Form of Secured Promissory Note - Maryland - PDF

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					FORM 8-K/A
Paradigm Holdings, Inc - PDHO
Filed: June 22, 2007 (period: April 09, 2007)
Amendment to a previously filed 8-K
                   Table of Contents
ITEM 1.01. ENTRY INTO MATERIAL DEFINITIVE AGREEMENT

ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
           UNDER AN

ITEM 7.01. REGULATION FD DISCLOSURE.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

SIGNATURES
EX-99.5 (Exhibits not specifically designated by another number and by investment
companies)
EX-99.6 (Inc. ("Trinity") for $4.0 million by issuing Theresa Kleszewski in connection with the
Stothe Commission on January 31, 2007. The acqui)
================================================================================

                                       UNITED STATES
                            SECURITIES AND EXCHANGE COMMISSION
                                  WASHINGTON, D.C. 20549

                                          FORM 8-K/A

                                     CURRENT REPORT
                         Pursuant to Section 13 or 15(d) of the
                             Securities Exchange Act of 1934

                               Date of Report: April 9, 2007

                                Paradigm Holdings, Inc.
                  (Exact Name of Registrant as Specified in Charter)


     Wyoming                               09-154                     83-0211506
 (State or other                  (Commission File Number)          (IRS Employer
  jurisdiction                                                    Identification No.)
of incorporation)

            9715 Key West Avenue, Third Floor, Rockville, Maryland 20850
                 (Address of principal executive offices) (Zip code)

                                    (301) 468-1200
                  Registrant's telephone number, including area code

                                        None
            (Former Name or Former Address, If Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

|_|    Written communications pursuant to Rule 425 under the Securities Act (17
       CFR 230.425)

|_|    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
       240.14a-12)

|_|    Pre-commencement communications pursuant to Rule 14d-2(b) under the
       Exchange Act (17 CFR 240.14d-2(b))

|_|    Pre-commencement communications pursuant to Rule 13e-4(c) under the
       Exchange Act (17 CFR 240.13e-4(c))


================================================================================




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
ITEM 1.01.    ENTRY INTO MATERIAL DEFINITIVE AGREEMENT

         On April 9, 2007, Paradigm Holdings, Inc., a Wyoming corporation (the
"Company"), issued a secured promissory note to Ms. Theresa Kleszewski in
connection with the Stock Purchase Agreement (as described in Item 2.01 below),
in the principal sum of Four Million Dollars (US $4,000,000) (the "Promissory
Note").

         Under the terms of the Promissory Note, the Company will repay the
principal sum of Four Million Dollars (US $4,000,000) plus interest at the
annual rate of seven and three-quarters percent (7.75%) of the unpaid balance
pursuant to the following terms:

                    (a) Five Hundred Thousand Dollars (US $500,000), less any
           Designated Professional Payments, shall be paid to Ms. Kleszewski
           within three (3) business days of April 9, 2007, and the Designated
           Professional Payments shall be paid as instructed by Ms. Kleszewski;

                    (b) One and One Half Million Dollars (US $1,500,000) (the
           "Second Amount") shall by paid to Ms. Kleszewski on June 30, 2007; and

                    (c) the remainder amount (the "Remainder Amount") equal to Two
           Million Dollars (US $2,000,000) shall be paid to Ms. Kleszewski on
           October 31, 2008.

         For purposes of the foregoing, "Designated Professional Payments" means
payments designated by Ms. Kleszewski as payments for invoices of attorneys
and/or other professionals who have rendered services to Ms. Kleszewski in
connection with the Stock Purchase Agreement. The Promissory Note may be
voluntarily prepaid, without penalty or premium, in whole or in part, at any
time and from time to time. Any prepayment must include all accrued interest on
the principal being paid through the date of prepayment. Ms. Kleszewski shall
have the option to elect to receive as partial repayment of the Second Amount or
the Remainder Amount up to a maximum of One Million Dollars ($1,000,000) of the
principal amount of the Promissory Note in increments of One Hundred Thousand
Dollars ($100,000), in the form of restricted shares of the Company's common
stock, calculated based on the average closing price of the Company's common
stock for the five trading days prior to the date of the issuance of the shares
of Company common stock. Such payments of part or all of the Second Amount
and/or the Remainder Amount in Shares, up to the maximum described above, shall
be made at the election of Ms. Kleszewski and shall be restricted by a vesting
period equal to the earlier of: (i) 18 months from the date of the issuance of
the Shares or (ii) the occurrence of a change of control of the Company. Any
remaining portion of the principal amount of the Promissory Note shall be paid
to Ms. Kleszewski in cash.



ITEM 2.01.    COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

         On April 9, 2007, the Company completed the acquisition of Trinity IMS,
Inc., a Nevada corporation ("Trinity"), pursuant to a Stock Purchase Agreement
(the "Stock Purchase Agreement") executed on January 29, 2007 by and among the
Company, Trinity and the shareholders of Trinity (the "Shareholders"). Pursuant
to the terms and conditions set forth in the Stock Purchase Agreement, the
Company purchased from the Shareholders, all of the issued and outstanding
capital stock of Trinity and Trinity became a wholly-owned subsidiary of the
Company in exchange for the Promissory Note (as described above in Item 1.01)
issued to Ms. Kleszewski on April 9, 2007.

         Trinity provides specialized information assurance ("IA") and cyber
forensics support services to the federal government, primarily the U.S.
Department of State. Trinity's focus on cyber forensics and information
assurance services in support of the U.S. Department of State complements the
Company's strategic plan to expand its IT solutions into the national security
marketplace. Trinity provides the Company with access to key customers, security
clearances and technical expertise.

         In addition, under certain conditions as set forth in the Stock
Purchase Agreement, the Shareholders will be eligible for incentive bonuses for
winning new contracts for Trinity.




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
         In addition on April 9, 2007, the Company entered into a two (2) year
Executive Employment Agreement by and between the Company and Christian L.
Kleszewski, a principal of Trinity, under which the Company agrees to employ Mr.
Kleszewski as Vice President of Information Assurance of the Company, reporting
to Mr. Peter B. LaMontagne, President and CEO of the Company. Mr. Kleszewski
shall be paid a base salary at an annual rate of $210,000 and be entitled to
participate in the Company's health and benefit plans.

         The sole purpose of this amendment is to provide the audited financial
statements of the business as required by Item 9.01(a) and the unaudited pro
forma financial information required by 9.01(b) of Form 8-K, respectively.



ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.

           See Items 1.01 and 2.01 for further information.



ITEM 7.01.     REGULATION FD DISCLOSURE.

         On April 12, 2007, the Company issued a press release with respect to
completing the acquisition of Trinity. Please refer to Exhibit 99.4 .



ITEM   9.01.    FINANCIAL STATEMENTS AND EXHIBITS.

                      (a) Financial Statements of Business Acquired.

                    The financial statements of the business acquired required by
           this item were not included in the Current Report on Form 8-K filed
           with the Commission on April 13, 2007. The financial statements are
           being provided pursuant to this amended report, which has been filed
           not later than 71 calendar days after April 13, 2007, the day that the
           initial report on Form 8-K was filed.

                    The financial statements of Trinity for the fiscal year ended
           December 31, 2006, and the report of Goodman & Company, L.L.P.,
           independent auditors as of and for the fiscal year ended December 31,
           2006, relating to the audited financial statements for the year ended
           December 31, 2006, are filed with this Form 8-K/A as Exhibit 99.5.

                      (b) Pro Forma Financial Information.

                    The financial information required by this item was not
           included in the Current Report on Form 8- K filed with the Commission
           on April 13, 2007. The financial information is being provided pursuant
           to this amended report, which has been filed not later than 71 calendar
           days after April 13, 2007, the date that the initial report on Form 8-K
           was filed.

                    The unaudited pro forma financial information included with
           this Form 8-K/A has been prepared to illustrate the pro forma effects
           of the acquisition of Trinity. The uanudited pro forma condensed
           combined statements of operations and balance sheet for the fiscal year
           ended December 31, 2006 are filed with this Form 8-K/A as Exhibit 99.6.
           The unaudited pro forma condensed combined statements of operations for
           the fiscal year ended December 31, 2006 give effect to the acquisition
           of Trinity as if it had occurred on January 1, 2006. The unaudited pro
           forma consolidated balance sheet as of December 31, 2006 included in
           this report has been prepared as if the acquisition occurred on
           December 31, 2006. All pro forma information in this Form 8-K/A has
           been prepared for informational purposes only and does not purport to
           be indicative of what would have resulted had the acquisition actually
           occurred on the dates indicated or what may result in the future.

                      (c) Not applicable.

                      (d) Exhibit No. Description:

                                               2




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
EXHIBIT            DESCRIPTION                                                           LOCATION

Exhibit 99.1       Stock Purchase Agreement, dated January 29, 2007, by and among        Incorporated by reference to
                   Paradigm Holdings, Inc., Trinity IMS, Inc. and the shareholders of    Form 8-K filed on January 31, 2007
                   Trinity IMS, Inc.

Exhibit 99.2       Promissory Note, dated April 9, 2007, issued by Paradigm Holdings,    Incorporated by reference to
                   Inc. to Theresa Kleszewski                                            Form 8-K filed on April 13, 2007

Exhibit 99.3       Executive Employment Agreement, dated April 9, 2007, by and between   Incorporated by reference to
                   Paradigm Holdings, Inc. and Christian L. Kleszewski                   Form 8-K filed on April 13, 2007

Exhibit 99.4       Press Release                                                         Incorporated by reference to
                                                                                         Form 8-K filed on April 13, 2007

Exhibit 99.5       Report of Goodman & Company, L.L.P., independent auditors, and the    Provided herewith
                   audited financial statements of Trinity for the fiscal years ended
                   December 31, 2006 and 2005

Exhibit 99.6       Unaudited pro forma condensed combined balance sheet                  Provided herewith
                   and statement of operations for the fiscal year ended
                   December 31, 2006



                                               3




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
                                          SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Company has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.



                                                     PARADIGM HOLDINGS, INC.
 Date: June 22, 2007

                                                     By:     /s/ Richard Sawchak
                                                             ---------------------------
                                                             Richard Sawchak
                                                             Chief Financial Officer




                                               4
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Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
Exhibit 99.5




                                       ANNUAL REPORT OF

                                       Trinity IMS, Inc

                         YEARS ENDED DECEMBER 31, 2006 AND 2005




                                        C O N T E N T S


                                                                     Page


REPORT OF INDEPENDENT AUDITORS                                         1

FINANCIAL STATEMENTS

   Balance Sheets                                                      2

   Statements of Income                                                3

   Statements of Changes in Equity                                     4

   Statements of Cash Flows                                            5

   Notes to Financial Statements                                  6 - 10




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
                              Report of Independent Auditors


Board of Directors
Trinity Information Management Services, Inc.


         We have audited the accompanying balance sheets of Trinity Information
Management Services, Inc. as of December 31, 2006 and 2005, and the related
statements of income, changes in equity and cash flows for the years then ended.
These financial statements are the responsibility of the management of Trinity
Information Management Services, Inc. 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 audits 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 Trinity Information
Management Services, Inc. as of December 31, 2006 and 2005, 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/ Goodman & Company, L.L.P.
McLean, Virginia
June 15, 2007




                                               -1-




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
                    Trinity Information Management Services, Inc.
                                    BALANCE SHEETS
                              DECEMBER 31, 2006 AND 2005

                                                           2006          2005
                                                        -----------   -----------
                                     ASSETS

CURRENT ASSETS

   Cash                                                 $   121,654   $     4,464
   Accounts receivable - less allowance for
      doubtful accounts of $10,000 for 2006
      and $0 for 2005                                       623,810       952,662
   Current portion of settlement receivable                  37,500        34,375
   Prepaid expenses                                           5,150         1,400
   Employee receivables                                       2,769            --
   Related party receivable                                      --         2,111
                                                        -----------   -----------
       TOTAL CURRENT ASSETS                                 790,883       995,012
                                                        -----------   -----------

PROPERTY AND EQUIPMENT, NET                                  94,633        85,877

OTHER ASSETS
   Settlement receivable - less current portion              46,875        84,375
   Deposit                                                   25,592        25,592
                                                        -----------   -----------

TOTAL ASSETS                                            $   957,983   $ 1,190,856
                                                        ===========   ===========

                          LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable and accrued expenses                $   307,015   $   206,701
   Credit card liabilities                                   49,470        38,109
   Line of credit                                                --       470,759
   Advances from stockholder                                     --         8,940
   Current portion of automobile financing                       --         7,658
   Current portion of deferred rent                           6,448        11,948
   Stock repurchase                                          40,000            --
   Deferred taxes                                           209,409       211,996
                                                        -----------   -----------
       TOTAL CURRENT LIABILITIES                            612,342       956,111
                                                        -----------   -----------

LONG-TERM LIABILITIES
   Deferred rent - less current portion                      20,097        15,010
                                                        -----------   -----------

TOTAL LIABILITIES                                           632,439       971,121
                                                        -----------   -----------

STOCKHOLDERS' EQUITY                                        325,544       219,735
                                                        -----------   -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $   957,983   $ 1,190,856
                                                        ===========   ===========

   The accompanying notes are an integral part of these financial statements.


                                               -2-




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
                    Trinity Information Management Services, Inc.
                                 STATEMENTS OF INCOME
                        YEARS ENDED DECEMBER 31, 2006 AND 2005



                                                          2006          2005
                                                       ----------    ----------

Contract revenue                                       $4,216,934    $3,660,482

Cost of contract revenue                                3,317,133     3,074,722
Selling, general and administrative expenses              612,748       669,852
                                                       ----------    ----------

Operating income (loss)                                   287,053       (84,092)
                                                       ----------    ----------

Other Income
  Settlement income                                            --       150,000
  Interest income                                             556           945
  Interest expense                                        (22,086)      (17,347)
                                                       ----------    ----------

      Total other income (expense)                        (21,530)      133,598
                                                       ----------    ----------

Net income before taxes                                   265,523        49,506

Income tax expense                                        109,714        27,574
                                                       ----------    ----------

Net income                                             $ 155,809     $   21,932
                                                       ==========    ==========

   The accompanying notes are an integral part of these financial statements.




                                               -3-




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
                    Trinity Information Management Services, Inc.
                            STATEMENTS OF CHANGES IN EQUITY
                        YEARS ENDED DECEMBER 31, 2006 AND 2005




                                                                     Common      Retained
                                                                     Stock        Earnings        Total
                                                                    ---------    ----------    ----------


Balance - December 31, 2004                                         $     825    $   196,978   $   197,803

Net income                                                                 --        21,932        21,932
                                                                    ---------    ----------    ----------

Balance - December 31, 2005                                               825        218,910       219,735

Net Income                                                                 --        155,809       155,809

Stock repurchase                                                         (372)      (49,628)      (50,000)
                                                                    ---------    ----------    ----------

Balance - December 31, 2005                                         $     453    $ 325,091     $ 325,544
                                                                    =========    ==========    ==========



   The accompanying notes are an integral part of these financial statements.




                                               -4-




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
                    Trinity Information Management Services, Inc.
                               STATEMENTS OF CASH FLOWS
                        YEARS ENDED DECEMBER 31, 2006 AND 2005


                                                          2006         2005
                                                       ---------     ---------
Cash flows from operating activities
   Net income                                          $ 155,809     $   21,932

   Adjustments to reconcile net cash from operating activities:

      Depreciation                                         33,899        21,079
      Deferred rent - less current portion                   (413)       (2,207)
      Deferred income taxes                                (2,587)       25,549
      Change in:
        Accounts receivable                              328,852       (30,052)
        Settlement receivable                             34,375      (118,750)
        Prepaid expenses                                  (3,750)       (1,400)
        Employee receivables                              (2,769)           --
        Related party receivable                           2,111         2,324
        Deposit                                               --        (4,104)
        Accounts payable and accrued expenses            100,314       (28,809)
                                                       ---------     ---------

        Net cash from operating activities               645,841      (114,438)
                                                       ---------     ---------
Cash flows from investing activities
   Property and equipment acquisitions                   (42,655)      (65,109)
                                                       ---------     ---------

Cash flows from financing activities
   Credit card liabilities                                11,361        23,170
   Net borrowings on line of credit                     (470,759)      169,300
   Repayment on stockholder advances                      (8,940)      (34,539)
   Repayment on auto financing                            (7,658)       (7,721)
   Repurchase of shares                                  (10,000)           --
                                                       ---------     ---------
        Net cash from financing activities              (485,996)      150,210
                                                       ---------     ---------

Net change in cash                                     $ 117,190     $ (29,337)

Cash - beginning of year                                   4,464        33,801
                                                       ---------     ---------

Cash - end of year                                     $ 121,654     $   4,464
                                                       =========     =========


Supplemental disclosure of cash flow information
   Cash paid for income taxes                          $    5,586    $    2,025
   Cash paid for interest                              $   23,496    $   12,690


   The accompanying notes are an integral part of these financial statements.

                                               -5-




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
Trinity Information Management Services, Inc.

Notes to Financial Statements
================================================================================

December 31, 2006 and 2005
--------------------------------------------------------------------------------

1.    Organization and Nature of Business

      Trinity Information Management Services, Inc. (Company), a Nevada
      corporation, is a privately held, SBA Certified 8(a), small, disadvantaged,
      minority, woman-owned company headquartered in McLean, Virginia. The
      Company provides specialized management, security and technology services
      to government and commercial customers.


2.    Summary of Significant Accounting Policies

      Revenue Recognition

      The Company generates revenue under time-and-material contracts with the
      U.S. government and its prime contractors. Revenue on time-and-materials
      contracts is recognized to the extent of fixed hourly rates for direct
      labor hours expended (proportional performance) plus burdened reimbursable
      expenses incurred. Costs and profit estimates are reviewed periodically as
      the work progresses, and adjustments, if needed, are reflected in the
      period in which the revisions are made. Provisions for estimated losses on
      uncompleted contracts are made in the period in which such losses are
      determined. Because of inherent uncertainties in estimating costs, it is at
      least reasonably possible that the estimates used could change within the
      near term.

      Accounts Receivable

      The Company evaluates each of its accounts receivables individually, and
      provides a charge to income which is appropriate, in the opinion of
      management, to absorb probable credit losses. Trade accounts receivable are
      recorded, net of allowance, at the amount the Company expects to collect on
      balances outstanding at year-end. Management closely monitors outstanding
      balances and writes off balances when they are deemed uncollectible. The
      Company recorded an allowance for doubtful accounts of $10,000 and $0 at
      December 31, 2006 and 2005, respectively.

      Property and Equipment

      Property and equipment acquisitions are recorded at cost. Depreciation is
      based on estimated useful lives and is computed on the accelerated method,
      which is not materially different from the straight-line method. Estimated
      useful lives are as follows:

                      Computer equipment             5 years
                      Furniture                      7 years
                      Leasehold improvements         4 years

      Maintenance and repairs are charged to expense, but renewals and
      betterments are capitalized. When property and equipment are sold or
      otherwise disposed of, the asset account and related accumulated
      depreciation account are relieved, and any gain or loss is included in
      operations. The Company's policy is to expense property and equipment with
      a cost of less than $50.

      Advertising Costs

      The Company expenses advertising costs as they are incurred. Advertising
      expense was $10,312 and $18,617 for 2006 and 2005, respectively.


                                               -6-




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
      Estimates

      The preparation of financial statements in conformity with generally
      accepted accounting principles 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. Such estimates also affect the reported amounts of
      revenues and expenses during the reporting period. Actual results could
      vary from the estimates that were used.

      Capital

      The Company has authorized 75,000,000 common shares, with a par value of
      $0.001. As of December 31, 2006 and 2005, 453,000 and 825,000 common shares
      were issued and outstanding, respectively.

      During 2005, the stockholders authorized a 3,000 for 1 stock split, thereby
      increasing the number of authorized shares from 25,000 to 75,000,000, and
      the number of issued and outstanding shares from 275 to 825,000. The par
      value of each share also increased from zero to $0.001. The stock split is
      retroactively adjusted for all periods presented.

      On November 17, 2006, the Company retired 372,000 shares of common stock
      from its stockholders for $50,000, which will be paid out within a period
      of 5 months. As of December 31, 2006 the outstanding balance owed was
      $40,000. On January 17, 2007 and March 14, 2007, the Company paid $10,000
      and $30,000, respectively, for final settlement of the outstanding balance.

      As of June 15, 2007, the Company had a total of 453,000 issued and
      outstanding shares of common stock.

      Income Taxes

      Income taxes are provided for the tax effects of transactions reported in
      the financial statements and consist of taxes currently due plus deferred
      taxes related to the difference between the bases of certain assets and
      liabilities for financial and tax reporting. The deferred taxes represent
      the future tax return consequences of those differences, which will either
      be taxable or deductible when the assets and liabilities are recovered or
      settled.

      Concentration of Credit Risk

      At times, the Company may have cash at a financial institution in excess of
      insured limits. The Company places its cash with high credit quality
      financial institutions whose credit rating is monitored by management to
      minimize credit risk. The Company's balances in excess of the FDIC
      insurance limits were $54,690 and $0 at December 31, 2006 and 2005,
      respectively.

      Accounts receivable consist of amounts primarily due from prime or
      subcontracts with the federal government. These amounts are reviewed
      periodically by management in order to determine amounts which may be
      potentially deemed uncollectible.

3.    Accounts Receivable

      Accounts receivable at December 31 consisted of the following:

                                                        2006         2005
                                                     ----------   ----------

           Accounts receivable                       $  328,946 $ 725,863
           Accrued billings                             304,864    226,799
                                                     ---------- ----------
                                                        633,810    952,662
           Less - allowance for doubtful accounts       (10,000)         -
                                                     ---------- ----------

                                                     $ 623,810    $ 952,662
                                                     ==========   ==========

      Bad debt expense was $29,312 and $0 for 2006 and 2005, respectively.


                                               -7-




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
4.    Settlement Receivable



      In February 2005, the Company entered into an agreement to settle a lawsuit
      in which the Company was the plaintiff. The agreement required the
      defendant to pay the Company $150,000. The defendant provided a promissory
      note to the Company for the amount due. The note requires equal monthly
      payments of $3,125 for thirty-six months beginning April 1, 2005. The note
      is interest free over the first thirty-six months. Following the thirty-six
      months, there are an additional twelve monthly payments. The payments
      include principle and interest at 6% per annum on the outstanding balance.

5.    Property and Equipment

      Major classes of property and equipment at December 31 consisted of the
      following:

                                                        2006          2005
                                                     ----------    ---------

           Computer equipment                        $  104,630    $  72,932
           Furniture                                     36,372       25,415
           Automobiles                                        -       40,275
           Leasehold improvements                        30,717       30,717
                                                     ----------    ---------
                                                        171,719      169,339
           Less - accumulated depreciation              (77,086)     (83,462)
                                                     ----------    ---------
                                                     $   94,633    $ 85,877
                                                     ==========    =========

6.    Operating Leases

      The Company leases office space and an automobile under operating lease
      agreements that expire in 2010. Total rent expense for 2006 and 2005 was
      approximately $194,000 and $153,000, respectively. Total automobile lease
      expense for 2006 and 2005 was approximately $15,000 and $13,000,
      respectively. Future commitments under these leases are as follows:

           2007                                      $  195,207
           2008                                         184,337
           2009                                          94,046
           2010                                          45,162
                                                     ----------
                                                     $ 518,752
                                                     ==========

7.    Capital Lease Obligations

      The Company leased an automobile under a capital lease that expired in
      2006. After the expiration of the lease the automobile was disposed.

8.    Pension Plan

      Effective January 1, 2005, the Company established a defined contribution
      pension plan. The plan covers employees who are at least 21 years of age
      and have completed 1,000 hours of service. The Company, at its discretion,
      may elect to contribute a percentage of the participant's elective
      deferral. Employer contributions to this plan totaled $40,727 and $12,010
      for 2006 and 2005, respectively.


                                               -8-




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
9.    Related Party Transactions

      A stockholder advanced the Company $58,300 in 2003 and $17,100 in 2004. All
      advances were due on demand and no written agreements for the advances were
      made. The balance of the advances at December 31, 2005 was $8,940. The
      advances were paid in full in 2006.

10.   Line of Credit

      The Company maintains a revolving line of credit with a financial
      institution that provides for borrowings not to exceed $500,000 and
      $750,000 at December 31, 2006 and 2005, respectively. The line is secured
      by all current and future accounts receivable and by all equipment owned by
      the Company and is payable on demand. Interest accrues on the outstanding
      balance at the prime lending rate plus 1% and .25% for 2006 and 2005,
      respectively (9.25 percent and 7.5 percent at December 31, 2006 and 2005,
      respectively). Borrowings as of December 31, 2006 and 2005 under the line
      of credit were $0 and $470,759, respectively.

      The Company also has a borrowing agreement with another financial
      institution in which the Company may be advanced funds not to exceed
      $25,000. The agreement does not have an expiration date. The advances
      accrue interest at 21% per annum. There were no borrowings under the
      agreement as of December 31, 2006 and 2005.

11.   Commitments and Contingencies

      Substantially all of the Company's revenues have been derived from
      contracts with the U.S. government. These contract revenues are subject to
      adjustment upon audit by various government agencies. Management does not
      expect the results of such audits to have a material effect on the
      Company's financial position or results of future operations.

12.   Income Taxes

      Deferred taxes result from differences in the bases of assets and
      liabilities for income and financial statement purposes. The source of
      these differences mainly resulted from timing differences related to
      accounts receivable, accrued expenses and carryforward of taxable net
      operating losses.

      The tax effect as of December 31 is as follows:

                                                        2006         2005
                                                     ----------    ---------

           Deferred tax assets                       $   90,738    $ 230,284
           Deferred tax liabilities                    (300,147)    (442,280)
                                                     ----------    ---------

           Net deferred tax assets (liability)       $ (209,409)   $(211,996)
                                                     ==========    =========

      The tax effects of principal temporary differences are as follows:

                                                        2006         2005
                                                     ----------    ---------

           Accounts receivable                       $ (249,524) $(381,065)
           Settlement receivable                        (33,750)   (47,500)
           Prepaid expenses                              (2,060)      (560)
           Accelerated tax depreciation                 (14,813)   (13,155)
           Accounts payable and accrued expenses         80,120     72,455
           Deferred rent                                 10,618     10,783
           Net operating loss carryforward                    -    147,046
                                                     ---------- ----------

                                                     $ (209,409) $ (211,996)
                                                     ========== ==========

                                               -9-




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
      The components of income tax expense (benefit) are as follows:

                                                            2006            2005
                                                          ---------      ---------
Federal:
   Current                                                $  90,959      $    --
   Deferred                                                (119,706)        (7,730)
   Tax expense of net operating loss carryforward           117,636         29,446
                                                          ---------      ---------
                                                             88,889         21,716
                                                          ---------      ---------
State:
   Current                                                   21,342          2,025
   Deferred                                                 (29,927)        (3,529)
   Tax expense of net operating loss carryforward            29,410          7,362
                                                          ---------      ---------
                                                             20,825          5,858
                                                          ---------      ---------

                                                          $ 109,714      $ 27,574
                                                          =========      =========

      The Company's income tax expense differed from the statutory federal rate
      of 34% as follows:

                                                                2006           2005
                                                              --------       --------

Statutory rate applied to earnings before income taxes        $ 90,278       $ 16,832
Increase (decrease) in income taxes resulting from:
  State income taxes                                            17,355          4,996
  Permanent tax differences                                      2,081          5,746
                                                              --------       --------

       Income tax expense                                     $109,714       $ 27,574
                                                              ========       ========


13.   Related Party Receivable

      In 2004, the Company advanced $6,866 to a stockholder payable in
      twenty-four installments of $286 without interest. The note was paid in
      full in 2006. The balance of the advance at December 31, 2005 was $2,111.


14.   Subsequent Events

      On January 29, 2007, the Company entered into and finalized a purchase
      agreement with Paradigm Holdings, Inc. (Paradigm), a publicly traded
      corporation, whereby Paradigm agreed to purchase, subject to the terms and
      conditions of the stock purchase agreement, all shares of the Company for
      the purchase price of $4,000,000. Final settlement on the sale of the
      Company was made on April 9, 2007.

      On January 17, 2007 and March 14, 2007 the Company paid $10,000 and
      $30,000, respectively, for the remaining balance owed for the repurchase of
      its shares.

      On March 23, 2007, the Company renewed a contract with one of its major
      customers. The contract value is anticipated to be $11,876,000 and funding
      was $726,921 as of June 15, 2007. The performance period for the contract
      is from May 15, 2007 to May 8, 2012.


                                              -10-
</TEXT>
</DOCUMENT>




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
Exhibit 99.6

                               Paradigm Holdings, Inc.
           Unaudited Pro Forma Condensed Combined Statements of Operations

On April 9, 2007, Paradigm Holdings, Inc. ("Paradigm") acquired Trinity IMS,
Inc. ("Trinity") for $4.0 million by issuing a secured promissory note to Ms.
Theresa Kleszewski in connection with the Stock Purchase Agreement filed with
the Commission on January 31, 2007. The acquisition has been accounted for using
purchase accounting.

Trinity provides specialized information assurance and cyber forensics support
services to the federal government, primarily the U.S. Department of State.
Trinity's focus on cyber forensics and information assurance services in support
of the U.S. Department of State compliments the Company's strategic plan to
expand its IT solutions into the national security marketplace. Trinity provides
the Company with access to key customers, security clearances and technical
expertise.

Incentive Compensation

The preliminary purchase price excludes the effect of the incentive bonuses that
the Sellers as defined in the Purchase Agreement will be eligible for which is
contingent on Trinity winning certain new contracts specified in the Qualified
Opportunities and Proposals (Exhibits D and G of the Purchase Agreement filed
with the Commission on January 31, 2007). Any incentive bonuses paid will be
accounted for as compensation expense. Sellers are eligible for up to 45% of the
awarded contracts' estimated cumulative profits which is fixed based on the
Calculation Period Financial Results defined in the Purchase Agreement. Further,
all incentive compensation payments for Qualified Opportunities and Proposals
will be made only if a minimum profitability of twelve percent (12%) (based on
Paradigm's rate structure as bid) is achieved during the Calculation Period. If
the profitability is between 6 and 10%, the bonus payment amounts will be
renegotiated reasonably and in good faith between Paradigm and the Sellers. No
incentive compensation will be paid for contracts with Calculation Period
Financial Results profitability that are less than six percent (6%). In
addition, bonus payments for contract awards will be paid only for Qualified
Opportunities and Proposals set forth in Exhibit D that are awarded within
eighteen (18) months of the execution of the Purchase Agreement. Management is
not able to estimate the potential incentive compensation until winning those
contracts.

Basis of Presentation

The unaudited pro forma condensed combined balance sheet as of December 31, 2006
in this report has been prepared as if the acquisition occurred on December 31,
2006 and condensed combined statements of operations for the twelve months ended
December 31, 2006 included in this report have been prepared as if the
acquisition occurred on January 1, 2006.

The unaudited pro forma condensed combined financial statements, which have been
prepared in accordance with rules prescribed by Article 11 of Regulation S-X,
are provided for informational purposes only and are not necessarily indicative
of the past or future results of operations. No effect has been given for
operational efficiencies that may have been achieved if the acquisition had
occurred on January 1, 2006.

This information should be read in conjunction with our Current Report of Form
8-K, filed with the SEC on April 13, 2007, Paradigm's historical financial
statements and the accompanying notes in both our Annual Report on Form 10-K for
the fiscal year ended December 31, 2006 and Trinity's historical financial
statements and the accompanying notes that are included in this Current Report
on Form 8-K/A.




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
                               Paradigm Holdings, Inc.
           Unaudited Pro Forma Condensed Combined Statements of Operations
                   For the twelve months ending December 31, 2006




                                                       Paradigm                       Pro Forma              Pro Forma
                                                       Holdings         Trinity      Adjustments     Note    Combined
                                                     ------------    ------------    -----------     ----   -----------
Contract Revenue

 Service contracts                                   $ 43,781,524    $  4,216,934    $        --            $ 47,998,458
 Repair and maintenance contracts                      16,046,570              --             --              16,046,570
                                                     ------------    ------------    -----------            ------------
   Total contract revenue                              59,828,094       4,216,934             --              64,045,028
                                                     ------------    ------------    -----------            ------------
Cost of revenue
 Service contracts                                     36,690,539       3,317,133             --              40,007,672
 Repair and maintenance contracts                      13,817,257              --             --              13,817,257
                                                     ------------    ------------    -----------            ------------
   Total cost of revenue                               50,507,796       3,317,133             --              53,824,929
                                                     ------------    ------------    -----------            ------------

Gross margin                                            9,320,298         899,801              --            10,220,099

Selling, General & Administrative                       8,315,113         612,748        400,000      (1)      9,327,861
                                                     ------------    ------------    -----------            ------------

Income from operations                                  1,005,185         287,053       (400,000)                892,238
                                                     ------------    ------------    -----------            ------------

Other expense
 Interest income                                              708             556             --                   1,264
 Interest expense                                        (486,923)        (22,086)      (184,063)     (2)       (693,072)
 Other expense                                            (23,679)             --             --                 (23,679)
                                                     ------------    ------------    -----------            ------------
   Total other expense                                   (509,894)        (21,530)      (184,063)               (715,487)
                                                     ------------    ------------    -----------            ------------

Income from continuing operations
 before income taxes                                      495,291         265,523        (584,063)              176,751

Provision for income taxes                                323,255         109,714       (233,625)     (3)        199,344
                                                     ------------    ------------    -----------            ------------

Income from continuing operations                    $    172,036    $    155,809    $ (350,438)            $    (22,593)
                                                     ============    ============    ===========            ============

Weighted average number of common shares:
 Basic                                                 20,552,097                                             20,552,097
 Diluted                                               20,713,109                                             20,713,109

Basic income from continuing operations
 per common share                                    $       0.01                             --            $      (0.00)
                                                     ------------    ------------    -----------            ------------

Diluted income from continuing operations
 per common share                                    $       0.01                             --            $      (0.00)
                                                     ------------    ------------    -----------            ------------




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
                                Paradigm Holdings, Inc.
                 Unaudited Pro Forma Condensed Combined Balance Sheet
                                As of December 31, 2006




                                                      Paradigm                     Pro Forma              Pro Forma
                                                      Holdings        Trinity     Adjustments    Note     Combined
                                                     -----------    -----------   -----------    ----    -----------
ASSETS

CURRENT ASSETS

  Cash and cash equivalents                 $    371,176            $   121,654   $        --            $   492,830
  Accounts receivable - net                   15,768,449                623,810            --             16,392,259
  Current portion of settlement receivable            --                 37,500            --                 37,500
  Prepaid expenses                               960,184                  5,150            --                965,334
  Other current assets                            25,903                  2,769            --                 28,672
  Current assets of discontinued operations    1,594,141                     --            --              1,594,141
                                            -----------             -----------   -----------            -----------
   TOTAL CURRENT ASSETS                       18,719,853                790,883            --             19,510,736
                                            -----------             -----------   -----------            -----------

PROPERTY AND EQUIPMENT, NET                              593,311         94,633            --                687,944
                                                     -----------    -----------   -----------            -----------
OTHER ASSETS
  Settlement receivable - less current portion       --                  46,875            --                 46,875
  Intangible assets                                  --                      --     1,500,000      (4)     1,500,000
  Goodwill                                           --                      --     2,774,456      (4)     2,774,456
  Other assets                                  233,414                  25,592            --                259,006
                                            -----------             -----------   -----------            -----------
   TOTAL OTHER ASSETS                           233,414                  72,467     4,274,456              4,580,337
                                            -----------             -----------   -----------            -----------

TOTAL ASSETS                                         $19,546,578    $   957,983   $ 4,274,456            $24,779,017
                                                     ===========    ===========   ===========            ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
 Bank overdraft                             $ 2,464,022             $        --   $        --            $ 2,464,022
 Note payable - line of credit                5,559,649                      --            --              5,559,649
 Note payable                                        --                      --     2,000,000      (5)     2,000,000
 Accounts payable and accrued expenses        5,619,834                  10,201            --              5,630,035
 Accrued salaries and related payables        2,137,002                 190,099            --              2,327,101
 Credit card liabilities                             --                  49,470            --                 49,470
 Stock repurchase                                    --                  40,000            --                 40,000
 Income taxes payable                                --                 106,715            --                106,715
 Expect loss on contract                        613,742                      --            --                613,742
 Deferred revenue                               452,491                      --            --                452,491
 Deferred taxes                                  72,259                 209,409       120,000      (6)       401,668
 Other current liabilities                      110,511                   6,448            --                116,959
 Current liabilities of discontinued operations 616,889                      --            --                616,889
                                            -----------             -----------   -----------            -----------
   TOTAL CURRENT LIABILITIES                 17,646,399                 612,342     2,120,000             20,378,741
                                            -----------             -----------   -----------            -----------

LONG TERM LIABILITIES
 Note payable                                                 --             --     2,000,000      (5)     2,000,000
 Deferred tax liabilities                                     --             --       480,000      (6)       480,000
 Other long term liabilities                             244,947         20,097            --                265,044
                                                     -----------    -----------   -----------            -----------
  TOTAL LONG TERM LIABILITIES                            244,947         20,097     2,480,000              2,745,044
                                                     -----------    -----------   -----------            -----------

   TOTAL LIABILITIES                                  17,891,346        632,439     4,600,000             23,123,785
                                                     -----------    -----------   -----------            -----------
STOCKHOLDERS' EQUITY
 Common stock - $.01 par value, 50,000,000
  shares authorized, 20,795,152 shares
  issued and outstanding                                 207,951            453          (453)     (7)       207,951
 Additional paid in capital                            2,106,641             --            --      (7)     2,106,641
 (Accumulated deficit) retained earnings                (659,360)       325,091      (325,091)     (7)      (659,360)
                                                     -----------    -----------   -----------            -----------
   TOTAL STOCKHOLDERS' EQUITY                          1,655,232        325,544      (325,544)             1,655,232
                                                     -----------    -----------   -----------            -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $19,546,578    $   957,983   $ 4,274,456            $24,779,017
                                                     ===========    ===========   ===========            ===========



Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
Source: Paradigm Holdings, I, 8-K/A, June 22, 2007
                               Paradigm Holdings, Inc.
             Notes to Pro Forma Condensed Combined Financial Statements

Basis of Presentation

The unaudited pro forma condensed combined statements of operations for the
twelve months ended December 31, 2006 included in this report have been prepared
as if the acquisition occurred on January 1, 2006. The unaudited pro forma
consolidated balance sheet as of December 31, 2006 included in this report has
been prepared as if the acquisition occurred on December 31, 2006.

The acquisition has been accounted for using purchase accounting.

Financial Notes

(1)   The incremental financial impact of the Executive Employment Agreement with
      Mr. Christian L. Kleszeswki following the acquisition by Paradigm has been
      included. In addition, $300,000 was recorded as SG&A expense attributable
      to the first year amortization of identifiable intangible assets.
(2)   Adjustment made to reflect additional interest expense assuming the
      acquisition occurred at the beginning of the period presented. Interest
      expense was calculated using an annual interest rate of 7.75% as specified
      in the Promissory Note. Interest expense is calculated in accordance with
      the payment schedule [($3,500,000 * 7.75% * 3/12) + ($2,000,000 * 7.75% *
      9/12)].
(3)   Adjustment made to reflect the income tax effect of increased interest
      expense and amortization of intangible assets at the effective tax rate of
      40%.
(4)   Goodwill represents the excess purchase price of $4.0 million over the
      historical basis of the assets and liabilities of Trinity and identifiable
      intangible assets. The excess of the purchase price was recorded as
      goodwill. The purchase price, purchase price allocation, and financing of
      the transaction are summarized as follows:

           Purchase price paid as:
           Proceed of Promissory Note issued                           $4,000,000
                                                                       ----------
           Total purchase consideration                                $4,000,000

           Allocated to:
           Historical book value of Trinity's assets and liabilities      325,544
           Identifiable intangible assets                               1,500,000
           Deferred tax liabilities                                      (600,000)
                                                                       ----------
           Excess purchase price over allocation to identifiable
              assets and liabilities (goodwill)                        $2,774,456
                                                                       ----------

     The purchase price allocation is preliminary, and Management expects that
     reallocation of goodwill to intangible assets will be completed during the
     next forty-five (45) days. Purchase price reallocation will be based on
     intangible assets associated with the value of the backlog from long-term
     contracts, the non-compete agreement contained within the employment
     contract with Mr. Kleszewski and existing customer relationships. The
     potential magnitude of such reclassifications would be a maximum of $1.5
     million of intangible assets that would result in annual amortization of
     approximately $0.3 million over an average life of five (5) years. The
     intangible assets will be primarily related to Trinity's contract backlog
     which extends to May 2012. The purchase price and goodwill calculation do
     not include any direct acquisition costs. The Company is currently
     reviewing direct acquisition costs to determine which, if any, may be
     capitalized.
(5) Adjustment made to reflect the issuance of a $4.0 million promissory note
     to finance the purchase price. Paradigm paid $500,000 upon execution of the
     Promissory Note.
(6) The Company recorded $600,000 of total deferred tax liabilities related to
     the identifiable intangible assets at the 40% tax rate. $120,000 of the
     total deferred tax was recorded as a current liability based on the five
     year average life of the intangible assets.
(7) Stockholder's equity adjustment reflects the elimination of the
     stockholders' equity accounts of Trinity.
</TEXT>
</DOCUMENT>

_______________________________________________
Created by 10KWizard www.10KWizard.com




Source: Paradigm Holdings, I, 8-K/A, June 22, 2007

				
DOCUMENT INFO
Description: Form of Secured Promissory Note - Maryland document sample