2. Goldstrike Fixed Asset Solution ™ Paragon Systems 1 FAS - Generate Cash Flow Scott Swarts Session 2 Room B Tennessee’s BEST 2005 Tech Tips User Conference

3. Goldstrike Fixed Asset Solution ™ Paragon Systems 2 Agenda Session Overview Taxes, SOX and related issues Review benefits of implementing fixed asset management system Discuss implementation and inventory Review demo of fixed asset software Sample bar code tags and scanner Q&A

4. Goldstrike Fixed Asset Solution ™ Paragon Systems 3 PARAGON International, Inc 20 years of service and over 50 million assets reviewed PARAGON SYSTEMS: Dedicated to enhancing fixed asset management Sage Software™ Charter Business Partner Complete Solution of hardware, software, services PARAGON VALUATION GROUP: maximizing corporate tax benefits Cost segregation and Tax Engineering Valuation and appraisal services

5. Goldstrike Fixed Asset Solution ™ Paragon Systems 4 TAX, S.OX, ISSUES

6. Goldstrike Fixed Asset Solution ™ Paragon Systems 5 “Bonus” Depreciation Workers Job Creation Act Immediate Write off Reduction in Basis Bonus 30-50% Sept 11, 2001 – 2004 Dates for change to 50%

7. Goldstrike Fixed Asset Solution ™ Paragon Systems 6 Sarbanes Oxley Act Background Overview - Not legal or financial advise, consult your professional auditor or accountant 2002 Congress passed new regulations designed to improve governance of public corporations Reduce fraudulent corporate reporting Holds CEO’s and CFO’s personally responsible for accuracy of financial reporting

8. Goldstrike Fixed Asset Solution ™ Paragon Systems 7 Sec 404 - Internal Controls Management responsible to assessment of internal controls over financial reporting including IT controls Establish and document internal controls on how information enters the company and relates to completion of annual reports

9. Goldstrike Fixed Asset Solution ™ Paragon Systems 8 Fixed Asset Inventories and SOX Accurate inventory is the core of solid financial reporting Physical Inventories conducted using same method Procedures for reconciliation Barcoding Assets Standardization on naming conventions

10. Goldstrike Fixed Asset Solution ™ Paragon Systems 9 Asset Management & Control

11. Goldstrike Fixed Asset Solution ™ Paragon Systems 10 Objective Improve control and reduce labor costs of asset management Automate and simplify the task of tracking fixed assets Identify unrecorded retirements (15-30%) Create CASH FLOW!

12. Goldstrike Fixed Asset Solution ™ Paragon Systems 11 What Are The Benefits? (Inquiring Minds Want To Know)

13. Goldstrike Fixed Asset Solution ™ Paragon Systems 12 Minimize Operating Expenses Federal & local taxes Third party accountability Property taxes (disposed/transferred assets) Write off of retired assets Track maintenance/service costs

14. Goldstrike Fixed Asset Solution ™ Paragon Systems 13 Support Strategic Management Planning Depreciation expense projections (book & tax) Forecast asset ratios Cost Center budgeting and control

15. Goldstrike Fixed Asset Solution ™ Paragon Systems 14 Determine Proper Insurance Coverage Avoid risk of being underinsured Minimize “proof of loss” exposure Accurate premiums / fire rates Base coverage on replacement costs not historical costs

16. Goldstrike Fixed Asset Solution ™ Paragon Systems 15 Eliminate Unnecessary Asset Purchases Idle or unassigned assets

17. Goldstrike Fixed Asset Solution ™ Paragon Systems 16 Identify Unrecorded Retirements & Transfers Document write-offs

18. Goldstrike Fixed Asset Solution ™ Paragon Systems 17 Ghost Assets Assets that are no longer there but cost still on the books Group type entries from projects Unrecorded damage or abandonment, replacement Partial Disposals, Transfers Typically find 15-30% unrecorded retirements

19. Goldstrike Fixed Asset Solution ™ Paragon Systems 18 Controllable Property Units Break assets into manageable groups based on operational needs Truck with multiple assets for service or equipment Manufacturing line – Components, motors, process sections, engineering fees Server with sub-components

20. Goldstrike Fixed Asset Solution ™ Paragon Systems 19 GoldStrike Solution Summary Complete corporate asset database installation/conversion Physical inventory and bar coding of all assets Cost Reconciliation Setup new asset ledger in FAS and provide training

21. Goldstrike Fixed Asset Solution ™ Paragon Systems 20 Economic Benefits of Project Implementation Are your current asset records accurate within 95% of actual asset inventory physically there? If we find unrecorded retirements in excess of 5%, the project typically GENERATES CASH FLOW!!

22. Goldstrike Fixed Asset Solution ™ Paragon Systems 21 BREAK EVEN and ROI

23. Goldstrike Fixed Asset Solution ™ Paragon Systems 22 ABC Company's Major Fixed Assets Fixed Asset Qty Avg. Value Total Value Printing Press 50 $30,000 $1,500,000 Folding Machine 20 $5,000 $ 100,000 Cutters/Trimmers 20 $5,000 $ 100,000 Binding/Stitching 30 $5,000 $ 150,000 Shrink Wrap Equip 10 $5,000 $ 50,000 Prepress/Camera 20 $15,000 $ 300,000 Misc. Equipment100 $3,000 $ 300,000 Total 250 $10,000 $2,500,000

24. Goldstrike Fixed Asset Solution ™ Paragon Systems 23 Income Tax Total cost of fixed assets $2,500,000 Avg. value of ghost assets ($2,500,000 x 7%)$175,000 Accumulated depreciation $70,000 Net book value/potential write-off ($175k - $70k) $100,500 Tax rate x 0.39 Total income tax overpayment $40,950

25. Goldstrike Fixed Asset Solution ™ Paragon Systems 24 Property Tax Total cost of fixed assets $2,500,000 Avg. value of ghost assets $175,000 Less accumulated depreciation factor (70%) $122,500 Taxable base ($175,000 - $122,500) $52,500 Representative assessment rate x 0.045 Total property tax overpayment per year $2,360

26. Goldstrike Fixed Asset Solution ™ Paragon Systems 25 Insurance Total cost of fixed assets $2,500,000 Avg. value of ghost assets $175,000 Avg. insurance payment per fixed asset 0.01 per $1 Total insurance overpayment per year $1,750

27. Goldstrike Fixed Asset Solution ™ Paragon Systems 26 Summary Total income tax overpayment $40,950 Property tax overpayment $ 2,360 Insurance overpayment $ 1,750 Total overpayment $45,060 Estimated cost of fixed asset management solution $25,000 Return on investment (ROI) Immediate!

28. Goldstrike Fixed Asset Solution ™ Paragon Systems 27 IMPLEMENTATION Let’s Get Started!

29. Goldstrike Fixed Asset Solution ™ Paragon Systems 28 Managing Asset Activity Example Invoice costs are logged to a clearing account for new capitalized assets Copies of Invoices are collected in folder for month end processing Disposals are documented and tag information sent to accounting via paper or electronic disposal form Asset activity logged in tracking system Monthly asset and depreciation reports

30. Goldstrike Fixed Asset Solution ™ Paragon Systems 29 Implementation Plan Checklist Review internal processes for managing assets Set goals for implementation Establish plans for inventory, what and how Perform inventories Reconcile results with existing ledgers Prepare final reports of results and document write-offs or additions Setup for ongoing management in a fixed asset system Document and train on new procedures for ongoing management

31. Goldstrike Fixed Asset Solution ™ Paragon Systems 30 FAS Software by SAGE #1 Fixed Asset Management Application Chosen 3 to 1 over alternative systems Integrates with virtually any GL System Over 300,000 tax rules and regulations Integrates with Bar Code Technology Automated Reconciliation Processes