UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB/A-2
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended September 30, 1997 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to
------------ -------------
Commission file number 0-14273
DCX, INC.
-----------------------------
(Name of small business issuer)
Colorado 84-0868815
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1597 Cole Boulevard, Suite 300B, Golden, Colorado 80401
(Address of principal executive offices) (Zip code)
Issuer's telephone number (303) 274-8708
Securities registered pursuant to Section 12(g) of the Exchange Act:
Title of each class
Common Stock, no par value
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities and Exchange Act during the past 12 months (or for
such shorter period that the registrant 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 pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant'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. [ ]
The issuer's revenues for its most recent fiscal year were $71,098.03.
As of December 31, 1997, the aggregate market value of the shares of the
issuer's voting stock held by non-affiliates of the issuer based on the average
of closing bid and asked prices of the Common Stock as reported on the NASDAQ
Small Cap Market sm, was approximately $5,485,775.
As of December 31, 1997, the issuer had outstanding 9,010,776 shares of Common
Stock.
Transitional Small Business Disclosure Format: Yes [ ]; No [ X ]
<PAGE>
PART II
Item 8- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
This Amendment No. 2 to Form 10-KSB for the fiscal year ending September 30,
1997, is filed to report certain changes to Note 2 to the Company's financial
statements for fiscal 1997, attached hereto.
PART IV
Item 13- EXHIBITS AND REPORTS ON FORM 8-K
(a) The following financial statements, schedules and exhibits are filed as a
part of this report:
1. Financial Statements
2. Exhibit Index
The following exhibits are filed as part of this Report:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page
- -------- --------- ------
<S> <C> <C>
Note 6
2.1a Acquisition Agreement between DCX, Inc. and
PlanGraphics, Inc. Note 7
2.1b Asset Purchase Agreement between DCX, Inc.
DCX-CHOL Enterprises, Inc. Note 8
3.1 Bylaws of DCX, Inc. Note 1
16
<PAGE>
3.2a Amended and Restated Articles of Incorpor-
ation of DCX, Inc., dated July 8, 1991. Note 2
3.2b Articles of Amendment to the Articles
of Incorporation of DCX, Inc., dated November
6, 1996 Note 4
3.2c Articles of Amendment to the Articles of
Incorporation of DCX, Inc., dated July 30, 1997 Note 9
4.1 Specimen Stock Certificate Note 1
4.2 DCX 1991 Stock Option Plan Note 5
4.3 DCX 1995 Stock Incentive Plan Note 5
4.4 DCX, Inc. Equity Incentive Plan Note 12
4.4 Warrant, dated January 15, 1997 issued to Transition
Partners Limited. Note 3
4.5 Warrant, dated October 15, 1997, issued to Transition
Partners Limited. Note 3
4.6 Warrant, dated January 15, 1997, issued to Copeland
Consulting Group, Inc. Note 3
4.7 Warrant, dated October 15, 1997, issued to Copeland
Consulting Group, Inc. Note 3
4.8 Warrant, dated June 19, 1997, issued to Spencer
Edwards, Inc. Note 3
4.9 Warrant, dated November 8, 1996, issued to Coretech, Ltd. Note 3
4.10 Warrant, dated October 10, 1997, issued to
SKB Corporation. Note 3
4.11 Warrant, dated October 24, 1997, issued to
Gerald Alexander. Note 3
4.12 Form of Option Agreement, dated July 31, 1997, between
the Company and the Pension Fund of Steven R. Perles. Note 10
4.13 Form of Option Agreement, dated July 31, 1997,
between the Company and Hamilton & Faatz, P.C. Note 10
10.1 Executive Employment Agreement dated March 28, 1997
between the Company and G. Stephen Carreker. Note 11
10.2 Executive Employment Agreement dated March 28, 1997
between the Company and Frederick G. Beisser. Note 11
10.3 Executive Employment Agreement dated March 28, 1997
between the Company and D. Scott McReynolds. Note 11
10.4 Executive Employment Agreement dated September 22, 1997
between the Company and John C. Antenucci. Note 12
10.5 Executive Employment Agreement dated September 22, 1997
between the Company and J. Gary Reed. Note 12
17
<PAGE>
21.1 List of Subsidiaries Page 18
27.1 Financial Data Schedule Note 12
</TABLE>
NOTE:
1. Incorporated by reference from Registration Statements on Form S-18,
file no. 33-1484.
2. Incorporated by Reference from the definitive Proxy Statement, dated
May 3, 1991
3. Incorporated by Reference from the Company's Registration Statement on
Form S-3 (Registration No. 333-39775) filed with the Commission on
November 7, 1997.
4. Incorporated by Reference from Form 8K, dated November 12, 1996.
5. Incorporated by Reference from Form S-8, dated September 29, 1996
6. Incorporated by Reference from Form 10-Q for June 30, 1996, dated
August 1, 1996. The agreement was terminated prior to completion.
7. Incorporated by Reference from Form 8-K, dated September 22, 1997.
8. Incorporated by Reference from Form 8-K, dated October 8, 1997.
9. Incorporated by Reference from Form 8-K, dated July 31, 1997.
10. Incorporated by Reference from Form S-8 (Registration No. 333-35293)
dated September 5, 1997.
11. Incorporated by Reference from Form 10-QSB for the Quarter ended March
31, 1997.
12. Incorporated by Reference from Form 10-KSB for the fiscal year ended
September 30, 1997.
(b) Reports on Form 8-K.
Following reports were filed on Form 8-K by the Company during fourth quarter of
the fiscal year covered by this annual report.
1. Current Report on Form 8-K, dated July 31, 1997 reporting sale of
convertible preferred stock under Regulation S.
2. Current Report on Form 8-K, dated August 13, 1997 reporting definitive
agreement between the Company and PlanGraphics, Inc.
3. Current Report on Form 8-K as, dated September 9, 1997, reporting sale
of convertible preferred stock pursuant to Regulation S.
4. Current Report on Form 8-K as amended, dated September 22, 1997,
reporting completion of an acquisition agreement between the Company
and PlanGraphics, Inc.
Reports filed on Form 8-K subsequent to the end of the fiscal year:
1. Current Report on Form 8-K as amended, dated October 8, 1997,
reporting divestiture of certain manufacturing assets to DCX-CHOL
Enterprises, Inc.
2. Current Report on Form 8-K, dated October 14, 1997, reporting sale of
convertible preferred stock pursuant to Regulation S.
3. Current Report on Form 8-K, dated November 3, 1997, reporting
appointment of additional members to the Company's Board of Directors.
4. Current Report on Form 8-K/A, dated September 22, 1997.
5. Current Report on Form 8-K/A, dated October 8, 1997.
18
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this Amendment No. 2 to Form 10-KSB to be signed
on its behalf by the undersigned, thereunto duly authorized.
DCX, INC.
Date: 10/29/98 By: /s/Robin Vail
-----------------------------
Robin Vail
Chief Financial Officer
19
<PAGE>
Exhibit 1
DCX, Inc.
and Subsidiaries
Index to Consolidated Financial Statements
================================================================================
Report of Independent Certified Public Accountants F-2
Consolidated Balance Sheet as of
September 30, 1997 F-3 - F-4
Consolidated Statements of Operations
for the Years Ended September 30,
1997 and 1996 F-5
Consolidated Statements of Stockholders'
Equity for the Years Ended
September 30, 1997 and 1996 F-6 - F-7
Consolidated Statements of Cash Flows
for the Years Ended September 30,
1997 and 1996 F-8
Summary of Accounting Policies F-9 - F-13
Notes to Consolidated Financial Statements F-14 - F-28
F-1
<PAGE>
Report of Independent Certified Public Accountants
The Board of Directors and Stockholders
DCX, Inc. and Subsidiaries
Golden, Colorado
We have audited the accompanying consolidated balance sheet of DCX, Inc. and
subsidiaries as of September 30, 1997 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the two years then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
consolidated 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 presentation of the financial
statements. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of DCX, Inc. and
subsidiaries as of September 30, 1997 and the results of their operations and
their cash flows for each of the two years then ended, in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations,
has negative working capital, and may not be able to meet the payment of certain
payables within the contractual terms of the agreements. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/S/ BDO SEIDMAN, LLP
Denver, Colorado
January 9, 1998
F-2
<PAGE>
DCX, Inc.
and Subsidiaries
Consolidated Balance Sheet
================================================================================
September 30, 1997
- --------------------------------------------------------------------------------
Assets (Note 5)
Current:
Cash and cash equivalents $ 582,326
Accounts receivable, less allowance
of $188,161 for possible losses
(Notes 2 and 4) 2,236,568
Amount due from sale of assets (Note 3) 1,100,000
Prepaid expenses and other 201,932
- --------------------------------------------------------------------------------
Total current assets 4,120,826
- --------------------------------------------------------------------------------
Property and equipment (Note 5):
Land and building under capital lease 1,866,667
Land and building held for rental (Note 12) 1,415,058
Equipment and furniture 447,003
Leased assets 183,512
- --------------------------------------------------------------------------------
Less accumulated depreciation 429,597
- --------------------------------------------------------------------------------
Net property and equipment 3,482,643
- --------------------------------------------------------------------------------
Other assets:
Goodwill 5,517,872
Capitalized software 258,855
Other 190,604
- --------------------------------------------------------------------------------
Total other assets 5,967,331
- --------------------------------------------------------------------------------
$13,570,800
================================================================================
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-3
<PAGE>
DCX, Inc.
and Subsidiaries
Consolidated Balance Sheet
================================================================================
September 30, 1997
- --------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current:
Checks written against future deposits $ 269,587
Accounts payable 1,351,484
Accrued expenses 1,054,660
Deferred revenue 189,354
Notes payable - current portion (Note 5) 854,060
Notes payable - related party (Note 5) 158,928
Obligations under capital leases - current (Note 8) 134,794
Accrued litigation settlement (Note 6) 521,000
- --------------------------------------------------------------------------------
Total current liabilities 4,533,867
Notes payable, less current maturities (Note 5) 576,000
Notes payable - related party - non-current (Note 5) 446,256
Obligations under capital leases (Note 8) 2,037,673
- --------------------------------------------------------------------------------
Total liabilities 7,593,796
- --------------------------------------------------------------------------------
Contingencies (Notes 1, 6 and 8)
Stockholders' equity:
Preferred stock, $.001 par value, 20,000,000 shares
authorized, 1,650 shares issued or outstanding (Note 9) 2
Common stock, no par value, 2,000,000,000 shares
authorized 7,736,380, shares issued and outstanding (Note 9) 9,741,501
Additional paid-in capital 3,550,869
Accumulated deficit (7,315,368)
- --------------------------------------------------------------------------------
Total stockholders' equity 5,977,004
- --------------------------------------------------------------------------------
$ 13,570,800
================================================================================
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-4
<PAGE>
DCX, Inc.
and Subsidiaries
Consolidated Statements of Operations
================================================================================
Years Ended September 30, 1997 1996
- --------------------------------------------------------------------------------
Revenues (Note 2) $ 71,098 $ --
Cost and expenses:
Salaries and employee benefits 779,934 140,934
Direct contract costs 16,032 --
Other operating expenses 799,556 491,548
- --------------------------------------------------------------------------------
Total costs and expenses 1,595,522 632,482
- --------------------------------------------------------------------------------
Operating loss (1,524,424) (632,482)
Other income (expense):
Other income (Note 5) 19,603 25,936
Interest expense (126,263) (155,757)
Life insurance proceeds (Note 14) 400,000 --
- --------------------------------------------------------------------------------
Total other income (expense) 293,340 (129,281)
- --------------------------------------------------------------------------------
Loss before extraordinary gain (1,231,084) (762,303)
Extraordinary gain on settlement of debt 278,019 82,826
- --------------------------------------------------------------------------------
Net loss from continuing operations (953,065) (679,477)
Loss from discontinued operations (Note 3) (1,598,313) (374,177)
- --------------------------------------------------------------------------------
Net loss $(2,551,378) $(1,053,654)
- --------------------------------------------------------------------------------
Preferred stock dividends $ 9,674 $ --
Deemed preferred stock dividends $ 892,592 $ --
- --------------------------------------------------------------------------------
Net loss attributable to common stockholders $(3,453,644) $(1,053,654)
Loss per common share:
Loss before extraordinary item $ (.26) $ (.18)
Extraordinary item $ .06 $ .02
Loss from continuing operations $ (.20) $ (.16)
Loss from discontinued operations $ (.33) $ (.09)
Loss attributable to common stockholders $ (.72) $ (.25)
- --------------------------------------------------------------------------------
Weighted average number of shares
of common stock outstanding 4,772,020 4,287,437
================================================================================
See accompanying summary of accounting policies and notes
to consolidated financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
DCX, Inc.
and Subsidiaries
Consolidated Statements of Stockholders' Equity
====================================================================================
Series A
Years ended Preferred Stock Common Stock
September 30, ------------------------- ------------------------
1997 and 1996 Shares Amount Shares Amount
- ------------------------------------------------------------------------------------
Balance,
<S> <C> <C> <C> <C>
October 1, 1995 -- -- 4,115,621 $ 4,765,540
Sale of stock through
options exercised -- -- 85,000 61,094
Stock issued for
services -- -- 233,488 233,723
Net loss for the year -- -- -- --
- ------------------------------------------------------------------------------------
Balance,
September 30, 1996 -- -- 4,434,109 5,060,357
Sale of stock through
options exercised -- -- 171,394 231,804
Issuance of preferred
stock (net of offering
costs of $312,000) 2,150 2 -- --
Conversion of
preferred stock into
common stock (500) -- 499,732 450,000
Stock issued in
acquisition -- -- 2,631,145 3,999,340
Stock warrants issued
for services -- -- -- --
Stock options issued for:
Acquisitions -- -- -- --
Services -- -- -- --
Forgiveness of subscrip-
tion receivable -- -- -- --
Deemed dividend on
preferred stock -- -- -- --
Deemed dividend on
warrants issued in
connection with
preferred stock -- -- -- --
Net loss for the year -- -- -- --
- ------------------------------------------------------------------------------------
Balance,
September 30, 1997 1,650 $ 2 7,736,380 $ 9,741,501
====================================================================================
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-6
<PAGE>
DCX, Inc.
and Subsidiaries
Consolidated Statements of Stockholders' Equity
Continued
======================================================================================
Additional
Paid-in Subscriptions Accumulated
Capital Receivable Deficit Total
- --------------------------------------------------------------------------------------
Balance,
October 1, 1995 $ 329,384 $ (179,000) $(2,808,070) $ 2,107,854
Sale of stock through
options exercised -- -- -- 61,094
Stock issued for
services -- -- -- 233,723
Net loss for the year -- -- (1,053,654) (1,053,654)
- --------------------------------------------------------------------------------------
Balance,
September 30, 1996 329,384 (179,000) (3,861,724) 1,349,017
Sale of stock through
options exercised -- -- -- 231,804
Issuance of preferred
stock (net of offering
costs of $312,000) 1,837,998 -- -- 1,838,000
Conversion of
preferred stock into
common stock (450,000) -- -- --
Stock issued in
acquisition -- -- -- 3,999,340
Stock warrants issued
for services 198,464 -- -- 198,464
Stock options issued for:
Acquisitions 296,177 -- -- 296,177
Services 436,580 -- -- 436,580
Forgiveness of subscrip-
tion receivable -- 179,000 -- 179,000
Deemed dividend on
preferred stock 9,674 -- (9,674) --
Deemed dividend on
warrants issued in
connection with
preferred stock 892,592 -- (892,592) --
Net loss for the year -- -- (2,551,378) (2,551,378)
- --------------------------------------------------------------------------------------
Balance,
September 30, 1997 $ 3,550,869 $ -- $(7,315,368) $ 6,052,004
======================================================================================
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-7
</TABLE>
<PAGE>
DCX, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows
================================================================================
Increase (Decrease) In Cash And Cash Equivalents
Years Ended September 30, 1997 1996
- --------------------------------------------------------------------------------
Operating activities:
Net loss $(2,551,378) $(1,053,654)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 98,298 114,202
Asset writedowns 179,000 --
Provision for losses on accounts receivable 158,161 --
Forgiveness of debt (278,069) (82,826)
Provision for litigation -- 521,000
Provision for losses on inventory -- 60,000
Stock issued for services -- 258,723
Stock options issued for acquisitions and
services 635,044 --
Loss on sale of assets 1,261,168 --
Changes in operating assets and liabilities:
Accounts receivable (709,755) 1,066,891
Inventories -- (352,750)
Other assets 178,798 9,915
Accounts payable 95,803 (82,360)
Accrued expenses 526,883 (275,291)
Deferred revenue 156,701 --
- -------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (249,346) 183,850
- -------------------------------------------------------------------------------
Investing activities:
Payments for business acquisitions,
net of cash acquired (689,735) --
Additions to capitalized software (2,564) --
Restricted cash -- 154,985
- -------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (692,299) 154,985
- -------------------------------------------------------------------------------
Financing activities:
Proceeds from debt 576,000 325,000
Payments on debt (1,018,062) (641,136)
Debt issue costs (101,226) --
Proceeds from the issuance of common stock 19,622 61,094
Proceeds from issuance of preferred stock
net of offering costs 1,838,000 --
- -------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 1,314,334 (255,042)
- -------------------------------------------------------------------------------
Net increase in cash 372,689 83,793
Cash and cash equivalents, beginning of year 209,637 125,844
- -------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 582,326 $ 209,637
===============================================================================
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-8
<PAGE>
DCX, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
Organization and
Business These consolidated financial statements include the
accounts of DCX, Inc. and those of its inactive
wholly-owned subsidiaries, GeoStars International, Inc.
and GeoNova US, Inc. ("GeoNova"), d/b/a GeoNova
International, Inc., and PlanGraphics, Inc.
(collectively the "Company"). DCX, Inc. provided
services and products to aerospace, aviation, military,
and commercial industries. DCX, Inc. was engaged in the
engineering design, development, testing, and
manufacturing of electronic and electro-mechanical
devices and assemblies for use in the missile and
aerospace industries, as well as the manufacturing of
wire harnesses and cable assemblies for use by
commercial computer and communications industries and
the U.S. Government.
PlanGraphics, Inc. is an independent consulting firm
specializing in the design and implementation of
Geographic Information Systems ("GIS") as well as
advisory services in the United States and foreign
markets. The customer base consists primarily of
utilities, government agencies, and land and resource
management organizations.
All intercompany balances and transactions have been
eliminated in consolidation.
Cash Equivalents For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments
purchased with an original maturity of three months or
less to be cash equivalents.
Revenue and
Cost Recognition Revenues are recognized as services are rendered.
Contract costs include all direct material and labor
costs and those indirect costs related to contract
performance, such as supplies, tools, repairs and
depreciation costs. General and administrative costs
are charged to expense as incurred. Provisions for
estimated losses on uncompleted contracts are made in
the period in which such losses are determined.
Goodwill Goodwill represents the excess of the cost over the
fair value of its net assets acquired at the date of
acquisition and is being amortized on the straight-line
method over fifteen years.
Deferred Revenue Deferred revenue represents amounts received under
certain contracts in excess of revenue recognized.
F-9
<PAGE>
DCX, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
Property,
Equipment and
Depreciation and
Amortization Property and equipment are recorded at cost.
Depreciation is provided on property and equipment by
charging against earnings, amounts sufficient to
amortize the costs of the assets over their estimated
useful lives. The ranges of estimated useful lives in
computing depreciation and amortization are as follows:
-------------------------------------------------------
Building 31 years
Leased assets Life of lease
Furniture and equipment 5 to 7 years
-------------------------------------------------------
Depreciation is computed principally on an accelerated
method.
Taxes on Income The Company accounts for income taxes under SFAS No.
109. Deferred income taxes result from temporary
differences. Temporary differences are differences
between the tax basis of assets and liabilities and
their reported amounts in the financial statements that
will result in taxable or deductible amounts in future
years.
Net Loss Per Share Net loss per common share is based on the weighted
average number of shares outstanding during each period
presented after preferred stock and deemed dividends.
Options to purchase stock are included as common stock
equivalents, when dilutive.
Concentrations of
Credit Risk The Company's financial instruments that are exposed to
concentrations of credit risk consist primarily of cash
and cash equivalent balances in excess of the insurance
provided by governmental insurance authorities. The
Company's cash and cash equivalents are placed with
financial institutions and are primarily in demand
deposit accounts.
Fair Value of
Financial
Instruments Unless otherwise specified, the Company believes the
book value of financial instruments approximates their
fair value.
Use of
Estimates The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that
affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and
the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from
those estimates.
F-10
<PAGE>
DCX, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
Capitalized
Software Costs Costs incurred internally in creating software products
for resale are charged to expense until technological
feasibility has been established upon completion of a
detail program design. Thereafter, all software
development costs are capitalized until the point that
the product is ready for sale and subsequently reported
at the lower of amortized cost or net realizable value.
In accordance with Statement of Financial Accounting
Standard No. 86, the Company recognizes the greater
amount of annual amortization of capitalized software
costs under 1) the ratio of current year revenues by
product, to the product's total estimated revenues
method or 2) over the products estimated economic
useful life by the straight-line method.
Software
Revenue
Recognition Revenue from licensing of software products is
recognized upon shipment. Revenue from support and
update service agreements is deferred at the time the
agreement is executed and recognized ratably over the
contractual period. The Company recognizes revenues
from customer training and consulting services when
such services are provided. All costs associated with
licensing of software products, support and update
services, and training and consulting services are
expensed as incurred.
Long-Term
Assets The Company applies SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets." Under SFAS No. 121,
long-lived assets and certain intangibles are reported
at the lower of the carrying amount or their estimated
recoverable amounts.
Stock Option
Plans The Company applied APB Opinion 25, "Accounting for
Stock Issued to Employees", and the related
Interpretation in accounting for all stock option
plans. Under APB Opinion 25, no compensation cost has
been recognized for stock options issued to employees
as the exercise price of the Company's stock options
granted equals or exceeds the market price of the
underlying common stock on the date of grant.
SFAS No. 123, "Accounting for Stock-Based
Compensation", requires the Company to provide pro
forma information regarding net income as if
compensation cost for the Company's stock options plans
had been determined in accordance with the fair value
based method prescribed in SFAS No. 123. To provide the
required pro forma information, the Company estimates
the fair value of each stock option at the grant date
by using the Black-Scholes option-pricing model.
F-11
<PAGE>
DCX, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
Recent Accounting
Pronouncements The Financial Accounting Standards Board ("FASB")
recently issued Statement of Financial Accounting
Standards No. 128 "Earnings Per Share" ("SFAS 128") and
Statement of Financial Accounting Standards No. 129
"Disclosure of Information About an Entity's Capital
Structure ("SFAS 129"). SFAS 128 provides a different
method of calculating earnings per share than is
currently used in accordance with Accounting Board
Opinion ("ABP") No. 15, "Earnings Per Share." SFAS 128
provides for the calculation of "Basic" and "Diluted"
earnings per share. Basic earnings per share includes
no dilution and is computed by dividing income
available to common stockholders by the weighted
average number of common shares outstanding for the
period. Diluted earnings per share reflects the
potential dilution of securities that could share in
the earnings of an entity, similar to fully diluted
earnings per share. SFAS 129 establishes standards for
disclosing information about an entity's capital
structure. SFAS 128 and SFAS 129 are effective for
financial statements issued for periods ending after
December 15, 1997. Their implementation is not expected
to have a material effect on the consolidated financial
statements.
In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
130, Reporting Comprehensive Income (SFAS 130), which
establishes standards for reporting and display of
comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include
all changes in equity except those resulting from
investments by owners and distributions to owners.
Among other disclosures, SFAS 130 requires that all
items that are required to be recognized under current
accounting standards as components of comprehensive
income be reported in a financial statement that is
displayed with the same prominence as other financial
statements.
F-12
<PAGE>
DCX, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
Also, in June 1997, FASB issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and
Related Information" which supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business
Enterprise." SFAS No. 131 establishes standards for the
way that public companies report information about
operating segments in annual financial statements and
requires reporting of selected information about
operating segments in interim financial statements
issued to the public. It also establishes standards for
disclosures regarding products and services, geographic
areas and major customers. SFAS No. 131 defines
operating segments as components of a company about
which separate financial information is available that
is evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in
assessing performance.
SFAS 130 and 131 are effective for financial statements
for periods beginning after December 15, 1997 and
requires comparative information for earlier years to
be restated. Because of the recent issuance of the
standard, management has been unable to fully evaluate
the impact, if any, the standard may have on future
financial statement disclosures. Results of operations
and financial position, however, will be unaffected by
implementation of the standard.
In October 1997, Statement of Position 97-2, Software
Revenue Recognition (SOP 97-2), was issued. The SOP
provides guidance on when revenue should be recognized
and in what amounts licensing, selling, leasing, or
otherwise marketing computer software. SOP 97-2 is
effective for transactions entered into in fiscal years
after December 15, 1997. Because of the recent issuance
of the SOP, management has been unable to fully
evaluate the impact, if any, the SOP may have on future
financial statement disclosure.
Reclassifications Certain items included in the prior year's financial
statements have been reclassified to conform to the
current presentation.
F-13
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
1. Going
Concern and
Continued
Existence As reflected in the accompanying financial statements,
the Company has a working capital deficit of $413,041
and the Company has incurred net losses from operations
of $953,065 and $679,477 for the years ended
September 30, 1997 and 1996. The Company also incurred
net losses from discontinued operations of $1,598,313
and $374,177 for the years ended September 30, 1997 and
1996. These conditions raise substantial doubt about
the Company's ability to continue as a going concern.
Management's plans include, among other items, actively
pursuing additional funding in both the debt and equity
markets in order to meet working capital requirements
and to provide for additional acquisitions.
Additionally, the Company is negotiating the timing of
and payment of certain payables to help improve the
working capital position. There are no assurances that
any of these events will occur or that the Company's
plan will be successful. The accompanying financial
statements do not include any adjustments that might
result from the outcome of these uncertainties.
2. Business
Acquisitions On September 22, 1997, the Company acquired all of the
outstanding stock of PlanGraphics, Inc. for 2,631,145
shares of common stock at the agreed upon rate of $1.52
per share. The acquisition was accounted for under the
purchase method of accounting. The results of
operations of PlanGraphics, Inc. have been included in
the accompanying statement of operations since the
effective date of the acquisition. The total purchase
price, including acquisition costs, was $5,517,872 and
is recorded as goodwill.
Unaudited proforma consolidated results of operations
of the Company are shown in the following table as if
the business was acquired as of the first day of each
period presented, October, 1, 1995. This unaudited
proforma information is based on the Company's
accompanying Statements of Operations and the
historical financial information of the acquired
companies, and includes adjustments to income taxes,
depreciation, and goodwill giving effect of the terms
of the transaction as if the acquisitions had occurred
on the first day presented.
F-14
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
Unaudited proforma consolidated results of operations:
September 30, 1997 1996
------------------------------------------------------
Revenue $ 8,204,236 $ 7,985,750
Loss from continuing
operations (2,614,832) (178,905)
Loss per common share
before discontinued
operations (.36) (.03)
========================================================
The proforma information is not necessarily indicative
of the combined results of operations that would have
occurred had the acquisitions been completed for such
periods.
PlanGraphics has historically received greater than 10%
of its revenues from one customer. The one customer
accounted for 25% and 35% of revenues for the years
ended September 30, 1997 and the nine month period
ended September 30, 1996.
3. Discontinued
Operations Effective September 30, 1997, the Company sold certain
assets of its defense industry business unit to a third
party for $1,100,000. The Company has subsequently
collected this receivable.
With the disposal of its defense industry business, the
Company discontinued all of its operations in the
defense industry. Therefore, it separately reported the
losses from this business as discontinued operations
for the years ended September 30, 1997 and 1996 as
follows:
September 30, 1997 1996
------------------------------------------------------
Revenues from
discontinued
operations $ 5,186,936 $ 4,403,740
Loss from
discontinued
operations (337,145) (374,177)
Loss on disposal (1,261,168) --
Net loss from
discontinued
operations $ (1,598,313) $ (374,177)
------------------------------------------------------
F-15
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
4. Accounts
Receivable The components of accounts receivable are as follows:
September 30, 1997
-----------------------------------------------------
Contract receivables:
Billed $ 1,228,389
Unbilled 1,196,340
-----------------------------------------------------
2,424,729
-----------------------------------------------------
Less provision for losses 188,161
-----------------------------------------------------
Total accounts receivable $ 2,236,568
=====================================================
5. Notes Payable September 30, 1997
-----------------------------------------------------
Note payable with interest of 14%, with
monthly interest only payments,
collateralized by a first lien on land
and building held for rental and
improvements, maturing on February 21,
2000 $ 576,000
Note payable to bank in monthly
principal installments of $5,000,
interest at 8.5% payable quarterly,
collateralized by equipment, accounts
receivable, a stock pledge agreement of
shares at the PlanGraphics level, and an
assignment of a $500,000 life insurance
policy on an individual. Note matures on
April 24, 1998 650,000
Line of credit with a bank, interest at
9.5% payable at maturity on August 7,
1997 collateralized by equipment and
accounts of PlanGraphics and is
guaranteed by a minority stockholder 180,000
Other 24,060
----------------------------------------------------
1,430,060
Less current maturities 854,060
----------------------------------------------------
Notes payable - less current maturities $ 576,000
====================================================
F-16
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
In June 1997, a discount of $278,019 was granted by the
lender for full settlement of the outstanding balance.
Final liquidation of the balance occurred during the
Company's 4th quarter. In December 1995, a previously
outstanding note payable was settled requiring a cash
payment of $205,000. The settlement gain on forgiven
debt of $82,826 was recorded in the year ended
September 30, 1996.
Notes Payable - Related Party
Total amounts under related party notes to a minority
shareholder were $605,184 at September 30, 1997. The
Company restructured these notes on October 10, 1997
by converting $289,902 of the related party note
payable into 170,531 shares of common stock, paying
$150,000 in cash and issuing a note with an interest
rate of 10%. The note requires monthly payments of
$14,000 principal and interest through October 15,
1998 and the remaining balance of approximately $2,200
is due on November 15, 1998.
Certain voting provisions relating to these related
party notes were cancelled with the restructuring of
the notes.
Principal payments on all notes payable due subsequent
to September 30, 1997 are as follows:
Due September 30, 1997
-----------------------------------------------------
1998 $ 1,012,989
1999 466,256
2000 576,000
-----------------------------------------------------
$ 2,035,245
=====================================================
6. Litigation The Company had previously filed an appeal before the
U.S. Court of Appeals for the Federal Circuit on a
contract with the Defense Logistics Agency (DLA). The
appeals court held for the DLA in the year ended
September 30, 1996. As such, the Company has recorded a
reserve for $521,000 for potential losses.
F-17
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
The Company is engaged in various litigation matters
from time to time in the ordinary course of business.
In the opinion of management, the outcome of any such
litigation will not materially affect the financial
position or results of operations of the Company.
7. Taxes on
Income The provision for income taxes consisted of the
following:
Year ended September 30, 1997 1995
------------------------------------------------------
Deferred benefit:
Federal $ 1,084,000 $ 301,000
State 104,000 29,000
------------------------------------------------------
1,188,000 330,000
Valuation allowance (1,188,000) (330,000)
------------------------------------------------------
$ -- $ --
------------------------------------------------------
A reconciliation of the effective tax rates and the
statutory U.S. federal income tax rates follows:
1997 1995
-------------------------------------------------------
U.S. federal statutory rates (34.0) % (34.0) %
State income tax benefit, net
of federal tax amount (3.3) (3.3)
Increase in deferred tax asset
valuation allowance 37.3 37.3
-------------------------------------------------------
Effective tax rate -- % -- %
-------------------------------------------------------
F-18
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
Temporary differences that give rise to a significant
portion of the deferred tax asset are as follows:
1997
-------------------------------------------------------
Net operating loss carryforward $ 1,472,000
Capital loss carryover 587,000
Compensation expense for common
stock options 237,000
Accrued litigation 194,000
Vacation 159,000
Other 64,000
-------------------------------------------------------
Total gross deferred tax assets 2,713,000
Valuation allowance (2,713,000)
-------------------------------------------------------
Net deferred tax asset $ --
-------------------------------------------------------
A valuation allowance equal to the net deferred tax
asset has been recorded, as management of the Company
has not been able to determine that it is more likely
than not that the deferred tax assets will be realized.
At September 30, 1997, the Company had net operating
loss carryforwards of approximately $4,000,000 with
expirations through 2013. The net operating losses are
limited due to issuances of common stock.
8. Leases Obligation Under Capital Leases - Related Parties
The Company leases an office facility from a related
party, Capitol View Development, LLC, under a triple
net commercial lease. An officer/shareholder owns
approximately ten percent of Capitol View Development.
The lease includes an annual base rent increasing over
the term of the lease plus an adjustment based on
Capitol View Development's rate of interest on its
loan. The initial lease term is for a period of fifteen
years with five renewal options for a term of one year
each. Annual payments approximate $320,000 per year.
F-19
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
The Company also leases certain equipment under capital
leases from a related party. Original lease terms are
for five years.
The following is a schedule, by years, of future
minimum payments required under these leases, together
with their present value as of September 30, 1997.
Land and
September 30, Building Equipment Total
-------------------------------------------------------
1998 $ 327,261 $ 82,331 $ 409,592
1999 330,218 58,411 388,629
2000 335,635 32,523 368,158
2001 337,089 - 337,089
2002 338,133 - 338,133
Thereafter 2,500,429 - 2,500,429
-------------------------------------------------------
4,168,765 173,265 4,342,030
Less: amount
representing
interest 2,155,571 13,992 2,169,563
-------------------------------------------------------
Present value
of minimum
lease payments 2,013,194 159,273 2,172,467
Less: current
portion - - 134,794
-------------------------------------------------------
Obligations under
capital leases
after current
portion $2,037,673
=======================================================
Operating Lease Commitments
The Company leases certain office facilities and
certain furniture and equipment under various operating
leases. Lease terms range from one to five years.
F-20
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
Rental expense for the years ending September 30, 1997
and 1996 totaled $10,000 and $0. Minimum annual
operating lease commitments at September 30, 1997 are
as follows:
September 30,
-------------------------------------------------------
1998 $ 119,144
1999 102,365
2000 44,953
2001 12,956
-------------------------------------------------------
$ 279,418
=======================================================
9. Equity
Transactions Preferred Stock
In November 1996, the Company amended its articles of
incorporation to provide for a Series A 6% cumulative
convertible redeemable preferred stock $.001 par value
(Series A). The Company designated 1,000,000 shares
Series A as part of the authorized class of preferred
shares. The Company issued 500 shares of Series A with
a stated value of $1,000 per share, with net proceeds
to the Company of $450,000 in November 1996. The
holders of these 500 shares of Series A converted the
preferred into common stock at various times during the
year in exchange for 499,732 shares of common stock.
In August 1997, the Company sold 650 shares of its
Series A with net proceeds of $547,500. In September
1997, the Company sold 1,000 shares of its Series A
with net proceeds of $840,500. The Series A preferred
stock and any accumulated and unpaid dividends are
convertible at the option of the holder at the lesser
of 75% of the average of the closing bid price per
share of the Company's common stock for the 5 days
prior to issuance or 75% of the average of the closing
bid price per share of the Company's common stock for
the five days preceding the date of conversion.
Subsequent to September 30, 1997 holders of Series A
converted 1,040 shares into 1,293,289 shares of common
stock.
Warrants issued to purchase 233,781 shares of common
stock were issued in connection with the placement of
the Series A. The warrants can be exercised at various
prices from $1.6875 to $1.875 and expire from November
1998 to August 2000. The Company recognized deemed
dividends of $175,925 in connection with issuing these
warrants under the accounting provisions of SFAS 123.
The Company also recognized $716,667 of deemed
dividends due to the convertibility of the preferred
stock at 75%.
F-21
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
Subsequent to September 30, 1997, the Company sold 250
more shares of Series A with net proceeds of $212,500
in a continuation of the placement from September 1997.
Common Stock
During fiscal year 1997, the Company exchanged $212,182
in payables for the exercise price of 144,094 shares of
common stock. Employees exercised options to purchase
27,300 shares with the Company recognizing proceeds of
$19,622. The Company forgave the $179,000 subscription
receivable in exchange for services rendered during the
year ended September 30, 1997.
During fiscal year 1996, as consideration for future
service to be performed by the recipient of certain
stock options, the exercise price on a portion of these
stock options was below the fair market value of the
stock on the date the options were granted.
Accordingly, the Company recorded $148,750 in deferred
charges for future services. In addition, the Company
waived the exercise price on 224,000 shares under the
stock option and recorded deferred charges for future
services of $150,000. In March 1995, the Company issued
options to purchase 250,000 shares to the same
individual at an exercise price of $.75 per share and
recorded $31,250 in deferred charges for future
services. The options were exercised in April 1995. The
Company amortized deferred compensation charges on a
straight line basis over the service term. Amortization
of approximately $97,000 and $118,000 was recorded
during the years ended September 30, 1997 and 1996.
At various times throughout the year ended September
30, 1996, options were exercised for a total of 85,000
shares for a total of $61,094.
The Company issued 230,000 shares valued at fair market
value of $231,215 to a financial advisor in exchange
for services to be performed for a period of 12 months
beginning in February 1996.
F-22
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
Anti-dilution Provisions
The Company has granted certain officers and
consultants anti-dilution rights in employment and
service agreements. The provision calls for the
issuance of options at fixed prices at each date more
stock is issued to enable the party to retain their
ownership percentage. Under the accounting provisions
of SFAS 123 and APB 25, the Company realized costs of
approximately $406,000 for the 380,340 options and
164,298 warrants issued during the year.
Stock Options
-------------
The Company's Board of Directors have reserved 300,000
and 750,000 shares under two stock option plans (1991
and 1995 respectively). The Company grants options
under the Plan in accordance with the determinations
made by the Option Committee. The Option Committee
will, at its discretion, determine individuals to be
granted options, the time or times at which options
shall be granted, the number of shares subject to each
option and the manner in which options may be
exercised. The option price shall be the fair market
value on the date of the grant and expire five years
subsequent to the date of grant.
1991 Plan
---------
In May 1992, the Company issued options for the
purchase of 140,000 shares at $1.22 per share. Of the
total issued, 125,000 were issued to officers and
directors. In February 1995, 20,000 options were
cancelled. Options to purchase 175,000 shares at
$.71875 were issued to officers of the Company in April
1995. The Company granted 30,000 options to purchase
common stock at $.72 in the year ended September 30,
1997. To date, none of these options have been
exercised.
1995 Plan
---------
In April 1995, the Company issued options to purchase
269,000 shares at $.71875 per share, of the total
issued, 60,000 were issued to an officer. Through
September 30, 1996, options to purchase 85,000 shares
were exercised resulting in proceeds to the Company of
$61,094. The Company granted 169,789 options to
purchase common stock at prices ranging from $.72 to
$1.75. Options to purchase 46,589 shares were exercised
during the year.
F-23
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
FASB Statement 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123"), requires the Company to
provide pro forma information regarding net income and
net income per share as if compensation costs for the
Company's stock option plans and other stock awards had
been determined in accordance with the fair value based
method prescribed in SFAS No. 123. The Company
estimated the fair value of each stock award at the
grant date by using the Black-Scholes option-pricing
model with the following weighted-average assumptions
used for grants in the year ended September 30, 1997:
dividend yield of 0 percent for all years; expected
volatility of 45 percent; risk-free interest rates
between 6 and 6.4 percent; and expected option lives of
five years. The Company did not grant any options in
1996.
Under the accounting provisions for SFAS No. 123, the
Company's net loss and net loss per share would have
been adjusted to the following pro forma amounts:
Years Ended September 30, 1997 1996
-----------------------------------------------------
Net loss
As reported $ (2,551,378) $ (1,053,654)
Pro forma (3,908,402) (1,053,654)
Net loss per share
As reported $ (.72) $ (.25)
Pro forma (.89) (.25)
=====================================================
A summary of the status of the Company's stock option
plans and outstanding options as of September 30, 1997
and 1996 and changes during the years ending on those
dates is presented below:
F-24
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
1997 1996
================================================================================
Weighted Weighted
Average Average
Range of Exercise Range of Exercise
Shares Price Shares Price
- --------------------------------------------------------------------------------
Outstanding, beginning
of year 478,000 $ 0.84 564,000 $ 0.83
Granted 3,495,623 1.38 -- N/A
Cancelled 312,000 0.81 1,000 0.72
Exercised 195,729 1.39 85,000 0.72
- --------------------------------------------------------------------------------
Outstanding, end of year 3,465,894 $ 1.36 478,000 $ 0.84
================================================================================
Options exercisable, end
of year 3,465,894 $ 1.36 478,000 $ 0.84
Weighted average fair
value of options granted
during the year 2,002,367 $ 0.72 N/A $ N/A
================================================================================
The following table summarizes information about stock
options outstanding at September 30, 1997:
F-25
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
Options Outstanding Options Exercisable
--------------------------------------------------------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 9/30/97 Life Price at 9/30/97 Price
--------------------------------------------------------------------
$0.58-1.00 836,603 3.41 $ 0.89 836,603 $ 0.89
1.13-1.39 1,243,658 4.27 1.15 1,013,658 1.16
1.63-4.25 1,385,633 4.76 1.83 1,160,633 1.97
---------------------------------------------------------------------
$0.58-4.25 3,465,894 4.22 $ 1.36 3,010,894 $ 1.35
=====================================================================
10. Employee
Benefit Plans 401(k) Plan
DCX has a Section 401(k) profit sharing plan covering
substantially all employees. Participants in the plan
may contribute up to 15% of their compensation, subject
to certain limitations. Under the plan, the Company
makes matching contributions equal to 25% of the
participants elected deferred contribution up to a
maximum of 6% of compensation. Company matching
contributions vest ratably over 5 years. Additional
contributions may be made at the Company's discretion
based upon the Company's performance. Total Company
contributions under the plan were approximately $8,854
and $9,700 in 1997 and 1996.
PlanGraphics has a qualified profit sharing plan with a
401(k) deferred compensation provision covering
substantially all employees. The plan allows employees
to defer up to 21% of their annual salary with a tiered
matching contribution by the Company up to 1.75%.
Additional contributions are at the Company's
discretion.
F-26
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
11. Commitments Self Insurance
The Company is partially self insured for employee
medical liabilities which covers risk up to $20,000 per
individual covered under the plan. The Company has
purchased excess medical liability coverage for
individual claims in excess of $20,000 and
approximately $250,000 in aggregate with a national
medical insurance carrier. Premiums and claim expenses
associated with the medical self insurance program are
included in the accompanying statements of income.
Employment Agreements
The Company has entered into employment agreements that
extend from December 31, 1999 through June 30, 2000
with four of its officers. The employment agreements
set forth annual compensation to the four officers of
between $60,000 and $175,000 each.
12. Lease
Agreement
of former
Manufacturing
Facility The buyer of the certain assets of the Company has
agreed to lease the manufacturing facility for 6 months
at a rate of $16,500 (for a total of $99,000 over the
term). The buyer also holds options to renew the lease
at terms similar to the original term for 32 months.
The buyer also holds an option to purchase the
buildings and real property for $1,500,000 during the
original term or any extensions of the lease.
13. Significant
Fourth Quarter
Adjustments During the quarter ended September 30, 1997, the
Company recorded an expense for the forgiveness of the
subscription receivable in the amount of $179,000. The
Company also recorded approximately $500,000 in expense
for stock options granted throughout the year.
During the quarter ended September 30, 1996, the
Company recorded consulting fees expense of
approximately $118,000 relating to the amortization of
deferred marketing expense.
14. Life
Insurance The Company recorded other income of $400,000 related
to the proceeds of two company owned key man life
insurance policies on a director of the Company during
the year ended September 30, 1997.
F-27
<PAGE>
DCX, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
15. Supplemental
Schedule of
Non-Cash
Investing and
Financing
Activities
1997 1996
------------------------------------------------------
Business acquired with
common stock $ 3,999,340 $ -
======================================================
Preferred stock converted
into common stock $ 450,000 $ -
======================================================
Common stock issued for
services and debt $ 508,359 $ 233,723
======================================================
Cash paid for interest $ 126,000 $ 114,000
======================================================
F-28
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 582,326
<SECURITIES> 0
<RECEIVABLES> 3,524,729
<ALLOWANCES> 188,161
<INVENTORY> 0
<CURRENT-ASSETS> 4,120,826
<PP&E> 201,932
<DEPRECIATION> 429,597
<TOTAL-ASSETS> 13,570,800
<CURRENT-LIABILITIES> 4,533,865
<BONDS> 0
2
0
<COMMON> 9,741,501
<OTHER-SE> (3,764,497)
<TOTAL-LIABILITY-AND-EQUITY> 13,570,800
<SALES> 0
<TOTAL-REVENUES> 71,098
<CGS> 0
<TOTAL-COSTS> 1,595,522<F1>
<OTHER-EXPENSES> (571,359)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 126,263
<INCOME-PRETAX> (953,065)
<INCOME-TAX> 0
<INCOME-CONTINUING> (953,065)
<DISCONTINUED> (1,598,313)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,453,644)<F2>
<EPS-PRIMARY> (.72)
<EPS-DILUTED> (.72)
<FN>
<F1>Includes parent Company full year expenses for administration, acquisitions,
legal and audit, and investment banking.
<F2>Includes $892,592 of "deemed" dividend expenses computed on possible
conversion of convertible preferred stock.
</FN>
</TABLE>
