-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GLN9tXQHRFdDluxBCi5zQh7M8B2hMZqp56zISGwaGjmPkzQ8j1bHTNTIU0oVfBOp AtnJB2ayDEZWZk8q4gX9+Q== 0000893220-95-000722.txt : 19970924 0000893220-95-000722.hdr.sgml : 19970924 ACCESSION NUMBER: 0000893220-95-000722 CONFORMED SUBMISSION TYPE: PRES14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951208 FILED AS OF DATE: 19951107 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIMENSIONAL VISIONS GROUP LTD CENTRAL INDEX KEY: 0000836809 STANDARD INDUSTRIAL CLASSIFICATION: 2750 IRS NUMBER: 232517953 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: PRES14A SEC ACT: SEC FILE NUMBER: 001-10196 FILM NUMBER: 95587669 BUSINESS ADDRESS: STREET 1: 718 ARCH ST STREET 2: STE 202N CITY: PHILADELPHIA STATE: PA ZIP: 19106 BUSINESS PHONE: 2154407791 MAIL ADDRESS: STREET 1: 718 ARCH STREET SUTIE 202N CITY: PHILADELPHIA STATE: PA ZIP: 19106 PRES14A 1 PRELIMINARY NOTICE OF SPECIAL MEETING 1 DIMENSIONAL VISIONS GROUP, LTD. NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 8, 1995 Dear Stockholder: A Special Meeting of Stockholders of Dimensional Visions Group, Ltd. (the "Company") will be held at the Company's principal executive offices, located at 718 Arch Street, Suite 202N, Philadelphia, Pennsylvania 19106 on December 8, 1995, at 9:00 a.m. (local time) for the following purposes: 1. to consider and vote upon a proposal to amend the Company's Certificate of Incorporation to authorize additional shares of common and preferred stock of the Company needed to accommodate the exercise of stock warrants and conversion of preferred stock of the Company; and 2. to consider and vote upon a proposal to amend the Company's Certificate of Incorporation to change the name of the Company to "Dimensional Group, Inc."; and 3. to transact such other business that may properly come before the meeting. The Board of Directors has fixed the close of business on November 3, 1995, as the record date for the Special Meeting. Only stockholders of record at that time are entitled to notice of and to vote at the Special Meeting, and any adjournment or postponement thereof. All stockholders are cordially invited to attend the Special Meeting. The enclosed proxy is solicited by the Board of Directors of the Company. Reference is made to the attached proxy statement for further information with respect to the business to be transacted at the Special Meeting. The Board of Directors urges you to date, sign and return promptly the enclosed proxy, even if you plan to attend the Special Meeting. The return of the proxy will not affect your right to vote in person if you do attend the Special Meeting. Executed proxies which contain no direction on the proposals presented will be voted FOR the authorization of 2 additional shares of common stock and preferred stock of the Company, and FOR the proposal to change the Company's name. By Order of the Board of Directors, /s/ Steven M. Peck ------------------------------- Steven M. Peck, Chief Executive Officer Dated: November __, 1995 -2- 3 PRELIMINARY PROXY STATEMENT DIMENSIONAL VISIONS GROUP, LTD. 718 ARCH STREET SUITE 202N PHILADELPHIA, PENNSYLVANIA 19106 PROXY STATEMENT This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Dimensional Visions Group, Ltd., (the "Company") for use at the Special Meeting of the Company's Stockholders to be held at the Company's executive offices, located at 718 Arch Street, Suite 202N, Philadelphia, Pennsylvania 19106 on December 8, 1995 at 9:00 a.m. (local time), and at any adjournment or adjournments of said meeting (the "Meeting"). Proxies are revocable at any time before they are voted by delivering written notice of revocation to the Secretary of the Company prior to or at the Meeting, by filing a duly executed proxy bearing a later date or by voting in person at the Meeting. Unless so revoked, the shares represented by proxies will be voted at the Meeting. The Company intends to mail this Proxy Statement to the Company's Stockholders on or about November 15, 1995. The cost of soliciting proxies will be borne by the Company. Solicitations may be made by mail, personal interview, telephone, and facsimile by officers and regular employees of the Company who will receive no additional compensation therefor. The Company will reimburse banks, brokers and other nominees for their reasonable expenses in forwarding proxy material to the beneficial owners for whom they own shares. The holders of record of the Company's shares of stock at the close of business on November 3, 1995, as listed below, are entitled to receive notice of, and to vote at, the Meeting and any adjournment thereof: 1. On November 3, 1995, there were 17,601,098 shares of common stock issued and outstanding. Each share of common stock is entitled to one (1) vote for each matter considered; 2. On November 3, 1995, there were 57,250 shares of First Series A Convertible 5% Preferred Stock issued and outstanding. Each share of First Series A Convertible Preferred Stock is entitled to forty (40) votes for each matter considered; -3- 4 3. On November 3, 1995, there were 175,700 shares of Second Series B Convertible 8% Preferred Stock issued and outstanding. Each share of Second Series B Convertible Preferred Stock is entitled to one hundred (100) votes for each matter considered; 4. On November 3, 1995, there were 22,876 shares of Series C Convertible Preferred Stock issued or to be issued and outstanding. Each share of Series C Convertible Preferred Stock is entitled to ten (10) votes for each matter considered; 5. On November 3, 1995, there were 32,150 shares of Third Series S Convertible Participating Preferred Stock issued and outstanding. Each share of the Third Series S Convertible Participating Preferred Stock is entitled to one hundred (100) votes for each matter considered; and 6. On November 3, 1995, there were 552,181 shares of Fourth Series P Convertible Participating Preferred Stock issued and outstanding. Each share of the Fourth Series P Convertible Participating Preferred Stock is entitled to ten (10) votes for each matter considered. The total number of shares of the Company's securities entitled to vote at the Meeting is 46,426,668. The shares of the Company's stock represented by each properly executed proxy will be voted at the Meeting in the manner specified in such proxy, or, if not specified, will be voted FOR the authorization of additional shares of common stock and preferred stock of the Company, and FOR the proposal to change the Company's name, and in the discretion of the persons named in the proxy, if granted, on all other matters properly presented to the Meeting. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information concerning stock ownership of all persons known by the Company to own beneficially 5% or more of the outstanding shares of the Company's Common Stock, each director, and all executive officers and directors of the Company as a group, as of November 3, 1995, and their percentage ownership of Common Stock and their percentage voting power. -4- 5
Name and Address Amount and Nature Percent of Beneficial Owners of Beneficial Ownership(1) Ownership - - - -------------------- ------------------------ ---------- George S. Smith(2) 6,319,870 26.6% 3130 Alexis Drive Palo Alto, California 94304 Avonwood Capital Corporation(3) 2,200,800 11.2% 3 Radnor Corporation Center Suite 400 Radnor, Pennsylvania 19087 1,000,000 5.4% Steven M. Peck(4) Sean F. Lee(5) 1,561,430 8.2% James W. Porter, Jr. (6) William A. Knegendorf (6) All officers and directors as a group (5 persons)(7) 4,661,510 21.1%
(1) Except as otherwise indicated, all of the shares are owned beneficially and of record. Beneficial ownership has been determined in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended. (2) Mr. Smith directly owns 50,000 shares of the Company's Common Stock. Mr. Smith also owns 21,000 shares of the Company's Third Series S Convertible Participating Preferred Stock which is convertible into 2,100,000 shares of the Company's Common Stock. Also included in the amount are common stock purchase warrants to purchase 2,669,840 shares of the Company's Common Stock and preferred stock purchase warrants to purchase 15,000 shares of the Company's Second Series B Convertible 8% Preferred Stock which is the equivalent of 1,500,000 shares of the Company's Common Stock. (3) Represents common stock purchase warrants to purchase 1,725,000 shares of the Company's Common Stock, 3,000 Series S Participating Convertible Preference Stock convertible into 100 shares of Common Stock for every one share of Series S Stock and 15,000 Fourth Series P Convertible Preferred Stock convertible into 10 shares of Common Stock for every one share of Series P stock. -5- 6 (4) Represents common stock purchase warrants to purchase 1,000,000 shares of the Company's Common Stock. (5) Represents 156,143 shares of Fourth Series P Convertible Participating Preferred Stock convertible into ten shares of Common Stock for every one share of Fourth Series P Convertible Participating Preferred Stock. Of this amount, 143,197 shares is owned by the Lee Family Partnership of which Mr. Lee is the general partner. (6) Owned directly by Avonwood Capital Corporation of which Mr. Porter is the President, the principal shareholder and sole voting shareholder and of which Mr. Knegendorf is a Managing Director, and a shareholder. Includes 3,000 shares of the Company's Third Series S Convertible Participating Preferred Stock which are convertible into 300,000 shares of the Company's Common Stock. Includes 15,080 shares of the Company's Fourth Series P Convertible Participating Preferred Stock convertible into 150,800 shares of Common Stock. Also includes common stock purchase warrants to purchase 1,750,000 shares of the Company's Common Stock. (7) Does not include common stock purchase warrants to purchase in the aggregate 7,919,840 shares of the Company's Common Stock. -6- 7 PROPOSAL 1 AUTHORIZATION OF ADDITIONAL SHARES OF COMMON STOCK AND PREFERRED STOCK BACKGROUND As of the date of this Proxy Statement, the Company has only 585,733 shares of authorized but unissued or not reserved shares of Common Stock. However, as of the date of this Proxy Statement, the Company has, issued and outstanding, the following warrants and convertible preferred stock, which if exercised or converted, as the case may be, require the issuance of Common Stock substantially in excess of the current authorized Common Stock of the Company: 1. Fifty-seven thousand two hundred and fifty (57,250) shares of First Series A Convertible 5% Preferred Stock, at $10 par value per share, 100,000 shares authorized, convertible into common stock at the rate of forty (40) shares of common stock for each share of the First Series A Convertible Preferred Stock; 2. Twenty-two thousand five hundred (22,500) preferred stock purchase warrants to purchase the Company's Second Series B Convertible 8% Preferred Stock. Each share of the Second Series B Convertible Preferred Stock is convertible at the rate of one hundred (100) shares of common stock; 3. One hundred seventy-five thousand seven hundred (175,700) shares of Second Series B Convertible 8% Preferred Stock, at $10 par value per share, 200,000 shares authorized, convertible at the rate of one hundred (100) shares of common stock for each share of Second Series B Convertible Preferred Stock; 4. Twenty-two thousand eight hundred seventy-six (22,876) shares of Series C Convertible Preferred Stock, at $10 par value per share, 1,000,000 shares authorized, convertible at the rate of ten (10) shares of common stock for each share of Series C Convertible Preferred Stock; 5. Five hundred fifty-two thousand one hundred eighty-one (552,181) shares of Fourth Series P Convertible Participating Preferred Stock at $10 par value per share, 600,000 authorized convertible at the rate of ten (10) shares of common stock for each share of Series P Convertible Participating Preferred Stock. 6. Thirty-two thousand one hundred and fifty (32,150) shares of Third Series S Convertible Participating Preferred Stock, at $10 par value per share, 50,000 shares authorized, convertible at the rate of one hundred (100) shares of common stock for each share of Third Series S Convertible Participating Preferred Stock; -7- 8 7. One million eight hundred and thirteen thousand one hundred and sixty-nine (1,813,169) Class B Redeemable Common Stock Purchase Warrants exercisable into three million eight hundred and seven thousand six hundred and fifty-five (3,807,655) shares of the Company's Common Stock. 8. Seventeen million nine hundred and sixty-five thousand five hundred and twenty-two (17,965,522) fully paid and non-assessable common stock purchase warrants. The total number of shares of common stock which would be outstanding assuming all of the warrants and convertible preferred stock were to be exercised or converted is 70,449,845. The Company's First Series A Convertible 5% Preferred Stock and the Company's Second Series B Convertible 8% Preferred Stock were issued through private placements for the purpose of increasing the capital of the Company. The Series C Convertible Preferred Stock was issued to certain holders of the Company's secured notes in lieu of accrued interest. The Third Series S Convertible Participating Preferred Stock was issued to certain stockholders consisting mainly of officers and directors of the Company in exchange for such stockholders' shares of common stock. Such common stock was then sold on September 5, 1995 for the purpose of raising additional capital. The Fourth Series P Convertible Participating Preferred Stock was issued to InfoPak, Inc. shareholders in exchange for all of the outstanding capital stock of InfoPak, Inc. on September 12, 1995. Certain financial information with regard to the acquisition of InfoPak, Inc. is set forth in Appendix I. To accommodate the future exercise of the warrants and/or conversion of the convertible preferred stock described above, at the Meeting, the stockholders will vote on a proposal to amend the Company's Certificate of Incorporation to authorize in the aggregate 90,000,000 shares of common stock and 10,000,000 shares of preferred stock. The Company has not entered into any agreement regarding the issuance of a significant number of additional shares other than as described above and does not have any other present intention to issue any of the additional shares of common stock or preferred stock to be authorized. However, the Company intends to seek additional funding and/or other business ventures which would require the issuance of the Company's securities. DESCRIPTION OF PROPOSED AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION To effect the proposed amendment to the Company's Certificate of Incorporation to authorize in the aggregate 90,000,000 shares of common stock and 10,000,000 shares of preferred stock, Article FOURTH of the Certificate of Incorporation would be amended to provide as follows: -8- 9 The total number of shares of stock which the corporation shall have authority to issue is One Hundred Million (100,000,000), consisting of Ten Million (10,000,000) shares of Preferred Stock, all of the par value of ($.001), and Ninety Million (90,000,000) shares of Common Stock, all of a par value of ($.001). -9- 10 INCREASE IN AUTHORIZED SHARES OF COMMON STOCK General. The Company is presently authorized to issue 20,000,000 shares of common stock, par value $.001 per share. Of such number, 17,601,098 shares were issued and outstanding at November 3, 1995. The proposed amendment to the Certificate of Incorporation would increase the number of authorized shares of common stock from 20,000,000 to 90,000,000. Such additional authorized shares of common stock will have no preemptive rights. No further vote of the stockholders will be required to issue such additional shares of authorized common stock. INCREASE IN AUTHORIZED SHARES OF PREFERRED STOCK General. The Company is authorized to issue 2,000,000 shares of preferred stock, par value $ .001 per share. Of such number, 840,159 shares were issued and outstanding at November 3, 1995. The proposed amendment to the Certificate of Incorporation would increase the number of authorized shares of preferred stock from 2,000,000 to 10,000,000. No further vote of the stockholders will be required to issue such additional shares of authorized preferred stock. Under Delaware law and under the terms of the Certificate of Incorporation, the Company's preferred stock may be issued in series established from time to time by the Board of Directors. In this connection, the Board of Directors has broad discretion to set the terms of the preferred stock, and, if it decided to, may fix for each series, without further stockholder approval, (1) the rate of the dividend, (2) the price at which and the terms and conditions on which shares may be redeemed, (3) the amount payable upon shares in the event of voluntary or involuntary liquidation, (4) sinking fund provisions, if any, for the redemption of the Company or purchase of shares, (5) the terms and conditions on which shares may be converted, if the shares of any series are issued with the privilege of conversion, and (6) voting rights, if any. The Board of Directors may fix the number of votes to which each share of preferred stock is entitled, or deny voting rights to the shares of any series, except to the extent voting rights are expressly granted by applicable law. Depending upon the terms or voting rights granted to any series of preferred stock, issuance thereof could result in a reduction in the voting power of the holders of common stock or other preferred stock. It is not possible to state the actual effect of the authorization of the preferred stock or other classes of stock upon the rights of holders of common stock until the Board of Directors determines the respective rights of the holders of one or more series of the preferred stock. However, such effects might include without limitation: (a) restrictions on dividends on common stock if preferred stock is issued with a preferential (and possibly cumulative) dividend right and dividends on the preferred stock are in arrears; (b) substantial dilution of the voting power of the common stock to the extent that the -10- 11 preferred stock has voting rights or to the extent that any preferred stock is given conversion rights into common stock; and (c) the holders of common stock not being entitled to share in the Company's assets upon liquidation or dissolution until satisfaction of any liquidation preference granted to the preferred stock, which the Board of Directors can set at its discretion. The Board of Directors could also authorize holders of the preferred stock to vote, either separately as a class or with the holders of common stock, on any merger, sale or exchange of assets by the Company or other extraordinary corporate transaction. Shares of preferred stock could also be privately placed with purchasers who might ally themselves with the Board in opposing a hostile takeover bid, diluting the stock ownership or voting power of persons seeking to obtain control of the Company. In addition, the Company may be affected to the extent that preferred stock is issued which is, by its terms, redeemable, either at the option of the Company or the holder of preferred stock, in accordance with such terms and conditions as may be designated by the Board of Directors in creating such series. The amount payable by the Company upon redemption of the preferred stock will be the redemption price fixed for the shares of each series by the Board of Directors and may also include payment of all accumulated and unpaid dividends. There are many other potential effects not mentioned here. POTENTIAL ANTI-TAKEOVER EFFECTS OF INCREASE IN AUTHORIZED CAPITAL STOCK The Board of Directors is not aware of any attempts to takeover or effect a change in control of the Company. As such, the proposed amendment to the Certificate of Incorporation increasing the authorized capital stock of the Company is not the result of a specific effort by the Board of Directors to thwart any known takeover attempts. Nonetheless, the increase in the authorized shares could be used to impede a takeover attempt since new shares could be issued to dilute the stock ownership of a person attempting to acquire control of the Company. Any provision which discourages the acquisition of Company stock by a person seeking control could be beneficial to the stockholders generally to the extent that it (i) provides for greater stability and continuity of management, (ii) protects stockholders against unfair or inequitable mergers or tender offers, and (iii) helps discourage or prevent a takeover by an acquiror seeking to obtain control in order to break up and auction off the Company's component parts or otherwise act in nonbeneficial ways with respect to the Company or its assets. However, such provisions could also have the effect of discouraging, making costlier or more difficult, or preventing a merger or a tender offer which would be beneficial to the Company's stockholders. Moreover, the adoption of the proposed amendments to the Certificate of Incorporation may have the effect of assisting the Company's management in retaining its position, even if removal would be beneficial to the stockholders generally. Consequently, management would be in a better position to resist changes that might benefit stockholders generally, but that might be disadvantageous to management. -11- 12 GENERAL EFFECT OF APPROVAL OF ADDITIONAL COMMON STOCK AND PREFERRED STOCK Dilution of Voting Power. The approval of additional common stock and preferred stock will have the effect of diluting the voting power of the stockholders entitled to vote only to the extent the warrants described in the Background Section above exercised. The conversion of existing preferred stock into the additional shares of common stock of the Company have no effect on the voting power of the stockholders of the Company because the preferred stockholders are currently entitled to vote in the same ratio that such preferred stockholders' shares would be converted into common shares of the Company. Dilution of Dividend Rights. To the extent that the warrants described in the Background Section are exercised, the Second Series B Convertible Preferred Stock shareholders right to dividends will be diluted in proportion to any increase in the number of issued Second Series B Convertible Preferred Stock resulting from the exercise of such warrants. The Board of Directors unanimously recommends that stockholders vote FOR this proposal at the Meeting. VOTE REQUIRED FOR APPROVAL The affirmative vote of the holders of a majority of the outstanding shares of the Company's voting stock is required for the adoption of the proposed amendment to the Certificate of Incorporation authorizing additional shares of common stock and preferred stock. -12- 13 PROPOSAL 2 CHANGE OF COMPANY NAME At the Meeting, the stockholders will vote on a proposal to amend the Certificate of Incorporation of the Company to change the name of the Company from "Dimensional Visions Group, Ltd.," to "Dimensional Group, Inc." The Company has proposed the change of name to more accurately reflect the nature of the Company's current and future operations. The Board of Directors unanimously recommends that the stockholders vote FOR this proposal at the Meeting. DESCRIPTION OF PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION Article FIRST of the Company's Certificate Incorporation would be amended to read as follows: The name of the corporation (hereinafter called the "corporation") is DIMENSIONAL GROUP, INC. VOTE REQUIRED FOR APPROVAL The affirmative vote of holders of a majority of the outstanding shares of the Company's voting stock is required in order to approve this proposal. If approved, this change of name will be effective upon filing with the Secretary of the State of Delaware of a Certificate of Amendment to the Certificate of Incorporation of the Company, which is expected to follow shortly after the Meeting. ADDITIONAL INFORMATION OTHER MATTERS The Board of Directors does not know of any matters to be presented at the Meeting other than those set forth in the Notice of Special Meeting of Stockholders. However, it is intended that proxies solicited will be voted on any matters that may properly come before the Meeting in the discretion of the persons named in the proxy. -13- 14 1995 STOCKHOLDER PROPOSALS In order for stockholder proposals for the 1995 Annual Meeting of Stockholders to be eligible for inclusion in the Company's proxy statement, they must be received by the Company at its executive offices, located at 718 Arch Street, Suite 202N, Philadelphia, Pennsylvania 19106, on or before January 31, 1996. -14- 15 APPENDIX I 16 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES YEARS ENDED JUNE 30, 1995 AND 1994 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Page ---- Independent Auditor's Report F-2 Consolidated Financial Statements Balance Sheet F-4 Statements of Operations F-5 Statements of Stockholders' Equity F-6 Statements of Cash Flows F-10 Notes to Consolidated Financial Statements F-11 Schedules Independent Auditor's Report F-19 Schedule V - Property and Equipment F-20 Schedule VI- Accumulated Depreciation and Amortization of Property and Equipment F-21
F-1 17 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1995 AND 1994 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders Dimensional Visions Group, Ltd. Philadelphia, Pennsylvania We have audited the accompanying consolidated balance sheet of Dimensional Visions Group, Ltd. and its subsidiaries (the "Company") as of June 30, 1995, and the related consolidated statements of operations, stockholders' deficiency, and cash flows for each of the two years in the period ended June 30, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Dimensional Visions Group, Ltd. and its subsidiaries at June 30, 1995 and the results of their operations and their cash flows for each of the two years in the period ended June 30, 1995 in conformity with generally accepted accounting principles. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a deficiency in working capital, which raises substantial doubt about the Company's ability to continue as a going concern. The Company has F-2 18 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1995 AND 1994 been funding its operations by selling its securities in private placements, loans, sale of surplus equipment and by certain employees and consultants deferring their compensation. The future of the Company as an operating business will depend on (1) its ability to successfully market its products, (2) obtain sufficient capital contributions or financing as may be required to sustain it's current operations and fulfill its sales and marketing activities, (3) achieving a level of sales adequate to support the Company's cost structure, and (4) to ultimately achieve a level of profitability. Management's plan concerning these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Gitomer & Berenholz, P.C. Jenkintown, Pennsylvania September 18, 1995 F-3 19 DIMENSIONAL VISIONS GROUP, LTD. CONSOLIDATED BALANCE SHEET JUNE 30, 1995
ASSETS DEFICIENCY Current Assets Cash and cash equivalents $227,972 Accounts receivable, trade 18,690 Inventory 26,453 Prepaid supplies and expenses 43,361 --------- Total Current Assets 316,476 --------- Equipment and Leasehold Improvements Equipment 1,628,028 Furniture and fixtures 134,938 Leasehold Improvements 109,446 --------- 1,872,412 Less Accumulated Depreciation and Amortization 1,791,049 --------- 81,363 --------- Other Assets Patent rights and other assets 53,398 --------- Total Assets $ 451,237 =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current Liabilities Note Payable $ 50,000 Accounts payable, accrued expenses and other liabilities 404,489 ----------- Total Current Liabilities 454,489 ----------- Long-Term Debt Secured notes 1,837,000 Accrued interest payable 210,741 ----------- 2,047,741 ----------- Commitments and contingencies - Stockholders' Deficiency Preferred stock - $.001 par value, authorized 2,000,000 shares; Series A convertible preferred stock - $10 par value authorized - 100,000 shares; issued and outstanding - 77,250 shares 772,500 Series B convertible preferred stock - $10 par value, authorized - 200,000 shares; issued - 0 - Common Stock - $.001 par value, authorized - 20,000,000 shares; Issued and outstanding - 16,936,098 16,936 Additional paid-in capital 11,881,927 Deficit (14,722,356) ----------- Total stockholders' deficiency (2,050,993) ----------- Total Liabilities and Stockholders Equity $ 451,237 ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-4 20 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED JUNE 30, 1995 AND 1994
1995 1994 ---- ---- Operating revenue $ 134,028 $ - ------------ ----------- Operating expense Cost of Sales 241,240 - Research and development costs 299,267 561,076 Marketing expenses 120,359 103,758 General and administrative expenses 460,680 436,712 ------------ ----------- Total operating expenses 1,121,546 1,101,546 ------------ ----------- Loss before other income (expenses) (987,518) (1,101,546) and extraordinary item ------------ ----------- Other income (expenses) Interest expense (208,717) (73,498) Interest income 1,318 3,317 Gain on sale of equipment 2,585 3,054 ------------ ----------- (204,814) (67,127) ------------ ----------- Loss before extraordinary item (1,192,332) (1,168,673) Extraordinary Item Gain on reversal of liabilities relating to unsecured creditors under dismissed Chapter 11 proceedings of DVG Plastics, Inc. - 99,031 ------------ ----------- Net loss ($1,192,332) ($1,069,642) ============ =========== Loss per share of common stock Loss before extraordinary item $ .07 $ .07 ============ =========== Net loss $ .07 $ .07 ============ =========== Weighted average shares of common stock outstanding 16,476,769 15,872,879 ============ ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-5 21 DIMENSIONAL VISIONS GROUP, LTD. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY YEARS ENDED JUNE 30, 1995 AND 1994
Preferred Stock Common Stock --------------- ------------ ($10 Series A ($.001 Par Value) ------------- ----------------- Convertible) Additional ------------ Paid-In Shares Amount Shares Amount Capital Deficit Total ------ ------ ------ ------ ------------- --------------- ----- Balance, July 1, 1993 77,250 $772,500 15,461,098 $15,461 $11,616,527 ($12,460,382) ($55,894) Issuance of 2,925,000 warrants to outside directors, company executive officers and employees to purchase 2,925,000 shares of the Company's common stock @ $.15 per share, exercisable over a five year period commencing July 1993 - - - - - - - Issuance of 3,900,000 warrants to company executive officers and an employee to purchase 3,900,000 shares of the Company's common stock @ $.15 per share, such warrants to be held in escrow, and when released to be exercisable over a five year period commencing December 1992 - - - - - - - Issuance of 1,070,000 warrants to outside consultants to purchase 1,070,000 shares of the Company's common stock @ $.15 per share, exercisable over a five year period commencing July 1993 - - - - 15,400 - 15,400 Retirement of 1,712,495 warrants issued to outside directors, a company executive officer, a company employee and an outside consultant to purchase 1,712,495 shares of the Company's common stock at exercise prices ranging from $.4375 to $3.94 per share - - - - - - -
F-6 22 DIMENSIONAL VISIONS GROUP, LTD. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (CONTINUED) YEARS ENDED JUNE 30, 1995 AND 1994
Preferred Stock Common Stock --------------- ------------ ($10 Series A ($.001 Par Value) ------------- ----------------- Convertible) Additional ------------ Paid-In Shares Amount Shares Amount Capital Deficit Total ------ ------ ------ ------ ------------- ------------- ----- Issuance of 900,000 shares of the Company's common stock in settlement of amounts due officers, employees and consultants for accrued payroll and fees - - 900,000 900 94,100 - 95,000 Issuance of 300,000 warrants to a company executive officer and an outside consultant to purchase 300,000 shares of the Company's common stock @ $.20 per share exercisable over a five year period commencing April 1994 - - - - - - - Net loss - - - - - ( 1,069,642) ( 1,069,642) ----- -------- ----------- ------- ----------- ------------ ----------- - Balance, June 30, 1994 77,250 $772,500 16,361,098 $16,361 $11,726,027 ($13,530,024) ($1,015,136) ====== ======== =========== ======= =========== ============ ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-7 23 DIMENSIONAL VISIONS GROUP, LTD. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (CONTINUED) YEARS ENDED JUNE 30, 1995 AND 1994
Preferred Stock Common Stock --------------- ------------ ($10 Series A ($.001 Par Value) ------------- ----------------- Convertible) Additional ------------ Paid-In Shares Amount Shares Amount Capital Deficit Total ------ ------ ------ ------ ------------ --------------- ----- Balance, July 1, 1994 77,250 $772,500 16,361,098 $16,361 $11,726,027 ($13,530,024) ($1,015,136) Issuance of 165,000 shares of the Company's common stock in bonuses to certain officers/employees/directors of the Company - - 165,000 165 16,335 - 16,500 Exercise of 110,000 warrants to purchase 110,000 shares of the Company's common stock @ $.01 per share - - 110,000 110 990 - 1,100 Issuance of 37,500 warrants to purchase 37,500 shares of the Company's common stock @ $.15 per share for a five year period commencing April, 1995 for consulting services rendered to the Company - - - - 3,375 - 3,375 Issuance of 500,000 warrants to purchase 500,000 shares of the Company's common stock @ $.10 per share for a three and half year period commencing May 1995 - - - - 60,000 - 60,000
F-8 24 DIMENSIONAL VISIONS GROUP, LTD. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (CONTINUED) YEARS ENDED JUNE 30, 1995 AND 1994 Issuance of 50,000 warrants to purchase 50,000 shares of the Company's common stock @ $.01 per share for a one year period commencing May 1995 - - - - 7,500 - 7,500 Issuance of 250,000 warrants to purchase 250,000 shares of the Company's common stock @ $.15 per share for a five year period commencing May 1995 - - - - 30,000 - 30,000 Exercise of 300,000 warrants to purchase 300,000 shares of the Company's common stock @ $.15 per share (250,000 shares) and $.01 per share (50,000 shares) - - 300,000 300 37,700 - 38,000 Net loss - - - - - ( 1,192,332) ( 1,192,332) ------- -------- ----------- ------- ----------- ------------ ----------- Balance, June 30, 1995 77,250 $772,500 16,936,098 $16,936 $11,881,927 ($14,722,356) ($2,050,993) ======= ======== =========== ======= =========== ============ ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-9 25 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 1995 AND 1994
1995 1994 ---- ---- (Reclassified) Operating activities Net loss Adjustments to reconcile net loss to net cash used in operating activities ($1,192,332) ($1,069,642) Extraordinary item Gain on reversal of liabilities relating to unsecured creditors under dismissed Chapter 11 proceedings of DVG Plastics, Inc. - ( 99,031) Compensation paid to officers/employees 16,500 - Interest paid through issuance of warrants 67,500 - Consulting service paid through issuance of warrants 4,625 15,400 Depreciation and amortization of property and equipment 150,491 341,697 Amortization of other assets 4,074 4,074 Gain on sale of equipment (2,584) (3,054) Changes in assets and liabilities which provided (used) cash Accounts Receivable, trade (18,690) - Inventory 12,634 (39,087) Prepaid expenses and deposit 3,118 (12,981) Accounts payable, accrued expenses and other liabilities (including accrued interest classified as long term) 281,769 (9,535) Issuance of common stock in connection with settlement of certain liabilities to employees and officers - 95,000 ----------- ----------- Net cash used in operating activities (672,895) (777,159) ----------- ----------- Investing activities Proceeds from sale of equipment 3,107 3,300 Purchase of equipment (16,374) (12,005) Capitalized legal fees related to patent rights - 3,025 Deposits - 589 ----------- ----------- Net cash used in investing activities (13,267) (5,091) ----------- ----------- Financing activities Proceeds from Issuance of common stock in connection with the exercise of warrants 39,100 - Borrowings 757,000 880,000 ----------- ----------- Net cash provided by financing activities 796,100 880,000 ----------- ----------- Net increase in cash and cash equivalents 109,938 97,750 Cash and cash equivalents, beginning 118,034 20,284 ----------- ----------- Cash and cash equivalents, ending $ 227,972 $ 118,034 =========== =========== Supplemental disclosure of cash flow information Cash paid during the year for interest $ - $ - =========== =========== Issuance of common stock in connection with settlement of certain liabilities to employees and officers $ - $ 95,000 =========== =========== Issuance of common stock in connection with officers/employees stock bonus $ 16,500 $ - =========== =========== Issuance of warrants in connection with Consulting service $ 33,375 =========== Financing $ 67,500 ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-10 26 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 AND 1994 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business, Financing and Basis of Financial Statement Presentation Dimensional Visions Group, Ltd. (the "Company" or "DVGL") was incorporated in Delaware on May 12, 1988. The Company, was a development stage company through June 30, 1994 and had an accumulated deficit during the development stage of $13,530,024. The Company produces and markets lithographically printed stereoscopic prints commonly referred to as three-dimensional prints. The prints may be viewed without the use of special glasses or viewing apparatus. The Company has financed its development through the sale of its securities, loans and sale of surplus equipment and by certain employees and consultants deferring their compensation. The Company has had limited sales of its product during the year ended June 30, 1995. The Company has completed the development of a photographic and compositing system capable of producing stationary three-dimensional images used in the manufacturing of the DV3D(TM) lithographic print products. The Company has also completed the development of the printing and separation process needed to produce the DV3D(TM) image for commercial use. The process involves a highly sophisticated computer controlled camera mounted on a micro-positioning mechanism and imaging system taking numerous photographs of a subject. The camera is mobile and takes photographs from various positions and angles. The photos are then composited in the clean room/photo laboratory to create a single stereoscopic master transparency, the product of which the company has trademarked the "DV3D(TM)" image. The DV3D(TM) image is then sent to commercial separator and printer where the master image, with the use of the company's proprietary methods and knowledge, is separated and lithographically printed on a polymer based lenticular material which focuses the multi- dimensional images. On September 5, 1995, the Company received $750,000 from the sale of the Company's Common Stock as part of its long term financing plans (See Note 13). The Company on September 12, 1995 completed the acquisition of InfoPak, Inc. which manufactures and markets hardware and software information and audio playback systems and method products and programs. (See Note 13). Liquidity and Capital Resources The Company has incurred losses since inception of $14,722,356, has a working capital deficiency of $138,013 as of June 30, 1995. The future of the Company as an operating business will depend on (1) its ability to successfully market its products, (2) obtain sufficient capital contributions or financing as may be required to sustain its current operations and to fulfill its sales and marketing activities, (3) achieving a level of sales adequate to support the Company's cost structure, and (4) to ultimately achieve a level of profitability. Management's plan to address these issues includes (a) substantially increase sales and marketing efforts of the Company's products, (b) exercise tight cost controls to conserve cash, (c) raise additional long term financing, and (d) evaluate possible merger or acquisition opportunities. The consolidated financial statements have been prepared on the basis that the Company is a going concern and do not reflect any adjustments that might result from the outcome of the uncertainties described in paragraph 1 above. Consolidation Policy The consolidated financial statements include the accounts of DVGL and its wholly-owned subsidiaries, DVG Plastics, Inc., DVG Films, Inc. (effective January 27, 1995 DVG Films, Inc. changed its name to Digital Dimensions, Inc.) and DV3D Images, Inc. As of June 30, 1995 all of the wholly-owned subsidiaries are inactive. All significant inter company balances and transactions have been eliminated in consolidation. F-11 27 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 AND 1994 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Inventory Inventory is stated at the lower of cost or market. Cost is determined by the first in first out method. Inventory consists of raw materials amounting to $26,453. Equipment and Leasehold Improvements and Depreciation and Amortization Equipment and leasehold improvements are stated at cost. Depreciation and amortization are provided by the use of the straight-line method over the estimated useful lives of the assets as follows: Equipment 5-7 years Furniture and fixtures 5 years Leasehold improvements Term of the initial operating lease (5 years)
Patent Rights Costs incurred to acquire patent rights and the related technology are amortized over the shorter of the estimated useful life or the remaining term of the patent rights. In the event that the costs of patent rights and/or acquired technology are abandoned, the write-off will be charged to expense in the period the determination is made to abandon them. Research and Development Costs The Company charges to Research and Development Costs all items of a non-capital nature related to bringing a "significant" improvement to its product. Such costs include salaries and expenses of employees and consultants, the conceptual formulation, design, and testing of the products and prototypes. All such costs of a capital nature are capitalized. Income Taxes Effective July 1, 1993, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." This statement supersedes Accounting Principles Board Opinion No. 11, "Accounting for Income Taxes." Deferred income taxes reflect the net tax effect of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss carryforwards. (See note 11 as to the Company's change in accounting for income taxes.) Employer's Accounting for Postemployment Benefits Employers Accounting for Post Employment Benefits Statement of Financial Accounting Standards No. 112, Employers Accounting for Post Employment Benefits (SFAS No. 112), establishes accounting standards for post employment benefits and requires either the accrual of the obligation or disclosure, depending upon the circumstances, for the cost of benefits provided to former or inactive employees after employment or before retirement. The Company adopted SFAS No. 112 during the first quarter of 1995. Such adoption will not have a material adverse effect on the Company's operations or financial position, since the Company does not have any post-retirement benefits. Reclassifications Certain reclassifications have been made to the June 30, 1994 financial statements to conform to classifications used in the June 30, 1995 financial statement. F-12 28 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 AND 1994 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) NET LOSS PER SHARE OF COMMON STOCK Net loss per share of common stock is based on the weighted average of shares of common stock outstanding. Outstanding warrants or options are not considered in the calculation of net loss per share of common stock, as they would have an anti-dilutive effect. NOTE 2 CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments, with an original maturity of three months or less when purchased, to be cash equivalents. Cash and cash equivalents are summarized as follows:
June 30, 1995 ------------- Cash in bank $ 82,334 Money Market Account 145,638 -------- $227,972 ========
The Company maintains its cash in banks located in Pennsylvania and California. The total cash balances are insured by the FDIC up to $100,000 per financial institution. As of June 30, 1995, the uninsured cash balance totaled $70,736. NOTE 3 PATENT RIGHTS AND OTHER ASSETS
June 30, 1995 ------------- Patent Rights $58,426 Organization Costs 2,000 Deposits 5,500 Trade Mark 225 ------- 66,151 Less Accumulated Amortization 12,753 ------- Total $53,398 =======
F-13 29 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 AND 1994 NOTE 4 ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES Accounts payable, accrued expenses and other liabilities consist of the following:
June 30, 1995 ------------- Accounts payable $116,410 Accrued Expenses Interest (1) 3,938 Salaries 29,241 Consulting fees 98,900 Customer Deposits(2) 156,000 -------- Total $404,489 ========
(1) Accrued interest of $210,741 is classified as long term as of June 30, 1995. (See Note 5). (2) $150,000 represents a deposit on two orders that were not accepted by a customer during 1992. NOTE 5 LONG-TERM DEBT As of June 30, 1995 the outstanding Secured Notes are $1,837,000. The Secured Notes are due beginning in fiscal 1996 and interest at 10% will be paid semi-annually, with the first interest payment not due to be paid until twelve months after the date of the Secured Notes. The Company is permitted to prepay the Secured Notes after twelve months from the date of the Secured Notes with no penalty. As collateral for the Secured Notes, the Company has given a security interest in all of the Company's assets, tangible and intangible, including all patents and proprietary technology, which was evidenced by a Uniform Commercial Code filing on March 24, 1994. On April 25, 1995, substantially all of the long term Secured Note Holders agreed to defer all interest payments until the Secured Notes mature beginning in fiscal 1996 or, upon the consummation of long term financing and/or a strategic partner relationship, to convert the Secured Notes and accrued interest into 8% Series "B" Convertible Preferred Stock through the exercise of the Series "B" Redeemable warrants. As of June 30, 1995, Secured Note Holders representing $95,000 of the outstanding notes have not agree to convert their Notes or defer interest. These notes are all long term obligations of the Company. As of June 30, 1995, 183,700 warrants are outstanding to purchase Series B Convertible Preferred Stock which can be converted to 18,370,000 shares of the Company's common stock at $.10 per share. In addition, there are 450,000 warrants that have not been exercised to purchase 450,00 shares of the Company's common stock at $.01 per share to certain Note Holders who lent funds to the Company during the year ended June 30, 1995. On May 24, 1995 the Company borrowed $50,000 at 9% per annum. The Promissory Note for $50,000 was due on November 24, 1998. On September 11, 1995, the Promissory Note and related accrued interest was paid in full. In connection with the loan, the Company issued warrants to purchase 500,000 shares of common stock at $.10 per share exercisable within three and one-half years from issuance and warrants to purchase 50,000 shares of common stock at $.01 per share. The warrants were valued at $67,500 ($.12 per warrant) at the time of issue and was recorded as additional interest expense. F-14 30 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 AND 1994 NOTES LONG TERM DEBT (CONTINUED) The annual maturity on long term debt is as follows:
Year Ending June 30 Amount ------------------- ------ 1996 $50,000 1997 1,130,000 1998 707,000 ---------- 1,887,000 Less Current Portion 50,000 ---------- Long Term Debt $1,837,000 ==========
NOTE 6 COMMITMENTS The company leases its corporate office, studio and lab facilities in Philadelphia, Pennsylvania under a five year operating lease through February 28, 1999 at an annual rental of approximately $44,100 through June 1995 and adjusted on March 1, of each year through 1998 by approximately $2,314 in 1995 and $1,371 each year thereafter. In addition, the Company is responsible for its proportionate share of excess operating expenses and real estate taxes. The Company has a conditional option to terminate the lease 30 days prior to ground breaking date on the proposed new building site adjacent to where the Company leases space.
Year Ending June 30 Annual Rental Amount ------------------- -------------------- 1996 $ 59,400 1997 60,800 1998 62,200 1999 42,100 -------- $224,500 ========
Total rent expense on all operating leases amounted to approximately $56,600 and $82,600, for the years ended June 30, 1995 and 1994, respectively. The Company has not declared dividends on Series A Convertible Preferred Stock. The cumulative dividend in arrears through June 30, 1995 is $151,750. The Company has outstanding employment and consulting contracts that expire through June 30, 1999 as follows:
Year ending June 30 ------------------- 1996 $164,000 1997 244,000 1998 144,000 1999 144,000 -------- $696,000 ========
In connection with a consulting contract providing among other things, assisting the Company with arranging for additional capital. For each dollar of capital raised a maximum of 1,600,000 warrants will be issued to purchase the Company's common stock at $.15 per share of which 250,000 warrants were issued during May 1995 and exercised during June 1995. The warrants will be exercisable over a five year period at $.15 per share. The warrants issued in May 1995 were valued at $30,000 ($.12 per warrant) at the time issued and will be recognized as additional consulting fees over the two-year term of the consulting contract. In addition, the contract provides for a fee of 5% on capital raised. F-15 31 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 AND 1994 NOTE 7 CONTINGENCIES During 1992, two former officers of DVG Plastics, Inc. resigned their positions. They filed claims amounting to $225,000 with the Bankruptcy Court for certain compensation (salary, severance and bonus) under their contracts. These claims have been dismissed by the Bankruptcy Court on November 16, 1993, as a result of the entire bankruptcy matter being dismissed and the Company is not aware of any legal action in connection with this dispute. Management of the Company feels that this matter, if pursued by the former officers of DVG Plastics, Inc., will be resolved with no material adverse financial impact to the Company. On November 16, 1993 the Bankruptcy Court dismissed the bankruptcy case of DVG Plastics, Inc. In connection with the dismissed bankruptcy case of DVG Plastics, Inc., the Company wrote off all liabilities relating to unsecured creditors of approximately $99,000 as of June 1994. There have been no claims by any of these creditors since the date of dismissal (November 16, 1993.) In connection with the various changes in management during 1991 and 1992, the Company believes that there are no outstanding obligations to former officers of the Company. In the event a claim would arise, the Company believes that no material adverse financial impact will occur. There are no legal proceedings which the Company believes will have a material adverse effect on its financial position. NOTE 8 COMMON STOCK As of June 30, 1995, the Company had issued non-public warrants to purchase 15,380,522 shares of the Company's Common Stock at prices ranging from $01 per share to $3.94 per share. Included in the non-public warrants are 3,900,000 warrants that are being held in escrow until officers and directors and a Company employee achieve certain bench mark goals established by management. As of June 30, 1995 the Company had issued 183,700 warrants to purchase Series B Convertible Preferred stock, in connection with a private placement offering which converts to 18,370,000 shares of the Company's common stock. As of June 30, 1995, the Company had 1,813,169 publicly-held warrants to purchase 1,813,169 shares of common stock. The Company may not have available sufficient common stock for those who elect to exercise their warrants or convert preferred stock to common stock. During January 1994 the Company issued 900,000 shares of the Company's common stock in settlement of amounts due to officers and employees for consulting fees and payroll valued at approximately $.11 per share. During January 1995, the company issued 165,000 shares of the Company's common stock as a bonus to certain officer/employees/directors of the Company valued at $.10 per share. During the period February 1995 through May 1995 the Company received $39,100 from the exercise of 410,000 warrants to purchase 410,000 shares of the Company's common stock. NOTE 9 STOCK OPTION PLAN The Company has adopted a stock option plan (the "Plan") covering 500,000 shares of the Company's common stock, $.001 par value, pursuant to which officers, directors, key employees and consultants of the Company are eligible to receive incentive as well as non-qualified stock options and Stock Appreciation Rights ("SAR's"). The Plan, which expires in September 1998, will be administered by the Board of Directors or a committee chosen therefrom. Incentive stock options granted under the Plan are exercisable for a period of up to 10 years from the date of grant at an exercise price which is not less than the fair market value of the Common stock on the date of the grant, except that the terms of an incentive stock option granted under the Plan to a stockholder owning more than 10% of the outstanding common stock may not exceed five years and the exercise price of an incentive stock option granted to such a stockholder may not be less than 110% of the fair market value of the common stock on the date of the grant. Non-qualified stock options maybe granted on terms determined by the Board of Directors or a F-16 32 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 AND 1994 NOTE 9 STOCK OPTION PLAN (CONTINUED) committee designated by the Board of Directors. SAR's which give the holder the privilege of surrendering such rights for the appreciation in the Company's common stock between the time of grant and the surrender, may be granted on any terms determined by the Board of Directors or committee designated by the Board of Directors. No SAR's have been granted. A summary of transactions under this Plan is as follows:
Option Price Per Share, Total Shares As Adjusted Option Price ------ ----------- ------------ Options outstanding 161,000 $.48 $77,280 Canceled (141,000) .48 (67,680) -------- ------- Options outstanding June 30, 1995 and 1994 20,000 $9,600 ======== =======
NOTE 10 EXTRAORDINARY ITEM On November 16, 1993 the Bankruptcy Court dismissed the bankruptcy case of DVG Plastics, Inc. In connection with the dismissed bankruptcy case of DVG Plastics, Inc., the Company wrote off all liabilities relating to unsecured creditors as of June 30, 1994. As a result of the write off the Company recognized a gain of $99,031 and has been classified as an Extraordinary item. NOTE 11 INCOME TAXES The Company adopted Statement of Financial Standards ("SFAS") No. 109, "Accounting for Income Taxes" effective July 1, 1993. There is no cumulative effect of adopting SFAS 109 on the Company's financial statements for the year ended June 30, 1994. Restatement of prior years for the effect of SFAS No. 109 would not have materially changed previously reported losses. The Tax effects of significant items comprising the Company's net deferred taxes as of June 30, 1995 were as follows:
1995 ------ Deferred Tax Assets: Property ($ 23,000) Patents 7,000 Operating loss carry forwards 5,050,000 Valuation allowance (5,034,000) ---------- $ ==========
The change in valuation allowance for the year ended June 30, 1995 was increased by approximately $431,000. There was no provision for current income taxes for the years ended June 30, 1995 and 1994. The federal net operating loss carryforwards of approximately $14,413,000 expire in varying amounts through 2010 and state net operating loss carryforwards are available up to $500,000 per year commencing in fiscal 1995 and will be available up to three years from date of loss. F-17 33 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 AND 1994 NOTE 11 INCOME TAXES (CONTINUED) The Company has had numerous transactions in its common stock. Such transactions may have resulted in a change in the Company's ownership, as defined in the Internal Revenue Code Section 382. Such change may result in an annual limitation on the amount of the Company's taxable income which may be offset with its net operating loss carryforwards. The Company has not evaluated the impact of Section 382, if any, on its ability to utilize its net operating loss carryforwards in future years. NOTE 12 RELATED PARTY TRANSACTIONS On July 19, 1993, 600,00 warrants to purchase the Company's Common Stock for five years at $.15 per share were issued to Mr. Smith, the Chairman of the Board and former Chief Executive Officer, and 687,495 warrants were canceled by the Company at prices that range between $.4375 and $1.00 per share. During March and April of 1994 Mr. Smith lent the Company an additional $50,000 in connection with the Company's Private Placement Secured Notes and Preferred Stock Purchase Warrants offering. As of June 30, 1995, Mr. Smith owns approximately 1,950,000 shares of the common stock of the Company and has 2,669,840 warrants to purchase the Company's Common Stock and 15,000 warrants to purchase 15,000 shares of Series B Preferred Stock at $10 per share, which is convertible into the equivalent of 1,500,000 shares of common stock. In addition, Mr. Smith owns 5,000 shares of Series A preferred stock at $10 per share which is convertible into the equivalent of 200,000 shares of common stock. On August 22, 1995, the Series A preferred stock was converted into 200,000 shares of common stock. NOTE 13 SUBSEQUENT EVENTS In connection with a private placement of its 10% Promissory Notes and preferred Stock Purchase Warrants (the "Notes"), the Company received additional loans of $105,000 from subscribers of promissory notes since June 30, 1995. On September 5, 1995 the Company received $675,000 net of fees of $75,000 from the sale of 3,000,000 shares of the Company's common stock at $.25 per share. In order to issue the shares sold on September 5, 1995, certain stockholders consisting mainly of officers and directors of the Company surrendered 3,215,000 shares of the Company's common stock in exchange for 32,150 shares of Series S Convertible Preferred Stock. The Series S Convertible Preferred Stock is convertible to 3,215,000 shares of common stock on the earlier of January 1, 1996 or such time as the Company has sufficient authorized common stock to convert all of the Series S Preferred stock. On September 12, 1995, the Company acquired all the outstanding capital stock of InfoPak, Inc. for 500,000 shares of its series P Convertible Preferred Stock, each share of which is convertibles into 10 shares of the Company's common stock. The Series P Convertible Preferred Stock issued in connection with the acquisition was valued at $2,750,000 ($.55 per share) by the Company and will be accounted for as a purchase. F-18 34 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1995 AND 1994 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders Dimensional Visions Group, Ltd. Philadelphia, Pennsylvania We have audited in accordance with generally accepted auditing standards, the financial statements of DIMENSIONAL VISIONS GROUP, LTD. included in this Annual Report on Form 10-KSB and have issued our report thereon dated September 18, 1995. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the preceding index are the responsibility of the Company's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth in relation to the basic financial statements taken as a whole. Gitomer & Berenholz, P.C. Jenkintown, Pennsylvania September 18, 1995 F-19 35 SCHEDULE V DIMENSIONAL VISIONS GROUP, LTD. SCHEDULE V - PROPERTY AND EQUIPMENT (1)
--------------- --------------- --------------- --------------- --------------- --------------- Column A Column B Column C Column D Column E Column F --------------- --------------- --------------- --------------- --------------- --------------- Balance at Other Beginning Additions at Changes - Balance at End Classification of Period Cost Retirements Add (Deduct) of Period --------------- --------------- --------------- --------------- --------------- --------------- Year Ended June 30, 1995 ------------------------ Equipment $1,621,408 $11,522 $5,228 $ 326 $1,628,028 Furniture and fixtures 130,412 4,852 - ( 326) 134,938 Leasehold improvements 109,446 - - - 109,446 ---------- ------- ------ ------ ---------- $1,861,266 $16,374 $5,228 $ - $1,872,412 ========== ======= ====== ====== ========== Year Ended June 30, 1994 ------------------------ Equipment $1,624,061 $ 6,197 $8,850 $ - $1,621,408 Furniture & Fixtures 124,604 5,808 - - 130,412 Leasehold Improvements 109,446 - - - 109,446 ---------- ------- ------ ----- ---------- $1,858,111 $12,005 $8,850 $ - $1,861,266 ========== ======= ====== ===== ==========
(1) Depreciation and amortization is computed by the straight-line method over the estimated useful lives of the related assets as follows: Equipment 5-7 years Furniture & Fixtures 5 years Leasehold improvements Term of initial operating lease (5 years)
F-20 36 SCHEDULE VI DIMENSIONAL VISIONS GROUP, LTD. SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT
--------------- --------------- --------------- --------------- --------------- --------------- Column A Column B Column C Column D Column E Column F --------------- --------------- --------------- --------------- --------------- --------------- Balance at Other Beginning Additions at Changes - Balance at End Classification of Period Cost Retirements Add (Deduct) of Period --------------- --------------- --------------- --------------- --------------- --------------- Year Ended June 30, 1995 ------------------------ Equipment $1,426,715 $137,720 $4,705 $ - $1,559,730 Furniture and fixtures 110,632 11,801 - 122,433 Leasehold improvements 107,916 970 - - 108,886 ---------- -------- ------ ------ ---------- $1,645,263 $150,491 $4,705 $ - $1,791,049 ========== ======== ====== ====== ========== Year Ended June 30, 1994 ------------------------ Equipment $1,134,545 $300,798 $8,604 ($24) $1,426,715 Furniture & Fixtures 88,051 22,557 - 24 110,632 Leasehold Improvements 90,574 18,342 - - 107,916 ---------- -------- ------ ----- ---------- $1,312,170 $341,697 $8,604 $ - $1,645,263 ========== ======== ====== ===== ==========
F-21 37 INFOPAK, INC. FINANCIAL STATEMENTS WITH INDEPENDENT ACCOUNTANTS' REPORT DECEMBER 31, 1994 BILLER, FRITH-SMITH & ARCHIBALD Certified Public Accountants 38 CONTENTS
Page ------ Independent auditors' report 1 Financial statements Balance sheet 2 Statement of income and deficit 3 Statement of cash flows 4 Notes to financial statements 5-8 Independent accountants' report on additional information 9 Supporting schedule of selling and marketing, and general and administrative expenses 10
BILLER, FRITH-SMITH & ARCHIBALD Certified Public Accountants 39 To the Board of Directors Infopak, Inc. Phoenix, Arizona INDEPENDENT AUDITORS' REPORT We have audited the accompanying balance sheet of Infopak, Inc., as of December 31, 1994, and the related statements of income and deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. 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 audit provides 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 Infopak, Inc. as of December 31, 1994, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Tarzana, California May 4, 1995 40 2 INFOPAK, INC. BALANCE SHEET DECEMBER 31, 1994 ASSETS Current assets Cash $ 74,093 Accounts receivable, net of allowance for doubtful accounts of $15,000 129,612 Notes and other receivables 56,950 Inventory 259,982 ----------- Total current assets 520,637 Property, equipment and development costs net of accumulated depreciation 118,838 Other assets Start-up costs, net of amortization 136,790 Deposits 1,140 ----------- Total other assets 137,930 ----------- $ 777,405 ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable $ 42,409 Accrued payroll 26,476 Accrued payroll taxes 24,025 Accrued interest 47,425 Commissions payable 31,924 Royalties payable 179,028 Current portion of long-term debt 175,000 ----------- Total current liabilities 526,287 Long-term liabilities 527,894 Stockholders' deficit Common stock, $.01 par value, 40,000,000 shares authorized, 5,071,131 shares issued and outstanding 50,711 Deficit ( 327,487) ----------- Total stockholders' deficit ( 276,776) ----------- $ 777,405 ===========
See accompanying accountants' audit report and notes to financial statements 41 3 INFOPAK, INC. STATEMENT OF INCOME AND DEFICIT YEAR ENDED DECEMBER 31, 1994 Revenue from sales $ 2,199,089 100.0 % Cost of goods sold 1,457,054 66.3 ------------ ------ Gross profit 742,035 33.7 ------------ ------ Selling and marketing expenses 631,908 28.7 General and administrative 268,308 12.2 ------------ ------ 900,216 41.0 ------------ ------ Loss before taxes and other expenses ( 158,181) ( 7.2) Interest expense 33,436 1.5 ------------ ------ Loss before income taxes ( 191,617) ( 8.7) Provision for income taxes - 0 - - ------------ ------ Net loss ( 191,617) ( 8.7)% ====== Deficit, beginning of year ( 135,870) ------------ Deficit, end of year $( 327,487) ============
See accompanying accountants' audit report and notes to financial statements 42 4 INFOPAK, INC. STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1994 Cash flows from operating activities: Net loss $( 191,617) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 72,940 Changes in assets and liabilities: Notes and other receivables 355,243 Supplies and samples 1,119 Inventory ( 259,982) Accounts payable 26,220 Accrued expenses 26,483 ----------- Net cash provided by operating activities 30,406 ----------- Cash flows from investing activities: Cash purchases of property and equipment ( 11,235) ----------- Net cash used in investing activities ( 11,235) ----------- Cash flows from financing activities: Proceeds from notes payable 28,655 Repurchase of common stock ( 5,155) ----------- Net cash provided by financing activities 23,500 ----------- Net increase in cash 42,671 Cash, beginning of year 31,422 ----------- Cash, end of year $ 74,093 =========== Supplemental disclosure of cash flows information: Cash paid during the period for: Interest $ 21,802 =========== Income taxes $ - 0 - ===========
See accompanying accountants' audit report and notes to financial statements 43 5 INFOPAK, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1994 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Line of business The Company designs and manufactures products in the hand held personal computer industry. Property and equipment and depreciation Property and equipment are stated at cost. Depreciation is computed using the straight line method over the estimated useful lives of the assets. The estimated useful lives are as follows: Machinery and equipment 3 - 5 years Furniture and fixtures 3 - 5 years Development costs 5 years
Expenditures for replacements and betterments are capitalized, while repairs and maintenance are charged to expense as incurred. Start-up costs amortization Start-up costs are amortized on the straight line method over seven years that commenced in 1993. Income taxes The Company elected in 1993, by unanimous consent of the shareholders, to be taxed as an S-Corporation under the provisions of the Internal Revenue Code. Under such provision, the Company does not pay federal or state corporate income taxes on its taxable income. Therefore, no provisions for federal or state income taxes have been made. Each individual shareholder is to report his respective share of the Company's taxable income, to the extent allowable, on his federal and state income tax returns. 44 6 INFOPAK, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1994 2. NOTES AND OTHER RECEIVABLES During the year ended December 31, 1994, the Company did not advance any additional funds to employee/shareholders. The amounts are recorded as notes receivable from the employee/shareholders with interest calculated annually at 6% and not to exceed specified amounts. Repayment is to begin when certain conditions are met. 3. INVENTORY Inventory consists of finished goods. 4. PROPERTY, EQUIPMENT AND DEVELOPMENT COSTS Property, equipment and development costs consist of the following:
Accumulated Net Book Cost Depreciation Value ---------- ------------ ----------- Machinery $ 21,926 $ 10,593 $ 11,333 Furniture and fixtures 1,994 1,701 293 Software development 8,469 4,188 4,281 Hardware development 198,009 95,078 102,931 ---------- ------------ ----------- $ 230,398 $ 111,560 $ 118,838 ========== ============ ===========
5. START-UP COSTS Start-up costs consist of expenses incurred for developing the Company's initial product patents, copyrights and manufacturing processes. $ 174,096 Accumulated amortization 37,306 ----------- $ 136,790 ===========
45 7 INFOPAK, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1994 6. LONG-TERM DEBT Long-term debt consists of the following: Notes payable, unsecured, with monthly payments including interest at 8%, commencing when the Company becomes profitable on a tax basis. $ 281,434 Loan payable, unsecured, due on demand, non-interest bearing. 175,000 Loans payable, employees, unsecured, with monthly payments including interest at 6%, commencing when the Company becomes profitable on a tax basis. No payments were made during 1994. 246,460 ----------- 702,894 Current maturities 175,000 ----------- $ 527,894 ===========
Future maturities of long-term debt are as follows: Year Ending December 31, ------------------------ 1995 $ 175,000 Thereafter 527,894 ----------- $ 702,894 ===========
7. COMMON STOCK The Company repurchased 515,464 shares of common stock during 1994 for a total of $6,008.97. The stock was retired and is available for issuance at a latter date. 8. INCOME TAXES The Company has a tax liability to the state of Arizona for the minimum state income tax of $50. There is no federal income tax due to the Company being a subchapter "S" corporation (Note 1). The amount of the liability is immaterial and not accrued in the financial statements. 46 8 INFOPAK, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1994 9. COMMITMENTS AND CONTINGENCIES Lease The Company has a month to month, noncapitalized operating lease for its premises. Royalty agreement The Company has a royalty agreement with certain officers of the Company. This agreement is to pay a royalty for sales of manufactured product. The royalty accrues and will be paid when the Company becomes profitable on a tax basis. There were no royalties paid during 1994. Bonus plans The Company entered into a bonus plan in 1993 to pay management and employees a percentage of the net profit on a cash (tax) basis. As of May 4, 1995 there have been no bonuses paid. Income taxes The Company has a net operating loss carryover which is available if the Company reverts to a "C" corporation. The net operating loss expires in 2008. Long term debt In 1994 the notes payable were renegotiated to begin payments after the Company becomes profitable on a tax basis. (See note 6) 10. SUBSEQUENT EVENTS Long term debt Subsequent to the balance sheet date, a potential investor requested the return of his initial deposit for the purchase of stock. Due to this the stock purchase deposit has been reclassified as a loan payable. (Note 6) 47 9 Board of Directors and Stockholders Infopak, Inc. Phoenix, Arizona INDEPENDENT ACCOUNTANTS' REPORT ON ADDITIONAL INFORMATION Our report on our audit of the basic financial statements of Infopak, Inc. for 1994 appears on page one. That audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supporting schedule of selling and marketing and general and administrative expenses is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Tarzana, California May 4, 1995 48 10 INFOPAK, INC. SUPPORTING SCHEDULE OF SELLING AND MARKETING, AND GENERAL AND ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1994 Selling and marketing --------------------- Commissions $ 63,445 2.9 Health insurance 42,420 1.9 Insurance 10,527 0.5 Marketing 13,344 0.6 Moving expenses 4,307 0.2 Payroll taxes 34,907 1.6 Salaries 451,715 20.5 Sales expense 9,223 0.4 Travel and entertainment 2,020 0.1 ----------- ---- Total $ 631,908 28.7 % =========== ==== General and administrative -------------------------- Accounting $ 2,000 0.1 % Amortization and depreciation 72,940 3.3 Legal and professional 10,512 0.5 Miscellaneous 19,185 0.9 Office expense 107,306 4.9 Repairs and maintenance 966 - Rent 14,725 0.7 Taxes and licenses 96 - Telephone 13,165 0.6 Travel 27,413 1.2 ----------- ----- Total $ 268,308 12.2 % =========== =====
See accountants' report 49 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1995 (Unaudited) The pro forma consolidated balance sheet is presented to show the financial position of Dimensional Visions Group, Ltd. (Company) as if the acquisition of InfoPak, Inc. had occurred on June 30, 1995, and the pro forma consolidated statement of operations as if the acquisition of InfoPak, Inc. had occurred on July 1, 1994, using the assumptions and adjustments described in the accompanying notes. These pro forma consolidated financial statements have been prepared for comparative purposes only, and do not purport to indicate what necessarily would have occurred had the acquisition been completed since inception, or what results may be in the future. The pro forma consolidated financial statements should be read in conjunction with the historical financial statements and notes, as presented in the 1995 Annual Form 10-KSB/A for the year ended June 30, 1995. On September 12, 1995, the Company acquired all of the outstanding capital stock of InfoPak, Inc., pursuant to a merger agreement dated September 6, 1995. The Company issued 500,000 shares of Series P Convertible Preferred Stock valued at $2,750,000 and the issuance of an additional 34,681 shares of Series P Convertible Preferred Stock relating to the cancellation of Notes and accrued interest of InfoPak, Inc. and 17,500 shares of Series P Convertible Preferred Stock relating to certain employees and a consultant of InfoPak, Inc. 50 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEET JUNE 30, 1995 (Unaudited)
ASSETS Pro Forma Historical Adjustments Pro Forma ---------- ----------- --------- Current assets Cash and cash equivalents $ 227,972 $ 275,632(1) $ 503,604 Receivables Trade 18,690 8,867(1) 27,557 Employee - 44,078(1) 44,078 Inventory 26,453 114,383(1) 140,836 Prepaid suppliers and expenses 43,361 - 43,361 ------------ ----------- ------------ Total current assets 316,476 442,960 759,436 ------------ ----------- ------------ Equipment and leasehold improvements, net 81,363 42,804(1) 124,167 ------------ ----------- ------------ Other Assets Patent rights and other assets 53,398 96,250(2) 1,140(1) 150,788 Goodwill 2,380,356(1) 190,746(3) - 36,866(4) 2,607,968 ------------ ----------- ------------ 53,398 2,705,358 2,758,756 ------------ ----------- ------------ Total assets $ 451,237 $ 3,191,122 $ 3,642,359 ============ =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current Liabilities Notes payable Employees $ - $ 73,729(1) $ 73,729 Other 50,000 - 50,000 Accounts payable, accrued expenses and 36,866(4) other liabilities 404,489 43,531(1) 484,886 ------------ ----------- ------------ Total Current Liabilities 454,489 154,126 608,615 ------------ ----------- ------------ Long term debt Secured notes 1,837,000 - 1,837,000 Accrued interest payable 210,741 - 210,741 ------------ ----------- ------------ 2,047,741 - 2,047,741 ------------ ----------- ------------ Stockholders' equity (deficiency) Preferred stock 772,500 10,000,000(1) 350,000 693,620 11,816,120 Common stock 16,936 - 16,936 Additional paid-in capital 11,881,927 (7,250,000)(1) (253,750)(2) (502,874)(3) 3,875,303 Deficit (14,722,356) - (14,722,356) ------------ ----------- ------------ Total stockholders' equity (deficiency) ( 2,050,993) 3,036,996 986,003 ------------ ----------- ------------ Total liabilities and stockholders equity (deficiency) $ 451,237 $ 3,191,122 $ 3,642,359 ============ =========== ============
The accompanying notes to pro forma consolidated financial statements are an integral part of this statement. 51 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 1995 (Unaudited)
Pro Forma Results of Operations of Pro Forma Historical InfoPak, Inc.(8) Adjustments Pro Forma ---------- ---------------- ----------- ------------ Operating revenue $ 134,028 $2,199,997 $ - $2,334,025 ------------ ------------ ------------ -------------- Operating expenses 241,240 1,395,276 (81,682)(5) 1,554,834 Cost of sales 299,267 238,378 14,664(6) 552,309 Research and development costs 120,359 184,494 6,418(6) 311,271 Marketing expenses 460,680 401,595 11,006(6) General and administrative expenses - - 521,594(7) 1,394,875 ------------ ------------ ------------ -------------- Total operating expenses 1,121,546 2,219,743 472,000 3,813,289 ------------ ------------ ------------ -------------- Loss before other income (expenses) (987,518) (19,746) (472,000) (1,479,264) ------------ ------------ ------------ -------------- Other income (expense) Interest expenses (208,717) (27,625) 12,021(5) (224,321) Interest income 1,318 2,491 - 3,809 Gain on sale of equipment 2,585 - - 2,585 ------------ ------------ ------------ -------------- (204,814) (25,134) (12,021) (217,927) ------------ ------------ ------------ -------------- Net loss ($1,192,332) ($ 44,880) ($ 459,979) ($1,697,191) ============ ============ ============ ============= Loss per share ($.10) ====== Weighted average number of shares outstanding 16,476,769 ==========
The accompanying notes to pro forma consolidated financial statements are an integral part of this statement. 52 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1995 (Unaudited) (1) Represents the acquisition of the net assets of InfoPak, Inc. on September 12, 1995, the issuance of 500,000 shares of Series P Convertible Preferred Stock and the recording of Goodwill resulting from the excess purchase price over the value of the net assets acquired. (2) Represents the issuance of 17,500 shares of Series P Convertible Preferred Stock in connection with employment and consulting contract signing bonuses to certain employees and a consultant to InfoPak, Inc. (3) Represents the issuance of 34,681 shares of Series P Convertible Preferred Stock in connection with the cancellation of debt and related accrued interest due to certain shareholders of InfoPak, Inc. (4) Represents legal fees in connection with the merger agreement dated September 6, 1995. (5) Represents the elimination of royalty fees and interest expense which would not be incurred by the Company to operate InfoPak, Inc. (6) Represents the amortization of the deferred compensation expense (signing bonuses) over the three year term of the employment contracts, and two year term of the consulting contract. (7) Represents amortization of Goodwill over a period of five years. (8) Represents the pro forma results of operations of InfoPak, Inc. for 12 monthly periods from July 1, 1994 through June 30, 1995. 53 [FRONT SIDE OF PROXY CARD] P R DIMENSIONAL VISIONS GROUP, LTD. O X PROXY SOLICITED BY THE BOARD OF DIRECTORS Y SPECIAL MEETING OF STOCKHOLDERS - DECEMBER 8, 1995 The undersigned stockholder of Dimensional Visions Group, Ltd. (the "Company"), revoking all previous proxies, hereby appoints Steven M. Peck and George S. Smith and each of them acting individually, as the attorney and proxy of the undersigned, with full power of substitution and resubstitution, to vote all shares of the Company's voting stock which the undersigned would be entitled to vote if personally present at the Special Meeting of Stockholders of the Company, to be held at 9:00 a.m., (Local Time), at the Company's principal executive offices located at 718 Arch Street, Suite 202N, Philadelphia, Pennsylvania 19106 on December 8, 1995, and at any adjournment or postponement thereof. Said proxies are authorized and directed to vote as indicated with respect to the following matters: 1. To consider and vote upon a proposal to _ FOR amend the Company's Certificate of Incorporation to authorize additional _ AGAINST shares of common stock and preferred stock of the Company. _ ABSTAIN 2. To amend the Certificate of Incorporation _ FOR to change the name of the Company to "Dimensional Group, Inc." _ AGAINST _ ABSTAIN 3. To transact such other business as may properly come before this meeting. 54 [BACK SIDE OF PROXY CARD] This Proxy is solicited on behalf of the Board of Directors. Unless otherwise specified, the shares will be voted FOR the authorization of additional shares of common stock and preferred stock of the Company, FOR the proposal to change the Company's name, in each case as described in the accompanying Proxy Statement. This Proxy also delegates discretionary authority to vote with respect to any other business which may properly come before the meeting or any adjournment or postponement thereof. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE SPECIAL MEETING OF THE STOCKHOLDERS OF DIMENSIONAL VISIONS GROUP, LTD. TO BE HELD DECEMBER 8, 1995. Dated:_________________________, 1995 _____________________________________ Signature of Stockholder _____________________________________ Signature of Stockholder NOTE: Please sign this Proxy exactly as name(s) appear in address. When signing as attorney-in-fact, executor, administrator, trustee or guardian, please add your title as such. If stockholder is a corporation, please sign with full corporate name by duly authorized officer or officers and affix the corporate seal. When stock is held in the name of two or more persons, all such persons should sign. PLEASE, SIGN, DATE AND RETURN THIS PROXY. IN THE ENCLOSED POSTAGE-PAID ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----