SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 12, 1998
UNIVIEW TECHNOLOGIES CORPORATION
(Exact name of Registrant as specified in its charter)
Texas 2-93668-FW 75-1975147
(State or other jurisdiction of Commission File Number (IRS Employer
incorporation) Identification No.)
10911 Petal Street, 75238
Dallas, Texas (Zip Code)
(Address of principal executive offices)
(214) 503-8880
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
The Company hereby amends its Current Report on Form 8-K dated June
12, 1998 to provide required financial information for Video Management,
Inc. ("VMI"), a Texas corporation, which owns 100 percent of the issued
and outstanding common stock of Network America, Inc. ("NWA"), an
Oklahoma corporation, and CompuNet Support Systems, Inc. ("CNSS"), a
Texas corporation.
On June 12, 1998 the Registrant consummated the acquisition of 100
percent of the issued and outstanding capital stock of VMI pursuant to a
Stock Purchase Agreement with the sole stockholder of VMI. The
consideration given for the acquisition was Eight Hundred Thousand
(800,000) shares of Registrant's par value $.10 common stock (the "Common
Stock"). The purchase price was established through arms length
negotiations between the parties, considering the historical revenues of
NWA and CNSS, VMI's only assets, as well as the then current market price
of Registrant's Common Stock.
VMI was acquired from Alscomm, Inc., a Nevada corporation, 16885
Dallas Parkway, Suite 313, Dallas, Texas 75248. There exists no material
relationship between Alscomm, Inc. and the Registrant or any of its
affiliates, any director or officer of the registrant, or any associate
of any such director or officer.
ITEM 5. OTHER EVENTS
Forward Looking Statements
This report may contain "Forward Looking Statements," which are
Company expectations, plans, and projections which may or may not
materialize, and which are subject to various risks and uncertainties.
When used in this report, the words "plans," "expects," "anticipates,"
"estimates" and similar expressions are intended to identify forward-
looking statements. For a discussion of risk factors associated with
some of these expectations, please refer to the section entitled "Risk
Factors" contained in the Company's most recent S-3 Registration
Statement, as well as the Company's other SEC filings, which contain
additional discussion about those factors which could cause actual
results or events to differ from management's expectations. These
forward-looking statements speak only as of the date of this report. The
Company expressly disclaims any obligation or undertaking to release
publicly any updates or change in the Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any
such statement may be based, except as may be otherwise required by the
securities laws.
A. On May 13, 1998, VMI acquired 100% ownership of NWA and CNSS
from DataTell Solutions, Inc. ("DataTell") as a result of an agreement to
accept collateral in satisfaction of a debt owing by DataTell to VMI.
Prior to that date, the stock of NWA and CNSS had been pledged to VMI by
DataTell as collateral in a series of note agreements with VMI.
On May 15, 1998, E. Wade Griffin ("Petitioner"), an individual,
filed an involuntary petition in bankruptcy against DataTell requesting
that an order for relief be entered against DataTell under Chapter 7 of
the United States Bankruptcy Code. Petitioner alleged in his petition
that DataTell was indebted to him, that DataTell was in default on the
obligation owed to him and that "upon information and belief, DataTell is
<PAGE>
generally not paying its debts that are not subject to bona fide dispute
as they become due." DataTell filed a motion to dismiss the petition,
alleging that Petitioner does not satisfy the necessary requirements and
has vigorously contested the proceeding.
The relevance to the Company of this proceeding is that if an order
for relief is entered by the Court, and if certain other conditions are
satisfied, the acquisition of NWA and CNSS by VMI could be reviewed by
the Court to determine whether a preferential or a fraudulent transfer of
those assets had occurred under the bankruptcy code. DataTell and VMI
are both cognizant that this proceeding could affect certain interests of
the Company in the future. VMI and its shareholders have been very
cooperative with the Company in ensuring that these issues are resolved
before the remaining administrative details of the acquisition of VMI by
the Company are finalized.
Management believes that the proceeding will have no material
adverse effect upon the Company. However, as with any action of this
type, the timing and degree of any effect upon the Company are uncertain
and there can be no assurance that the proceeding will not have an
adverse impact on the Company in the future. The action is currently
pending and DataTell's Motion to Dismiss and Petitioner's application for
an order for relief is currently set for hearing in October 1998 in the
United States Bankruptcy Court, Northern District of Texas, Dallas
Division, under Case No. 398-34353-RCM-7 (Chapter 7), styled In re:
DataTell Solutions, Inc. (Tax I.D. #75-2687364), Debtor.
B. As had been previously announced, the Company has recently gone
through a major transformation, reducing its dependence on consumer
electronics, and focusing on new technologies. This conversion required
the orderly winding down of manufacturing and distribution activities,
and the expansion of new technical staff, education of existing staff,
and development of an overall business plan going forward. This has been
very costly, and at times confusing to most investors.
The greatest challenges facing the Company at this time are: 1)
building the revenue stream, 2) finalizing contracts on major projects
currently in process, 3) communicating to the investment community the
current focus and capabilities of the Company.
The Company's greatest accomplishment in the recent past has been
building a new revenue stream and adding to our technical staff. Through
three acquisitions, the Company expanded its highly qualified engineering
and programming staff, and gained an existing client base. This revenue
is further outlined elsewhere in this 8-K/A report. The combined revenue
of these acquisitions and our own expansion has enabled the Company to
approach former revenue levels. In addition, with our technologies and
exciting new prospects, the year ahead shows promise.
The Company is now positioned into four distinct units:
1) Network America, Inc. is concentrated on specific network hardware
design, buildup and implementation of these systems for schools,
universities, and businesses. NWA also supplies other units of the
Company their hardware requirements to perform consulting and software
designed systems. NWA currently makes the largest single revenue
contribution to the Company as a whole;
<PAGE>
2) CompuNet Support Systems, Inc. is similar to NWA but more focused on
the implementation of Local Area Networks and therefore generates a
larger percentage of its business through consulting fees rather than
hardware and equipment sales;
3) Advanced Systems Group is a combination of the original technical
group of uniView Technologies and the acquisition of personnel from
Corporate Network Solutions. This group has an elite staff dedicated to
provide very high level design, installation, and convergence network
solutions. Management feels that this group is the most advanced team
ever assembled specifically for the convergence market. By utilizing the
developed intellectual property of the Company and their highly qualified
specialties, this group is expected in the future to be the leader for
the Company in growth and profitability;
4) Products Group also has an excellent technical staff and is
responsible for the management and expansion of the ISP, customer
service, and the continued design of products for the Company. This
group will also support the other units of the Company by customizing
applications, modifying products, and evaluating other products from
either customers or internal sources. Having partnership arrangements
with companies like Lucent Technologies and Motorola gives this group the
additional strength to provide advanced products and technologies.
Management believes the Company is now positioned to be the only
provider of complete integrated systems for the rapidly developing market
requiring customizable End-to-End solutions. It is able to identify
potential customers and apply the hardware, software and total
integration necessary to meet the demands of this unique and complex
industry. Whether the Company is working with the largest
telecommunication companies in the world, or the business next door, its
solutions and technologies can be scaled to fulfill all of its customers'
needs in the convergence market.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
(b) Auditor's statement on pro forma financial information.
(c) Exhibits.
Reference is made to the Exhibit Index at the end of this Form 8-K/A
report for a list of all exhibits filed with and incorporated by
reference in this report.
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.
uniView Technologies Corporation
(Registrant)
By: /s/ F. Shelton Richardson, Jr.
F. Shelton Richardson, Jr.
Vice President - Chief Financial Officer
(Principal Financial and Duly Authorized
Officer)
Date: August 26, 1998
<PAGE>
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
NETWORK AMERICA, INC.
MARCH 31, 1998 (UNAUDITED) and
SEPTEMBER 30, 1997
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Network America, Inc.
We have audited the accompanying balance sheet of Network America, Inc.
as of September 30, 1997 and the related statements of operations,
stockholder's equity 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 Network
America, Inc. as of September 30, 1997, and the results of its operations
and its cash flows for the year ended September 30, 1997, in conformity
with generally accepted accounting principles.
/s/ King Griffin Adamson P.C.
KING GRIFFIN & ADAMSON P.C.
Dallas, Texas
August 20, 1998
<PAGE>
NETWORK AMERICA, INC. - BALANCE SHEETS
March 31, 1998 (unaudited) and September 30, 1997
ASSETS
March
31,
1998 September 30,
CURRENT ASSETS (unaudited) 1997
----------- ------------
Cash $ - $ 243,036
Trade accounts receivable, net of
allowance for doubtful
accounts of $8,634 in 1998
and 1997 582,345 906,190
Inventory 268,060 337,366
Prepaid expenses 8,899 22,640
Deferred tax asset 8,036 8,036
------- ---------
Total current assets 867,340 1,517,268
------- ---------
PROPERTY AND EQUIPMENT, net 107,480 117,254
OTHER ASSETS
Goodwill, net of accumulated
amortization of $35,811 and
$8,577 in 1998 and 1997,
respectively 736,096 763,330
Other 20,671 17,679
Deferred tax asset 13,600 13,600
------- -------
Total other assets 770,367 794,609
------- -------
Total assets $ 1,745,187 $ 2,429,131
========= =========
LIABILITIES AND STOCKHOLDER'S (DEFICIT) EQUITY
CURRENT LIABILITIES
Bank overdraft $ 171,577 $ -
Notes payable 14,262 24,009
Line of credit 898,453 903,460
Trade accounts payable 745,761 973,758
Accrued expenses 310,466 181,998
------- -------
Total current liabilities 2,140,519 2,083,225
--------- ---------
COMMITMENTS AND CONTINGENCIES (Notes B, E & G)
STOCKHOLDER'S (DEFICIT) EQUITY
Common stock - $1.00 par
value; 1,500 shares,
authorized, 500 shares issued
and outstanding 500 500
Additional paid-in capital 593,500 593,500
Accumulated deficit (989,332) (248,094)
--------- ---------
Total stockholder's
(deficit) equity (395,332) 345,906
--------- ---------
Total liabilities and
stockholder's (deficit)
equity $ 1,745,187 $ 2,429,131
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
NETWORK AMERICA, INC.
STATEMENTS OF OPERATIONS
Six months ended March 31, 1998 (unaudited) and year ended September 30, 1997
Six
months
ended Year ended
March 31, September
1998 30, 1997
(unaudited)
SALES $ 5,655,770 $11,598,678
COST OF GOODS SOLD 4,613,898 9,622,056
--------- ---------
GROSS PROFIT 1,041,872 1,976,622
SELLING, GENERAL AND ADMINISTRATIVE 877,336 1,884,298
--------- ---------
OPERATING INCOME 164,536 92,324
OTHER INCOME (EXPENSES)
Other income (expense) - (60,799)
Interest expense (53,405) (67,774)
-------- --------
(53,405) (128,573)
-------- ---------
NET INCOME (LOSS) BEFORE INCOME TAXES 111,131 (36,249)
Income tax expense (40,581) (18,564)
-------- --------
NET INCOME (LOSS) $ 70,550 $ (54,813)
====== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
NETWORK AMERICA, INC.
STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
Six months ended March 31, 1998 (unaudited) and year ended September 30, 1997
(Accumulated
Additional Deficit)
Common Stock paid-in Retained
Shares Amount Capital Earnings Total
------ ------ ------- -------- -----
Balance at
September 30, 1996 500 $ 500 $2,380,178 $ 35,268 $ 2,415,946
Purchase price
adjustment - - (1,786,678) 592,162 (1,194,516)
(See Note A)
Net loss - - - (54,813) (54,813)
Distributions to
parent - - - (820,711) (820,711)
----- ----- ----- --------- ---------
Balance at
September 30, 1997 500 500 593,500 (248,094) 345,906
Net income
(unaudited) - - - 70,550 70,550
Distributions to
parent (unaudited) - - - (811,788) (811,788)
---- ---- ---- --------- ---------
Balance at March
30, 1998 (unaudited) 500 $ 500 $ 593,500 $ (989,332) $ (395,332)
===== === ======= ========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
NETWORK AMERICA, INC.
STATEMENTS OF CASH FLOWS
Six months ended March 31, 1998 (unaudited) and year ended September 30, 1997
Six
months
ended Year
March ended
31, September 30,
1998 1997
(unaudited)
----------- ------
Cash flows from operating activities:
Net income (loss) $ 70,550 (54,813)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 41,371 161,282
Changes in operating assets and
liabilities:
Trade accounts receivable 323,845 (74,956)
Inventory 69,306 114,385
Prepaid expenses 13,741 (17,094)
Other assets (2,992) (12,946)
Trade accounts payable (227,997) 574,443
Other current liabilities 128,468 28,835
------- -------
Net cash provided by operating
activities 416,292 719,136
------- -------
Cash flows from investing activities
Purchase of property and equipment (4,363) (91,860)
------- --------
Net cash used by investing
activities (4,363) (91,860)
------- --------
Cash flows from financing activities
Bank overdraft 171,577 -
Proceeds from line of credit - 755,747
Payments on line of credit (5,007) (322,287)
Proceeds from notes payable - 15,985
Payments on notes payable (9,747) (12,974)
Distributions to parent (811,788) (820,711)
--------- ---------
Net cash used by financing
activities (410,250) (384,240)
Net increase(decrease) in cash (243,036) 243,036
Cash at beginning of period 243,036 -
------- -------
Cash at end of period $ - $ 243,036
======= =======
Cash paid during the period for:
Interest $ 53,405 $ 67,774
====== ======
The accompanying notes are an integral part of these financial statements.
<PAGE>
NETWORK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and September 30, 1997
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature of Operations
Network America, Inc. ("Company") sells, installs, and provides ongoing
maintenance and repair service for computer hardware and software
products. The Company's operations are concentrated in Oklahoma and
Arkansas.
General
In April 1993, 100% of the outstanding common stock of the Company was
purchased by a public entity for a total consideration of $2,500,000. At
the time of this transaction, the Company applied the "push down" basis
of accounting by allocating the purchase price to all assets and
liabilities based upon their fair value under the purchase method of
accounting. The excess of the purchase price over fair values of assets
and liabilities totaled $2,321,179 and was recorded by the Company as
goodwill. The Company amortized this goodwill over its estimated life of
20 years.
On June 28, 1996, 51% of the outstanding common stock of the Company was
sold to DataTell Solutions, Inc. ("DataTell" or "Parent"), a non public
entity. On July 1, 1997, the remaining 49% of the Company's common stock
was sold to DataTell. The consideration for both transactions totaled
$594,000 paid in cash. The Company again applied the "push down" basis
of accounting by restating their assets and liabilities (at the date of
purchase of the 49% of the Company's common stock) to their fair value
with the excess of the purchase price allocated to goodwill. A summary
of the purchase price allocation on July 1, 1997, is as follows:
Current assets 1,489,402
Fixed assets 103,870
Goodwill 771,907
Other assets 18,282
Current liabilities (1,789,461)
-----------
$ 594,000
=======
Goodwill, as restated, is being amortized over its estimated life of 15
years. Amortization expense for the six months ended March 31, 1998
(unaudited) and the year ended September 30, 1997, totaled $ 27,234 and
$76,040, respectively. Adopting a "push down" basis for assets and
liabilities had the effect of reducing amortization expense by $18,675
and $20,800, for the six months ended March 31, 1998 (unaudited), and the
year ended September 30, 1997, respectively.
Advertising Costs
Advertising costs are charged to operations when the advertising first
takes place. Advertising costs charged to expense totaled $ 52,082 and $
143,619 for the six months ended March 31, 1998 (unaudited), and the year
ended September 30, 1997, respectively.
<PAGE>
NETWORK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and September 30, 1997
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES - continued
Revenue Recognition
The Company recognizes service revenue as the services are provided.
Equipment sales are recognized at the time of product delivery and
customer acceptance. Maintenance revenues are recognized ratably over
the contractual period or as services are provided.
Inventory
Inventory is stated at the lower of cost or market. Cost is determined
by the average cost method. Inventory consists of computer parts and
peripherals to be used in network systems.
Warranty
The Company sells the majority of its products with a two year parts and
labor warranty. Warranty expense is recognized when the items are sold
and is based upon the Company's experience of the amount of claims
actually made. At September 30, 1997, the Company has recorded an
allowance for future warranty claims of $40,000.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided by
the straight-line method over the estimated useful lives of 3 to 5 years.
Income Taxes
The Company utilizes the asset and liability method for financial
accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed annually for differences between the financial
statement and tax bases of assets and liabilities that will result in
taxable or deductible amounts in the future based on enacted tax laws and
rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be
realized. Income tax expense or benefit is the tax payable or refundable
for the period plus or minus the change during the period in deferred tax
assets and liabilities.
Use of Estimates and Assumptions
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported amounts of revenues and expenses. Actual results could vary
from the estimates that were used.
<PAGE>
NETWORK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and September 30, 1997
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES - continued
Goodwill
Goodwill prior to the application of "push down" accounting applied in
connection with DataTell's acquisition of the remaining 49% of the
Company's common stock was being amortized over 20 years. Goodwill
arising from the application of "push down" accounting from the DataTell
purchase is being amortized over its estimated useful life of 15 years.
Management periodically evaluates the recoverability, valuation, and
amortization of goodwill. As a part of this review, management considers
the undiscounted projected future net earnings. If the undiscounted
future net earnings is less than the stated value, goodwill will be
written down to fair value.
Unaudited Period
The financial information as of March 31, 1998 and for the six months
ended March 31, 1998 is unaudited. In the opinion of management, such
information contains all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the results for such
period. The results of operations for the interim period is not
necessarily indicative of the results of operations for the full fiscal
year.
Statement of Cash Flows
For purposes of the statement of cash flows, cash equivalents include
time deposits, certificates of deposits, and all highly liquid debt
instruments with original maturities of three months or less when
purchased
NOTE B - ABILITY TO CONTINUE AS A GOING CONCERN
As reflected in the accompanying financial statements, at September 30,
1997, current liabilities exceeded current assets by approximately
$566,000. A significant portion of current liabilities relates to the
line of credit which matured on July 31, 1998, and is now past due (see
Note D). At the date of this report, management is in the process of
refinancing this line of credit with another financial institution. The
Company's ability to continue as a going concern will be based upon its
ability to refinance this line of credit or obtain an extension until the
refinancing is accomplished. Management believes that cash flows from
operations is sufficient to meet all other cash flow needs of the
Company. Subsequent to June 12, 1998, the Company's new parent, uniView
Technologies Corporation advanced to the Company $300,000 for use in
normal operations.
<PAGE>
NETWORK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and September 30, 1997
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
March 31,
1998 September
(unaudited) 30, 1997
Office furniture and equipment $ 51,825 $ 47,462
Automobiles 76,295 76,295
Leasehold improvements 48,294 48,294
Rental equipment 166,250 166,250
------- -------
342,664 338,301
Accumulated depreciation and
amortization (235,184) (221,047)
--------- ---------
$107,480 $117,254
======= =======
Depreciation expense totaled $14,137 and $85,242 for the six months ended
March 31, 1998 (unaudited) and the year ended December 31, 1997,
respectively.
NOTE D - LINE OF CREDIT
The Company maintained a $1,800,000 line of credit with a bank which bore
interest at prime plus 1% and was collateralized by accounts receivable,
inventory, and equipment. At September 30, 1997, the amount due under
this line of credit totaled $903,460. On May 30, 1998, this line of
credit was extended and modified to allow maximum borrowings of
$1,000,000. All other terms remained unchanged. The note is due on
demand and matured on July 31, 1998 (See note B.)
NOTE E - CONCENTRATIONS AND CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of accounts receivable.
In the normal course of business, the Company extends unsecured credit to
virtually all of its customers. The Company's customers are concentrated
primarily in Arkansas and Oklahoma. Because of the credit risk involved,
management has provided an allowance for doubtful accounts which reflects
its opinion of amounts which will eventually become uncollectible. In the
event of complete non-performance by the Company's customers, the maximum
exposure to the Company is the outstanding accounts receivable balance at
the date of non-performance. The Company's customers are concentrated
primarily in Arkansas and Oklahoma. For the year ended September 30,
1997, one customer accounted for $1,457,285 or 12.6% of the Company's
total sales. In addition, at September 30, 1997, three customers'
accounts comprised approximately 49% of the total trade accounts
receivable balance.
NOTE F - RELATED PARTY TRANSACTIONS
During the year ended September 30, 1997, the Company made net advances
to the Parent totaling $820,711, which included $18,564 in current taxes
payable deemed to be paid by the Parent. During the six months ended
March 31, 1998 (unaudited), the Company made additional advances of
$811,788. These amounts have been recorded as equity distributions.
<PAGE>
NETWORK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and September 30, 1997
NOTE G - COMMITMENTS
The Company leases office facilities under lease agreements classified as
operating leases. Total rent expense for the six months ended March 31,
1998, and for the year ended September 30, 1998, totaled $63,969 and
$89,312, respectively. Annual future minimum rental payments required
under operating leases for future years are as follows:
Year Ending
September 30,
1998 $ 106,680
1999 109,380
2000 109,380
2001 85,380
2002 17,260
------
$ 428,080
=======
NOTE H - INCOME TAXES
Income tax expense is comprised of the following:
Six months
ended Year
March 31, ended
1998 September
30,
(unaudited) 1997
----------- ------
Current 40,581 18,564
Deferred - -
------ ------
$40,581 $18,564
====== ======
<PAGE>
NETWORK AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and September 30, 1997
NOTE H - INCOME TAXES - continued
A reconciliation of income tax expense computed by applying the U. S.
Federal statutory rate to income (loss) before income taxes for the six
months ended March 31, 1998 (unaudited) and the year ended September 30,
1997 is as follows:
March 31
1998 September
(unaudited) 30, 1997
----------- --------
Statutory rate applied
to income(loss)
before income taxes $ 37,785 $ (12,325)
Permanent differences 2,796 30,889
------ ------
$ 40,581 $ 18,564
====== ======
Deferred tax assets and liabilities consist of the following:
March 31
1998 September
(unaudited) 30,1997
----------- -------
Deferred tax assets - current
Accounts receivable - current $ 2,936 $ 2,936
Inventory - current 5,100 5,100
----- -----
$ 8,036 $ 8,036
===== =====
Deferred tax asset - noncurrent
Accrued liabilities - long term $ 13,600 $ 13,600
====== ======
NOTE I - PROFIT SHARING PLAN
Substantially all of the Company's employees are covered by the Parent's
401(k) plan. Contributions to the plan are at the discretion of
management. During the year ended September 30, 1997, the Company made
no discretionary contributions to the plan.
NOTE J - SUBSEQUENT EVENT
On May 13, 1998, VMI acquired 100% ownership of the Company from DataTell
Solutions, Inc. ("DataTell") as a result of an agreement to accept
collateral in satisfaction of a debt owing by DataTell to VMI. Prior to
that date, the stock of the Company had been pledged to VMI by DataTell
as collateral in a series of note agreements with VMI. On June 12, 1998,
Video Management, Inc. was acquired by uniView Technologies Corporation,
a public company.
<PAGE>
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
COMPUNET SUPPORT SYSTEMS, INC.
MARCH 31, 1998 (UNAUDITED) and
DECEMBER 31, 1997
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
CompuNet Support Systems, Inc.
We have audited the accompanying balance sheet of CompuNet Support
Systems, Inc. as of December 31, 1997, and the related statements of
operations, stockholder's deficit 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 CompuNet
Support Systems, Inc. as of December 31, 1997, and the results of its
operations and its cash flows for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ King Griffin & Adamson P.C.
KING GRIFFIN & ADAMSON P.C.
Dallas, Texas
July 31, 1998
<PAGE>
COMPUNET SUPPORT SYSTEMS, INC. - BALANCE SHEETS
March 31, 1998 (unaudited) and December 31, 1997
ASSETS
March December
31,1998 31, 1997
(unaudited)
----------- ---------
CURRENT ASSETS
Trade accounts receivable, net of
allowance for doubtful accounts of
$13,832 and $ -0- at March 31, 1998
and December 31, 1997 $ 617,511 $ 823,770
Inventory 216,601 202,484
Deferred income taxes 23,797 37,026
------ ------
Total current assets 857,909 1,063,280
------- ---------
PROPERTY AND EQUIPMENT, net 110,548 112,657
------- -------
OTHER ASSETS 7,355 7,355
----- -----
Total assets $ 975,812 $1,183,292
======= =========
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES
Line of credit 628,498 729,807
Trade accounts payable 242,835 196,207
Accrued expenses 174,607 151,289
Bank overdraft 100,958 68,452
Income taxes payable 2,325 19,599
Notes payable, current portion 4,576 6,715
----- -----
Total current liabilities 1,153,799 1,172,069
--------- ---------
DEFERRED INCOME TAXES 10,442 11,111
------ ------
NOTES PAYABLE, less current portion 5,118 5,118
----- -----
COMMITMENTS AND CONTINGENCIES (NOTE E)
STOCKHOLDER'S DEFICIT
Common stock - $0.05 par value;
authorized 10,000,000 shares; issued and
outstanding, 50,838 shares 2,542 2,542
Additional paid-in capital 218,753 218,753
Accumulated deficit (414,842) (226,301)
--------- ---------
Total stockholder's deficit (193,547) (5,006)
--------- -------
Total liabilities and stockholder's
deficit $ 975,812 $1,183,292
======= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
COMPUNET SUPPORT SYSTEMS, INC.
STATEMENTS OF OPERATIONS
Three months ended March 31, 1998 (unaudited) and
year ended December 31, 1997
Three
months Year
ended ended
March 31, December
1998 31,
(unaudited) 1997
----------- ----
SALES $ 1,075,574 $ 5,747,862
COST OF GOODS SOLD 875,471 4,602,147
------- ---------
GROSS PROFIT 200,103 1,145,715
SELLING, GENERAL AND ADMINISTRATIVE 197,135 96,179
------- ------
OPERATING INCOME 2,968 149,536
----- -------
OTHER (INCOME) EXPENSES
Other income (expense) (1,404) (4,237)
Interest expense 19,276 37,284
------ ------
17,872 33,047
------ ------
NET INCOME (LOSS) BEFORE INCOME TAXES (14,904) 116,489
Income tax expense (benefit) (4,714) 14,285
------- ------
NET INCOME (LOSS) (10,190) 102,024
======== =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
COMPUNET SUPPORT SYSTEMS, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
Three months ended March 31, 1998 (unaudited) and
year ended December 31, 1997
Retained
Additional Earnings
Preferred stock Common stock paid-in (Accumulated
Shares Amount Shares Amount Capital Deficit) Total
------ ------ ------ ------ ------- -------- -----
Balance at
December 31,
1996 2,000 $10,000 50,838 $ 2,542 $ 22,405 $ 76,273 $ 111,220
Purchase Price
Adjustment - - - - 196,348 (196,348) -
Retirement of
Stock (2,000)(10,000) - - - - (10,000)
Distribution to
Parent - - - - - (208,430) (208,430)
Net Earnings - - - - - 102,204 102,204
------ ---- ---- ---- ---- ------- -------
Balance at
December 31, 1997 - - 50,838 2,542 218,753 (226,301) (5,006)
Distribution to
Parent (unaudited) - - - - - (178,351) (178,351)
Net Loss (unaudited) - - - - - (10,190) (10,190)
---- ---- ---- ---- ---- -------- --------
Balances at March
31, 1998 (unaudited) - $ - 50,838 $2,542 $218,753 $(414,842)$(193,547)
==== ==== ====== ===== ======= ========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
COMPUNET SUPPORT SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
Three months ended March 31, 1998 (unaudited) and
year ended December 31, 1997
Three
months Year
ended ended
March 31, December
1998 31,
(unaudited) 1997
----------- ----
Cash flows from operating activities:
Net income (loss) $ (10,190) $ 102,204
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating
activities:
Depreciation and amortization 11,651 23,961
Allowance for doubtful accounts 13,901 (21,240)
Inventory obsolescence reserve - 14,596
Deferred income taxes 12,560 (5,822)
Changes in operating assets and liabilities:
Trade accounts receivable 192,358 (160,801)
Inventory (14,117) (56,947)
Other assets - (5,000)
Trade accounts payable 46,628 (279,393)
Other current liabilities 38,550 102,789
------ -------
Net cash provided (used) by
operating activities 291,341 (285,653)
------- ---------
Cash flows from investing activities:
Purchase of property and equipment (9,542) (57,419)
------- --------
Net cash used by investing
activities (9,542) (57,419)
------- --------
Cash flows from financing activities:
Net proceeds from lines of credit - 561,179
Purchase and retirement of preferred stock - (10,000)
Payments on borrowings (103,448) (6,775)
Distributions to Parent (178,351) (208,430)
--------- ---------
Net cash provided (used) by
financing activities (281,799) 335,974
--------- -------
Net increase (decrease) in cash - (7,098)
Cash at beginning of period - 7,098
------- -----
Cash at end of period $ - $ -
======= =====
Cash paid during the period for:
Interest $ 19,276 $37,284
======= ======
Income taxes $ - $17,171
======= ======
The accompanying notes are an integral part of these financial statements.
<PAGE>
COMPUNET SUPPORT SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (unaudited) and December 31, 1997
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
CompuNet Support Systems, Inc. ("Company") is a full service systems
integration company involved in design and installation of local area
networks and wide area networks. The Company's operations are
concentrated in Texas and its customer base is nationwide.
General
On July 31, 1997, 100 % of the outstanding common stock of the Company
was sold to DataTell Solutions, Inc. ("DataTell" or "Parent"). Total
consideration paid for the common stock totaled approximately $220,000,
which approximated the net book value of the Company on July 31, 1997.
The Company has applied the "push down" basis of accounting by allocating
the purchase price to all assets and liabilities based upon their fair
value on the date of purchase. No adjustment to total equity or
allocation to goodwill was necessary, as the fair value of all assets and
liabilities held approximated their book value. At the date of purchase
by DataTell, $196,348, being all of the retained earnings, was eliminated
against additional paid-in capital. Accumulated deficit at December 31,
1998 is the deficit accumulated since the purchase date by DataTell.
Revenue Recognition
The Company recognizes service revenue as the services are provided.
Equipment sales are recognized at the time of product delivery and
customer acceptance. Maintenance and warranty revenues are recognized
ratably over the contractual period or as the services are provided.
Inventory
Inventory is stated at the lower of cost or market. Cost is determined
by the specific identification method. Inventory consists of computer
parts and peripherals to be used in network systems.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided by
the straight-line method over the estimated useful lives of 3 to 5 years.
Income Taxes
The Company utilizes the asset and liability method for financial
accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed annually for differences between the financial
statement and tax bases of assets and liabilities that will result in
taxable or deductible amounts in the future based on enacted tax laws and
rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be
realized. Income tax expense or benefit is the tax payable or refundable
for the period plus or minus the change during the period in deferred tax
assets and liabilities.
<PAGE>
COMPUNET SUPPORT SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998 (unaudited) and December 31, 1997
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES - continued
Unaudited Period
The financial information as of March 31, 1998 and for the three months
ended March 31, 1998 is unaudited. In the opinion of management, such
information contains all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the results for such
period. The results of operations for the interim period is not
necessarily indicative of the results of operations for the full fiscal
year.
Statement of Cash Flows
For purposes of the statement of cash flows, cash equivalents include
time deposits, certificates of deposits, and all highly liquid debt
instruments with original maturities of 3 months or less when purchased.
Use of Estimates and Assumptions
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities, and
the reported amounts of revenues and expenses. Actual results could vary
from the estimates that were used.
NOTE B - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
March 31, 1998
(unaudited) December 31, 1997
----------- -----------------
` Equipment $ 201,101 $ 191,559
Furniture and fixtures 16,782 16,782
Software 11,651 11,651
Leasehold improvements 3,500 3,500
----- -----
233,034 223,492
Accumulated depreciation and
amortization (122,487) (110,835)
--------- ---------
$ 110,548 $ 112,657
======= =======
<PAGE>
COMPUNET SUPPORT SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998 (unaudited) and December 31, 1997
NOTE C - NOTES PAYABLE
Notes payable consists of loans to the Company from former shareholders
for the retirement of preferred stock, with interest rates of 10%,
payable in monthly installments. These notes are unsecured.
Future annual maturities as of December 31, 1997, are as follows:
1998 $ 6,715
1999 2,811
2000 2,307
-----
$ 11,833
======
NOTE D - LINE OF CREDIT
Prior to July 31, 1997, the Company maintained a line of credit which
provided for borrowings up to $250,000 with an interest rate of prime
plus 3%. This line was collateralized by all assets and was due on
demand. On July 31, 1997, the Company entered into a new line of credit
agreement allowing maximum borrowings of $1,000,000. The line bears
interest at prime plus 2.375% and is collateralized by substantially
all assets of the Company (effective rate was 10.875% at March 31,
1998 (unaudited) and December 31, 1997). At December 31, 1997, amounts
due under this line of credit totaled $729,807. On July 31, 1998,
the line automatically renewed establishing the current maturity date
of July 31, 1999.
NOTE E - COMMITMENTS
The Company leases certain equipment and office facilities under lease
agreements classified as operating leases. Total rent expense during the
three months ended March 31, 1998 (unaudited) and the year ended December
31, 1997 was $ 16,253 and $53,480, respectively.
Annual future minimum rental payments required under operating leases for
future years are as follows:
Years ending
December 31,
1998 $ 47,784
1999 27,138
2000 7,810
-----
$ 82,732
======
NOTE F - CONCENTRATIONS AND CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of accounts receivable.
In the normal course of business, the Company extends unsecured credit to
virtually all of its customers. Because of the credit risk involved,
management has provided an allowance for doubtful accounts which reflects
its opinion of amounts which will eventually become uncollectible. In
the event of complete non-performance by the Company's customers, the
maximum exposure to the Company is the outstanding accounts receivable
balance at the date of non-performance. During 1997, a significant
portion of the Company's sales were provided by one major customer which
represented approximately $2.1 million in sales or 37%. At December 31,
1997, this customer had an accounts receivable balance of $374,857.
<PAGE>
COMPUNET SUPPORT SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998 (unaudited) and December 31, 1997
NOTE G - RELATED PARTY TRANSACTIONS
During the year ended December 31, 1997, the Company made net advances to
the Parent totaling $208,430, which included $6,222 in current taxes
payable deemed to be paid by the Parent. These amounts have been
recorded as equity distributions.
NOTE H - INCOME TAXES
Income tax expense (benefit) is comprised of the following:
March 31,
1998 December
(unaudited) 31, 1997
----------- --------
Current $ (17,274) $ 20,107
Deferred 12,560 (5,822)
------ -------
$ (4,714) $ 14,285
======= ======
A reconciliation of income tax expense computed by applying the U. S.
Federal statutory rate to income (loss) before income taxes for the three
months ended March 31, 1998 and the year ended December 31, 1997 is as
follows:
March
31,1998 December
(unaudited) 31, 1997
----------- --------
Statutory rate applied
to income(loss)
before income taxes $ (3,465) $ 34,688
Benefit of surtax rates - (11,742)
Other (1,249) (8,661)
------- -------
$ (4,714) $ 14,285
======= ======
Deferred tax assets and liabilities consist of the following:
March 31,
1998 December
(unaudited) 31, 1997
----------- --------
Deferred tax assets -
current $ 23,797 $ 37,026
Deferred tax liabilities
- long term (10,442) (11,111)
-------- --------
Net deferred tax assets $ 13,355 $ 25,915
====== ======
The current deferred tax asset results from the inventory obsolescence
reserve, deferred revenue and deferred rent which are amounts recorded
differently for income tax and financial reporting purposes. The non-
current deferred tax liability results from the differences in income tax
and financial reporting depreciation methods.
<PAGE>
COMPUNET SUPPORT SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998 (unaudited) and December 31, 1997
NOTE I - PROFIT SHARING PLAN
Substantially all of the Company's employees are covered by the Parent's
401(k) plan. Contributions to the plan are at the discretion of
management. During the year ended December 31, 1997, the Company made no
discretionary contributions to the plan.
NOTE J - SUBSEQUENT EVENT
On May 13, 1998, VMI acquired 100% ownership of the Company from DataTell
Solutions, Inc. ("DataTell") as a result of an agreement to accept
collateral in satisfaction of a debt owing by DataTell to VMI. Prior to
that date, the stock of the Company had been pledged to VMI by DataTell
as collateral in a series of note agreements with VMI. On June 12, 1998,
Video Management, Inc. was acquired by uniView Technologies Corporation,
a public company.
<PAGE>
uniView Technologies Corporation
Pro Forma Financial Information
Effective June 12, 1998, uniView Technologies Corporation ("uniView"),
completed the acquisition of 100% of the issued and outstanding common
stock of Video Management, Inc. ("VMI") in a stock for stock transaction.
This acquisition was accounted for by uniView as a pooling of interests.
Consideration given for the acquisition of VMI's stock was 800,000 newly
issued shares of uniView's common stock.
On May 13, 1998, VMI acquired 100% of the outstanding common stock of
Network America, Inc. ("NWA") and CompuNet Support Systems, Inc. ("CNSS")
through an agreement to accept such stock in satisfaction of a debt owed
to VMI. This acquisition was accounted for by VMI as a purchase. Prior
to the acquisition of these two subsidiaries, VMI had no operations.
As the acquisition of VMI by uniView was accounted for using the pooling
method, pro forma statements of operations would typically be required to
be presented for the years ended June 30 (uniView year end), 1995, 1996,
and 1997 assuming the acquisition had occurred on July 1, 1994. A pro
forma balance sheet would typically be presented as of March 31, 1998,
reflecting the combination as if it had occurred on that date. However,
VMI had no significant operations during or as of these periods to be
presented as its purchase of NWA and CNSS occurred subsequent to these
periods. Accordingly, no pro forma financial information is presented.
<PAGE>
UNIVIEW TECHNOLOGIES CORPORATION
EXHIBIT INDEX
Exhibit Sequential
Number Description of Exhibits Page
2 Stock Purchase Agreement dated as of June 12, 1998 between
the Company and Alscomm, Inc. (filed as Exhibit "2" to the
Company's Current Report on Form 8-K originally filed with the
Commission on June 26, 1998 and incorporated herein by
reference.) N/A
4.1 Articles of Incorporation of the Company, as amended,
defining the rights of security holders (filed as Exhibit "4.1"
to the Company's Registration Statement on Form S-3 originally
filed with the Commission on May 13, 1998 and incorporated
herein by reference.) N/A
4.2 Bylaws of the Company, as amended, defining the rights of
security holders (filed as Exhibit "3(ii)" to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1997 and incorporated herein by reference.) N/A
4.3 Series A Preferred Stock terms and conditions (filed as
Exhibit "4.3" to the Company's annual report on Form 10-K for
the fiscal year ended June 30, 1994 and incorporated herein by
reference.) N/A
4.4 Series H Preferred Stock terms and conditions (filed as
Exhibit "4.4" to the Company's Registration Statement on Form S-
3 filed with the Commission on June 20, 1996 and incorporated
herein by reference.) N/A
4.5 Series Q Preferred Stock terms and conditions (filed as
Exhibit "4.6" to the Company's Current Report on Form 8-K dated
June 12, 1998 and incorporated herein by reference.) N/A
4.6 Series 1998-A1 Preferred Stock terms and conditions (filed
as Exhibit "4.5" to the Company's Registration Statement on
Form S-3 filed with the Commission on July 20, 1998 and
incorporated herein by reference.) N/A
_______________
* Filed herewith.
