The sole purpose of this amendment is to provide the financial statements of the businesses acquired as required by Item 7(a) and the pro forma financial information required by Item 7(b), which financial statements and information were excluded from the original filing in reliance on Items 7(a)(4) and 7(b)(2), respectively, of Form 8-K. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Business Acquired. Page # 1. Vacman Enterprise Line Of Business Of Vasco Data Security International, Inc. F-1 o Independent Auditors' Report (KPMG LLP) F-2 o Balance Sheets as of December 31, 2001, 2002 and June F-3 30, 2003 (unaudited) o Statements of Operations for the years ended December F-4 31, 2001 and 2002 and for the six months ended June 30, 2002 and 2003 (unaudited) o Statements of Business Net Worth (Deficit) for the years F-5 ended December 31, 2001 and 2002 and for the six months ended June 30, 2003 (unaudited) o Statements of Cash Flows for the years ended December F-6 31, 2001 and 2002 and for the six months ended June 30, 2002 and 2003 (unaudited) o Notes to Financial Statements F-7 2. Selected Business Assets of Dolfin.com, Inc. F-12 o Balance Sheets as of December 31, 2002 and June 30, 2003 F-13 (unaudited) o Statements of Operations for the years ended December F-14 31, 2001 and 2002 and for the six months ended June 30, 2002 and 2003 (unaudited) o Statements of Business Net Worth (Deficit) for the years F-15 ended December 31, 2001 and 2002 and for the six months ended June 30, 2003 (unaudited) o Statements of Cash Flows for the years ended December F-16 31, 2001 and 2002 and for the six months ended June 30, 2002 and 2003 (unaudited) o Notes to Financial Statements F-17 (b) Pro Forma Financial Information - Secured Services, Inc. o Introduction to Unaudited Pro Forma Financial Information PF-1 o Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2003 PF-4 o Unaudited Pro Forma Condensed Combined Statement of PF-5 Operations for the year ended December 31, 2002 o Unaudited Pro Forma Condensed Combined Statement of Operations for the six months ended June 30, 2003 PF-6 o Notes to Unaudited Pro Forma Condensed Combined PF-7 Financial Statements 1 (c) Exhibits. Exhibit Number Description ------ ----------- 2.1 Agreement and Plan of Merger * Exhibit A - Dolfin Asset Purchase Agreement Exhibit B - VASCO Asset Purchase Agreement Exhibit C - Private Placement Term Sheet Schedules 3.1 Certificate of Amendment * 3.2 Certificate of Merger * ---------- * Previously filed on August 4, 2003 in the Registrant's initial Current Report on Form 8-K. 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. SecureD Services, Inc. Dated: October 8, 2003 By: /s/ King T. Moore --------------------------------------- King T. Moore, Chief Executive Officer 2 VACMAN ENTERPRISE LINE OF BUSINESS OF VASCO DATA SECURITY INTERNATIONAL, INC. Index to Financial Statements Pages ----- Independent Auditors' Report............................................. F-2 Balance Sheets as of December 31, 2001, 2002 and June 30, 2003 (unaudited)............................................................ F-3 Statements of Operations for the years ended December 31, 2001 and 2002 and for the six months ended June 30, 2002 and 2003 (unaudited)........................................................... F-4 Statements of Business Net Worth (Deficit) for the years ended December 31, 2001 and 2002 and for the six months ended June 30, 2003 (unaudited)............................................. F-5 Statements of Cash Flows for the years ended December 31, 2001 and 2002 and for the six months ended June 30, 2002 and 2003 (unaudited)........................................................... F-6 Notes to Financial Statements............................................ F-7 F-1 INDEPENDENT AUDITORS' REPORT The Board of Directors VASCO Data Security International, Inc.: We have audited the accompanying balance sheets of VACMAN Enterprise Line of Business ("the Business") of VASCO Data Security International, Inc. ("the Company") as of December 31, 2002 and 2001, and the related statements of operations, business net worth (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Business' management. Our responsibility is to express an opinion on these financial statements based on our audits. 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 VACMAN Enterprise Line of Business of VASCO Data Security International, Inc. as of December 31, 2002 and 2001, 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/ KPMG LLP Chicago, Illinois September 5, 2003 F-2 VACMAN ENTERPRISE LINE OF BUSINESS OF VASCO DATA SECURITY INTERNATIONAL, INC. BALANCE SHEETS

See accompanying notes to financial statements. F-3 VACMAN ENTERPRISE LINE OF BUSINESS OF VASCO DATA SECURITY INTERNATIONAL, INC. STATEMENTS OF OPERATIONS

See accompanying notes to financial statements. F-4 VACMAN ENTERPRISE LINE OF BUSINESS OF VASCO DATA SECURITY INTERNATIONAL, INC. STATEMENTS OF BUSINESS NET WORTH (DEFICIT) Balance at January 1, 2000 $ 376,708 Net loss for the year (1,419,009) Contributions from Parent 1,027,371 ----------- Balance at December 31, 2001 $ (14,930) Net income for the year 347,231 Distributions to Parent (284,286) ----------- Balance at December 31, 2002 $ 48,015 Net income for the period (unaudited) 357,470 Distributions to Parent (unaudited) (128,688) ----------- Balance at June 30, 2003 (unaudited) $ 276,797 =========== See accompanying notes to financial statements. F-5 VACMAN ENTERPRISE LINE OF BUSINESS OF VASCO DATA SECURITY INTERNATIONAL, INC. STATEMENTS OF CASH FLOWS

See accompanying notes to financial statements. F-6 VACMAN ENTERPRISE LINE OF BUSINESS OF VASCO DATA SECURITY INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations The accompanying financial statements include the assets, liabilities, results of operations and cash flows of the VACMAN Enterprise Line of Business (the Business) of VASCO Data Security International, Inc. (the Parent). The Business designs, develops, markets and supports security products and services that manage user access and single sign-on to web, client/server and legacy applications in one integrated system for corporate and government customers. Basis of Presentation Since the Business' inception, the Parent has provided funding to the Business for working capital. The Business participates in the Parent's cash management process. As part of the Parent's central cash management system, all cash generated from and cash required to support the Business' operations were deposited and received through the Parent's corporate operating cash accounts. As a result, there were no separate bank accounts or accounting records for these transactions. Accordingly, the amounts represented by the caption "Contributions from (distributions to) Parent" in the Business' Statements of Cash Flows represent the net effect of all cash transactions between the Business and the Parent. While the Parent incurred interest expense on debt outstanding during the periods presented, no interest expense has been allocated to the Business in the accompanying statements of operations. In addition, interest expense has not been charged to the Business related to its balance due to the Parent. This balance represents internal financing extended to the Business by the Parent to support the Business' operations. The average balance due to the Parent was approximately $1,299,000 and $918,000 for the years ended December 31, 2002 and 2001, respectively. The Parent provides various operational and general accounting services for the Business in the normal course of its business. These services include customer invoice processing, trade payables processing, general accounting functions and human resource services. In consideration for these services, the Parent has allocated a portion of its overhead costs related to such services to the Business. A portion of the Parent's professional fees incurred, such as accounting and legal, were also allocated to the Business. These allocations were estimated using proportional cost allocation methods. Allocated costs for services provided by the Parent to the Business were determined by calculating an average percentage and applying that percentage to the personnel costs and professional fees incurred by the Parent. The average percentage included the following factors: headcount, operating costs and transaction counts. In management's opinion, the methods to identify and allocate costs to the Business for these services provided by the Parent are reasonable. Revenue Recognition License Fees. The Business applies the provisions of AICPA Statement of Position 97-2, "Software Revenue Recognition," as amended, which specifies the following four criteria that must be met prior to recognizing revenue: (1) persuasive evidence of the existence of an arrangement, (2) delivery, (3) fixed or determinable fee, and (4) probable collection. In addition, revenue earned on software arrangements involving multiple elements is allocated to each element based on the relative fair value of the elements. When applicable, revenue allocated to the Business' software products (including specified upgrades/enhancements) is recognized upon delivery of the products. Support Agreements. Support agreements generally call for the Business to provide technical support and software updates to customers. Revenue on technical support and software update rights is recognized ratably over the term of the support agreement. Consulting and Other. The Business provides consulting and education services to its customers. Revenue from such services is generally recognized during the period in which the services are performed. F-7 Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets ranging from three to seven years. Additions and improvements are capitalized, while expenditures for maintenance and repairs are charged to operations as incurred. Gains or losses resulting from sales or retirements are recorded as incurred, at which time related costs and accumulated depreciation are removed from the accounts. Software Costs The Business capitalizes software development costs in accordance with Statement of Financial Accounting Standards (SFAS) No. 86, "Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed". Research and development costs, prior to the establishment of technological feasibility, determined based upon the creation of a working model, are expensed as incurred. The Business's policy is to amortize capitalized costs by the greater of (a) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or (b) the straight-line method over the remaining estimated economic life of the product, generally two to five years, including the period being reported on. The Business did not capitalize any software costs during the years ended December 31, 2001 and 2002 as such costs were not significant. Income Taxes The Business is included in the Federal and state income tax returns of the Parent. The provision for income taxes for the Business has been calculated as if the Business were a stand-alone corporation filing separate tax returns. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Federal and state deferred tax assets and liabilities have been included in Business Net Worth (Deficit) as their ultimate realization is dependent upon the Parent's results of operations. Fair Value of Financial Instruments The estimated fair value of the Business' financial instruments, which consist of receivables, accounts payable and accrued liabilities, approximates their carrying value. Earnings per Common Share The Business' historical structure is not indicative of its prospective capital structure and, accordingly, historical earnings per share information has not been presented. Stock Options Certain employees of the Business participate in the Parent's employee stock option plan. The Parent accounts for its stock options under APB No. 25 "Accounting for Stock Issued to Employees". No compensation expense related to the issuance of stock options has been recognized by the Business, as all options granted by the Parent to the Business' employees were issued at the then fair market value of the Parent's common stock. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. F-8 Interim Financial Information (unaudited) The financial statements as of June 30, 2003 and for the six months ended June 30, 2002 and 2003 are unaudited; however, in the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the financial statements for the interim periods have been included. The results of operations for the six months ended June 30, 2002 and 2003 are not necessarily indicative of the results to be achieved for the full fiscal year. NOTE 2 - PROPERTY AND EQUIPMENT Property and equipment are comprised of the following: December 31, ---------------------- 2001 2002 -------- -------- Furniture and fixtures $ 28,984 $ 28,984 Office equipment 611,059 611,059 -------- -------- Total property and equipment $640,043 $640,043 ======== ======== NOTE 3 - ACCRUED EXPENSES Accrued expenses are comprised of the following: December 31, -------------------- 2001 2002 ------- ------- Accrued payroll $14,095 $10,338 Accrued vacation 10,669 19,609 Other accrued expenses -- 1,124 ------- ------- Total accrued expenses $24,764 $31,071 ======= ======= F-9 NOTE 4 - INCOME TAXES If the Business had filed separate tax returns, at December 31, 2002, the Business would have had a net operating loss carryforward approximating $1,611,000. Such losses would have been available to offset future taxable income and expire in varying amounts through 2012. The provision for income taxes consists of the following: For the Years Ended December 31, -------------------------------- 2001 2002 --------- -------- Current: Federal $(429,518) $ -- State (103,611) -- Deferred: Federal $(299,631) $206,615 State (65,544) 15,552 --------- -------- Total provision $(898,304) $222,167 ========= ======== The differences between income taxes computed using the statutory federal income tax rate of 34% and the provisions for income taxes reported in the statements of operations are as follows:

The deferred income tax balances, which have been included in Business Net Worth (Deficit), are comprised of the following: As of December 31, ---------------------- 2001 2002 -------- -------- Deferred tax assets: Net operating loss carryforwards $756,556 $628,197 Accrued expenses 5,497 11,680 Deferred revenue 129,521 29,530 -------- -------- Net deferred income taxes $891,574 $669,407 ======== ======== F-10 In assessing the realizability of deferred tax assets, the Business considers whether it is more likely than not that some portion or all of the deferred tax assets could have been realized if the Business were filing tax returns as a stand-alone entity. Although realization of the deferred tax assets is not assured, management believes that it is more likely than not that all of the deferred tax assets could be realized if the Business were filing tax returns as a stand-alone entity. The ultimate realization of the Business' deferred tax assets is dependent upon the Parent's ability to generate future taxable income during the period in which these temporary differences become deductible. NOTE 5 - COMMITMENTS AND CONTINGENCIES In 2001, the Business had a lease agreement for six suites of office space in Baltimore, Maryland expiring on March 31, 2003. On April 1, 2003, the Business entered into a month-to-month operating lease for one of the suites of office space in Baltimore. Under the terms of the new lease, the monthly payment is $2,704 and can be terminated with 30 days notice. Rent expense under the operating lease was approximately $155,000 and $71,000 for the years ended December 31, 2001 and 2002, respectively. NOTE 6 - RESTRUCTURING As part of the Parent's corporate-wide restructuring in 2001, the Business incurred $313,325 of severance costs related to the reduction of 33 staff. NOTE 7 - SUBSEQUENT EVENTS On July 7, 2003, the Parent sold the Business to SecureD Services, Inc., a newly-organized security consulting and managed security services business. Under the terms of the Agreement, the Parent received a senior secured promissory note of $1,073,000 and $2,000,000 of Convertible Preferred Stock from SecureD Services in exchange for the Business' net assets. The Parent's CEO and Chairman, Mr. T. Kendall Hunt, is one of the founders and organizers of SecureD Services. F-11 SELECTED BUSINESS ASSETS OF DOLFIN.COM, INC. Index to Financial Statements Balance Sheets as of December 31, 2002 and June 30, 2003 (unaudited) Statements of Operations for the years ended December 31, 2001 and 2002 and for the six months ended June 30,2002 and 2003 (unaudited) Statements of Business Net Worth (Deficit) for the years ended December 31, 2001 and 2002 and for the six months ended June 30, 2003 (unaudited) Statements of Cash Flows for the years ended December 31, 2001 and 2002 and for the six months ended June 30, 2002 and 2003 (unaudited) Notes to Financial Statements. F-12 DOLFIN.COM, INC., SELECTED ASSETS BALANCE SHEETS (UNAUDITED)

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS F-13 DOLFIN.COM, INC., SELECTED ASSETS STATEMENTS OF OPERATIONS (UNAUDITED)

See Accompanying Notes to Financial Statements F-14 DOLFIN.COM, INC., SELECTED ASSETS STATEMENTS OF BUSINESS NET WORTH (UNAUDITED) Business Net Worth Balance at January 1, 2001 $ 0 Net loss for the year (146,612) Contributions from Parent 125,663 --------- Balance at December 31, 2001 (20,949) Net loss for the year (40,584) Distributions to Parent (63,131) --------- Balance at December 31, 2002 (124,664) Net loss for the period (66,819) Contributions from Parent 44,474 --------- Balance at June 30, 2003 $(147,009) ========= See accompanying notes to financial statements F-15 DOLFIN.COM, INC., SELECTED ASSETS STATEMENTS OF CASH FLOW (UNAUDITED)

See Accompanying notes to financial statements F-16 DOLFIN.COM, INC. SELECTED ASSETS NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations The accompanying financial statements include the assets, liabilities, results of operations and cash flows of the purchased assets of DOLFIN.COM, Inc. The Business markets and supports security products and services that manage data security across integrated systems of corporate customers. Basis of Presentation Dolfin.com, Inc. has consistently accounted for its assets and liabilities as a single entity, consequently all cash management accounts payable and receivables were administered centrally. Only selected assets and liabilities of Dolfin.com, Inc. were purchased by SecureD Services. The financial information has been adjusted for costs not related to the selected assets sold where applicable. Administrative costs were determined by eliminating costs attributable to excluded assets and non recurring costs. In management's opinion, the resulting information contains estimates which are considered reasonable in preparing this segmented data. Revenue Recognition Product Sales. Revenues from the sale of computer security software are recorded upon shipment or, if an acceptance period is allowed, at the later of shipment or customer acceptance. No significant obligations exist with regard to delivery or customer acceptance at the time of recognizing revenue. Consulting Services. The Business provides consulting services to its customers. Revenue from such services is generally recognized during the period in which the services are performed. F-17 Income Taxes The Selected assets are accounted for in the income tax return of Dolfin.com, Inc., consequently there is no provision for income tax expense or benefit. Fair Value of Financial Instruments The estimated fair value of the Business' financial instruments, which consist of receivables, accounts payable and accrued liabilities, approximates their carrying value. Earnings per Common Share The Business' historical structure is not indicative of its prospective capital structure and, accordingly, historical earnings per share information has not been presented. Stock Options Certain employees of the Business participate in the Parent's employee stock purchase plan. The Parent accounts for its stock options under APB No. 25 "Accounting for Stock Issued to Employees". No compensation expense related to the issuance of stock options has been recognized by the Business, as all options were issued at the then fair value of the Parent's common stock. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Interim Financial Information (unaudited) These financial statements are unaudited; however, in the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the financial statements for the interim periods have been included. The results of operations for the six months ended June 30, 2002 and 2003 are not necessarily indicative of the results to be achieved for the full fiscal year. F-18 Commitments and Contingencies In 1999 Dolfin.com, Inc., entered into a lease arrangement for their offices in Toronto. This lease expires in July, 2004. Rent expense under this lease approximates $44,000 in 2001 and 2002. F-19 INTRODUCTION TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS On July 18, 2003, Southern Software Group, Inc. ("SSGI"), a publicly-held company with no current operating business, completed a merger (the "Merger") with SecureD Services, Inc. ("SSI"), a privately-held company that had been recently-formed to acquire, and had completed the acquisition of, two operating businesses. The Merger was effected pursuant to an Agreement and Plan of Merger (the "Merger Agreement") that was executed on July 18, 2003 by and between SSGI, SSGI Acquisition Corp. ("Newco"), a newly-formed, wholly-owned subsidiary of SSGI, and SSI. Pursuant to the Merger Agreement, Newco merged with and into SSI; SSI became the surviving corporation; SSI changed its name to SSI Operating Corp.; SSGI became authorized to issue shares of Series A Convertible Preferred Stock; and SSGI changed its name to SecureD Services, Inc. As further explained below, SSGI issued shares of common and voting preferred stock to the stockholders of SSI in order to complete the Merger. Since the stockholders of SSI received the majority of the voting securities of the merged companies, the Merger will be accounted for, effective as of July 18, 2003, as a "reverse acquisition" whereby SSI, the legal acquiree, will be the accounting acquirer and SSGI, the legal acquirer, will be the accounting acquiree. A summary of the principal terms of the Merger Agreement affecting the reverse acquisition is set forth below: 1. Prior to the completion of the Merger, SSI was required to have completed the acquisition of the operating assets related to, and the business operations of, the VACMAN Enterprise product line ("Vacman") of Vasco Data Security International, Inc. ("Vasco"). T. Kendall Hunt, a director of the merged companies, was a director and executive officer of Vasco and a principal stockholder of SSI at the time of the closing of the acquisition of the assets of Vacman. 2. Prior to the completion of the Merger, SSI was required to have completed the acquisition of certain assets related to, and the business operations of, Dolfin.com, Inc. ("Dolfin"). Michael P. Dubreuil, the current Chairman of the Board of Directors and Secretary of the merged companies, was a director and executive officer of Dolfin at the time of the closing of the acquisition of the assets of Dolfin. 3. Prior to the completion of the Merger, SSI was required to have completed a private offering of its common stock from which it would have received at least $1,000,000. 4. Each of the issued and outstanding shares of common stock of SSI would be converted into and exchanged for a like number of shares of common stock of the merged companies. 5. Each of the issued and outstanding shares of Series A Convertible Preferred Stock of SSI would be converted into and exchanged for a like PF-1 number of shares of Series A Convertible Preferred Stock of the merged companies. Prior to the completion of the Merger, SSGI had 508,934 outstanding shares of common stock. Following the closing of the Merger, the combined companies had 6,996,271 outstanding shares of common stock and 2,000,000 outstanding shares of Series A Convertible Preferred Stock, each of which has voting rights equivalent to a share of common stock. The stockholders of SSI before the Merger owned approximately 94% of the voting securities of the combined companies following the closing of the Merger. The accompanying unaudited pro forma condensed combined statements of operations initially combine the historical consolidated statements of operations of the businesses of Vacman and Dolfin that SSI acquired on or about July 18, 2003 and reflect the completion of the private offering of its common stock that was a condition of the Merger, as if those transactions had been consummated on January 1, 2002. The accompanying unaudited pro forma condensed combined balance sheet initially combines the historical consolidated balance sheet of SSI with those of the businesses of Vacman and Dolfin and reflect the completion of the private offering of its common stock, as if those transactions had been consummated on June 30, 2003. SSI was formed prior to June 30, 2003 as a holding company to acquire Vacman, Dolfin and SSGI. As of June 30, 2003, it had received a noninterest bearing advance of approximately $769,000 from one of its founders and its only activities were related to the consummation of the Merger Agreement and the performance of related due diligence procedures. The accompanying unaudited pro forma condensed combined statements of operations also combine the pro forma combined statements of operations of SSI, Vacman and Dolfin with the historical statements of operations of SSGI, as if the Merger had been consummated on January 1, 2002. The accompanying unaudited pro forma condensed combined balance sheet also combines the pro forma combined balance sheet of SSI, Vacman and Dolfin with the historical balance sheet of SSGI, as if the Merger had been consummated on June 30, 2003. You should read this information in conjunction with: o the accompanying notes to the unaudited pro forma condensed combined financial statements; o the separate audited and unaudited historical financial statements of SecureD Services, Inc., formerly Southern Software Group, Inc., included in its Annual Report on Form 10-KSB for the year ended December 31, 2002 and its Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2003, which were previously filed with the Securities and Exchange Commission; PF-2 o the separate audited and unaudited historical financial statements of the VACMAN Enterprise product line of Vasco Data Security International, Inc. as of December 31, 2002 and for the two years ended December 31, 2002 and as of June 30, 2003 and for the six months ended June 30, 2003 and 2002, which are included in this amended report on Form 8-K; and o the separate unaudited historical financial statements of Dolfin as of December 31, 2002 and for the two years ended December 31, 2002 and as of June 30, 2003 and for the six months ended June 30, 2003 and 2002, which are included in this amended report on Form 8-K. We have presented the accompanying unaudited pro forma condensed combined financial statements for informational purposes only. The accompanying unaudited pro forma condensed combined financial statements are not necessarily indicative of what our financial position or results of operations actually would have been had we completed the Merger on June 30, 2003 or on January 1, 2002. In addition, the unaudited pro forma condensed combined financial statements do not purport to project the future financial position or operating results of the combined companies. We prepared the accompanying unaudited pro forma condensed combined financial statements using the purchase method of accounting with SSI treated as the accounting acquirer. Accordingly, SSI's cost to acquire SSGI will be allocated to the assets acquired and the liabilities assumed based upon the estimated fair values as of the date of acquisition. The allocation is dependent upon certain valuations and other studies that have not progressed to a stage where there is sufficient information to make a definitive allocation. Accordingly, the pro forma adjustments related to the purchase price allocation are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information. PF-3 SECURED SERVICES, INC. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET JUNE 30, 2003

See Notes to Unaudited Proforma Condensed Combined Financial Statements. PF-4 SECURED SERVICES, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2002

See Notes to Unaudited Proforma Condensed Combined Financial Statements. PF-5 SECURED SERVICES, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003

See Notes to Unaudited Proforma Condensed Combined Financial Statements. PF-6 NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (1) Description of the Transactions and Basis of Presentation: On July 18, 2003, Southern Software Group, Inc. ("SSGI"), a publicly-held company with no current operating business, completed a merger (the "Merger") with SecureD Services, Inc. ("SSI"), a privately-held company that had been recently-formed to acquire, and had completed the acquisition of, two operating businesses. The Merger was effected pursuant to an Agreement and Plan of Merger (the "Merger Agreement") that was executed on July 18, 2003 by and between SSGI, SSGI Acquisition Corp. ("Newco"), a newly-formed, wholly-owned subsidiary of SSGI, and SSI. Pursuant to the Merger Agreement, Newco merged with and into SSI; SSI became the surviving corporation; SSI changed its name to SSI Operating Corp.; SSGI became authorized to issue shares of Series A Convertible Preferred Stock; and SSGI changed its name to SecureD Services, Inc. SSGI issued shares of common and voting preferred stock to the stockholders of SSI in order to complete the Merger. Prior to the completion of the Merger, SSGI had 508,934 outstanding shares of common stock. Following the closing of the Merger, the combined companies had 6,996,271 outstanding shares of common stock and 2,000,000 outstanding shares of Series A Convertible Preferred Stock, each of which has voting rights equivalent to a share of common stock. The stockholders of SSI before the Merger owned approximately 94% of the voting securities of the combined companies following the closing of the Merger. Since the stockholders of SSI received the majority of the voting securities of the merged companies, the Merger will be accounted for, effective as of July 18, 2003, as a "reverse acquisition" whereby SSI, the legal acquiree, will be the accounting acquirer and SSGI, the legal acquirer, will be the accounting acquiree. The Merger will be accounted for as a purchase by SSI under accounting principles generally accepted in the United States of America. Under the purchase method of accounting, the assets and liabilities of SSGI will be recorded by SSI as of the acquisition date at their respective fair values and combined with those of SSI and its subsidiaries as of that date. Under the purchase method of accounting, the reported results of operations of SSGI will be combined with the results of operations of SSI and its subsidiaries commencing with the date of the completion of the Merger. Prior to the completion of the Merger, SSI was required to have completed the acquisition of the operating assets related to, and the business operations of, the VACMAN Enterprise product line ("Vacman") of Vasco Data Security International, Inc. ("Vasco"), the acquisition of certain assets related to, and the business operations of, Dolfin.com, Inc. ("Dolfin") and a private offering of its common stock from which it would have received at least $1,000,000. Those acquisitions, which were also completed on or about July 18, 2003, will also be accounted for as purchases by SSI under accounting principles generally accepted in the United States of America. PF-7 (2) Pro Forma Adjustments: (a) As explained above, SSI completed the acquisition of certain assets and the business of Vasco on or about July 18, 2003 which will be accounted for as a purchase. Accordingly, the accompanying unaudited pro forma condensed combined statements of operations assume that Vacman had been acquired on January 1, 2002 and the accompanying unaudited pro forma condensed combined balance sheet assumes that Vacman had been acquired on June 30, 2003. Total consideration for the purchase was estimated at $3,073,094 comprised of a note issued to Vasco in the principal amount of $1,073,094 that is payable in 36 monthly installments, including interest at 6%, and 2,000,000 shares of Series A Convertible Preferred Stock with an estimated fair value of $2,000,000 or $1.00 per share. The accompanying unaudited pro forma condensed combined balance sheet reflects historical amounts for the entire Vacman division of Vasco. Accordingly, pro forma adjustments have been made to eliminate amounts applicable to assets not acquired and liabilities not assumed, to record the identifiable assets acquired and liabilities assumed at their fair values, including identifiable intangible assets comprised of customer lists and technology at an estimated fair value of $2,573,094, and to allocate the remaining excess of the estimated cost of the acquisition over the fair value of the net identifiable assets acquired of $400,000 to goodwill as shown below: Accounts receivable $ 104,546 Computer equipment 100,000 Goodwill 400,000 Other intangible assets 2,573,094 Accrued expenses (10,757) Deferred revenues (93,789) ----------- Net assets acquired $ 3,073,094 =========== The purchase price allocation was based on preliminary information as to, among other things, the fair value of the preferred stock issued by SSI and the fair value of the computer equipment and the identifiable intangible assets acquired. The final valuations may differ and, accordingly, the amounts actually allocated to the computer equipment, the identifiable intangible assets and goodwill and certain other assets and liabilities may differ from those shown above. (b) As explained above, SSI completed the acquisition of Dolfin on or about July 18, 2003 which will be accounted for as a purchase. Accordingly, the accompanying unaudited pro forma condensed combined statements of operations assume that Dolfin had been acquired on January 1, 2002 and the accompanying unaudited pro forma condensed combined balance sheet assumes that Dolfin had been acquired on June 30, 2003. Total PF-8 consideration for the purchase was comprised of 500,000 shares of common stock with an estimated fair value of $375,000 or $.75 per share. Accordingly, pro forma adjustments have been made to record the identifiable assets acquired and liabilities assumed at their fair values, including identifiable intangible assets comprised primarily of technology at an estimated fair value of $302,872, and to allocate the remaining excess of the estimated cost of the acquisition over the fair value of the net identifiable assets acquired of $219,137 to goodwill as shown below: Accounts receivable $ 61,521 Sundry other assets 4,500 Goodwill 219,137 Other intangible assets 302,872 Accounts payable (203,610) Accrued expenses (9,420) --------- Net assets acquired $ 375,000 ========= The purchase price allocation was based on preliminary information as to, among other things, the fair value of the common stock issued by SSI and the fair value of the identifiable intangible assets acquired. The final valuations may differ and, accordingly, the amounts actually allocated to the identifiable intangible assets and goodwill and certain other assets and liabilities may differ from those shown above. (c) Prior to the completion of the Merger, SSI was required to have completed a private offering of its common stock from which it would have received at least $1,000,000. Pro forma adjustments have been made to record the sale of 1,333,333 shares of SSI's common stock through a private placement completed prior to the Merger from which SSI received gross proceeds of $1,000,000. (d) Pro forma adjustments have been made to eliminate the historical additional paid-in capital and the accumulated deficit of SSGI in order to properly reflect the capital structure of the combined companies immediately after the Merger and reverse acquisition in which SSGI will be the accounting acquiree. The combined companies are authorized to issue 50,000,000 shares of common stock with a par value of $.0001 per share and 5,000,000 shares of preferred stock with a par value of $.0001 per share. Immediately after the Merger, the combined companies will have 6,996,271 shares of common stock and 2,000,000 shares of Series A Convertible Preferred Stock outstanding. (e) Pro forma adjustments have been made to eliminate the historical revenues and expenses of SSGI that arose from operations that will not be conducted by the combined companies. PF-9 (f) Pro forma adjustments have been made to record depreciation and amortization expense for equipment and identifiable intangible assets based on the fair values recorded in connection with SSI's acquisitions of Vacman and Dolfin. Depreciation of equipment will be computed over five years. The customer lists and technology comprising other intangible assets will be amortized over three years and five years, respectively. (g) Pro forma adjustments have been made to record interest expense on the 6% note payable which was issued in connection with the acquisition of Vacman. (h) Pro forma adjustments have been made to record the estimated tax provision or benefit and the utilization of net loss carryforwards at an effective tax rate of 40%. (i) Each of the 2,000,000 shares of Series A Convertible Preferred Stock issued in connection with the acquisition of Vasco will provide the holder with voting rights equivalent to a share of common stock. Therefore, the weighted average number of shares outstanding used in the computation of basic and diluted pro forma income (loss) per share has been adjusted to include the 2,000,000 shares of Series A Convertible Preferred Stock that will be outstanding in accordance with the "two class" method of computing earnings (loss) per share. PF-10

SECURED SERVICES INC 8-K/A