SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A2
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 31, 1995
----------------
DATATREND SERVICES, INC.
------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
--------
(State or other Jurisdiction of Incorporation)
0-15929 11-272610
------- ---------
(Commission File Number) (I.R.S. Employer Identification No.)
1515 Washington Street, Braintree, MA
-------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number (617)-691-1200
--------------
Item 7. Financial Statements and Exhibits
-----------------------------------------
A.) Financial Statements
Complete financial statements for DTI for the year ended
December 31, 1994 and the period ended December 31, 1993 are filed
herewith at pages 1-13.
B.) Pro Forma Financial Information
Pro forma financial information is filed herewith at pages 14-18.
DATATREND, INC.
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1994 AND
FROM INCEPTION (April 26, 1993)
THROUGH DECEMBER 31, 1993
DATATREND, INC.
---------------
TABLE OF CONTENTS
-----------------
Page
----
INDEPENDENT ACCOUNTANTS' REPORT 1
FINANCIAL STATEMENTS
BALANCE SHEET DECEMBER 31, 1994 2a-2b
STATEMENTS OF INCOME YEAR ENDED DECEMBER 31, 1994 3
AND FROM INCEPTION (April 26, 1993)
THROUGH DECEMBER 31, 1993
STATEMENTS OF STOCKHOLDERS' EQUITY YEAR ENDED 4
DECEMBER 31, 1994 AND FROM INCEPTION
(April 26, 1993) THROUGH DECEMBER 31, 1993
STATEMENTS OF CASH FLOWS YEAR ENDED 5a-5b
DECEMBER 31, 1994 AND FROM INCEPTION
(April 26, 1993) THROUGH DECEMBER 31, 1993
NOTES TO FINANCIAL STATEMENTS YEAR ENDED 6 - 11
DECEMBER 31, 1994 AND FROM INCEPTION
(April 26, 1993) THROUGH DECEMBER 31, 1993
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholders
Datatrend, Inc.
Westwood, Massachusetts
We have audited the accompanying balance sheet of Datatrend, Inc. at
December 31, 1994, and the related statements of income, stockholders'
equity, and cash flows for the year ended December 31, 1994 and from
inception (April 26, 1993) through December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Datatrend, Inc. at
December 31, 1994 and the results of its operations and its cash flows for
the year ended December 31, 1994 and from inception (April 26, 1993) through
December 31, 1993 in conformity with generally accepted accounting
principles.
/s/ Kennedy & Lehan
------------------------------
Kennedy & Lehan
March 16, 1995
Quincy, Massachusetts
<PAGE> - 1 -
DATATREND, INC.
---------------
BALANCE SHEET
-------------
DECEMBER 31, 1994
-----------------
<TABLE>
<CAPTION>
ASSETS
------
(Note 4)
<S> <C>
Cash (Note 6) $ 2,015
Accounts receivable, trade, net of
allowance for doubtful accounts of
$42,629 (Note 3) 2,073,213
Inventories 3,286,875
Other current assets 493,632
----------
Total current assets 5,855,735
----------
PROPERTY AND EQUIPMENT, AT COST:
Furniture and fixtures (Note 5) 58,261
Warehouse equipment (Note 5) 50,080
Leasehold improvements 20,153
Computer equipment 9,879
----------
138,373
Less accumulated depreciation 54,072
----------
Property and equipment, net 84,301
----------
OTHER ASSETS:
Security deposit 1,600
Organization costs, net of accumulated
amortization of $4,835 9,670
----------
Total other assets 11,270
----------
$5,951,306
==========
</TABLE>
See Notes to Financial Statements.
<PAGE> - 2a -
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C>
CURRENT LIABILITIES:
Note payable, bank (Notes 4 and 8) $ 416,517
Accounts payable 2,727,322
Accrued expenses and other accrued
liabilities (Note 2) 308,455
Current portion of capital lease
obligations (Note 5) 12,382
----------
Total current liabilities 3,464,676
----------
OTHER LIABILITIES:
Capital lease obligations, net of
current portion (Note 5) 17,809
Note payable, stockholder,
net of current portion (Notes 2 and 8) 1,743,567
----------
Total other liabilities 1,761,376
----------
STOCKHOLDERS' EQUITY:
Common stock:
$.01 par value; 1,000 shares authorized;
1,000 shares issued and outstanding 10
Retained earnings 725,244
----------
Total stockholders' equity 725,254
----------
$5,951,306
==========
</TABLE>
<PAGE> - 2b -
DATATREND, INC.
---------------
STATEMENTS OF INCOME
--------------------
<TABLE>
<CAPTION>
Inception
(April 26, 1993)
Year Ended Through
December 31, December 31,
1994 1993
------------ ----------------
<S> <C> <C>
SALES (Note 3) $36,368,251 $21,597,951
COST OF SALES 32,662,221 19,578,332
----------- -----------
GROSS PROFIT 3,706,030 2,019,619
OPERATING EXPENSES 2,843,063 1,220,899
----------- -----------
OPERATING INCOME 862,967 798,720
----------- -----------
OTHER INCOME (EXPENSE):
Rental income (Note 5) 13,850 ---
Interest expense (Note 2) (233,352) (428,120)
----------- -----------
Total other income (expense) (219,502) (428,120)
----------- -----------
INCOME BEFORE PROVISION FOR STATE
INCOME TAXES 643,465 370,600
PROVISION FOR STATE INCOME TAXES 34,645 26,256
----------- -----------
NET INCOME $ 608,820 $ 344,344
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE> - 3 -
DATATREND, INC.
---------------
STATEMENTS OF STOCKHOLDERS' EQUITY
----------------------------------
<TABLE>
<CAPTION>
Inception
(April 26, 1993)
Year Ended Through
December 31, December 31,
1994 1993
------------ ----------------
<S> <C> <C>
COMMON STOCK:
Balance, beginning of period $ 10 $ ---
Issuance of common stock --- 10
--------- --------
Balance, end of period $ 10 $ 10
========= ========
RETAINED EARNINGS:
Balance, beginning of period $ 344,344 $ ---
Net income 608,820 344,344
Distributions for taxes (Note 7) (227,920) ---
--------- --------
Balance, end of period $ 725,244 $344,344
========= ========
</TABLE>
See Notes to Financial Statements.
<PAGE> - 4 -
DATATREND, INC.
---------------
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
Inception
(April 26, 1993)
Year Ended Through
December 31, December 31,
1994 1993
------------ ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 608,820 $ 344,344
----------- -----------
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 45,797 13,110
Net change in certain current assets
and certain current liabilities 1,066,424 (3,884,367)
----------- -----------
Total adjustments 1,112,221 (3,871,257)
----------- -----------
Net cash provided (used) by
operating activities 1,721,041 (3,526,913)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (71,081) (25,739)
Other assets (1,000) (600)
Organization costs --- (14,505)
----------- -----------
Net cash (used) by investing
activities (72,081) (40,844)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Note payable, bank (1,493,483) 1,910,000
Proceeds from note payable, stockholder 2,650,000 2,347,494
Payments on note payable, stockholder (3,253,927) ---
Payments on capital lease obligations (11,362) ---
Distributions for taxes (Note 7) (227,920) ---
Issuance of common stock --- 10
----------- -----------
Net cash provided (used) by
financing activities (2,336,692) 4,257,504
----------- -----------
NET INCREASE (DECREASE) IN CASH (687,732) 689,747
CASH, BEGINNING OF PERIOD 689,747 ---
----------- -----------
CASH, END OF PERIOD $ 2,015 $ 689,747
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE> - 5a -
<TABLE>
<CAPTION>
Inception
(April 26, 1993)
Year Ended Through
December 31, December 31,
1994 1993
------------ ----------------
<S> <C> <C>
Details of net change in certain current
assets and certain current liabilities:
Accounts receivable, trade $ (590,235) $(1,482,978)
Inventories (102,210) (3,184,665)
Other current assets (411,271) (82,361)
Accounts payable 2,024,194 703,128
Accrued expenses and other
accrued liabilities 145,946 162,509
----------- -----------
Net change in certain current assets
and certain current liabilities $ 1,066,424 $(3,884,367)
=========== ===========
Additional disclosures of cash flow information:
Cash paid during the year for:
Interest $ 234,118 $ 389,834
Income taxes $ 35,191 $ 33,350
Additional disclosures of noncash financing activities:
During period ended December 31, 1993,
the Company entered into several capital
lease obligations for various office and
warehouse equipment (Note 5).
</TABLE>
<PAGE> - 5b -
DATATREND, INC.
---------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
YEAR ENDED DECEMBER 31, 1994 AND
--------------------------------
FROM INCEPTION (April 26, 1993) THROUGH DECEMBER 31, 1993
---------------------------------------------------------
Note 1 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Organization - Datatrend, Inc. was incorporated under the general laws of
the Commonwealth of Massachusetts on April 26, 1993 and commenced operations
on that date. Its principal business activity is the wholesale distribution
and retail sale of new, refurbished and used computer hardware throughout
the United States and Europe.
In 1995, the Company went through a merger with a subsidiary of a publicly
held company (Note 8).
Inventories - Inventories, which consist primarily of computer hardware, are
stated at the lower of cost or market. Cost is determined on the first-in,
first out (FIFO) method.
Property and Equipment - Items capitalized as property and equipment are
stated at cost. Maintenance, routine repairs and minor replacements are
charged against expense as incurred, while those items which materially
improve or extend the lives of existing assets are capitalized. For
financial reporting, depreciation is computed using accelerated methods
calculated to depreciate the cost of the assets over their estimated useful
lives which are as follows:
<TABLE>
<CAPTION>
Assets Years
------ -----
<S> <C>
Furniture and fixtures 3 - 7
Computer equipment 3 - 5
Leasehold improvements 2
Warehouse equipment 5
</TABLE>
Income Taxes - The Company has elected S Corporation status for federal
income tax purposes. As such, the Corporation is not liable for federal
income taxes but rather the stockholders report their allocable share of the
Corporation's income on their individual federal income tax returns. The
Commonwealth of Massachusetts has adopted amendments to the general laws to
recognize S Corporation status. As an S Corporation in the Commonwealth of
Massachusetts, the Company is required to pay a corporate level tax of 4.5%
and the stockholders will be taxed at 5.95% on the Company's taxable income.
In connection with a merger, the S Corporation status will terminate in 1995
(Note 8).
Organization Costs - The cost of incorporation and organization is being
amortized on a straight-line basis over a sixty month period.
<PAGE> - 6 -
Warranty Reserve - The Company established a warranty reserve to provide for
future returns of defective inventory. At December 31, 1994, this reserve of
$101,808 is included in accrued expenses.
Reclassification - Certain items in 1993 have been reclassified to conform
with 1994 classifications.
Restatement of 1993 Financial Statements - The Company's December 31, 1993
financial statements were restated in 1994 to reflect the inclusion of
additional costs of sales, inventory and the related liability which was
erroneously omitted from the initially issued financial statements.
Note 2 - Related Party Transactions
- -----------------------------------
At December 31, 1994, the Company has a note payable to a stockholder of
$1,743,567. The note required monthly payments of interest at 18% in 1993.
The interest rate was revised to 6% in 1994 and all interest payments made
in excess of 6% in 1994 were reclassified as principal reductions. In
October 1993, $1,000,000 of this note was subordinated to the bank with
which the Company has a line of credit (Note 4).
As part of a merger in 1995 (Note 8), the entire loan was repaid in 1995
with proceeds from the sale of stock. Therefore, at December 31, 1994, the
total note payable balance is classified as a long-term liability.
Total interest expense relating to this note was $122,310 and $338,445 in
1994 and 1993, respectively. At December 31, 1994, the Company has accrued
interest to the stockholder of $32,326.
Note 3 - Transactions with Significant Customers
- ------------------------------------------------
During the period ended December 31, 1993, one company accounted for 56% of
total sales. As of the balance sheet date, this customer owed the Company
$780,783. For the year ended December 31, 1994, this customer accounted for
12% of total sales.
During 1994, this customer accumulated excess inventories of products
purchased from the Company. These inventories were a result of customer
returns and slow moving merchandise. In 1995, the Company agreed to purchase
these excess inventories for $811,037, payment for the repurchase was in the
form of a credit to the customer's account against future purchases. Because
the inventory was repurchased for 16% less than the original sales price,
the Company has treated the sales and the repurchase as separate
transactions and did not adjust 1994 sales for the repurchase.
<PAGE> - 7 -
During the year ended December 31, 1994, a new customer accounted for
approximately 20% of the total sales. At December 31, 1994, this customer
owed the Company $936,622.
Note 4 - Note Payable, Bank
- ---------------------------
During the period ended December 31, 1993, the Company entered into a line
of credit agreement with a bank which permits borrowings up to the lesser of
$5,000,000 or 80% of eligible accounts receivable plus 40% of eligible
inventory. The line of credit bears interest at prime plus 1% and is
collateralized by substantially all assets of the Company. The amount
outstanding on the line of credit was $416,517 at December 31, 1994. The
line of credit was revised subsequent to year end in connection with a
merger (Note 8).
Note 5 - Lease Commitments
- --------------------------
In 1993, the Company leased an office and warehouse facility under an
operating lease agreement which expired in February 1994. In March 1994, the
Company moved to a larger office and warehouse facility, which it leases
under an operating lease agreement which expires in April 1996. Total rent
expense under the leases amounted to $138,702 and $23,475 for the periods
ended December 31, 1994 and 1993, respectively. In connection with the
lease, the Company has a standby letter of credit outstanding for $26,953 as
a security deposit. This letter of credit expires on March 15, 1995.
The Company subleases some of its space at the new facility under an
operating lease which expires March 15, 1996. Total rental income under the
sublease amounted to $13,850 for the year ended December 31, 1994. In
accordance with the sublease agreement, the subtenant has elected to
terminate the sublease agreement effective March 31, 1995.
Through July 1994, the Company rented another warehouse facility as a tenant
at will. Total rent expense for this facility amounted to $35,396 and
$21,058 for the periods ended December 31, 1994 and 1993, respectively.
<PAGE> - 8 -
The Company leases motor vehicles under operating lease agreements which
have various expiration dates through 1997. Total rent expense under the
lease agreements amounted to $11,842 and $9,622 for the periods ended
December 31, 1994 and 1993, respectively.
At December 31, 1994 future minimum rental commitments under the operating
leases are as follows:
<TABLE>
<CAPTION>
Years Amount
----- ------
<C> <C>
1995 $178,922
1996 82,813
1997 3,707
--------
$265,442
========
</TABLE>
The Company is the lessee of office and warehouse equipment under capital
leases expiring in various years through 1998. The assets and liabilities
under capital leases are recorded at the lower of the present value of the
minimum lease payments or the fair value of the asset. The assets are
depreciated over the lower of their related lease terms or their estimated
productive lives. Depreciation of assets under capital leases is included in
depreciation expense.
The following is a summary of property held under capital leases at December
31, 1994:
<TABLE>
<CAPTION>
<S> <C>
Warehouse equipment $20,121
Furniture and fixtures 26,544
-------
46,665
Less accumulated depreciation 30,255
-------
$16,410
=======
</TABLE>
<PAGE> - 9 -
At December 31, 1994, future minimum lease payments under capital leases are
as follows:
<TABLE>
<CAPTION>
Years Amount
----- ------
<S> <C>
1995 $15,736
1996 12,315
1997 5,266
1998 1,755
-------
Total minimum lease payments 35,072
Less amount representing interest 4,881
-------
30,191
Less current portion 12,382
-------
Present value of future minimum
lease payments, net of current
portion $17,809
=======
</TABLE>
Obligations under certain lease agreements have been personally guaranteed
by a stockholder of the Company.
Note 6 - Concentration of Credit Risk
- -------------------------------------
The Company has bank deposits which are financial instruments which
potentially expose the Company to credit risk because they are only insured
in full up to $100,000 through the Federal Deposit Insurance Corporation.
Note 7 - Distributions
- ----------------------
As indicated in Note 1, the Company is treated as an S Corporation whereby
the stockholders are taxed on corporate earnings. During the year ended
December 31, 1994, the Company made distributions to stockholders of
$227,920 representing the tax effect on corporate earnings for 1993 and
1994. Subsequent to December 31, 1994, the Company will make additional
distributions to its stockholders for the tax effect of corporate earnings
in 1994. These distributions will approximate $137,000.
<PAGE> - 10 -
Note 8 - Subsequent Events
- --------------------------
In January 1995, the Company, through a reverse acquisition, was merged with
Babystar, Inc., a publicly held corporation. In connection with this merger,
the Company became a wholly-owned subsidiary of Babystar and the following
events occurred:
The Company repurchased stock from two stockholders totaling 50% of
the outstanding common stock for a cost of $210,050. The Company had a
note payable to one of these stockholders in the amount of $1,743,567
which was repaid (Note 2). Babystar, Inc. invested $2,100,000 in
Datatrend, Inc. in order to repurchase the stock and repay the note
payable.
The terms of the line of credit were renegotiated. The most significant
revision was to reduce the maximum borrowings from $5,000,000 to
$2,500,000 (Note 4).
The remaining stockholders were named officers of the Company and the
president entered into an employment agreement.
As a result of the change in ownership, the Company will no longer be
considered a subchapter S Corporation.
<PAGE> - 11 -
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Babystar Inc. on Form S-3 (File No. ) of our report dated March
16, 1995, on our audits of the financial statements of Datatrend, Inc. as of
December 31, 1994, and for the periods ended December 31, 1994 and 1993,
which report is included on Form 8-K/A filed by Babystar Inc.
Kennedy & Lehan, P. C.
Quincy, Massachusetts
January , 1997
PRO FORMA UNAUDITED BALANCE SHEET
The following pro forma unaudited balance sheet combines the
historical consolidated balance sheets of Datatrend, Inc. (the "Company")
and Babystar Inc. ("Babystar") as if the acquisition had been effected on
December 31, 1994. The acquisition is recorded under the purchase method of
accounting, after giving effect to the pro forma adjustments and assumptions
described in the accompanying notes. Under this method of accounting, which
is in accordance with generally accepted accounting principles, assets and
liabilities of Babystar, Inc. are adjusted to the estimated fair value and
combined with the recorded values of the assets and liabilities of the
Company. This pro forma combined financial data should be read in
conjunction with the financial data appearing in, and are qualified in
their entirety by, the consolidated financial statements, including the
notes thereto, of the Company and Babystar included in the documents
incorporated by reference herein.
DataTrend Inc. and Babystar Inc.
Proforma Consolidating Balance Sheet
As of December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
DATATREND INC. BABYSTAR INC. ADJUSTMENTS CONSOLIDATED
- ------------------------------------------------------------------------------------------------------------
ASSETS (HISTORICAL) (HISTORICAL)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 2,010 $ 2,404,000 $ (210,000) (1) $ 29,010
$ (137,000) (2)
$ (200,000) (5)
$ (86,000) (8)
$(1,744,000) (9)
ACCOUNTS RECEIVABLE AND NOTES RECEIVABLE $2,073,000 $ 241,000 $2,314,000
INVENTORY $3,287,000 $3,287,000
PPD & OTHER CURRENT ASSETS $ 493,000 $ 24,000 $ 517,000
--------------------------------------------------------------
TOTAL CURRENT ASSETS $5,855,010 $ 2,669,000 $6,147,010
PROPERTY PLANT & EQUIPMENT $ 84,000 $ 2,000 $ 86,000
$ 7,000
OTHER ASSETS $ 12,000 $ (7,000) (3) $ 12,000
--------------------------------------------------------------
TOTAL $5,951,010 $ 2,678,000 $6,245,010
==============================================================
LIABILITIES
CURRENT LIABILITIES:
DEMAND NOTE PAYABLE $ 417,000 $ 417,000
ACCOUNTS PAYABLE & ACCRUED EXPENSES $3,035,000 $ 236,000 $3,271,000
CURRENT PORTION - CAPITAL LEASE $ 12,000 $ 12,000
--------------------------------------------------------------
TOTAL CURRENT LIABILITIES $3,464,000 $ 236,000 $3,700,000
OTHER LIABILITIES:
CAPITAL LEASE OBLIGATION, NET
OF CURRENT PORTION $ 18,000 $ 18,000
SUBORDINATED STOCKHOLDER DEBT $1,744,000 $(1,744,000) (9) $ 0
--------------------------------------------------------------
TOTAL LIABILITIES $5,226,000 $ 236,000 $3,718,000
STOCKHOLDERS' EQUITY
CAPITAL STOCK - COMMON $ 10 $ 35,000 $ 12,000 (6) $ 47,010
ADDITIONAL PAID IN CAPITAL $ 7,497,000 $ (210,000) (1) $2,480,000
$ (137,000) (2)
$ (7,000) (3)
$ (200,000) (5)
$(5,102,000) (6)
$ 725,000 (7)
$ (86,000) (8)
RETAINED EARNINGS (DEFICIT) $ 725,000 $(5,090,000) $ 5,090,000 (6)
$ (725,000) (7)
--------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $ 725,010 $ 2,442,000 $2,527,010
TOTAL $5,951,010 $ 2,678,000 $6,245,010
==============================================================
</TABLE>
PRO FORMA UNAUDITED STATEMENT OF OPERATIONS
The following pro forma unaudited statement of income for the year
ended December 31, 1994 combines the historical statements of income of
Datatrend, Inc. ( the "Company") and Babystar, Inc.("Babystar") as if the
acquisition had been effected at the beginning of the period presented.
The acquisition is recorded under the purchase method of accounting, after
giving effect to the pro forma adjustments and assumptions described in the
accompanying note. Under this method of accounting, which is in accordance
with generally accepted accounting principles, assets and liabilities of
Babystar are adjusted to the estimated fair value and combined with the
recorded values of the assets and liabilities of the Company. This pro forma
combined financial data should be read in conjunction with the financial
data appearing in, and are qualified in their entirety by, the consolidated
financial statements, including the notes thereto, of the Company and
Babystar included in the documents incorporated by reference herein.
The pro forma combined statement of operations is intended for
information purposes only and is not intended to present the results that
would have actually occurred if the acquisition had been in effect for the
assumed periods, and are not necessarily indicative of the results that may
be obtained in the future.
DataTrend, Inc. and Babystar, Inc.
Proforma Consolidating Statement of Operations
For the Year Ended December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
DATATREND INC. BABYSTAR INC. ADJUSTMENTS CONSOLIDATED
--------------------------------------------------------------
(HISTORICAL) (HISTORICAL)
<S> <C> <C> <C> <C>
SALES $ 36,368,000 $ 36,368,000
COST OF SALES $(32,662,000) $(32,662,000)
--------------------------------------------------------------
GROSS PROFIT $ 3,706,000 $ 3,706,000
OPERATING EXPENSES-SG&A $ (2,843,000) $(550,000) $ (7,000) (3) $ (3,400,000)
--------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS $ 863,000 $(550,000) $ (7,000) $ 306,000
INTEREST INCOME-NET $ 76,000 $ 76,000
INTEREST (EXPENSE) $ (233,000) $ 122,000 $ (111,000)
OTHER INCOME (EXPENSE) $ 14,000 $ 3,000 $ 17,000
--------------------------------------------------------------
INCOME (LOSS) BEFORE PROVISION
CREDIT FOR TAXES $ 644,000 $(471,000) $ 115,000 $ 288,000
LESS-PROVISION FOR TAXES $ (35,000) $(109,000) $ (144,000)
--------------------------------------------------------------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS $ 609,000 $(471,000) $ 6,000 $ 144,000
==============================================================
</TABLE>
SEE ACCOMPANYING NOTES TO THE PROFORMA CONSOLIDATING FINANCIAL STATEMENTS
DataTrend, Inc. and Babystar, Inc.
Notes to the Unaudited Proforma Consolidating Financial Statements
December 31, 1994
(1) BUYOUT BY DATATREND OF A FORMER SHAREHOLDER
(2) DISTRIBUTIONS TO DATATREND SHAREHOLDER
(3) TO WRITE OFF SECURITY DEPOSIT FOR BABYSTAR LEASE
(4) ALLOCATION OF TAX EXPENSE AND BENEFIT
(5) TO REFLECT SEVERANCE PAYMENT TO FORMER BABYSTAR OFFICER
(6) TO RECORD THE ISSUANCE OF SHARES SUBSEQUENT TO THE AQUISITION
(7) TRANSFER PRIOR "S" CORP, EARNINGS OF DATATREND TO ADDITIONAL PAID
IN CAPITAL
(8) TO RECORD THE ESTIMATED COSTS OF THE ACQUISITION
(9) TO RECORD THE EFFECT OF THE ADVANCE FROM BABYSTAR TO DATATREND
