<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996
Commission File No. 02532
FIFTH DIMENSION INC.
-------------------------------------------------------
(Name of Small Business Issuer in its Charter)
New Jersey 21-0717490
------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) IdentificationNumber)
801 New York Avenue, Trenton, New Jersey 08638-3982
---------------------------------------- ----------------------------
(Address of Principal Executive Office) (Zip Code)
Issuer's Telephone Number (609) 393-8350
--------------
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT:
Common Stock - $0.33-1/3
------------------------
(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the Issuer's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
The Issuer's revenues for its most recent fiscal year (1996) were
$4,241,236.
As of March 17, 1997 the aggregate market value of the voting stock held by
non-affiliates of the Issuer was $1,913,863.
As of March 17, 1997 the Issuer had outstanding 1,093,636 shares of Common
Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual Shareholders Meeting to be held
May 14, 1997, are incorporated by reference into Part III.
Exhibit Index is located in Part IV, Page 31 and 32.
<PAGE>
PART I
Item 1. Description of Business
- ------ -----------------------
(a) Business Development
--------------------
(1) The Issuer was incorporated under the laws of the State of
New Jersey on May 1, 1959.
(2) No material changes have occurred in the Issuer's mode of
conducting business in the last three fiscal years.
(b) Business of Issuer
------------------
(1) The Issuer's business is limited to providing goods and services
relating to the electronics industry. The Issuer operates under two basic
product groups.
A. Development and manufacturing of "telemetry" (Slip Ring
Group);
B. Development and manufacturing of "components" (Mercury
Products Group).
TELEMETRY (Slip Ring Group)
---------------------------
Telemetry is the science of transmitting signals over a distance with
minimal distortion. Microwave transmission of telephone calls, information from
satellites, or the collection of data by a computer from sensors within a single
vehicle (an airplane for example) are examples of technologies using telemetric
science.
2
<PAGE>
PART I
Item 1. Description of Business
- ------ -----------------------
(b) Business of Issuer (continued)
------------------------------
The Issuer's Slip Ring Group manufactures custom built slip rings for
Applications such as Armored Vehicle Turrets, Inertial Measurement, Simulators,
Industrial Equipment, Radar Antennae, Aircraft and Fire Control Systems.
A typical Slip Ring consists of a brush or wiper that is always in
sliding electrical and mechanical contact with rings in rotation as part of a
rotor assembly. The Slip Ring assembly allows for the transmission of
electrical signals or power from a rotating member to a stationary member. In
addition, in some applications the transmission of pneumatic and/or hydraulic
fluid in a rotating member is also involved.
The Issuer is manufacturing custom slip ring assemblies for the
Trident Guidance System, the Abrams Tank Turret, radar pedestals, pharmaceutical
equipment, sophisticated amusement rides, robots for automobile manufacturing,
paper converting equipment and various other rotating applications. In
addition, the Issuer recently introduced a standard family of commercial slip
rings called the MAGNA Ring. In January 1996, the Issuer filed for a Patent on
a new Brushless Slip Ring.
In 1985, procurement responsibility for the Trident Slip Ring Assembly
was transferred from Draper Laboratories to Kearfott Guidance and Navigation
Corporation ("KG&N"). The Issuer has negotiated production contracts with KG&N
periodically since 1985, and has contracts in place for final delivery in 1997
with no new contracts pending. During 1996 revenues from these contracts
amounted to $3,256,090 or 76.8% of the Issuer's sales.
3
<PAGE>
PART I
Item 1. Description of Business
- ------ -----------------------
(b) Business of Issuer (continued)
------------------------------
COMPONENTS (Mercury Products Group)
-----------------------------------
The Issuer designs, manufactures, and markets a family of Mercury
switches and relays to various military and commercial users. These switches
are of three types.
Tilt switches, which operate when the switch is physically rotated
about an axis, so that the Mercury makes or breaks an electrical contact as
required. Typical applications are for burglar alarms, telephones, household
appliances, toys, etc.
Magnetically actuated switches which operate when a magnetic field is
applied, either by a permanent magnet, or by an electromagnet. When operated by
an electromagnet, these are called relays. The Issuer's magnetically operated
Mercury switches are unique in that they are position insensitive (i.e. they may
be mounted to operate in any position, even while moving).
Impulse Switches are components which provide an electrical signal in
the event a shock of sufficient magnitude is encountered, such as by sudden
starting or stopping. Typical applications include fusing for ordnance,
vibration sensors, motion and similar security devices.
In 1989, a development program was undertaken by this group to
manufacture a mercury level sensor for the Paveway system. Paveway is the
"smart" bomb guidance system developed by Texas Instruments. Development of
Paveway III was completed in 1993 and included a new sensor package resulting in
significant cost reductions and quality improvement. This is an ongoing program
with substantial product shipped in 1996. Continued production through 1997 or
beyond is likely.
4
<PAGE>
PART I
Item 1. Description of Business
- ------ -----------------------
(b) Business of Issuer (continued)
------------------------------
(2) All products manufactured by the Issuer are shipped from the
factory as specified by the customer, either standard carrier or special
services.
(3) A press release is generally issued as a form of advertising
newly developed products.
(4) The Issuer experiences intense competition with respect to most
areas of its business. The Issuer competes primarily on the basis of
performance and reliability of its products, the ability of its products to
perform in severe environments encountered in military, aerospace and high
reliability commercial applications, prompt and responsive contract performance,
price, and the Issuer's technical competence. The Issuer believes that its
product lines and its ability to integrate its products into systems and sub-
systems, and to interface these systems with end-user applications, provide the
Issuer with an advantage over many of its competitors. In addition, the applied
research funding since 1995 is believed to be key to developing products with
competitive advantages.
(5) The raw materials for the manufacture of the Issuer's products are
available from several sources, such as Carpenter Technology Corporation and
Engelhard Corporation, and generally are made to order.
(6) The Issuer's business and the products offered relate to the
electronics industry for use in defense, industrial, and commercial
applications.
Revenue from billings during 1996 and 1995, respectively on a series
of production contracts, currently in the Telemetry (Slip Ring) Group, with one
major domestic customer (Kearfott Guidance and Navigation Corporation), amounted
to 76.8% and 76.3% of total sales. The current contract is expected to be
completed in 1997 and there are no anticipated additional contracts from
Kearfott Guidance and Navigation Corporation at this time.
5
<PAGE>
PART I
Item 1. Description of Business
- ------ -----------------------
(b) Business of Issuer (continued)
------------------------------
(7) Many of the Issuer's products are patented. These include patents
on position insensitive mercury switches; normally open contact mercury impulse
sensors; and normally open or normally closed tilt switches.
In 1983, a Licensing Agreement was signed with Saunders-Roe
Developments Limited (England), (now known as Saunders-Roe, Limited (England)),
for a ten year period, covering manufacture and sole source sales of the
Issuer's Tilt Switches, to Common Market countries, and non-sole source
marketing elsewhere, excluding the United States. The Issuer provided
technical data, equipment, engineering and start-up service in exchange for
licensing fees and an ongoing royalty. In 1987, the license was extended to
include the Issuer's LCII Switch. Revenues attributable to these royalties
amounted to $5,441 during 1996. Agreement was reached which would extend this
license for a period of ten years (August 2003). However, in 1996, Saunders-Roe
Limited advised that they no longer planned to manufacture Mercury Switches and
are in discussions relative to transferring technology to another manufacturer.
This transfer requires approval of the Issuer.
(8) Where products are manufactured that may have a military
application, approval for export is required from the Commerce Department or the
State Department.
(9) the Issuer provides information to applicable federal, state, and
local governments regarding compliance with all applicable laws. These
regulations require an ever increasing cost of doing business and result in
increasing product costs.
(10) Approximately $215,000 was spent by the Issuer on Engineering and
Research activities during 1996 as compared with $175,000 in 1995. This
activity was primarily directed to new applications for existing products, the
development of new products, and process improvement. The Issuer directly funds
all Research and Development activity.
6
<PAGE>
PART I
Item 1. Description of Business
- ------ -----------------------
(b) Business of Issuer (continued)
------------------------------
(11) Compliance with Federal, State and local provision which have
been enacted or adopted regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment or the
Issuer's employees, has had a material effect on the Issuer's earnings based
upon increases in time spent by the Issuer's employees and fees paid for outside
services to monitor and review environmental control. It has not had a material
effect on capital expenditures and the competitive position of the Issuer. The
costs to the Issuer to comply with Environmental Protection Agency Regulations
in 1996 amounted to approximately $53,000 in labor, equipment and materials
compared with $39,885 in 1995.
(12) The Issuer has a total of 51 full-time employees.
Item 2. Description of Property
- ------ -----------------------
(a) On September 1, 1983, the Issuer acquired the premises at 801 New
York Avenue, Trenton, New Jersey. This property had been leased by the Issuer
since 1980, and serves as the sole manufacturing and office facility of the
Issuer. The premises was purchased from Princeton Commerce Center, Inc., which
has no material relationship with the Issuer, at a purchase price of $425,000.
A down payment of $25,000 was made on September 1, 1983, and two Mortgage Notes
were held by the seller, the terms of which are as follows: $350,000 payable in
monthly installments over a ten (10) year period at 9% interest and $50,000
payable in monthly installments over a three (3) year period at 10% interest.
The $50,000 Note was paid in full during 1986. The balance of the $350,000 Note
was paid during 1993.
The building is a one story brick building containing 18,000 square
feet in good condition located in an industrial section on a well traveled
street with an ongoing Maintenance Program in place.
(b) The Issuer has made no Real Estate Investments.
7
<PAGE>
PART I
Item 3. Legal Proceedings
- ------ -----------------
(a) The U.S. Environmental Protection Agency ("EPA") has filed suit
against Princeton Gamma Tech ("PGT"), an unrelated third party, alleging that
releases of hazardous substances by PGT have contaminated two sites in New
Jersey. The Issuer occupied a facility destroyed by fire in 1974, which was
located in the general vicinity of the identified sites. PGT has filed a third
party complaint against the Issuer, among others, alleging that these parties
also caused the contamination.
Originally the EPA listed the Issuer as a potentially responsible
party; however, following their initial investigation, the EPA elected to file
suit against PGT only. In a January 17, 1996 letter, the United States
Environmental Protection Agency ("EPA") stated that it has information which
documents the release of hazardous substances from the property that Fifth
Dimension formerly occupied in Rocky Hill, New Jersey, that is affecting the
groundwater, and advised Fifth Dimension Inc. that it is potentially liable
under the Comprehensive Environmental Response, Compensation and Liability Act.
Based on the information, EPA stated that Fifth Dimension should perform some
response action, at the minimum an investigation to determine the nature, extent
and impact of contamination at the property. The Issuer is undertaking
additional investigation. The Issuer continues to believe that it did not
contribute to the contamination, and intends to vigorously defend this action.
As this case is still in discovery, the Issuer's special counsel is unable to
predict an outcome of this matter at this time.
The Issuer's insurance carrier has agreed to pay a portion of the
costs attributable to the defense of this matter but has reserved its rights to
withdraw in the event they disclaim coverage. Management believes the insurance
company is liable for all costs and is actively seeking reimbursement.
Item 4. Submission Of Matters To Vote Of Security Holders.
- ------ -------------------------------------------------
None.
8
<PAGE>
PART II
Item 5. Market For Common Stock and Related Stockholder Matters
- ------ -------------------------------------------------------
(a) Market Information.
------------------
The Issuer's Common Stock is traded in the Over-the-Counter Market.
Effective August 31, 1987, the Issuer was accepted for inclusion by NASDAQ,
trading under the symbol "FIVD".
The following table provides information with respect to the high and
low bid quotations of the Registrant's Common Stock for each quarter during the
past two years.
<TABLE>
<CAPTION>
BID QUOTATIONS
--------------------------
1996 1995
------------ ------------
HIGH LOW HIGH LOW
----- ----- ----- -----
<S> <C> <C> <C> <C>
First Quarter 2 1-1/2 4-5/8 4-1/4
Second Quarter 3-3/4 1-3/4 4-1/4 2-1/4
Third Quarter 2-1/2 1-1/2 3-3/4 3-1/2
Fourth Quarter 1-5/8 13/16 3-3/4 2
</TABLE>
The information provided above with respect to the bid quotations was
furnished by NASDAQ, 1735 K Street, Northwest, Washington, D.C. 20006.
(b) Holders
-------
The approximate number of stockholders of record as of March 17, 1997
is 422.
(c) Dividends.
---------
There was no dividend paid during the past two years. Payment of
dividends is not anticipated during the foreseeable future based on projections
of the capital requirements needed for the Issuer's growth.
9
<PAGE>
PART II
Item 6. Management's Discussion and Analysis
- ------ ------------------------------------
FINANCIAL CONDITION AND LIQUIDITY
---------------------------------
The Corporation spent $122,128 on capital additions during 1996 while
recording $124,611 of depreciation expense. A reduction in capital spending is
projected for 1997 while depreciation reserves are projected at slightly lower
levels than in 1996.
The loss from operations contributed a decline in working capital from
$1,256,218 in 1995 to $1,098,976 at the end of 1996. While cash balances
increased from $155,764 at the end of 1995 to $296,777 at December 31, 1996, the
trade receivable balances declined significantly as a consequence of forth
quarter shipment delays on the Kearfott Contract. However, the Company was able
to reduce outstanding debt by $225,000 during 1996, as a result of the fourth
quarter receivable collections. As reported in December 1996 and early 1997, as
a consequence of some test sample failures during Kearfott's environmental
testing on the IMU Slip Rings, the Company was advised of the anticipated return
of 283 units and a hold on the final 140 units to be delivered until the problem
causing the test failures could be identified and corrected. Because of this
development in the Kearfott Contract as well as the already projected operating
losses, continued support of the Company's Four Point Plan will require
additional outside financing in 1997. Despite such projected losses, the
Company believes that its credit history in regard to repayment of debt, its low
debt position as of the end of 1996 and its significant stockholders' equity
balance of $1,704,680 will permit the Company to secure the required financing.
RESULTS OF OPERATIONS
---------------------
Sales for 1996 increased 2.1% over 1995 to $4,241,236 as continued
shipments on a major Slip Ring contract and increased penetration of the
commercial Slip Ring market more than offset reductions in mercury switch
revenues. While the Company anticipates continued shipments of military
products and increases in shipments to commercial Slip Ring customers, the
Company's major contract with Kearfott Guidance and Navigation Corporation for
Trident IMU Slip Rings will end in 1997. This is expected to result in a
significantly lower overall sales level during 1997. Backlog beginning 1997 was
$1,768,120.
10
<PAGE>
PART II
Item 6. Management's Discussion and Analysis
- ------ ------------------------------------
RESULTS OF OPERATIONS (continued)
---------------------------------
Gross profit increased by 7.0% in 1996 to $1,124,225 compared with
$1,051,093 in 1995. This increase is primarily attributable to improvements in
gross margins on the Kearfott Contract which experienced production problems and
delays in early 1995. Although the Company experienced a similar delay with the
Kearfott Contracts during the final quarter of 1996 (which continues into the
first quarter of 1997), more profitable operating results over the first three
quarters of 1996 together with overhead reductions made during the fourth
quarter reduced the negative affect on the Company's gross percentage for 1996.
The gross profit is expected to decline significantly, however, during 1997
because of projected declines in gross sale revenues and a shift of the sales
mix to products with lower margins.
Selling, general and administrative expenses increased by 1.8% in 1996
to $1,224,507 compared with $1,202,634 in 1995. The Company projects a
significant overhead decline during 1997 as further overhead reductions are
undertaken in response to lower sales levels.
Financing costs declined from $21,684 in 1995 to $12,518 in 1996 as a
consequence of the Company's reduced bank debt. Company borrowing is expected
to increase in 1997, however as a result of working capital requirements.
The Company recorded a $78,978 charge for deferred state tax benefits
which may not be realizable in future periods. Although the tax benefits will
remain available, their use will require significant taxable income over the
next five years. This charge results in a provision for 1996 of $40,147 despite
an operating loss of $104,019. This contrasts with $78,278 tax benefit recorded
in 1995 based on an operating loss of $170,918.
The modest sales and gross profit increases contributed to a reduction
in operating losses before taxes from $170,918 in 1995 to $104,019 in 1996.
Although the operating results improved in 1996 over 1995 after recording the
tax affect described above and reserving for the Kearfott rework cost described
in Note 11, the net loss of $0.13 per share exceeded the 1995 loss of $0.08 per
share. The Company does project a significant increase in the loss per share in
1997, however, as a consequence of the end of the Kearfott Contract (which
accounted for approximately 75% of 1996 revenues).
11
<PAGE>
PART II
Item 6. Management's Discussion and Analysis
- ------ ------------------------------------
RESULTS OF OPERATIONS (continued)
---------------------------------
The Company continues its efforts to minimize the end of this contract
and return to its long-term aspirations through the implementation of its Four
Point Plan as described in the report to shareholders of August 9, 1996. In
short, this plan includes increased efforts to serve a wider range of
applications in the commercial Slip Ring markets while continuing to pursue
other fresh opportunities in the defense industry.
Management is dedicated to continued applied research in areas where
the possibility exists for large sales to replace lost revenues. The Company is
encouraged by potential opportunities opening up for its new Brushless Slip Ring
(patent pending), a direct consequence of its ambitious applied research
program. Although many customers have expressed interest, it must be stated
that this effort is in its early development, and so its eventual affect on
Company operations will not be known until late 1997.
As reported earlier, the Company also continues to pursue possible
mergers/acquisitions which would positively impact its future operations.
12
<PAGE>
PART II
-------
Item 7. Financial Statements
- ------- --------------------
FIFTH DIMENSION INC.
FINANCIAL STATEMENTS
AND INDEPENDENT AUDITOR'S REPORT
FORM 10-KSB - ITEM 7
YEARS ENDED DECEMBER 31, 1996 AND 1995
PAGES 13 - 27
13
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Yohalem, Gillman & Co. LLP 477 Madison Ave NY, NY 10022
Certified Public Accountants (212) 371-2100
Board of Directors and Stockholders
Fifth Dimension Inc.
We have audited the accompanying balance sheet of Fifth Dimension Inc. as
of December 31, 1996 and the related statements of operations, stockholders'
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 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 Fifth Dimension Inc. at
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.
New York, New York
January 31, 1997
14
<PAGE>
FIFTH DIMENSION INC.
BALANCE SHEET
DECEMBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
<S> <C>
CURRENT ASSETS
Cash and equivalents $ 296,777
Accounts receivable, less allowance
For doubtful accounts of $3,309 227,204
Inventories 902,974
Prepaid expenses and other current assets 37,465
----------
Total current assets 1,464,420
----------
Property, plant and equipment - at cost,
less accumulated depreciation and amortization 625,174
----------
Patent costs, less accumulated amortization 13,863
----------
$2,103,457
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term obligations 50,000
Accounts payable 137,173
Accrued compensation 125,635
Accrued expenses 54,636
----------
Total current liabilities 365,444
----------
Long-term obligations, less current maturities 33,333
----------
COMMITMENTS AND CONTINGENCIES
Stockholders' equity
Common stock, $.33-1/3 par value; authorized
1,800,000 shares; issued 1,094,808 shares 364,936
Additional paid-in capital 403,663
Retained earnings 936,685
----------
1,705,284
Less cost of treasury stock - 1,172 shares 604
----------
Total stockholders' equity 1,704,680
----------
$2,103,457
----------
</TABLE>
See accompanying notes.
15
<PAGE>
FIFTH DIMENSION INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Net sales $4,241,236 $4,152,361
Cost of sales 3,117,011 3,101,268
---------- ----------
Gross profit 1,124,225 1,051,093
---------- ----------
Selling, general and administrative expenses 1,224,507 1,202,634
Unusual items - environmental costs 2,115 2,740
Interest expense 12,518 21,684
Interest and other income (10,896) (5,047)
---------- ----------
1,228,244 1,222,011
---------- ----------
Loss before provision (benefit) for income taxes (104,019) (170,918)
Provision (benefit) for income taxes 40,147 (78,278)
---------- ----------
Net loss $ (144,166) $ (92,640)
---------- ----------
(Loss) earnings per common share:
Primary and Fully diluted $(.13) $(.08)
---------- ----------
Weighted average number of common shares
outstanding:
Primary and Fully diluted 1,093,636 1,093,636
</TABLE>
See accompanying notes.
16
<PAGE>
FIFTH DIMENSION INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
Additional
Paid-in Retained Less
Common Stock Capital Earnings Treasury Stock Total
---------------------- ------------ ----------- -------------------- ------------
Amount Shares Shares Amout
---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $1,094,808 $364,936 $403,663 $1,173,491 1,172 $604 $1,941,486
Net income (92,640) (92,640)
---------- --------- ------------ ---------- --------- -------- ------------
Balance at December 31, 1995 1,094,808 364,936 403,663 1,080,851 1,172 604 1,848,846
Net Loss (144,166) (144,166)
---------- --------- ------------ ---------- --------- -------- ------------
Balance at December 31, 1996 $1,094,808 $364,936 $403,663 $ 936,685 1,172 $604 $1,704,680
---------- --------- ------------ ---------- --------- -------- ------------
</TABLE>
See accompanying notes.
17
<PAGE>
FIFTH DIMENSION INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Cash flows from operating activities
Net loss $(144,166) $ (92,640)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities
Depreciation and amortization expense 124,611 125,661
Decrease (increase) in accounts receivable 518,080 (12,036)
Increase in inventories (49,840) (23,227)
Increase in prepaid expenses and
other current assets (25,339) (20,726)
Decrease in accounts payable (2,520) (82,748)
Increase (decrease) in accrued compensation and
expenses, income taxes payable and deferred
income taxes 87,650 (91,567)
--------- ---------
Net cash provided by (used in)
operating activities 508,476 (197,283)
--------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment (122,128) (59,662)
Increase in patent costs (5,584) --
--------- ---------
Net cash used in investing activities (127,712) (59,662)
--------- ---------
Cash flows from financing activities
Proceeds from loans -- 175,000
Repayment of loans (225,000) (50,000)
--------- ---------
Net cash (used in) provided by
financing activities (225,000) 125,000
--------- ---------
Net increase (decrease) in cash and cash equivalents 155,764 (131,945)
Cash and equivalents - beginning of year 141,013 272,958
--------- ---------
Cash and equivalents - end of year $ 296,777 $ 141,013
--------- ---------
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for
Interest $ 14,080 $ 20,541
Income taxes -- 18,062
</TABLE>
See accompanying notes.
18
<PAGE>
FIFTH DIMENSION INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
Fifth Dimension Inc. (the "Company") is a provider, to various
military and commercial users, of products relating to the electronics
industry. The Company designs, manufactures and markets a variety of
products which include mercury switches, relays, and signal processing and
data handling devices called commutators and slip rings.
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles which contemplates
continuation of the Company as a going concern. However, the Company has
sustained operating losses during 1995 and 1996 and was informed by its
major customer that there would be no renewal of their contract. It also
incurred a production problem which will require rework and/or
remanufacture of 283 units previously shipped. As of December 31, 1996,
the Company had working capital of $1,098,976 and stockholders' equity of
$1,704,680. Management has established a plan for future growth that
includes: increasing its efforts to serve a wider range of applications in
the commercial slip ring markets; pursuing fresh opportunities in the
defense industry; developing and marketing its new brushless slip ring; and
continuing its search for possible mergers and/or acquisitions.
Additionally, the Company believes its credit history, low debt position,
and significant stockholders' equity will permit them to secure financing.
Inventories
Inventories are stated at the lower of cost or market determined by
the first-in, first-out method.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation for
financial reporting purposes is calculated primarily on a straight-line
basis over the estimated useful lives of the asset which are as follows:
Machinery, office furniture and equipment 3-10 years
Building improvements 10 years
Building 25 years
For income tax purposes, assets purchased after 1980 are depreciated
under either the accelerated cost recovery system (ACRS) or the modified
accelerated cost recovery system (MACRS).
It is the policy of the Company to charge costs of maintenance and
repairs to operations as incurred and to capitalize expenditures for
replacement or renewals which extend the life of the asset. When assets
are sold or retired, the cost and related accumulated depreciation are
eliminated from the accounts, and any resulting gain or loss is reflected
in income for the period.
19
<PAGE>
FIFTH DIMENSION INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
Sales are recognized upon passage of title to the customer, which
usually coincides with physical delivery or customer acceptance, as
specified by contractual terms. Such sales are recorded based on the unit
selling price specified in the contract.
Cash Equivalents
For purposes of the statements of cash flows, the Company considers
all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Income Taxes
Deferred income taxes are provided for the temporary differences
between the financial reporting basis and the tax basis of assets and
liabilities.
Research and Development
Company-sponsored research and development expenditures are charged to
expense as incurred, the elements of which are allocated to cost of sales
and general and administrative expenses. Research and development
activities amounted to approximately $215,000 and $175,000 for the years
ended December 31, 1996 and 1995 respectively.
Earnings per Share
Earnings per share computations generally are based on the weighted
average number of common shares and common equivalent shares (relative to
stock options) outstanding during the year. In 1996 and 1995 loss per
share is based on the number of outstanding common shares because the
effect of common equivalent shares would be anti-dilutive.
Use of Estimates in Financial Statements
In preparing financial statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
NOTE 2 - INVENTORIES
Inventories at December 31, 1996 are summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
Raw materials $250,848
Work in process 631,721
Finished goods 20,405
--------
Total $902,974
--------
</TABLE>
20
<PAGE>
FIFTH DIMENSION INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment as of December 31,
1996 were as follows:
<TABLE>
<CAPTION>
<S> <C>
Land $ 49,111
Building 379,181
Machinery 987,089
Office furniture and equipment 276,406
Building improvements 251,524
Automobiles 7,946
----------
Total 1,951,257
Less accumulated depreciation
and amortization 1,326,083
----------
Net $ 625,174
==========
</TABLE>
Depreciation expense for the years ended December 31, 1996 and
1995 was $116,745 and $116,598, respectively.
NOTE 4 - PATENTS
The cost of patents is capitalized and amortized to operations on a
straight-line basis over a period of five (5) years. Accumulated
amortization at December 31, 1996 was $42,139 and amortization expense for
the years ended December 31, 1996 and 1995 was $7,866 and $9,063,
respectively.
NOTE 5 - CREDIT FACILITIES
Long-term obligations as of December 31, 1996 amounted to $83,333
evidenced by a term loan which matures on August 15, 1998. The loan is
payable in monthly installments of $4,167 plus interest at the prime rate
plus one percent and is secured by all business assets.
The term loan is scheduled to mature as follows:
<TABLE>
<S> <C>
1997 $ 50,000
1998 33,333
--------
$ 83,333
========
</TABLE>
The Company has available a working capital line of credit which
allows for a maximum borrowing of $750,000 through April 30, 1997. This
borrowing facility requires (1) a zero balance for thirty (30) consecutive
days; (2) accrues interest at prime plus .25 percent; (3) is secured by all
business assets; and (4) prohibits the Company from obtaining a mortgage on
its business premises. In addition, the line of credit agreement contains
restrictive convenants which require, among other things, that the Company
maintain certain financial ratios. There were no borrowings outstanding
against this credit line at December 31, 1996.
21
<PAGE>
FIFTH DIMENSION INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
NOTE 6 - INCOME TAXES
The provision (benefit) for income taxes includes income taxes
currently payable and those deferred because of a temporary difference
between the financial statement and tax basis of assets and liabilities.
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1996 1995
----------- ------------
<S> <C> <C>
Federal income taxes:
Current $ -- $(34,158)
Deferred (30,718) (23,497)
State income taxes:
Current -- --
Deferred (8,113) (20,623)
-------- -----------
Valuation allowance for
deferred tax assets 78,978 --
-------- -----------
Provision (benefit) for
income taxes $ 40,147 $ (78,278)
-------- -----------
</TABLE>
The difference between the statutory federal income tax rate of 34% on
income (loss) before income taxes and the Corporation's effective tax rate
is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1996 1995
------------ -----------
<S> <C> <C>
Statutory federal income taxes $(35,366) $(58,112)
State income tax, net of federal
benefit (5,149) (15,337)
Research and other credits (6,000) (19,524)
Graduated federal income tax
brackets and other 7,684 14,695
-------- --------
Valuation allowance for deferred
tax assets 78,978 --
-------- --------
Provision (benefit) for
taxes on income $ 40,147 $(78,278)
-------- --------
Effective tax rate 28% 28%
</TABLE>
22
<PAGE>
FIFTH DIMENSION INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
NOTE 6 - INCOME TAXES (CONTINUED)
Deferred income taxes are recognized for tax consequences of
"temporary differences" by applying enacted statutory rates, applicable to
future years, to differences between financial reporting and the tax basis
of existing assets and liabilities. Temporary differences and
carryforwards for 1996 are as follows:
<TABLE>
<S> <C>
Deferred tax asset
Allowance for doubtful accounts and
vacation pay accruals $ 31,961
State net operating loss carryforwards 45,899
Federal net operating loss carryforwards 32,418
Credits available for carryforward 57,792
--------
Deferred tax assets 168,070
--------
Deferred tax liabilities
Depreciation 65,451
Federal tax arising from State tax benefits 23,641
--------
Deferred tax liabilities 89,092
--------
Net deferred tax asset 78,978
Valuation allowance (78,978)
--------
Net deferred tax asset $ --
=========
</TABLE>
At December 31, 1996, the Company had available the following tax
carryforwards:
<TABLE>
<CAPTION>
Year of
Type Amount Expiration
- ---- --------- ----------
<S> <C> <C>
Federal net operating loss $115,781 2010-2011
Federal research credit $ 19,524 2009
New Jersey net operating loss $611,987 1999-2003
New Jersey tax credits $ 38,268 1998-2002
</TABLE>
NOTE 7 - EMPLOYEE BENEFIT PLANS
401(k) Plan
Beginning July 1, 1995, the Company established a 401(k) plan to
replace the pension and profit sharing plans which were terminated during
1993. The plan covers all employees, ages 21 and over, with a minimum of
one year of service and provides for elective deferrals by the employees up
to 15% of compensation. Additionally, the Company, at its sole discretion,
may contribute additional amounts to the plan. Employer contributions
amounted to $20,713 and $11,488 for the year ended December 31, 1996 and
1995 respectively.
23
<PAGE>
FIFTH DIMENSION INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
NOTE 7 - EMPLOYEE BENEFIT PLANS (CONTINUED)
Compensation for Future Absences
Employees of the Company are entitled to paid vacation and sick days
depending on length of service and other factors. The Company recognizes
these costs when earned by the employees.
NOTE 8 - STOCK OPTIONS
The Company, in April 1988, approved an incentive stock option plan
whereby eligible employees would be granted options to purchase up to
150,000 shares of the Company's common stock at the market value on the
date of the grant. The options are exercisable for a period beginning
three years and ending ten years after the date of the grant, subject to
certain limitations and other restrictions. During the years ended
December 31, 1988 and 1987, 12,375 and 37,500 options were granted to
employees at the price of $2.25 and $2.33, respectively, and none were
exercised. During the years ended December 31, 1989 through 1995, no
options were granted or exercised. During the year ended December 31, 1996,
Options to purchase 24,000 shares were granted to employees at a share
price of $1.875. At December 31, 1996 options for 49,875 shares were
exercisable.
In August 1987, the Board granted options to each of the Company's
five directors serving at that time to purchase 15,000 shares of Common
Stock, at the price of $2.67 per share (the fair market value of the shares
on the date of grant), in recognition of past and ongoing service to the
Company. The options terminate ten years from the date of grant and are
exercisable at any time before then. For the year ended December 31, 1996,
no additional shares were granted. None of the options granted have yet
been exercised. At December 31, 1996, options for 75,000 shares were
exercisable.
The Company's president and chief executive officer, pursuant to
employment agreements, was granted nonqualified stock options to purchase
shares of the Company's common stock (based on the fair market value on the
date of grant), as follows:
<TABLE>
<CAPTION>
Number of Exercise
Date Shares Allowed Price Per
of Granted to be Purchased Share Exercise Period
- ---------- --------------- --------- ----------------------
<S> <C> <C> <C>
July 27, 1993 15,000 $2.19 Expire on July 27, 2003
July 27, 1994 15,000 $3.75 Expire on July 27, 2004
July 27, 1994 75,000 $3.75 Subsequent to the first
fiscal year in which the
Company achieves net
sales of $10 million and
has net income; expire
July 27, 2004
July 27, 1994 75,000 $3.75 Subsequent to the first
year in which the
Company achieves net
sales of $15 million and
has net income; expire
July 27, 2004
</TABLE>
As of December 31, 1996, none of these options were exercised and
options for 30,000 shares were exercisable.
24
<PAGE>
FIFTH DIMENSION INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
NOTE 8 - STOCK OPTIONS (CONTINUED)
During 1994, the Board granted options to purchase 5,000 shares each
of the Company's common stock, to two key executives, at the price of $3.75
per share (the fair market value of the shares on July 27, 1994, the grant
date) as incentive for performance of services. These options expire ten
years from the date of grant; none were exercised as of December 31, 1996
and 10,000 options were exercisable.
NOTE 9 - EXECUTIVE COMPENSATION
The Company has a Board-approved incentive compensation arrangement
with certain key executive officers whereby each officer receives a certain
percentage of pre-tax or post-tax earnings in addition to base pay. Such
incentives, in total, amounted to $-0- for the years ended December 31,
1996 and 1995 respectively.
The Company has employment agreements with two key executives for two
year terms with expiration dates of September 18, 1997 and December 31,
1998. Among other provisions, the agreements provide for base compensation
and incentives based on pre-tax profits.
During 1994, the Company entered into an employment agreement with its
new president and chief executive officer which continues through April
1999. Among other provisions, the agreement provides for a base
compensation, incentives based on post-tax profits and stock options (see
Note 8).
NOTE 10 - UNUSUAL ITEMS - ENVIRONMENTAL COSTS
The Company incurred legal costs of $2,115 and $2,740 during 1996 and
1995, respectively, in connection with the environmental suit more fully
described in Note 11.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
Product Rework Contingency
The Company, during 1996, was advised by their major customer of
sample test failures within a production lot containing approximately 283
units that will be returned to the Company for repair and/or remanufacture.
Additionally, this customer has advised the Company that it will not accept
further shipments of the 140 units remaining against the original contract
until the production problem is rectified. Based on preliminary testing of
the defective units management believes the problem may be a minor
production adjustment which would cost the Company approximately $25,000 in
the rework costs. However, should the Company be required to remanufacture
all 283 units, the expected costs would approximate $300,000. In
accordance with FAS 5 "Accounting for Contingencies" the financial
statements reflect a rework cost of $25,000 as a charge to current year
income.
25
<PAGE>
FIFTH DIMENSION INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
NOTE 11 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
Environmental Issue
The U.S. Environmental Protection agency ("EPA") has filed suit
against Princeton Gamma Tech ("PGT"), an unrelated third party, alleging
that releases of hazardous substances by PGT have contaminated two sites in
New Jersey. Fifth Dimension Inc. occupied a facility, destroyed by fire in
1974, which was located in the general vicinity of the identified sites.
PGT has filed a third party complaint against the Company, among others,
alleging that these parties also caused the contamination.
Originally, the EPA listed the Company as a potentially responsible
party; however, following their initial investigation, the EPA elected to
file suit against PGT only. In a January 17, 1996 letter, the United
States Environmental Protection Agency ("EPA") stated that it has
information which documents the release of hazardous substances from the
property that Fifth Dimension formerly occupied in Rocky Hill, New Jersey,
that is affecting the groundwater, and advised Fifth Dimension Inc. that it
is potentially liable under the Comprehensive Environmental Response,
Compensation and Liability Act. Based on the information, EPA stated that
Fifth Dimension should perform some response action, at the minimum an
investigation to determine the nature, extent and impact of contamination
at the property. The Company has proposed to undertake additional
investigation; however, they continued to believe that it did not
contribute to the contamination, and intends to vigorously defend this
action. As this case is still in discovery, the Company's special counsel
is unable to predict an outcome of this matter at this time.
The Company's insurance carrier has agreed to pay a portion of the
costs attributable to the defense of this matter but has reserved its
rights to withdraw in the event they disclaim coverage. Management
believes the insurance company is liable for all costs and is actively
seeking reimbursement.
Backlog
Backlog at December 31, 1996 was $1,804,253 as compared to $4,394,385
at December 31, 1995.
NOTE 12 - SEGMENT INFORMATION AND CONCENTRATIONS OF REVENUE AND CREDIT RISK
The Company's business and the products relate to the electronics
industry and are used in defense, industrial and consumer applications.
Net sales during 1996 and 1995 resulting from a series of production
contracts with one major domestic customer amounted to 76.8% and 76.3% of
total sales, respectively. Accounts receivable from the Company's major
customer amounted to 42.6% and 72.1% of total accounts receivable at
December 31, 1996 and 1995, respectively.
The option for additional production on the current contract with the
major domestic customer expired without being exercised, and no new
contracts for this program are under discussion. Production of the
remaining 140 units necessary to fulfill the contract will be completed
upon resolution of the product rework as discussed in Note 11.
26
<PAGE>
FIFTH DIMENSION INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
NOTE 13 - FOURTH QUARTER RESULTS OF OPERATIONS (UNAUDITED)
During the fourth quarter of 1996, the Company incurred operating
losses due to the production problems and shipping freeze on the contract
with its major customer (see Note 11). The Company continued to incur
manufacturing and other overhead costs, although at reduced levels, during
the fourth quarter that contributed to significantly reduced gross margins
and operating losses. The Company also recorded a charge of $78,978 for a
valuation allowance of deferred tax assets which may not be realizable in
future periods.
27
<PAGE>
PART II
Item 8. Changes In and Disagreements With Accountants on Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosure
--------------------
None
28
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
- ------- -------------------------------------------------------------
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
(a) Directors and persons chosen to become directors.
The information contained on Pages 4 and 5 of Fifth Dimension Inc.'s
Proxy Statement dated March 28, 1997, with respect to directors of the Issuer,
is incorporated herein by reference in response to this item.
(b) Executive Officers of the Issuer
<TABLE>
<CAPTION>
Present Position or Office
Age of Issuer Held
---- ------------------------------
<S> <C> <C>
Craig E. Ebner 57 President and Chief Executive
Officer
Sheldon Bitko 69 Vice President, Motion
Components
Alfred R. Senni 68 Vice President, Slip Rings
Elaine H. Cain 68 Vice President, Administration
and Secretary-Treasurer
</TABLE>
On April 28, 1993, Craig E. Ebner was appointed President and Chief
Executive Officer of the Corporation; Sheldon Bitko was appointed Vice
President, Mercury Products and Alfred R. Senni was appointed Vice President,
Slip Rings. Prior to this appointment, Sheldon Bitko had served as President
and Alfred R. Senni had served as Executive Vice President and Chief Executive
Officer. Both Mr. Bitko and Mr. Senni have been employed continuously by the
Issuer in excess of five years.
29
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
- ------- -------------------------------------------------------------
Compliance with Section 16(a) of the Exchange Act. (continued)
---------------------------------------------------------------
On March 2, 1978, Mrs. Elaine H. Cain was appointed Secretary; on
April 24, 1984 Mrs. Cain was appointed Treasurer and on December 19, 1990, she
was appointed Vice President Administration and Secretary-Treasurer of the
Issuer. Mrs. Cain had been employed continuously by the Issuer in excess of
five years, primarily as Executive Secretary, prior to her appointment to the
position of Secretary of the Issuer.
There is no family relationship between or among any of the Issuer's
directors or officers, and nor is there any arrangement between any of them and
any other person pursuant to which any were selected as an officer or director.
The officers serve at the pleasure of the board, in their respective capacities
without specified terms of office.
Item 10. Executive Compensation.
- -------- -----------------------
The information contained on Pages 6, 7, 8, 9 and 10 of the
Issuer's Proxy Statement dated March 28, 1997 with respect to executive
compensation and transactions, is incorporated herein by reference in response
to this item.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
- -------- ---------------------------------------------------------------
The information contained on Pages 1, 2 and 3 of the Issuer's
Proxy Statement dated March 28, 1997 with respect to security ownership of
certain beneficial owners and management, is incorporated herein by reference in
response to this item.
Item 12. Certain Relationships and Related Transactions.
- -------- -----------------------------------------------
The information contained on Page 5 of the Issuer's Proxy Statement
dated March 28, 1997 with respect to Certain Relationships and Related
Transactions, is incorporated herein by reference in response to this item.
30
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8K
- -------- -------------------------------
2. (a) Exhibits
-------------
Exhibit (3) Articles of Incorporation and By-Laws
-------------------------------------------------
(a) Articles of Incorporation
------------------------------
3.1 Certificate of Incorporation of the Issuer filed May 1,
1959.**
3.2 Amendment to the Certificate of Incorporation of the
Issuer filed May 14, 1959.**
3.3 Amendment to the Certificate of Incorporation of the
Issuer filed June 25, 1959.**
3.4 Amendment to the Certificate of Incorporation of the
Issuer filed April 5, 1961.**
3.5 Amendment to the Certificate of Incorporation of the
Issuer filed May 23, 1961.**
3.6 Amendment to the Certificate of Incorporation of the
Issuer filed May 10, 1988.**
(b) By-Laws
--- -------
3.7 By-Laws of the Issuer as adopted and restated as of
February 23, 1991 filed under Form 8-K March 11, 1991.***
- ---------------------
** Incorporated by reference to Exhibits to the Issuer's Report on Form 10-K
for the fiscal year ended December 31, 1988.
*** Incorporated by reference to the Issuer's Report on Form 10-K for the
fiscal year ended December 31, 1991.
31
<PAGE>
PART IV
Exhibit (10) Material Contracts
------------ ------------------
10.1 Purchase Order Number P109020703 dated January 7, 1993
between Fifth Dimension Inc. and Texas Instruments.**
10.2 Purchase Order Number NG5527 dated July 5, 1994
between Fifth Dimension Inc. and Kearfott Guidance and
Navigation Corporation.***
Exhibit (11) Statement Regarding Computation of Per Share Earnings
------------ -----------------------------------------------------
11.1 Statement of Computation of Per Share Earnings.*
Exhibit (23) Consent of Experts and Counsel
------------ ------------------------------
23.1 Consent of Independent Certified Public Accountants.*
- -----------------------
* Exhibits filed herewith.
** Incorporation by reference to Exhibits to the Issuer's Report on Form 10-
KSB for the fiscal year ended 1993.
*** Incorporation by reference to Exhibits to the Issuer's Report on Form 10-
KSB for the fiscal year ended 1994.
3. (b) Reports on Form 8-K
------------------------
The Issuer filed one (1) report on Form 8-K, December 13, 1996, in
reference to sample test failures of Trident IMU Slip Rings at Kearfott
Guidance and Navigation Corporation fully describer in Note 11 of the
Financial Statements.
32
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Issuer has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FIFTH DIMENSION INC.
--------------------
(Registrant)
By: /s/ Craig E. Ebner By: /s/ Sheldon Bitko
----------------------------- -----------------------------
Craig E. Ebner Sheldon Bitko
President and Chief Vice President, Mercury Products
Executive Officer Director
Director
By: /s/ Alfred R. Senni By: /s/ Elaine H. Cain
----------------------------- -----------------------------
Alfred R. Senni Elaine H. Cain
Vice President, Slip Vice President, Administration
Rings Secretary-Treasurer
Director
Dated: March 14 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by following persons on behalf of the Registrant
and in the capacities and on the date indicated.
FIFTH DIMENSION INC.
---------------------
(Registrant)
By: /s/ Charles Davidoff By: /s/ Charles E. Rausch
----------------------------- -----------------------------
Charles Davidoff Charles E. Rausch
Director Director
By: /s/ Peter N. Heydon By: /s/ Frederick C. Scherer
----------------------------- -----------------------------
Peter N. Heydon Frederick C. Scherer
Director Director
By: /s/ Lee R. Marks
-----------------------------
Lee R. Marks
Director
Dated: March 18, 1997
33
[DESCRIPTION] EXHIBIT 11
<PAGE>
Exhibit (11) Statement Regarding Computation of Per Share Earnings
- ------------ -----------------------------------------------------
FIFTH DIMENSION INC.
COMPUTATION OF EARNINGS PER SHARE
FOR THE YEARS ENDED DECEMBER 31, 1996 and 1995
PRIMARY 1996 1995
- ------- ---- ----
Primary loss per common share $ (144,166) $ (92,640)
--------- ---------
Weighted average number of common
shares outstanding during the year 1,093,636 1,093,636
--------- ---------
Primary loss per common share $ (.13) (.08)
--------- ---------
FULLY DILUTED
- -------------
Fully diluted loss per common share $ (144,166) $ (92,640)
--------- ---------
Weighted average number of shares
used in calculating primary income
per common share 1,093,636 1,093,636
--------- ---------
Fully diluted loss per common share $ (.13) (.08)
--------- ---------
<PAGE>
Exhibit (23) Consent of Experts and Counsel
- ------------ ------------------------------
23.1 Consent of Independent Certified Public Accountants
YOHALEM, GILLMAN & COMPANY LLP
We consent to the incorporation by reference in this Annual Report on
Form 10-K of Fifth Dimension Inc. of our report dated January 31, 1997.
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Employee Incentive Stock Plan and the Board of
Directors Stock Option Plan of Fifth Dimension Inc. and the related Prospectuses
of our report dated January 31, 1997 included and incorporated by reference in
this Annual Report (Form 10-K) for the year ended December 31, 1996.
YOHALEM, GILLMAN & COMPANY LLP
New York, New York
March 24, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FIFTH
DIMENSION INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1996
AND 1995, STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
1996 AND 1995, STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996
AND 1995, AND BALANCE SHEET DATED DECEMBER 31,1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 296,777
<SECURITIES> 364,936
<RECEIVABLES> 227,204
<ALLOWANCES> 3,309
<INVENTORY> 902,974
<CURRENT-ASSETS> 1,464,420
<PP&E> 625,174
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,103,457
<CURRENT-LIABILITIES> 365,444
<BONDS> 0
0
0
<COMMON> 364,936
<OTHER-SE> 1,339,744
<TOTAL-LIABILITY-AND-EQUITY> 2,103,457
<SALES> 4,241,236
<TOTAL-REVENUES> 4,230,340
<CGS> 3,117,011
<TOTAL-COSTS> 4,341,518
<OTHER-EXPENSES> 2,115
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,518
<INCOME-PRETAX> (104,019)
<INCOME-TAX> 40,147
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (144,166)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
