<PAGE> 1
EXHIBIT 99.2
INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
presented below reflects the effect of the acquisition of T & B Design, Inc.
(f/k/a Advanced Digital Designs, Inc.), Advanced Technologies, Inc. and 937 Plum
Grove Road Partnership (collectively "ADD") by Dauphin Technology, Inc., and
reflects management's present estimate of pro forma adjustments, including a
preliminary estimate of the purchase price allocations, which ultimately may be
different.
This pro forma information has been prepared utilizing historical financial
statements of the Company and ADD. The unaudited pro forma condensed combined
statements of operations give effect to the acquisition as if the transaction
was consummated as of the beginning of each period reported, utilizing the
results of operations for the twelve months ended December 31, 1999 and the six
months ended June 30, 2000 for the Company and ADD. This information should be
read in conjunction with the historical financial statements and notes thereto.
The pro forma financial data have been included as required by the rules and
regulations of the Securities and Exchange Commission and are provided for
comparative purposes only. The pro forma financial data do not purport to be
indicative of the results which actually would have been obtained if the
acquisition had occurred on the date indicated or of those results which may be
obtained in the future.
<PAGE> 2
DAUPHIN TECHNOLOGY, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Pro forma
Dauphin ADD Adjustments Pro Forma
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 2,279,058 $ - $ - $ 2,279,058
Consulting Revenue - 3,234,435 - 3,234,435
Cost of Revenue 4,833,601 1,230,785 - 6,064,386
------------ ------------ ------------ ------------
Gross profit (loss) (2,554,543) 2,003,650 - (550,893)
Selling, General and Administrative
Expenses 4,173,095 218,808 1,141,000(1) 5,532,903
Research and Development 510,287 - - 510,287
------------ ------------ ------------ ------------
Earnings (loss) from
Operations (7,237,928) 1,784,842 (1,141,000) (6,594,083)
Interest expense (2,099,179) (8,522) - (2,107,701)
Interest income 30,800 - - 30,800
Other income - 54,022 - 54,022
------------ ------------ ------------ ------------
Earnings (loss) before
Taxes (9,306,304) 1,830,342 (1,141,000) (8,616,962)
Income Taxes - 33,327 - 33,327
------------ ------------ ------------ ------------
Net income (loss) $ (9,306,304) $ 1,797,015 $ (1,141,000) $ (8,650,289)
============ ============ ============ ============
Basic and diluted loss per share $ (0.20) $ (0.19)
============ ============
Weighted average number of common
shares outstanding 46,200,408 46,200,408
============ ============
</TABLE>
<PAGE> 3
DAUPHIN TECHNOLOGY, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
Pro forma
Dauphin ADD Adjustments Pro Forma
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 16,041 $ - $ - $ 16,041
Consulting Revenue - 1,684,283 - 1,684,283
Cost of Revenue 123,411 601,090 - 724,501
------------ ------------ ------------ ------------
Gross profit (loss) (107,370) 1,083,193 - 975,823
Selling, General and Administrative
Expenses 1,820,049 135,363 570,500(1) 2,525,912
Research and Development 250,858 - - 250,858
------------ ------------ ------------ ------------
Earnings (loss) from
Operations (2,178,277) 947,830 (570,500) (1,800,947)
Interest expense (1,817,141) (2,287) - (1,819,428)
Interest income 13,810 - - 13,810
Other income - 26,992 - 26,992
------------ ------------ ------------ ------------
Earnings (loss) before
Taxes (3,981,608) 972,535 (570,500) (3,579,573)
Income Taxes - 14,600 - 14,600
------------ ------------ ------------ ------------
Net income (loss) $ (3,981,608) $ 957,935 $ (570,500) $ (3,594,173)
============ ============ ============ ============
Basic and diluted loss per share $ (0.07) $ (0.06)
============ ============
Weighted average number of common
shares outstanding 57,005,361 57,005,361
============ ============
</TABLE>
<PAGE> 4
DAUPHIN TECHNOLOGY, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 2000
<TABLE>
<CAPTION>
Pro forma
Dauphin ADD Adjustments Pro Forma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash $ 4,014,815 $ 226,752 $(6,000,000)(2) $ 514,815
2,500,000 (3)
(226,752)(2)
Accounts receivable-Trade 533,394 508,895 (508,895)(2) 533,394
Allowance for Bad Debts (428,599) - (428,599)
Accounts receivable-Employee 118 - 118
Inventory 3,446,828 - 3,446,828
Reserve for obsolescence (1,945,296) - (1,945,296)
Prepaid expense 101,834 - 101,834
----------- ----------- ----------- -----------
5,723,094 735,647 (4,235,647) 2,223,094
INVESTMENTS IN RELATED PARTY 290,000 - 290,000
PROPERTY AND EQUIPMENT
Building - 362,102 37,898 (2) 400,000
Manufacturing and warehouse equipment 624,690 - 624,690
Leasehold improvements 407,186 - 407,186
Plastic molds for the Orasis 696,862 - 696,862
Computer equipment 249,732 111,811 (1,811)(2) 359,732
Furniture, fixtures and other equipment 101,357 23,331 (8,331)(2) 116,357
----------- ----------- ----------- -----------
2,079,827 497,244 27,756 2,604,827
Accumulated depreciation (912,776) (116,195) 116,195 (2) (912,776)
----------- ----------- ----------- -----------
1,167,051 525,000 143,951 1,692,051
GOODWILL - - 5,500,000 (2) 5,500,000
----------- ----------- ----------- -----------
$ 7,180,145 $ 1,116,696 $ 1,408,304 $ 9,705,145
=========== =========== =========== ===========
</TABLE>
<PAGE> 5
DAUPHIN TECHNOLOGY, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET -CONTINUED
JUNE 30, 2000
<TABLE>
<CAPTION>
Pro forma
Dauphin ADD Adjustments Pro Forma
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 211,694 $ 32,000 $ (32,000)(2) $ 211,694
Accrued expenses 121,742 47,101 (47,101)(2) 146,742
25,000 (2)
Current portion of long-term debt 127,249 23,760 (23,760)(2) 127,249
------------ ------------ ------------ ------------
460,685 102,861 (77,861) 485,685
LONG TERM DEBT 150,399 239,974 6,000,000 (2) 150,399
(6,000,000)(2)
(239,974)(2)
OTHER LONG-TERM LIABILITIES - 10,864 (10,864) -
SHAREHOLDERS' EQUITY
Preferred stock - - -
Common stock 57,960 - 649 (3) 58,609
Warrants 1,649,180 - 1,649,180
Paid-in capital 47,670,265 - 2,499,351 (3) 50,169,616
Accumulated deficit (42,808,344) - (42,808,344)
Retained earnings - 762,997 (762,997)(2) -
------------ ------------ ------------ ------------
6,569,061 762,997 1,737,003 9,069,061
------------ ------------ ------------ ------------
$ 7,180,145 $ 1,116,696 $ 1,408,304 $ 9,705,145
============ ============ ============ ============
</TABLE>
<PAGE> 6
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made to the unaudited condensed
consolidated statements of operations for the year ended December 31, 1999 and
the six months ended June 30, 2000.
(1) To record amortization expense of goodwill using a useful life of five
years and to record depreciation expense using useful lives ranging
from five to twenty-five years, as if the acquisition had been
completed as of January 1, 1999.
(2) To record the purchase of assets of ADD and to eliminate the debt.
(3) To record the drawdown of $2.5 million and the issuance of 648,618
shares.
The total purchase price for the acquisition will be allocated to acquired
assets based on estimates of their fair values. The excess of the total purchase
price over the allocations of fair value to the net assets acquired will be
recorded as goodwill, which was calculated as follows for purposes of the pro
forma presentations herein:
Purchase considerations $6,000,000
Direct acquisition costs 25,000
----------
Total purchase price 6,025,000
Less: tangible assets acquired
Building 400,000
Computer equipment 110,000
Other equipment 15,000
----------
Goodwill $5,500,000
==========
On July 31, 2000, the Company issued a drawdown notice to Techrich International
Limited in connection with the common stock purchase agreement dated April 9,
2000, evidencing an equity draw down facility between the Company and Techrich.
The common stock purchase agreement is more fully described in the Company's
Prospectus Statement filed on Form S-1 dated July 21, 2000. During the first 11
days of the drawdown period, Techrich purchased 648,618 shares of the Company's
common stock. These purchases resulted in aggregate proceeds of $2,500,000 being
paid to the Company. These proceeds were used in the acquisition of ADD.
