<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of The Securities Exchange Act of 1934
Date Of Report: April 25, 1995
SPORTS-TECH, INC.
(Exact Name of Registrant as specified in its Charter)
<TABLE>
<S> <C> <C>
Nevada 0-16730 88-0085608
- ---------------------------------- -------------------------- -------------------
(State or other jurisdiction of (Commission File No.) (IRS Employer Identification
corporation) No.)
</TABLE>
<TABLE>
<S> <C>
400 Corporate Pointe, Suite 780
Culver City, CA 90230
- --------------- -----
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: 310-342-2800
<PAGE> 2
Item 7(a) Financial Statements of Businesses Acquired
Included herein are the following reports and financial statements of Stephen
Dunn & Associates, Inc.:
(i) Auditor's Report, dated June 2,1995.
(ii) Balance Sheets as of December 31, 1994 and 1993.
(iii) Statements of Income for the years ended December 31, 1994, 1993 and
1992.
(iv) Statements of Shareholder's Equity for the years ended December 31,
1994, 1993 and 1992.
(v) Statements of Cash Flows for the years ended December 31, 1994, 1993
and 1992.
(vi) Notes to the Financial Statements.
(vii) Balance Sheet as of March 31, 1995 ( Unaudited).
(viii) Statements of Operations for the Three Months ended March 31, 1995 and
1994 (Unaudited).
(ix) Statement of Shareholder's Equity for the Three Month period Ended
March 31, 1995 (Unaudited)
(x) Statements of Cash Flows for the Three Months ended March 31, 1995 and
1994 (Unaudited).
(xi) Notes to the Unaudited Financial Statements for the Three Months ended
March 31, 1995 and 1994.
Item 7( b) Unaudited Pro Forma Financial Information
The unaudited pro forma financial information presented in this section has
been prepared to reflect the Unaudited Combined Balance Sheet and Unaudited
Statements of Operations of SPORTS- TECH. Inc. ("SPORTS-TECH"), Alliance
Media Corporation ("Alliance") and Stephen Dunn & Associates, Inc.("SDA") as if
they had been one entity for the nine months ended March 31, 1995 and the
twelve months ended June 30, 1994.
The information contained in these unaudited combined financial statements
include pro forma adjustments to reflect the net proceeds from the sale of
common stock by Alliance, the acquisition of SDA by Alliance and the
acquisition, by merger, of Alliance by SPORTS-TECH, Inc.
In accordance with generally accepted accounting principles, the merger will be
accounted for as a purchase of Alliance. Consequently, the purchase price,
including the fair value of the shares issued in connection with the merger,
obligations assumed and merger costs, will be allocated to the assets and
rights acquired, based upon their respective fair values. Such allocation will
be based upon evaluations which are still in process. For purposes of the
accompanying unaudited pro forma financial statements, the pro forma
adjustments have been reflected on an estimated basis using preliminary
information available. No assurance can be given that the pro forma adjustments
will not differ materially from the amounts ultimately determined.
The unaudited pro forma combined financial statements should be read in
conjunction with the respective historical consolidated financial statements
and related notes of SPORTS-TECH, which have been previously filed with the
Commission, and the financial statements and related notes of SDA, which are
included herein.
The revenues and results of operations of the acquired businesses
included in the summary are not considered by management to be indicative
of the anticipated results of the business for periods subsequent to the
acquisitions by
<PAGE> 3
the SPORTS-TECH, nor are they considered to be indicative of the results
of operations which might have been attained for the periods presented.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf by the
undersigned hereto duly authorized.
SPORTS-TECH, INC.
Date: June 25, 1995 By: /s/ Martin S. McDermut
---------------------------------------------
Name: Martin S. McDermut
Title: Vice President and Chief Financial Officer
<PAGE> 4
STEPHEN DUNN & ASSOCIATES, INC.
__________
REPORT ON AUDITED FINANCIAL STATEMENTS
As Of December 31, 1994 And 1993
For The Years Ended December 31, 1994, 1993 And 1992
__________
<PAGE> 5
REPORT OF INDEPENDENT ACCOUNTANTS
__________
To the Shareholder
Stephen Dunn & Associates, Inc.
We have audited the balance sheets of Stephen Dunn & Associates, Inc. as of
December 31, 1994 and 1993, and the related statements of income, shareholder's
equity and cash flows for the three years ended December 31, 1994, 1993 and
1992. 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 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 Stephen Dunn & Associates,
Inc. as of December 31, 1994 and 1993, and the results of its operations and
its cash flows for the years ended December 31, 1994, 1993 and 1992 in
conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND LLP
Los Angeles, California
June 2, 1995
<PAGE> 6
STEPHEN DUNN & ASSOCIATES, INC.
BALANCE SHEETS
As Of December 31, 1994 And 1993
__________
<TABLE>
<CAPTION>
1994 1993
---- ----
A S S E T S:
<S> <C> <C>
Current assets:
Cash $164,910 $137,204
Accounts receivable, less allowance for doubtful accounts of $8,000
and $6,000 in 1994 and 1993, respectively 1,473,712 1,095,493
Prepaid expenses and other current assets
58,818 27,079
--------- ---------
Total current assets 1,697,440 1,259,776
Property and equipment - at cost, less accumulated depreciation of
$702,842 and $536,171 in 1994 and 1993, respectively - Note 2 352,309 434,536
Deposits 23,452 23,452
--------- ---------
Total assets $2,073,201 $1,717,764
========= =========
</TABLE>
LIABILITIES AND SHAREHOLDER'S EQUITY:
<TABLE>
<S> <C> <C>
Current liabilities:
Accounts payable $195,203 $80,463
Accrued wages and payroll taxes 262,586 189,103
Accrued expenses and other current liabilities 70,956 64,927
Loan payable, shareholder - Note 3 - 293,626
Current portion of long-term debt - Note 5 78,353 78,353
Income taxes payable 55,270 1,065
Deferred income taxes - Note 8 30,600 26,900
-------- -------
Total current liabilities 692,968 734,437
-------- -------
Long-term liabilities:
Long-term debt, less current portion - Note 5 10,517 88,870
Deferred income taxes - Note 8 - 1,400
Other taxes and licenses - Note 6
72,000 76,300
-------- -------
Total long-term liabilities 82,517 166,570
-------- -------
Commitments and contingencies - Notes 6 and 7
Shareholder's equity:
Common stock:
Authorized - 1,000 shares of no par common stock;
issued and outstanding - 400 shares 400 400
Loan receivable, shareholder (167,523) -
Retained earnings 1,464,839 816,357
--------- -------
Total shareholder's equity 1,297,716 816,757
--------- -------
Total liabilities and shareholder's equity $2,073,201 $1,717,764
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 7
STEPHEN DUNN & ASSOCIATES, INC.
STATEMENTS OF INCOME
For The Years Ended December 31, 1994, 1993 And 1992
__________
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net sales $13,595,763 $11,338,654 $11,251,180
Cost of sales 9,448,130 7,926,589 7,654,771
----------- ----------- -----------
Gross profit 4,147,633 3,412,065 3,596,409
Operating expenses
2,987,315 2,586,092 2,387,680
----------- ----------- -----------
Income from operations 1,160,318 825,973 1,208,729
----------- ----------- -----------
Other income (expense):
Interest income 7,485 15,553 11,499
Interest expense (36,855) (50,640) (58,556)
-------- -------- ---------
Total other expense (29,370) (35,087) (47,057)
-------- -------- ---------
Income before officer's salary 1,130,948 790,886 1,161,672
Officer's salary
434,061 451,050 1,308,200
-------- -------- ---------
Income (loss) before income taxes
and cumulative effect 696,887 339,836 (146,528)
Provision for income tax expense 48,405 20,376 5,596
-------- -------- ---------
Income (loss) before cumulative effect 648,482 319,460 (152,124)
Cumulative effect adjustment, for the change in income
tax accounting - Note 8 - (16,900) -
-------- -------- ---------
Net income (loss) $648,482 $302,560 ($152,124)
======== ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 8
STEPHEN DUNN & ASSOCIATES, INC.
STATEMENTS OF SHAREHOLDER'S EQUITY
For The Years Ended December 31, 1994, 1993 And 1992
__________
<TABLE>
<CAPTION>
Common Loans To Retained
Stock Shareholder Earnings Total
--------- ----------- -------- -------
<S> <C> <C> <C> <C>
Balance, January 1, 1992 $400 $665,921 $666,321
Net loss - (152,124) (152,124)
---- -------- --------
Balance, December 31, 1992 400 513,797 514,197
Net income - 302,560 302,560
---- -------- --------
Balance, December 31, 1993 400 816,357 816,757
Net income - 648,482 648,482
Loans to shareholder - ($167,523) (167,523)
---- --------- -------- --------
Balance, December 31, 1994 $400 ($167,523) $1,464,839 $1,297,716
==== ========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 9
STEPHEN DUNN & ASSOCIATES, INC.
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1994, 1993 And 1992
__________
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $648,482 $302,560 ($152,124)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation 166,671 153,438 148,825
Provision for doubtful accounts 2,000 - (6,000)
(Increase) decrease in:
Accounts receivable (380,219) (128,204) 39,947
Prepaid expense and other current assets (31,739) (15,430) 56,226
Increase (decrease) in:
Accounts payable 114,740 (72,112) 32,116
Accrued wages and payroll taxes 73,483 (596,201) 581,609
Accrued expenses and other current liabilities 6,029 (6,228) 48,498
Income taxes payable 54,205 (4,135) 3,565
Deferred income taxes 2,300 28,300 -
Other taxes and licenses (4,300) 23,700 27,100
----- ------ ------
Net cash provided by (used in)
operating activities 651,652 (314,312) 779,762
------- ------- -------
Cash flows from investing activities:
Purchase of equipment (84,444) (37,449) (82,589)
------ ------ ------
Net cash used in investing activities (84,444) (37,449) (82,589)
------ ------ ------
Cash flows from financing activities:
Payments by shareholder (293,626) (493,577) (318,681)
Loans to shareholder
(167,523) 306,055 403,238
Repayment of notes payable (78,353) (70,493) (78,601)
Repayment of bank credit line borrowings - - (200,000)
------ ------ -------
Net cash used in financing activities (539,502) (258,015) (194,044)
------- ------- -------
Net increase (decrease) in cash 27,706 (609,776) 503,129
Cash at beginning of year 137,204 746,980 243,851
------- ------- -------
Cash at end of year $164,910 $137,204 $746,980
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $37,050 $47,650 $50,357
Income taxes 4,065 6,629 2,031
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 10
STEPHEN DUNN & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
As Of December 31, 1994 And 1993
For The Years Ended December 31, 1994, 1993 And 1992
__________
1. Significant Accounting Policies:
The Company provides telemarketing and other services related to
fund-raising campaigns for non-profit entities located throughout the
United States.
Recognition Of Revenue:
Revenues from on-site campaigns are earned when pledged cash is
received. Revenues from off-site campaigns are earned when the
Company's services have been provided.
Property And Depreciation:
Property and equipment are reported at cost. Expenditures which
improve or extend the life of the asset are capitalized, while
maintenance and repairs which do not appreciably extend the useful
lives of the related assets are charged to expense as incurred.
Depreciation is provided using the straight-line method over the
estimated useful lives of the assets.
Income Taxes:
The Company has elected to be taxed under the provision of Subchapter
S of the Internal Revenue Code and as a result the Company's federal
taxable income or loss and tax credits are passed through to the
individual shareholder. However, the Company does have a liability
for income taxes on its net income in prior years to the extent of the
built-in gain which existed at the time of the S Corporation election
- see Note 6.
Some states either do not recognize the Company's "S" Corporation
status or require income taxes at a reduced rate. The income tax
provision relates to income taxes due on taxable income for those
states plus deferred taxes related primarily to the differences that
exist between the financial statement and the tax bases of the assets
and liabilities. These differences are primarily a result of
differences in depreciation methods and the use of the cash basis of
accounting for tax reporting.
Cash And Cash Equivalents:
For purposes of the Statements of Cash Flows, the Company considers
all highly liquid investments purchased with a maturity of three
months or less to be cash equivalents.
Continued
6
<PAGE> 11
STEPHEN DUNN & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
As Of December 31, 1994 And 1993
For The Years Ended December 31, 1994, 1993 And 1992
__________
2. Property And Equipment:
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Office furniture and equipment $805,383 $766,358
Automobile 26,581 26,581
Leasehold improvements 223,187 177,768
------- -------
1,055,151 970,707
Less, Accumulated depreciation (702,842) (536,171)
-------- -------
$352,309 $434,536
======= =======
</TABLE>
Depreciation expense for the years ended December 31, 1994, 1993 and
1992 was $166,671, $153,438 and $148,825, respectively.
3. Related Party:
The Company was indebted to its sole shareholder in the amount of
$293,626 as of December 31, 1993. Interest was payable at 10%. This
amount was repaid in 1994. The debt at December 31, 1993 included
unpaid interest of $331. Interest expense for the years ended
December 31, 1994, 1993 and 1992 was $9,799, $30,808 and $27,632,
respectively.
The Company advanced funds to its sole shareholder in the amount of
$166,179 as of December 31, 1994. The advance accrues interest at 10%
per annum, does not have a specified maturity date, and is reflected
as a reduction in Shareholder's Equity. At December 31, 1994 the
advance included unpaid interest of $1,344. Interest income for the
year ended December 31, 1994 was $1,344.
Continued
7
<PAGE> 12
STEPHEN DUNN & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
As Of December 31, 1994 And 1993
For The Years Ended December 31, 1994, 1993 And 1992
__________
3. Related Party, Continued:
The Company leases its corporate business premises in Venice,
California from its sole shareholder requiring monthly rental payments
of $9,905 through January 1994 and $11,805 until the lease term
expires on January 1, 1999, with an option for renewal at such time.
The Company incurs all costs of insurance, maintenance and utilities.
Total rent paid by the Company to its sole shareholder for the years
ended December 31, 1994, 1993 and 1992 was $139,754, $118,854 and
$118,854, respectively. Future minimum rental payments for this lease
are as follows:
<TABLE>
<S> <C>
1995 $141,654
1996 141,654
1997 141,654
1998 141,654
-------
$566,616
=======
</TABLE>
4. Concentrations Of Credit Risk:
The Company maintains cash deposits with primarily one financial
institution amounting to $254,051 and $222,837, respectively, at
December 31, 1994 and 1993. These deposits are insured for up to
$100,000 by the U.S. Federal Deposit Insurance Corporation.
Concentrations of credit risk with respect to trade receivables are
limited due to the large number of customers comprising the Company's
customer base, and their dispersion across many different geographical
regions within the United States. At December 31, 1994, the Company
had no significant concentrations of credit risk.
5. Long-Term Debt:
During the year ended December31, 1993, the Company refinanced two
loans into a single bank loan. The bank note payable requires monthly
principal payments of $6,529 plus interest based on the bank's prime
rate of interest (8.5% and 6.0% at December 31, 1994 and 1993,
respectively) plus 1.75%. The note matures on January 15, 1996. The
note is collateralized by substantially all of the Company's assets
and is guaranteed by the shareholder. The debt to shareholder is
subordinate to the bank debt. The bank loan contains financial
covenants including current ratio and working capital, debt/net worth,
capital expenditure limits and cash flows.
Continued
8
<PAGE> 13
STEPHEN DUNN & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
As Of December 31, 1994 And 1993
For The Years Ended December 31, 1994, 1993 And 1992
__________
5. Long-Term Debt, Continued:
Maturity of the bank note payable is as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
------------
<S> <C>
1995 $78,353
1996 10,517
------
88,870
Less current maturities 78,353
------
$10,517
======
</TABLE>
The Company also has available an unsecured $350,000 line of credit at
December 31, 1994 and 1993. There were no borrowings from the line at
December 31, 1994 and 1993.
Total interest incurred during the years ended December 31, 1994, 1993
and 1992 on bank borrowings was $17,089, $16,611 and $24,279,
respectively.
6. Commitments And Contingencies:
Effective October 1, 1990, the Company elected to be taxed as an S
Corporation. As a result, the Company is required to pay taxes on the
built-in gain which existed when the Company converted from a C
Corporation to an S Corporation. The Company estimates that the
minimum tax on the built-in gain was $25,500. The actual liability
may be higher if goodwill for tax purposes is determined to have
existed at October 1, 1990. A provision for the minimum expected
liability has been made. Interest and penalties of $15,045 and
$12,500 have been estimated and recorded at December 31, 1994 and 1993,
respectively. Subsequent to December 31, 1994, the Company will be
taxed as a C Corporation - see Note 9.
Continued
9
<PAGE> 14
STEPHEN DUNN & ASSOCIATES, INC.
NOTES TO
FINANCIAL STATEMENTS, Continued
As Of December 31, 1994 And 1993
For The Years Ended December 31, 1994, 1993 And 1992
__________
7. Lease Commitments:
In addition to leasing corporate office space (Note 3), the Company
leases office space in Berkeley, California, requiring monthly rental
payments of $9,135. The lease term expired on October 22, 1994 and was
extended to January 31, 1996 at $9,610 per month. There are no
further options to renew this lease. Total rent paid by the Company
for this location for the years ended December 31, 1994, 1993 and 1992
was $110,570, $109,575 and $109,519, respectively. Future minimum
rental payments for this lease are as follows:
<TABLE>
<S> <C>
1995 $115,320
1996 9,610
--------
$124,930
========
</TABLE>
The Company also leases office space in New York, requiring monthly
rental payments of $550. Total rent paid by the Company for this
location for the years ended December 31, 1994, 1993 and 1992 was
$6,600, $6,006, and $5,800, respectively.
8. Income Taxes:
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". The
cumulative effect of the change in accounting principle is included in
determining net income for 1993. The financial statements for prior
years have not been restated.
As of December 31, 1994 and 1993, deferred state tax liabilities
recognized for taxable temporary differences totalled $30,600 and
$39,800, respectively. Deferred state tax assets recognized for
deductible temporary differences and capital loss carryforwards as of
December 31, 1993 totalled $11,500, net of a valuation allowance of
$2,100; there were no deferred state tax assets or valuation
allowances recognized as of December 31, 1994.
Continued
10
<PAGE> 15
STEPHEN DUNN & ASSOCIATES, INC.
NOTES TO
FINANCIAL STATEMENTS, Continued
As Of December 31, 1994 And 1993
For The Years Ended December 31, 1994, 1993 And 1992
__________
8. Income Taxes, Continued:
The provision for state income taxes consists of the following
components:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Current taxes $5,596
$46,105 $8,976
Deferred taxes 2,300 11,400 -
------- ------ ------
$48,405 $20,376 $5,596
======= ======= ======
</TABLE>
The Company has a capital loss carryforward of $10,000 available for
offset against future capital gains.
9. Subsequent Events:
On April 25, 1995, all of the outstanding common stock of the Company
was acquired by Alliance Media Corporation and subsequently by
Sports-Tech, Inc. upon consummation of the merger between STI Merger
Corporation, a wholly owned subsidiary of Sports-Tech, Inc. and
Alliance Media Corporation. The Company has consequently changed its
fiscal year-end from December 31 to June 30, and as a result of the
acquisition the Company will be taxed as a C Corporation.
<PAGE> 16
STEPHEN DUNN & ASSOCIATES, INC.
INTERIM FINANCIAL STATEMENTS
AS OF MARCH 31, 1995 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1994
<PAGE> 17
STEPHEN DUNN & ASSOCIATES, INC.
BALANCE SHEET
March 31, 1995
(Unaudited)
ASSETS:
<TABLE>
<S> <C>
Current assets:
Cash $ 445,897
Accounts receivable, less allowance for doubtful accounts of $6,000 1,578,099
Prepaid expenses and other current assets 70,636
----------
Total current assets 2,094,632
Property and equipment - at cost, less accumulated depreciation of $744,504 317,958
Deposits 23,452
----------
Total assets $2,436,042
==========
LIABILITIES & SHAREHOLDER'S EQUITY:
Current liabilities:
Accounts payable $ 30,745
Accrued wages and payroll taxes 628,413
Accrued expenses and other current liabilities 165,508
Current portion of long-term debt 78,353
Income taxes payable 55,270
Deferred income taxes 30,600
----------
Total current liabilities 988,889
Long-term liabilities:
Long-term debt, less current portion 90,929
Other taxes and licenses 72,000
----------
Total liabilities 1,151,818
Commitments and contingencies
Shareholder's equity:
Common stock:
Authorized - 1,000 shares of no par common stock;
issued and outstanding - 400 shares 400
Retained earnings 1,450,003
Loan receivable, shareholder (166,179)
----------
Total shareholder's equity 1,284,224
----------
Total liabilities and shareholder's equity $2,436,042
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 18
STEPHEN DUNN & ASSOCIATES, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Net sales $3,551,095 $2,857,471
Cost of sales 2,588,125 2,143,347
---------- ----------
Gross Profit 962,970 714,124
Operating expenses 867,127 664,165
---------- ----------
Income from operations 95,843 49,959
Interest expense 2,164 4,743
---------- ----------
Income before officers' salary 93,679 45,216
Officer's salary 108,515 108,515
---------- ----------
Loss before income taxes (14,836) (63,299)
Provision for income tax expense - -
---------- ----------
Net loss $ (14,836) $ (63,299)
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 19
STEPHEN DUNN & ASSOCIATES, INC.
STATEMENT OF SHAREHOLDER'S EQUITY
For The Three Month Period Ended March 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Common Retained Loans to
Stock Earnings Shareholder Total
------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 $400 $1,464,839 $(167,523) $1,297,716
Net loss (14,836) (14,836)
Payments by shareholder 1,344 1,344
---- ---------- --------- ----------
Balance, March 31, 1995 $400 $1,450,003 $(166,179) $1,284,224
==== ========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 20
STEPHEN DUNN & ASSOCIATES, INC.
STATEMENTS OF CASH FLOWS
For The Three Month Periods Ended March 31, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1944
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (14,836) $(63,299)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 41,952 41,668
(Increase) decrease in:
Accounts receivable (104,387) (77,905)
Prepaid expenses and other current assets (11,818) 2,921
Increase (decrease) in:
Accounts payable (164,458) (488)
Accrued wages and payroll taxes 365,827 404,397
Accrued expenses and other current liabilities 94,552 35,649
--------- --------
Net cash provided by operating activites 206,832 342,943
Cash flows from investing activities:
Purchase of equipment (7,601) (57,404)
--------- --------
Net cash used in investing activities (7,601) (57,404)
Cash flows from financing activities:
Loans to shareholder (5,725)
Payments by shareholder 1,344
Borrowings on bank line of credit 100,000 350,000
Payments on bank line of credit (19,588) (19,588)
--------- --------
Net cash provided by financing activities 81,756 324,687
--------- --------
Net increase in cash 280,987 610,226
Cash at beginning of peroid 164,910 137,204
--------- --------
Cash at end of period $ 445,897 $747,430
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 21
STEPHEN DUNN & ASSOCIATES. INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
For The Three Months Ended March 31, 1995 and 1994
(Unaudited)
1. General
The interim financial statements included herein were prepared by
the Company without audit. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. The Company believes that the disclosures are
adequate to make the information presented not misleading. The
interim financial statements reflect all adjustments that are, in
the opinion of management, necessary for the fair presentation of
the results for the interim periods presented. All adjustments are
of a recurring nature. These interim financial statements should be
read in conjunction with the financial statements as of December 31,
1994 and 1993 and for the three years in the period ended December
31, 1994 and notes thereto also included in the Report on Form
8-K/A-1.
2. Subsequent Event
On April 25, 1995, all the outstanding common stock of the
Company was acquired by Alliance Media Corporation and
subsequently by SPORTS-TECH, Inc. upon consummation of the merger
between STI Merger Corporation, a wholly-owned subsidiary of
SPORTS-TECH, Inc. and Alliance Media Corporation. The Company
has consequently changed its fiscal year end from December 31
to June 30 and a result of the acquisition of the Company will
be taxed as a C corporation.
<PAGE> 22
SPORTS-TECH, Inc., Alliance Media Corporation and Stephen Dunn & Associates,
Inc.
Pro Forma Condensed Combined Balance Sheet as of March 31, 1995 and
Pro Forma Condensed Combined Statements of Operations For
The Nine Months Ended March 31, 1995 And The
Twelve Months Ended June 30, 1994
(Unaudited)
<PAGE> 23
SPORTS-TECH, Inc., Alliance Media Corporation and
Stephen Dunn & Associates, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
March 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------------------------------------ -----------------------------------
Alliance Stephen Dunn
SPORTS-TECH Media & Associates,
Inc. Corporation Inc. Adjustments Combined
------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $1,163,005 $ 14,174 $ 445,897 $ 7,250 (1) $ 1,630,326
Accounts receivable 6,940 5,547 1,578,099 1,590,586
Other current assets 8,278 70,636 78,914
---------- -------- ---------- ---------- -----------
Total current assets 1,178,223 19,721 2,094,632 7,250 3,299,826
Property and equipment, net 68,521 317,958 386,479
Investment in land 756,125 756,125
Cost in excess of net assets 7,051,360 (2) 7,051,360
Other assets 6,444 221,469 23,452 (221,469)(3) 29,896
---------- -------- ---------- ---------- -----------
Total assets 2,009,313 241,190 2,436,042 6,837,141 11,523,686
========== ======== ========== ========== ===========
LIABILITIES & STOCKHOLDERS EQUITY
Current liabilities:
Note payable to bank 78,353 78,353
Note payable other 90,000 90,000
Trade accounts payable 5,844 236,469 30,745 424,971 (4) 698,029
Accrued expenses 161,152 61,638 793,921 70,000 (4) 1,086,711
Income taxes payable 55,270 55,270
Payable to former owner 1,784,221 (5) 1,784,221
Deferred income taxes 30,600 30,600
---------- -------- ---------- ---------- -----------
Total current liabilities 256,996 298,107 988,889 2,279,192 3,823,184
Payable to former owner 3,000,000 (6) 3,000,000
Note payable to bank 90,929 90,929
Other taxes and licenses 72,000 72,000
---------- -------- ---------- ---------- -----------
Total liabilities 256,996 298,107 1,151,818 5,279,192 6,986,113
Stockholders' Equity:
Common Stock 59,123 1,800 400 40,300 (7) 101,623
Additional paid-in capital 6,053,475 34,747 2,708,009 (7) 8,796,231
Retained Earnings (Accumulated
Deficit) (4,224,812) (93,464) 1,450,003 (1,356,539)(8) (4,224,812)
Treasury stock (135,469) (135,469)
Loan receivable, shareholder (166,179) 166,179 (9) --
---------- -------- ---------- ---------- -----------
Total Stockholders' Equity 1,752,317 (56,917) 1,284,224 1,557,949 4,537,573
---------- -------- ---------- ---------- -----------
Total Liabilities and
Stockholders' Equity $2,009,313 $241,190 $2,436,042 $6,837,141 $11,523,686
========== ======== ========== ========== ===========
</TABLE>
See accompanying notes to unaudited proforma condensed combined balance sheet.
<PAGE> 24
SPORTS-TECH, Inc., Alliance Media Corporation and Stephen Dunn & Associates,
Inc.
Notes To Unaudited Pro Forma Condensed
Combined Balance Sheet
The unaudited pro forma condensed combined balance sheet presents the
historical balance sheets and pro forma adjustments had the
capitalization of Alliance Media Corporation ("Alliance"), the
acquisition of Stephen Dunn & Associates, Inc. ("SDA") and the merger
of Alliance and SPORTS-TECH. Inc. ("SPORTS-TECH") taken place as of
March 31, 1995. The pro forma purchase accounting adjustments are
summarized as follows:
1. Reflects the net cash proceeds from the issuance of common shares
of Alliance, net of the initial cash payment related to the
acquisition of SDA.
2. Reflects the $5,186,722 excess of initial acquisition payments,
note payable and acquisition costs of SDA over net assets acquired;
and the $1,864,638 excess of the value of 1,845,000 restricted shares
issued in connection with the acquisition of Alliance and related
investment banking and professional fees over the net assets acquired.
3. Reflects reclassification of deferred common stock issuance costs
and elimination of deferred acquisition costs.
4. Reflects the accounts payable and accrued expenses due relating to
the issuance of common stock and the merger of the companies.
5. Reflects the current portion of note payable and current payable
relating to the acquisition of SDA.
6. Reflects the long term portion of note payable relating to the
acquisition of SDA.
7. Reflects the issuance of SPORTS-TECH common shares, net of issuance
costs, relating to the acquisition of Alliance and SDA, and the
elimination of equity accounts.
8. Reflects the elimination of equity accounts.
9. Reflects the repayment of the shareholder note.
<PAGE> 25
SPORTS-TECH, Inc.,
Alliance Media Corporation and Stephen Dunn & Associates, Inc.
Unaudited Pro Forma Condensed Combined Statements of Operations
For The Nine Months Ended March 31, 1995
<TABLE>
<CAPTION>
Historical Pro Forma
--------------------------------------- ----------------------------
Alliance Stephen Dunn
SPORTS-TECH, Media & Associates
Inc. Corporation Inc. Adjustments Combined
------------ ----------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C>
Net sales $10,148,696 $10,148,696
Costs and expenses:
Cost of sales 7,176,173 7,176,173
Selling, general and
administrative $ 734,515 $93,464 2,667,769 $ (91,311)(1) 3,404,437
Depreciation and amortization 31,456 104,169 324,868 (2) 460,493
---------- -------- ----------- --------- -----------
Total costs and expenses 765,971 93,464 9,948,111 233,557 11,041,103
Income (loss) from operations (765,971) (93,464) 200,585 (233,557) (892,407)
---------- -------- ----------- --------- -----------
Other income (expense):
Interest income 10,490 7,485 17,975
Interest expense (18,276) (27,283) (293,951)(3) (339,510)
Gains from sales of securities 1,339,073 1,339,073
Other, net 318 1,590 1,908
---------- -------- ----------- --------- -----------
Total other income (expense) 1,331,605 - (18,208) (293,951) 1,019,446
Income from continuing operations before
discontinued operations and income taxes 565,634 (93,464) 182,377 (527,508) 127,039
Provision for income tax expense - - 24,202 - 24,202
---------- -------- ----------- --------- -----------
Income from continuing operations
before discontinued operations 565,634 (93,464) 158,175 (527,508) 102,837
Discontinued operations:
Loss from discontinued operations (293,751) (293,751)
Gain on disposal of discontinued operation 644,829 644,829
---------- -------- ----------- --------- -----------
Net income (loss) $ 916,712 ($93,464) $ 158,175 ($527,508) $ 453,915
========== ======== =========== ========= ===========
Income per share:
From continuing operations $ 0.10 $ 0.01
From discontinued operations 0.06 0.03
---------- -----------
Total $ 0.16 $ 0.04
========== ===========
Weighted average common and common
equivalent shares outstanding 5,837,216 (4) 10,087,216
========== ===========
See accompanying notes to unaudited pro forma condensed statements of operations.
</TABLE>
<PAGE> 26
SPORTS-TECH, Inc., Alliance Media Corporate and Stephen Dunn & Associates, Inc.
Unaudited Pro Forma Condensed Combined Statements of Operations
For The Twelve Months Ended June 30, 1994
<TABLE>
<CAPTION>
Historical Pro Forma
---------------------------------------- ---------------------------
Alliance Stephen Dunn
SPORTS-TECH, Media & Associates,
Inc. Corporation Inc. Adjustments Combined
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales $12,684,529 $12,684,529
Cost and expenses:
Cost of sales 9,005,768 9,005,768
Selling, general and administrative $ 1,675,207 $ 33,227 2,743,129 $(855,851)(1) 3,595,712
Related party charges 21,000 21,000
Depreciation and amortization 418,344 154,522 56,757 (2) 629,623
----------- -------- ----------- --------- -----------
Total costs and expenses 2,114,551 33,227 11,903,419 (799,094) 13,252,103
Income (loss) from operations (2,114,551) (33,227) 781,110 799,094 (567,574)
Other income (expense)
Interest income 4,732 4,732
Interest expense (7,476) (53,257) (374,523)(3) (435,256)
Gains from sales of securities 937,365 937,365
Dividend income 7,237 7,237
Other, net (21,104) (21,104)
----------- -------- ----------- --------- -----------
Total other income (expense) 916,022 - (48,525) (374,523) 492,974
Income (loss) from continuing operations before
discontinued operations and income taxes (1,198,529) (33,227) 732,585 424,571 (74,600)
Provision (credit) for federal income tax
on continuing operations (13,600) 44,579 30,979
----------- -------- ----------- --------- -----------
Income (loss) from continuing operations
before discontinued operations (1,184,929) (33,227) 688,006 424,571 (105,579)
Loss from discontinued operations (1,624,958) (1,624,958)
----------- -------- ----------- --------- -----------
Net income (loss) $(2,809,887) $(33,227) $ 688,006 $ 424,571 $(1,730,537)
=========== ======== =========== ========= ===========
Loss per share:
From continuing operations $(0.22) $(0.01)
From discontinued operations (0.31) (0.17)
----------- -----------
Totals $(0.53) $(0.18)
=========== ===========
Weighted average common and common
equivalent shares outstanding 5,336,135 (4) 9,586,135
=========== ===========
See accompanying notes to unaudited pro forma condensed combined statements of operations.
</TABLE>
<PAGE> 27
SPORTS-TECH, Inc., Alliance Media Corporation and Stephen Dunn & Associates,
Inc.
Notes To Unaudited Pro Forma Condensed Combined
Statements of Operations
The unaudited pro forma condensed combined statements of operations
combine the results of operations of SPORTS-TECH for its fiscal year
ended June 30, 1994 with the results of operations of SDA for the
twelve months then ended and the results of operations of Alliance
from inception (January 1, 1994) to June 30,1994; and the results of
operations of SPORTS-TECH for the nine months ended March 31, 1995
with the results of operations of SDA and Alliance for the nine months
then ended. The revenues and results of operations of the acquired
businesses included in the summary are not considered by management to
be indicative of the anticipated results of the business for periods
subsequent to the acquisitions by the Company, nor are they considered
to be indicative of the results of operations which might have been
attained for the periods presented.
The pro forma purchase accounting adjustments reflect the effect on
the combined results for the respective periods as if the merger had
taken place at the beginning of such periods. The adjustments are
summarized as follows:
1. Reflects salary adjustments to reflect revised Stephen Dunn
employment contract; and general and administrative expense estimated
for the consolidated company.
2. Reflects amortization of excess of cost over net assets acquired.
For purposes of these pro forma statements amortization periods of
fifteen years have been utilized. Actual amortization may vary
depending on fair values ultimately assigned to the assets and rights
acquired.
3. Reflects interest expense on acquisition indebtedness and
elimination of interest on loans to SDA shareholder.
4. Pro forma primary and fully diluted earnings per share include the
effect of the issuance of 4,250,000 shares in connection with the
merger.
