<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported July 2, 1997)
-------------
U.S. Digital Communications, Inc.
------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
<TABLE>
<S> <C> <C>
Nevada 0-21225 52-2124492
- ------- ------- ----------
(State or Other Commission File (IRS Employer
Jurisdiction Number) Identification
Incorporation No.)
</TABLE>
<TABLE>
<S> <C>
2 Wisconsin Circle, Chevy Chase, Maryland 20815
- ------------------------------------------ -----
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (301) 961-1540
-------------
Not Applicable
-----------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
1
<PAGE>
The text of this 8-K/A is identical to the one filed originally on July 2, 1997
except that the required financial statements have been added as Exhibit Nos.
99.2 and 99.3. This filing should be read in conjunction with the more extensive
information provided in the Company's 10-K/A Amendment No. 2 for fiscal year
1997 concerning that year and subsequent events in fiscal year 1998.
Item 1. CHANGES IN CONTROL OF REGISTRANT
On June 20, 1997, Jerome Greenberg, a shareholder and one of the founders of the
Illinois company which was merged with the Registrant, agreed to contribute 90%
of the shares of Common Stock of the Registrant he presently owns to the
Registrant. Based on the number of shares listed in the Registrant's recent Form
10-K, Mr. Greenberg will contribute 5,902,200 shares of Common Stock and will
retain 655,800 (plus the 100,000 shares which may be acquired pursuant to the
exercise of vested stock options). No funds will be involved in this
transaction. As a result Mr. Greenberg will hold approximately 4% (instead of
30.6%) of the issued and outstanding of the Registrant's Common Stock.
Pursuant to a lawsuit filed by Registrant in the Federal Court in Chicago,
1,952,000 shares of Common Stock held by William H. Buck is the subject of a
court order restraining him from selling or transferring said shares until the
further order of the court. Mr. Buck has recently filed a declaratory judgment
suit in the same court in order to release 220,000 of such shares.
The Registrant intends to vigorously pursue its action against Mr. Buck and to
vigorously defend the action just filed against the Registrant.
Item 2. ACQUISITION OF ASSETS
On June 20, 1997, VISCORP (the "Company") entered into an agreement to acquire
all of the outstanding capital stock of SKYSITE COMMUNICATIONS CORPORATION
("SKYSITE"). The transaction, which is expected to close shortly, is contingent
upon the fulfillment of certain conditions by both of the parties. The Company
will account for the acquisition as a purchase.
The Company will issue 750,000 shares of its common stock to the shareholders of
SKYSITE, as well as options to purchase an additional 500,000 shares of its
common stock at an exercise price of $.40 per share. SKYSITE is basically a
telephone service provider utilizing certain satellite facilities centered over
most of North and Central America, Hawaii and parts of the Pacific and Atlantic
Oceans. Communications may be made in remote areas with equipment (a form of a
small disc) which focuses on a satellite in this coverage area. The satellites
are controlled by an unrelated entity to whom SKYSITE pays fees. Generally, the
telephone equipment used by SKYSITE customers does not operate through the
infrastructure of telephone lines which are under the aegis of the well
recognized telephone companies. The equipment sold to SKYSITE customers for this
type of service is significantly larger and more cumbersome, and costlier than
most cellular telephones presently being used in the general market. The cost
per minute is generally higher if within a particular country, but the rates may
be lower if used in making international calls.
A person receiving a call from a SKYSITE customer is not necessarily required to
have equipment that SKYSITE customers have. The current suppliers of the units
used by SKYSITE customers are Westinghouse Electric and Mitsubishi. SKYSITE has
entered into distributor agreements with both of these suppliers.
2
<PAGE>
Due, in part, to the fact that SKYSITE is a start up, it has not made any profit
but has incurred losses. No assurances can be given that SKYSITE will ever
become profitable. There also can be no assurance that the Company will acquire
SKYSITE, and if so, upon the terms set forth in their present Agreement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Reorganization, dated as of June 20, 1997,
by and among the Registrant, Skysite and the shareholders of
Skysite, amended *
99.2 Audited Financial Statements for Skysite Communications
Corporation for the years ended March 31, 1997 and 1996.
99.3 Pro forma financial information
* As previously filed
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
U.S. DIGITAL COMMUNICATIONS, INC.
(Registrant)
Date: February 25, 1999 By: /s/ Robert J. Wussler
-----------------------------------
Name: Robert J. Wussler
Title: Chairman
4
<PAGE>
Exhibit No. 99.2
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
SKYSITE COMMUNICATIONS CORPORATION
MARCH 31, 1997 AND 1996
<PAGE>
Skysite Communications Corporation
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS
BALANCE SHEETS 4
STATEMENTS OF OPERATIONS 5
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) 6
STATEMENTS OF CASH FLOWS 7
NOTES TO FINANCIAL STATEMENTS 8
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Skysite Communications Corporation
We were engaged to audit the accompanying balance sheets of Skysite
Communications Corporation as of March 31, 1997 and 1996, and the related
statements of operations, changes in stockholders' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management.
Because we were not engaged as auditors until January 1999, we were not
present to observe the taking of physical inventories at March 31, 1997 and 1996
(stated at $264,644 and $17,113, respectively), and we were unable to satisfy
ourselves concerning inventory quantities on hand at those dates by other
auditing procedures.
Since the inventory balances as of March 31, 1997 and 1996, materially
affect the determination of financial position, results of operations and cash
flows, the scope of our work was not sufficient to enable us to express, and we
do not express, an opinion on the financial statements referred to in the first
paragraph.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 1, 1999
3
<PAGE>
Skysite Communications Corporation
BALANCE SHEETS
March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-------- ---------
CURRENT ASSETS
<S> <C> <C>
Cash $ 9,235 $ -
Trade accounts receivable, net of allowance
for uncollectible accounts of $18,015 78,252 -
Inventory 264,644 17,113
------------- -----------
Total current assets $ 352,131 $ 17,113
OTHER NONCURRENT ASSETS 4,964 -
------------- -----------
Total assets $ 357,095 $ 17.113
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Bank overdraft $ - $ 8,107
Accounts payable and accrued expenses 970,667 74,623
Customer deposits 1,080 -
------------- -----------
Total current liabilities 971,747 82,730
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $1 par value; 1,000 shares
authorized, issued and outstanding 1,000 1,000
Additional paid-in capital 471,366 164,360
Accumulated deficit (1,087,018) (230,977)
----------- ----------
(614,652) (65,617)
----------- ---------
Total liabilities and stockholders' equity (deficit) $ 357,095 $ 17,113
============== ==========
</TABLE>
See notes to financial statements
4
<PAGE>
Skysite Communications Corporation
STATEMENTS OF OPERATIONS
Years ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
Sales
<S> <C> <C>
Equipment $ 718,671 $ 8,676
Airtime services 114,801 -
---------------- ----------------
Total sales 833,472 8,676
Cost of goods sold 890,360 13,689
---------------- ----------------
Gross margin (56,888) (5,013)
---------------- ----------------
Operating expenses
Sales and marketing 429,060 161,913
General and administrative 318,770 64,051
---------------- ----------------
Total operating expenses 747,830 225,964
---------------- ----------------
Loss from operations (804,718) (230,977)
Interest expense 51,323 -
---------------- ----------------
NET LOSS $ (856,041) $ (230,977)
================ ================
</TABLE>
See notes to financial statements
5
<PAGE>
Skysite Communications Corporation
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Years ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
Additional
paid-in Accumulated
Shares Amount capital deficit Total
---------- -------- -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Contributions 1,000 $ 1,000 $ 164,360 $ - $ 165,360
Net loss - - - (230,977) (230,977)
---------- -------- -------------- ---------------- ----------
Balance, March 31, 1996 1,000 1,000 164,360 (230,977) (65,617)
Contributions - - 307,006 - 307,006
Net loss - - - (856,041) (856,041)
---------- -------- -------------- ---------------- ----------
Balance, March 31, 1997 1,000 $ 1,000 $ 471,366 $ (1,087,018) $ (614,652)
========== ======== ============== ================ ==========
</TABLE>
See notes to financial statements
6
<PAGE>
Skysite Communications Corporation
STATEMENTS OF CASH FLOWS
Year ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
Cash flows from operating activities
<S> <C> <C>
Net loss $ (856,041) $ (230,977)
Changes in assets and liabilities
Increase in trade accounts receivable (78,252) -
Increase in inventory (247,531) (17,113)
Increase in other noncurrent assets (4,964) -
Increase in accounts payable and accrued expenses 896,044 74,623
Increase in customer deposits 1,080 -
---------------- ----------------
Net cash used in operating activities (289,664) (173,467)
---------------- ----------------
Cash flows from financing activities
Bank overdraft - 8,107
Repayment of bank overdraft (8,107) -
Contributions from stockholders 307,006 165,360
---------------- ----------------
Net cash provided by financing activities 298,899 173,467
---------------- ----------------
NET INCREASE IN CASH 9,235 -
Cash, beginning - -
---------------- ----------------
Cash, end $ 9,235 $ -
================ ================
Supplemental disclosures of cash transactions
Cash paid for interest $ 51,323 $ -
================ ================
</TABLE>
7
<PAGE>
Skysite Communications Corporation
NOTES TO FINANCIAL STATEMENTS
March 31, 1997 and 1996
NOTE A ORGANIZATION
Operations
----------
Skysite Communications Corporation ("Skysite" or the "Company") markets
satellite and wireless digital communications equipment and services
throughout the United States. The Company works closely with satellite
telephone manufacturers and systems operators to provide solutions to
communications needs of individuals and corporations.
NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Management has made estimates in connection with the valuation allowance on
deferred income taxes and the allowance for doubtful accounts in connection
with trade accounts receivable.
Inventory
---------
Inventory, which consists primarily of finished goods, is stated at the lower
of cost or market on a first-in, first-out basis. Cost is determined using
the weighted average cost method.
Advertising Costs
-----------------
In accordance with the AICPA's Statement of Position 93-7, "Reporting on
Advertising Costs," costs for advertising are expensed as incurred. Such
costs are included in sales and marketing expenses in the accompanying
statements of operations.
Revenue Recognition
-------------------
The Company recognizes equipment sales revenue upon shipment. Airtime
services are recognized in the period in which communications services are
rendered.
8
<PAGE>
Skysite Communications Corporation
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
March 31, 1997 and 1996
NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
-------------------
The Company uses the allowance method for doubtful accounts. Additions are
made to the allowance account when doubt arises regarding the collectability
of account balances.
Concentration of Credit Risk
----------------------------
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of accounts receivable.
Risk with respect to accounts receivable is generally diversified among a
number of entities comprising the Company's customer base. The Company
performs ongoing credit evaluations of its customers' financial condition and
maintains allowances for potential credit losses. At March 31, 1997, there
was no required allowance.
Income Taxes
------------
Deferred income taxes are recognized based on the estimated future tax effects
of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amount used for income
tax purposes. Valuation allowances are established when necessary to reduce
deferred tax assets to the amounts expected to be realized. Income tax
expense represents the current tax provision for the period and the change
during the period in deferred tax assets and liabilities.
NOTE C SIGNIFICANT CUSTOMERS/SUPPLIERS
A significant portion of the Company's net revenue is derived from a limited
number of customers. During the year ended March 31, 1997, approximately 31%
of the Company's total net revenue was derived from two customers. In
addition, during the year ended March 31, 1997, the Company purchased its
supplies from two suppliers--Westinghouse Electric and American Mobile
Satellite Corporation.
NOTE D RELATED PARTY TRANSACTIONS
During 1997 and 1996, the Company made advances to an affiliate of a
stockholder totaling $13,423 and $41,880, respectively. The advances were
noninterest bearing and were written off in 1997 and 1996. In addition,
during 1996, equipment sales to an affiliate of a stockholder totaled $5,995.
9
<PAGE>
Skysite Communications Corporation
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
March 31, 1997 and 1996
NOTE E INCOME TAXES
The components of the provision for income taxes for the years ended March 31,
1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
Deferred taxes (benefit)
<S> <C> <C>
Federal $ (289,982) $ (72,439)
State (76,760) (20,582)
---------------- ----------------
Income tax benefit (366,742) (93,021)
Increase in valuation allowance 366,742 93,021
---------------- ----------------
Income tax provision $ - $ -
================ ================
</TABLE>
Components of the Company's deferred tax assets as of March 31, 1997 and 1996
are as follows:
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
Deferred taxes assets
<S> <C> <C>
Net operating loss carryforwards $ 459,763 $ 93,021
Valuation allowance (459,763) (93,021)
---------------- ----------------
$ - $ -
================ ================
</TABLE>
Because of the uncertainty associated with future realization of the deferred
tax assets, the deferred tax asset has been offset in total by a valuation
allowance.
10
<PAGE>
Skysite Communications Corporation
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
March 31, 1997 and 1996
NOTE E INCOME TAXES (Continued)
The Company has net operating loss ("NOL") carryforwards for federal tax
return purposes that may be offset against future taxable income. The use of
the NOLs is subject to statutory and regulatory limitations regarding changes
in ownership. If not used, the carryforwards will expire as follows:
<TABLE>
<S> <C> <C>
2011 $93,021
2012 366,742
------------
$ 459,763
=============
</TABLE>
NOTE F COMMITMENTS AND CONTINGENCIES
Supplier Agreement
------------------
The Company was subject to a "take-or-pay" provision pursuant to an agreement
with a supplier of private network satellite products and services. Under the
original agreement, entered into in 1996, Skysite had a minimum purchase
commitment of $250,000 for the 12 months ended June 30, 1997. Skysite made
total purchases of approximately $105,332 through March 31, 1997. Through
December 31, 1997, the Company made total purchases of approximately $419,000.
Effective January 1, 1998, the Company executed a new agreement with the
supplier requiring the Company to make future minimum purchases from the
supplier as follows:
Year ending December 31, 1998 $ 252,000
1999 572,000
2000 892,000
2001 1,212,000
2002 1,532,000
2003 1,852,000
2004 2,172,000
2005 1,206,000
-------------
$ 9,690,000
=============
11
<PAGE>
Skysite Communications Corporation
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
March 31, 1997 and 1996
NOTE F COMMITMENTS AND CONTINGENCIES (Continued)
Lease
-----
In August 1996, the Company entered into an operating lease for office space
that expired in August 1998. In August 1998, the Company entered into a lease
for new office space that expires in July 1999. As of March 31, 1997, the
Company had the following minimum lease obligations:
Year ending March 31, 1998 $ 33,480
1999 58,175
2000 22,000
----------------
$ 113,655
================
Total rent expense was $21,181 for the year ended March 31, 1997. No rent
expense was incurred during the year ended March 31, 1996.
NOTE G LITIGATION
On October 6, 1997, the former president of the Company filed a complaint with
the Labor Commissioner of the State of California, seeking damages for
vacation pay and wellness days he alleges he was due upon termination, in the
amount of $9,300. A hearing on the former president's claim was held on June
2, 1998, pursuant to which the Labor Commissioner issued a decision in favor
of the former president in the amount of $2,500.
On March 5, 1997, a vendor filed a complaint against the Company alleging
actions for open account and breach of contract resulting from the Company's
alleged obligation to place certain advertisements in the vendor's
publications. The case was settled in October 1998, and the vendor was paid
approximately $10,000.
On February 6, 1997, a vendor filed a complaint against the Company alleging
actions for open account and account stated, and seeking monetary damages.
The case was settled on December 12, 1997 whereby the Company agreed to pay
the vendor $19,308.
12
<PAGE>
Skysite Communications Corporation
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
March 31, 1997 and 1996
NOTE G LITIGATION (Continued)
On November 12, 1997, a vendor filed a complaint against the Company alleging
breach of contract. In January 1998, the Company agreed to pay the vendor
$5,044.
On April 1, 1998, a vendor filed a complaint alleging that the Company
breached a distribution argument. In June 1998 the vendor and the Company
entered into a settlement agreement and the vendor was paid $430,000.
NOTE H SUBSEQUENT EVENTS
Sale of Skysite
---------------
On June 30, 1997, the Company entered into an agreement and plan of
reorganization (the "Agreement") with U.S. Digital Communications ("USDI"),
formerly Visual Information Service Corporation ("Viscorp"). Under the
agreement, the shareholders of Skysite were to receive 750,000 shares of
common stock of USDI, as well as options to purchase an additional 500,000
shares of restricted common stock at an exercise price of $.40 per share.
The stock of Skysite was transferred to USDI on August 26, 1997. Subsequent
to the sale, a dispute arose between USDI and the former President of Skysite
related to the value of Skysite at the time of the acquisition. As a result
of this dispute, USDI withheld the issuance of its shares. During 1998, USDI
entered into an amended agreement with the shareholders of Skysite, except for
the former president who was originally allocated 240,000 shares. Under the
terms of this amended agreement, the other shareholders' shares and options
were placed in an escrow account in October 1998.
On January 29, 1999, the former president of the Company filed a complaint
against the Company and others in Los Angeles County Superior Court alleging
breach of contract; fraud and deceit; negligent representation; specific
performance; conversion; trespass; and seeking money damages and that USDI
perform its obligations under the agreement to acquire Skysite by issuing and
delivering to the former president shares and options to purchase shares of
the common stock of USDI. The Company is unable to express an opinion as to
the outcome of this matter and has made no independent investigation of
potential claims, defense and counterclaims. The Company intends to
vigorously defend itself against this action.
13
<PAGE>
Exhibit No. 99.3
U.S. DIGITAL COMMUNICATIONS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
Pro Forma Pro Forma
US Digital Pro Forma March 31,
Communications Skysite Adjustments 1997
-------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents $ 1,510,315 $ 9,235 $ (262,861) $ 1,256,689
Trade accounts receivable, net - 78,252 - 78,252
Inventory 1,389 264,644 - 266,033
Other receivable 20,000 - - 20,000
Prepaid expenses 31,820 - - 31,820
----------- --------- ----------- -----------
Total current assets 1,563,524 352,131 (262,861) 1,652,794
Property and equipment, net 86,289 - 11,474 97,763
Intangible assets, net 86,950 - 788,567 875,517
Other noncurrent assets 6,414 4,964 4,200 15,578
----------- --------- ----------- -----------
Total assets $ 1,743,177 $ 357,095 $ 541,380 $ 2,641,652
=========== ========= =========== ===========
LIABILITIES AND STOCKHOLDERS (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses 979,948 970,667 - 1,950,615
Customer deposits - 1,080 - 1,080
Stockholder loans 744,385 - - 744,385
Accrued interest on stockholder loans 9,841 - - 9,841
Notes payable 13,527 - - 13,527
Minimum royalty obligation 450,000 - - 450,000
Due to former officers and stockholders 203,522 - - 203,522
----------- --------- ----------- -----------
Total current liabilities 2,401,223 971,747 - 3,372,970
Notes payable (net of current portion) 25,034 - - 25,034
----------- --------- ----------- -----------
Total liabilities 2,426,257 971,747 - 3,398,004
----------- --------- ----------- -----------
Commitments and contingencies
----------- --------- ----------- -----------
Stockholders' (deficit):
Preferred stock 20,318 - - 20,318
Common stock 221,280 1,000 (1,000) 221,280
Additional paid-in capital 16,967,773 471,366 (471,366) 16,967,773
Common stock warrants 1,249,577 - - 1,249,577
Deferred compensation (3,713,542) - - (3,713,542)
Common stock to be issued - - 389,583 389,583
Stockholders' receivable - - (200,000) (200,000)
Accumulated deficit (15,428,486) (1,087,018) 824,163 (15,691,341)
----------- --------- ----------- -----------
Total stockholders' (deficit) (683,080) (614,652) 541,380 (756,352)
----------- --------- ----------- -----------
Total liabilities and
stockholders' (deficit) $ 1,743,177 $ 357,095 $ 541,380 $ 2,641,652
----------- --------- ----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
U.S. DIGITAL COMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended March 31, 1997
(Unaudited)
Pro Forma
US Digital
Communications Skysite Pro Forma
March 31, 1997 acquisition March 31, 1997
--------------- -------------- --------------
Sales:
<S> <C> <C> <C>
Equipment - 99,020 B 99,020
Services - 38,950 B 38,950
--------------- -------------- --------------
Total sales - 137,970 137,970
Cost of goods sold - 160,106 B 160,106
--------------- -------------- --------------
Gross margin - (22,136) (22,136)
--------------- -------------- --------------
Operating expenses:
Sales and marketing - 92,514 B 92,514
General and administrative 499,229 76,109 B 627,909
52,571 C
Stock option compensation 97,896 - 97,896
--------------- -------------- --------------
Total operating expenses 597,125 221,194 818,319
--------------- -------------- --------------
Loss from operations (597,125) (243,330) (840,455)
--------------- -------------- --------------
Other income (expense):
Interest expense (28,465) (29,667) B (58,132)
--------------- -------------- --------------
Total other income (expense), net (28,465) (29,667) (58,132)
--------------- -------------- --------------
Net loss (625,590) (272,997) (898,587)
Dividends on preferred stock (416,149) - (416,149)
--------------- -------------- --------------
Net loss available to common stockholders $ (1,041,739) $ (272,997) $ (1,314,736)
=============== ============== ==============
Net loss per common share:
Basic $ (0.05) $ (0.06)
Diluted $ (0.05) $ (0.06)
Weighted average shares of
common stock outstanding 22,128,000 22,638,000
</TABLE>
See accompanying notes to pro forma condensed consolidated financial statement
<PAGE>
U.S. DIGITAL COMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the year ended December 31 1996
(Unaudited)
<TABLE>
Pro Forma
US Digital
Communications Skyline Pro Forma
December 31, 1996 acquisition December 31, 1996
----------------- ----------- -----------------
<S> <C> <C> <C>
Sales:
Equipment - 628,328 B 628,328
Services - 75,851 B 75,851
----------------- ----------- -----------------
Total sales - 704,179 704,179
----------------- ----------- -----------------
Cost of goods sold - 730,079 C 730,079
----------------- ----------- -----------------
Gross margin - (25,900) (25,900)
----------------- ----------- -----------------
Operating expenses:
Research and development 955,570 - 955,570
Minimum royalty expense 900,000 - 900,000
Fund-raising fees for failed offering 118,237 - 118,237
Sales and marketing - 530,020 B 530,020
General and administrative 2,985,039 286,099 B 3,481,422
210,284 C
Stock option compensation 2,297,083 - 2,927,083
----------------- ----------- -----------------
Total operating expenses 7,885,929 1,026,403 8,912,332
----------------- ----------- -----------------
Loss from operations (7,885,929) (1,052,303) (8,938,232)
----------------- ----------- -----------------
Other income (expense)
Interest expense (47,618) (21,656)B (69,274)
Interest and other income 7,385 - 7,385
Loss on investments and
disposal of equipment (130,756) - (130,756)
----------------- ----------- -----------------
Total other income
(expense), net (170,989) (21,656) (192,645)
----------------- ----------- -----------------
Net loss (8,056,918) (1,073,959) (9,130,877)
Dividends on preferred stock - - -
----------------- ----------- -----------------
Net loss available to common
stockholders $ (8,056,918) $ (1,073,959) $ (9,130,877)
================= ============ =================
Net loss per common share:
Basic $ (0.37) $ (0.41)
Diluted $ (0.37) $ (0.41)
Weighted average shares
of common stock outstanding 21,914,630 22,424,630
</TABLE>
See accompanying notes to pro forma condensed consolidated financial statements
<PAGE>
U.S. DIGITAL COMMUNICATIONS,INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1997 and December 31, 1996
<TABLE>
A
Debit Credit
----------------------------------
<S> <C> <C>
Current assets 289,440
Property and equipment 11,474
Other assets 4,200
Goodwill 1,051,422
Stockholders' recievable 200,000
Advance made from Company to Skysite prior to acquisition 231,039
Shares to be issued 389,583
Liabilities assumed 935,914
</TABLE>
<TABLE>
Record purchase of Skysite at fair value of assets and liabilities acquired.
B
Year Three Months
--------- -----------------
<S> <C> <C> <C> <C>
Cost of goods sold 730,079 160,106
Sales and marketing 530,029 92,514
General and administrative 286,099 76,109
Interest expense 21,656 29,667
Sales - equipment 628,328 99,020
Sales - services 75,851 38,950
</TABLE>
Record Skysite estimated profit and loss for the year 12/31/96 and the three
months ended 3/31/97.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
C
Year Three Months
--------- -----------------
Goodwill amortization 210,284 52,571
Accumulated amortization - Goodwill 210.284 52,571
</TABLE>
Record amortization of goodwill over five years on a straight line basis.
