SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
to
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): May 17, 1996
ELTRAX SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Minnesota 0-22190 41-1484525
(State of incorporation) (Commission (I.R.S. Employerion
File Number) Identification No.)
1775 Old Highway 8, St. Paul, Minnesota 55112
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 612/633-8373
The undersigned registrant, Eltrax Systems, Inc. ("Eltrax"), hereby amends the
following items, financial statements, exhibits or other portions of its Current
Report on Form 8-K, initially filed with the Commission on June 3, 1996 as set
forth herein. The June 3, 1996 original filing of the Form 8-K described the
registrant's acquisition of Nordata, Inc. and Rudata, Inc. (collectively
"Datatech").
Item 7 of the registrant's Current Report on Form 8-K dated May 17, 1996
(improperly dated March 17, 1996) and filed with the Commission on June 3, 1996,
is hereby amended to include the financial statements, the pro forma financial
information and the exhibits indicated in Item 7 below.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired
Report of Independent Accountants
Combined Balance Sheets of Datatech as of December 31, 1995 and March 31,
1996 (unaudited).
Combined Statements of Income of Datatech for the years ended December 31,
1995 and 1994, and the three-month periods ended March 31, 1996
and 1995 (unaudited).
Combined Statements of Stockholders' Equity of Datatech for the years
ended December 31, 1995 and 1994, and the three-month period ended March
31, 1996 (unaudited).
Combined Statements of Cash Flows of Datatech for the years ended December
31, 1995 and 1994, and for the three-month periods ended March 31, 1996
and 1995 (unaudited).
Notes to Combined Financial Statements.
(b) Pro Forma Financial Information
Unaudited Combined Pro Forma Consolidated Balance Sheet of Eltrax as of
March 31, 1996.
Notes to Pro Forma Consolidated Balance Sheet.
Unaudited Combined Pro Forma Statement of Income of Eltrax for the fiscal
year ended March 31, 1996.
Notes to Pro Forma Statement of Income.
(c) Exhibits
27 Financial Data Schedule.
<TABLE>
<CAPTION>
NORDATA, INC. AND RUDATA, INC.
(dba DATATECH)
INDEX TO COMBINED FINANCIAL STATEMENTS
Page
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Report Of Independent Accountants 1
Combined Balance Sheets As Of December 31, 1995 And March 31, 1996, (Unaudited) 2
Combined Statements Of Income For The Years Ended December 31, 1995 And 1994 And
For The Three-Month Periods Ended March 31, 1996 And 1995 (Unaudited) 3
Combined Statements Of Stockholders' Equity For The Years Ended December 31,
1995 And 1994 And For The Three-Month Period Ended March 31, 1996 (Unaudited) 4
Combined Statements Of Cash Flows For The Years Ended December 31, 1995 And 1994
And For The Three-Month Periods Ended March 31, 1996 And 1995 (Unaudited) 5
Notes To Combined Financial Statements 6
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Nordata, Inc. and Rudata, Inc.
We have audited the accompanying combined balance sheet of Nordata, Inc. and
Rudata, Inc. (dba Datatech) as of December 31, 1995, and the related combined
statements of income, stockholder's equity and cash flows for the years ended
December 31, 1995 and 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Nordata, Inc. and
Rudata, Inc. (dba Datatech) as of December 31, 1995, and the results of their
operations and their cash flows for the years ended December 31, 1995 and 1994,
in conformity with generally accepted accounting principles.
Newport Beach, California
July 31, 1996
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<CAPTION>
NORDATA, INC. AND RUDATA, INC.
(dba DATATECH)
COMBINED BALANCE SHEETS
DECEMBER 31, MARCH 31,
1995 1996
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 598,479 $ 972,992
Accounts receivable, net 3,165,681 3,130,132
Inventory, net 2,474,822 1,707,375
Other current assets 1,682 1,340
----------- -----------
Total current assets 6,240,664 5,811,839
Property and equipment, net 23,071 30,035
Lease contracts receivable 121,081 157,890
Other assets 10,502 10,637
----------- -----------
Total assets $ 6,395,318 $ 6,010,401
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable 4,198,050 3,542,467
Accrued liabilities 332,667 312,158
Income taxes payable 333,561 415,322
Deferred income taxes 402,071 444,398
Other current liabilities 13,731
----------- -----------
Total current liabilities 5,266,349 4,728,076
----------- -----------
Commitments and contingencies (Note 9)
Stockholders' equity:
Nordata, Inc. common stock no par value, 1,000
shares authorized, issued and outstanding 30,000 30,000
Rudata, Inc. common stock no par value, 1,000,000
shares authorized, 20,000 issued and
outstanding 20,000 20,000
Note receivable from stockholder (210,745) (214,433)
Retained earnings 1,289,714 1,446,758
----------- -----------
Total stockholders' equity 1,128,969 1,282,325
----------- -----------
Total liabilities and stockholders' equity $ 6,395,318 $ 6,010,401
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE COMBINED FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
NORDATA, INC. AND RUDATA, INC.
(dba DATATECH)
COMBINED STATEMENTS OF INCOME
FOR THE THREE-MONTH
FOR THE YEARS ENDED PERIODS ENDED
DECEMBER 31, MARCH 31,
---------------------------- ----------------------------
1994 1995 1995 1996
----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Sales, net $12,248,781 $16,614,514 $ 3,384,460 $ 4,731,377
Cost of sales 10,127,426 13,241,766 2,697,415 3,789,833
----------- ----------- ----------- -----------
Gross profit 2,121,355 3,372,748 687,045 941,544
Costs and expenses:
Selling and marketing 888,160 1,526,066 353,831 388,601
General and administrative 714,064 1,015,358 139,094 276,760
----------- ----------- ----------- -----------
Operating income 519,131 831,324 194,120 276,183
Interest income (expense), net 8,787 19,180 (10,897) 9,352
----------- ----------- ----------- -----------
Income before provision for
income taxes 527,918 850,504 183,223 285,535
Provision for income taxes 241,434 401,489 88,951 128,491
----------- ----------- ----------- -----------
Net income $ 286,484 $ 449,015 $ 94,272 $ 157,044
=========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE COMBINED FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
NORDATA, INC. AND RUDATA, INC.
(dba DATATECH)
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
NOTE
RECEIVABLE
NORDATA, INC. RUDATA, INC. FROM
COMMON STOCK COMMON STOCK STOCK- RETAINED
SHARES AMOUNT SHARES AMOUNT HOLDER EARNINGS TOTAL
---------- ---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1993 1,000 $ 30,000 20,000 20,000 $ (184,073) $ 554,215 $ 420,142
Net income 286,484 286,484
Accrued interest on note (12,885) (12,885)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balances, December 31, 1994 1,000 30,000 20,000 20,000 (196,958) 840,699 693,741
Net income 449,015 449,015
Accrued interest on note
Distributions (13,787) (13,787)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balances, December 31, 1995 1,000 30,000 20,000 20,000 (210,745) 1,289,714 1,128,969
Net income (unaudited) 157,044 157,044
Accrued interest on
note (unaudited) (3,688) (3,688)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balances, March 31, 1996
(unaudited) 1,000 $30,000 20,000 $20,000 ($214,433) $1,446,758 $1,282,325
========== ========== ========== =========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE COMBINED FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
NORDATA, INC. AND RUDATA, INC.
(dba DATATECH)
COMBINED STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTH
FOR THE YEARS ENDED PERIODS ENDED
DECEMBER 31, MARCH 31,
1994 1995 1995 1996
(Unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 286,484 $ 449,015 $ 94,272 $ 157,044
Add (deduct) items not providing or requiring cash:
Depreciation and amortization 20,572 21,185 4,297 6,964
Change in allowance for doubtful accounts 31,651 43,063 11,153 12,839
Interest on note receivable (12,885) (13,787) (3,477) (3,668)
Loss on disposals 0 13,636 -- --
Deferred income taxes 93,750 77,500 42,697 42,327
Changes in operating balance sheet accounts:
Accounts and lease contracts receivable (842,006) (724,873) 78,680 (14,099)
Inventory (1,336,600) (868,313) 772,865 767,447
Other current assets (1,403) 95 1,777 342
Accounts payable 1,797,570 1,298,930 (759,413) (655,583)
Other current liabilities 92,720 (3,405) (87,943) (20,861)
Income taxes payable 113,998 185,877 46,254 81,761
---------- ---------- ---------- ----------
Net cash provided by (used in) operating 243,851 478,923 201,162 374,513
activities
Cash flows from investing activities:
Purchases of property and equipment (6,298) (4,196) (3,403)
---------- ---------- ---------- ----------
Cash flows from financing activities:
Change in book overdraft (113,801)
Net increase in cash and cash equivalents 123,752 474,727 197,759 374,513
Cash and cash equivalents, beginning of period 123,752 123,752 598,479
---------- ---------- ---------- ----------
Cash and cash equivalents, end of period $ 123,752 $ 598,479 $ 321,511 $ 972,992
========== =========== ========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE COMBINED FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE-MONTH
FOR THE YEARS ENDED PERIODS ENDED
DECEMBER 31, MARCH 31,
-------------------- --------------------
1994 1995 1995 1996
------ ------- ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Income taxes 33,686 138,112 -- 1,410
Interest paid 10,998 21,213 17,637 --
Interest received 6,900 26,608 3,293 5,684
Supplemental schedule of noncash investing activities:
Accrual of interest on note receivable from stockholder 12,885 13,787 3,447 3,688
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE COMBINED FINANCIAL STATEMENTS.
</TABLE>
NORDATA, INC. AND RUDATA, INC.
(dba DATATECH)
NOTES TO COMBINED FINANCIAL STATEMENTS
1. The Company:
Nordata, Inc. ("Nordata") and Rudata, Inc. ("Rudata"), dba Datatech
(hereafter collectively referred to as the "Company" or "Datatech")
were incorporated in the state of California in January, 1990, and
November, 1992, respectively. The Company is a value-added distributor
as well as a value-added reseller of data communications equipment.
Approximately, 52% and 43% of the Company's sales for the years ended
December 31, 1995 and 1994, respectively, were to equipment resellers.
The balance of the Company's sales are to end-users. The Company also
performs certain services for end-users such as system design,
installation and maintenance.
On May 17, 1996, 100 percent of the outstanding shares of Datatech were
sold by the Company's shareholders to Eltrax Systems, Inc. (Eltrax) a
Minnesota corporation.
2. Summary Of Significant Accounting Policies:
Principles Of Combination:
Prior to May 17,1996, the date of acquisition of the Company by Eltrax,
Nordata and Rudata were 100% owned by Howard Norton and Ruby Norton,
husband and wife. Together, Nordata and Rudata conducted business under
the name of Datatech. Due to their common control and interdependency
of operations, the accompanying financial statements present the
accounts of Nordata and Rudata on a combined basis. All significant
intercompany accounts and transactions have been eliminated in
combination.
Revenue Recognition:
Hardware sales and related cost of goods sold are recognized when goods
are shipped to customers. Service revenues and related costs of
services are recognized when earned. The Company records, at the time
of sale, an allowance for estimated returns of product based on
historical experience.
Cash And Cash Equivalents:
Cash and cash equivalents consist of cash in banks and certificates of
deposit with acquired maturities of three months or less. The carrying
amount of cash and cash equivalents approximates market value.
Inventories:
Inventories, consisting of equipment and peripherals held for resale,
are stated at the lower of cost or market, cost being determined on the
average cost basis.
Property and Equipment:
Property and equipment are stated at cost and depreciated using the
straight-line method over the estimated useful lives of the assets
which range from three to five years. Leasehold improvements are
amortized on a straight-line basis over the lesser of the term of the
related lease or its estimated useful life.
Repairs and maintenance costs are expensed as incurred while renewals
or betterments are capitalized. Upon the sale or retirement of property
and equipment, the accounts are relieved of the cost and the related
accumulated depreciation and amortization, and any resulting gain or
loss is included in operations.
Income Taxes:
The Company follows Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," which requires the recognition of
deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred income taxes are
recognized for the tax consequences in future years of differences
between the tax bases of assets and liabilities, and their financial
reporting amounts at each year-end, based on enacted tax laws and
statutory 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. The provision for income taxes
represents the tax payable for the period and the change during the
period in deferred tax assets and liabilities. The Company is a cash
basis tax payer.
Estimates:
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results may differ
from those estimates.
Interim Financial Information (Unaudited):
The financial information as of March 31, 1996 and for the three-month
periods ended March 31, 1995 and 1996 is unaudited but includes all
adjustments consisting only of normal recurring entries which the
Company considers necessary for a fair presentation of the financial
position at such date and the operating results and cash flows for
those periods. Results of the March 31, 1996 period are not necessarily
indicative of the results for the entire year.
3. Cash And Cash Equivalents:
Cash and cash equivalents consist of the following:
<TABLE>
<CAPTION>
December 31, March 31,1996
------------ -------------
1995 (Unaudited)
--------
<S> <C> <C>
Cash $143,251 $478,858
Certificates of deposit 455,228 494,134
-------- ---------
$598,479 $ 972,992
======== =========
</TABLE>
4. Accounts Receivable
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
December 31, 1995 March 31,1996
------------------ -------------
(Unaudited)
<S> <C> <C>
Trade accounts receivable $ 3,074,166 $ 3,022,868
Lease contracts receivable, current (Note 6) 62,376 53,683
Allowance for doubtful accounts (145,779) (158,618)
----------- -----------
2,990,763 2,917,933
Trade accounts receivable from related parties (Note 11) 174,918 212,199
----------- -----------
$ 3,165,681 $ 3,130,132
=========== ===========
</TABLE>
Certain accounts receivable are pledged as collateral (Note 9)
5. Property And Equipment:
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,1995 March 31,1996
---------------- -------------
(Unaudited)
<S> <C> <C>
Furniture, fixtures and equipment $ 54,619 $ 55,179
Vehicles 58,175 58,175
Leasehold improvements 5,225 5,225
--------- ---------
118,019 118,579
Accumulated depreciation and amortization (94,948) (88,544)
--------- ---------
$ 23,071 $ 30,035
========= =========
</TABLE>
Depreciation and amortization expense for 1994 and 1995 was $20,572 and
$21,185, respectively. Certain equipment is pledged as collateral
(Note 9).
6. Lease Contracts Receivable:
Lease contracts receivable result from customer leases of products
under agreements which qualify as sales-type leases. Annual future
lease payments under sales-type leases for years subsequent to December
31, 1995 are as follows:
1996 $ 62,376
1997 84,943
1998 59,849
--------
207,168
Less, Deferred interest 23,711
--------
$183,457
=========
Unearned revenues related to sales-type leases are included in accrued
liabilities. (Note 7).
7. Accrued Liabilities
Accrued liabilities consist of the following:
December 31,1995 March 31,1996
---------------- -------------
(Unaudited)
Accrued payroll taxes $ 11,413 $ 18,508
Accrued commissions 100,596 106,224
Sales taxes payable 175,420 148,679
Deferred interest (Note 6) 23,711 18,747
Other 21,527 20,000
-------- --------
$332,667 $312,158
======== ========
8. Income Taxes:
The provision for income taxes for the years ended December 31, 1994
and 1995 consists of the following:
1994 1995
------- -------
Current:
Federal $124,541 $268,890
State 23,143 55,099
-------- --------
147,684 323,989
-------- --------
Deferred:
Federal 80,357 66,650
State 13,393 10,850
-------- --------
93,750 77,500
-------- --------
$241,434 $401,489
======== ========
The provision for income taxes differs from the amount that would
result from applying the federal statutory rate as follows:
Years Ended December 31,
1994 1995
---- ----
Statutory regular federal income tax rate 34.00% 34.00%
State income taxes net of federal benefit 6.90 7.80
Business meals and entertainment 2.40 3.00
Other 3.40 2.40
----- -----
45.70% 47.20%
===== =====
The components of the net deferred tax liability at December 31, 1995
(consists of the following deferred tax assets (liabilities):
Accounts receivable $(1,222,656)
Inventories (955,776)
-----------
Gross deferred tax liability (2,178,432)
-----------
Accounts payable 1,621,287
Other 155,074
-----------
Gross deferred tax asset 1,776,361
-----------
Net deferred tax liabilities $ (402,071)
===========
9. Commitments And Contingencies:
Leases:
The Company leases office and warehouse facilities in Southern
California having a remaining noncancellable lease term as of December
31, 1995 of 12 months. In addition, the Company leases office equipment
with lease terms ranging from 21 to 60 months. As of December 31, 1995,
future minimum annual lease payments are as follows:
1996 $62,532
1997 6,512
1998 6,264
1999 5,832
2000 5,346
-------
$86,490
=======
Rent expense for the years ended December 31, 1994 and 1995 was
approximately $12,860 and $44,421, respectively.
The Company has entered into a UCC funding statement in favor of one of
its equipment vendors whereby the Company has pledged all right, title
and interest in all of the Company's equipment (whether included in
inventories or fixed assets) and all of the Company's receivables
and/or proceeds related to sales of equipment, for equipment purchased
from the vendor. Accounts payable to the vendor in question are
$236,701 at December 31, 1995 and $256,678 at March 31, 1996
(unaudited).
10. Concentrations and Credit Risk:
The Company's customers are primarily in the western United States. The
two largest customers accounted for approximately 5.4% and 5.5% of
accounts receivable at December 31, 1995. One customer accounted for
approximately 6.5% of accounts receivable at March 31, 1996
(unaudited). The two largest customers totaled approximately 9% and 11%
of sales for the years ended December 31, 1994 and 1995, respectively,
and the three largest customers totaled approximately 14% of sales for
the year ended December 31, 1995. One customer totaled approximately
6.5% of sales for the three months ended March 31, 1996 (unaudited).
The Company reviews a customer's credit history before extending
credit. The Company establishes allowances for doubtful accounts based
upon factors surrounding the credit risk of specific customers. The
accounting loss, should a customer be unable to meet its obligation to
the Company, would be equal to the recorded account receivable.
The Company currently acquires a majority of its product from three
U.S. equipment manufacturers. For the years ended December 31, 1995 and
1994, approximately 65.7% and 56.7% of sales, respectively, were
comprised of product from these suppliers.
11. Related Party Transactions:
The Company had sales totaling $1,170,531 and $759,908 in 1995 and
1994, respectively to a customer in which the Datatech shareholders
owned 15 percent of the customer's common shares outstanding.
Subsequent to the acquisition of Datatech by Eltrax, the Datatech
shareholders terminated their ownership in the customer.
ELTRAX SYSTEMS AND NORDATA, INC. AND
RUDATA, INC. (dba DATATECH)
PRO FORMA FINANCIAL INFORMATION - NARRATIVE OVERVIEW
(UNAUDITED)
The following unaudited pro forma statement of operations for the year
ended March 31, 1996, combines the historical combined statement of operations
of Nordata, Inc. and Rudata, Inc., dba Datatech and the historical statement of
operations relating to Eltrax Systems, Inc. (Eltrax).
The unaudited pro forma statements of operations for the year ended
March 31, 1996, assumes the acquisition had occurred on April 1, 1995, and has
been prepared by combining the statement of operations of Eltrax and Datatech
for the year ended March 31, 1996.
The unaudited pro forma statement of operations gives effect to (i) the
acquisition of Datatech, (ii) the issuance of 2,068,000 common shares of Eltrax
common stock in connection with the acquisition, and (iii) other adjustments
described in the accompanying notes.
The unaudited pro forma statement of operations is not necessarily
indicative of results of operations as they may be in the future or as they
might have been for the period presented had the acquisition been effective at
April 1, 1995. The unaudited pro forma statement of operations and accompanying
notes should be read in conjunction with the historical financial statements of
Eltrax, as filed on Form 10-KSB for the year ended March 31, 1996, and the
historical combined financial statements of Datatech, including the notes to
such financial statements and set forth elsewhere in this Form 8-K,
respectively. The pro forma adjustments are based upon available information and
upon certain assumptions that Eltrax management believes are reasonable in the
circumstances.
<TABLE>
<CAPTION>
ELTRAX SYSTEMS, INC.
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
Eltrax Datatech Pro Forma Pro Forma
Historical(1) Historical(2) Adjustments Combined
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 480,523 $ 972,992 $ 1,453,515
Short-term investments 1,384,886 (990,000)(3) 394,886
Accounts receivable, net 223,991 3,130,132 3,354,123
Inventories 57,091 1,707,375 1,764,466
Prepaid expenses 26,510 1,340 27,850
Note receivable - current 81,832 -- 81,832
---------- ---------- --------- -----------
Total current assets 2,254,833 5,811,839 (990,000) 7,076,672
Furniture and equipment, net 42,514 30,035 72,549
Note receivable - non current 198,658 198,658
Lease contracts receivable -- 157,890 157,890
Other assets -- 10,637 10,637
Deferred Income Taxes -- 1,342,368 (4) 1,342,368
Intangible Assets -- -- 5,270,307 (5) 5,270,307
---------- ---------- --------- -----------
Total assets $2,496,005 $6,010,401 $5,622,675 $14,129,081
========== ========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 65,537 3,542,467 3,608,004
Accrued expenses 145,006 312,158 701,000 (6) 1,158,164
Deferred Income Taxes 444,398 444,398
Income Taxes Payable 415,322 415,322
Other current liabilities 13,731 13,731
----------- ---------- ---------- -----------
Total current liabilities 210,543 4,728,076 701,000 5,639,619
Shareholders' equity:
Series A convertible preferred stock 29,163 -- 29,163
Common stock 44,971 50,000 (50,000)(7) 65,651
20,680 (8)
Additional paid-in capital 7,622,100 -- 6,183,320 (8) 13,805,420
Note receivable from shareholder (214,433) 214,433 (7) 0
Accumulated deficit (5,410,772) 1,446,758 (1,446,758)(7) (5,410,772)
----------- ---------- ---------- -----------
Total shareholders' equity 2,285,462 1,282,325 4,921,675 8,489,462
----------- ---------- ---------- -----------
Total liabilities and shareholders' equity $ 2,496,005 $6,010,401 $5,622,675 $14,129,081
=========== ========== ========== ===========
</TABLE>
ELTRAX SYSTEMS, INC.
NOTES TO PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
1. Represents the historical balance sheet of Eltrax as of March 31, 1996.
2. Represents the historical balance sheet of Datatech as of March 21,
1996.
3. Represents cash portion of consideration paid as part of the purchase
price of Datatech.
4. Represents the reduction of Eltrax's valuation allowance on its net
deferred tax assets since, with the addition of Datatech's taxable
income, management believes it is more likely than not that Eltrax will
generate sufficient future taxable income to realize the majority of
its deferred tax assets.
5. Represents the excess of Eltrax's purchase price over Datatech's book
value and the reduction in Eltrax's deferred tax valuation allowance
(see Note 4 above) on the acquisition date. The components of the
intangible assets, which consist principally of goodwill, have been
determined by Eltrax on a preliminary basis.
6. To reflect transaction costs paid, or to be paid, by Eltrax in
connection with the acquisition.
7. To eliminate the components of shareholders' equity of Datatech
acquired by Eltrax.
8. Represents issuance of 2,068,000 share of Eltrax common stock issued in
connection with the acquisition.
<TABLE>
<CAPTION>
ELTRAX SYSTEMS, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1996
(UNAUDITED)
ELTRAX DATATECH PRO FORMA PRO FORMA
HISTORICAL (1) HISTORICAL (2) ADJUSTMENTS COMBINED
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 880,304 $ 17,961,431 $ 18,841,735
Cost of sales 293,954 14,334,184 14,628,138
-------------- -------------- ------------- -------------
Gross Profit 586,350 3,627,247 4,213,597
Operating expenses:
Selling, general and administrative 967,607 2,713,860 3,681,467
Amortization of intangible assets 433,134 (3) 433,134
Product development 103,170 103,170
-------------- -------------- ------------- -------------
Operating income (loss) (484,427) 913,387 (433,134) (4,174)
Investment income (loss), net 114,135 39,429 (49,500)(4) 104,064
Gain on settlement related to past investment losses 100,000 100,000
-------------- -------------- ------------- -------------
Income (loss) from continuing operations (270,292) 952,816 (482,634) 199,890
Discontinued digital imaging archiving operations:
Income from discontinued operations 242,013 242,013
Gain on disposal of discontinued operations 133,214 133,214
-------------- -------------- ------------- -------------
Income before income taxes 104,935 952,816 (482,634) 575,117
Income tax expense 441,029 (31,360)(5) 390,469
(19,200)(6)
-------------- -------------- ------------- -------------
Net income $ 104,935 $ 511,787 $ (432,074) $ 184,648
============== ============== ============= ============
Income (loss) per common share and common equivalent:
Continuing operations ($0.04) $0.14 ($0.07) $0.03
============== ============== ============== =============
Discontinued operations $0.06 ___ ___ $0.06
============== ============== ============== =============
Net income (loss) per share $0.02 $0.08 ($0.07) $0.03
============== ============== ============== =============
Weighted average shares outstanding (7) 6,721,473 6,721,473 6,721,473 6,721,473
============== ============== ============== =============
</TABLE>
ELTRAX SYSTEMS, INC.
NOTES TO PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1996
(UNAUDITED)
1. Represents the historical results of operations of Eltrax for the year
ended March 31, 1996.
2. Represents the historical operating results of Datatech for the year
ended March 31, 1996.
3. To reflect an adjustment associated with amortization of intangible
assets reflecting the excess of Eltrax's purchase price over Datatech's
net book value on the acquisition date. The allocation of the purchase
price to intangible assets has been performed by Eltrax on a
preliminary basis. For purposes of the Pro Forma Statement Operations
is being amortized on a straight line basis over 15 years.
4. Represents a reduction of interest income, resulting from the loss of
interest income related to the $990,000 of cash consideration paid by
Eltrax in connection with the acquisition.
5. Represents the tax benefit related to the deductible portion of
goodwill resulting from the acquisition. Approximately $1 million of
goodwill is estimated to be deductible.
6. Represents the tax benefit associated with reduction of interest
income.
7. Includes 2,068,000 shares of Eltrax common stock issued in connection
with the acquisition.
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.
ELTRAX SYSTEMS, INC.
/s/ Mack V. Traynor, III
Mack V. Traynor, III
President, Chief Executive Officer
and Chief Financial Officer
(Principal Financing and Accounting
Officer)
Dated: August 2, 1996
INDEX TO EXHIBITS
Exhibit
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 143
<SECURITIES> 455
<RECEIVABLES> 3,311
<ALLOWANCES> 146
<INVENTORY> 2,475
<CURRENT-ASSETS> 6,241
<PP&E> 118
<DEPRECIATION> 95
<TOTAL-ASSETS> 6,395
<CURRENT-LIABILITIES> 5,266
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 1,079
<TOTAL-LIABILITY-AND-EQUITY> 6,395
<SALES> 16,615
<TOTAL-REVENUES> 16,615
<CGS> 13,242
<TOTAL-COSTS> 15,783
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (19)
<INCOME-PRETAX> 851
<INCOME-TAX> 402
<INCOME-CONTINUING> 449
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 449
<EPS-PRIMARY> 21.38
<EPS-DILUTED> 21.38
</TABLE>
