<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) NOVEMBER 21, 1997
VIEW TECH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-25940 77-0312442
(STATE OR OTHER JURISDICTION (COMMISSION FILE (I.R.S. EMPLOYER
OF INCORPORATION) NUMBER) IDENTIFICATION NO.)
3760 CALLE TECATE, SUITE A, CAMARILLO CALIFORNIA 93012
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (805) 482-8277
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
EXPLANATORY NOTE: Pursuant to Item 7, this Form 8-K/A amends Item 7 of View
Tech, Inc.'s ("View Tech") Current Report on Form 8-K filed on December 5, 1997,
to provide the financial statements of the business acquired and the pro forma
financial information required by Item 7. The remaining Items have not been
amended and have not been restated in this Form 8-K/A.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
(a) Financial Statements of Business Acquired-Vermont Telecommunications
Network Services, Inc.
1. Independent Auditors' Report 3
Balance Sheet as of December 31, 1996 4
Statement of Income and Retained Earnings for the Year Ended
December 31, 1996 5
Statement of Cash Flows for the Year Ended December 31, 1996 6
Notes to Financial Statements 7
Supplemental Schedule - Selling, General and Administrative 11
2. Independent Accountants' Compilation Report 12
Balance Sheet as of September 30, 1997 (unaudited) 13
Statement of Income and Retained Earnings for the Nine Months
Ended September 30, 1997 (unaudited) 14
Statement of Cash Flows for the Nine Months ended September 15
30, 1997 (unaudited)
Supplemental Schedule - Selling, General and Administrative 16
(b) Pro Forma Financial Information
1. Pro Forma Condensed Combined Balance Sheet as of September
30, 1997 (unaudited) 17
Pro Forma Statement of Operations for the Twelve Months Ended
December 31, 1996 (unaudited) 18
Pro Forma Statement of Operations for the Nine Months Ended
September 30, 1997 (unaudited) 19
Notes to Pro Forma Financial Statements 20
Signature Page 22
(c) Exhibits.
Exhibit Index 23
23.1 Consent of McSoley McCoy & Co., filed herewith 24
99.1 Press release announcing completion of the acquisition, dated
November 13, 1997. 25
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Vermont Telecommunications
Network Services, Inc.
Burlington, Vermont
We have audited the accompanying balance sheet of Vermont Telecommunications
Network Services, Inc. as of December 31, 1996, and the related statement of
income and retained earnings and cash flows for the year then ended. 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 audit.
We conducted our audit 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 audit provides 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 Vermont Telecommunications
Network Services, Inc. as of December 31, 1996, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information as listed
in the table of contents is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ McSoley McCoy & Co.
October 10, 1997
Vermont Reg. No. 92-349
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES
Statement of Income and Retained Earnings
For the Year Ended December 31, 1996
<TABLE>
<S> <C>
ASSETS
------
Current assets:
Cash and cash equivalents (note 6) $ 297,563
Accounts receivable, less allowance for doubtful
accounts of $67,460 at December 31, 1996 (note 5) 716,177
Due from officers and employees 43,094
Deposits 5,735
Investments 50,738
----------
Total current assets 1,113,307
Property and equipment, net (note 2) 56,764
Covenant not to compete, net (note 3) 42,597
----------
TOTAL ASSETS $1,212,668
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 1,808
Accrued wages and withholdings 166,445
Accrued profit sharing contribution (note 10) 49,134
Sales tax payable 151
Current installments of long-term debt (note 4) 28,753
Due to affiliate 6,663
Other accrued expenses 4,103
----------
Total current liabilities 257,057
Long-term debt, less current installments (note 4) 25,427
Stockholders' equity:
Common stock, $1 par 100 shares authorized, 75 issued and outstanding 75
Additional paid in capital in excess of par 24,925
Retained earnings 930,184
Treasury stock, 25 shares, at cost (25,000)
----------
Total stockholders' equity 930,184
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,212,668
==========
</TABLE>
See auditors' report and notes to financial statements.
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES
Statement of Income and Retained Earnings
For the Year Ended December 31, 1996
<TABLE>
<S> <C>
Revenue from product sales $ 83,830
Cost of goods sold 62,887
----------
Gross profit on product sales 20,943
----------
Revenue from commissions (note 5) 2,431,026
Commissions paid to salespeople 738,091
----------
Gross profit on commissions 1,692,935
----------
Total gross profit 1,713,878
Selling, general and administrative expenses (notes 7, 8 and 10) 971,869
----------
Income from operations 742,009
----------
Other income and (expense)
Interest income 14,584
Interest expense (7,204)
Dividend income 1,593
Miscellaneous income 11,216
----------
Total other income 20,189
----------
Net income 762,198
Retained earnings, beginning of year 639,520
Less: dividends declared 471,534
----------
Retained earnings, end of year $ 930,184
==========
</TABLE>
See auditors' report and notes to financial statements.
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC.
Statement of Cash Flows
For the Year Ended December 31, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net Income $ 762,198
---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 36,953
Changes in assets and liabilities:
Increase in accounts receivable (278,664)
Increase in due from officers and employees (1,966)
Increase in deposits (2,715)
Decrease in accounts payable (1,952)
Increase in accrued wages 119,297
Increase in accrued profit sharing 12,086
Increase in sales tax payable 86
Increase in other accrued expenses 4,103
---------
Total adjustments (112,772)
---------
Net cash provided by operating activities 649,426
---------
Cash flows from investing activities:
Purchase of investments (50,738)
Purchase of property and equipment (13,315)
---------
Net cash used by investing activities (64,053)
---------
Cash flows from financing activities:
Principal payments on long-term debt (26,949)
Dividends declared (471,534)
---------
Net cash used by financing activities (498,483)
---------
Net increase in cash and cash equivalents 86,890
Cash and cash equivalents, beginning of year 210,673
---------
Cash and cash equivalents, end of year $ 297,563
=========
Supplemental cash flow information:
Interest expense 7,204
Income taxes 150
</TABLE>
See auditors' report and notes to financial statements.
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC.
Notes to Financial Statements
1) Summary of Significant Accounting Policies
------------------------------------------
A summary of the Company's significant accounting policies consistently
applied in the accompanying financial statements follows:
a) Organization and Purpose
------------------------
The Company operates as an authorized sales agent for NYNEX corporation,
selling telephone network service in Vermont, New Hampshire, western
Massachusetts and upstate New York.
b) Basis of Accounting
-------------------
Assets and liabilities are recorded and revenues and expenses are
recognized using the accrual basis of accounting. Revenue is recognized
when orders are signed by customers.
c) Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation is calculated
using the straight-line method over the assets' useful lives ranging from 5
to 31.5 years.
d) Covenant Not To Compete
-----------------------
The covenant not to compete is stated at cost. Amortization is calculated
using the straight-line method over the period of seven years.
e) Income Taxes
------------
The Company has elected to be taxed as an S Corporation under the
provisions of the Internal Revenue Code. Under those provisions, taxable
income from the Corporation is generally taxed to the shareholders rather
than the Company. The Company uses the cash basis of accounting for income
tax purposes.
f) Cash Equivalents
----------------
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. Cash
equivalents consist of money market funds.
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC.
Notes to Financial Statements
Summary of Significant Accounting Policies (continued)
-------------------------------------------
g) Estimates
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
h) Investments
-----------
Investments consist of 900 shares of NYNEX common stock, stated at cost,
which approximates market value.
2) Property and Equipment
----------------------
Property and equipment and accumulated depreciation as of December 31, 1996 is
as follows:
<TABLE>
<S> <C>
Computer equipment $ 59,534
Office furniture 19,262
Office equipment 24,426
Leasehold improvements 2,509
--------
105,731
Less accumulated depreciation 48,967
--------
Property and equipment, net $ 56,764
========
</TABLE>
Depreciation expense for the year ended December 31, 1996 was $15,655.
3) Covenant Not To Compete
-----------------------
The Company has a covenant with Vermont Telephone Service and Supply Company
which prohibits Vermont Telephone Service and Supply Co. from acting as a
sales agent of NYNEX. This covenant expires in October, 1998 and is stated at
$42,597, net of accumulated amortization of $106,492 at December 31, 1996.
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC.
Notes to Financial Statements
4) Long-term Debt
--------------
Long-term debt at December 31, 1996 consisted of the following:
<TABLE>
<S> <C>
Note payable requiring monthly
payments of $2,619 including interest
at 6.5%, through October, 1998 $54,180
Less current installments 28,753
-------
Long-term debt, less current
installments $25,427
=======
</TABLE>
5) Major Customer
--------------
Substantially all of the Company's revenue is derived either directly or
indirectly from the Company's relationship as a sales agent for NYNEX.
Substantially all of the accounts receivable consist of commissions earned
from NYNEX. The Company has a contract with NYNEX through December 31, 1998.
Termination or non-renewal of the contract could have a negative impact on the
Company's ability to continue as a going concern.
6) Concentration of Credit Risk
----------------------------
At December 31, 1996, the Company maintained a cash balance which exceeded
federally insured limits by $243,748.
7) Leases
------
The Company leases an automobile under an operating lease requiring monthly
payments of $599 through February 1998.
The Company also leases office space under three lease agreements expiring on
varying dates through September 1997. Rent expense for the year ended
December 31, 1996 amounted to $29,603.
8) Related Party Transactions
--------------------------
The Company is related through common ownership to North American
Telecommunications. During the year ended December 31, 1996 the Company
provided administrative and management services to North American
Telecommunications at no charge.
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC.
Notes to Financial Statements
9) Line of Credit
--------------
The Company has a line of credit agreement with a local bank with a maximum
borrowing limit of $100,000. There were no borrowings outstanding on the line
at December 31, 1996.
10) Employee Benefit Plan
---------------------
The Company has a discretionary, noncontributory profit sharing plan that
covers substantially all administrative employees. Contributions to the plan
amounted to $49,134 in 1996.
11) Commitments
-----------
The Company has an agreement with a salesperson through 1997 under which
the salesperson receives a base salary of $36,500. This salesperson is also
eligible to receive commissions.
12) Sale of Operating Assets
------------------------
On July 25, 1997, the Company signed a letter of intent to sell substantially
all of its operating assets to View Tech, Inc. Under the agreement, the
Company will cease operations. The parties executed a definitive purchase and
sale agreement during October 1997.
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC.
Supplemental Schedule of Selling, Administrative Expenses
For the Year Ended December 31, 1996
<TABLE>
<S> <C>
Advertising and promotion $ 1,973
Amortization 21,298
Auto expense - officer 8,869
Auto expense - other 13,358
Bad debt expense 67,460
Bank charges and brokerage fees 2,578
Contract labor 6,243
Contributions 3,738
Depreciation 15,655
Dues & subscriptions 2,456
Education and training 1,010
Employee benefits 999
Equipment lease 702
Insurance - group 57,884
Insurance - officer's life 948
Insurance - other 1,258
Office supplies 18,946
Profit sharing contribution 49,134
Profit sharing administration 1,619
Maintenance and repairs - other 6,287
Meals and entertainment 10,088
Miscellaneous 1,629
Postage and shipping 6,535
Professional fees 14,758
Referral fees 3,246
Rent 29,603
Salaries and wages - administrative 258,693
Salaries and wages - officers 244,580
Salaries and wages - sales 10,067
Taxes - payroll 78,987
Taxes - property 826
Taxes - other 150
Telephone 16,317
Travel 9,988
Utilities 3,987
--------
Total $971,869
========
</TABLE>
See auditors' report.
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
-------------------------------
Vermont Telecommunications
Network Services, Inc.
Burlington, Vermont
We have compiled the accompanying balance sheet of Vermont Telecommunications
Network Services, Inc. as of September 30, 1997, and the related statement of
income and retained earnings and cash flows for the nine months then ended, and
the accompanying schedules of selling, general and administrative expenses,
which are presented only for supplementary analysis purposes, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures and
statement were included in the financial statements, they might influence the
user's conclusions about the Company's financial position, results of
operations, and cash flows. Accordingly, these financial statements are not
designed for those who are not informed about such matters.
/s/ McSoley McCoy & Co.
January 21, 1998
Vermont Reg. No. 92-349
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC.
Balance Sheets
September 30, 1997
<TABLE>
<S> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $214,445
Accounts receivable, less allowance for doubtful
accounts of $40,000 357,517
Due from officers and employees 47,330
Inventory 3,971
Deposits 660
--------
Total current assets 623,923
Property and equipment, net 129,847
Covenant not to compete, net 26,623
--------
TOTAL ASSETS $780,393
========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 34,577
Accrued wages and withholdings 120,800
Current installments of long-term debt 30,186
Sales tax payable 179
Other accrued expenses 349
--------
Total current liabilities 186,091
Long-term debt, less current installments 3,042
Stockholders' equity:
Common stock, $1 par value, 100 shares authorized, 75 issued and outstanding 75
Additional paid in capital in excess of par 24,925
Retained earnings 591,260
Treasury stock, 25 shares, at cost (25,000)
--------
Total stockholders' equity 591,260
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $780,393
========
</TABLE>
See accountants' compilation report.
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES
Statement of Income and Retained Earnings
For the Nine Months Ended September 30, 1997
<TABLE>
<CAPTION>
Quarter Year
Ended to
September 30 Date
------------ ----------
<S> <C> <C>
Revenue from product sales $ 28,615 $ 78,782
Cost of goods sold 16,267 71,231
-------- ----------
Gross profit on product sales 12,348 7,551
-------- ----------
Revenue from commissions 539,174 1,671,596
Commissions paid to salespeople 107,668 441,522
-------- ----------
Gross profit on commissions 431,506 1,230,074
-------- ----------
Total gross profit 443,854 1,237,625
Selling, general and administrative expenses 372,218 917,881
-------- ----------
Income from operations 71,636 319,744
-------- ----------
Other income and (expense)
Interest income 802 8,199
Interest expense (114) (402)
Dividend income 85 1,168
Miscellaneous income 1,622 6,693
-------- ----------
Total other income 2,395 15,658
-------- ----------
Net income 74,031 335,402
Retained earnings, beginning of period 547,279 930,184
Less: dividends declared 30,050 674,326
-------- ----------
Retained earnings, end of period $591,260 $ 591,260
======== ==========
</TABLE>
See accountants' compilation report.
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC.
Statement of Cash Flows
For the Nine Months Ended September 30, 1997
<TABLE>
<S> <C>
Cash flows from operating activities:
Net Income $ 335,402
---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 35,302
Changes in assets and liabilities:
Decrease in accounts receivable 358,660
Increase in inventory (3,971)
Increase in due from officers and employees (4,236)
Decrease in deposits 5,075
Increase in accounts payable 32,769
Decrease in due to affiliate (6,663)
Decrease in accrued wages and withholdings (45,645)
Decrease in accrued profit sharing (49,134)
Increase in sales tax payable 28
Decrease in other accrued expenses (3,754)
---------
Total adjustments 318,431
---------
Net cash provided by operating activities 653,833
---------
Cash flows from investing activities:
Purchase of property and equipment (92,411)
Sale of investments 50,738
---------
Net cash used by investing activities (41,673)
---------
Cash flows from financing activities:
Principal payments on long-term debt (20,952)
Dividends declared (674,326)
---------
Net cash used by financing activities (695,278)
---------
Net decrease in cash and cash equivalents (83,118)
Cash and cash equivalents, beginning of period 297,563
---------
Cash and cash equivalents, end of period $ 214,445
=========
Supplemental cash flow information:
Interest expense 402
Income taxes 554
</TABLE>
See accountants' report.
<PAGE>
VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC.
Supplemental Schedule of Selling, Administrative Expenses
For the Nine Months Ended September 30, 1997
<TABLE>
<CAPTION>
Quarter Year
Ended to
September 30 Date
------------ ----------
<S> <C> <C>
Advertising and promotion $ 1,073 $ 6,747
Amortization 5,325 15,974
Auto expense - officer 2,005 8,292
Auto expense - other 6,175 11,563
Bank charges and brokerage fees 529 1,710
Contract labor 2,874 7,068
Contributions - 587
Depreciation 7,569 19,335
Dues & subscriptions 695 1,119
Employee benefits - 2,732
Insurance - group 8,575 29,750
Insurance - officer's life 256 768
Insurance - other 161 191
Office supplies 4,167 16,272
Profit sharing contribution - 575
Profit sharing administration - 1,060
Maintenance and repairs - other 2,247 5,903
Meals and entertainment 5,479 13,726
Miscellaneous 305 935
Postage and shipping 752 3,943
Professional fees 31,515 46,566
Referral fees 4,025 8,091
Rent 13,766 30,966
Salaries and wages - administrative 78,049 216,033
Salaries and wages - officers 87,462 262,385
Salaries and wages - sales 62,886 68,867
Taxes - payroll 19,403 76,899
Taxes - property 241 711
Taxes - other - 554
Telephone 21,990 35,028
Travel 3,718 20,500
Utilities 976 3,031
-------- --------
Total $372,218 $917,881
======== ========
</TABLE>
See accountants' report.
<PAGE>
VIEW TECH, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
View Tech VTNSI Adjustments Combined
------------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents.............................. $ 1,456,544 $214,445 $ -- $ 1,670,989
Accounts receivable, net............................... 12,668,364 357,517 13,025,881
Inventory.............................................. 2,283,540 -- 2,283,540
Other current assets................................... 437,213 51,961 489,174
----------- -------- ---------- -----------
Total Current Assets.............................. 16,845,661 623,923 17,469,584
Property and equipment, net................................. 2,907,949 129,847 3,037,796
Excess of cost over net assets acquired, net................ 1,548,606 -- 2,258,740 (3) 3,807,346
Other assets................................................ 438,617 26,623 465,240
----------- -------- ---------- -----------
$21,740,833 $780,393 $2,258,740 $24,779,966
=========== ======== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable....................................... $ 7,452,954 $ 34,577 $ 200,000 (3) $ 7,687,531
Short-term bank debt - lines of credit................. 3,220,496 -- 2,000,000 (3) 5,220,496
Note payable........................................... -- -- 250,000 (3) 250,000
Current portion of capital lease obligations........... 487,497 -- 487,497
Other current liabilities.............................. 2,795,858 151,514 2,947,372
----------- -------- ---------- -----------
Total Current Liabilities......................... 13,956,805 186,091 2,450,000 16,592,896
----------- -------- ---------- -----------
Long -Term Liabilities 465, 271 3,042 -- 468,313
----------- -------- ---------- -----------
Stockholders' Equity:
Common stock, par value $0.01.......................... 639 75 (69) (2) 645
Additional paid-in capital............................. 12,732,439 24,925 375,069 (2) 13,132,433
Treasury stock......................................... -- (25,000) 25,000 (2) --
Retained earnings (deficit)............................ (5,414,321) 591,260 (591,260) (2) (5,414,321)
----------- -------- ---------- -----------
7,318,757 591,260 (191,260) 7,718,757
----------- -------- ---------- -----------
$21,740,833 $780,393 $2,258,740 $24,779,966
=========== ======== ========== ===========
</TABLE>
See notes to the pro forma condensed combined financial statements.
<PAGE>
VIEW TECH, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Twelve Months Ended December 31, 1996
----------------------------------------------------------------------
Pro Forma
View Tech VTNSI Combined
------------------ ---------------- ------------------
<S> <C> <C> <C>
Revenues $36,948,232 $2,514,856 $39,463,088
Operating Expenses:
Costs of goods sold................... 18,370,747 62,887 18,433,634
Selling, general & administrative (3). 18,512,898 1,709,960 20,335,795
Merger costs.......................... 2,563,573 -- 2,563,573
----------- ---------- -----------
39,447,218 1,772,847 41,333,002
----------- ---------- -----------
Income (Loss) from Operations........... (2,498,986) 742,009 (1,869,914)
Other Income (Expenses) (3)............. (660,799) 20,189 (840,610)
----------- ---------- -----------
Income (Loss) before Income Taxes....... (3,159,785) 762,198 (2,710,524)
Provision for Income Taxes(5)........... (172,434) -- (172,434)
----------- ---------- -----------
Net Income (Loss)....................... $(2,987,351) $ 762,198 $(2,538,090)
=========== ========== ===========
Earnings (Loss) Per Share............... $ (.57) $ (.48)
=========== ===========
Weighted Average Shares
Outstanding (4)......................... 5,262,243 5,324,355
=========== ===========
</TABLE>
See notes to the pro forma condensed combined financial statements.
<PAGE>
VIEW TECH, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1997
------------------------------------
Pro Forma
View Tech VTNSI Combined
------------------ --------------- ------------------
<S> <C> <C> <C>
Revenues $35,232,704 $1,750,378 $36,983,082
Operating Expenses:
Costs of goods sold................... 16,901,135 71,231 16,972,366
Selling, general & administrative (3). 18,030,310 1,359,403 19,474,416
----------- ---------- -----------
34,931,445 1,430,634 36,446,782
----------- ---------- -----------
Income from Operations.................. 301,259 319,744 536,300
Other Income (Expenses) (3)............. (194,990) 15,658 (329,332)
----------- ---------- -----------
Income before Income Taxes.............. 106,269 335,402 206,968
Provision for Income Taxes (5).......... 4,512 -- 4,512
----------- ---------- -----------
Net Income (Loss)....................... $ 101,757 $ 335,402 $ 202,456
=========== ========== ===========
Earnings Per Share...................... $ .02 $ .03
=========== ===========
Weighted Average Shares
Outstanding(4).......................... 6,323,135 6,369,719
=========== ===========
</TABLE>
See notes to the pro forma condensed combined financial statements.
<PAGE>
VIEW TECH, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
1. FISCAL PERIODS
The pro forma data presented herein is derived from the consolidated balance
sheet and consolidated statement of operations of View Tech as of December 31,
1996 and for the twelve months then ended, and from the unaudited consolidated
balance sheet as of September 30, 1997 and the consolidated statement of
operations for the nine months then ended. The financial data presented for
Vermont Telecommunications Network Services, Inc. ("VTNSI") is derived from the
audited financial statements of VTNSI for the year ended December 31, 1996 and
from the compiled financial statements for the nine months ended September 30,
1997. View Tech acquired VTNSI, effective November 1, 1997 and completed the
transaction on November 21, 1997. The acquisition was accounted for by View
Tech utilizing the purchase method accounting.
2. STOCKHOLDERS' EQUITY
The pro forma adjustments to common stock, paid in capital, treasury stock
and retained earnings as of September 30, 1997 reflect the elimination of the
equity accounts of VTNSI as a result of applying purchase accounting and the
issuance of 62,112 shares of View Tech common stock valued at $6.44 in
connection with the acquisition.
3. ACQUISITION PRICE AND GOODWILL
The pro forma adjustments shown in the accompanying consolidated balance
sheet as of September 30, 1997 and in the consolidated statement of operations
for the twelve months ended December 31, 1996 and the nine months ended
September 30, 1997, include the effects of the acquisition as follows: (a) the
issuance of 62,112 shares of View Tech common stock valued at $6.44 per share,
or $400,000; (b) payment of $2 million in cash, which was obtained under View
Tech's revolving line of credit, the issuance of a promissory note for $250,000
and the interest expense related to such borrowings; (c) the recording of
estimated goodwill of $2,258,740, and (d) the amortization of goodwill of
$112,937 and $84,703, for the twelve months and nine months ended December 31,
1996 and September 30, 1997, respectively. The total estimated goodwill
recognized of $2,258,740 resulting from the acquisition of VTNSI will be
amortized on a straight line basis over 20 years.
Pursuant to the Asset Purchase Agreement, dated November 21, 1997 (the
"Purchase Agreement"), as of the closing date, the seller received a contingent
note payable of $250,000. The Company is obligated to pay such contingent note
if VTNSI achieves operating income during calendar 1998 equal to or greater than
$700,000. In addition, the seller is entitled to receive 40% of all operating
income generated by VTNSI in excess of $900,000 for each of the years ending
December 31, 1998, 1999 and 2000. The pro forma information presented herein
do not show the effects of such contingent payments due to the fact that there
can be no assurance that such operating results can or will be achieved.
<PAGE>
VIEW TECH, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. WEIGHTED AVERAGE SHARES OUTSTANDING
The weighted average number of shares shown in the statement of operations
for the twelve months and nine months ended December 31, 1996 and September 30,
1997 includes the actual weighted average shares outstanding for View Tech for
each period and the effects of issuing the 62,112 shares of View Tech common
stock in connection with the acquisition of VTNSI.
5. PROVISION FOR INCOME TAXES
VTNSI was an S Corporation and as such VTNSI was generally not subject to
federal income taxes. Instead the sole stockholder was taxed on his respective
share of VTNSI income at the stockholder's individual federal and state income
tax rates. Accordingly, there was no provision for federal income taxes
recorded by VTNSI for the year ended and nine months ended December 31, 1996 and
September 30, 1997, respectively. The operating results for each period
presented do not include a pro forma provision for income taxes due to the fact
that View Tech, during such periods, had net operating loss carryforwards
to offset the tax provision relating to such results.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VIEW TECH, INC.
January 31, 1998 /s/ David A. Kaplan
- ---------------- ---------------------------
Date David A. Kaplan
Senior Vice President
of Finance and Operations
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Page
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
23.1 Consent of McSoley McCoy & Co., filed herewith 23
99.1 Press release announcing completion of the acquisition, dated 24
November 13, 1997.
</TABLE>
<PAGE>
EXHIBIT 23.1
------------
The Board of Directors
Vermont Telecommunications Network Services, Inc.
We consent to the inclusion of our report dated October 10, 1997, with respect
to the balance sheets of Vermont Telecommunications Network Services, Inc. as of
December 31, 1996, and the related statements of income and retained earnings
and cash flows for the year ended December 31, 1996, which report appears in the
Form 8-K of View Tech, Inc. to be filed on or about January 30, 1998.
We also consent to the inclusion of our compilation report dated January 21,
1998, with respect to the balance sheet of Vermont Telecommunications Network
Services, Inc. as of September 30, 1997, and the related statements of income
and retained earnings, and cash flows for the nine months then ended, which
report appears in the Form 8-K of View Tech, Inc. to be filed on or about
January 30, 1998. The report states that management has elected to omit
substantially all disclosures required by generally accepted accounting
principles.
/s/ McSoley McCoy & Co.
January 30, 1998
<PAGE>
EXHIBIT 99.1
------------
CONTACTS:
Robert G. Hatfield Meredith Mendola
Chief Executive Officer Senior Account Associate
VIEW TECH, INC. ROURKE.MS&L
(805) 482-8277 (617) 267-1909 x346
FOR IMMEDIATE RELEASE
VIEW TECH SIGNS AGREEMENT TO ACQUIRE VERMONT TELECOMMUNICATIONS NETWORK
SERVICES, INC.
- ACQUISITION ALLOWS GEOGRAPHIC EXPANSION IN BELL ATLANTIC TERRITORY -
CAMARILLO, CA - November 13, 1997 - View Tech, Inc. (Nasdaq: VUTK) today
announced it has agreed to acquire Vermont Telecommunications Network Services,
Inc. ("Network Services") of Burlington, Vermont, an agent selling Bell Atlantic
services in New England and Upstate New York. As a result of this acquisition,
Network Services will become a wholly owned View Tech subsidiary, expanding View
Tech's offices to 20 nationwide and increasing the Company's customer base and
geographic presence.
Under the terms of the agreement, View Tech will purchase substantially all the
assets of Network Services for a combination of $2.65 million in cash, a note
and common stock. The purchase price also includes assumption of certain
Network Services liabilities and contingent payments of up to $750,000 over
three years if certain earnings are achieved. The acquisition, which is
expected to close by mid-November, is subject to final due diligence and a
financing contingency.
"The acquisition of Network Services continues the execution of View Tech's
strategic plan outlined at mid-year," said Paul C. O'Brien, View Tech's chairman
of the board. "We are particularly pleased that Network Services' President and
Chief Executive Officer Zoltan B. Keve will join View Tech. He brings a proven
track record and industry knowledge which will complement our management team,
while reinforcing our relationship with Bell Atlantic."
Network Services is an Authorized Sales Agent for Bell Atlantic in Vermont, New
Hampshire, Upstate New York and western Massachusetts. It currently has four
offices and 28 employees, including a dedicated sales force of 14. Through
these new offices, View Tech will not only sell Bell Atlantic services, but will
also market its voice, video and data communications equipment to Network
Services' installed customer base. In 1996, Network Services' operating income
was $762,198 on revenues of $2.4 million.
"We expect that this acquisition will make it possible for View Tech to offer
bundled communications solutions and expert customer service to many new
business customers," said Robert G. Hatfield, chief executive officer of View
Tech. "By expanding into new geographic regions, View Tech plans to become a
leading national presence in our rapidly growing market niche."
- more -
<PAGE>
ABOUT VIEW TECH, INC.
- ---------------------
View Tech, Inc., with headquarters in Camarillo, CA, together with its wholly
owned subsidiary, USTeleCenters, Inc., headquartered in Boston, MA, is a
leading, single-source provider of voice, video and data equipment, network
services and bundled communications solutions for mid-size business customers
nationwide.
The Company has equipment distribution partnerships with PictureTel Corporation,
Ascend Communications and Northern Telecom, markets UUNET's Internet access
under the name USTeleNet and markets network services through agency agreements
with Bell Atlantic, BellSouth, GTE, Southwestern Bell and Sprint.
The acquisition of Network Services is subject to the satisfaction of a number
of conditions including, among others, completion of due diligence.
Statements expressing the beliefs and expectations of management regarding
future performance are forward-looking statements and involve known factors,
risks and uncertainties which may cause the Company's actual results in future
periods to differ materially from forecasted results. These factors, risks and
uncertainties, include, but are not limited to: the Company's ability to
consummate successfully future mergers and acquisitions and to realize the
benefits of these strategic opportunities; the Company's ability to achieve
integration of product lines, distinct corporate cultures and sales and
marketing operations and to retain key personnel; and the Company's ability to
manage effectively its business in a rapidly changing regulatory and
technological environment and within diverse geographic areas. These risk
factors are detailed from time to time in the Company's filings with the
Securities and Exchange Commission. Actual results may differ materially from
management's expectations.
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