<PAGE> 1
DIMENSIONAL VISIONS GROUP, LTD.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 8, 1995
Dear Stockholder:
A Special Meeting of Stockholders of Dimensional Visions Group, Ltd. (the
"Company") will be held at the Company's principal executive offices, located
at 718 Arch Street, Suite 202N, Philadelphia, Pennsylvania 19106 on December 8,
1995, at 9:00 a.m. (local time) for the following purposes:
1. to consider and vote upon a proposal to amend the Company's Certificate
of Incorporation to authorize additional shares of common and preferred
stock of the Company needed to accommodate the exercise of stock
warrants and conversion of preferred stock of the Company; and
2. to consider and vote upon a proposal to amend the Company's Certificate
of Incorporation to change the name of the Company to "Dimensional
Group, Inc."; and
3. to transact such other business that may properly come before the
meeting.
The Board of Directors has fixed the close of business on November 3, 1995,
as the record date for the Special Meeting. Only stockholders of record at
that time are entitled to notice of and to vote at the Special Meeting, and any
adjournment or postponement thereof.
All stockholders are cordially invited to attend the Special Meeting. The
enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the attached proxy statement for further information with
respect to the business to be transacted at the Special Meeting. The Board of
Directors urges you to date, sign and return promptly the enclosed proxy, even
if you plan to attend the Special Meeting. The return of the proxy will not
affect your right to vote in person if you do attend the Special Meeting.
Executed proxies which contain no direction on the proposals presented will be
voted FOR the authorization of
<PAGE> 2
additional shares of common stock and preferred stock of the Company, and FOR
the proposal to change the Company's name.
By Order of the Board of Directors,
/s/ Steven M. Peck
-------------------------------
Steven M. Peck,
Chief Executive Officer
Dated: November __, 1995
-2-
<PAGE> 3
PRELIMINARY PROXY STATEMENT
DIMENSIONAL VISIONS GROUP, LTD.
718 ARCH STREET
SUITE 202N
PHILADELPHIA, PENNSYLVANIA 19106
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Dimensional Visions Group, Ltd., (the
"Company") for use at the Special Meeting of the Company's Stockholders to be
held at the Company's executive offices, located at 718 Arch Street, Suite
202N, Philadelphia, Pennsylvania 19106 on December 8, 1995 at 9:00 a.m. (local
time), and at any adjournment or adjournments of said meeting (the "Meeting").
Proxies are revocable at any time before they are voted by delivering written
notice of revocation to the Secretary of the Company prior to or at the
Meeting, by filing a duly executed proxy bearing a later date or by voting in
person at the Meeting. Unless so revoked, the shares represented by proxies
will be voted at the Meeting.
The Company intends to mail this Proxy Statement to the Company's
Stockholders on or about November 15, 1995.
The cost of soliciting proxies will be borne by the Company. Solicitations
may be made by mail, personal interview, telephone, and facsimile by officers
and regular employees of the Company who will receive no additional
compensation therefor. The Company will reimburse banks, brokers and other
nominees for their reasonable expenses in forwarding proxy material to the
beneficial owners for whom they own shares.
The holders of record of the Company's shares of stock at the close of
business on November 3, 1995, as listed below, are entitled to receive
notice of, and to vote at, the Meeting and any adjournment thereof:
1. On November 3, 1995, there were 17,601,098 shares of common stock issued
and outstanding. Each share of common stock is entitled to one (1) vote for
each matter considered;
2. On November 3, 1995, there were 57,250 shares of First Series A
Convertible 5% Preferred Stock issued and outstanding. Each share of First
Series A Convertible Preferred Stock is entitled to forty (40) votes for each
matter considered;
-3-
<PAGE> 4
3. On November 3, 1995, there were 175,700 shares of Second Series B
Convertible 8% Preferred Stock issued and outstanding. Each share of Second
Series B Convertible Preferred Stock is entitled to one hundred (100) votes for
each matter considered;
4. On November 3, 1995, there were 22,876 shares of Series C Convertible
Preferred Stock issued or to be issued and outstanding. Each share of Series C
Convertible Preferred Stock is entitled to ten (10) votes for each matter
considered;
5. On November 3, 1995, there were 32,150 shares of Third Series S
Convertible Participating Preferred Stock issued and outstanding. Each share
of the Third Series S Convertible Participating Preferred Stock is entitled to
one hundred (100) votes for each matter considered; and
6. On November 3, 1995, there were 552,181 shares of Fourth Series P
Convertible Participating Preferred Stock issued and outstanding. Each share
of the Fourth Series P Convertible Participating Preferred Stock is entitled to
ten (10) votes for each matter considered.
The total number of shares of the Company's securities entitled to vote at
the Meeting is 46,426,668.
The shares of the Company's stock represented by each properly executed
proxy will be voted at the Meeting in the manner specified in such proxy, or,
if not specified, will be voted FOR the authorization of additional shares of
common stock and preferred stock of the Company, and FOR the proposal to change
the Company's name, and in the discretion of the persons named in the proxy, if
granted, on all other matters properly presented to the Meeting.
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 November 3,
1995, and their percentage ownership of Common Stock and their percentage
voting power.
-4-
<PAGE> 5
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owners of Beneficial Ownership(1) Ownership
- - - -------------------- ------------------------ ----------
<S> <C> <C>
George S. Smith(2) 6,319,870 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
1,000,000 5.4%
Steven M. Peck(4)
Sean F. Lee(5) 1,561,430 8.2%
James W. Porter, Jr. (6)
William A. Knegendorf (6)
All officers and directors as a group
(5 persons)(7) 4,661,510 21.1%
</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 Third 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 common
stock purchase warrants to purchase 2,669,840 shares of the Company's
Common Stock and preferred stock purchase warrants to purchase 15,000
shares of the Company's Second Series B Convertible 8% Preferred Stock
which is the equivalent of 1,500,000 shares of the Company's Common Stock.
(3) Represents common stock purchase warrants to purchase 1,725,000 shares of
the Company's Common Stock, 3,000 Series S Participating Convertible
Preference Stock convertible into 100 shares of Common Stock for every one
share of Series S Stock and 15,000 Fourth Series P Convertible Preferred
Stock convertible into 10 shares of Common Stock for every one share of
Series P stock.
-5-
<PAGE> 6
(4) Represents common stock purchase warrants to purchase 1,000,000 shares of
the Company's Common Stock.
(5) Represents 156,143 shares of Fourth Series P Convertible Participating
Preferred Stock convertible into ten shares of Common Stock for every one
share of Fourth Series P Convertible Participating Preferred Stock. Of
this amount, 143,197 shares is owned by the Lee Family Partnership of
which Mr. Lee is the general partner.
(6) 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 Third Series S Convertible Participating
Preferred Stock which are convertible into 300,000 shares of the Company's
Common Stock. Includes 15,080 shares of the Company's Fourth Series P
Convertible Participating Preferred Stock convertible into 150,800 shares
of Common Stock. Also includes common stock purchase warrants to purchase
1,750,000 shares of the Company's Common Stock.
(7) Does not include common stock purchase warrants to purchase in the
aggregate 7,919,840 shares of the Company's Common Stock.
-6-
<PAGE> 7
PROPOSAL 1
AUTHORIZATION OF ADDITIONAL SHARES OF COMMON STOCK
AND PREFERRED STOCK
BACKGROUND
As of the date of this Proxy Statement, the Company has only 585,733 shares
of authorized but unissued or not reserved shares of Common Stock. However, as
of the date of this Proxy Statement, the Company has, issued and outstanding,
the following warrants and convertible preferred stock, which if exercised or
converted, as the case may be, require the issuance of Common Stock
substantially in excess of the current authorized Common Stock of the Company:
1. Fifty-seven thousand two hundred and fifty (57,250) shares of First
Series A Convertible 5% Preferred Stock, at $10 par value per share, 100,000
shares authorized, convertible into common stock at the rate of forty (40)
shares of common stock for each share of the First Series A Convertible
Preferred Stock;
2. Twenty-two thousand five hundred (22,500) preferred stock purchase
warrants to purchase the Company's Second Series B Convertible 8% Preferred
Stock. Each share of the Second Series B Convertible Preferred Stock is
convertible at the rate of one hundred (100) shares of common stock;
3. One hundred seventy-five thousand seven hundred (175,700) shares of
Second Series B Convertible 8% Preferred Stock, at $10 par value per share,
200,000 shares authorized, convertible at the rate of one hundred (100) shares
of common stock for each share of Second Series B Convertible Preferred Stock;
4. Twenty-two thousand eight hundred seventy-six (22,876) shares of Series
C Convertible Preferred Stock, at $10 par value per share, 1,000,000 shares
authorized, convertible at the rate of ten (10) shares of common stock for each
share of Series C Convertible Preferred Stock;
5. Five hundred fifty-two thousand one hundred eighty-one (552,181) shares
of Fourth Series P Convertible Participating Preferred Stock at $10 par value
per share, 600,000 authorized convertible at the rate of ten (10) shares of
common stock for each share of Series P Convertible Participating Preferred
Stock.
6. Thirty-two thousand one hundred and fifty (32,150) shares of Third
Series S Convertible Participating Preferred Stock, at $10 par value per share,
50,000 shares authorized, convertible at the rate of one hundred (100) shares of
common stock for each share of Third Series S Convertible Participating
Preferred Stock;
-7-
<PAGE> 8
7. One million eight hundred and thirteen thousand one hundred and
sixty-nine (1,813,169) Class B Redeemable Common Stock Purchase Warrants
exercisable into three million eight hundred and seven thousand six hundred and
fifty-five (3,807,655) shares of the Company's Common Stock.
8. Seventeen million nine hundred and sixty-five thousand five hundred and
twenty-two (17,965,522) fully paid and non-assessable common stock purchase
warrants.
The total number of shares of common stock which would be outstanding
assuming all of the warrants and convertible preferred stock were to be
exercised or converted is 70,449,845.
The Company's First Series A Convertible 5% Preferred Stock and the
Company's Second Series B Convertible 8% Preferred Stock were issued through
private placements for the purpose of increasing the capital of the Company.
The Series C Convertible Preferred Stock was issued to certain holders of the
Company's secured notes in lieu of accrued interest. The Third Series S
Convertible Participating Preferred Stock was issued to certain stockholders
consisting mainly of officers and directors of the Company in exchange for such
stockholders' shares of common stock. Such common stock was then sold on
September 5, 1995 for the purpose of raising additional capital. The Fourth
Series P Convertible Participating Preferred Stock was issued to InfoPak, Inc.
shareholders in exchange for all of the outstanding capital stock of InfoPak,
Inc. on September 12, 1995. Certain financial information with regard to the
acquisition of InfoPak, Inc. is set forth in Appendix I.
To accommodate the future exercise of the warrants and/or conversion of the
convertible preferred stock described above, at the Meeting, the
stockholders will vote on a proposal to amend the Company's Certificate of
Incorporation to authorize in the aggregate 90,000,000 shares of common stock
and 10,000,000 shares of preferred stock.
The Company has not entered into any agreement regarding the issuance of a
significant number of additional shares other than as described above and does
not have any other present intention to issue any of the additional shares of
common stock or preferred stock to be authorized. However, the Company intends
to seek additional funding and/or other business ventures which would require
the issuance of the Company's securities.
DESCRIPTION OF PROPOSED AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION
To effect the proposed amendment to the Company's Certificate of
Incorporation to authorize in the aggregate 90,000,000 shares of common stock
and 10,000,000 shares of preferred stock, Article FOURTH of the Certificate of
Incorporation would be amended to provide as follows:
-8-
<PAGE> 9
The total number of shares of stock which the corporation shall have
authority to issue is One Hundred Million (100,000,000), consisting of Ten
Million (10,000,000) shares of Preferred Stock, all of the par value of
($.001), and Ninety Million (90,000,000) shares of Common Stock, all of a
par value of ($.001).
-9-
<PAGE> 10
INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
General. The Company is presently authorized to issue 20,000,000 shares of
common stock, par value $.001 per share. Of such number, 17,601,098 shares
were issued and outstanding at November 3, 1995. The proposed amendment to the
Certificate of Incorporation would increase the number of authorized shares of
common stock from 20,000,000 to 90,000,000. Such additional authorized shares
of common stock will have no preemptive rights. No further vote of the
stockholders will be required to issue such additional shares of authorized
common stock.
INCREASE IN AUTHORIZED SHARES OF PREFERRED STOCK
General. The Company is authorized to issue 2,000,000 shares of preferred
stock, par value $ .001 per share. Of such number, 840,159 shares were issued
and outstanding at November 3, 1995. The proposed amendment to the Certificate
of Incorporation would increase the number of authorized shares of preferred
stock from 2,000,000 to 10,000,000. No further vote of the stockholders will
be required to issue such additional shares of authorized preferred stock.
Under Delaware law and under the terms of the Certificate of Incorporation,
the Company's preferred stock may be issued in series established from time to
time by the Board of Directors. In this connection, the Board of Directors has
broad discretion to set the terms of the preferred stock, and, if it decided
to, may fix for each series, without further stockholder approval, (1) the rate
of the dividend, (2) the price at which and the terms and conditions on which
shares may be redeemed, (3) the amount payable upon shares in the event of
voluntary or involuntary liquidation, (4) sinking fund provisions, if any, for
the redemption of the Company or purchase of shares, (5) the terms and
conditions on which shares may be converted, if the shares of any series are
issued with the privilege of conversion, and (6) voting rights, if any.
The Board of Directors may fix the number of votes to which each share of
preferred stock is entitled, or deny voting rights to the shares of any series,
except to the extent voting rights are expressly granted by applicable law.
Depending upon the terms or voting rights granted to any series of preferred
stock, issuance thereof could result in a reduction in the voting power of the
holders of common stock or other preferred stock.
It is not possible to state the actual effect of the authorization of the
preferred stock or other classes of stock upon the rights of holders of common
stock until the Board of Directors determines the respective rights of the
holders of one or more series of the preferred stock. However, such effects
might include without limitation: (a) restrictions on dividends on common
stock if preferred stock is issued with a preferential (and possibly
cumulative) dividend right and dividends on the preferred stock are in arrears;
(b) substantial dilution of the voting power of the common stock to the extent
that the
-10-
<PAGE> 11
preferred stock has voting rights or to the extent that any preferred stock is
given conversion rights into common stock; and (c) the holders of common stock
not being entitled to share in the Company's assets upon liquidation or
dissolution until satisfaction of any liquidation preference granted to the
preferred stock, which the Board of Directors can set at its discretion. The
Board of Directors could also authorize holders of the preferred stock to vote,
either separately as a class or with the holders of common stock, on any
merger, sale or exchange of assets by the Company or other extraordinary
corporate transaction. Shares of preferred stock could also be privately
placed with purchasers who might ally themselves with the Board in opposing a
hostile takeover bid, diluting the stock ownership or voting power of persons
seeking to obtain control of the Company.
In addition, the Company may be affected to the extent that preferred stock
is issued which is, by its terms, redeemable, either at the option of the
Company or the holder of preferred stock, in accordance with such terms and
conditions as may be designated by the Board of Directors in creating such
series. The amount payable by the Company upon redemption of the preferred
stock will be the redemption price fixed for the shares of each series by the
Board of Directors and may also include payment of all accumulated and unpaid
dividends. There are many other potential effects not mentioned here.
POTENTIAL ANTI-TAKEOVER EFFECTS OF INCREASE IN AUTHORIZED CAPITAL STOCK
The Board of Directors is not aware of any attempts to takeover or effect a
change in control of the Company. As such, the proposed amendment to the
Certificate of Incorporation increasing the authorized capital stock of the
Company is not the result of a specific effort by the Board of Directors to
thwart any known takeover attempts. Nonetheless, the increase in the
authorized shares could be used to impede a takeover attempt since new shares
could be issued to dilute the stock ownership of a person attempting to acquire
control of the Company.
Any provision which discourages the acquisition of Company stock by a person
seeking control could be beneficial to the stockholders generally to the extent
that it (i) provides for greater stability and continuity of management, (ii)
protects stockholders against unfair or inequitable mergers or tender offers,
and (iii) helps discourage or prevent a takeover by an acquiror seeking to
obtain control in order to break up and auction off the Company's component
parts or otherwise act in nonbeneficial ways with respect to the Company or its
assets. However, such provisions could also have the effect of discouraging,
making costlier or more difficult, or preventing a merger or a tender offer
which would be beneficial to the Company's stockholders. Moreover, the adoption
of the proposed amendments to the Certificate of Incorporation may have the
effect of assisting the Company's management in retaining its position, even if
removal would be beneficial to the stockholders generally. Consequently,
management would be in a better position to resist changes that might benefit
stockholders generally, but that might be disadvantageous to management.
-11-
<PAGE> 12
GENERAL EFFECT OF APPROVAL OF ADDITIONAL COMMON STOCK AND PREFERRED STOCK
Dilution of Voting Power. The approval of additional common stock and
preferred stock will have the effect of diluting the voting power of the
stockholders entitled to vote only to the extent the warrants described in the
Background Section above exercised. The conversion of existing preferred stock
into the additional shares of common stock of the Company have no effect on the
voting power of the stockholders of the Company because the preferred
stockholders are currently entitled to vote in the same ratio that such
preferred stockholders' shares would be converted into common shares of the
Company.
Dilution of Dividend Rights. To the extent that the warrants described in
the Background Section are exercised, the Second Series B Convertible Preferred
Stock shareholders right to dividends will be diluted in proportion to any
increase in the number of issued Second Series B Convertible Preferred Stock
resulting from the exercise of such warrants.
The Board of Directors unanimously recommends that stockholders vote FOR this
proposal at the Meeting.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of the outstanding shares
of the Company's voting stock is required for the adoption of the proposed
amendment to the Certificate of Incorporation authorizing additional shares of
common stock and preferred stock.
-12-
<PAGE> 13
PROPOSAL 2
CHANGE OF COMPANY NAME
At the Meeting, the stockholders will vote on a proposal to amend the
Certificate of Incorporation of the Company to change the name of the Company
from "Dimensional Visions Group, Ltd.," to "Dimensional Group, Inc."
The Company has proposed the change of name to more accurately reflect the
nature of the Company's current and future operations.
The Board of Directors unanimously recommends that the stockholders vote FOR
this proposal at the Meeting.
DESCRIPTION OF PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
Article FIRST of the Company's Certificate Incorporation would be amended to
read as follows:
The name of the corporation (hereinafter called the
"corporation") is DIMENSIONAL GROUP, INC.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of holders of a majority of the outstanding shares of
the Company's voting stock is required in order to approve this proposal. If
approved, this change of name will be effective upon filing with the Secretary
of the State of Delaware of a Certificate of Amendment to the Certificate of
Incorporation of the Company, which is expected to follow shortly after the
Meeting.
ADDITIONAL INFORMATION
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Meeting other than those set forth in the Notice of Special Meeting of
Stockholders. However, it is intended that proxies solicited will be voted on
any matters that may properly come before the Meeting in the discretion of the
persons named in the proxy.
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<PAGE> 14
1995 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 1995 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's proxy statement,
they must be received by the Company at its executive offices, located at 718
Arch Street, Suite 202N, Philadelphia, Pennsylvania 19106, on or before January
31, 1996.
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<PAGE> 15
APPENDIX I
<PAGE> 16
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> 17
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1995 AND 1994
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 concern.
The Company has
F-2
<PAGE> 18
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1995 AND 1994
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.
Gitomer & Berenholz, P.C.
Jenkintown, Pennsylvania
September 18, 1995
F-3
<PAGE> 19
DIMENSIONAL VISIONS GROUP, LTD.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
DEFICIENCY
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
=========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
<S> <C>
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 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 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> 20
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 (1,192,332) (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> 21
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) Additional
------------ Paid-In
Shares Amount Shares Amount Capital Deficit Total
------ ------ ------ ------ ------------- --------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1993 77,250 $772,500 15,461,098 $15,461 $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> 22
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) Additional
------------ Paid-In
Shares Amount Shares Amount Capital Deficit Total
------ ------ ------ ------ ------------- ------------- -----
<S> <C> <C> <C> <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 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 77,250 $772,500 16,361,098 $16,361 $11,726,027 ($13,530,024) ($1,015,136)
====== ======== =========== ======= =========== ============ ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-7
<PAGE> 23
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) Additional
------------ Paid-In
Shares Amount Shares Amount Capital Deficit Total
------ ------ ------ ------ ------------ --------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1994 77,250 $772,500 16,361,098 $16,361 $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 - - 165,000 165 16,335 - 16,500
Exercise of 110,000 warrants
to purchase 110,000 shares of
the Company's common stock @
$.01 per share - - 110,000 110 990 - 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> 24
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> 25
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> 26
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> 27
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:
<TABLE>
<S> <C>
Equipment 5-7 years
Furniture and fixtures 5 years
Leasehold improvements Term of the initial operating lease (5 years)
</TABLE>
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> 28
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> 29
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
18,370,000 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 at $.01 per share
to certain Note Holders who lent funds to the Company during 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> 30
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> 31
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 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
18,370,000 shares of the Company's common stock. As of June 30, 1995,
the Company had 1,813,169 publicly-held warrants to purchase 1,813,169
shares of 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
F-16
<PAGE> 32
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
NOTE 9 STOCK OPTION PLAN (CONTINUED)
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 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 $99,031 and has been classified as an
Extraordinary item.
NOTE 11 INCOME TAXES
The Company adopted Statement of Financial Standards ("SFAS") No. 109,
"Accounting for Income Taxes" effective July 1, 1993. There is no
cumulative effect of adopting SFAS 109 on the Company's financial
statements for the year ended June 30, 1994. Restatement of prior years
for the effect of SFAS No. 109 would not have materially changed
previously reported losses.
The Tax effects of significant items comprising the Company's net
deferred taxes as of June 30, 1995 were as follows:
<TABLE>
<CAPTION>
1995
------
<S> <C>
Deferred Tax Assets:
Property ($ 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.
F-17
<PAGE> 33
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
NOTE 11 INCOME TAXES (CONTINUED)
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.
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 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 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 32,150 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> 34
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 AND 1994
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 Annual
Report on Form 10-KSB 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.
Gitomer & Berenholz, P.C.
Jenkintown, Pennsylvania
September 18, 1995
F-19
<PAGE> 35
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:
<TABLE>
<S> <C>
Equipment 5-7 years
Furniture & Fixtures 5 years
Leasehold improvements Term of initial operating lease (5 years)
</TABLE>
F-20
<PAGE> 36
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> 37
INFOPAK, INC.
FINANCIAL STATEMENTS
WITH
INDEPENDENT ACCOUNTANTS' REPORT
DECEMBER 31, 1994
BILLER, FRITH-SMITH & ARCHIBALD Certified Public Accountants
<PAGE> 38
CONTENTS
<TABLE>
<CAPTION>
Page
------
<S> <C>
Independent auditors' report 1
Financial statements
Balance sheet 2
Statement of income and deficit 3
Statement of cash flows 4
Notes to financial statements 5-8
Independent accountants' report on additional information 9
Supporting schedule of selling and marketing,
and general and administrative expenses 10
</TABLE>
BILLER, FRITH-SMITH & ARCHIBALD Certified Public Accountants
<PAGE> 39
To the Board of Directors
Infopak, Inc.
Phoenix, Arizona
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of
Infopak, Inc., as of December 31, 1994, and the related
statements of income and deficit, and cash flows for
the year then ended. 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 audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Infopak, Inc. as of December 31,
1994, and the results of its operations and its cash
flows for the year then ended in conformity with
generally accepted accounting principles.
Tarzana, California
May 4, 1995
<PAGE> 40
2
INFOPAK, INC.
BALANCE SHEET
DECEMBER 31, 1994
ASSETS
<TABLE>
<S> <C> <C>
Current assets
Cash $ 74,093
Accounts receivable, net of
allowance for doubtful
accounts of $15,000 129,612
Notes and other receivables 56,950
Inventory 259,982
-----------
Total current assets 520,637
Property, equipment and development costs
net of accumulated depreciation 118,838
Other assets
Start-up costs, net of amortization 136,790
Deposits 1,140
-----------
Total other assets 137,930
-----------
$ 777,405
===========
</TABLE>
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<S> <C> <C>
Current liabilities
Accounts payable $ 42,409
Accrued payroll 26,476
Accrued payroll taxes 24,025
Accrued interest 47,425
Commissions payable 31,924
Royalties payable 179,028
Current portion of long-term debt 175,000
-----------
Total current liabilities 526,287
Long-term liabilities 527,894
Stockholders' deficit
Common stock, $.01 par value,
40,000,000 shares authorized,
5,071,131 shares issued and
outstanding 50,711
Deficit ( 327,487)
-----------
Total stockholders' deficit ( 276,776)
-----------
$ 777,405
===========
</TABLE>
See accompanying accountants' audit report and notes to financial statements
<PAGE> 41
3
INFOPAK, INC.
STATEMENT OF INCOME AND DEFICIT
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
Revenue from sales $ 2,199,089 100.0 %
Cost of goods sold 1,457,054 66.3
------------ ------
Gross profit 742,035 33.7
------------ ------
Selling and marketing expenses 631,908 28.7
General and administrative 268,308 12.2
------------ ------
900,216 41.0
------------ ------
Loss before taxes and other expenses ( 158,181) ( 7.2)
Interest expense 33,436 1.5
------------ ------
Loss before income taxes ( 191,617) ( 8.7)
Provision for income taxes - 0 - -
------------ ------
Net loss ( 191,617) ( 8.7)%
======
Deficit, beginning of year ( 135,870)
------------
Deficit, end of year $( 327,487)
============
</TABLE>
See accompanying accountants' audit report and notes to financial statements
<PAGE> 42
4
INFOPAK, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $( 191,617)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 72,940
Changes in assets and liabilities:
Notes and other receivables 355,243
Supplies and samples 1,119
Inventory ( 259,982)
Accounts payable 26,220
Accrued expenses 26,483
-----------
Net cash provided by operating activities 30,406
-----------
Cash flows from investing activities:
Cash purchases of property and equipment ( 11,235)
-----------
Net cash used in investing activities ( 11,235)
-----------
Cash flows from financing activities:
Proceeds from notes payable 28,655
Repurchase of common stock ( 5,155)
-----------
Net cash provided by financing activities 23,500
-----------
Net increase in cash 42,671
Cash, beginning of year 31,422
-----------
Cash, end of year $ 74,093
===========
Supplemental disclosure of cash flows information:
Cash paid during the period for:
Interest $ 21,802
===========
Income taxes $ - 0 -
===========
</TABLE>
See accompanying accountants' audit report and notes to financial statements
<PAGE> 43
5
INFOPAK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Line of business
The Company designs and manufactures products in the hand held
personal computer industry.
Property and equipment and depreciation
Property and equipment are stated at cost. Depreciation is computed
using the straight line method over the estimated useful lives of the
assets. The estimated useful lives are as follows:
<TABLE>
<S> <C>
Machinery and equipment 3 - 5 years
Furniture and fixtures 3 - 5 years
Development costs 5 years
</TABLE>
Expenditures for replacements and betterments are capitalized, while
repairs and maintenance are charged to expense as incurred.
Start-up costs amortization
Start-up costs are amortized on the straight line method over seven
years that commenced in 1993.
Income taxes
The Company elected in 1993, by unanimous consent of the shareholders,
to be taxed as an S-Corporation under the provisions of the Internal
Revenue Code. Under such provision, the Company does not pay federal
or state corporate income taxes on its taxable income. Therefore, no
provisions for federal or state income taxes have been made. Each
individual shareholder is to report his respective share of the
Company's taxable income, to the extent allowable, on his federal and
state income tax returns.
<PAGE> 44
6
INFOPAK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
2. NOTES AND OTHER RECEIVABLES
During the year ended December 31, 1994, the Company did not advance
any additional funds to employee/shareholders. The amounts are
recorded as notes receivable from the employee/shareholders with
interest calculated annually at 6% and not to exceed specified
amounts. Repayment is to begin when certain conditions are met.
3. INVENTORY
Inventory consists of finished goods.
4. PROPERTY, EQUIPMENT AND DEVELOPMENT COSTS
Property, equipment and development costs consist of the following:
<TABLE>
<CAPTION>
Accumulated Net Book
Cost Depreciation Value
---------- ------------ -----------
<S> <C> <C> <C>
Machinery $ 21,926 $ 10,593 $ 11,333
Furniture and fixtures 1,994 1,701 293
Software development 8,469 4,188 4,281
Hardware development 198,009 95,078 102,931
---------- ------------ -----------
$ 230,398 $ 111,560 $ 118,838
========== ============ ===========
</TABLE>
<TABLE>
<S> <C> <C>
5. START-UP COSTS
Start-up costs consist of expenses incurred
for developing the Company's initial product
patents, copyrights and manufacturing processes. $ 174,096
Accumulated amortization 37,306
-----------
$ 136,790
===========
</TABLE>
<PAGE> 45
7
INFOPAK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
6. LONG-TERM DEBT
Long-term debt consists of the following:
Notes payable, unsecured, with monthly
payments including interest at 8%,
commencing when the Company becomes
profitable on a tax basis. $ 281,434
Loan payable, unsecured, due on demand,
non-interest bearing. 175,000
Loans payable, employees, unsecured, with
monthly payments including interest at 6%,
commencing when the Company becomes
profitable on a tax basis. No payments
were made during 1994. 246,460
-----------
702,894
Current maturities 175,000
-----------
$ 527,894
===========
</TABLE>
Future maturities of long-term debt are as follows:
<TABLE>
<S> <C>
Year Ending December 31,
------------------------
1995 $ 175,000
Thereafter 527,894
-----------
$ 702,894
===========
</TABLE>
7. COMMON STOCK
The Company repurchased 515,464 shares of common stock during 1994 for
a total of $6,008.97. The stock was retired and is available for
issuance at a latter date.
8. INCOME TAXES
The Company has a tax liability to the state of Arizona for the
minimum state income tax of $50. There is no federal income tax due
to the Company being a subchapter "S" corporation (Note 1). The
amount of the liability is immaterial and not accrued in the
financial statements.
<PAGE> 46
8
INFOPAK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
9. COMMITMENTS AND CONTINGENCIES
Lease
The Company has a month to month, noncapitalized operating lease for
its premises.
Royalty agreement
The Company has a royalty agreement with certain officers of the
Company. This agreement is to pay a royalty for sales of
manufactured product. The royalty accrues and will be paid when the
Company becomes profitable on a tax basis. There were no royalties
paid during 1994.
Bonus plans
The Company entered into a bonus plan in 1993 to pay management and
employees a percentage of the net profit on a cash (tax) basis. As of
May 4, 1995 there have been no bonuses paid.
Income taxes
The Company has a net operating loss carryover which is available if
the Company reverts to a "C" corporation. The net operating loss
expires in 2008.
Long term debt
In 1994 the notes payable were renegotiated to begin payments after
the Company becomes profitable on a tax basis. (See note 6)
10. SUBSEQUENT EVENTS
Long term debt
Subsequent to the balance sheet date, a potential investor requested
the return of his initial deposit for the purchase of stock. Due to
this the stock purchase deposit has been reclassified as a loan
payable. (Note 6)
<PAGE> 47
9
Board of Directors and Stockholders
Infopak, Inc.
Phoenix, Arizona
INDEPENDENT ACCOUNTANTS' REPORT ON ADDITIONAL INFORMATION
Our report on our audit of the basic financial statements
of Infopak, Inc. for 1994 appears on page one. That
audit was made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The
supporting schedule of selling and marketing and general
and administrative expenses is presented for purposes of
additional analysis and is not a required part of the
basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
Tarzana, California
May 4, 1995
<PAGE> 48
10
INFOPAK, INC.
SUPPORTING SCHEDULE OF SELLING AND MARKETING, AND
GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
Selling and marketing
---------------------
Commissions $ 63,445 2.9
Health insurance 42,420 1.9
Insurance 10,527 0.5
Marketing 13,344 0.6
Moving expenses 4,307 0.2
Payroll taxes 34,907 1.6
Salaries 451,715 20.5
Sales expense 9,223 0.4
Travel and entertainment 2,020 0.1
----------- ----
Total $ 631,908 28.7 %
=========== ====
General and administrative
--------------------------
Accounting $ 2,000 0.1 %
Amortization and depreciation 72,940 3.3
Legal and professional 10,512 0.5
Miscellaneous 19,185 0.9
Office expense 107,306 4.9
Repairs and maintenance 966 -
Rent 14,725 0.7
Taxes and licenses 96 -
Telephone 13,165 0.6
Travel 27,413 1.2
----------- -----
Total $ 268,308 12.2 %
=========== =====
</TABLE>
See accountants' report
<PAGE> 49
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(Unaudited)
The pro forma consolidated balance sheet is presented to show the financial
position of Dimensional Visions Group, Ltd. (Company) as if the acquisition of
InfoPak, Inc. had occurred on June 30, 1995, and the pro forma consolidated
statement of operations as if the acquisition of InfoPak, Inc. had occurred on
July 1, 1994, using the assumptions and adjustments described in the
accompanying notes.
These pro forma consolidated financial statements have been prepared for
comparative purposes only, and do not purport to indicate what necessarily
would have occurred had the acquisition been completed since inception, or what
results may be in the future. The pro forma consolidated financial statements
should be read in conjunction with the historical financial statements and
notes, as presented in the 1995 Annual Form 10-KSB/A for the year ended June
30, 1995.
On September 12, 1995, the Company acquired all of the outstanding capital
stock of InfoPak, Inc., pursuant to a merger agreement dated September 6, 1995.
The Company issued 500,000 shares of Series P Convertible Preferred Stock
valued at $2,750,000 and the issuance of an additional 34,681 shares of Series
P Convertible Preferred Stock relating to the cancellation of Notes and accrued
interest of InfoPak, Inc. and 17,500 shares of Series P Convertible Preferred
Stock relating to certain employees and a consultant of InfoPak, Inc.
<PAGE> 50
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $ 227,972 $ 275,632(1) $ 503,604
Receivables
Trade 18,690 8,867(1) 27,557
Employee - 44,078(1) 44,078
Inventory 26,453 114,383(1) 140,836
Prepaid suppliers and expenses 43,361 - 43,361
------------ ----------- ------------
Total current assets 316,476 442,960 759,436
------------ ----------- ------------
Equipment and leasehold improvements, net 81,363 42,804(1) 124,167
------------ ----------- ------------
Other Assets
Patent rights and other assets 53,398 96,250(2)
1,140(1) 150,788
Goodwill 2,380,356(1)
190,746(3)
- 36,866(4) 2,607,968
------------ ----------- ------------
53,398 2,705,358 2,758,756
------------ ----------- ------------
Total assets $ 451,237 $ 3,191,122 $ 3,642,359
============ =========== ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
<S> <C> <C> <C>
Current Liabilities
Notes payable
Employees $ - $ 73,729(1) $ 73,729
Other 50,000 - 50,000
Accounts payable, accrued expenses and 36,866(4)
other liabilities 404,489 43,531(1) 484,886
------------ ----------- ------------
Total Current Liabilities 454,489 154,126 608,615
------------ ----------- ------------
Long term debt
Secured notes 1,837,000 - 1,837,000
Accrued interest payable 210,741 - 210,741
------------ ----------- ------------
2,047,741 - 2,047,741
------------ ----------- ------------
Stockholders' equity (deficiency)
Preferred stock 772,500 10,000,000(1)
350,000
693,620 11,816,120
Common stock 16,936 - 16,936
Additional paid-in capital 11,881,927 (7,250,000)(1)
(253,750)(2)
(502,874)(3) 3,875,303
Deficit (14,722,356) - (14,722,356)
------------ ----------- ------------
Total stockholders' equity (deficiency) ( 2,050,993) 3,036,996 986,003
------------ ----------- ------------
Total liabilities and stockholders equity (deficiency) $ 451,237 $ 3,191,122 $ 3,642,359
============ =========== ============
</TABLE>
The accompanying notes to pro forma consolidated financial statements
are an integral part of this statement.
<PAGE> 51
DIMENSIONAL VISIONS GROUP, LTD.
AND SUBSIDIARIES
PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Results of
Operations of Pro Forma
Historical InfoPak, Inc.(8) Adjustments Pro Forma
---------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
Operating revenue $ 134,028 $2,199,997 $ - $2,334,025
------------ ------------ ------------ --------------
Operating expenses 241,240 1,395,276 (81,682)(5) 1,554,834
Cost of sales 299,267 238,378 14,664(6) 552,309
Research and development costs 120,359 184,494 6,418(6) 311,271
Marketing expenses 460,680 401,595 11,006(6)
General and administrative expenses - - 521,594(7) 1,394,875
------------ ------------ ------------ --------------
Total operating expenses 1,121,546 2,219,743 472,000 3,813,289
------------ ------------ ------------ --------------
Loss before other income (expenses) (987,518) (19,746) (472,000) (1,479,264)
------------ ------------ ------------ --------------
Other income (expense)
Interest expenses (208,717) (27,625) 12,021(5) (224,321)
Interest income 1,318 2,491 - 3,809
Gain on sale of equipment 2,585 - - 2,585
------------ ------------ ------------ --------------
(204,814) (25,134) (12,021) (217,927)
------------ ------------ ------------ --------------
Net loss ($1,192,332) ($ 44,880) ($ 459,979) ($1,697,191)
============ ============ ============ =============
Loss per share ($.10)
======
Weighted average number of shares
outstanding 16,476,769
==========
</TABLE>
The accompanying notes to pro forma consolidated financial statements
are an integral part of this statement.
<PAGE> 52
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(Unaudited)
(1) Represents the acquisition of the net assets of InfoPak, Inc. on
September 12, 1995, the issuance of 500,000 shares of Series P
Convertible Preferred Stock and the recording of Goodwill resulting from
the excess purchase price over the value of the net assets acquired.
(2) Represents the issuance of 17,500 shares of Series P Convertible
Preferred Stock in connection with employment and consulting contract
signing bonuses to certain employees and a consultant to InfoPak, Inc.
(3) Represents the issuance of 34,681 shares of Series P Convertible
Preferred Stock in connection with the cancellation of debt and related
accrued interest due to certain shareholders of InfoPak, Inc.
(4) Represents legal fees in connection with the merger agreement dated
September 6, 1995.
(5) Represents the elimination of royalty fees and interest expense which
would not be incurred by the Company to operate InfoPak, Inc.
(6) Represents the amortization of the deferred compensation expense (signing
bonuses) over the three year term of the employment contracts, and two
year term of the consulting contract.
(7) Represents amortization of Goodwill over a period of five years.
(8) Represents the pro forma results of operations of InfoPak, Inc. for 12
monthly periods from July 1, 1994 through June 30, 1995.
<PAGE> 53
[FRONT SIDE OF PROXY CARD]
P
R DIMENSIONAL VISIONS GROUP, LTD.
O
X PROXY SOLICITED BY THE BOARD OF DIRECTORS
Y SPECIAL MEETING OF STOCKHOLDERS - DECEMBER 8, 1995
The undersigned stockholder of Dimensional Visions Group, Ltd.
(the "Company"), revoking all previous proxies, hereby appoints
Steven M. Peck and George S. Smith and each of them acting
individually, as the attorney and proxy of the undersigned, with full
power of substitution and resubstitution, to vote all shares of the
Company's voting stock which the undersigned would be entitled to vote
if personally present at the Special Meeting of Stockholders of the
Company, to be held at 9:00 a.m., (Local Time), at the Company's
principal executive offices located at 718 Arch Street, Suite 202N,
Philadelphia, Pennsylvania 19106 on December 8, 1995, and at any
adjournment or postponement thereof. Said proxies are authorized and
directed to vote as indicated with respect to the following matters:
1. To consider and vote upon a proposal to _ FOR
amend the Company's Certificate of
Incorporation to authorize additional _ AGAINST
shares of common stock and preferred stock
of the Company. _ ABSTAIN
2. To amend the Certificate of Incorporation _ FOR
to change the name of the Company to
"Dimensional Group, Inc." _ AGAINST
_ ABSTAIN
3. To transact such other business as may properly come before this
meeting.
<PAGE> 54
[BACK SIDE OF PROXY CARD]
This Proxy is solicited on behalf of the Board of Directors.
Unless otherwise specified, the shares will be voted FOR the
authorization of additional shares of common stock and preferred stock
of the Company, FOR the proposal to change the Company's name, in
each case as described in the accompanying Proxy Statement. This
Proxy also delegates discretionary authority to vote with respect to any
other business which may properly come before the meeting or any
adjournment or postponement thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE
SPECIAL MEETING OF THE STOCKHOLDERS OF DIMENSIONAL VISIONS GROUP, LTD.
TO BE HELD DECEMBER 8, 1995.
Dated:_________________________, 1995
_____________________________________
Signature of Stockholder
_____________________________________
Signature of Stockholder
NOTE: Please sign this Proxy exactly
as name(s) appear in address. When
signing as attorney-in-fact, executor,
administrator, trustee or guardian,
please add your title as such. If
stockholder is a corporation, please
sign with full corporate name by duly
authorized officer or officers and
affix the corporate seal. When
stock is held in the name of two or
more persons, all such persons should
sign.
PLEASE, SIGN, DATE AND RETURN THIS PROXY.
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
