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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 1995
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-10196
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Dimensional Visions Group, Ltd.
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(Exact name of registrant as specified in its charter)
Delaware 23-2517953
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
718 Arch Street, Suite 202 N, Philadelphia 19106
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 440-7791
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Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
Redeemable Class B Warrants
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter periods that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
X YES NO
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained
herein,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.
---
As of SEPTEMBER 18, 1995, the number of shares of Common Stock
outstanding was 17,521,098. The aggregate market value of the Company's Common
Stock held by non-affiliates of the registrant as of September 18, 1995 was
approximately $27,298,590 (based upon 17,471,098 shares at $1.5625 per share).
DOCUMENTS INCORPORATED BY REFERENCE: NONE
Certain exhibits are incorporated by reference to the Company's
Registration Statement on Form S-1, Form 10-KSB and Form 8-K as listed in
response to Item 13(a)(3) of Part III.
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PART I
ITEM 1. BUSINESS
THE COMPANY
Dimensional Visions Group, Ltd. ("DVG") was organized in 1988. DVG
produces and markets lithographically printed stereoscopic prints commonly
referred to as three-dimensional prints. The prints may be viewed without the
use of special glasses or other viewing apparatus. DVG has trademarked its
three-dimensional products as the DV3D(TM) image. DVG's product lines are
determined by the technical specifications of the polymer based lenticular
material on which the DV3D(TM) image is printed. The DV3D(TM) print product
may be produced in varying sizes for specified customer applications. The
current DV3D(TM) print product is designed for hand-held viewing.
On September 12, 1995, DVG, through a wholly-owned subsidiary,
acquired all the outstanding capital stock of InfoPak, Inc. ("InfoPak").
InfoPak, located in Phoenix, Arizona, manufactures and markets hardware and
software information and audio playback systems and method products and
programs. References herein to the "Company" includes DVG and its wholly-owned
subsidiaries.
InfoPak was founded in 1992. InfoPak has developed a system that
allows those that use large and cumbersome printed dated material an electronic
alternative which is easier to use. The InfoPak Information System (the
"System") was designed to manage voluminous databases that change often and to
distribute information to remote locations where the System utilizes standard
telephone lines and personal computers (PC's) to distribute the information.
Information is stored on an InfoCard(TM) and displayed by a hand-held
InfoReader(TM). The System has been designed to provide the owners and
publishers of the information many levels of security to ensure that piracy and
unauthorized use does not occur. In essence, InfoPak distributes data
electronically then repackages directories onto InfoCards(TM) to be used in
InfoReaders(TM). In many cases, InfoPak provides key business information to
the end user in just a few seconds when, historically, that process took days
or even weeks.
InfoPak currently produces and markets the System to the residential
real estate agent marketplace as the InfoPak Portable MLS. InfoPak is selling
the Portable MLS to realtors as an option to the printed Multiple Listing
Service Directory. The InfoCard(TM) stores the real estate listings and the
operating program for portable access through the InfoReader(TM).
Since its inception, the Company has been dependent upon the proceeds
of the sale of its securities, loans and sale of surplus equipment to conduct
its business. There
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can be no assurance that the Company will generate sufficient revenues from the
sale of its products necessary to maintain its cost structure or achieve
profitability.
MARKETING
Since its inception, DVG has been attempting to develop a commercially
acceptable product. Management believes that during the first half of fiscal
1994, DVG was able to complete the development of its technologies necessary to
begin a sales and marketing effort.
DVG initiated a sales and marketing program in January 1994 and
shipped its first commercial order in July 1994 and received additional orders
which have resulted in a limited amount of sales to date. However, until
recently, the Company continued to lack adequate financial resources to begin
full operations which include a manufacturing/production executive, a creative
design employee and an adequate inventory of lenticular print material to fill
large volume orders.
DVG is marketing commercial and promotional applications of its
DV3D(TM) print products to all users of graphic arts. Some of the applications
of DV3D(TM) print products are packaging, book and magazine covers and inserts,
CD covers, trading cards, games, and greeting cards. Other proposed markets
include point-of-sale materials and displays, direct mail, specialty
advertising, premium incentives, trade show exhibits, and special events
promotion.
DVG uses its own employees and independent sales agents in marketing
its products. The independent sales agents are paid on a commission basis for
orders shipped, accepted and for which payment has been received. DVG does not
provide for any advance against commissions or expenses incurred by such
independent agents. DVG also sells its products to independent marketing
organizations. During the first six months of fiscal 1995, DVG entered into a
number of exclusive sales and marketing agreements with independent sales and
marketing organizations. The agreements relate to the sales and marketing of
the DVG's products for certain enumerated potential users, including, but not
limited to, comic books, greeting cards, magazines, sports organizations, food
companies, entertainment companies, computer hardware and software companies
and advertising agencies. The agreements have specific performance goals to be
met in order to retain exclusive distribution rights for identified target
accounts.
To date, InfoPak has grown its business primarily through the use of
outside distributors. The objective was to develop a wide-spread distribution
network in order to establish broad based customer acceptance in the real
estate marketplace. Using this method of marketing, operations have been
established in over thirty cities in the United
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States and Canada. Expansion has been steady and is expected to continue
during the foreseeable future.
Presently, each distributor under contract with InfoPak receives an
exclusive marketing territory that may cover anywhere from one city to many
cities. Territories are granted based upon the distributor's financial
strength, real estate industry experience, performance goals, and initial
purchase commitments. The distributor maintains exclusivity as long as it
meets the performance benchmarks outlined in its distribution agreement with
InfoPak. Although these benchmarks vary from one distributor to another, they
all encompass inventory purchase requirements which is one of InfoPak's sources
of revenue.
InfoPak's revenues are primarily generated in two ways: 1) through
the sale of new Portable MLS InfoReaders(TM) to the distributor and 2) through
ongoing licensing revenue collected from the distributor for each InfoPak
Portable MLS InfoReader(TM) in operation. The licensing fee is assessed for
ongoing MLS data delivery, system support, and system maintenance, and normally
begins the thirteenth month following activation of an InfoReader(TM).
Distributors, in turn, either lease or sell the InfoReaders(TM) to the end
customer (normally realtors), collecting monthly licensing fees for ongoing
support in all cases. A portion of this licensing fee is what is returned to
InfoPak as described above.
To further enhance market penetration in addition to expansion through
outside distributors, InfoPak is pursuing market growth through direct Company
sales and marketing whereby it will contract with Real Estate Boards and
Associations directly to establish sales and marketing activities at those
sites without the assistance of outside distributors. Initially, InfoPak's
direct Company marketing campaign is targeting small to medium size Real Estate
Boards and Associations which are interested in using the InfoPak system,
without the aid of outside distributors.
PRODUCTION
DVG controls or supervises all phases of the production of the
DV3D(TM) print product from the stereoscopic photography and proprietary image
compositing through the color separation and printing.
There are four basic phases of the manufacturing process, the multiple
image stereoscopic photography, the multiple image compositing of the DV3D(TM)
image to create a master transparency, the color separation of the master
transparency and the printing of the separated image on polymer based
lenticular material. Lenticular material is a plastic optical material that
allows the three-dimensional image to be viewed without the use of any viewing
apparatus such as glasses, hoods, etc. The process involves, in part,
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the taking and then compositing of numerous photographs of a subject in order
to create a single stereoscopic master image. The technology involves a
computer controlled camera mounted on a micro-positioning mechanism and imaging
system taking numerous photographs of a subject. The camera is mobile and
takes photographs from various positions and angles. The photos are then
composited in a clean room/photo laboratory to create a single stereoscopic
master transparency. The present stereoscopic photographic system used by the
Company can only produce an image of stationary objects. The DV3D(TM) image
is then sent to a commercial separator and printer where the master image, with
the use of the Company's proprietary methods and knowledge, is separated and,
through the lithographic process, printed on a polymer based lenticular
material which focuses the multi-dimensional images. The Company produces the
multi-image, stereoscopic photography and compositing of the DV3D(TM) image for
the master transparency at its facilities in Philadelphia, Pennsylvania.
Proprietary color separation and printing are done under the supervision of the
Company with third-party vendors.
The polymer based lenticular material on which the DV3D(TM) image is
printed is supplied by producers in the petrochemical and plastic fabricating
industries. The DV3D(TM) image is printed on the polymer based lenticular
material by commercial lithographic printing processes. In the printer's
pre-press preparation stage, state-of-the-art computerized photo-equipment is
necessary because production specifications for the DV3D(TM) image require
ultra-accurate tolerances. The Company has established working arrangements
with third-party separators and printers on a per order basis.
InfoPak's product is manufactured by a third party pursuant to a
Turnkey Agreement with Elamex, S.A. de C.V. The Turnkey Agreement provides for
the manufacture of the portable MLS InfoReader(TM) whereby creditworthy purchase
orders are placed directly through InfoPak with Elamex. Receivables are
assigned to a lockbox and upon receipt are distributed in accordance with the
costs of goods as agreed upon between InfoPak and Elamex.
PATENTS, TRADEMARKS AND PROPRIETARY PROTECTION
In November 1988 concurrent with the initial public offering of its
securities, the Company was assigned the rights to a patent, "Method and
Apparatus For Stereoscopic Photography." However, because applications were
not filed on a timely basis in other countries, except Canada, prior to the
patent being issued and before the Company's acquisition of the patent rights,
patent applications cannot be filed in any other country. The patent covers a
method and apparatus for taking three-dimensional pictures of an object in
which a plurality of cameras are used, or a single camera is operated
sequentially, on a side by side basis to take a plurality of separate pictures
of the same object. In September of 1990, the Company was issued an additional
patent, "Electronic
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(digitalized) Method and Apparatus For Stereoscopic Photography", which can be
used on the Company's photographic process.
In February 1993, certain officers of InfoPak sold and assigned
technology as set forth in a patent application "System and Method for Printing
Data and Program Code to a Card for Use by a Realtor" to InfoPak. In August
1993, certain officers of InfoPak sold and assigned certain technology as set
forth in a patent application "System and Method for Credit Card Verification
System" to InfoPak. InfoPak also has a patent application "Electronic
Telephone Directory with Interchangeable Listings". All patent applications
are pending before the Patent and Trademark Office. The Company enters into
confidentiality agreements with all persons and entities who or which may have
access to its technology. However, no assurance can be given that such
agreements, the patents or any additional patents which may be issued to the
Company will prevent third parties from developing similar or competitive
technology. There can be no assurance that the patents will provide the Company
with any significant competitive advantages, or that challenges will not be
instituted against the validity or enforceability of its patents, or if
instituted that any such challenges will not be successful. The cost of
litigation to uphold the validity and prevent infringement can be substantial.
In addition, no assurance can be given that the Company will have sufficient
resources to either institute or defend any action, suit or other proceeding by
or against the Company with respect to any claimed infringement of patent or
other proprietary rights. In the event that the Company should lose, in the
near future, the protection afforded by the patents and any future patents,
such event could have a material adverse effect on the Company's operations.
Furthermore, there can be no assurance that the Company's technologies will not
infringe patents or other rights owned by others, licenses to which may not be
available to the Company.
The Company has registered the DV3D(TM) mark with the Patent and
Trademark office.
COMPETITION
Other processes currently are available which allow a viewer to
perceive an image in three-dimension, including those which employ
stereoglasses and viewing hoods and other processes, such as holograms and
other three-dimensional image systems, which do not require the use of viewing
apparatus. The Company is aware of at least three companies which manufacture
equipment capable of producing traditional three-dimensional images for
commercial or consumer use, all of which have substantially greater financial
and other resources than the Company. Various systems exist for taking
traditional three-dimensional photographs, including a system providing for the
taking of two pictures from different angles using filters, requiring glasses
for viewing and the use of a plurality of cameras spaced side by side or in an
arc around the subject. Holographic
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and other stereoscopic techniques, when perfected, may result in
three-dimensional images which will be directly competitive with the Company's
products. Further, the Company's products are substantially more expensive
than conventional, high quality, two-dimensional prints and for this reason,
high quality, conventional processes and methods may be favored for many, if
not most, illustration and advertising contexts. Certain of the Company's
competitors, who may have substantially greater financial and organizational
resources than the Company have developed three-dimensional processes, such as
Optigraphics, Inc., which compete with the Company's products.
Management of InfoPak believe that no other product competes directly
with the InfoPak Portable MLS because of the single application function that
it provides its subscribers. However, many companies with far greater
resources than InfoPak offer palm-top and lap-top computers for use with
Multiple Listing Service Systems. No assurance can be given that such other
companies may not redesign their products specifically for the real estate
niche market that InfoPak sells its Portable MLS.
EMPLOYEES
The Company has fourteen employees. DVG employs six persons, three of
whom are executive officers. InfoPak employs eight persons, four of whom are
executive officers.
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CONSOLIDATED SELECTED FINANCIAL DATA
Set forth below is selected financial data derived from the Company's
consolidated financial statements, some of which appear elsewhere in this
report. This data should be read in conjunction with the consolidated
financial statements, some of which are included elsewhere in this report.
<TABLE>
<CAPTION>
=======================================================================================================================
Year Ended Year Ended Year Ended Year Ended Year Ended
June 30, 1995 June 30, 1994 June 30, 1993 June 30, 1992 June 30, 1991
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operation revenue $134,028 $ -0- $ -0- $ 166,385 $ -0-
- -----------------------------------------------------------------------------------------------------------------------
Net Loss ($1,192,332) ($1,069,642) ($1,327,258) ($4,033,997) ($3,911,359)
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Net loss per share of ($.07) ($.07) ($.10) ($.39) ($.44)
common stock
- -----------------------------------------------------------------------------------------------------------------------
Balance Sheet Data:
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Working capital
(deficit) ($138,013) ($85,149) ($305,014) ($297,463) ($704,527)
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Total assets $451,237 $449,725 $636,133 $2,870,149 $4,675,768
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Total Liabilities $2,502,230 $1,464,861 $692,027 $2,273,631 $2,521,633
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Stockholders' equity
(deficiency) ($2,050,993) ($1,015,136) ($55,894) $596,518 $2,154,135
=======================================================================================================================
</TABLE>
ITEM 2. DESCRIPTION OF PROPERTY
DVG leases approximately 5,485 rentable square feet, for its
administration and technical operations. The term of the lease is five years,
expiring on February 28, 1999. The annual fixed rent of $23,595 for the first
year, $58,963 in year two, $60,335 in year three, $61,706 in year four and
$63,077 in the fifth year.
DVG leases approximately 770 square feet of office space in Los Gatos,
California. DVG leases the space for the use by its Executive Vice President,
Director of Research and Product Development, and its Chairman of the Board of
Directors, who reside in California. The monthly rent is $1,042, subject to
normal adjustments, on a month to month basis.
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InfoPak leases approximately 1,800 square feet of office space in
Phoenix, Arizona. The monthly rent is $1,227 on a month to month basis.
ITEM 3. LEGAL PROCEEDINGS. None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None
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PART II
ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The principal market for the Company's Common Stock is the National
Association of Securities Dealers, Inc. over-the-counter market, on the
Electronic Bulletin Board. The trading symbol for the Common Stock is
"DVGL.U". The Company does not believe that any trading market exists for its
Series "B" Redeemable Common Stock Purchase Warrants.
On August 25, 1992, the Company's securities were delisted from the
NASDAQ trading system. Since that time the Company's Common Stock has been
listed on the Electronic Bulletin Board.
Public trading in the Company's Common Stock commenced in November
1988. Set forth below are the high and low bid prices for the Company's Common
Stock by the Company's fiscal quarters beginning July 1, 1994, as quoted by the
National Quotation Bureau. The prices represent prices between dealers, do not
include retail mark-ups, mark-downs or commissions and may not represent actual
transactions.
<TABLE>
<CAPTION>
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Fiscal 1994 High Low
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<S> <C> <C>
First Quarter $.44 $.09
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Second Quarter $.81 $.16
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Third Quarter $.41 $.16
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Fourth Quarter $.28 $.13
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Fiscal 1995
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First Quarter $.41 $.19
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Second Quarter $.47 $.22
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Third Quarter $.44 $.19
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Fourth Quarter $.75 $.19
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Fiscal 1996
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First Quarter $2.76 $.75
(through
September 18,
1995)
==================================================
</TABLE>
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HOLDERS
As of September 18, 1995, the number of stockholders of record was
369, not including beneficial owners whose shares are held by banks, brokers
and other nominees. The Company estimates that it has approximately 1,500
stockholders in total.
DIVIDENDS
The company has paid no dividends since its inception and does not
anticipate or contemplate paying cash dividends in the foreseeable future.
Pursuant to the terms of the Company's Series A Convertible Preferred
Stock, a 5% annual dividend is due and owing. The dividend is currently being
accrued. As of June 30, 1995, the unpaid cumulative dividends totaled
approximately $151,750. See Note 6 of Notes to Consolidated Financial
Statements.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FISCAL YEARS 1993 AND 1994
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1994, the Company had a working capital deficiency of
$85,149, compared with a working capital deficiency of $305,014 in 1993.
During the period ended June 30, 1994, the Company raised approximately
$880,000 through the sales of its promissory notes in a private placement.
RESULTS OF OPERATIONS
During the fiscal year ended June 30, 1994, the Company remained a
development stage company. The net loss for the period was $1,069,642,
compared with a net loss of $1,327,258 for the fiscal year ended June 30, 1993.
The decrease in the net loss reflects management's continued efforts to control
costs. During the fiscal year ended June 30, 1994, the Company paid consulting
fees and expenses of approximately $190,000 which included fees and expenses
paid to the Company's Chief Executive Officer and the Company's Director of
Sales and Marketing which were not related to research and development. The
Company paid consulting fees of approximately $59,000 relating to research and
development. Salaries totaled approximately $170,000 during the period. Other
expenses during the period included plastic and materials and printing expenses
of approximately $51,000, travel and related expenses of approximately $40,000
and approximately $99,000 for office rent and utilities expenses. Interest
expense for the period was approximately $73,000 which was accrued.
During the period, the Company continued to refine its technologies
which included seeking printers and separators capable of translating the
DV3D(TM) image into a high resolution lithographically printed product. The
Company spent approximately six months with one printer before deciding that it
was not capable of producing the desired results. In January of 1994, the
Company began working with a printer that has produced what the Company
believes is an acceptable product. The Company has also established
relationships with two separators.
In September 1993, the Company engaged the services of a full-time
Director of Sales and Marketing to design and implement a plan for bringing the
Company's DV3D(TM) product to the marketplace. The Company also retained the
services of independent marketing agents to market its DV3D(TM) product
throughout the country. Problems encountered with the Company's then current
printer resulted in the curtailing of marketing
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activities until the third quarter of fiscal 1994, although the Company
continued to make contact with potential customers through referrals, direct
mail and telephone.
FISCAL YEARS 1994 AND 1995
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1995, the Company had a working capital deficiency of
$138,013, compared with a working capital deficiency of $85,149 in 1994. During
the period ended June 30, 1995, the Company raised $757,000 through the sale of
its promissory notes in private placements and received approximately $39,000
through the exercise of warrants. The Company's selling and marketing efforts
had been limited until adequate funding was obtained. During the period the
Company was taking selected orders based upon availability of inventory used in
the production process.
On April 25, 1995, substantially all of the long term note holders
(see Note 5 of Notes to Consolidated Financial Statements) agreed to defer all
interest payments on the notes until the notes mature beginning in fiscal 1997,
or upon the consummation of long term financing and/or strategic partner
relationship, to convert the notes and accrued interest into 8% Series B
Convertible Preferred stock through the exercise of the Series B Redeemable
Warrants. As of September 18, 1995, there was approximately $1,942,000
principle amount of long-term notes issued. Management believes that the
InfoPak acquisition and the raising of $750,000 through the sale of Common
Stock meets the conditions by which conversion of the long-term notes will
occur. However, no assurance can be given as to how many of the long-term
notes will be converted into Series B Redeemable Warrants.
RESULTS OF OPERATION
During the fiscal year ended June 30, 1995, the Company began limited
production. The net loss for the period was $1,192,332 compared with a net
loss of $1,069,642 for the fiscal year ended June 30, 1994. For the period the
Company paid consulting fees and expenses of approximately $235,000 which were
not related to research and development, and consulting fees of approximately
$137,720 relating to research and development. Salaries totaled approximately
$243,000 during the period. Other expenses during the period included outside
production costs consisting of plastic, printing and separating of
approximately $117,000, travel and related expenses of approximately $62,000
and approximately $72,000 for office rent and utilities expenses. Professional
fees for the period were approximately $46,000. Interest expense for the
period totalled approximately $208,700 which includes $141,200 of accrued
interest and $67,500 of additional interest relating to the issuance of
warrants.
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Revenues for the period were approximately $135,000. Operational
funding needed to fully commence operations, i.e., purchase additional
inventory and equipment, offer a variety of DV3D(TM) products, hire additional
personnel and maintain good working relationships with third party vendors was
not obtained until after the period.
The Company's independent auditors report contains an explainatory
paragraph regarding the ability of the Company to continue as a going concern.
EVENTS SUBSEQUENT TO JUNE 30, 1995
The Company has been funding its operations by selling its securities
in private placements, short-term borrowing, equipment sales, and accruing
compensation to certain employees and consultants.
Subsequent to June 30, 1995, the Company raised a total of $855,000
through the sale of its promissory notes ($105,000) and Common Stock
($750,000). The additional funds have allowed DVG to commence full operations.
In September 1995, the Company acquired all of the outstanding capital
stock of InfoPak for 500,000 shares of its Series P Convertible Preferred
Stock, each share of which is convertible into 10 shares of the Company's
Common Stock. For the fiscal year ended December 31, 1994, InfoPak had revenue
from sales of $2,199,089, a net loss of $191,617 and a deficit at the end of
the year of $327,487.
The Company believes it has sufficient funds to maintain its DVG
operations for the balance of the current fiscal year whether or not it
generates sales. InfoPak is currently in discussions with a major distributor
regarding renegotiation of a distribution agreement. It is possible that
InfoPak and the distributor may not reach an agreement. InfoPak has developed
an alternative marketing program, which may have the effect of slower sales
until the marketing program is developed and fully operational. The Company
can give no assurances that it will not need additional funds for InfoPak's
operations. The Company intends to seek additional funding to expand both DVG
and InfoPak's business to include new products and increased research
development activity. No assurance can be given that the Company will be able
to obtain funds sufficient to meeting its capital needs. The Company's outside
auditors have qualified their report as to the ability of the Company to
continue as a going concern.
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ITEM 7. FINANCIAL STATEMENTS
The consolidated financial statements required to be filed pursuant to
this Item 7 begins on page F-1 of this report. Such consolidated financial
statements are hereby incorporated by reference into this Item 7.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE. Non applicable.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
George S. Smith * 60 Director, Chairman of the Board of Directors
Steven M. Peck 38 Chief Executive Officer, President, Chief Financial Officer of DVG and Director
Sean F. Lee 55 Chief Executive Officer of InfoPak, Inc. and Director
John L. Miller 36 Executive Vice-President and Director of Research and Product Development of DVG
Robert L. Morris,Jr. 44 Executive Vice-President and Director of Sales and Marketing of DVG
James W. Porter, Jr. * 45 Director
William A. Knegendorf * 50 Director
</TABLE>
- ---------------------
* Members of the Audit Committee
Mr. Smith was appointed Chairman of the Board in April 1992. From
April 1992 until September 12, 1995, Mr. Smith served as the Chief Executive
Officer of DVG. From 1980 to 1988, Mr. Smith was a Senior Vice-President at
Drexel Burnham Lambert. From 1988 to 1990 he was a Senior Vice President at
Shearson Leahman Brothers. From September 1990 until April 1992, Mr. Smith was
on sabbatical for corrective back surgery. Mr. Smith is a honors graduate in
economics with a minor in engineering from San Jose State University.
Mr. Peck was appointed to his position on September 12, 1995. Prior
to his joining the Company, Mr. Peck had been a private investor since March,
1995. From 1986 to March, 1995, Mr. Peck was with the Bachman Company, a snack
food manufacturer, as their Director of Marketing. From 1982-1986, Mr. Peck
was Director of Marketing at Fleer
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Corporation, a manufacturer of confectionery, sport/entertainment trading cards
and other licensed products. Mr. Peck graduated from the University of North
Carolina with a Bachelor of Arts Degree.
Mr. Lee was appointed a Director in September 1995. Mr. Lee has
served as InfoPak's Chief Executive Officer since January 1992. I April 1994,
Mr. Lee co-founded and became Chairman of the Board of Directors of Auto X-ray,
Inc., a privately held company (diagnostic system for American automobiles).
From September 1988 until December 1991, Mr. Lee served as a Director, Chief
Executive officer and President of Builder's Express, a publicly held company
based in San Antonio, Texas which filed for bankruptcy under Chapter 7 of the
U.S. Bankruptcy Code in 1991.
Mr. Miller has held his position with the Company since November 1992.
Since April 1988, Mr. Miller has been a partner in Perceptual Images, a
partnership formed to do research and development in three-dimensional video
imaging and display. After joining the Company, Mr. Miller did not sever his
ties to the partnership and continues his research on a part-time basis. Mr.
Miller currently devotes eighty percent of his professional time to the affairs
of the Company and twenty percent to the partnership. Miller holds a B.S. in
Mechanical Engineering from Rose Hulman Institute of Technology.
Mr. Morris was appointed Executive Vice President and Director of
Sales and Marketing in September of 1993. Mr. Morris has over 20 years
management experience in sales and marketing with both Fortune 500 and start-up
companies. From 1987 to joining the Company, Mr. Morris served as Vice
President, Sales and Marketing for Paro, Inc., San Jose, CA., a marketing,
sales and capital company that provides strategic business and financial
resources to small mezzanine level companies. Mr. Morris graduated from
Arizona State University with a Bachelor of Science Degree.
Mr. Porter was appointed to the Board of Directors in August 1995.
Mr. Porter is the President and the principle shareholder of Avonwood Capital
Corporation, a management and investment consulting firm which Mr. Porter
co-founded in August 1994. From April 1990 to August 1994, Mr. Porter was the
Chief Executive Officer of OESI Power Corporation, a geothermal energy firm.
Mr. Porter was appointed to the Board of Directors on August 18, 1995 at such
time Mr. Porter was required to file a Form 3 within 10 days of his
appointment. The Form 3 was not filed within the 10 day period but was filed
shortly thereafter.
Mr. Knegendorf was appointed to the Board of Directors in September
1995. Since November 1994, Mr. Knegendorf has served as a Managing Director
and Chief Financial Officer of Avonwood Capital Corporation. From November
1992 to November 1994, Mr. Knegendorf was the owner and a financial advisor in
Key Valve Systems, a business consulting firm. From 1988 to November 1992, Mr.
Knegendorf was the Chief Financial Officer of Clark Capital Management, a
registered investment adviser.
18
<PAGE> 19
Directors serve until the next annual meeting or until their
successors are qualified and elected. Officers serve at the discretion of the
Board of Directors.
The Delaware General Corporation Law permits a corporation through its
Certificate of Incorporation to eliminate or limit its directors' personal
liability to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, with certain exceptions. The exceptions
include a breach of the director's duty of loyalty, acts or omissions not in
good faith or which involve intentional misconduct or knowing violation of law,
improper declarations of dividend, and transactions from which the directors
derived an improper personal benefit. The Company's Certificate of
Incorporation limits its directors' liability to the extent permitted by this
statutory provision. The limitation of liability provision does not eliminate a
stockholder's right to seek non-monetary, equitable remedies such as injunction
or rescission to redress an action taken by directors. However, as a practical
matter, equitable remedies may not be available in all situations and there may
be instances in which no effective remedy is available.
19
<PAGE> 20
EXECUTIVE COMPENSATION
ITEM 10
Summary Compensation Table
The following table sets forth the total compensation earned by or
paid to the named executive officer by the Company for the fiscal year ended
June 30, 1995.
<TABLE>
<CAPTION>
==========================================================================================================================
LONG TERM COMPENSATION
-------- -------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
==============================================================================================================
OTHER RESTRICTED SECURITIES ALL
ANNUAL STOCK UNDERLYING LTIP OTHER
YEAR SALARY ($) BONUS ($) COMPENSATION AWARDS ($) OPTIONS/SARs PAYOUTS COMPEN
($) (#) ($) SATION
($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George S. Smith 1995 $60,000 $5,000 $47,138(2) $0 -0- $0 $0
(Former Chief
Executive
Officer)(1)
===================================================================================================================================
</TABLE>
(1) Mr. George S. Smith resigned as Chief Executive Officer in September
1995.
(2) Represents $31,099 of travel expenses and $16,039 of living expenses
and other travel related expenses.
20
<PAGE> 21
<TABLE>
<CAPTION>
====================================================================================================================================
OPTIONS/SAR GRANTS IN THE FISCAL YEAR 1995
- ------------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARs EXERCISE
UNDERLYING GRANTED TO OR
OPTION/SARs EMPLOYEES IN BASE PRICE EXPIRATION
NAME YEAR GRANTED(#) FISCAL YEAR ($/Share) DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
George S. Smith,
(Former Chief Executive Officer)(1) 1995 -0- -0- -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
</TABLE>
(1) Mr. Smith resigned as Chief Executive Officer in September 1995.
21
<PAGE> 22
<TABLE>
<CAPTION>
==================================================================================================================================
AGGREGATED OPTIONS/SAR EXERCISES IN THE FISCAL YEAR 1995 AND FY- END OPTION/SAR VALUES
==================================================================================================================================
Number of Securities Value of
Shares Underlying Unexercised Unexercised
Acquired Options/SARs at In-the-Money Options/SARs
on FY-End (#) at FY-End($)
Name Year Exercise(#) Value Realized Exercisable/Unexercisable(1) Exercisable/Unexercisable(1)
=================================================================================================================================
<S> <C> <C> <C> <C> <C>
George S. Smith 1995 $0 $0 2,669,840(E)/O(U) $693,135
(Former Chief Executive
Officer)(1)
=================================================================================================================================
</TABLE>
(1) Mr. Smith resigned as Chief Executive Officer in September 1995.
22
<PAGE> 23
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning stock
ownership of all persons known by the Company to own beneficially 5% or more of
the outstanding shares of the Company's Common Stock, each director, and all
executive officers and directors of the Company as a group, as of September 18,
1995, and their percentage ownership of Common Stock and their percentage
voting power.
<TABLE>
<CAPTION>
=========================================================================================
Name and Address Amount and Nature Percent
of Beneficial Owners of Beneficial Ownership
-------------------- Ownership (1) ---------
---------
-----------------------------------------------------------------------------------------
<S> <C> <C>
George S. Smith (2) 6,319,840 26.6%
3130 Alexis Drive
Palo Alto, California 94304
-----------------------------------------------------------------------------------------
Avonwood Capital Corporation(3) 2,200,800 11.2%
3 Radnor Corporation Center
Suite 400
Radnor, Pennsylvania 19087
-----------------------------------------------------------------------------------------
Steven M. Peck (4) 1,000,000 5.4%
-----------------------------------------------------------------------------------------
Sean F. Lee (5) 1,561,430 8.2%
-----------------------------------------------------------------------------------------
John L. Miller (6) 1,450,000 7.7%
-----------------------------------------------------------------------------------------
Robert Morris (7) 250,000 1.4%
-----------------------------------------------------------------------------------------
James W. Porter, Jr. (8)
-----------------------------------------------------------------------------------------
William A. Knegendorf (8)
-----------------------------------------------------------------------------------------
All officers and directors as a 4,661,510 21.1%
group (7 persons)(9)
=========================================================================================
</TABLE>
(1) Except as otherwise indicated, all of the shares are owned
beneficially and of record. Beneficial ownership has been determined
in accordance with Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended.
(2) Mr. Smith directly owns 50,000 shares of the Company's Common Stock.
Mr. Smith also owns 21,000 shares of the Company's Series S
Convertible Participating Preferred Stock which is convertible into
2,100,000 shares of the Company's Common Stock. Also included in the
amount are warrants to purchase 2,669,840 shares of the Company's
Common Stock and warrants to purchase 15,000 shares of the Company's
Series "B" Convertible Preferred Stock which is the equivalent of
1,500,000 shares of the Company's Common Stock.
(3) Represents warrants to purchase 1,725,000 shares of the Company's
Common Stock, 3,000 Series S Convertible Preferred Stock convertible
into 300,000 shares
23
<PAGE> 24
of Common Stock and 15,080 Series P Convertible Preferred Stock
convertible into 150,800 shares of Common Stock.
(4) Represents warrants to purchase 1,000,000 shares of the Company's
Common Stock.
(5) Represents 156,143 shares of Series P Convertible Preferred Stock
convertible into 1,561,430 shares of the Company's Common Stock. Of
this amount, 143,197 shares of Series P Stock is owned by the Lee
Family Partnership of which Mr. Lee is the general partners.
(6) Includes warrants to purchase 1,100,000 shares of the Company's Common
Stock. Also includes 3,000 shares of the company's Series S
Convertible, Preferred Stock convertible into 300,000 shares of the
Company's Common Stock.
(7) Includes warrants to purchase 100,000 shares of the Company's Common
Stock. Also includes 1,500 shares of Series S Convertible Preferred
Stock convertible into 150,000 shares of the Company's Common Stock.
(8) Owned directly by Avonwood Capital Corporation of which Mr. Porter is
the President, the principal shareholder and sole voting shareholder
and of which Mr. Knegendorf is a Managing Director, and a shareholder.
Includes 3,000 shares of the Company's Series S Convertible Preferred
Stock convertible into 300,000 shares of the Company's Common Stock.
Includes 15,080 shares of the Company's Series P Convertible Preferred
Stock convertible in 150,800 shares of the Company's Common Stock.
Also includes warrants to purchase 1,750,000 shares of the Company's
Common Stock.
(9) Includes 4,561,510 shares of Preferred Stock which have voting rights.
Does not include warrants to purchase in the aggregate 7,919,840
shares of the Company's Common Stock.
STOCK OPTION PLAN
The Company has adopted a stock option plan (the "Plan") covering
500,000 shares of the Company's Common Stock, $.001 par value, pursuant to
which officers, directors, key employees and consultants of the Company are
eligible to receive incentive as well as non-qualified stock options and Stock
Appreciation Rights ("SAR'S"). The Plan, which expires in September 1998, is
administered by the Board of Directors. Incentive stock options granted under
the Plan are exercisable for a period of up to 10 years from the date of grant
and at an exercise price which is not less than the fair market value of the
Common Stock on the date of the grant, except that the term of an incentive
stock option granted under the Plan to a stockholder owning more than 10% of
the outstanding Common Stock may not exceed five years and the exercise price
of an incentive stock option granted to such a stockholder may not be less than
110% of the fair market value of the Common Stock on the date of the grant.
Non-qualified stock options may be granted on terms determined by the Board of
Directors. SAR's which give the holder the privilege of surrendering such
rights for the appreciation in the
24
<PAGE> 25
Company's Common Stock between the time of grant and the surrender, may be
granted on any terms determined by the Board of Directors. No SAR's have been
granted.
To date, 20,000, options are currently in effect. The exercise price
of the options granted under the Plan to date is $.48 per share.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July of 1993 Mr. George Smith was granted warrants to purchase
1,000,000 shares of the Company's Common Stock for a five year period at an
exercise price of $.15 per share. Also in July 1993 600,000 warrants to
purchase the Company's Common Stock for five years at $.15 per share were
issued to Mr. Smith and 687,495 warrants were canceled by the Company at prices
ranging between $.4375 and $1.00 per share. Mr. Smith is an employee of the
Company. Mr. Smith's annual compensation is $96,000.
Mr. John L. Miller, the Company's Executive Vice-President, and
Director of Research and Product Development has an agreement with the Company
whereby he has been granted 3,000,000 warrants to purchase the Company's common
stock at varying prices upon the completion of certain technical and production
benchmarks. Mr. Miller has been issued 1,000,000 warrants under the terms of
the agreement. These warrants are exercisable at $.25 per share for a five
year period. The remaining 2,000,000 warrants being held in escrow have an
exercise price of $.15 per share for a five year period of time. Mr. Miller
was also issued 100,000 warrants in July of 1993 at $.15 per share exercisable
over a five year period. Additionally Mr. Miller owns 350,000 shares of the
Company's common stock, of which 300,000 shares were granted in January of 1994
in lieu of $30,000 accrued compensation, and 50,000 shares valued at $.10 per
share were granted in January of 1995 as an executive bonus. In August 1995,
Mr. Miller converted 300,000 shares of Common Stock into the Company's Series S
Participating Convertible Preferred Stock.
Mr. Robert L. Morris, the Company's Executive Vice-President, and
Director of Sales and Marketing has an agreement with the Company whereby he
has been granted 1,000,000 warrants, being held in escrow, to purchase the
Company's common stock at $.20 per share, exercisable over a five year period
upon the completion of certain sales and marketing benchmarks. Mr. Morris was
also issued 100,000 warrants in July of 1993 at $.15 per share, exercisable
over a five year period. Additionally Mr. Morris owns 150,000 shares of the
Company's Common Stock of which 100,000 shares were granted by the Company in
January of 1994 and 50,000 shares were granted by the Company in January of
1995 as an executive bonus. The shares are valued at $.10. In August 1995, Mr.
Morris converted his Common Stock into the Company's Series S Participating
Convertible Preferred Stock.
Mr. Morris has a five-year employment agreement with DVG which expires
in May 1999. Under the terms of the Agreement, Mr. Morris' annual
compensation is $72,000.
In May 1995, Avonwood Capital Corporation ("Avonwood") entered into a
Letter of Intent and a Management and Consulting Agreement (collectively the
"Agreement") the Agreements require Avonwood to assist the Company with
financial restructuring,
25
<PAGE> 26
corporate finance negotiations, strategic alliance development, corporate
consulting and advisory and arranging of capital as required. For their
management and consulting services, the Agreement is renewable annually by
mutual agreement except in the event that $1,000,000 of capital is raised then
there is an automatic 12 month renewable period, Avonwood receives a fee of
$100,000 per year accruing quarterly in arrears and payable when the Company
has a pre-tax operating profit for any such quarter, provided that the amount
to be paid does not exceed the pre-tax operating profit. In September, 1995
the Agreement was extended for an additional year. Also in September the
Company agreed to pay Avonwood $25,000 toward their consulting fee. As
additional compensation for each dollar of capital raised, Avonwood will
receive warrants to purchase common stock to a maximum of 1,600,000 of which
1,000,000 warrants have been issued and 250,000 exercised. The warrants are
for a five year term. The exercise price is $.15 per share. Avonwood will
also be entitled to a maximum of 5% of any capital raised.
Pursuant to the terms of the Agreement, Avonwood loaned the Company
$50,000 and was issued a 9% unsecured promissory note due in November 1998. In
connection with the loan, the Company issued warrants to purchase 500,000
shares of Common Stock at $.10 per share exercisable within three and one-half
years from issuance and warrants to purchase 50,000 shares of Common Stock at
$.01 per share which have been exercised. In September 1995, the Company
repaid the loan.
The Agreement provides that at Avonwood's expense, the Company would
register 300,000 shares of Common Stock upon the exercise of any of the
warrants. In May 1995, Avonwood exercised warrants to purchase 300,000 shares
of Common Stock for $38,000. In August 1995, Avonwood converted these shares
of Common Stock into the Company's Series S Convertible Preferred Stock.
Avonwood also has a consulting agreement with InfoPak under the terms
of the agreement Avonwood is paid $2,500 per month and is paid a success fee
for sales and marketing performances. The term of the agreement is year to
year.
Mr. Sean F. Lee has an employment agreement with InfoPak. The term of
the agreement is three years ending in September 1998. Mr. Lee's base
compensation is $100,000 per year. Mr. Lee is also entitled to participate in
InfoPak's Bonus Plan. The Bonus Plan is set at 10% of InfoPak's pre-tax
profits. Fifty percent of the Bonus Plan is set aside for target management
compensation. Mr. Lee's target compensation is $300,000 per year and his
percentage of the 50% is .62. The other 50% of the Bonus Plan is set aside for
all InfoPak employee,including management, based upon decision of InfoPak's
Board of Directors. Mr. Lee also received 7,000 shares of the Company's Series
P Convertible Preferred Stock as a signing bonus. Pursuant to the Agreement
Mr. Lee was appointed to the Company's Board of Directors and the Company is
required to nominate Mr. Lee to continue to serve on the Board of Directors
during the term of the Agreement. Each share of the Series P Convertible
Preferred Stock is convertible into 10 shares of the Company's Common Stock.
In September 1995, Mr. Lee and his spouse as a creditor of InfoPak
cancelled a promissory note in the amount of $170,039 in exchange for 17,004
shares of the Company's Series P Convertible Preferred Stock.
26
<PAGE> 27
Mr. Lee is a party to an Asset Purchase Agreement dated September 6,
1995, between InfoPak, Mr. Lee and two other executive officers of InfoPak.
Pursuant to an terms of the Agreement Mr. Lee and the other InfoPak executives
sold certain digital sound device technology to InfoPak in return for a royalty
of 3% (1% to each seller) of the net revenue per quarter from any sales at the
device. Net revenue is defined in the Agreement to be gross revenues from the
sale or license of the technology less returns. The term of the Agreements is
the earlier of seventeen years or for the term of any patent that may be issued
on the technology.
Mr. Steven M. Peck was issued warrants to purchase 1,000,000 shares of
the Company's Common Stock in September 1995 as a condition of his employment.
The term of the warrants is five years. The exercise price is $.25 per
warrant. Mr. Peck's annual compensation is $96,000. The Company and Mr. Peck
are currently negotiating an employment agreement. However, no assurance can
be given that a definitive agreement will be reached.
ITEM 13. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
A. The following documents are filed as part of this report:
1. The consolidated financial statements filed as part
of this report are listed under the caption "Index to
Financial Statements and Schedules", appearing
elsewhere in this report.
2. The consolidated financial schedules of the Company
are filed as part of this report:
Schedule V - Property and Equipment
Schedule VI - Accumulated Depreciation and
Amortization of Property and Equipment
3. The following Exhibits are filed herein:
Exhibit
Number Description
3.1* Certificate of Incorporation and By
Laws
3.2** Form of Certificate of Designation -
Series A Convertible Preferred Stock
3.4** Certificate of Designation - Series B
Convertible Preferred Stock
3.4a*** Form of Certificate of Designation -
Series P Convertible Preferred Stock
27
<PAGE> 28
3.4b Form of Certificate of Designation -
Series S Participating Convertible
Preferred Stock
4.1* Warrant Agreement (including form of
warrant)
10.1** Agreement of lease between 718 Arch
Street Associates, Ltd. and
Dimensional Visions Group, Ltd.
Dated March 1, 1994
10.2** Lease between Alden Johnson and
Carolyn Johnson and registrant made
as of June 1, 1994
10.3*** Agreement and Plan of Merger By and
Among InfoPak, Inc. Certain
Shareholders of InfoPak, Inc.
InfoPak Acquisition Co. and
registrant dated September 6, 1995.
21.0 Subsidiaries of the registrant
27.0 Financial Data Schedule
B. Reports on Form 8-K
filed:
September 27, 1995
To report an event under Item 2 regarding the registrants'
acquisition of all of the issued and outstanding capital stock
of InfoPak, Inc.
- --------------------------
* Incorporated by reference from the registrants registration statement
on Form S-1 (No. 33-24554)
** Incorporated by reference from the registrants' Annual Report on Form
10-KSB for the fiscal years ended June 30, 1992, 1993 and 1994.
*** Incorporated by reference from registrants' Current Report on Form 8-K
dated September 27, 1995.
28
<PAGE> 29
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
duly authorized.
DIMENSIONAL VISIONS GROUP, LTD.
DATED: September 26, 1995 BY: /s/ George S. Smith
-------------------------------------
George S. Smith,
Chief Executive Officer
(for the Period ending September 12, 1995)
BY: /s/ Steven M. Peck
------------------------------------
Steven M. Peck,
Chief Executive Officer
(from September 13, 1995)
In accordance with Section 13 or 15(d) of the Exchange Act, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ George S. Smith Chief Executive Officer (Principle September 26, 1995
- ----------------------- Executive Officer and Principal
George S. Smith Financial Officer for the period
ending September 12, 1995) and Director
/s/ Steven M. Peck Chief Executive Officer, Chief September 26, 1995
- ----------------------- Financial Officer (Principle Executive
Steven M. Peck Officer, Principle Financial Officer
and Principle Accounting Officer)
and Director from September 13, 1995
/s/ Sean F. Lee Director September 26, 1995
- ------------------------
Sean F. Lee
/s/ James W. Porter, Jr. Director September 26, 1995
- ------------------------
James W. Porter, Jr.
/s/ William A. Knegendorf Director September 26, 1995
- -------------------------
William A. Knegendorf
</TABLE>
29
<PAGE> 30
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
YEARS ENDED JUNE 30, 1995 AND 1994
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditor's Report F-2
Consolidated Financial Statements
Balance Sheet F-4
Statements of Operations F-5
Statements of Stockholders' Equity F-6
Statements of Cash Flows F-10
Notes to Consolidated Financial Statements F-11
Schedules
Independent Auditor's Report F-19
Schedule V - Property and Equipment F-20
Schedule VI - Accumulated Depreciation and Amortization
of Property and Equipment F-21
</TABLE>
F-1
<PAGE> 31
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Dimensional Visions Group, Ltd.
Philadelphia, Pennsylvania
We have audited the accompanying consolidated balance sheet of Dimensional
Visions Group, Ltd. and its subsidiaries (the "Company") as of June 30, 1995,
and the related consolidated statements of operations, stockholders'
deficiency, and cash flows for each of the two years in the period ended June
30, 1995. 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 consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Dimensional Visions Group, Ltd.
and its subsidiaries at June 30, 1995 and the results of their operations and
their cash flows for each of the two years in the period ended June 30, 1995 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 described in Note 1 to
the consolidated financial statements, the Company has suffered recurring
losses from operations and has a deficiency in working capital, which raises
substantial doubt about the Company's ability to continue as a going
F-2
<PAGE> 32
concern. The Company has been funding its operations by selling its securities
in private placements, loans, sale of surplus equipment and by certain
employees and consultants deferring their compensation. The future of the
Company as an operating business will depend on (1) its ability to successfully
market its products, (2) obtain sufficient capital contributions or financing
as may be required to sustain it's current operations and fulfill its sales and
marketing activities, (3) achieving a level of sales adequate to support the
Company's cost structure, and (4) to ultimately achieve a level of
profitability. Management's plan concerning 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/ GITOMER & BERENHOLZ, P.C.
----------------------------
Gitomer & Berenholz, P.C.
Jenkintown, Pennsylvania
September 18, 1995
F-3
<PAGE> 33
DIMENSIONAL VISIONS GROUP, LTD.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets
Cash and cash equivalents $227,972
Accounts receivable, trade 18,690
Inventory 26,453
Prepaid supplies and expenses 43,361
------
Total Current Assets 316,476
-------
Equipment and Leasehold Improvements
Equipment 1,628,028
Furniture and fixtures 134,938
Leasehold Improvements 109,446
-------
1,872,412
Less Accumulated Depreciation and Amortization 1,791,049
---------
81,363
------
Other Assets
Patent rights and other assets 53,398
------
Total Assets $451,237
========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Note Payable $50,000
Accounts payable, accrued expenses and other liabilities 404,489
-------
Total Current Liabilities 454,489
-------
Long-Term Debt
Secured notes 1,837,000
Accrued interest payable 210,741
-------
2,047,741
---------
Commitments and contingencies -
Stockholders' Deficiency
Preferred stock - $.001 par value, authorized 2,000,000
shares; Series A convertible preferred stock - $10 par value
authorized - 100,000 shares; issued and outstanding -
77,250 shares at June 30, 1995 772,500
Series B convertible preferred stock - $10 par value,
authorized - 200,000 shares; issued - 0 -
Common Stock - $.001 par value, authorized - 20,000,000
shares; Issued and outstanding - 16,936,098 shares at
June 30, 1995 16,936
Additional paid-in capital 11,881,927
Deficit (14,722,356)
------------
Total stockholders' deficiency (2,050,993)
-----------
Total Liabilities and Stockholders Equity $451,237
========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE> 34
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Operating revenue $ 134,028 $ -
------- -------
Operating expense
Cost of Sales 241,240 -
Research and development costs 299,267 561,076
Marketing expenses 120,359 103,758
General and administrative expenses 460,680 436,712
--------- ---------
Total operating expenses 1,121,546 1,101,546
--------- ---------
Loss before other income (expenses) (987,518) (1,101,546)
and extraordinary item --------- -----------
Other income (expenses)
Interest expense (208,717) (73,498)
Interest income 1,318 3,317
Gain on sale of equipment 2,585 3,054
--------- -------
(204,814) (67,127)
--------- --------
Loss before extraordinary item (1,192,322) (1,168,673)
Extraordinary Item
Gain on reversal of liabilities relating to
unsecured creditors under dismissed Chapter 11
proceedings of DVG Plastics, Inc. - 99,031
---------- ---------
Net loss ($1,192,332) ($1,069,642)
========== ==========
Loss per share of common stock
Loss before extraordinary item $ .07 $ .07
============ ==========
Net loss $ .07 $ .07
============ ==========
Weighted average shares of common stock outstanding 16,476,769 15,872,879
========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-5
<PAGE> 35
DIMENSIONAL VISIONS GROUP, LTD.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------- ------------
($10 Series A ($.001 Par Value)
------------- -----------------
Convertible)
------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Balance, July 1, 1993 77,250 $772,500 15,461,098 $15,461
Issuance of 2,925,000 warrants to
outside directors, company executive
officers and employees to purchase
2,925,000 shares of the Company's
common stock @ $.15 per share,
exercisable over a five year period
commencing July 1993 - - - -
Issuance of 3,900,000 warrants to
company executive officers and an
employee to purchase 3,900,000 shares
of the Company's common stock @ $.15
per share, such warrants to be held in
escrow, and when released to be
exercisable over a five year period
commencing December 1992 - - - -
Issuance of 1,070,000 warrants to
outside consultants to purchase
1,070,000 shares of the Company's
common stock @ $.15 per share,
exercisable over a five year period
commencing July 1993 - - - -
Retirement of 1,712,495 warrants
issued to outside directors, a company
executive officer, a company employee
and an outside consultant to purchase
1,712,495 shares of the Company's
common stock at exercise prices
ranging from $.4375 to $3.94 per share - - - -
</TABLE>
<TABLE>
<CAPTION>
Additional
Paid-In
Capital Deficit Total
------------- --------------- -----
<S> <C> <C> <C>
Balance, July 1, 1993 $11,616,527 ($12,460,382) ($55,894)
Issuance of 2,925,000 warrants to
outside directors, company executive
officers and employees to purchase
2,925,000 shares of the Company's
common stock @ $.15 per share,
exercisable over a five year period
commencing July 1993 - - -
Issuance of 3,900,000 warrants to
company executive officers and an
employee to purchase 3,900,000 shares
of the Company's common stock @ $.15
per share, such warrants to be held in
escrow, and when released to be
exercisable over a five year period
commencing December 1992 - - -
Issuance of 1,070,000 warrants to
outside consultants to purchase
1,070,000 shares of the Company's
common stock @ $.15 per share,
exercisable over a five year period
commencing July 1993 15,400 - 15,400
Retirement of 1,712,495 warrants
issued to outside directors, a company
executive officer, a company employee
and an outside consultant to purchase
1,712,495 shares of the Company's
common stock at exercise prices
ranging from $.4375 to $3.94 per share - - -
</TABLE>
F-6
<PAGE> 36
DIMENSIONAL VISIONS GROUP, LTD.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (continued)
YEARS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------- ------------
($10 Series A ($.001 Par Value)
------------- -----------------
Convertible)
------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Issuance of 900,000 shares of the
Company's common stock in settlement
of amounts due officers, employees and
consultants for accrued payroll and
fees - - 900,000 900
Issuance of 300,000 warrants to a
company executive officer and an
outside consultant to purchase
300,000 shares of the Company's common
stock @ $.20 per share exercisable
over a five year period commencing
April 1994 - - - -
Net loss - - - -
------ -------- ----------- -------
Balance, June 30, 1994 77,250 $772,500 16,361,098 $16,361
====== ======== =========== =======
</TABLE>
<TABLE>
<CAPTION>
Additional
Paid-In
Capital Deficit Total
------------- --------------- -----
<S> <C> <C> <C>
Issuance of 900,000 shares of the
Company's common stock in settlement
of amounts due officers, employees and
consultants for accrued payroll and
fees 94,100 - 95,000
Issuance of 300,000 warrants to a
company executive officer and an
outside consultant to purchase
300,000 shares of the Company's common
stock @ $.20 per share exercisable
over a five year period commencing
April 1994 - - -
Net loss - ( 1,069,642) (1,069,642)
----------- ------------- -----------
Balance, June 30, 1994 $11,726,027 ($13,530,024) ($1,015,136)
=========== ============= ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-7
<PAGE> 37
DIMENSIONAL VISIONS GROUP, LTD.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (CONTINUED)
YEARS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------- ------------
($10 Series A ($.001 Par Value)
------------- -----------------
Convertible)
------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Balance, July 1, 1994 77,250 $772,500 16,361,098 $16,361
Issuance of 165,000 shares of
the Company's common stock in
bonuses to certain
officers/employees/directors
of the Company - - 165,000 165
Exercise of 110,000 warrants
to purchase 110,000 shares of
the Company's common stock @
$.01 per share - - 110,000 110
Issuance of 37,500 warrants to
purchase 37,500 shares of the
Company's common stock @ $.15
per share for a five year
period commencing April, 1995
for consulting services
rendered to the Company - - - -
Issuance of 500,000 warrants
to purchase 500,000 shares of
the Company's common stock @
$.10 per share for a three and
half year period commencing
May 1995 - - - -
</TABLE>
<TABLE>
<CAPTION>
Additional
Paid-In
Capital Deficit Total
------------- --------------- -----
<S> <C> <C> <C>
Balance, July 1, 1994 $11,726,027 ($13,530,024) ($1,015,136)
Issuance of 165,000 shares of
the Company's common stock in
bonuses to certain
officers/employees/directors
of the Company 16,335 - 16,500
Exercise of 110,000 warrants
to purchase 110,000 shares of
the Company's common stock @
$.01 per share 990 - 1,100
Issuance of 37,500 warrants to
purchase 37,500 shares of the
Company's common stock @ $.15
per share for a five year
period commencing April, 1995
for consulting services
rendered to the Company 3,375 - 3,375
Issuance of 500,000 warrants
to purchase 500,000 shares of
the Company's common stock @
$.10 per share for a three and
half year period commencing
May 1995 60,000 - 60,000
</TABLE>
F-8
<PAGE> 38
DIMENSIONAL VISIONS GROUP, LTD.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (CONTINUED)
YEARS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of 50,000 warrants to
purchase 50,000 shares of the
Company's common stock @ $.01
per share for a one year
period commencing May 1995 - - - - 7,500 7,500
Issuance of 250,000 warrants
to purchase 250,000 shares of
the Company's common stock @
$.15 per share for a five year
period commencing May 1995
- - - - 30,000 30,000
Exercise of 300,000 warrants
to purchase 300,000 shares of
the Company's common stock @
$.15 per share (250,000
shares) and $.01 per share
(50,000 shares) - - 300,000 300 37,700 - 38,000
Net loss - - - - - ( 1,192,332) (1,192,332)
------- -------- ----------- ------- ------------ -------------- ------------
Balance, June 30, 1995 77,250 $772,500 16,936,098 $16,936 $11,881,927 ($14,722,356) ($2,050,993)
======= ======== =========== ======= ============ ============== ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-9
<PAGE> 39
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
(Reclassified)
<S> <C> <C>
Operating activities
Net loss
Adjustments to reconcile net loss to net
cash used in operating activities ($1,192,332) ($1,069,642)
Extraordinary item
Gain on reversal of liabilities relating to unsecured creditors
under dismissed Chapter 11 proceedings of DVG Plastics, Inc. - (99,031)
Compensation paid to officers/employees 16,500 -
Interest paid through issuance of warrants 67,500 -
Consulting service paid through issuance of warrants 4,625 15,400
Depreciation and amortization of property and equipment 150,491 341,697
Amortization of other assets 4,074 4,074
Gain on sale of equipment (2,584) (3,054)
Changes in assets and liabilities which provided (used) cash
Accounts Receivable, trade (18,690) -
Inventory 12,634 (39,087)
Prepaid expenses and deposit 3,118 (12,981)
Accounts payable, accrued expenses and other liabilities
(including accrued interest classified as long term) 281,769 (9,535)
Issuance of common stock in connection with settlement of certain
liabilities to employees and officers - 95,000
--------- ---------
Net cash used in operating activities (672,895) (777,159)
--------- ---------
Investing activities
Proceeds from sale of equipment 3,107 3,300
Purchase of equipment (16,374) (12,005)
Capitalized legal fees related to patent rights - 3,025
Deposits - 589
-------- -------
Net cash used in investing activities (13,267) (5,091)
-------- -------
Financing activities
Proceeds from
Issuance of common stock in connection with the exercise of warrants 39,100 -
Borrowings 757,000 880,000
-------- -------
Net cash provided by financing activities 796,100 880,000
-------- -------
Net increase in cash and cash equivalents 109,938 97,750
Cash and cash equivalents, beginning 118,034 20,284
-------- -------
Cash and cash equivalents, ending $227,972 $118,034
======== =======
Supplemental disclosure of cash flow information
Cash paid during the year for interest $ - $ -
========= =======
Issuance of common stock in connection with settlement of certain liabilities
to employees and officers $ - $ 95,000
========= =======
Issuance of common stock in connection with officers/employees stock bonus $ 16,500 $ -
========= ====
Issuance of warrants in connection with
Consulting service $ 33,375
=========
Financing $ 67,500
=========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-10
<PAGE> 40
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business, Financing and Basis of Financial Statement
Presentation
Dimensional Visions Group, Ltd. (the "Company" or "DVGL") was
incorporated in Delaware on May 12, 1988. The Company, was a development
stage company through June 30, 1994 and had an accumulated deficit during
the development stage of $13,530,024. The Company produces and markets
lithographically printed stereoscopic prints commonly referred to as
three-dimensional prints. The prints may be viewed without the use of
special glasses or viewing apparatus.
The Company has financed its development through the sale of its
securities, loans and sale of surplus equipment and by certain employees
and consultants deferring their compensation. The Company has had
limited sales of its product during the year ended June 30, 1995. The
Company has completed the development of a photographic and compositing
system capable of producing stationary three-dimensional images used in
the manufacturing of the DV3D(TM) lithographic print products. The Company
has also completed the development of the printing and separation process
needed to produce the DV3D(TM) image for commercial use. The process
involves a highly sophisticated computer controlled camera mounted on a
micro-positioning mechanism and imaging system taking numerous
photographs of a subject. The camera is mobile and takes photographs
from various positions and angles. The photos are then composited in the
clean room/photo laboratory to create a single stereoscopic master
transparency, the product of which the company has trademarked the
"DV3D"(TM) image. The DV3D(TM) image is then sent to commercial separator
and printer where the master image, with the use of the company's
proprietary methods and knowledge, is separated and lithographically
printed on a polymer based lenticular material which focuses the multi-
dimensional images.
On September 5, 1995 the Company received $750,000 from the sale of the
Company's Common Stock as part of its long term financing plans (See Note
13).
The Company on September 12, 1995 completed the acquisition of InfoPak,
Inc. which manufactures and markets hardware and software information and
audio playback systems and method products and programs. (See Note 13).
Liquidity and Capital Resources
The Company has incurred losses since inception of $14,722,356, has a
working capital deficiency of $138,013 as of June 30, 1995. The future
of the Company as an operating business will depend on (1) its ability to
successfully market its products, (2) obtain sufficient capital
contributions or financing as may be required to sustain its current
operations and to fulfill its sales and marketing activities, (3)
achieving a level of sales adequate to support the Company's cost
structure, and (4) to ultimately achieve a level of profitability.
Management's plan to address these issues includes (a) substantially
increase sales and marketing efforts of the Company's products, (b)
exercise tight cost controls to conserve cash, (c) raise additional long
term financing, and (d) evaluate possible merger or acquisition
opportunities.
The consolidated financial statements have been prepared on the basis
that the Company is a going concern and do not reflect any adjustments
that might result from the outcome of the uncertainties described in
paragraph 1 above.
Consolidation Policy
The consolidated financial statements include the accounts of DVGL and
its wholly-owned subsidiaries, DVG Plastics, Inc., DVG Films, Inc.
(effective January 27, 1995 DVG Films, Inc. changed its name to Digital
Dimensions, Inc.) and DV3D Images, Inc. As of June 30, 1995 all of the
wholly-owned subsidiaries are inactive. All significant inter company
balances and transactions have been eliminated in consolidation.
F-11
<PAGE> 41
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Inventory
Inventory is stated at the lower of cost or market. Cost is
determined by the first in first out method. Inventory consists of
raw materials amounting to $26,453.
Equipment and Leasehold Improvements and Depreciation and Amortization
Equipment and leasehold improvements are stated at cost. Depreciation
and amortization are provided by the use of the straight-line method over
the estimated useful lives of the assets as follows:
Equipment 5-7 years
Furniture and fixtures 5 years
Leasehold improvements Term of the initial operating lease (5 years)
Patent Rights
Costs incurred to acquire patent rights and the related technology are
amortized over the shorter of the estimated useful life or the remaining
term of the patent rights. In the event that the costs of patent rights
and/or acquired technology are abandoned, the write-off will be charged
to expense in the period the determination is made to abandon them.
Research and Development Costs
The Company charges to Research and Development Costs all items of a
non-capital nature related to bringing a "significant" improvement to its
product. Such costs include salaries and expenses of employees and
consultants, the conceptual formulation, design, and testing of the
products and prototypes. All such costs of a capital nature are
capitalized.
Income Taxes
Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes."
This statement supersedes Accounting Principles Board Opinion No. 11,
"Accounting for Income Taxes." Deferred income taxes reflect the net tax
effect of (a) temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes, and (b) operating loss carryforwards. (See
note 11 as to the Company's change in accounting for income taxes.)
Employer's Accounting for Postemployment Benefits
Employers Accounting for Post Employment Benefits Statement of Financial
Accounting Standards No. 112, Employers Accounting for Post Employment
Benefits (SFAS No. 112), establishes accounting standards for post
employment benefits and requires either the accrual of the obligation or
disclosure, depending upon the circumstances, for the cost of benefits
provided to former or inactive employees after employment or before
retirement. The Company adopted SFAS No. 112 during the first quarter of
1995. Such adoption will not have a material adverse effect on the
Company's operations or financial position, since the Company does not
have any post-retirement benefits.
Reclassifications
Certain reclassifications have been made to the June 30, 1994 financial
statements to conform to classifications used in the June 30, 1995
financial statement.
F-12
<PAGE> 42
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
NET LOSS PER SHARE OF COMMON STOCK
Net loss per share of common stock is based on the weighted average of
shares of common stock outstanding. Outstanding warrants or options are
not considered in the calculation of net loss per share of common stock,
as they would have an anti- dilutive effect.
NOTE 2 CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments, with an original
maturity of three months or less when purchased, to be cash equivalents.
Cash and cash equivalents are summarized as follows:
<TABLE>
<CAPTION>
June 30, 1995
-------------
<S> <C>
Cash in bank $ 82,334
Money Market Account 145,638
--------
$227,972
========
</TABLE>
The Company maintains its cash in banks located in Pennsylvania and
California. The total cash balances are insured by the FDIC up to
$100,000 per financial institution. As of June 30, 1995, the uninsured
cash balance totaled $70,736.
NOTE 3 PATENT RIGHTS AND OTHER ASSETS
<TABLE>
<CAPTION>
June 30, 1995
-------------
<S> <C>
Patent Rights $58,426
Organization Costs 2,000
Deposits 5,500
Trade Mark 225
-------
66,151
Less Accumulated Amortization 12,753
------
Total $53,398
=======
</TABLE>
F-13
<PAGE> 43
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
NOTE 4 ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES
Accounts payable, accrued expenses and other liabilities consist of the
following:
<TABLE>
<CAPTION>
June 30, 1995
-------------
<S> <C>
Accounts payable $116,410
Accrued Expenses
Interest (1) 3,938
Salaries 29,241
Consulting fees 98,900
Customer Deposits(2) 156,000
--------
Total $404,489
========
</TABLE>
(1) Accrued interest of $210,741 is classified as long term as of
June 30, 1995. (See Note 5).
(2) $150,000 represents a deposit on two orders that were not
accepted by a customer during 1992.
NOTE 5 LONG-TERM DEBT
As of June 30, 1995 the outstanding Secured Notes are $1,837,000. The
Secured Notes are due beginning in fiscal 1996 and interest at 10%
will be paid semi-annually, with the first interest payment not due to
be paid until twelve months after the date of the Secured Notes. The
Company is permitted to prepay the Secured Notes after twelve months
from the date of the Secured Notes with no penalty. As collateral for
the Secured Notes, the Company has given a security interest in all of
the Company's assets, tangible and intangible, including all patents
and proprietary technology, which was evidenced by a Uniform
Commercial Code filing on March 24, 1994.
On April 25, 1995, substantially all of the long term Secured Note
Holders agreed to defer all interest payments until the Secured Notes
mature beginning in fiscal 1996 or, upon the consummation of long term
financing and/or a strategic partner relationship, to convert the
Secured Notes and accrued interest into 8% Series "B" Convertible
Preferred Stock through the exercise of the Series "B" Redeemable
warrants.
As of June 30, 1995, Secured Note Holders representing $95,000 of the
outstanding notes have not agree to convert their Notes or defer
interest. These notes are all long term obligations of the Company.
As of June 30, 1995, 183,700 warrants are outstanding to purchase
Series B Convertible Preferred Stock which can be converted to
1,837,000 shares of the Company's common stock at $.10 per share. In
addition, there are 450,000 warrants that have not been exercised to
purchase 450,00 shares of the company's common stock are $.10 per
share to Note Holder who lent funds to the Company during the last
half of the year ended June 30, 1995.
On May 24, 1995 the Company borrowed $50,000 at 9% per annum. The
Promissory Note for $50,000 was due on November 24, 1998. On
September 11, 1995, the Promissory Note and related accrued interest
was paid in full. In connection with the loan, the Company issued
warrants to purchase 500,000 shares of common stock at $.10 per share
exercisable within three and one-half years from issuance and warrants
to purchase 50,000 shares of common stock at $.01 per share. The
warrants were valued at $67,500 ($.12 per warrant) at the time of issue
and was recorded as additional interest expense.
F-14
<PAGE> 44
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
NOTES LONG TERM DEBT (CONTINUED)
The annual maturity on long term debt is as follows:
<TABLE>
<CAPTION>
Year Ending June 30 Amount
------------------- ------
<S> <C>
1996 $50,000
1997 1,130,000
1998 707,000
----------
1,887,000
Less Current Portion 50,000
----------
Long Term Debt $1,837,000
==========
</TABLE>
NOTE 6 COMMITMENTS
The company leases its corporate office, studio and lab facilities in
Philadelphia, Pennsylvania under a five year operating lease through
February 28, 1999 at an annual rental of approximately $44,100 through
June 1995 and adjusted on March 1, of each year through 1998 by
approximately $2,314 in 1995 and $1,371 each year thereafter. In
addition, the Company is responsible for its proportionate share of
excess operating expenses and real estate taxes. The Company has a
conditional option to terminate the lease 30 days prior to ground
breaking date on the proposed new building site adjacent to where the
Company leases space.
<TABLE>
<CAPTION>
Year Ending June 30 Annual Rental Amount
------------------- --------------------
<S> <C>
1996 $ 59,400
1997 60,800
1998 62,200
1999 42,100
------
$224,500
========
</TABLE>
Total rent expense on all operating leases amounted to approximately
$56,600 and $82,600, for the years ended June 30, 1995 and 1994,
respectively.
The Company has not declared dividends on Series A Convertible Preferred
Stock. The cumulative dividend in arrears through June 30, 1995 is
$151,750.
The Company has outstanding employment and consulting contracts that
expire through June 30, 1999 as follows:
<TABLE>
<CAPTION>
Year ending June 30
-------------------
<S> <C>
1996 $164,000
1997 244,000
1998 144,000
1999 144,000
-------
$696,000
========
</TABLE>
In connection with a consulting contract providing among other things,
assisting the Company with arranging for additional capital. For each
dollar of capital raised a maximum of 1,600,000 warrants will be issued
to purchase the Company's common stock at $.15 per share of which 250,000
warrants were issued during May 1995 and exercised during June 1995. The
warrants will be exercisable over a five year period at $.15 per share.
The warrants issued in May 1995 were valued at $30,000 ($.12 per warrant)
at the time issued and will be recognized as additional consulting fees
over the two-year term of the consulting contract. In addition, the
contract provides for a fee of 5% on capital raised.
F-15
<PAGE> 45
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
NOTE 7 CONTINGENCIES
During 1992, two former officers of DVG Plastics, Inc. resigned their
positions. They filed claims amounting to $225,000 with the Bankruptcy
Court for certain compensation (salary, severance and bonus) under their
contracts. These claims have been dismissed by the Bankruptcy Court on
November 16, 1993, as a result of the entire bankruptcy matter being
dismissed and the Company is not aware of any legal action in connection
with this dispute. Management of the Company feels that this matter, if
pursued by the former officers of DVG Plastics, Inc., will be resolved
with no material adverse financial impact to the Company.
On November 16, 1993 the Bankruptcy Court dismissed the bankruptcy case
of DVG Plastics, Inc. In connection with the dismissed bankruptcy case of
DVG Plastics, Inc., the Company wrote off all liabilities relating to
unsecured creditors of approximately $99,000 as of June 1994. There have
been no claims by any of these creditors since the date of dismissal
(November 16, 1993.)
In connection with the various changes in management during 1991 and
1992, the Company believes that there are no outstanding obligations to
former officers of the Company. In the event a claim would arise, the
Company believes that no material adverse financial impact will occur.
There are no legal proceedings which the Company believes will have a
material adverse effect on its financial position.
NOTE 8 COMMON STOCK
As of June 30, 1995, the Company had issued non-public warrants to
purchase 15,380,522 shares of the Company's Common Stock at prices
ranging from $01 per share to $3.94 per share. Included in the
non-public warrants are 3,900,000 warrants that are being held in escrow
until officers and directors and a Company employee achieve certain bench
mark goals established by Note management. As of June 30, 1995 the
Company had issued 183,700 warrants to purchase Series B Convertible
Preferred stock, in connection with a private placement offering which
converts to 1,837,000 shares of the Company's common stock.
The Company may not have available sufficient common stock for those who
elect to exercise their warrants or convert preferred stock to common
stock.
During January 1994 the Company issued 900,000 shares of the Company's
common stock in settlement of amounts due to officers and employees for
consulting fees and payroll valued at approximately $.11 per share.
During January 1995, the company issued 165,000 shares of the Company's
common stock as a bonus to certain officer/employees/directors of the
Company valued at $.10 per share.
During the period February 1995 through May 1995 the Company received
$39,100 from the exercise of 410,000 warrants to purchase 410,000 shares
of the Company's common stock.
NOTE 9 STOCK OPTION PLAN
The Company has adopted a stock option plan (the "Plan") covering 500,000
shares of the Company's common stock, $.001 par value, pursuant to which
officers, directors, key employees and consultants of the Company are
eligible to receive incentive as well as non-qualified stock options and
Stock Appreciation Rights ("SAR's"). The Plan, which expires in
September 1998, will be administered by the Board of Directors or a
committee chosen therefrom. Incentive stock options granted under the
Plan are exercisable for a period of up to 10 years from the date of
grant at an exercise price which is not less than the fair market value
of the Common stock on the date of the grant, except that the terms of an
incentive stock option granted under the Plan to a stockholder owning
more than 10% of the outstanding common stock may not exceed five years
and the exercise price of an incentive stock option granted to such a
stockholder may not be less than 110% of the fair market value of the
common stock on the date of the grant. Non-qualified stock options maybe
granted on terms determined by the Board of Directors or a committee
designated by the Board of Directors. SAR's which give the holder the
privilege of surrendering such rights for the appreciation in the
Company's common stock between the time of grant and the surrender, may
be
F-16
<PAGE> 46
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
NOTE 9 STOCK OPTION PLAN (CONTINUED)
granted on any terms determined by the Board of Directors or committee
designated by the Board of Directors. No SAR's have been granted.
A summary of transactions under this Plan is as follows:
<TABLE>
<CAPTION>
Option Price
Per Share, Total
Shares As Adjusted Option Price
------ ----------- ------------
<S> <C> <C> <C>
Options outstanding 161,000 $.48 $77,280
Canceled (141,000) .48 (67,680)
--------- --------
Options outstanding
June 30, 1995 and
1994 20,000 $9,600
========= =======
</TABLE>
NOTE 10 EXTRAORDINARY ITEM
On November 16, 1993 the Bankruptcy Court dismissed the bankruptcy case
of DVG Plastics, Inc. In connection with the dismissed bankruptcy case
of DVG Plastics, Inc., the Company wrote off all liabilities relating to
unsecured creditors as of June 30, 1994. As a result of the write off
the Company recognized a gain of $99,031 and has been classified as an
Extraordinary item.
NOTE 11 INCOME TAXES
The Company adopted Statement of Financial Standards ("SFAS") No. 109,
"Accounting for Income Taxes" effective July 1, 1993. There is no
cumulative effect of adopting SFAS 109 on the Company's financial
statements for the year ended June 30, 1994. Restatement of prior years
for the effect of SFAS No. 109 would not have materially changed
previously reported losses. The Tax effects of significant items
comprising the Company's net deferred taxes as of June 30, 1995 and July
1, 1994 were as follows:
<TABLE>
<CAPTION>
1995
------
<S> <C>
Deferred Tax Assets:
Property ($ 23,000)
Patents 7,000
Operating loss carry forwards 5,050,000
Valuation allowance (5,034,000)
------------
$ -
============
</TABLE>
The change in valuation allowance for the year ended June 30, 1995 was
increased by approximately $431,000.
There was no provision for current income taxes for the years ended June
30, 1995 and 1994.
The federal net operating loss carryforwards of approximately $14,413,000
expire in varying amounts through 2010 and state net operating loss
carryforwards are available up to $500,000 per year commencing in fiscal
1995 and will be available up to three years from date of loss.
The Company has had numerous transactions in its common stock. Such
transactions may have resulted in a change in the Company's ownership, as
defined in the Internal Revenue Code Section 382. Such change may result
in an annual limitation on the amount of the Company's taxable income
which may be offset with its net operating loss carryforwards. The
Company has not evaluated the impact of Section 382, if any, on its
ability to utilize its net operating loss carryforwards in future years.
F-17
<PAGE> 47
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
NOTE 12 RELATED PARTY TRANSACTIONS
On July 19, 1993, 600,00 warrants to purchase the Company's common stock
for five years at $.15 per share were issued to Mr. Smith, the Chairman
of the Board of Directors and former Chief Executive Officer, and 687,495
warrants were canceled by the Company at prices that range between $.4375
and $1.00 per share.
During March and April of 1994 Mr. Smith lent the Company an additional
$50,000 in connection with the Company's Private Placement of Secured
Notes and Preferred Stock Purchase Warrants offering.
As of June 30, 1995, Mr. Smith owns approximately 1,950,000 shares of the
common stock of the Company and has 2,669,840 warrants to purchase the
Company's common stock and 15,000 warrants to purchase 15,000 shares of
Series B Preferred Stock at $10 per share, which is convertible into the
equivalent of 1,500,000 shares of common stock. In addition, Mr. Smith
owns 5,000 shares of Series A Preferred Stock at $10 per share which is
convertible into the equivalent of 200,000 shares of common stock. On
August 22, 1995, the Series A Preferred Stock was converted into 200,000
shares of common stock.
NOTE 13 SUBSEQUENT EVENTS
In connection with a private placement of its 10% Promissory Notes and
preferred Stock Purchase Warrants (the "Notes"), the Company received
additional loans of $105,000 from subscribers of promissory notes since
June 30, 1995.
On September 5, 1995 the Company received $675,000 net of fees of $75,000
from the sale of 3,000,000 shares of the Company's common stock at $.25
per share. In order to issue the shares sold on September 5, 1995,
certain stockholders consisting mainly of officers and directors of the
Company surrendered 3,215,000 shares of the Company's common stock in
exchange for 3,215 shares of Series S Convertible Preferred Stock. The
Series S Convertible Preferred Stock is convertible to 3,215,000 shares
of common stock on the earlier of January 1, 1996 or such time as the
Company has sufficient authorized common stock to convert all of the
Series S Preferred stock.
On September 12, 1995, the Company acquired all the outstanding capital
stock of InfoPak, Inc. for 500,000 shares of its Series P Convertible
Preferred Stock, each share of which is convertibles into 10 shares of
the Company's common stock.
The Series P Convertible Preferred Stock issued in connection with the
acquisition was valued at $2,750,000 ($.55 per share) by the Company and
will be accounted for as a purchase.
F-18
<PAGE> 48
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Dimensional Visions Group, Ltd.
Philadelphia, Pennsylvania
We have audited in accordance with generally accepted auditing standards, the
financial statements of DIMENSIONAL VISIONS GROUP, LTD. included in this
registration statement and have issued our report thereon dated September 18,
1995. Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the preceding
index are the responsibility of the Company's management and are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth in relation to the basic financial
statements taken as a whole.
/s/ GITOMER & BERENHOLZ, P.C.
-----------------------------
Gitomer & Berenholz, P.C.
Jenkintown, Pennsylvania
September 18, 1995
F-19
<PAGE> 49
SCHEDULE V
DIMENSIONAL VISIONS GROUP, LTD.
SCHEDULE V - PROPERTY AND EQUIPMENT (1)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- --------------------------------------------------------------------------------------------------------------------------
Balance at Other
Beginning Additions at Changes - Balance at End
Classification of Period Cost Retirements Add (Deduct) of Period
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended June 30, 1995
------------------------
Equipment $1,621,408 $11,522 $5,228 $ 326 $1,628,028
Furniture and fixtures 130,412 4,852 - ( 326) 134,938
Leasehold improvements 109,446 - - - 109,446
------- ------- ------ ------ -------
$1,861,266 $16,374 $5,228 $ - $1,872,412
========== ======= ====== ====== ==========
Year Ended June 30, 1994
------------------------
Equipment $1,624,061 $ 6,197 $8,850 $ - $1,621,408
Furniture & Fixtures 124,604 5,808 - - 130,412
Leasehold Improvements 109,446 - - - 109,446
------- ----- ----- ---- -------
$1,858,111 $12,005 $8,850 $ - $1,861,266
========== ======= ====== ===== ==========
</TABLE>
(1) Depreciation and amortization is computed by the straight-line method over
the estimated useful lives of the related assets as follows:
Equipment 5-7 years
Furniture & Fixtures 5 years
Leasehold improvements Term of initial operating lease (5 years)
F-20
<PAGE> 50
SCHEDULE VI
DIMENSIONAL VISIONS GROUP, LTD.
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- --------------------------------------------------------------------------------------------------------------------------
Balance at Other
Beginning Additions at Changes - Balance at End
Classification of Period Cost Retirements Add (Deduct) of Period
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended June 30, 1995
------------------------
Equipment $1,426,715 $137,720 $4,705 $ - $1,559,730
Furniture and fixtures 110,632 11,801 - 122,433
Leasehold improvements 107,916 970 - - 108,886
------- --- ------ ------ -------
$1,645,263 $150,491 $4,705 $ - $1,791,049
========== ======== ====== ====== ==========
Year Ended June 30, 1994
------------------------
Equipment $1,134,545 $300,798 $8,604 ($24) $1,426,715
Furniture & Fixtures 88,051 22,557 - 24 110,632
Leasehold Improvements 90,574 18,342 - - 107,916
------ ------ ----- ----- -------
$1,312,170 $341,697 $8,604 $ - $1,645,263
========== ======== ====== ===== ==========
</TABLE>
F-21
<PAGE> 51
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.4b Form of Certificate of Designation - Series S Participating
Convertible Preferred Stock
21.0 Subsidiaries of the registrant
27.0 Financial Data Schedule
</TABLE>
<PAGE> 1
1
EXHIBIT 3.4b
CERTIFICATE OF DESIGNATION OF TERMS OF
THIRD SERIES S CONVERTIBLE PARTICIPATING PREFERRED STOCK
Dimensional Visions Group, Ltd. (the "Corporation" or "Company"), a
Delaware corporation, pursuant to Section 151(g) of the General Corporation Law
of the State of Delaware, as amended, hereby certifies that:
1. The Board of Directors of the Corporation, pursuant
to authority expressly vested in it by the provisions of the Company's Restated
Certificate of Incorporation, duly adopted the following resolution creating
the third series of the Preference Stock of the Corporation to consist
initially of 50,000 shares and fixing the designations, preferences and rights,
and the qualifications, limitations and restrictions thereof, of the shares of
such series at a meeting duly held on August 26, 1995:
RESOLVED, That pursuant to authority expressly granted to the
Board of Directors by the provisions of this Corporation's
Certificate of Incorporation, the Board of Directors hereby
creates the third series of the Preference Stock of the
Corporation to consist initially of 50,000 shares ("Third
Series") and hereby fixes the designations, preferences and
rights, and qualifications, limitations and restrictions
thereof, of the shares of such series (in addition to the
designations, preferences and rights, and the qualification,
limitations and restrictions thereof, set forth in the
Certificate of Incorporation which are applicable to this
Corporation's Preference Stock of all series) as follows:
(1) Designation of Series. The Third Series
shall be designated by the Series S Convertible Participating
Preferred Stock.
(2) Number of Shares. The number of shares
of the Third Series shall be 50,000, which number from time to
time may be increased or decreased (but not below the number
of shares of the series then outstanding) by resolution of the
Board of Directors of the Corporation.
(3) Dividends. Dividends will be paid on
the Third Series S Convertible Participating Preferred Stock
to the extent that dividends are paid on the Corporation's
Common Stock.
(4) Redemption. Shares of the Third Series
S Convertible Participating Preferred Stock shall not be
redeemable.
(5) No Liquidation Preference. In the event
of a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, holders of
<PAGE> 2
2
shares of the Third Series shall have no liquidation
preference over holders of the Corporation's Common Stock.
Holders of shares of the Third Series shall participate
ratably with holders of the Corporation's Common Stock in the
distribution of assets with each share of the Third Series
accounting for one hundred (100) shares of the Corporation's
Common Stock. Neither the merger nor consolidation of the
Corporation with or into any corporation, nor any sale,
transfer or lease of all or part of the Corporation's assets,
shall be deemed a liquidation of the Corporation within the
meaning of this paragraph (5).
(6) Conversion Rights. Any holder of shares
of the Third Series may convert any or all such shares into
fully paid and non-assessable shares of Common Stock of the
Corporation (hereafter called "Common Stock") on the terms, at
the times, and in the manner hereinafter set forth.
(a) Shares of the Third Series may be
converted at any time after January 1, 1996, or at such time
after October 1, 1995 that the number of shares of the
Company's authorized but unissued Common Stock are available
to allow 100% conversion of the entire issued and outstanding
Third Series S Convertible Participating Preferred Stock, into
shares of Common Stock at the rate of one hundred (100) shares
of Common Stock for each share of the Third Series, such rate
to be subject to adjustment as hereinafter provided.
(b) Any holders of shares of the Third
Series who elects to convert them shall surrender the
certificate therefor at the principal office of any Transfer
Agent, or the Corporation as the case may be, for such shares,
with the form of written notice endorsed on such certificate
of his election to convert them completed. If necessary under
the circumstances, such certificate shall be endorsed for
transfer or accompanied by executed instruments of transfer,
together with such other transfer papers as the Transfer Agent
may reasonably require. The Corporation or such Transfer
Agent, as the case may be, may require, as a condition to the
exercise of the conversion privilege, the payment of any
transfer tax or other governmental charge (but not any tax
payable upon the issue of stock deliverable upon such
conversion) that may be imposed upon any transfer incidental
or prior to the conversion, or the submission of proper proof
that the same has been paid. The conversion privilege shall
be deemed to have been exercised, and the shares of Common
Stock issuable upon such conversion shall be deemed to have
been issued, upon the date the Transfer Agent, or the
Corporation as the case may be, receives for conversion the
certificate representing such shares with the required terms
for conversion satisfied, except that as to any shares of such
series which are surrendered for conversion on a date which is
less than five business days preceding the date fixed for the
determination of holders of Common Stock entitled to receive
rights to subscribe for or to purchase shares of Common Stock
or other securities of the Corporation convertible to Common
Stock, the conversion privilege shall be deemed to have been
exercised on the business day next succeeding the date fixed
for such determination. Each person entitled to receive the
Common Stock issuable upon such conversion shall from the same
date be treated as the record holder of such Common Stock, and
the person who surrenders such shares for conversion shall on
that date cease to be treated as the record holder of the
shares surrendered.
<PAGE> 3
3
(c) The Corporation shall not issue in
connection with the conversion of shares of the Third Series
certificates for a fraction of one share of Common Stock, but
in lieu thereof shall pay to any person who would otherwise be
entitled thereto an amount of case equal to such fraction
multiplied by the Market Price of the Common Stock on the last
business day of the week preceding the week in which the
conversion privilege was deemed to have been exercised. As
used herein, "Market Price" means the last reported sale price
regular way on such day or, in case no such reported sale
takes place on such day, the reported closing bid price
regular way, in either case on the principal national
securities exchange on which the Common Stock is then listed
or, if not listed on any national securities exchange, the
closing bid price in the over-the-counter market as reported
by any New York Stock Exchange member firm selected from time
to time by the Board of Directors for that purpose.
(d) As soon as practicable after the
effective date of conversion of any shares of the Third
Series, the Corporation shall deliver to the person or persons
entitled thereto, at the principal office of the Transfer
Agent at which such stock was surrendered for conversion,
certificates representing the shares of Common Stock and any
cash to which such person or persons shall be entitled on such
conversion.
(e) The conversion rate set forth in
subparagraph (a) of this paragraph (6) shall be subject to
adjustment as follows:
(i) if the Corporation subdivides the
outstanding shares of its Common Stock into a greater
number of shares or combines them into a smaller
number of shares, the conversion rate in effect
immediately prior to such subdivision or combination
shall be proportionately increased or decreased
effective at the opening of business on the day
following the day upon which such subdivision or
combination becomes effective;
(ii) if the Corporation fixes a record date
for the purpose of determining the holders of shares
of Common Stock, entitled to receive any dividend in
Common Stock, the conversion rate in effect
immediately prior to such record date shall be
proportionately increased effective at the opening of
business on the day following such record date,
provided that if for any reason the plan to pay such
dividend in Common Stock is legally abandoned before
payment, then any adjustment made in the conversion
rate by reason of the passage of such record date
shall be canceled as of the date the plan is
abandoned; and
(iii) the issuance to all holders of Common
Stock of the Corporation of rights to subscribe to
Common Stock at a price lower than 90% of the Market
Price (defined above) thereof as of the close of
business on the last business day of the week
preceding such issuance of rights shall be deemed to
constitute the payment of a dividend in Common Stock
to the holders of shares of Common Stock (and the
record date therefore shall be deemed to have been
fixed as the date of issuance of such rights) of that
number of shares which is determined by dividing the
Market Price per share as of such time into the
difference between (A) the total Market Price as of
such time of the number of shares purchasable upon
exercise of such rights and (B) the total offering
price of such shares.
<PAGE> 4
4
(f) In case of
(i) any reclassification or change of the
Common Stock of the Corporation other than a change
in its par value, a change from par value to no par
value or case provided for in subparagraph (c) of
this paragraph (6), or
(ii) a merger of consolidation in which the
Corporation is not the continuing corporation,
provision shall be made so that holders of the Third Series
shall thereafter have the right to convert each share thereof
into the kind and amount of shares of stock or other
securities or property receivable upon such reclassification,
change, merger or consolidation by a holder of the number and
kind of shares of capital stock of the Corporation into which
such shares of the Third Series were convertible immediately
prior thereto. In any such case the Board of Directors shall
determine the manner in which the adjustments provided for in
subparagraph (e) of the paragraph (6) shall thereafter be
made.
(g) Whenever the conversion rate is required to be
adjusted:
(i) the Corporation shall file a certificate
setting forth such adjusted conversion rate and the
facts upon which the adjustment is based with the
Transfer Agents for shares of the Third Series and the
Transfer Agents for the Common Stock and thereafter
(until further adjusted) the adjusted conversion rate
shall be as set forth in such certificate; and
(ii) the Corporation shall mail notice of
such adjusted conversion rate to each holder of
shares of the Third Series.
(7) Voting Rights. Except as provided below,
holders of shares of the Third Series shall have the
general power to vote in the election of directors and for all
other purposes, on the basis of one hundred (100) votes per
share of the Third Series. Holders of shares of the Third
Series shall not have the general power to vote on any matters
on which they are entitled to vote as a series or as part of
the class of Preference Stock, regardless of series.
<PAGE> 5
5
2. This instrument will become effective as of the beginning of business on
August 28, 1995.
IN WITNESS WHEREOF, The Company has caused its corporate seal to be
hereunto affixed and this certificate to be signed by George S. Smith, its
Chief Executive Officer, and attested by Joann Furman, its Secretary/Treasurer,
this 28th day of August, 1995.
DIMENSIONAL VISIONS GROUP, LTD.
By /s/ GEORGE S. SMITH
---------------------------------
George S. Smith
Chief Executive Officer
[CORPORATE SEAL]
Attest:
/s/ JOANN FURMAN
- -------------------------
Joann Furman
Secretary/Treasurer
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME STATE OF INCORPORATION
---- ----------------------
<S> <C>
DVG Plastics, Inc. Delaware
Digital Dimensions, Inc. Delaware
DV3D Images, Inc. Delaware
InfoPak, Inc. Arizonia
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 227,972
<SECURITIES> 0
<RECEIVABLES> 18,690
<ALLOWANCES> 0
<INVENTORY> 26,453
<CURRENT-ASSETS> 316,476
<PP&E> 1,872,412
<DEPRECIATION> 1,791,049
<TOTAL-ASSETS> 451,237
<CURRENT-LIABILITIES> 454,489
<BONDS> 0
<COMMON> 16,936
0
772,500
<OTHER-SE> (2,840,429)
<TOTAL-LIABILITY-AND-EQUITY> 451,237
<SALES> 134,028
<TOTAL-REVENUES> 0
<CGS> 241,240
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,121,546
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208,717
<INCOME-PRETAX> (1,192,332)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,192,332)
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
</TABLE>
