-----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, J3mR3ALFfWcWgofDA2bNiGOlv/mHdURMGplC7lDut0X4Et5xFVsDh/bHOo1hY657 jG9uK1PhCbUKMdXIEBLWWw== 0000950116-96-001096.txt : 19961016 0000950116-96-001096.hdr.sgml : 19961016 ACCESSION NUMBER: 0000950116-96-001096 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19961015 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIMENSIONAL VISIONS GROUP LTD CENTRAL INDEX KEY: 0000836809 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 232517953 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-10196 FILM NUMBER: 96643185 BUSINESS ADDRESS: STREET 1: 8855 N. BLACK CANYON HWY STREET 2: STE 2000 CITY: PHOENIX STATE: AZ ZIP: 85021 BUSINESS PHONE: 6029971990 MAIL ADDRESS: STREET 1: 8855 N. BLACK CANYON HWY STREET 2: STE 2000 CITY: PHOENIX STATE: AZ ZIP: 85021 10KSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ___________________ Commission file number 1-10196 DIMENSIONAL VISIONS GROUP, LTD. ------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 23-2517953 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 8855 N. Black Canyon Hwy., Suite 2000 85021 Phoenix, Arizona (Zip Code) (Address of Principal Executive Offices) Registrant's telephone number, including area code: (602) 997-1990 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained herein, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. Yes No X --- --- For the fiscal year ended June 30, 1996, the Company's revenues were $1,083,897. As of September,30, 1996, the number of shares of Common Stock outstanding was 30,463,013. The aggregate market value of the Company's Common Stock held by non-affiliates of the registrant as of September 30, 1996, was approximately $5,081,988 (based upon 26,747,303 shares at $.19 per share). DOCUMENTS INCORPORATED BY REFERENCE: NONE Certain exhibits are incorporated by reference to the Company's Registration Statements on Form S-1 and Form S-8, Form 10-KSB and Form 8-K as listed in response to Item 13(a)(3) of Part III. (2) PART I ITEM 1. BUSINESS The Company Dimensional Visions Group, Ltd. ("DVG") was organized in 1988. DVG produces and markets lithographically printed stereoscopic prints commonly referred to as three-dimensional prints as well as lithographically printed animation which the Company has termed Animotion(TM). The stereoscopic prints may be viewed without the use of special glasses or other viewing apparatus. DVG has been issued a trademark for its three-dimensional products as the DV3D(R) image and has applied for a trademark for the Animotion(TM) name. The DV3D(R) and Animotion(TM) product lines are determined by the technical specifications of the polymer based lenticular material on which the image is printed. The print products may be produced in varying sizes for specified customer applications. The current DV3D(R) print product is designed for hand-held viewing. On September 12, 1995, DVG, through a wholly-owned subsidiary, acquired all the outstanding capital stock of InfoPak, Inc. ("InfoPak"). InfoPak, located in Phoenix, Arizona, manufactures and markets hardware and software information and audio playback systems and method products and programs. References herein to the "Company" includes DVG and its wholly-owned subsidiaries. InfoPak was founded in 1992. InfoPak has developed a system that allows those that use large and cumbersome printed dated material an electronic alternative which is easier to use. The InfoPak Information System (the "System") was designed to manage voluminous databases that change often and to distribute information to remote locations where the System utilizes standard telephone lines and personal computers to distribute the information. Information is stored on an InfoCard(TM) and displayed by a hand-held InfoReader(TM). The System has been designed to provide the owners and publishers of the information many levels of security to ensure that piracy and unauthorized use does not occur. In essence, InfoPak distributes data electronically then repackages directories onto InfoCards(TM) to be used in InfoReaders(TM). In many cases, InfoPak provides key business information to the end user in just a few seconds when, historically, that process took days or even weeks. All of InfoPak's programming and hardware design is accomplished by the Company while its hardware, including both the InfoReader(TM) and InfoCard(TM), are manufactured via turnkey agreements and strategic alliances by outside vendors. InfoPak currently produces and markets the System to the residential real estate agent marketplace as the InfoPak Portable MLS and to the automotive industry as an electronic automotive pricing guidebook which has been named AutoPak(TM). The Portable MLS application is sold to realtors as an option to the printed Multiple Listing Service Directory and the automotive application is sold to auto dealers, auto brokers and banks as an electronic alternative to the printed Kelley Blue Book automotive pricing guide. The InfoCard(TM) stores the data and the operating program for each of these respective applications for portable access via the InfoReader(TM). The Company has been dependent upon the proceeds of the sale of its securities, loans, and revenues from operations which include proceeds from the sale of DV3D(R) print products, InfoReader's and monthly licensing revenue for InfoPak Systems, to conduct its business. There can be no assurance that the Company will generate sufficient revenues from the sale of its products and services necessary to maintain its cost structure or achieve profitability. (3) Marketing DVG is marketing commercial and promotional applications of its DV3D(R) print products to all users of graphic arts. Some of the applications of DV3D(R) print products are packaging, book and magazine covers and inserts, CD covers, trading cards, games, and greeting cards. Other proposed markets include point-of-sale materials and displays, direct mail, specialty advertising, premium incentives, trade show exhibits, and special events promotion. DVG uses its own employees and independent sales agents in marketing its products. The independent sales agents are paid on a commission basis for orders shipped, accepted and for which payment has been received. DVG also sells its products to independent marketing organizations. During fiscal year 1995, DVG entered into exclusive sales and marketing agreements with independent sales and marketing organizations. During the last fiscal year, the Company sold principally through one sales and marketing organization and is now selling to a variety of customers through its own internal sales and marketing organization as well as a number of independent sales organizations. DVG, during the first quarter of fiscal 1997, shipped 50,000 three dimensional images to a major credit card service company and currently has other purchase orders including an order for 50,000 Animotion(TM) images with a large toy distributor which the Company believes will ultimately be expanded to a 520,000 image order as well as an agreement in principal for 1,000,000 images for a series of NHL and NBA DV3D(R) images. To date, InfoPak has grown its business primarily through the use of outside distributors. The objective has been to develop a wide-spread distribution network in order to establish broad based customer acceptance in real estate as well as other markets. Using this method of marketing, operations have been established in over sixty cities in the United States and Canada for the MLS product. Expansion has been steady and is expected to continue during the foreseeable future. Presently, each distributor under contract with InfoPak receives a specific marketing territory that may cover anywhere from one city to many cities. Territories are granted based upon the distributor's financial strength, real estate industry experience, performance goals, and initial purchase commitments. The distributor maintains rights to operate in its assigned territory as long as it meets the performance benchmarks outlined in its distribution agreement with InfoPak. Although these benchmarks vary from one distributor to another, they normally encompass inventory purchase requirements which is one of InfoPak's sources of revenue. InfoPak's current revenues are primarily generated in two ways: 1) through the sale of new Portable MLS InfoReaders(TM) to the distributor and 2) through ongoing licensing revenue collected from the distributor for each InfoPak Portable MLS InfoReader(TM) in operation. The licensing fee is assessed for ongoing MLS data delivery, system support, and system maintenance, and normally begins the thirteenth month following activation of an InfoReader(TM). Distributors, in turn, either lease or sell the InfoReaders(TM) to the end customer (normally realtors), collecting monthly licensing fees for ongoing support in all cases. A portion ($6.00 to $8.33) of that fee, per month per InfoReader(TM) in use, is monthly revenue to InfoPak. Beginning in January of 1997, InfoPak will begin collecting monthly licensing revenue on the majority of InfoPak's existing customer base who currently use the Portable MLS. Expansion of the customer base for the Portable MLS has been steady and is expected to continue to grow during the foreseeable future as a result of an expanding and more decentralized distributor base that are highly motivated and customer service oriented. InfoPak recently successfully completed a market test of its electronic automotive pricing guidebook, referred to as the AutoPak(TM), which was conducted in conjunction with Kelley Blue Book. Based on the successful completion of the test, InfoPak expects shortly to conclude a national agreement with Kelley Blue Book allowing for expansion from the Phoenix Arizona Metropolitan Area, where the initial test was conducted, to the majority of the Kelley Blue Book market areas. Inasmuch as the AutoPak(TM) product (4) uses the same InfoReader(TM) hardware as the Portable MLS, InfoPak will generate additional revenue from hardware sales as well as ongoing fees assessed per bi-monthly update of Kelley Blue Book data. Additionally, InfoPak is currently working to further expand the AutoPak(TM) product to include other major suppliers of automotive pricing data, over the next six to twelve months. Production DVG controls or supervises all phases of the production of the Company's DV3D(R) print products from the stereoscopic and/or animation photography and proprietary image compositing through the color separation and printing. There are four basic phases of the manufacturing process, the multiple image stereoscopic and/or animation photography, the multiple image compositing of the DV3D(R) image to create a master transparency, the color separation of the master transparency and the printing of the separated image on polymer based lenticular material. Lenticular material is a plastic optical material that allows the three-dimensional and/or animation image to be viewed without the use of any viewing apparatus such as glasses, hoods, etc. The process involves, in part, the taking and then compositing of numerous photographs of a subject in order to create a single stereoscopic and/or animation master image. The technology involves a computer controlled camera mounted on a micropositioning 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 a clean room/photo laboratory to create a single stereoscopic and/or animation master transparency. The present stereoscopic photographic system used by the Company can only produce an image of stationary objects. The DV3D(R) image is then sent to a commercial separator and printer where the master image, with the use of the Company's proprietary methods and knowledge, is separated and, through the lithographic process, printed on a polymer based lenticular material which focuses the multi-dimensional images. The Company produces the multi-image, stereoscopic and/or animation photography and compositing of the DV3D(R) image for the master transparency at its facilities in Philadelphia, Pennsylvania. Proprietary color separation and printing are done under the supervision of the Company with third-party vendors. The polymer based lenticular material on which the DV3D(R) image is printed is supplied by producers in the petrochemical and plastic fabricating industries. The DV3D(R) image is printed on the polymer based lenticular material by commercial lithographic printing processes. In the printer's pre-press preparation stage, state-of-the-art computerized photo equipment is necessary because production specifications for the DV3D(R) image require ultraaccurate tolerances. The Company has established working arrangements with third-party separators and a printer on a per order basis. InfoPak's products are manufactured by a third party pursuant to a Turnkey Agreement with Elamex, S.A. de C.V. The Turnkey Agreement provides for the manufacture of the portable InfoReader(TM) products whereby creditworthy purchase orders are placed directly through InfoPak with Elamex. Receivables are assigned to a lockbox and upon receipt are distributed in accordance with the costs of goods as agreed upon between InfoPak and Elamex. Patents, Trademarks and Proprietary Protection In November 1988 concurrent with the initial public offering of its securities, the Company was assigned the rights to a patent, "Method and Apparatus For Stereoscopic Photography." However, because applications were not filed on a timely basis in other countries, except Canada, prior to the patent being issued and before the Company's acquisition of the patent rights, patent applications cannot be filed in any other country. The patent covers a method and apparatus for taking three-dimensional pictures of an object in which a plurality of cameras are used, or a single camera is operated sequentially, on a side by (5) side basis to take a plurality of separate pictures of the same object. In September of 1990, the Company was issued an additional patent, Electronic (digitalized) Method and Apparatus For Stereoscopic Photography", which can be used on the Company's photographic process. In February 1993, certain officers of InfoPak sold and assigned technology as set forth in a patent application "System and Method for Providing Data and Program Code to a Card for Use by a Reader" to InfoPak. In August 1993, certain officers of InfoPak sold and assigned certain technology as set forth in a patent application "System and Method for Credit Card Verification System" to InfoPak. In September 1996, certain officers of InfoPak assigned certain technology as set forth in both of the following patent applications "Audio System for a Toy" and "Audio and Visual Collector Card System" to InfoPak. InfoPak also has a patent application "Electronic Telephone Directory with Interchangeable Listings". All patent applications are pending before the United States Patent and Trademark office. The Company enters into confidentiality agreements with all persons and entities who or which may have access to its technology. However, no assurance can be given that such agreements, the patents or any additional patents which may be issued to the Company will prevent third parties from developing similar or competitive technology. There can be no assurance that the patents will provide the Company with any significant competitive advantages, or that challenges will not be instituted against the validity or enforceability of its patents, or if instituted that any such challenges will not be successful. The cost of litigation to uphold the validity and prevent infringement can be substantial. In addition, no assurance can be given that the Company will have sufficient resources to either institute or defend any action, suit or other proceeding by or against the Company with respect to any claimed infringement of patent or other proprietary rights. In the event that the Company should lose, in the near future, the protection afforded by the patents and any future patents, such event could have a material adverse effect on the Company's operations. Furthermore, there can be no assurance that the Company's technologies will not infringe patents or other rights owned by others, licenses to which may not be available to the Company. The Company has registered the DV3D(R) trademark and has recently applied to register the Animotion(TM) mark with the United States Patent and Trademark office. Competition Other processes currently are available which allow a viewer to perceive an image in three-dimension, including those which employ stereoglasses and viewing hoods and other processes, such as holograms and other three-dimensional image systems, which do not require the use of viewing apparatus. The Company is aware of at least three companies which manufacture equipment capable of producing traditional three-dimensional images for commercial or consumer use, all of which have substantially greater financial and other resources than the Company. Various systems exist for taking traditional three-dimensional photographs, including a system providing for the taking of two pictures from different angles using filters, requiring glasses for viewing and the use of a plurality of cameras spaced side by side or in an arc around the subject. Holographic and other stereoscopic techniques, when perfected, may result in three-dimensional images which will be directly competitive with the Company's products. Further, the Company's products are substantially more expensive than conventional, high quality, two-dimensional prints and for this reason, high quality, conventional processes and methods may be favored for many, if not most, illustration and advertising contexts. Certain of the Company's competitors, who may have substantially greater financial and organizational resources than the Company have developed three--dimensional processes, such as Optigraphics, Inc., and National Graphics, which compete with the Company's products. Management of InfoPak believe that no other product competes directly with the InfoPak Portable MLS or the AutoPak(TM) because of the single application function and low cost provided to its subscribers. However, many companies with far greater resources than InfoPak offer palm-top and lap-top computers (6) for use with Multiple Listing Service Systems. No assurance can be given that such other companies may not redesign their products specifically for the real estate niche market that InfoPak sells its Portable MLS. Employees The Company has 14 employees. DVG employs 5 persons, 1 of whom is an executive officer. InfoPak employs 9 persons, 8 of whom work full time, and 1 of whom is an executive officer. (7) Consolidated Selected Financial Data Set forth below is selected financial data derived from the Company's consolidated financial statements, some of which appear elsewhere in this report. This data should be read in conjunction with the consolidated financial statements, some of which are included elsewhere in this report.
========================================================================================================================== Year Ended Year Ended Year Ended Year Ended Year Ended June 30, 1996 June 30, 1995 June 30, 1994 June 30, 1993 June 30, 1992 - -------------------------------------------------------------------------------------------------------------------------- Operation revenue $1,083,897 $134,028 $ -0- $ -0- $ 166,385 - -------------------------------------------------------------------------------------------------------------------------- Net Loss ($2,035,647) ($1,192,332) ($1,069,642) ($1,327,258) ($4,033,997) - -------------------------------------------------------------------------------------------------------------------------- Net Loss per share of common stock ($.12) ($.07) ($.07) ($.10) ($.39) - -------------------------------------------------------------------------------------------------------------------------- Balance Sheet Data: - -------------------------------------------------------------------------------------------------------------------------- Working Capital (deficit) $9,528 ($138,013) ($85,149) ($305,014) ($297,463) - -------------------------------------------------------------------------------------------------------------------------- Total Assets $1,408,919 $451,237 $449,725 $636,133 $2,870,149 - -------------------------------------------------------------------------------------------------------------------------- Total Liabilities $673,058 $2,502,230 $1,464,861 $692,027 $2,273,631 - -------------------------------------------------------------------------------------------------------------------------- Stockholders' equity (deficiency) $735,861 ($2,050,993) ($1,015.136) ($55,894) $596,518 ==========================================================================================================================
ITEM 2. DESCRIPTION OF PROPERTY DVG leases approximately 5,485 rentable square feet, for its marketing and technical operations in Philadelphia, PA. The term of the lease, which has early termination provisions, is five years, expiring on February 28, 1999. The annual fixed rent of $23,595 for the first year, $58,963 in year two, $60,335 in year three, $61,706 in year four and $63,077 in the fifth year. InfoPak rents approximately 1,800 square feet of office space in Phoenix, Arizona. The monthly rent is $1,227 on a month to month basis which includes electricity. The Company is planning to consolidate the Philadelphia and Phoenix offices, in Phoenix, which will necessitate larger quarters in Phoenix. The consolidation will, however, reduce the overall rent and related expenses currently being paid by the Company. ITEM 3. LEGAL PROCEEDINGS. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of security holders during the fourth fiscal quarter of 1996. (8) PART II ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The principal market for the Company's Common Stock is the National Association of Securities Dealers, Inc. over-the-counter market, on the Electronic Bulletin Board. The trading symbol for the Common Stock is "DVGL.U". Set forth below are the high and low bid prices for the Company's Common Stock by the Company's fiscal quarters beginning July 1, 1995 as quoted by the National Quotation Bureau. The prices represent prices between dealers, do not include retail mark-ups, mark-downs or commissions and may not represent actual transactions. Fiscal 1995 High Low ----------- ----- ---- First Quarter $ .41 $ .19 Second Quarter $ .47 $ .22 Third Quarter $ .44 $ .19 Fourth Quarter $ .75 $ .19 Fiscal 1996 ----------- First Quarter $2.76 $ .75 Second Quarter $1.87 $ .50 Third Quarter $1.00 $ .32 Fourth Quarter $ .75 $ .20 Fiscal 1997 ----------- First Quarter $ .32 $ .11 Holders As of September 30, 1996, the number of stockholders of record was 384, not including beneficial owners whose shares are held by banks, brokers and other nominees. The Company estimates that it has approximately 4000 stockholders in total. Dividends The company has paid no dividends since its inception and does not anticipate or contemplate paying cash dividends in the foreseeable future. Pursuant to the terms of the Company's Series A Convertible Preferred Stock, a 5% annual dividend is due and owing. Pursuant to the terms of the Company's Series B Convertible Preferred Stock, a 8% annual dividend is due and owing. As of June 30, 1996, the Company has not declared dividends on preferred stock. The unpaid cumulative dividends totaled approximately $245,800. See Note 10 of Notes to Consolidated Financial Statements. (9) ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Fiscal Years 1994 and 1995 Liquidity and Capital Resources As of June 30, 1995, the Company had a working capital deficiency of $138,013, compared with a working capital deficiency of $85,149 in 1994. During the period ended June 30, 1995, the Company raised $757,000 through the sale of its promissory notes in private placements and approximately $39,000 through the exercise of warrants. The Company's selling and marketing efforts had been limited until adequate funding was obtained. During the period the Company was taking selected orders based upon availability of inventory used in the production process. On April 25, 1995, substantially all of the long term note holders agreed to defer all interest payments on the notes until the notes mature beginning in fiscal year 1997, or upon the consummation of long term financing and/or strategic partner relationship, to convert the notes and accrued interest into 8% Series B Convertible Preferred stock through the exercise of the Series B Redeemable Warrants. Results of Operation During the fiscal year ended June 30, 1995, the Company began limited production. The net loss for the period was $1,192,332 compared with a net loss of $1,069,642 for the fiscal year ended June 30, 1994. For the period the Company paid consulting fees and expenses of approximately $235,000 which were not related to research and development and consulting fees of approximately $137,720 relating to research and development. Salaries totaled approximately $243,000 during the period. Other expenses during the period included outside production costs consisting of plastic, printing and separating of approximately $117,000, travel and related expenses of approximately $62,000 and approximately $72,000 for office rent and utilities expenses. Professional fees for the period were approximately $46,000. Interest expense for the period totaled approximately $208,700 which includes $141,200 of accrued interest and $67,500 of additional interest relating to the issuance of warrants. Revenues for the period were approximately $135,000. Operational funding needed to fully commence operations, i.e., purchase additional inventory and equipments offer a variety of DV3D(TM) products, hire additional personnel and maintain good working relationships with third party vendors was not obtained until after the period. The Company's independent auditors report contains an explanatory paragraph regarding the ability of the Company to continue as a going concern. Fiscal Years 1995 and 1996 Liquidity and Capital Resources As of June 30, 1996, the Company had working capital of $9,528 compared with a working capital deficiency of ($138,013) as of June 30, 1995. During the period ended June 30, 1996, the Company raised a total of $1,425,000 through the sale of its equity securities and debt in various offshore transactions and a private placement. Holders of such debt financing representing $425,000 converted their debt into shares of Common Stock during the period. Also during the period ended June 30, 1996, holders of $1,907,000 in principal amount of secured notes converted such notes into 190,700 shares of the Company's 8% Series B (10) Convertible Preferred Stock. Interest on such secured notes totaling $262,750 was converted into 26,275 shares of the Company's Series C Convertible Preferred Stock. The Company expects to receive approximately $250,000 to $300,000 during fiscal year 1997 from monthly licensing fees for the InfoPak Portable MLS product. As of September 30, 1996, InfoPak has billed $42,962 of this amount and will continue to invoice its distributors on a monthly basis. The majority of the fees will begin in January 1997 pursuant to existing distribution agreements. The actual amount of such fees will be determined by the number of MLS InfoReaders in service during the year. As of June 30, 1996, the Company's financial position was precarious. The Company needed additional funding in order to maintain current operations and extend its product lines. The Company is still not to the point of generating sufficient revenues from operations to cover its cost structure. The Company has been funding its operations by selling its securities in private placements, offshore transactions, short-term borrowing, accruing compensation to certain employees, and sale of its products. The Company continues to discuss with outside shareholders and other third parties the raising of additional funds. The amount of third party funding, depends to some extent on the Company's revenues and cash flow from operations. Since June 30, 1996, the Company has raised $619,000 through private placement of its securities. No assurance can be given that the Company will be able to obtain additional funds in the long term necessary to maintain its existing operations. In the event the Company is not able to secure sufficient funds in a timely basis necessary to maintain its current operations, it may cease all or part of its existing operations. The Company's independent auditors report contains an explanatory paragraph regarding the ability of the Company to continue as a going concern. Results of Operations The net loss for the period ending June 30, 1996 was $2,035,647 compared with a net loss of $1,192,332 for the period ended June 30, 1995. The increase in the loss was caused primarily by an increase in compensation expenses such as consulting fees, professional fees and salaries. The Company also incurred a bad debt expense of $213,522 as explained below. The Company's cost of producing its DV3D(R) print products continued to be high during the period resulting in marginal gross profits for this product. Subsequently, the Company, through arrangements with new suppliers and negotiations with existing suppliers, has been able to substantially reduce the cost of producing its DV3D(R) print products with a resultant increase in its gross operating margins. Revenues for the period ended June 30, 1996 were $1,083,897 compared to revenues of approximately $134,028 for the fiscal year ended June 30, 1995. The increase in revenues was the result of the Company commencing operations for its DV3D(R) print products and the Company's acquisition of InfoPak in September 1995. Revenues for InfoPak for the period were $522,837. Approximately 81% of such revenues were derived from two customers, one of which accounted for approximately 64%. During the period InfoPak encountered difficulties with its distribution program which resulted in much lower sales than projected which has since been resolved by changing the distributor base. During the period ended June 30, 1996, the Company's DV3D(R) print products were sold principally through one independent sales and marketing organization. In April 1996, the Company delivered an order to such organization but has not received any payment for it. The Company has filed a lawsuit to seek payment for the order. The amount of the order was $213,522. While the Company believes that the merits of the lawsuit are very good it has taken a bad debt allowance for the amount of the order because of its concerns about the collectibility of any reward. The Company has ceased doing business with this organization and has increased its own internal marketing organization as well as broadened its base of outside sales and marketing representatives. (11) The Company expects to incur operating losses through the quarter ending December 31, 1996. However, the Company has implemented a program for reducing its operating expenses and controlling its internal costs. The Company has consolidated its corporate offices in Phoenix, Arizona, and anticipates that the production facilities will also be consolidated in Phoenix by the end of the second fiscal quarter. It has placed its various engineering functions under a single engineering officer and its administrative and operations functions under a single administrative officer. The Company has also decreased its use in consultants and sought to lower its professional fees and other non-operating expenses. The Company continues to reduce its outside production costs for its DV3D(R) print products. The Company has introduced two new products, the Animotion(TM) print product and the AutoPak(TM) electronic automotive pricing guidebook product. The Company continues to rely on third party vendors for the production of its products and any disruption could have a material adverse effect on the Company's operations. Events Subsequent to June 30, 1996 The Company sold, through a private placement, 1,190,000 shares of the Company's common stock (restricted shares) during August and September for $119,000 ($.10 per share). During September and October, 1996, the Company received $500,000 from the sale of its securities, $350,000 from the sale of common stock at $.14 per share and $150,000 from the sale of a convertible debenture with a maximum conversion price of $.15 per share. ITEM 7. FINANCIAL STATEMENTS The consolidated financial statements required to be filed pursuant to this Item 7 begins on page F-1 of this report. Such consolidated financial statements are hereby incorporated by reference into this Item 7. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Non applicable. (12) PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT The directors and executive officers of the Company are as follows:
Name Age Position ---- --- -------- George S. Smith (1) 62 Director, Chairman of the Board of Directors, President and Chief Executive Officer and Chief Financial Officer Sean F. Lee (1) 56 Director, Chief Operating Officer and Executive Vice President of Dimensional Visions Group, Ltd., and President of InfoPak, Inc. Steven L. Flint, Ph.D. (2)(3)(4) 46 Director Hans J. Kaemmlein (2)(3)(4) 51 Director Robert A. Smith 52 Director Thomas A. Cadez (4) 31 Director
- -------------------- (1) Member of the Executive Committee (2) Member of the Audit Committee (3) Member of the Compensation Committee (4) Member of the Nominating Committee Mr. George S. Smith was appointed Chairman of the Board in April 1992. From April 1992 until September 12, 1995, Mr. Smith served as the Chief Executive Officer of DVG. Mr Smith was reappointed Chief Executive Officer in June 1996. From 1980 to 1988, Mr. Smith was a Senior Vice-President at Drexel Burnham Lambert. From 1988 to 1990 he was a senior Vice President at Shearson Leahman Brothers. From September 1990 until April 1992, Mr. Smith was on sabbatical for corrective back surgery. Mr. Smith is an honors graduate in economics with a minor in engineering from San Jose State University. Mr. Lee was appointed a Director in September 1995. Mr. Lee has served as InfoPak's President since January 1992. In April 1994, Mr. Lee co-founded and became Chairman of the Board of Directors of Auto X-ray, Inc., a privately held company (diagnostic system for American automobiles). From September 1988 until December 1991, Mr. Lee served as a director, Chief Executive officer and President of Builder's Express, a publicly held company based in San Antonio, Texas which filed for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code in 1991. Dr. Flint was appointed as a Director in June 1996. Dr. Flint is a Senior Vice President, Chief Financial Officer and member of the Board of Directors of The Alexander Group, Inc., a national marketing and sales consulting firm whose clients are typically Fortune 1000 companies. Dr. Flint has been employed with The Alexander Group, Inc. since 1991. Additionally, Dr. Flint holds a Ph.D. in finance from the graduate school (13) of business at Stanford University, has previously held the position of Chief Financial Officer and Board member of a high tech firm and has been a professor of finance. Dr. Flint is currently engaged in a number of volunteer and service organizations including sitting on the Board of The Arizona Shakespeare Festival. Mr. Kaemmlein was appointed as a Director in June of 1996. Mr. Kaemmlein is the Chairman, President and Chief Executive Officer of Advanced Media which specializes in the development and marketing of interactive multimedia solutions and technologies. Mr. Kaemmlein has held these positions since 1993. Previously, Mr. Kaemmlein spent over 25 years as an executive with Mercedes Benz and more recently has served as a management consultant and venture capitalist for several start-up and public companies. Mr. Kaemmlein completed his business management education in Europe. Mr. Robert A. Smith was appointed as a Director in July of 1996. Mr. Smith was formerly the President and Chief Executive Officer of CareerCom Corporation where he served in executive positions over a ten year period of time from 1982 to 1992. From 1992 to present Mr. Smith has been a private investor and owner of a private educational institution. He is a graduate of the University of Georgia with a degree in business Administration and Economics. Mr. Cadez was appointed as a Director in July of 1996. Mr. Cadez is the President and Chief Executive Officer of Spectrum Media, Inc., which is a media planning and strategic marketing firm that provides services to national retail advertisers and is based in Long Beach, California with offices in San Francisco and Dallas. Mr. Cadez has served as President and Chief Executive Officer of Spectrum Media since 1991 with several years of prior executive marketing and management experience with Media Marketing Network and Celestial Products. Directors serve until the next annual meeting or until their successors are qualified and elected. Officers serve at the discretion of the Board of Directors. Directors are not paid a fee for their services but are reimbursed for their reasonable expenses for attending meetings of the Board and its committees. Each outside Director is eligible to receive a total of 100,000 common stock purchase warrants. The Warrants vest at the rate of 25,000 warrants per quarter and expire three (3) years after the date of grant. The exercise price is $.31 per warrant. The Delaware General Corporation Law permits a corporation through its Certificate of Incorporation to eliminate or limit its directors' personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duty as directors with certain exceptions. The exceptions include a breach of the director's duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, improper declarations of dividend, and transactions from which the directors derived an improper personal benefit. The Company's Certificate of Incorporation limits its directors' liability to the extent permitted by this statutory provision. The limitation of liability provision does not eliminate a stockholder's right to seek non-monetary, equitable remedies such as injunction or rescission to redress an action taken by directors. However, as a practical matter, equitable remedies may not be available in all situations and there may be instances in which no effective remedy is available. Compliance with Section 16(a) of the Exchange Act Section 16(a) of the Securities Exchange Act of 1934, as amended, requires directors and certain officers of the Company, as well as persons who own more than 10% of a registered class of the Company's equity securities ("Reporting Persons") to file reports of ownership and changes in ownership of Forms 3, 4 and 5 with the Securities and Exchange Commission. The Company believes that all Reporting Persons have complied on a timely basis with all filing requirements applicable to them. (14) ITEM 10. EXECUTIVE COMPENSATION Summary Compensation Table The following table sets forth the total compensation earned by or paid to the named executive officers by the Company for the fiscal year ended June 30, 1996.
============================================================================================================================ LONG TERM COMPENSATION - ---------------------------------------------------------------------------------------------------------------------------- ANNUAL COMPENSATION Awards Payouts - ---------------------------------------------------------------------------------------------------------------------------- Securities Other Annual Restricted Underlying LTIP All Other Compensation Stock Awards Options/SARs Payouts Compensa- Year Salary ($) Bonus ($) ($) ($) (#) ($) tion ($) - ---------------------------------------------------------------------------------------------------------------------------- Steven M. Peck 1996 $93,885 $0 $0 $0 1,000,000 $0 $0 (Former CEO) George S. Smith(1) 1996 $19,200 $0 $0 $0 -- $0 $0 CEO ============================================================================================================================
========================================================================================================================== OPTIONS/SAR GRANTS IN THE FISCAL YEAR 1996 - -------------------------------------------------------------------------------------------------------------------------- INDIVIDUAL GRANTS - -------------------------------------------------------------------------------------------------------------------------- Number of % of Total Securities Options/SARs Underlying Granted to Option/SARs Employees in Exercise or Base Expiration Name Year Granted (#) Fiscal Year Price ($/Share) Date - -------------------------------------------------------------------------------------------------------------------------- Steven M. Peck 1996 1,000,000 100% $.25 September, (Former CEO) 2000 George S. Smith 1996 0 0% $0 -- CEO ==========================================================================================================================
1. Excludes $9,349 of travel and living expenses and $47,619 of consulting fees paid to Mr. Smith for work he completed as a consultant prior to being re-appointed Chief Executive Officer on June 15, 1996. (15)
================================================================================================================= AGGREGATED OPTIONS/SAR EXERCISES IN THE FISCAL YEAR 1996 AND FY-END OPTION/SAR VALUES - ----------------------------------------------------------------------------------------------------------------- Number of Securities Shares Underlying Exercised Value of Acquired on Options/ SARs at FY-End Unexercised In- Exercise (#) (#) the-Money Value Exercisable/ Unexercisable Options/SARs at Name Year Realized FY-End ($) - ----------------------------------------------------------------------------------------------------------------- Steven M. Peck 1996 ____ 0 1,000,000 (E) $50,000 (Former CEO) George S. Smith 1996 ____ 0 2,669,840 (E)/O(U) $340,000 CEO =================================================================================================================
(16) 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 September 30, 1996 and their percentage ownership of Common Stock and their percentage voting power.
==================================================================================================================== Name and Address of Beneficial Owners Amount and Nature of Percent Beneficial Ownership(1) Ownership - -------------------------------------------------------------------------------------------------------------------- George S. Smith (2) 6,228,550 18.02 3130 Alexis Drive Palo Alto, CA 94304 - -------------------------------------------------------------------------------------------------------------------- H. Thomas Ferstl (3) 3,610,000 10.92 8761 State Street Millington, MI 48746 - -------------------------------------------------------------------------------------------------------------------- Avonwood Capital Corporation (4) 2,200,080 6.83 3 Radnor Corporation Center, Suite 400 Radnor, PA 19087 - -------------------------------------------------------------------------------------------------------------------- Sean F. Lee (5) 1,482,160 4.83 InfoPak, Inc. 8855 N. Black Canyon Highway, Suite 2000 Phoenix, AZ 85021 - -------------------------------------------------------------------------------------------------------------------- John Arrillaga (6) 1,750,000 5.48 1950 Cowper Street Palo Alto, CA 93401 - -------------------------------------------------------------------------------------------------------------------- Richard Peery (7) 1,750,000 5.48 2200 Cowper Street Palo Alto, CA 94301 - -------------------------------------------------------------------------------------------------------------------- James B. Salmon (8) 1,810,000 5.72 1525 Lakesite Drive Birmingham, AL 35235 - -------------------------------------------------------------------------------------------------------------------- Hans J. Kaemmlein (9) 1,700,000 5.29 80 Orville Drive Bohemia, NY 11716 - -------------------------------------------------------------------------------------------------------------------- Alejandro and Lida Zaffaroni (10) 1,469,999 4.64 4005 Miranda Avenue, Suite 180 Palo Alto, CA 94304 - -------------------------------------------------------------------------------------------------------------------- All executive officers and directors as a group (6 persons) (11) 3,715,710 12.20 ====================================================================================================================
(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, owns 2,128,550 shares of the Company's Common Stock. Also included in the amount are common stock purchase warrants to purchase 2,600,000 shares of the Company's Common Stock and 15,000 shares of the Company's Second Series B Convertible Preferred 8% Stock which is convertible into 1,500,000 shares of the Company's Common Stock. (3) Mr. Ferstl owns common stock purchase warrants to purchase 1,010,000 shares of the Company's Common Stock and 26,000 shares of the Company's Second Series B Convertible Preferred 8% Stock which is the convertible into 2,600,000 shares of the Company's Common Stock. (4) Avonwood Capital Corporation owns 450,080 shares of the Company's Common Stock. Also included in the amount are common stock purchase warrants to purchase 1,750,000 shares of the Company's Common Stock. (17) (5) Mr. Lee, a Director of the Company and President of InfoPak, Inc. owns 1,262,160 shares of the Company's Common Stock which is owned by the Lee Family Partnership of which Mr. Lee is the general partner. Also included in the amount are 7,000 shares of the Company's Series P Convertible Preferred which is convertible into 70,000 shares of the Company's Common Stock and common stock purchase warrants to purchase 150,000 shares of the Company's common stock. The warrants are for a five year period with an exercise price of $.15 per share. Also, Mr. Lee owns 19,625 shares of the Company's Series P Convertible Preferred which is being held in escrow. (6) Mr. Arrillaga owns 250,000 shares of Common Stock and 15,000 shares of the Company's Second Series B Convertible Preferred 8% Stock which is the convertible into 1,500,000 shares of the Company's Common Stock. (7) Mr. Peery owns 250,000 shares of Common Stock and 15,000 shares of the Company's Second Series B Convertible Preferred 8% Stock which is the convertible into 1,500,000 shares of the Company's Common Stock. (8) Mr. Salmon owns 610,000 shares of the Company's Common Stock. Also included in the amount are common stock purchase warrants to purchase 50,000 shares of the Company's Common Stock and 11,500 shares of the Company's Second Series B Convertible Preferred 8% Stock which is the convertible into 1,150,000 shares of the Company's Common Stock. (9) Mr. Kaemmlein owns common stock purchase warrants to purchase 200,000 shares of the Company's Common Stock and 15,000 shares of the Company's Second Series B Convertible Preferred 8% Stock, which is convertible into 1,500,000 shares of the Company Common Stock. (10) Dr. and Mrs. Zaffaroni jointly own 249,999 shares of the Company's Common Stock and 12,200 shares of the Company's Second Series B Convertible Preferred 8% Stock which is the convertible into 1,220,000 shares of the Company's Common Stock. (11) Does not include common stock purchase warrants to purchase in the aggregate 2,975,000 shares of the Company's Common Stock, and warrants to purchase 32,500 shares of the Company's Series B Convertible Preferred 8% Stock which would be convertible into 3,250,000 shares of the Company's Common Stock. 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 nonqualified stock options and Stock Appreciation Rights ("SAR'S"). The Plan, which expires in September 1998, is administered by the Board of Directors. Incentive stock options granted under the Plan are exercisable for a period of up to 10 years from the date of grant and 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 term 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. Nonqualified stock options may be granted on terms determined 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. No SAR's have been granted. As of September 30, 1996, 20,000 options were in effect. The exercise price of the options granted under the Plan to date is $.48 per share. 1996 Equity Incentive Plan The Company, in June 1996. adopted the 1996 Equity Incentive Plan (the "1996 Plan") covering 10,000,000 shares of the Company's Common Stock pursuant to which employees, consultants and other persons or entities who are in a position to make a significant contribution to the success of the Company's are eligible to receive awards in the form of incentive or non-incentive options, stock appreciation rights, restricted stock or deferred stock. The 1996 Plan will terminate ten (10) years of the effective date after 1996 Plan, subject to approval of the 1996 Plan by the Company's stockholders. The 1996 Plan was deeded effective June 12, 1996. The 1996 Plan has not been approved by the Company's stockholders. Grants of awards under the 1996 Plan may be made prior to the receipt of stockholders approval, subject to such approval of the 1996 Plan. The 1996 Plan is administered by the Compensation Committee of the Board of Directors. In its discretion, the Board of Directors may elect to administer the 1996 Plan. Restricted stock entities the recipients to receive shares of the Company's Common Stock subject to such restriction and condition as the Compensation Committee may determine for no consideration or such considerations as determined by the Compensation Committee. Any participants receiving such shares will have all of the rights of a stockholder of the Company including the right to veto the shares and the right to receive dividends. Deferred stock entitles the recipients to receive shares of the Company's Common Stock in the future. As of September 30, 1996, 252,350 shares have been issued pursuant to this plan. (18) ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Sean F. Lee has an employment agreement with InfoPak, a wholly owned subsidiary of the Company. The term of the agreement is three years ending in September 1998. Mr. Lee's base compensation is $100,000 per year of which 40% is currently being deferred. Mr. Lee is also entitled to participate in InfoPak's Bonus Plan. The Bonus Plan is set at 10% of InfoPak's pre-tax profits. Fifty percent of the Bonus Plan is set aside for target management compensation. Mr. Lee's target compensation is $300,000 per year and his percentage of the 50% is 62%. The other 50% of the Bonus Plan is set aside for all InfoPak employees, including management. Pursuant to the Agreement, Mr. Lee was appointed to the Company's Board of Directors and the Company is required to nominate Mr. Lee to continue to serve on the Board of Directors during the term of the Agreement. Mr. Lee also received 7,000 shares of the Company's Series P Convertible Preferred Stock as a signing bonus. Each share of the Series P Convertible Preferred Stock is convertible into 10 shares of the Company's Common Stock. In September 1995, Mr. Lee and his spouse as a creditor of InfoPak canceled a promissory note in the amount of $170,039 in exchange for 13,702 shares of the Company's Series P Convertible Preferred Stock. In October 1995, Mr. Lee was granted common stock purchase warrants to purchase 30,000 shares of the Company's common stock. The warrants are for a five year period with an exercise price of $.15 per share. Mr. Lee is a party to an Asset Purchase Agreement dated September 6, 1995, between InfoPak, Mr. Lee and two other executive officers of InfoPak. Pursuant to the terms of the Agreement Mr. Lee and the other InfoPak executives sold certain digital sound device technology to InfoPak in return for a royalty of 3% (1% to each seller) of the net revenue per quarter from any sales of the device. Net revenue is defined in the Agreement to be gross revenues from the sale or license of the technology less returns. The term of the Agreements is the earlier of seventeen years or for the term of any patent that may be issued on the technology. George S. Smith is paid at an annual rate of $120,000 of which one half is currently being deferred. ITEM 13. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K A. The following documents are filed as part of this report: 1. The consolidated financial statements filed as part of this report are listed under the caption "Index to Financial Statements and Schedules", appearing elsewhere in this report. 2. The consolidated financial schedules of the Company are filed as part of this report: Schedule V - Property and Equipment Schedule VI - Accumulated Depreciation and Amortization of Property and Equipment 3. The following Exhibits are filed herein:
Exhibit Number Description 3.1(a) Certificate of Incorporation and By Laws 3.2(b) Form of Certificate of Designation - Series A Convertible Preferred Stock 3.4(b) Form of Certificate of Designation - Series B Convertible Preferred Stock 3.4a(c) Form of Certificate of Designation - Series P Convertible Preferred Stock 3.4b(d) Form of Certificate of Designation - Series S Convertible Preferred Stock 3.4c(d) Form of Certificate of Designation - Series C Convertible Preferred Stock 4.1(a) Warrant Agreement (including form of warrant) 10.1(b) Agreement of lease between 718 Arch Street Associates, Ltd. and registrant made as of March 1, 1994
(19) 10.2(c) Agreement and Plan of Merger By and Among InfoPak, Inc., Certain Shareholders of InfoPak, Inc., InfoPak Acquisition Co. and registrant dated September 6, 1995. 10.3(b) Stock Option Plan 10.4(d) 1996 Equity Incentive Plan 21.0(b) Subsidiaries of the registrant 27.0 Financial Data Schedule B. Reports on Form 8-K filed: September 27, 1995 and as amended November 21, 1995. To report an event under Item 2 regarding the registrants' acquisition of all of the issued and outstanding capital stock of InfoPak, Inc.
- -------------------------------- (a) Incorporated by reference from the registrants registration statement on Form S-1 (No. 33-24554) (b) Incorporated by reference from the registrants' Annual Report on Form 10-KSB for the fiscal years ended June 30, 1992, 1993, 1994 and 1995 (c) Incorporated by reference from registrants' Current Report on Form 8-K dated September 27, 1995. (d) Incorporated by reference from registrant registration statement on Form S8 (No. 333-06679). (20) DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES YEARS ENDED JUNE 30, 1996 AND 1995 Index to Consolidated Financial Statements and Schedules -------------------------------------------------------- Page ---- Independent Auditors' Report F-2 Consolidated Financial Statements Balance Sheet F-3 Statements of Operations F-4 Statements of Stockholders' Equity (Deficiency) F-5 Statements of Cash Flows F-9 Notes to Consolidated Financial Statements F-11 Schedules Independent Auditors' Report F-23 Schedule IV - Property and Equipment F-24 Schedule V - Accumulated Depreciation and Amortization of Property and Equipment F-25 F-1 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Board of Directors and Stockholders Dimensional Visions Group, Ltd. and Subsidiaries Phoenix, Arizona We have audited the accompanying consolidated balance sheet of Dimensional Visions Group, Ltd. and Subsidiaries (the "Company") as of June 30, 1996, and the related consolidated statements of operations, stockholders' equity (deficiency), and cash flows for each of the two years in the period ended June 30, 1996. 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 Subsidiaries at June 30, 1996 and the results of their operations and their cash flows for each of the two years in the period ended June 30, 1996 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. The Company has been funding its operations by selling its securities in private placements, loans, certain employees and consultants deferring their compensation and sales of its products. As described in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has limited operations and resources, which raises substantial doubt about the Company's ability to continue as a going concern. The future of the Company as an operating business will depend on (1) its ability to successfully market its product, (2) obtain sufficient capital contributions or financing as may be required to sustain its 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 30, 1996, except for paragraph 2 of Note 15, as to which the date is October 10, 1996 F-2 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET JUNE 30, 1996 ASSETS ------ Current assets Cash and cash equivalents $ 203,073 Accounts receivable, trade, net of allowance for bad debts of $215,743 32,608 Inventory 89,458 Prepaid supplies and expenses 32,447 ------------- Total current assets 357,586 ------------- Equipment and leasehold improvements Equipment 1,891,703 Furniture and fixtures 143,408 Leasehold improvements 109,446 ------------- 2,144,557 Less accumulated depreciation and amortization 2,007,317 ------------- 137,240 ------------- Other assets Goodwill, net of accumulated amortization of $152,790 812,199 Patent rights and other assets 51,505 Deferred costs 50,389 ------------- 914,093 ------------- Total assets $ 1,408,919 ============= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities Accounts payable, accrued expenses and other liabilities $ 348,058 ------------- Total current liabilities 348,058 ------------- Long-term debt 325,000 ------------- Total liabilities 673,058 ------------- Commitments and contingencies - Stockholders' equity Preferred stock - $.001 par value, authorized 10,000,000 shares; issued and outstanding 632,207 shares 632 Additional paid-in capital 3,503,161 ------------- 3,503,793 Common stock - $.001 par value, authorized 100,000,000 shares; issued and outstanding 26,711,657 shares 26,712 Additional paid-in capital 13,963,359 Deficit (16,758,003) ------------- Total stockholders' equity 735,861 ------------- Total liabilities and stockholders' equity $ 1,408,919 ==============
See notes to consolidated financial statements. F-3 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED JUNE 30, 1996 AND 1995
1996 1995 ---- ---- Operating revenue $ 1,083,897 $ 134,028 Cost of sales 841,805 241,240 ----------- ----------- Gross profit (loss) 242,092 (107,212) Operating expenses Engineering and development costs 366,650 299,267 Marketing expenses 246,704 120,359 General and administrative expenses 1,569,688 460,680 ----------- ----------- Total operating expenses 2,183,042 880,306 ----------- ----------- Loss before other income (expenses) (1,940,950) (987,518) Other income (expenses) Interest expense (111,446) (208,717) Interest income 13,539 1,318 Gain on sale of equipment - 2,585 Write-off of customer deposits 156,000 - Amortization of goodwill (152,790) - ----------- ----------- (94,697) (204,814) ----------- ----------- Net loss $(2,035,647) $(1,192,332) =========== =========== Loss per share of common stock Net loss $ (.12) $ (.07) =========== ========== Weighted average shares of common stock outstanding 17,069,442 16,476,769 =========== ===========
See notes to consolidated financial statements. F-4 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) YEARS ENDED JUNE 30, 1996 AND 1995
Preferred Stock Common Stock (Series A Convertible) Additional ($.001 Par Value) ---------------------- Paid-in --------------------- Shares Amount Capital Shares Amount ------ ------ ------- ------ ------ Balance, July 1, 1994 77,250 $ 77 $772,423 16,361,098 $16,361 Issuance of 165,000 shares of the Company's common stock in bonuses to certain officers/ employees/directors of the Company - - - 165,000 165 Exercise of 110,000 warrants to purchase 110,000 shares of the Company's common stock @ $.01 per share - - - 110,000 110 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 consultingservices rendered to the Company - - - - - Issuance of 500,000 warrants to purchase 500,000 shares of the Company's common stock @ $.10 per share for a three and a half year period commencing May, 1995 - - - - - Issuance of 50,000 warrants to purchase 50,000 shares of the Company's common stock @$.01 per share for a one year period commencing May, 1995 - - - - - 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 - - - - - 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 Net loss - - - - - ------ ---------- -------- ------------ ------- Balance, June 30, 1995 77,250 $ 77 $772,423 16,936,098 $16,936 ====== ========== ======== ========== =======
[RESTUBBED FROM TABLE ABOVE]
Additional Paid-in Capital Deficit Total ------- ------- ----- Balance, July 1, 1994 $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 16,335 - 16,500 Exercise of 110,000 warrants to purchase 110,000 shares of the Company's common stock @ $.01 per share 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 @ $.10 per share for a three and a half year period commencing May, 1995 60,000 - 60,000 Issuance of 50,000 warrants to purchase 50,000 shares of the Company's common stock @$.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) 37,700 - 38,000 Net loss - (1,192,332) (1,192,332) ----------- ------------- ------------ Balance, June 30, 1995 $11,881,927 $(14,722,356) $(2,050,993) =========== ============ ===========
See notes to consolidated financial statements. F-5 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995
Preferred Stock Common Stock ($.001 Par Value ) Additional ($.001 Par Value) ------------------ Paid-in ----------------- Shares Amount Capital Shares Amount ------ ------ ------- ------ ------ Balance, July 1, 1995 77,250 $ 77 $772,423 16,936,098 $16,936 Conversion of 36,750 shares of Series A convertible preferred stock to 1,470,000 shares of the Company's common stock (36,750) (37) (367,463) 1,470,000 1,470 Surrender of 3,215,000 shares of the Company's common stock in exchange for 32,150 shares of Series S convertible preferred stock by mainly officers and directors 32,150 32 377,968 (3,215,000) (3,215) Sale of common stock net of offering cost of $75,000 - - - 3,000,000 3,000 Issuance of 2,750,000 warrants; in connection with the sale of 3,000,000 shares of the Company's common stock (1,250,000 warrants) to a financial consultant (500,000 warrants) and to the chief executive officer (1,000,000 warrants) to purchase the Company's common stock (750,000 shares at $.15 per share, 500,000 shares at $.50 per share, 500,000 shares at $.15 per share and 1,000,000 shares at $.25 per share) for a five year period commencing September, 1995 - - - - - Exercise of 310,000 warrants to purchase 310,000 shares of the Company's common stock at $.01 per share - - - 310,000 310 Issuance of Series P convertible preferred stock in connection with the merger of InfoPak, Inc., debt cancellation and signing bonuses to certain employees and consultant of InfoPak, Inc. 548,879 549 1,371,649 - - Issuance of 105,000 warrants to purchase 105,000 shares of the Company's Series B preferred stock at $10 per share for a three year period commencing in August and September, 1995 - - - - -
[RESTUBBED FROM TABLE ABOVE]
Additional Paid-in Capital Deficit Total ------- ------- ----- Balance, July 1, 1995 $11,881,927 $(14,722,356) $(2,050,993) Conversion of 36,750 shares of Series A convertible preferred stock to 1,470,000 shares of the Company's common stock 366,030 - - Surrender of 3,215,000 shares of the Company's common stock in exchange for 32,150 shares of Series S convertible preferred stock by mainly officers and directors (374,785) - - Sale of common stock net of offering cost of $75,000 672,000 - 675,000 Issuance of 2,750,000 warrants; in connection with the sale of 3,000,000 shares of the Company's common stock (1,250,000 warrants) to a financial consultant (500,000 warrants) and to the chief executive officer (1,000,000 warrants) to purchase the Company's common stock (750,000 shares at $.15 per share, 500,000 shares at $.50 per share, 500,000 shares at $.15 per share and 1,000,000 shares at $.25 per share) for a five year period commencing September, 1995 100,000 - 100,000 Exercise of 310,000 warrants to purchase 310,000 shares of the Company's common stock at $.01 per share 2,790 - 3,100 Issuance of Series P convertible preferred stock in connection with the merger of InfoPak, Inc., debt cancellation and signing bonuses to certain employees and consultant of InfoPak, Inc. - - 1,372,198 Issuance of 105,000 warrants to purchase 105,000 shares of the Company's Series B preferred stock at $10 per share for a three year period commencing in August and September, 1995 - - -
F-6 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995
Preferred Stock Common Stock ($.001 Par Value ) Additional ($.001 Par Value) ------------------ Paid-in ----------------- Shares Amount Capital Shares Amount ------ ------ ------- ------ ------ Issuance of 14,500 warrants to purchase 14,500 shares of the Company's common stock at $.01 per share for a one year period commencing in August and September, 1995 - - - - - Issuance of 150,000 warrants to a director to purchase 150,000 shares of the Company's common stock at $.15 per share for a five year period commencing October, 1995 - - - - - Secured noteholders exercised their Series B warrants to purchase 190,700 shares of Series B convertible preferred stock (175,700 on October 1, 1995 and 15,000 on February 22, 1996 by a director) 190,700 191 1,906,809 - - Secured noteholders converted $262,750 of interest due on the notes into 26,275 shares of Series C convertible preferred stock 26,275 26 262,724 - - Conversion of 29,000 shares of Series S convertible preferred stock to 2,900,000 shares of the Company's common stock (29,000) (29) (356,471) 2,900,000 2,900 Conversion of 174,442 shares of Series P convertible preferred stock to 1,744,420 shares of the Company's common stock (174,442) (174) (435,931) 1,744,420 1,745 Conversion of 2,855 shares of Series C convertible preferred stock to 28,500 shares of the Company's common stock (2,855) (3) (28,547) 28,550 29 Issuance of 100,000 warrants to purchase the Company's common stock at $.50 per share for a five year period commencing March, 1996, for services in connection with debenture financing - - - - - Issuance of 390,000 warrants to purchase the Company's common stock at $.15 per share (290,000 warrants) and $.50 per share (100,000 warrants) for a five year period commencing May, 1996 for financial consulting services - - - - -
[RESTUBBED FORM TABLE ABOVE]
Additional Paid-in Capital Deficit Total ------- ------- ----- Issuance of 14,500 warrants to purchase 14,500 shares of the Company's common stock at $.01 per share for a one year period commencing in August and September, 1995 - - - Issuance of 150,000 warrants to a director to purchase 150,000 shares of the Company's common stock at $.15 per share for a five year period commencing October, 1995 7,500 - 7,500 Secured noteholders exercised their Series B warrants to purchase 190,700 shares of Series B convertible preferred stock (175,700 on October 1, 1995 and 15,000 on February 22, 1996 by a director) - - 1,907,000 Secured noteholders converted $262,750 of interest due on the notes into 26,275 shares of Series C convertible preferred stock - - 262,750 Conversion of 29,000 shares of Series S convertible preferred stock to 2,900,000 shares of the Company's common stock 353,600 - - Conversion of 174,442 shares of Series P convertible preferred stock to 1,744,420 shares of the Company's common stock 434,360 - - Conversion of 2,855 shares of Series C convertible preferred stock to 28,500 shares of the Company's common stock 28,521 - - Issuance of 100,000 warrants to purchase the Company's common stock at $.50 per share for a five year period commencing March, 1996, for services in connection with debenture financing - - - Issuance of 390,000 warrants to purchase the Company's common stock at $.15 per share (290,000 warrants) and $.50 per share (100,000 warrants) for a five year period commencing May, 1996 for financial consulting services 54,600 - 54,600
F-7 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995
Preferred Stock Common Stock ($.001 Par Value) Additional ($.001 Par Value) ------------------ Paid-in ----------------- Shares Amount Capital Shares Amount ------ ------ ------- ------ ------ Issuance of 500,000 warrants to purchase the Company's common stock at $.31 per share for a three year period commencing June, 1996 in connection with the debenture financing - - - - - Conversion of the debenture financing to 3,495,239 shares of the Company's common stock - - - 3,495,239 3,495 Issuance of 20,000 warrants to purchase the Company's common stock at $.50 per share for a four year period commencing June, 1996, for consulting services to the Company - - - - - Issuance of 42,350 shares of the Company's common stock at $.26 per share for consulting services to the Company - - - 42,350 42 Net loss - - - - - --------------------- ---------------------------------------- Balance, June 30, 1996 632,207 $ 632 $3,503,161 26,711,657 $26,712 ======= ====== ========== ========== =======
[RESTUBBED FROM TABLE ABOVE]
Additional Paid-in Capital Deficit Total ------- ------- ----- Issuance of 500,000 warrants to purchase the Company's common stock at $.31 per share for a three year period commencing June, 1996 in connection with the debenture financing - - - Conversion of the debenture financing to 3,495,239 shares of the Company's common stock 423,947 - 427,442 Issuance of 20,000 warrants to purchase the Company's common stock at $.50 per share for a four year period commencing June, 1996, for consulting services to the Company 1,900 - 1,900 Issuance of 42,350 shares of the Company's common stock at $.26 per share for consulting services to the Company 10,969 - 11,011 Net loss - (2,035,647) (2,035,647) ----------- ------------ ------------ Balance, June 30, 1996 $13,963,359 $(16,758,003) $ 735,861 =========== ============ ============
See notes to consolidated financial statements. F-8 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 1996 AND 1995
1996 1995 ---- ---- Operating activities Net loss $(2,035,647) $(1,192,332) Adjustments to reconcile net loss to net cash used in operating activities Compensation paid to officers/employees through issuance of warrants and common stock 7,500 16,500 Interest paid through issuance of warrants - 67,500 Consulting service paid through issuance of warrants and common stock 167,511 4,625 Depreciation and amortization of property and equipment 87,491 150,491 Amortization of other assets and deferred costs 20,762 4,074 Amortization of goodwill 152,790 - Gain on sale of equipment - (2,584) Changes in assets and liabilities which provided (used) cash Accounts receivable, trade (5,051) (18,690) Inventory 51,378 12,634 Prepaid expenses and deposit 10,914 3,118 Accounts payable, accrued expenses and other liabilities (including accrued interest classified as long term) (108,012) 281,769 ----------- ----------- Net cash used in operating activities (1,650,364) (672,895) ----------- ----------- Investing activities Cash acquired in acquisition 275,632 - Proceeds from sale of equipment - 3,107 Purchase of equipment (40,360) (16,374) Capitalized legal fees related to acquisition (36,866) - Deposits (1,041) - ----------- ----------- Net cash provided by (used in) investing activities 197,365 (13,267) ----------- ----------- Financing activities Proceeds from Sale of common stock net of offering costs $75,000 675,000 - Issuance of common stock in connection with the exercise of warrants 3,100 39,100 Borrowings net of deferred costs $20,000 and payment of note $50,000 750,000 757,000 ----------- ----------- Net cash provided by financing activities 1,428,100 796,100 ----------- ----------- Net increase (decrease) in cash and cash equivalents (24,899) 109,938 Cash and cash equivalents, beginning of year 227,972 118,034 ----------- ----------- Cash and cash equivalents, end of year $ 203,073 $ 227,972 =========== =========== Supplemental disclosure of cash flow information: Cash paid during the year for interest $ 7,500 $ - =========== =========== Issuance of common stock in connection with officers/employees stock bonus $ - $ 16,500 =========== =========== Issuance of warrants in connection with Consulting service $ 167,511 $ 33,375 =========== =========== Financing $ - $ 67,500 =========== =========== Compensation $ 7,500 $ - =========== ===========
F-9 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Supplemental disclosure of non-cash investing and financing activities for fiscal year 1996: 1,470,000 shares of the Company's common stock was issued as a result of the conversion of 36,750 shares of Series A Convertible Preferred Stock valued at $367,500. In August, 1995 in connection with the sale of 3,000,000 shares of the Company's common stock to third parties, certain stockholders, consisting mainly of officers and directors, surrendered 3,215,000 of the Company's common stock in exchange for 32,150 shares of Series S Preferred Stock valued at $378,000. In March, 1996, after the stockholders approved an increase in the number of authorized common stock shares, 29,000 shares of Series S Preferred Stock was converted back to 2,900,000 shares of the Company's common stock valued at $356,500. The Company acquired all of the outstanding common stock of InfoPak, Inc. for 500,000 shares of Series P Convertible Preferred Stock ("Series P Preferred") valued at $1,250,000. At the date of acquisition, InfoPak's assets were valued at $503,944, (including cash of $275,632), and its liabilities at $103,590. The Company also issued 31,379 shares of Series P Preferred valued at $78,448 in exchange for the cancellation of debt of certain shareholders of InfoPak. The Company accounted for this transaction as a purchase and, accordingly, recorded goodwill of $964,989. Certain InfoPak employees under contract and a consultant also received 17,500 shares of Series P Convertible Preferred Stock from the Company (valued at $43,750) as a signing bonus. The Company also issued 150,000 of warrants, to purchase the Company's common stock at $.15 per share, to an officer of InfoPak, which were valued at $7,500 and expensed. The Company issued 500,000 common stock warrants to a financial consultant which were valued at $100,000 and expensed. The Company issued 3,495,239 shares of the Company's common stock in connection with the conversion of approximately $425,000 of convertible debentures to common stock under a Regulation S Securities Subscription Agreement. 1,744,420 shares of the Company's common stock was issued as a result of the conversion of 174,442 shares of Series P Convertible Preferred Stock valued at $436,105. 190,700 shares of Series B Convertible Preferred Stock was issued as a result of conversion of $1,907,000 of secured notes and 26,275 shares of Series C Convertible Preferred Stock was issued as payment for $262,750 of accrued interest on secured notes. 28,550 shares of the Company's common stock was issued as a result of conversion of 2,855 shares of Series C Convertible Stock valued at $28,550. 42,350 shares of the Company's common stock was issued to consultants for services valued at $11,011. The Company issued 410,000 common stock warrants for consulting services provided to the Company which were valued at $56,500 and expensed. See notes to consolidated financial statements. F-10 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1996 AND 1995 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, as well as lithographically printed animation which the Company has termed Animotion.(TM) The Company, on September 12, 1995 completed the acquisition of InfoPak, Inc. which manufacturers and markets hardware and software information and audio playback systems and method products and programs. 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 and sale of products. The Company has had limited sales of its products during the year ended June 30, 1996. Even though the sales have significantly increased over the prior years the volume of business is not sufficient to support the Company's cost structure. Liquidity and Capital Resources The Company has incurred losses since inception of $16,758,003, and has limited working capital of $9,528 as of June 30, 1996. The future of the Company as an operating business will depend on (1) its ability to successfully market its product, (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 increasing marketing efforts of the Company's products and increasing sales results, (b) exercise tight cost controls to conserve cash, (c) raise additional long term financing, (d) evaluate possible merger or acquisition opportunities, and (e) alliances or joint venture agreement opportunities. The consolidated financial statements have been prepared on a going concern basis which contemplates the realization and settlement of liabilities and commitments in the normal course of business. The Company expects to incur expenditures to further expand the lithographic market. The working capital at June 30, 1996, plus the limited revenue will not be sufficient to satisfy the present cost structure. Management recognizes that the Company must generate additional resources or substantially modify its operating costs to enable it to continue operations with available resources. Management plans include the sale of additional equity securities, establishing alliance or other joint venture arrangements with entities interested in and resources to support the Company's current products, or other business transactions which will generate sufficient resources to assure continuation of the Company's operations. F-11 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Note 1: Summary of Significant Accounting Policies (Continued) Liquidity and Capital Resources (Continued) Further, there can be no assurances, assuming the Company successfully raises additional funds or enters into a business alliance, that the Company will achieve profitability or positive cash flow. If the Company is unable to obtain adequate additional financing or enter into such business alliance, management will be required to sharply curtail the Company's lithographic product and curtail its overall operations. Consolidation Policy The consolidated financial statements include the accounts of DVGL and its wholly-owned subsidiaries, InfoPak, Inc. (acquired September 12, 1995) DVG Plastics, Inc., Digital Dimensions, Inc. and DV3D Images, Inc. As of June 30, 1996, all of the wholly-owned subsidiaries are inactive, except for InfoPak, Inc. All significant inter-company balances and transactions have been eliminated in consolidation. 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 of $68,088 and finished goods of $21,370. 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 expenses in the period the determination is made to abandon them. Goodwill The excess of the cost over the net assets acquired relates to the acquisition of InfoPak, Inc. The goodwill is being amortized over five years. F-12 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Note 1: Summary of Significant Accounting Policies (Continued) Engineering and Development Costs The Company charges to engineering and development costs all items of a non-capital nature related to bringing "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 creation of prototypes. All such costs of a capital nature are capitalized. Income Taxes Deferred income taxes reflect the net 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. Employer's Accounting for Post Employment 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 had no effect on the Company's operations or financial position, since the Company does not have any post-retirement benefits. 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. Use of 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 dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. F-13 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Note 2: Acquisition On September 12, 1995, the Company acquired all the outstanding common stock of InfoPak, Inc. in exchange for 500,000 shares of Series P Convertible Preferred Stock valued at $1,250,000. The fair value of the InfoPak assets acquired was $503,944 (originally reported in previously filed quarterly financial statements at $442,769 and subsequently adjusted at year end by $61,175), which included $275,632 of cash, and the liabilities assumed equaled $103,590. The Company also issued 31,379 shares of Series P Convertible Preferred Stock valued at $78,448, in exchange for the cancellation of certain Series P Convertible Preferred Stock valued at $78,448, in exchange for the cancellation of certain notes payable, including related accrued interest, due to certain shareholders of InfoPak. The Company has accounted for this transaction as a purchase and, accordingly, resulted in the Company recording goodwill of $964,989, which will be amortized over five years. In addition, certain employees under contract and a consultant received 17,500 shares of Series P Convertible Preferred Stock valued at $43,750 as signing bonuses, which are being amortized over the term of the contracts. The following proforma results are unaudited and were prepared under the assumption that the transaction was effective at the beginning of each year presented. 1996 1995 ---- ---- Sales $ 1,657,895 $ 2,334,025 Net loss (2,374,803) (1,697,191) ----------- ----------- Net loss per share $ (.14) $ (.10) =========== =========== Note 3: 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 as of June 30, 1996 are summarized as follows: Cash on hand $ 123 Cash in bank 25,971 Money market account 176,979 ------------ $ 203,073 ============ The Company maintains its cash in banks located in Pennsylvania, Arizona and California. The total cash balances are insured by the FDIC up to $100,000 per financial institution. As of June 30, 1996, there were no uninsured balances. F-14 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Note 4: Patent Rights and Other Assets and Deferred Costs Patent rights $ 58,426 Organization costs 2,000 Deposits 7,682 Trademark 225 --------- 68,333 Less accumulated amortization 16,828 --------- Total $ 51,505 ======== Note 5: Deferred Costs Deferred compensation relating to signing bonuses to certain employees and consultant of InfoPak, Inc. (see Note 2) $ 31,380 Deferred debt cost 19,009 -------- $ 50,389 ======== Note 6: Accounts Payable, Accrued Expenses and Other Liabilities Accounts payable $118,525 Accrued expenses Interest 3,684 Salaries 111,449 Consulting fees 88,000 Customer deposits 26,400 -------- Total $348,058 ======== Note 7: Long-Term Debt As of June 30, 1996 long-term debt consisted of the following: 5% convertible debenture due August 1, 1997 $250,000(1) 10% secured notes due in January and February, 1998 75,000(2) --------- $325,000 ========
The long-term debt is classified as long term with the entire obligation being due during fiscal year ending in June 30, 1998. (1) During July through September 30, 1996, $150,000 of the debenture was converted to 2,063,186 shares of the Company's common stock at an average per share price of $.07. This debt is convertible into the Company's common stock at 50% of the price of the Company's stock on the day prior to conversion, but at no time shall the conversion price be greater than $.31 a share. F-15 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Note 7: Long-Term Debt (Continued) (2) As collateral for the secured notes, the Company has given a security interest in all of the Company's tangible and intangible assets, including all patents and proprietary technology, which was evidenced by a uniform commercial code of living on March 24, 1994. On October 1, 1995, $1,757,000 of the outstanding secured noteholders exercised their warrant to convert the secured notes to Series B Convertible Preferred Stock except for the above secured noteholders and a director who subsequently, in February, 1996, exercised his right to convert a $150,000 secured note to Series B Convertible Preferred Stock. In addition, the noteholders also agreed to convert $262,750 of interest due on the 10% secured notes into Series C Convertible Preferred Stock. Note 8: Commitments and Contingencies The Company leases its studio and production facilities in Philadelphia, Pennsylvania under a five year operating lease through February 28, 1999 at an annual rental of approximately $60,000 through June, 1996 and adjusted on March 1, of each year through 1998 by $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 the ground breaking date on the proposed new building site adjacent to where the Company leases space. Years Ending June 30, Annual Rental Amount --------------------- -------------------- 1997 $ 60,800 1998 62,200 1999 42,100 -------- $165,100 ======== Total rent expense on all operating leases amounted to approximately $83,000 and $56,600 for the years ended June 30, 1996 and 1995, respectively. The Company has outstanding employment and consulting contracts that expire through June 30, 1999 as follows: Years Ending June 30, Amount --------------------- ---------- 1997 $ 534,000 1998 534,000 1999 185,000 ---------- $1,253,000 ========== F-16 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Note 8: Commitments and Contingencies (Continued) The Company's former principle distributor of its print products refused to pay a certain sales invoice for goods shipped to, accepted and paid for by the distributor's customer. The Company had demanded payment and the distributor has refused to pay the invoice for $213,522. The Company filed for judgment on the $213,522 invoice together with interest, costs and such other relief the court will deem just and proper. The distributor has filed a counterclaim. Management feels this matter will be resolved favorably and will not have a material adverse effect on its financial position. As of June 30, 1996, the Company has provided an allowance for possible bad debts for the full amount of this sales transaction. There are no other legal proceedings which the Company believes will have a material adverse effect on its financial position. The Company has not declared dividends on Series A or B Convertible Preferred Stock. The cumulative dividends in arrears through June 30, 1996 was $245,800. Note 9: Common Stock In March, 1996, the stockholders approved an increase in the authorized number of shares of the Company's common stock to 100,000,000 shares and the authorized number of shares of the Company's Preferred Stock to 10,000,000 shares. As of June 30, 1996, the Company had outstanding $250,000 of convertible debt which is convertible into the Company's common stock (see Note 7). As of June 30, 1996, there are outstanding 14,736,610 of non-public warrants to purchase the Company's common stock at prices ranging from $.01 to $.75 with a weighted average price of $.23 per share. The Company has also agreed to issue up to 3,700,000 warrants to purchase the Company's common stock, at prices ranging from $.15 to $.20 with a weighted average price of $.16 per share, to certain employees. The issuance of these warrants is subject to the individuals meeting certain predetermined performance goals, which if obtained would improve the Company's DV3D(TM) print products and the sales of such products. As of June 30, 1996, there were 632,207 shares of Convertible Preferred Stock outstanding which can be converted to 24,983,570 shares of common stock (see Note 10). As of June 30, 1996, there are 7,500 Series B Warrants outstanding to purchase Series B Convertible Preferred Stock which can be converted into 750,000 shares of the Company's common stock (see Note 7). As of June 30, 1996, there was a $250,000 5% Convertible Debenture which can be converted into a minimum of 1,612,903 shares of the Company's common stock depending upon the price of the Company's common stock the day preceding the conversion. F-17 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Note 9: Common Stock (Continued) The total number of shares of the Company's common stock that would have been issuable upon conversion of the outstanding debt, warrants and preferred stock equaled 45,783,083 shares as of June 30, 1996, and would be in addition to the 26,711,657 shares of common stock outstanding as of June 30, 1996. During the year ended June 30, 1996, 1,470,000 shares of the Company's common stock was issued as a result of the conversion of 36,750 shares of Series A Convertible Preferred Stock valued at $367,500. On September 5, 1995, the Company sold 3,000,000 shares of the Company's common stock to third parties for $750,000 less offering costs of $75,000 under a Regulation S offering. In August, 1995 in connection with the sale of 3,000,000 shares of the Company's common stock to third parties, certain stockholders, consisting mainly of officers and directors, surrendered 3,215,000 of the Company's common stock in exchange for 32,150 shares of Series S Preferred Stock valued at $378,000. In March, 1996, after the stockholders approved an increase in the number of authorized common stock shares, 29,000 shares of Series S Preferred Stock was converted back to 2,900,000 shares of the Company's common stock valued at $356,500. The Company issued 3,495,239 shares of the Company's common stock in connection with the conversion of $425,000 of convertible debentures to common stock under a Regulation S Securities Subchapter Agreement. The Company issued 42,350 shares of the Company's common stock to consultants for services valued at $11,011 ($.26 per share). Note 10: Preferred Stock The Company has authorized 10,000,000 shares of $.001 par value per share Preferred Stock, which has been allocated to the following Series and is outstanding as of June 30, 1996, as follows: Allocated Outstanding --------- ----------- Series A Preferred 100,000 40,500 Series B Preferred 200,000 190,700 Series C Preferred 1,000,000 23,420 Series P Preferred 600,000 374,437 Series S Preferred 50,000 3,150 --------- ------- Total Preferred Stock 1,950,000 632,207 ========= ======= The Company's Series A Convertible 5% Preferred Stock ("Series A Preferred"), 100,000 shares authorized, is convertible into common stock at the rate of 40 shares of common stock for each share of the Series A Preferred. Dividends from date of issue, are payable from retained earnings, and have been accumulated on June 30 each year, but have not been declared or paid (see Note 8). F-18 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Note 10: Preferred Stock (Continued) The Company's Series B Convertible 8% Preferred Stock ("Series B Preferred"), is convertible at the rate of 100 shares of common stock for each share of Series B Preferred. Dividends from date of issue are payable on June 30 from retained earnings at the rate of 8% per annum and have not been declared or paid (see Note 8). The Company's Series C Convertible Preferred Stock ("Series C Preferred"), is convertible at a rate of 10 shares of common stock per share of Series C Preferred. The Company's Series P Convertible Preferred Stock ("Series P Preferred"), is convertible at a rate of 10 shares of common stock for each share of Series P Preferred. The fair market value of the 548,879 shares of Series P Preferred issued relating to the merger, debt cancellation and signing bonuses to certain employees and a consultant, was valued at $1,372,198 ($2.50 per share) based upon the price at which the Company was able to sell 3,000,000 shares of its common stock on September 5, 1995 through a Regulation S offering which was $.25 per share. The Company's Series S Convertible Preferred Stock ("Series S Preferred"), is convertible at the rate of 100 shares of common stock for each share of Series S Preferred. The Company's Series A Preferred and Series B Preferred were issued for the purpose of increasing the capital or debt of the Company. The Series C Preferred was issued to certain holders of the Company's 10% Secured Notes in lieu of accrued interest and also will be held for future investment purposes. The Series S Preferred was issued to certain stockholders consisting mainly of officers and directors of the Company in exchange for such stockholders' shares of common stock. After this exchange, common stock was sold on September 5, 1995 for the purpose of raising additional capital. The Series P Preferred was issued on September 12, 1995 to InfoPak shareholders in exchange for (1) all of the outstanding capital stock of InfoPak, (2) as signing bonuses for certain employees and a consultant of InfoPak, and (3) to satisfy InfoPak's outstanding debt obligations to certain shareholders. The 190,700 shares of Series B Preferred were issued to holders of warrants to purchase such preferred stock. The funding for the exercise of these warrants was the exchange of $1,907,000 of principal amount of secured and unsecured notes. The 26,275 shares of Series C Preferred were also issued in exchange for $262,750 of interest due under the secured and unsecured noteholders of 2,855 shares of Series C Preferred Stock have subsequently converted their shares into the Company's common stock. F-19 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Note 11: Stock Option Plan and Equity Incentive 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 common stock on the date of the grant. Non-qualified stock options may be granted on terms determined by the Board of Directors or a 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 Option Shares As Adjusted Price ------ ----------- ------------ Options outstanding 161,000 $.48 $ 77,280 Cancelled (141,000) .48 (67,680) --------- -------- Options outstanding June 30, 1996 and 1995 20,000 $ 9,600 ========= ========
The Company on June 13, 1996 has adopted the 1996 Equity Incentive Plan (the "Plan") covering 10,000,000 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, SAR's, and Restricted Stock and Deferred Stock. The Plan, which expires in June, 2006, will be administered by the Compensation Committee of the Board of Directors. 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 common stock on the date of the grant. Non-qualified stock options may be granted on terms determined by the Compensation Committee of 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 Compensation Committee of the Board of Directors. Restricted stock awards entitle the recipient to acquire shares for no cash consideration or for consideration determined by the Compensation Committee. The award may be subject to restrictions, conditions and forfeiture as the Committee may determine. Deferred stock award entitles recipient to receive shares in the future. As of June 30, 1996, 42,350 shares of common stock has been issued under this plan at $.26 per share. In addition, as of June 30, 1996, no options or SAR's have been granted. F-20 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Note 12: Income Taxes The tax effects of significant items comprising the Company's net deferred taxes as of June 30, 1996 were as follows: Deferred tax assets: Property $ (42,000) Patents 8,000 Operating loss carryforwards 5,708,000 Valuation allowance (5,674,000) ---------- $ - ========== The change in valuation allowance for the year ended June 30, 1996 was increased by approximately $640,000. There was no provision for current income taxes for the years ended June 30, 1996 and 1995. The federal net operating loss carryforwards of approximately $16,348,000 expire in varying amounts through 2011 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. 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 13: Related Party Transactions As of June 30, 1996, the Company's chief executive officer owned approximately 2,128,550 shares of the common stock of the Company and had 2,669,840 warrants to purchase the Company's common stock and 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. Note 14: Segment of Business Reporting The operations of the Company are divided into the following business segments for financial reporting purposes. o Lithographically printed stereoscopic prints commonly referred to as three-dimensional prints and lithographically printed animation. o Hardware and software information and audio playback systems and method products and programs. F-21 DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1996 AND 1995 Note 14: Segment of Business Reporting (Continued) There are no intersegment sales. There are no foreign sales and one customer accounts for approximately 100% of the lithographic sales and two customers account for approximately 81% of the hardware and software information and playback systems. Financial information by business segments is as follows:
Hardware and Lithographic Software Consolidated ------------ -------- ------------ Net customer sales $ 561,060 $ 522,837 $ 1,083,897 Operating loss (1,617,325) (323,625) (1,940,950) Identifiable assets 1,199,582 209,337 1,408,919 Depreciation 59,632 27,859 87,491 Capital expenditures 37,644 2,716 40,360
Note 15: Subsequent Events The Company sold, through a private placement, 1,190,000 shares of the Company's common stock (restricted shares) during August and September, 1996 for $119,000 ($.10 per share). During September and October, 1996, the Company received $500,000 from the sale of its securities, $350,000 from the sale of common stock at $.14 per share and $150,000 from a sale of a convertible debenture with a maximum conversion price of $.15 per share. F-22 INDEPEDENT AUDITORS' REPORT --------------------------- To the Board of Directors and Stockholders Dimensional Visions Group, Ltd. and Subsidiaries Phoenix, Arizona We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements of DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES included in this annual report on Form 10-KSB and have issued our report thereon dated September 30, 1996, except for Paragraph 2, Note 15 as to which the date is October 10, 1996. Our audit was made for the purpose of forming an opinion on the basic consolidated 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 consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the consolidated financial data required to be set forth in relation to the basic consolidated financial statements taken as a whole. GITOMER & BERENHOLZ, P.C. Jenkintown, Pennsylvania September 30, 1996 F-23 Exhibit IV DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES SCHEDULE IV - PROPERTY AND EQUIPMENT(1)
- ------------------------------ ---------------- ----------------- ---------------- ----------------- ---------------- Column A Column B Column C Column D Column E Column F - ------------------------------ ---------------- ----------------- ---------------- ----------------- ---------------- Balance at Other Beginning of Additions Changes - Balance at Classification Period at Cost Retirements Add (Deduct) (2) End of Period - ------------------------------ ---------------- ----------------- ---------------- ----------------- ---------------- Year Ended June 30, 1996 - ------------------------ Equipment $1,628,028 $33,884 $ - $229,791 $1,891,703 Furniture and fixtures 134,938 6,476 - 1,994 143,408 Leasehold improvements 109,446 - - - 109,446 ---------- ------- ----------- -------- ---------- $1,872,412 $40,360 $ - $231,785 $2,144,557 ========== ======= =========== ======== ========== 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 ========== ======= =========== ======== ==========
(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 and fixtures 5 years Leasehold improvements Term of the initial operating lease (5 years) (2) Represents equipment acquired through acquisition. F-24 Exhibit V DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES SCHEDULE V - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT
- ------------------------------ ---------------- ----------------- ---------------- ----------------- ---------------- Column A Column B Column C Column D Column E Column F - ------------------------------ ---------------- ----------------- ---------------- ----------------- ---------------- Balance at Other Beginning of Additions Changes - Balance at Classification Period at Cost Retirements Add (Deduct)(1) End of Period - ------------------------------ ---------------- ----------------- ---------------- ----------------- ---------------- Year Ended June 30, 1996 - ------------------------ Equipment $1,559,730 $ 81,417 $ - $126,830 $1,767,977 Furniture and fixtures 122,433 5,808 - 1,947 130,188 Leasehold improvements 108,886 266 - - 109,152 ---------- -------- ------ -------- ---------- $1,791,049 $ 87,491 $ - $128,777 $2,007,317 ========== ======== ====== ======== ========== 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 ========== ======== ====== ======== ==========
(1) Represents accumulated depreciation acquired through acquisition. F-25 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, duly authorized. DIMENSIONAL VISIONS GROUP, LTD. DATED: October 11, 1996 By: /s/ George S. Smith ------------------- George S. Smith, Chairman, President and Chief Executive Officer In accordance with Section 13 or 15(d) of the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date /s/ George S. Smith Chairman, President and Chief October 11, 1996 - -------------------- Executive Officer (Principal George S. Smith Executive Officer and Principal Financial Officer, and principal accounting officer) and Director /s/ Sean F. Lee Chief Operating Officer, Executive October 11, 1996 - ------------------- Vice President and Director Sean F. Lee /s/ Steven L. Flint Director October 11, 1996 - ------------------- Steven L. Flint /s/ Hans J. Kaemmlein Director October 11, 1996 - --------------------- Hans J. Kaemmlein /s/ Robert A. Smith Director October 11, 1996 - ------------------- Robert A. Smith /s/ Thomas A. Cadez Director October 11, 1996 - ------------------- Thomas A. Cadez
(21) EX-27 2 FINANCIAL DATA SCHEDULE
5 12-MOS JUN-30-1996 JUL-01-1995 JUN-30-1996 203,073 0 32,608 215,743 89,458 357,586 2,144,557 2,007,317 1,408,919 348,058 0 0 3,503,793 26,712 (2,794,644) 1,408,919 1,083,897 1,083,897 841,805 2,183,042 94,697 0 111,446 (2,035,647) 0 0 0 0 0 (2,035,647) (.12) 0
-----END PRIVACY-ENHANCED MESSAGE-----