SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1 to
CURRENT REPORT
Amending Item 7
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported ): December 22, 1997
TMCI ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27510 77-0413814
(State or other jurisdiction) (Commission File Number) (IRS Employer ID No.)
1875 Dobbins Drive, San Jose, CA 95133
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(408) 272-5700
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 7. Financial Statements and Exhibits
(a),(b)The financial information being filed with this report is as
follows:
(1) Report of Independent Auditors;
(2) Balance sheet of Trinity Electronics, Inc. as of September 30,
1997 (unaudited) and December 31, 1996;
(3) Statement of Operations for Trinity Electronics, Inc. for the
nine months ended September 30, 1997 and 1996, respectively
(unaudited) and for the fiscal years ended December 31, 1996
and 1995, respectively;
(4) Statement of Stockholder's Equity for the nine months ended
September 30, 1997 (unaudited) and for the fiscal years ended
December 31, 1996 and 1995, respectively;
(5) Statement of Cash Flows for Trinity Electronics, Inc. for the
nine months ended September 30, 1997 and 1996, respectively
(unaudited) and for the fiscal years ended December 31, 1996
and 1995, respectively;
(6) Notes to Financial Statements;
(7) Pro Forma Condensed Combined Financial Statements Basis of
Presentation (unaudited);
(8) Pro Forma Condensed Combined Balance Sheet as of September 30,
1997(unaudited);
(9) Pro Forma Condensed Combined Income Statement for the Nine
Months Ended September 30, 1997 (unaudited);
(10) Pro Forma Condensed Combined Income Statement for the Fiscal
Year Ended December 31, 1996 (unaudited); and
(11) Notes to Pro Forma Condensed Combined Financial Statements
(unaudited).
(c) The following exhibits were previously filed with the Report on Form
8-K dated January 6, 1998:
2.0 Merger Agreement and Plan of Reorganization by and among TMCI
Electronics, Inc., TMCI\Trinity Acquisition Corp, Trinity
Electronics, Inc. and Patrick McQuade, dated December 22, 1997.
[Remainder of Page Intentionally Left Blank]
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
TMCI ELECTRONICS, INC.
Date: May 26, 1998 By:/s/ Edmund J. Becmer
Edmund J. Becmer
Vice President and
Chief Financial Officer
<PAGE>
TMCI ELECTRONICS, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
Report of Independent Auditors.................................... F-1
Balance Sheet of Trinity Electronics, Inc. as of September 30, 1997
(unaudited)and December 31, 1996 ................................. F-2
Statement of Operations for Trinity Electronics, Inc. for the nine
months ended September 30, 1997 and 1996, respectively (unaudited)
and for the fiscal years ended December 31, 1996 and 1995,
respectively...................................................... F-3
Statement of Stockholder's Equity for Trinity Electronics, Inc. the
nine months ended September 30, 1997 (unaudited) and for the fiscal
years ended December 31, 1996 and 1995, respectively ............. F-4
Statement of Cash Flows for Trinity Electronics, Inc. for the nine
months ended September 30, 1997 and 1996, respectively (unaudited)
and for the fiscal years ended December 31, 1996 and 1995,
respectively...................................................... F-5
Notes to Financial Statements..................................... F-6-F-9
Pro Forma Condensed Combined Financial Statements
Basis of Presentation (unaudited)................................. P-1
Pro Forma Condensed Combined Balance Sheet as of September 30, 1997
(unaudited)....................................................... P-2
Pro Forma Condensed Combined Income Statement for the Nine Months
Ended September 30, 1997 (unaudited) ............................. P-3
Pro Forma Condensed Combined Income Statement for the Fiscal Year
Ended December 31, 1996 (unaudited)............................... P-4
Notes to Pro Forma Condensed Combined Financial Statements (unaudited).P-5
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholder of
Trinity Electronics, Inc.
San Jose, California
We have audited the accompanying balance sheet of Trinity
Electronics, Inc. as of December 31, 1996, and the related statements of
operations, stockholder's equity, and cash flows for each of the two years in
the period ended December 31, 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 audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Trinity Electronics,
Inc. as of December 31, 1996, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
MOORE STEPHENS, P. C.
Certified Public Accountants.
New York, New York
March 22, 1998
F-1
<PAGE>
TRINITY ELECTRONICS, INC.
- ------------------------------------------------------------------------------
BALANCE SHEETS
- ------------------------------------------------------------------------------
<TABLE>
September 30, December 31,
1 9 9 7 1 9 9 6
[Unaudited]
Assets: ------------ ------------
Current Assets:
<S> <C> <C>
Cash $ 610,176 $ 850,000
Accounts Receivable - [Net of Allowance for Doubtful
Accounts of $10,398 and $4,398] 296,854 196,081
Inventory 443,392 414,389
Prepaid Expenses and Other Current Assets 9,062 5,181
Advance - Related Party -- 1,150
---------- -----------
Total Current Assets 1,359,484 1,466,801
Property, Plant and Equipment - Net 13,829 18,359
---------- -----------
Total Assets $1,373,313 $ 1,485,160
========== ===========
Liabilities and Stockholder's Equity:
Current Liabilities:
Accounts Payable and Accrued Expenses $ 189,709 $ 180,497
Due to Stockholder 19,972 45,246
Accrued Profit-Sharing 39,492 51,365
Dividend Payable - Stockholder 441,694 --
Note Payable - Related Party - Current Portion 5,359 4,384
---------- -----------
Total Current Liabilities 696,226 281,492
Long-Term Liability:
Note Payable - Related Party - Net of Current Portion 6,246 9,740
---------- -----------
Total Liabilities 702,472 291,232
---------- -----------
Commitments and Contingencies -- --
---------- -----------
Stockholder's Equity:
Common Stock, No Par Value, 100,000 Shares Authorized,
15,000 Shares Issued and Outstanding 51,184 51,184
Retained Earnings 619,657 1,142,744
---------- -----------
Total Stockholder's Equity 670,841 1,193,928
---------- -----------
Total Liabilities and Stockholder's Equity $1,373,313 $ 1,485,160
========== ===========
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
TRINITY ELECTRONICS, INC.
- ------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------
<TABLE>
Nine months ended Years ended
September 30, December 31,
1 9 9 7 1 9 9 6 1 9 9 6 1 9 9 5
[Unaudited] [Unaudited]
------------ ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sales - Net $ 3,309,654 $ 2,817,191 $ 3,628,465 $ 3,574,704
Cost of Goods Sold 2,010,177 1,731,692 2,244,173 2,296,536
----------- ----------- ----------- -----------
Gross Profit 1,299,477 1,085,499 1,384,292 1,278,168
----------- ----------- ----------- -----------
Operating Expenses:
Officer's Salary 110,000 390,000 520,000 424,000
Other Salaries and Wages 291,340 227,648 312,252 269,969
Other Expenses 220,779 177,313 233,939 209,186
----------- ----------- ----------- -----------
Total Operating Expenses 622,119 794,961 1,066,191 903,155
----------- ----------- ----------- -----------
Income from Operations 677,358 290,538 318,101 375,013
----------- ----------- ----------- -----------
Other Income [Expense]:
Interest Income 5,160 16,437 23,506 13,637
Interest Expense - Related Party (533) (886) (1,145) (1,421)
----------- ----------- ----------- -----------
Total Other Income 4,627 15,551 22,361 12,216
----------- ----------- ----------- -----------
Income Before Provision for
Income Taxes 681,985 306,089 340,462 387,229
----------- ----------- ----------- -----------
Provision for Income Taxes 6,040 4,440 6,032 5,891
----------- ----------- ----------- -----------
Net Income $ 675,945 $ 301,649 $ 334,430 $ 381,338
=========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
TRINITY ELECTRONICS, INC.
- ------------------------------------------------------------------------------
STATEMENTS OF STOCKHOLDER'S EQUITY
- ------------------------------------------------------------------------------
<TABLE>
Common Stock Total
Number of Retained Stockholder's
Shares Amount Earnings Equity
------- -------- -------- ---------
<S> <C> <C> <C> <C>
Balance - December 31, 1994 15,000 $ 51,184 $ 509,092 $ 560,276
Net Income for the Year Ended
December 31, 1995 -- -- 381,338 381,338
Dividends Paid -- -- (17,269) (17,269)
-------- ----------- ----------- -----------
Balance - December 31, 1995 15,000 51,184 873,161 924,345
Net Income for the Year Ended
December 31, 1996 -- -- 334,430 334,430
Dividends Paid -- -- (64,847) (64,847)
-------- ----------- ----------- -----------
Balance - December 31, 1996 15,000 51,184 1,142,744 1,193,928
Net Income for the Nine Months Ended
September 30, 1997 [Unaudited] -- -- 675,945 675,945
Dividends Paid [Unaudited] -- -- (757,338) (757,338)
Dividends Payable [Unaudited] -- -- (441,694) (441,694)
-------- ----------- ----------- -----------
Balance - September 30, 1997
[Unaudited] 15,000 $ 51,184 $ 619,657 $ 670,841
======== =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
TRINITY ELECTRONICS, INC.
- ------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------
<TABLE>
Nine months ended Years ended
September 30, December 31,
1 9 9 7 1 9 9 6 1 9 9 6 1 9 9 5
[Unaudited] [Unaudited]
Operating Activities: ----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Net Income $ 675,945 $ 301,649 $ 334,430 $ 381,338
Adjustments to Reconcile Net ----------- ----------- ----------- -----------
Income to Net Cash Provided
by Operations:
Depreciation 4,759 4,525 6,036 10,035
Loss on Disposal of Equipment 157 -- -- --
Changes in Assets and Liabilities:
[Increase] Decrease in:
Accounts Receivable (100,773) 96,112 124,630 (81,224)
Inventory (29,003) (74,464) (80,550) (71,256)
Prepaid Expenses and Other Assets (3,881) (1,588) (2,338) 5,040
Interest Receivable -- (11,914) 8,333 (8,333)
Increase [Decrease] in:
Accounts Payable and Accrued
Expenses (2,549) 290,683 22,394 13,836
Income Taxes Payable (112) (2,962) (2,850) 2,962
Due to Related Party (25,274) (16,349) (10,031) (2,176)
----------- ----------- ----------- -----------
Total Adjustments (156,676) 284,043 65,624 (131,116)
----------- ----------- ----------- -----------
Net Cash - Operating Activities 519,269 585,692 400,054 250,222
----------- ----------- ----------- -----------
Investing Activities:
Cash Placed on Deposit -- -- -- (300,000)
Repayment of Deposit -- -- 300,000 --
Cash Paid for Equipment (386) (10,687) (16,971) (11,455)
Advance to Related Party -- -- (1,150) --
Repayment by Related Party 1,150 -- -- --
----------- ----------- ----------- -----------
Net Cash - Investing Activities 764 (10,687) 281,879 (311,455)
----------- ----------- ----------- -----------
Financing Activities:
Payments of Long-Term Debt (2,519) (3,039) (4,088) (3,813)
Dividends Paid (757,338) (64,847) (64,847) (17,269)
----------- ----------- ----------- -----------
Net Cash - Financing Activities (759,857) (67,886) (68,935) (21,082)
----------- ----------- ----------- -----------
Net [Decrease] Increase in Cash (239,824) 507,119 612,998 (82,315)
Cash - Beginning of Periods 850,000 237,002 237,002 319,317
----------- ----------- ----------- -----------
Cash - End of Periods $ 610,176 $ 744,121 $ 850,000 $ 237,002
=========== =========== =========== ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the periods for:
Interest $ 533 $ 886 $ 1,145 $ 1,421
Income Taxes $ 6,152 $ 7,402 $ 8,882 $ 1,420
Supplemental Schedule of Non-Cash Investing and Financing Activities:
A dividend payable to the sole stockholder, in the amount of $441,694 has been
accrued as of September 30, 1997.
See Notes to Financial Statements.
</TABLE>
F-5
<PAGE>
TRINITY ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
[1] Organization and Nature of Operations
Trinity Electronics, Inc. [the "Company"] was incorporated October 6, 1989. The
Company's revenues are predominantly generated from purchase and distribution of
board level components including capacitors, resistors, board to board
interconnects and back plane interconnects. The Company also provides cable
assembly services to its customers. The Company sells primarily to original
equipment manufacturers and contract manufacturers located in northern
California.
[2] Summary of Significant Accounting Policies
Cash and Cash Equivalents - Cash equivalents are comprised of certain highly
liquid investments with a maturity of three months or less when purchased. At
September 30, 1997 and December 31, 1996, there were no cash equivalents.
Allowance for Doubtful Accounts - The Company has provided for an allowance for
doubtful accounts on the basis of a review for collectibility of accounts
receivable at the end of each financial statement period. The allowance for
doubtful accounts amounted to $10,398 and $4,398 at September 30, 1997 and
December 31, 1996, respectively.
Inventory - Inventory, which consists of finished goods, is recorded at the
lower of cost or market. Cost is determined using the first-in, first-out
method. Inventory at September 30, 1997 was determined using an estimated gross
profit percentage..
Property, Plant and Equipment and Depreciation - Property, plant and equipment
is stated at cost. Depreciation is computed utilizing the straight-line method
generally over the estimated useful life of five to seven years.
Income Taxes - The Company has elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code. Under those provisions, the Company
does not pay federal corporate income taxes on its taxable income. Instead, the
stockholder is liable for federal income taxes on the Company's taxable income.
The Company is, however, responsible for California state income tax at the rate
of 1.5% of taxable income. Deferred income taxes are not material.
Risk Concentrations - Financial instruments that potentially subject the Company
to concentrations of credit risk include cash, cash equivalents and accounts
receivable arising from its normal business activities. The Company places its
cash and cash equivalents with high credit quality financial institutions
located in the western United States. The Company periodically has money in a
financial institution that is subject to normal credit risk beyond insured
amounts. This credit risk, representing the excess of the bank's deposit
liabilities reported by the bank over the amounts that would have been covered
by federal insurance, amounted to approximately $602,315 and $1,201,711 at
September 30, 1997 and December 31, 1996, respectively. The Company does not
require collateral or other security to support financial instruments subject to
credit risk.
Accounts receivable are primarily composed of balances due from customers in
northern California.
Regarding accounts receivable, the Company believes that credit risk is limited
due to the collection history with the Company's customer base. The Company
routinely monitors receivables aging and payments by customers, and based upon
factors surrounding the credit risk of its customers, establishes an allowance
for uncollectible accounts and, as a consequence, believes that its accounts
receivable credit risk exposure beyond such allowance is limited. Such
assessment may be subject to change in the near term.
F-6
<PAGE>
TRINITY ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #2
- ------------------------------------------------------------------------------
[2] Summary of Significant Accounting Policies [Continued]
Advertising - The Company expenses advertising costs as incurred. Total
advertising costs charged to expense amounted to $2,477, $3,055, $2,410 and
$1,084 for the nine months ended September 30, 1997 and 1996 and the years ended
December 31, 1996 and 1995, respectively.
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 date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.
Actual results could differ from those estimates.
[3] Property, Plant and Equipment and Depreciation
Property, plant and equipment consisted of the following:
September 30, December 31,
1 9 9 7 1 9 9 6
----------- -----------
Machinery and Equipment $ 71,293 $ 70,908
Motor Vehicle -- 20,957
Totals 71,293 91,865
Less: Accumulated Depreciation (57,464) (73,506)
Totals $ 13,829 $ 18,359
Depreciation expense amounted to $4,759, $4,525, $6,036 and $10,035 for the nine
months ended September 30, 1997 and 1996 and the years ended December 31, 1996
and 1995, respectively.
[4] Note Payable - Related Party
Note payable, uncollateralized, to the Company's sole stockholder is payable in
monthly installments of $436, including interest of 7.0% per annum. Payments
commenced January 15, 1995. Maturities of this debt at December 31, 1996 are as
follows:
December 31,
1997 $ 4,384
1998 4,700
1999 5,040
Total $ 14,124
Interest expense amounted to $533, $886, $1,145 and $1,421 for the nine months
ended September 30, 1997 and 1996 and the years ended December 31, 1996 and
1995, respectively.
[5] Related Party Transactions
The Company had only one stockholder, Mr. P. McQuade, during the periods covered
by these financial statements. Transactions between Mr. P. McQuade and the
Company included:
[a] Payment of interest and principle on a note payable [See Note 4].
[b] Reimbursement of expenses incurred. The amounts payable at September 30,
1997 and December 31, 1996 were $19,972 and $45,246, respectively
[disclosed as "Due to Stockholder"].
F-7
<PAGE>
TRINITY ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #3
- ------------------------------------------------------------------------------
[6] Commitments and Contingencies
The Company had an operating lease on its premises until December 1996. From
then, it occupied its premises on a month-to-month basis only.
Rent expense amounted to $32,319, $25,227, $33,886 and $31,441 for the nine
months ended September 30, 1997 and 1996 and the years ended December 31, 1996
and 1995, respectively.
The Company had no other material commitments or contingent liabilities.
[7] Employee Profit-Sharing Plan
The Company had an approved defined contribution profit-sharing plan covering
employees that had completed 1,000 hours of service and were actively employed
at the end of the fiscal year. The Company contributed to the plan on a
discretionary basis and each employees' account vested 100% over six years
service. As of October 1, 1997, the plan was terminated as a result of the
acquisition of the Company and accordingly all employees were 100% vested. The
Company contributions charged to expense were $39,492, $38,524, $51,365 and
$41,423 for the nine months ended September 30, 1997 and 1996 and the years
ended December 31, 1996 and 1995, respectively.
[8] Subsequent Events
On December 22, 1997, the Company merged with and into TMCI/Trinity Acquisition
Corp., a wholly owned subsidiary of TMCI Electronics, Inc. ["TMCI"]. The merger
agreement is effective as of October 1, 1997. TMCI paid the sole stockholder a
total consideration of $4,290,000 in connection with the merger, including
$1,000,000 in cash, $1,000,000 in a promissory note due March 9, 1998, $290,000
in a promissory note due January 4, 1998 extended to April 15, 1998 and
$2,000,000 in common stock of TMCI resulting in the issuance of 404,539 shares
of the common stock of TMCI. The common stock issued in connection with the
merger is being held in escrow as security for the representations and
warranties of Trinity and the sole stockholder of Trinity and as security for
the performance of the sole stockholder of Trinity of his obligations pursuant
to an Employment Agreement entered into in connection with the merger.
[9] Unaudited Interim Statement
The financial statements as of September 30, 1997 and for the nine months ended
September 30, 1997 and 1996 are unaudited; however, in the opinion of management
all adjustments [consisting solely of normal recurring adjustments] necessary to
make the financial statements not misleading have been made. The results of the
interim periods are not necessarily indicative of the results to be obtained for
a full fiscal year.
[10] New Authoritative Accounting Pronouncements
The Financial Accounting Standards Board ["FASB"] has issued Statement of
Financial Accounting Standards ["SFAS"] No. 130, "Reporting Comprehensive
Income." SFAS No. 130 is effective for fiscal years beginning after December 15,
1997. Earlier application is permitted. Reclassification of financial statements
for earlier periods provided for comparative purposes is required. SFAS No. 130
is not expected to have a material impact on the Company.
F-8
<PAGE>
TRINITY ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #4
- ------------------------------------------------------------------------------
[10] New Authoritative Accounting Pronouncements [Continued]
The FASB has issued SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information." SFAS No. 131 changes how operating segments are
reported in annual financial statements and requires the reporting of selected
information about operating segments in interim financial reports issued to
shareholders. SFAS No. 131 is effective for periods beginning after December 15,
1997, and comparative information for earlier years is to be restated. SFAS No.
131 need not be applied to interim financial statements in the initial year of
its application. SFAS No. 131 is not expected to have a material impact on the
Company.
[11] Fair Value of Financial Instruments
In assessing the fair value of financial instruments, the Company is required to
make assumptions, which are based on estimates of market conditions and risks
existing at that time. For the financial instruments, including cash, accounts
receivable, accounts payable, amounts due to and from related parties, and
short-term debt, management estimates that the carrying amount approximated fair
value for the majority of these instruments because of their short maturities.
Management estimates that the carrying amount of its long-term indebtedness
approximates fair value since the interest rates currently offered to the
Company for debt of the same remaining maturities approximates the average
interest rates which the Company is currently paying.
. . . . . . . . . . . . .
F-9
<PAGE>
TMCI ELECTRONICS, INC.
- -------------------------------------------------------------------------------
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
[UNAUDITED]
- --------------------------------------------------------------------------------
The following pro forma condensed combined balance sheet as of
September 30, 1997 and the condensed combined statements of operations for the
nine months ended September 30, 1997 and the year ended December 31, 1996, give
effect to TMCI Electronics, Inc. and Subsidiaries [the "Company"] acquiring
through its TMCI/Trinity Acquisition Corp. subsidiary, all of the common stock
of Trinity Electronics, Inc. ["Trinity"] for a purchase price of $4,290,000.
The pro forma information is based on the historical financial
statements of the Company and the aforementioned acquired company, giving effect
to the transactions under the purchase method of accounting and the assumptions
and adjustments in the accompanying notes to the pro forma financial statements.
The pro forma balance sheet at September 30, 1997 gives effect to
the transaction as if it occurred on the balance sheet date.
The pro forma statements of operations for the nine months ended
September 30, 1997 and for the year ended December 31, 1996, gives effect to
these transactions as if they occurred at the beginning of the respective
periods presented.
The pro forma condensed combined financial statements have been
prepared by the Company 's management based upon the historical financial
statements of the Company and Trinity. These pro forma condensed combined
financial statements may not be indicative of the results that actually would
have occurred if the acquisitions had been in effect on the dates indicated. The
pro forma condensed combined financial statements should be read in conjunction
with the historical financial statements and notes contained elsewhere herein,
and in the Company's registration statement on Form 10-K and the Company's
quarterly reports on Form 10-Q.
P-1
<PAGE>
TMCI ELECTRONICS, INC.
- --------------------------------------------------------------------------------
PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF SEPTEMBER 30, 1997.
[UNAUDITED]
- --------------------------------------------------------------------------------
<TABLE>
Historicals
TMCI Pro Forma Pro Forma
Electronics, Inc. Trinity Adjustments Combined
Assets: ----------------- ------- ----------- -----------
Current Assets:
<S> <C> <C> <C> <C>
Cash $ 112,076 $ 610,176 $ (461,666)[3] $ 260,586
Accounts Receivable [Net] 5,260,122 296,854 -- 5,556,976
Inventory 7,938,699 443,392 -- 8,382,091
Deferred Income Taxes 68,748 -- -- 68,748
Prepaid Expenses and Other
Current Assets 523,856 9,062 (6,219)[1] 526,699
Notes Receivable - Stockholders 204,197 -- -- 204,197
----------- ---------- ---------- -----------
Total Current Assets 14,107,698 1,359,484 (467,885) 14,999,297
----------- ---------- ---------- -----------
Property and Equipment [Net] 5,381,313 13,829 36,171 [1] 5,431,313
----------- ---------- ---------- -----------
Other Assets:
Due from Stockholders and
Related Party 699,148 -- -- 699,148
Other Assets 22,895 -- -- 22,895
Goodwill 2,797,324 -- 3,583,000 6,380,324
----------- ---------- ---------- -----------
Total Other Assets 3,519,367 -- 3,583,000 7,102,367
----------- ---------- ---------- -----------
Total Assets $23,008,378 $1,373,313 $3,151,286 $27,532,977
=========== ========== ========== ===========
Liabilities and Stockholders' Equity:
Liabilities:
Accounts Payable and Accrued
Expenses $ 3,845,085 $ 229,201 $ 39 [1] $ 4,074,325
Notes Payable and Capital Lease
Obligation - Current Portion 4,145,112 5,359 2,290,000 [4] 6,440,471
Due to Affiliate 27,503 461,666 (461,666)[3] 27,503
----------- ---------- ---------- -----------
Total Current Liabilities 8,017,700 696,226 1,828,373 10,542,299
----------- ---------- ---------- -----------
Long-Term Liabilities:
Notes Payable and Capital Lease
Obligation - Net of Current
Portion 4,184,419 6,246 (6,246)[1] 4,184,419
Deferred Income Taxes 556,973 -- -- 556,973
----------- ---------- ---------- -----------
Total Long-Term Liabilities 4,741,392 6,246 (6,246) 4,741,392
----------- ---------- ---------- -----------
Total Liabilities 12,759,092 702,472 1,822,127 15,283,691
Stockholders' Equity 10,249,286 670,841 1,329,159[2,4] 12,249,286
----------- ---------- ---------- -----------
Total Liabilities and Stock-
holders' Equity $23,008,378 $1,373,313 $3,151,286 $27,532,977
=========== ========== ========== ===========
See Notes to Pro Forma Condensed Combined Financial Statements.
</TABLE>
P-2
<PAGE>
TMCI ELECTRONICS, INC.
- ------------------------------------------------------------------------------
PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997.
[UNAUDITED]
- --------------------------------------------------------------------------------
<TABLE>
Historicals
TMCI Pro Forma AdjustmentsPro Forma
Electronics, Inc.Trinity DR CR Combined
<S> <C> <C> <C> <C> <C>
Net Sales $27,773,034 $3,309,654 $ -- $ -- $31,082,688
Cost of Goods Sold 17,572,573 2,010,177 -- -- 19,582,750
----------- ---------- --------- --------- -----------
Gross Profit 10,200,461 1,299,477 -- -- 11,499,938
Operating Expenses 7,865,808 622,119 179,000[5] -- 8,666,927
----------- ---------- --------- --------- -----------
Income From
Operations 2,334,653 677,358 (179,000) -- 2,833,011
Other Income [Expense] (231,282) 4,627 (155,000)[6] -- (381,655)
----------- ---------- --------- --------- -----------
Income Before Provision
for Income Taxes 2,103,371 681,985 (334,000) -- 2,451,356
Provision for Income
Taxes 792,914 6,040 139,000[7] -- 937,954
----------- ---------- --------- --------- -----------
Net Income $ 1,310,457 $ 675,945 $(473,000) $ -- $ 1,513,402
=========== ========== ========= ========= ===========
Net Income Per
Share - Basic $ .37 $ .39
=========== ===========
Net Income Per
Share - Diluted $ .33 $ .36
=========== ===========
Weighted Average Shares
Outstanding - Basic 3,515,829 3,920,368
========= =========
Weighted Average Shares
Outstanding - Diluted 3,854,791 4,259,330
========= =========
See Notes to Pro Forma Condensed Combined Financial Statements.
</TABLE>
P-3
<PAGE>
TMCI ELECTRONICS, INC.
- --------------------------------------------------------------------------------
PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE YEAR ENDED
DECEMBER 31, 1996. [UNAUDITED]
- -------------------------------------------------------------------------------
<TABLE>
Historicals
TMCI Pro Forma AdjustmentsPro Forma
Electronics, Inc.Trinity DR CR Combined
<S> <C> <C> <C> <C> <C>
Net Sales $26,139,828 $3,628,465 $ -- $ -- $29,768,293
Cost of Goods Sold 20,237,746 2,244,173 -- -- 22,481,919
----------- ---------- --------- --------- -----------
Gross Profit 5,902,082 1,384,292 -- -- 7,286,374
Operating Expenses 5,377,132 1,066,191 238,900[5] -- 6,682,223
----------- ---------- --------- --------- -----------
Income From Operations 524,950 318,101 (238,900) -- 604,151
Other Income [Expense] (357,614) 22,361 (206,000)[6] -- (541,253)
----------- ---------- --------- --------- -----------
Income Before Provision
for Income Taxes 167,336 340,462 (444,900) -- 62,898
Provision for Income
Taxes 18,999 6,032 (40,000) -- (14,969)
----------- ---------- --------- --------- -----------
Net Income $ 148,337 $ 334,430 $(404,900) $ -- $ 77,867
=========== ========== ========= ========= ===========
Net Income Per
Share - Basic $ .05 $ .02
=========== ===========
Net Income Per
Share - Diluted $ .05 $ .02
=========== ===========
Weighted Average Shares
Outstanding - Basic 2,865,445 3,269,984
========= =========
Weighted Average Shares
Outstanding - Diluted 3,197,599 3,602,138
========= =========
See Notes to Pro Forma Condensed Combined Financial Statements.
</TABLE>
P-4
<PAGE>
TMCI ELECTRONICS, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[UNAUDITED]
- -------------------------------------------------------------------------------
[1] To adjust to market assets acquired and liabilities assumed.
[2] To eliminate equity accounts of acquired enterprise in the amount of
$671,000 and record the issuance of common stock.
[3] To reflect payment of dividends to stockholder.
[4] To record consideration paid of $1,000,000 in cash from draw down of line
of credit, $1,290,000 in promissory notes and issuance of 404,539 shares
with a fair value of $2,000,000 in exchange for all of the common stock of
Trinity which gives rise to goodwill of $3,583,000 calculated as follows:
Purchase Price $ 4,290,000
Less:Assets in Excess of Liabilities Acquired - At
Book Value 671,000
Adjustments to Fair Market Value - Net 36,000
-----------
Goodwill $ 3,583,000
===========
[5] To record amortization of goodwill over 15 years utilizing the
straight-line method. Calculated as follows:
Goodwill $ 3,583,000
Life 15
-----------
Annual Amortization $ 238,900
===========
Nine Month Amortization $ 179,000
===========
[6] To record interest expense on indebtedness, incurred related to the
acquisition at 9%:
Annual $ 206,000
===========
Nine Month Expense $ 155,000
===========
[7] To reflect additional income tax [benefit] expense:
Annual $ (40,000)
===========
Nine Month Expense $ 139,000
===========
. . . . . . . . . . . . . . .
P-5
<PAGE>
