<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8 - K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): August 22, 1995
-----------------
(June 8, 1995)
-----------------
OSICOM TECHNOLOGIES, INC
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 0-15810 22-2367234
---------------------- ----------- ------------------
(STATE OR JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
1800 STEWART STREET, SANTA MONICA, CALIFORNIA 90404
--------------------------------------------- ----------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (310) 828-7496
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<PAGE> 2
<TABLE>
<S> <C>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired (Pages 3-12)
(b) Pro Forma Financial Information (Pages 13 - 14)
SIGNATURES (Page 15)
</TABLE>
2
<PAGE> 3
DYNAIR ELECTRONICS, INC
FINANCIAL STATEMENTS
MAY 31, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Pages
--------
<S> <C>
Independent Accountants' Report 4
Balance Sheets as of January 31 and May 31, 1995 5 - 6
Statements of Operations and (Retained Earnings) Accumulated Deficit
Eight Months Ended January 31, 1994, Year Ended January 31, 1995
and Four Months Ended May 31, 1995 7
Statements of Cash Flows Eight Months Ended January 31, 1994,
Year Ended January 31, 1995 and Four Months Ended May 31, 1995 8
Notes to Financial Statements 9 - 12
</TABLE>
3
<PAGE> 4
WEINBAUM & YALAMANCHI
[LOGO] Certified Public Accountants
Independent Accountants' Report
The Stockholder
Dynair Electronics, Inc.
We audited the accompanying balance sheets of Dynair Electronics, Inc.
(Dynair) as of January 31 and May 31, 1995 and the related statements of
operations and (retained earnings) accumulated deficit and cash flows for the
eight months ended January 31, 1994, the year ended January 31, 1995 and the
four months ended May 31, 1995. These financial statements are the
responsibility of Dynair'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 also 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 our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, Dynair's financial position as of January 31
and May 31, 1995 and the results of its operations and cash flows for the eight
months ended January 31, 1994, year ended January 31, 1995 and four months
ended May 31, 1995 in conformity with generally accepted accounting principles.
As discussed in financial statement Note 15, Dynair changed its method
of allocating overhead to inventory during the eight months ended January 31,
1994.
/s/ Weinbaum & Yalamanchi
-------------------------------
Weinbaum & Yalamanchi
Canoga Park, California
August 8, 1995
dynar
4
<PAGE> 5
Dynair Electronics, Inc.
Balance Sheets
January 31 and May 31, 1995
ASSETS
<TABLE>
<CAPTION>
January May
----------- -----------
<S> <C> <C>
Current Assets
Cash $ 19,000
Accounts receivable (less $23,000 and $24,000 allowances
for doubtful accounts) 309,000 $ 266,000
Costs in excess of billings (Note 11) 107,000
Inventories (Note 5) 1,018,000 913,000
Prepaid expenses 77,000 68,000
----------- -----------
Total current assets 1,423,000 1,354,000
----------- -----------
Property and Equipment
Land (Note 3) 266,000 266,000
Building (Note 3) 552,000 552,000
Building improvements (Note 3) 380,000 380,000
Machinery and equipment 851,000 859,000
Office equipment and computers 472,000 472,000
Assets under capital lease (Note 9) 151,000 151,000
----------- -----------
2,672,000 2,680,000
Accumulated depreciation (1,876,000) (1,911,000)
Accumulated amortization of leased assets (66,000) (75,000)
----------- -----------
730,000 694,000
----------- -----------
Other assets 66,000
----------- -----------
$ 2,219,000 $ 2,048,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
Dynair Electronics, Inc.
Balance Sheets
January 31 and May 31, 1995
LIABILITIES AND STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
January May
----------- -----------
<S> <C> <C>
Current Liabilities
Outstanding checks payable $ 25,000
Stockholder loan (Note 4) 20,000
Accounts payable $ 629,000 650,000
Accrued expenses (Note 6) 379,000 492,000
Bank loan (Note 3) 580,000 560,000
Current portion of capitalized lease obligation (Note 9) 26,000 26,000
----------- -----------
Total current liabilities 1,614,000 1,773,000
----------- -----------
Capitalized lease obligation (Note 9) 78,000 70,000
Deferred income taxes (Note 13) 28,000
Commitments and contingencies (Note 2)
Stockholders' Equity
Common stock, par value $1.00
1,000,000 shares authorized
510,544 shares outstanding 511,000 511,000
Additional paid-in-capital 400,000 400,000
Accumulated deficit (412,000) (706,000)
----------- -----------
Total stockholders' equity 499,000 205,000
----------- -----------
$ 2,219,000 $ 2,048,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
Dynair Electronics, Inc.
Statements of Operations and (Retained Earnings) Accumulated Deficit
Eight Months Ended January 31, 1994
Year Ended January 31, 1995 and Four Months Ended May 31, 1995
<TABLE>
<CAPTION>
January January May
1994 1995 1995
----------- ----------- ----------
<S> <C> <C> <C>
Net sales (Notes 8 & 11) $ 2,351,000 $ 3,438,000 $1,567,000
----------- ----------- ----------
Cost of sales 1,370,000 1,900,000 770,000
Inventory writedowns 48,000 68,000 148,000
----------- ----------- ----------
1,418,000 1,968,000 918,000
----------- ----------- ----------
Gross margin 933,000 1,470,000 649,000
----------- ----------- ----------
Selling, general and administrative expenses
(Notes 10 & 12) 1,025,000 1,363,000 535,000
Research and development 551,000 862,000 343,000
----------- ----------- ----------
1,576,000 2,225,000 878,000
----------- ----------- ----------
Operating loss 643,000 755,000 229,000
----------- ----------- ----------
Interest expense 26,000 148,000 65,000
Loss on fixed asset sales 25,000
----------- ----------- ----------
51,000 148,000 65,000
----------- ----------- ----------
Loss before cummulative effect of accounting change 694,000 903,000 294,000
Cummulative effect to May 31, 1993
of accounting change (Note 15) 47,000
----------- ----------- ----------
Net loss 647,000 903,000 294,000
Accumulated deficit (retained earnings)-beginning of period (1,138,000) (491,000) 412,000
----------- ----------- ----------
Accumulated deficit (retained earnings)-end of period ($ 491,000) $ 412,000 $ 706,000
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
Dynair Electronics, Inc.
Statements of Cash Flows
Eight Months Ended January 31, 1994
Year Ended January 31, 1995 and Four Months Ended May 31, 1995
<TABLE>
<CAPTION>
January January May
1994 1995 1995
--------- --------- ---------
<S> <C> <C> <C>
Operating cash flows:
Net loss ($647,000) ($903,000) ($294,000)
Adjustments to reconcile net loss to cash used by operations
Depreciation and amortization 138,000 157,000 44,000
Changes in operating assets
Accounts receivable 253,000 103,000 43,000
Costs in excess of billings (107,000)
Inventories 86,000 (38,000) 105,000
Prepaid expenses (6,000) 11,000 (19,000)
Outstanding checks payable 25,000
Accounts payable (79,000) 431,000 21,000
Accrued expenses (132,000) (11,000) 113,000
Other assets 2,000 110,000 66,000
-------- ------- -------
Cash used by operations 385,000 140,000 3,000
-------- ------- -------
Investing cash flows:
Property acquisitions 19,000 31,000 8,000
-------- ------- -------
Cash used by investing activities 19,000 31,000 8,000
-------- ------- -------
Financing cash flows:
Bank loan 400,000
Payment of bank loan (20,000) (20,000)
Reduction in capitalized lease obligations (15,000) (13,000) (8,000)
Stockholder loan 20,000
-------- ------- -------
Cash provided (used) by financing activities 385,000 (33,000) (8,000)
-------- ------- -------
Decrease in cash (Note 7) (19,000) (204,000) (19,000)
Cash - beginning of period 242,000 223,000 19,000
-------- ------- -------
Cash - end of period $223,000 $19,000 $0
======== ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 9
Dynair Electronics, Inc.
Notes To Financial Statements
January 31, 1994 and 1995 and May 31, 1995
NOTE 1. Accounting Policies and Operations
Basis of Presentation - The financial statements include the assets and
liabilities of Dynair Electronics, Inc. (Dynair) a Delaware corporation.
Business Description - Dynair manufactures products for transmitting, switching
and distributing analog and digital information. Dynair sells primarily to
commercial contractors and government agencies within the United States.
Inventories - Inventories are valued at the lower of cost, weighted average
method, or market.
Property and Equipment - Property and equipment are stated at cost.
Depreciation is recorded by the straight-line method over the related assets
estimated useful lives. Assets held under capitalized leases are amortized
over the lease term. Fully depreciated assets still in use at May 31, 1995
were $1,127,000.
Accounts Receivable - Dynair provides an allowance for doubtful accounts to
reduce receivables to net realizable value. Dynair's largest May 31, 1995
receivable was $32,000. Receivables include a $126,000 contract receivable.
Revenue Recognition - Revenue is recognized when products are shipped except
for long-term contracts which are recorded by the percentage of completion
method. Losses on long term contracts are recorded as they become known. Costs
in excess of billings represents revenues in excess of amounts billed. Billings
in excess of costs represents billings in excess of revenues recognized.
NOTE 2. Sale of Dynair
On June 8, 1995 Dynair transferred all of its assets except for real estate to
New Dynair. New Dynair assumed all of Dynair's liabilities except the bank loan
(Note 3). Simultaneously, Dynair sold New Dynair's stock to Meret Optical
Communications, Inc., (Meret) for $270,000 which was New Dynair's May 31, 1995
audited book value.
Meret agreed to pay Dynair additional consideration based on New Dynair's sales
for each of the five years ending May 31, 2000. Dynair also leased its premises
to New Dynair for three months at $10,000 per month with three 3-month renewal
options.
NOTE 3. Bank Loan
At May 31, 1995 Dynair owed a bank $560,000 bearing interest at .5% over prime,
secured by a trust deed on its building and land which Dynair carried at
$495,000. The line of credit was last renewed on July 2, 1995. The line of
credit requires, among other things, Dynair maintain certain financial ratios
and amounts of tangible net worth and working capital. Dynair was in default on
the line of credit based on these financial covenants during 1995 and at May
31, 1995 but received waivers from the bank.
NOTE 4. Stockholder Loan
On April 7, 1995 E.G. Gramman, Dynair's 62% stockholder, lent Dynair $20,000
with interest at .5% percent over prime.
9
<PAGE> 10
Dynair Electronics, Inc.
Notes To Financial Statements (continued)
January 31, 1994 and 1995 and May 31, 1995
NOTE 5. Inventories
Inventories were:
<TABLE>
<CAPTION>
January May
----------- -----------
<S> <C> <C>
Raw materials $ 827,000 $ 804,000
Work in process 269,000 339,000
Finished goods 191,000 119,000
---------- ----------
1,287,000 1,262,000
Obsolescence reserve 269,000 349,000
---------- ----------
$1,018,000 $ 913,000
========== ==========
NOTE 6. Accrued Expenses
Accrued expenses include:
Vacations $ 101,000 $ 108,000
Compensation 19,000 56,000
Sales commissions 99,000 219,000
Warranty 35,000 35,000
Other 125,000 74,000
---------- ----------
$ 379,000 $ 492,000
========== ==========
</TABLE>
NOTE 7. Supplemental Cash Flow Disclosures
Interest income and expense approximated cash received and paid for interest
for the three periods. Taxes paid were not material. Deferred tax assets and
liabilities of $28,000 written off in May 1995 were excluded from the statement
of cash flows as they neither used nor provided cash.
NOTE 8. Sales and Expense Information
Sales and Expenses included these amounts by period:
<TABLE>
<CAPTION>
January January May
1994 1995 1995
-------- ------- --------
<S> <C> <C> <C>
Export sales $334,000 $468,0 $230,000
Sales to US government agencies 360,000 412,000 774,000
Customer A NIL NIL 169,000
Repair and maintenance expense 29,000 35,000 12,000
Advertising expense 15,000 49,000 NIL
</TABLE>
10
<PAGE> 11
Dynair Electronics, Inc.
Notes To Financial Statements (continued)
January 31, 1994 and 1995 and May 31, 1995
NOTE 9. Capitalized Lease Obligation
Capitalized lease obligation was payable in $3,000 monthly installments through
1997 including 10.7% implicit interest and has a $15,000 purchase option.
NOTE 10. Operating Leases
Rent expense was $2,000, $2,000 and $1,000 for the three periods. New Dynair
had no operating lease commitments at May 31, 1995 except as disclosed in
Note 2.
NOTE 11. Contract in progress at May 31, 1995 is:
<TABLE>
<S> <C>
Costs incurred on uncompleted contract $429,000
Estimated earnings 193,000
--------
622,000
Billings to date 515,000
--------
Costs in excess of billings $107,000
========
</TABLE>
NOTE 12. Retirement Plan
Dynair has a 401K plan for certain employees which permits Dynair to contribute
to the plan. Dynair contributed $53,000; $57,000 and $36,000 for the three
periods.
NOTE 13. Income Taxes
At May 31, 1995 the differences between the book and tax bases of Dynair's
assets and liabilities were:
<TABLE>
<S> <C>
Allowance for doubtful accounts $ 24,000
See 263A inventory adjustment 190,000
Obsolescence reserve 349,000
Warranty accrual 35,000
Vacation accrual 108,000
Accumulated depreciation (112,000)
---------
$ 594,000
=========
</TABLE>
At May 31, 1995 Dynair had NOL carry forwards available to reduce New Dynair's
taxable income usable at the rate of $16,000 per year until 2010. Dynair also
had various credits aggregating $200,000 which could be used to reduce taxes
payable at the rate of $6,000 per year through 2005. Future tax benefits
attributable to the differences between the book and tax basis of Dynair's
assets and liabilities and the NOL's realization are not assured and therefore
have not been recognized in these financial statements.
NOTE 14. SUBSEQUENT EVENTS
In June 1995, Meret advanced New Dynair $230,000. In July 1995, Meret advanced
New Dynair $60,000 which New Dynair returned in July 1995.
11
<PAGE> 12
Dynair Electronics, Inc.
Notes To Financial Statements (continued)
January 31, 1994 and 1995 and May 31, 1995
NOTE 15. CHANGE IN ACCOUNTING PRINCIPLE
Effective May 31, 1993, Dynair changed its method of allocating overheads to
work-in-progress and finished goods. Previously, Dynair charged overheads based
on direct labor dollars. Since Dynair's direct labor content has decreased as a
percentage of sales, Dynair believes that allocating overheads to inventories
based on direct materials and direct labor provides a better matching of costs
and revenues. The change's effect on income was not material for any of the
three periods.
NOTE 16. PRO FORMA BALANCE SHEET (UNAUDITED)
Had New Dynair been sold on May 31, 1995, Dynair's balance sheet would have
been:
<TABLE>
<S> <C>
Due from Meret $ 270,000
Land 266,000
Building 552,000
Building improvements 380,000
Accumulated depreciation (703,000)
---------
$ 765,000
=========
Bank loan $ 560,000
Stockholders' equity 205,000
---------
$ 765,000
=========
</TABLE>
12
<PAGE> 13
ITEM 7(b) Pro Forma Financial Information
The following pro forma financial information presents the effects
of the acquisition of Dynair Electronics, Inc. by the registrant as if the
acquisition had been completed as of April 30, 1995.
The pro forma financial information is not necessarily indicative of
the results of operations and financial position which will be attained in
the future. The pro forma information should be read in conjunction with the
historical consolidated financial statements of Osicom Technologies, Inc. as
reported on Forms 10-QSB and 10-KSB for the three months and the year ended
April 30 and January 31, 1995 respectively.
OSICOM TECHNOLOGIES, INC.
Pro Forma Condensed Consolidated Balance Sheet
April 30, 1995
<TABLE>
<CAPTION>
Company
before Pro forma Pro forma Pro forma
ASSETS acquisition Dynair Ref adjustments Ref adjustments consolidated
----------- ------ --- ----------- --- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash $185,552 $55,000 $240,552
Accounts receivable 470,648 193,000 663,648
Notes receivable - Affiliates 490,625 490,625
Notes receivable 799,502 799,502
Inventories 2,795,817 1,174,000 (c) ($150,000) 3,819,817
Prepaid expenses 149,436 64,000 213,436
Property and equipment-net 45,680 703,517 (b) (495,000) (c) $150,000 404,197
Other assets 75,747 66,667 142,414
Investment in Dynair (a) 476,130 (b) (476,130)
---------- ---------- --------- --------- ----------
TOTAL ASSETS $5,013,007 $2,256,184 ($168,870) ($326,130) $6,774,191
========== ========== ========= ========= ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Loan payable - bank $610,209 $585,000 (b) ($585,000) $610,209
Accounts payable and accrued expenses 956,341 1,285,054 2,241,395
Acquisition debt (a) 476,130 476,130
Negative goodwill 1,037,817 1,037,817
---------- ---------- --------- --------- ----------
TOTAL LIABILITIES 2,604,367 1,870,054 (108,870) 4,365,551
---------- ---------- --------- --------- ----------
Preferred stock 250,000 250,000
Common stock 239,180 511,000 (b) (511,000) 239,180
Additional paid-in-capital 793,683 400,000 (b) (400,000) 793,683
Retained earnings (Accumulated deficit) 1,125,777 (524,870) (b) 524,870 1,125,777
---------- ---------- --------- --------- ----------
TOTAL STOCKHOLDERS' EQUITY 2,408,640 386,130 (386,130) 2,408,640
---------- ---------- --------- --------- ----------
TOTAL LIABILITIES AND EQUITY $5,013,007 $2,256,184 ($495,000) $6,774,191
========== ========== ========= ========= ==========
</TABLE>
(a) To record acquisition of Dynair by the Company
(b) To eliminate net equity of Dynair and assets and liabilities not
acquired and to eliminate investment account on consolidation.
(c) To record difference between historical book and estimated fair value of
assets.
13
<PAGE> 14
OSICOM TECHNOLOGIES, INC.
Pro Forma Condensed Consolidated Income Statements
For the Twelve Months Ended January 31, and Three Months Ended April 30, 1995
<TABLE>
<CAPTION>
Company
before Pro forma
pro forma adjustments Pro forma
adjustments Dynair (a) consolidated
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
THREE MONTHS ENDED APRIL 30, 1995
---------------------------------
Net sales $1,174,507 $ 928,000 $ 2,102,507
Cost of Sales 699,695 465,000 1,164,695
---------- --------- -------- ---------
Gross Profit 474,812 463,000 937,812
Selling, General & Administrative Expenses 553,551 598,000 1,151,551
Amortization of Negative Goodwill 237,717 237,717
Interest expense 17,000 45,000 $7,000 69,000
---------- --------- -------- ---------
Net earnings (loss) from continuing operations $141,978 ($180,000) ($7,000) ($45,022)
========== ========= ======== =========
PRIMARY EARNINGS (LOSS) PER COMMON SHARE
Total earnings (loss) per share $0.09 ($0.15) ($0.07)
Weighted average shares used in computation 1,195,898 1,195,898 1,195,898
TWELVE MONTHS ENDED JANUARY 31, 1995
--------------------------------------
Net sales $5,892,356 $ 3,438,000 $9,330,356
Cost of sales 4,051,409 1,968,000 6,019,409
--------- --------- -------- ---------
Gross profit 1,840,947 1,470,000 3,310,947
Selling, general & administrative expenses 2,058,095 2,225,000 4,283,095
Amortization of negative goodwill 950,868 950,868
Interest expense 84,431 148,000 $ 27,000 259,431
--------- --------- -------- ---------
Net earnings from continuing operations 649,289 (903,000) (27,000) (280,711)
--------- --------- -------- ---------
Loss on discontinued operations 276,269 276,269
--------- --------- -------- ---------
Net earnings (loss) $373,020 ($903,000) ($27,000) ($556,980)
========== ========= ======== =========
PRIMARY EARNINGS (LOSS) PER COMMON SHARE
Total earnings (loss) per share $0.21 ($0.86) ($0.67)
Weighted average shares used in computation 1,055,818 1,055,818 1,055,818
</TABLE>
(a) To recognize interest expense for each period on acquisition debt
14
<PAGE> 15
SIGNATURE
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 thereunto duly authorized.
Osicom Technologies, Inc.
(Registrant)
Dated: August 22, 1995 By: /s/ Sharon Gill Chadha
----------------------------------
Sharon Gill Chadha
Chief Executive Officer
15
