<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential,
for Use of the Commission Only
/X/ Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DIMENSIONAL VISIONS GROUP, LTD.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
JOHN L. THOMAS
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing party:
DVG
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(4) Date filed:
2-16-96
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- ---------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE> 2
DIMENSIONAL VISIONS GROUP, LTD.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 20, 1996
Dear Stockholder:
An Annual Meeting of Stockholders of Dimensional
Visions Group, Ltd. (the "Company") will be held at the offices of Clark,
Ladner, Fortenbaugh & Young, One Commerce Square, 2005 Market Street,
Philadelphia, Pennsylvania 19103 on March 20, 1996, at 9:00 a.m. (local time)
for the following purposes:
1. to elect three directors;
2. to ratify the appointment of Gitomer &
Berenholz, P.C. as the Company's independent
auditors for the current fiscal year;
3. 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
4. to transact such other business that may
properly come before the meeting.
A copy of the Annual Report for the fiscal year ended
June 30, 1995, is enclosed for your information.
The Board of Directors has fixed the close of
business on February 14, 1996, as the record date for the Annual Meeting. Only
stockholders of record at that time are entitled to notice of and to vote at
the Annual Meeting, and any adjournment or postponement thereof.
All stockholders are cordially invited to attend the
Annual 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 Annual
Meeting. The Board of Directors urges you to date, sign and return promptly
the enclosed proxy, even if you plan to attend the Annual Meeting. The return
of the proxy will not affect your right to vote in person if you do attend the
Annual Meeting. Executed proxies which contain no direction on the proposals
presented will be voted FOR the election of the three nominees to the Board of
Directors, FOR the ratification of Gitomer & Berenholz, P.C. as the Company's
independent
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auditors, and FOR the authorization of additional shares of common stock and
preferred stock of the Company.
By Order of the Board of Directors,
/s/ Steven M. Peck
----------------------
Steven M. Peck,
Chief Executive Officer
Dated: February 20, 1996
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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 Annual Meeting of the Company's
Stockholders to be held at the offices of Clark, Ladner, Fortenbaugh & Young,
One Commerce Square, 2005 Market Street, Philadelphia, Pennsylvania 19103 on
March 20, 1996 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 February 20, 1996.
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 business on February 14, 1996, as listed below, are entitled
to receive notice of, and to vote at, the Meeting and any adjournment thereof:
1. On February 14, 1996, there were 17,966,098
shares of common stock issued and outstanding. Each share of common stock is
entitled to one (1) vote for each matter considered;
2. On February 14, 1996, there were 52,250
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. On February 14, 1996, 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 February 14, 1996, 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;
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5. On February 14, 1996, 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 February 14, 1996, there were 548,879
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 46,558,648.
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 election of the three
nominees to the Board of Directors, FOR the ratification of Gitomer &
Berenholz, P.C. as the Company's independent auditors, and FOR the
authorization of additional shares of common stock and preferred stock of the
Company, and in the discretion of the persons named in the proxy, if granted,
on all other matters properly presented to the Meeting.
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<PAGE> 6
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
February 14, 1996, and their percentage ownership of Common Stock and their
percentage voting power.
<TABLE>
<CAPTION>
=====================================================================================================
Name and Address of Amount and Nature of Percent
Beneficial Owners Beneficial Ownership(1) Ownership
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<S> <C> <C>
George S. Smith(2) 6,279,840 25.9%
3130 Alexis Drive
Palo Alto, California 94304
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H. Thomas Ferstl(3) 4,165,920 18.8%
8761 State Street
Millington, MI 48746
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Avonwood Capital Corporation(4) 2,200,800 10.9%
3 Radnor Corporation Center
Suite 400
Radnor, PA 19087
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John Arrillaga(6) 1,770,680 9.0%
1950 Cowper Street
Palo Alto, CA 93401
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Richard Peery(7) 1,770,680 9.0%
2200 Cowper Street
Palo Alto, CA 94301
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James B. Salmon(8) 1,696,160 8.8%
1525 Lakesite Drive
Birmingham, AL 35235
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Hans J. Kaemmlein(9) 1,731,120 8.8%
80 Orville Drive
Bohemia, NY 11716
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Sean F. Lee(5) 1,678,410 8.5%
InfoPak, Inc.
8855 N. Black Canyon Highway, Suite 2000
Phoenix, AZ 85021
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Marton & Kjellaug M. Klepp(10) 1,350,750 7.0%
12 Day Road
Armon, NY 10504
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John L. Miller(11) 1,250,000 6.5%
Dimensional Visions Group, Ltd.
45 E. Main Street, Suite B
Los Gatos, CA 95030
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</TABLE>
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<TABLE>
<S> <C> <C>
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Alejandro & Lida Zaffaroni(12) 1,244,190 6.5%
4005 Miranda Ave., Suite 180
Palo Alto, CA 94304
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Peter L. Jensen(13) 1,111,270 5.8%
2158 Balboa Avenue
Del Mar, CA 93014
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Robert & Jacqueline Stibor(14) 1,045,380 5.6%
9016 Thornberry Lane
Las Vegas, NV 89134
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Steven M. Peck(15) 1,000,000 5.3%
Dimensional Visions Group, Ltd.
718 Arch Street, 202N
Philadelphia, PA 19106
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All executive officers and directors as a group 3,638,410 16.8%
(3 persons)(16)
=====================================================================================================
</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, the Chairman of the Company's Board of Directors, owns
10,000 shares of the Company's Common Stock and 21,000 shares of the
Company's Third Series S Convertible Participating 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 Preferred 8% Stock which is the equivalent of
1,500,000 shares of the Company's Common Stock.
(3) Mr. Ferstl owns 3,000 shares of the Company's First Series A
Convertible 5% Preferred Stock which is convertible into 120,000 shares
of Common Stock, 30,000 shares of the Company's Second Series B
Convertible 8% Preferred Stock which is convertible into 3,000,000
shares of Common Stock and 3,592 shares of Series C Convertible Stock
which is convertible into 35,920 shares of Common Stock. Also included
in the amount are common stock purchase warrants to purchase 1,010,000
shares of the Company's Common Stock.
(4) Avonwood Capital Corporation owns 3,000 Series S Participating
Convertible Preferred Stock convertible into 300,000 shares of Common
Stock and 15,080 Fourth Series P Convertible Preferred Stock
convertible into 150,800 of Common Stock. Also included in the amount
are common stock purchase warrants to purchase 1,750,000 shares of the
Company's Common Stock.
(5) Mr. Lee, a Director of the Company and Chief Executive Officer of
InfoPak, Inc. owns 152,841 shares of Fourth Series P Convertible
Participating Preferred Stock convertible
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into ten shares of Common Stock for every one share of Fourth Series P
Convertible Participating Preferred Stock. Of this amount, 145,841
shares is owned by the Lee Family Partnership of which Mr. Lee is the
general partner. Also includes common stock purchase warrants to
purchase 150,000 shares of the Company's common stock.
(6) Mr. Arrillaga owns 5,000 shares of the Company's First Series A
Convertible 5% Preferred Stock which is convertible into 200,000 shares
of Common Stock, 15,000 shares of the Company's Second Series B
Convertible 8% Preferred Stock which is convertible into 1,500,000
shares of Common Stock and 2,068 shares of Series C Convertible Stock
which is convertible into 20,680 shares of Common Stock. Also included
in the amount are common stock purchase warrants to purchase 50,000
shares of the Company's Common Stock.
(7) Mr. Peery owns 5,000 shares of the Company's First Series A Convertible
5% Preferred Stock which is convertible into 200,000 shares of Common
Stock, 15,000 shares of the Company's Second Series B Convertible 8%
Preferred Stock which is convertible into 1,500,000 shares of Common
Stock and 2,068 shares of Series C Convertible Stock which is
convertible into 20,680 shares of Common Stock. Also included in the
amount are common stock purchase warrants to purchase 50,000 shares of
the Company's Common Stock.
(8) Mr. Salmon owns 490,000 shares of the Company's Common Stock and 11,500
shares of the Company's Second Series B Convertible 8% Preferred Stock
which is convertible into 1,150,000 shares of Common Stock and 616
shares of Series C Convertible Stock which is convertible into 6,160
shares of Common Stock. Also included in the amount are common stock
purchase warrants to purchase 50,000 shares of the Company's Common
Stock.
(9) Mr. Kaemmlein owns common stock purchase warrants to purchase 200,000
shares of the Company's Common Stock. Also included are the following,
which are held in the name of Software Marketing Corporation, which is
solely owned by Mr. Kaemmlein: (a) 15,000 shares of the Company's
Second Series B Convertible 8% Preferred Stock which is convertible
into 1,500,000 shares of Common Stock, and (b) 3,112 shares of Series C
Convertible Stock which is convertible into 31,120 shares of Common
Stock.
(10) Mr. and Mrs. Klepp jointly own 57,500 shares of the Company's Common
Stock and 12,500 shares of the Company's Second Series B Convertible 8%
Preferred Stock which is convertible into 1,250,000 shares of Common
Stock and 1,825 shares of Series C Convertible Stock which is
convertible into 18,250 shares of Common Stock. Also included in the
amount are common stock purchase warrants to purchase 75,400 shares of
the Company's Common Stock.
(11) Mr. Miller, an officer of the Company, owns 50,000 shares of the
Company's Common Stock, and 3,000 shares of the Company's Third Series
S Convertible Participating Preferred Stock which is convertible into
300,000 shares of the Company's Common
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<PAGE> 9
Stock. Also included in the amount are common stock purchase warrants
to purchase 900,000 shares of the Company's Common Stock. Not included
are common stock purchase warrants to purchase 2,000,000 shares of the
Company's Common Stock, which are being held by the Company in escrow,
subject to Mr. Miller meeting certain job performance goals.
(12) Mr. and Mrs. Zaffaroni jointly own 12,200 shares of the Company's
Second Series B Convertible 8% Preferred Stock which is convertible
into 1,220,000 shares of Common Stock and 2,419 shares of Series C
Convertible Stock which is convertible into 24,190 shares of Common
Stock.
(13) Mr. Jensen owns 20,000 shares of the Company's Common Stock and 10,500
shares of the Company's Second Series B Convertible 8% Preferred Stock
which is convertible into 1,050,000 shares of Common Stock and 1,627
shares of Series C Convertible Stock which is convertible into 16,270
shares of Common Stock. Also included in the amount are common stock
purchase warrants to purchase 25,000 shares of the Company's Common
Stock.
(14) Mr. and Mrs. Stibor own directly or jointly 250,000 shares of the
Company's Common Stock, 5,000 shares of the Company's First Series A
Convertible 5% Preferred Stock which is convertible into 200,000 shares
of Common Stock, 5,000 of the Company's Second Series B Convertible 8%
Preferred Stock which is convertible into 500,000 shares of Common
Stock and 38 shares of Series Convertible Stock which is convertible
into 380 shares of Common Stock. Also included in the amount are
common stock purchase warrants to purchase 95,000 shares of the
Company's Common Stock.
(15) Mr. Peck, the Company's President and Chief Executive Officer owns
common stock purchase warrants to purchase 1,000,000 shares of the
Company's Common Stock.
(16) Does not include common stock purchase warrants to purchase in the
aggregate 3,819,840 shares of the Company's Common Stock, and warrants
to purchase 15,000 shares of the Company's Series B Convertible
Preferred 8% Stock which would be convertible into 1,500,000 shares of
the Company's Common Stock.
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<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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 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 totaled approximately $208,700 which includes $141,200 of accrued
interest and $67,500 of additional interest relating to the issuance of
warrants.
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.
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<PAGE> 11
The Company's independent auditors report contains an explanatory
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 $895,000
through the private placement of its secured notes and Common Stock, which has
allowed DVG to commence full operations. The $145,000 secured 10% notes
(including (I) warrants to purchase 14,500 shares of Series B Convertible
Preferred, each share of which is convertible into 100 shares of the Company's
Common Stock, and (ii) warrants to purchase 105,000 shares of the Company's
Common Stock) were sold for $145,000. The Company sold 3,000,000 shares of its
Common Stock through a Regulation S stock offering for $750,000. At the time
the Company initially entered into negotiations for the Regulation S offering,
the market price of its common stock ranged between $.40 and $.75 per share.
When negotiations were concluded, the market price approximated $1.89 per
share, however, the purchasers were unwilling to increase their offered
purchase price.. As the Company had been attempting to raise funds for a period
of time with limited success, the Board of Directors determined that the above
offering was still in the best interest of the Company in order to continue its
financial viability. Also, at the time of the offering, the Company
anticipated a second funding through the same placement agent at a smaller
discount from the market price for an amount considerably more than the above
offering. However, the second placement did not occur.
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 retained earnings
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 and
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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<PAGE> 12
SIX MONTHS ENDED DECEMBER 31, 1994 AND 1995
RESULTS OF OPERATIONS
During the three months ended December 31, 1995 the net loss was ($562,915)
compared to a net loss of ($232,046) for the three months ended December 31,
1994. During the three month period ended December 31, 1995, the Company had
revenues of $309,389 and gross profit of $82,520, compared to revenues of
$48,521 and a gross loss of ($15,469) for the comparable period in 1994. The
1995 results include the operations of InfoPak which was acquired on September
12, 1995.
InfoPak accounted for $69,171 of the Company's revenues and $36,465 of the
gross profit for the three month period ended December 31, 1995.
In the third quarter of fiscal year 1995, the Company delivered to a major
producer of graphic arts consumer products, a variety of DV3D(TM) print
products for test marketing. The tests were completed in the first quarter of
fiscal year 1996, and the Company has subsequently received through its major
distributer three commercial orders for these DV3D(TM) print products. The
second order totaling approximately $225,000 was delivered in November 1995.
The Company has received a third order from this distributor totaling
approximately $ 240,000 for delivery in February and anticipates further orders
from this distributor.
The Company is attempting to continue to lower the costs of producing its
product. The main areas for this effort are with the Company's third party
suppliers of lenticular material and printing for its DV3D(TM) print products.
Operating expense was $594,862 for the three months ended December 31, 1995
compared to $183,295 for the three months ended December 31, 1994. InfoPak's
operating expenses were $200,152 for the three months ended December 31, 1995.
Engineering and development, marketing and general administrative costs for DVG
were $71,114, $30,359, and $293,237, respectively for the quarter ended
December 31, 1995, compared to $62,004, $27,116, and $94,135 for the quarter
ended December 31, 1994. The $199,100 increase in the Company's general
administrative expense was primarily due to approximate increases in
consulting costs of $80,000, legal fees $8,500, accounting costs of $40,400,
compensation of $39,500, and $15,000 for stockholder communications.
Interest expense decreased $29,210 due to the conversion of $1,752,000 of 10%
Secured Notes to preferred stock, while interest income increased with the
short-term investments of the proceeds of the $675,000 net sale of common stock
on September 5,1995. Amortization of the goodwill incurred in the acquisition
of InfoPak was $51,308 for the quarter ended December 31, 1995.
InfoPak currently produces and markets the InfoPak System(TM) to the
residential real estate agent marketplace as the InfoPak Portable MLS(TM). The
Portable MLS(TM) is currently the only product being sold. The Portable
MLS(TM) product was marketed through four distributors. The MLS product has
not generated revenues as expected by InfoPak, nor does InfoPak have any back
orders for its product at this time. InfoPak was unable to make any sales
during the three months ended December 31, 1995 through its primary distributor
due to legal negotiations over the terms of their distribution agreement.
InfoPak's revenues during the quarter totaled $69,171 compared to $239,432, in
the corresponding quarter in 1994. On February 8, 1996, negotiations with
InfoPak's primary distributor were successfully concluded in an out of court
agreement, whereby, InfoPak and the distributor entered into a new distribution
agreement with more favorable terms for InfoPak. In addition, a third party
has acquired one of the less significant
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<PAGE> 13
distributors which, should lead to increased sales for InfoPak. These sales
are anticipated to commence in February 1996.
In October 1995, InfoPak entered into a Letter of Intent with a division of
Spectrum Media, Inc. to form a joint venture. Negotiations are continuing
between the parties and no assurance can be given that a definitive agreement
can be reached.
During the six months ended December 31, 1995 the net loss was ($1,005,978)
compared to a net loss of ($513,298) for the six months ended December 31,
1994. During the six month period ended December 31, 1995, the Company had
revenues of $522,425 and gross profit of $136,140, compared to revenues of
$62,645 and a gross loss of ($18,944) for the comparable period in 1994. The
1995 results includes the operations of InfoPak which was acquired on September
12, 1995.
Operating expense was $1,036,847 for the six months ended December 31, 1995,
compared to $433,820 for the six months ended December 31, 1994. InfoPak's
operating expenses were $239,610 for the December 31, 1995 period. Engineering
and development, marketing and general administrative costs for DVG were
$116,158, $73,970, and $607,112, respectively for the six month ended December
31, 1995, compared to $169,769, $61,137, and $202,914 for the six months ended
December 31, 1994. The $53,600 reduction in development resulted primarily from
the completion of the initial development of the DV3D(TM) print product. The
Company anticipates continued efforts to refine and improve its DV3D(TM)
product. The $404,000 approximate increase in general administrative cost
was due primarily to consulting expenses of $213,700 (including $100,000 value
of warrants issued to an affiliate), additional increased legal fees of
$30,200, accounting costs of $45,800, audit fees of $24,600, compensation costs
of $54,700, prior rent settlement costs of $20,000, and $15,000 for stockholder
communications.
Interest expense decreased $8,596 due to the conversion of $1,752,000 of 10%
Secured Notes to preferred stock, while interest income increased primarily due
to the short-term investments of the proceeds of the $675,000 net sale of
common stock on September 5,1995. Amortization of the goodwill incurred in the
acquisition of InfoPak was $59,858 for the six months ended December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
On December 31, 1995, the Company had working capital of $115,206, compared to
a working capital deficiency of ($138,013) on June 30, 1995. During the three
month period ended September 30, 1995, the Company converted $1,757,000
principle amount of its 10% secured notes to 8% Series B Convertible Preferred
Stock and also converted $228,760 of interest due on its 10% secured notes to
Series P Convertible Preferred Stock. Operating revenues for the three months
ended December 31, 1995, totaled $309,389, compared to $213,036 for the three
months ended September 30, 1995, and compared to $48,521 for the three months
ended December 31, 1994.
The Company's current financial position continues to be precarious. The
Company will need additional funding in order to maintain current operations,
extend its product lines, and to enter into any merger, acquisition or joint
venture. The Company has been funding its operations by selling its securities
in private placements, short-term borrowing, sales, and accruing compensation
to certain employees and consultants. The Company continues to discuss with
third parties the raising of additional funds. The amount of third party
funding, if any, will depend to some extent on the Company's revenues and
cash flow from operations. No assurance can be given that the Company will
be able to obtain the additional funds necessary to maintain its
existing operations. In the event the Company is not able
12
<PAGE> 14
to secure sufficient funds on a timely basis necessary to maintain its current
operations, it may cease all or part of its existing operations or may seek
protection under the federal bankruptcy laws.
13
<PAGE> 15
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, three (3) Directors will be elected to serve
until the next Annual Meeting of Stockholders and until their respective
successors have been duly elected and qualified. Nominees receiving a
plurality of the votes cast will be elected as directors. Unless contrary
instructions are indicated, the shares represented by a properly executed proxy
will be voted FOR the election of the nominees named below, each of whom
presently serves on the Board of Directors of the Company. The Company is not
aware of any reason why any of the nominees, if elected, would be unable to
serve as directors. Should any nominee become unavailable to serve as a
director, the persons named in the enclosed proxy will vote the shares which
they represent for the election of such other nominee as recommended by the
Board of Directors.
<TABLE>
<CAPTION>
Director
--------
Name Age Since Position
- ---- --- ----- --------
<S> <C> <C> <C>
George S. Smith 61 1992 Director, Chairman of the Board of Directors
Steven M. Peck 39 1995 Chief Executive Officer, President, Chief Financial Officer of
Company and Director
Sean F. Lee 55 1995 Chief Executive Officer, of InfoPak, Inc., and Director
</TABLE>
- -----------------------
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 an
honors graduate in economics with a minor in engineering from San Jose State
University.
Mr. Peck was appointed to his position in September 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 Corporation, a manufacturer of
confectionery, sports/entertainment trading cards and other licensed products.
Mr. Peck graduated from the University of North Carolina with a Bachelor of
Arts Degree.
14
<PAGE> 16
Mr. Lee was appointed a Director in September 1995. Mr. Lee
has served as InfoPak's Chief Executive Officer since January 1992. In 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.
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.
15
<PAGE> 17
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held eight (8) meetings during the last
fiscal year and nine (9) meetings since the last fiscal year. The Board of
Directors does not have nominating, audit or compensation committees.
DIRECTORS' FEES
Outside members of the Board of Directors are not paid a fee,
but are reimbursed for expenses, for each meeting of the Board of Directors or
Committee thereof attended.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires directors and certain officers of the Company, as well as
persons who own more than 10% of a registered class of the Company's equity
securities ("Reporting Persons") to file reports of ownership and changes in
ownership of Forms 3, 4 and 5 with the Securities and Exchange Commission. The
Company believes that other than as set forth below, all Reporting Persons have
complied on a timely basis with all filing requirements applicable to them.
Mr. Ferstl was required to file a Form 3 within 10 days of
when his beneficial ownership of the Company's Common Stock exceeds 10%. This
occurred on December 17, 1992 when he acquired 1,000,000 of his warrants to
purchase the Company's Common Stock. As of this date, the Company has no record
of his filing a Form 3.
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 a consultant to the
Company at a current fee of $5,000 per month.
Mr. Sean F. Lee has an employment agreement with InfoPak, a
wholly owned subsidiary of the Company. 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 employees, including
management. 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. Mr. Lee
also received 7,000 shares of the Company's Series P Convertible Preferred
Stock as a signing bonus. Each share of the Series P Convertible Preferred
Stock is convertible into 10 shares of the Company's Common Stock.
16
<PAGE> 18
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
13,702 shares of the Company's Series P Convertible Preferred Stock. In
October 1995, Mr. Lee was granted common stock purchase warrants to purchase
150,000 shares of the Company's common stock. The warrants are for a five year
period with an exercise price of $.15 per share.
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 the 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 of 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. John L. Miller, an officer of the Company, has an
agreement with the Company whereby he has been granted 2,000,000 warrants in
July 1993 to purchase the Company's common stock at $.15 per share for a five
year period and will vest upon the completion of certain technical and
production benchmarks. Mr. Miller was also issued 100,000 warrants to purchase
the Company's Common Stock in July of 1993 at $.15 per share exercisable over a
five year period. Additionally, Mr. Miller owns 50,000 shares of the
Company's Common Stock, valued at $.10 per share, which were granted in January
of 1995 as a bonus. In August 1995, Mr. Miller converted 300,000 shares of the
Company's Common Stock (which were granted in January 1994 in lieu of $30,000
of accrued compensation) into the Company's Series S Participating Convertible
Preferred Stock. Mr. Miller's current compensation is $6,000 per month, of
which $1,000 is being deferred until the Company has a positive cash flow.
Mr. Steven M. Peck was issued warrants to purchase 1,000,000
shares of the Company's Common Stock in September 1995 at an exercise price of
$.25 per warrant with a term of five years as a condition of his employment.
In December 1995, the Company and Mr. Peck entered into an employment
agreement. The agreement which is effective January 1, 1996, is for a three
year term, with a base salary of $125,000 per year. Such base salary shall be
subject to increases by the Board of Directors upon annual review.
17
<PAGE> 19
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the total compensation earned
by or paid to the named executive officer by the Company for the fiscal year
ended June 30, 1995.
<TABLE>
<CAPTION>
====================================================================================================================
LONG TERM COMPENSATION
--------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
======================================================================================================
OTHER RESTRICTED SECURITIES ALLOTHER
ANNUAL STOCK UNDERLYING LTIP COMPEN
YEAR SALARY ($) BONUS ($) COMPENSATION AWARDS ($) OPTIONS/SARs PAYOUTS SATION
($) (#) ($) ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George S. Smith 1995 $0 $5,000 $107,138(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, 16,039 of living
expenses and consulting fees of $60,000. Does not include
$36,000 of consulting fees accrued in fiscal year 1995.
18
<PAGE> 20
<TABLE>
<CAPTION>
==================================================================================================================
OPTIONS/SAR GRANTS IN THE FISCAL YEAR 1995
- ------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARs EXERCISE
UNDERLYING GRANTED TO OR
OPTION/SARs EMPLOYEES IN BASE PRICE EXPIRATION
NAME YEAR GRANTED(#) FISCAL YEAR ($/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.
19
<PAGE> 21
<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.
20
<PAGE> 22
INDEPENDENT PUBLIC ACCOUNTANTS
On February 17, 1995, the Company notified its independent auditors, Rudolph
Palitz, that they were dismissed. Also, on February 17, 1995, the Company
engaged Gitomer & Berenholz, P.C. as its independent auditors.
Rudolph Palitz performed no auditing work for the Company. There was no
disagreement on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which disagreements, if not
resolved to the satisfaction of the former accountant, would have caused it to
make reference to the subject matter of such disagreement.
The Company has authorized Rudolph Palitz to respond fully to any inquiries of
the Company's successor accountant.
The determination to change accountants was unanimously approved by the
Company's Board of Directors.
21
<PAGE> 23
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to stockholder ratification, the Board of Directors,
upon recommendation of the Audit Committee, has reappointed the firm of
Gitomer & Berenholz, P.C. as the independent auditors to examine the Company's
financial statements for fiscal year 1996. The Board of Directors unanimously
recommends that the stockholders vote FOR such ratification.
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 the stockholders do not ratify this appointment, other
independent auditors will be considered by the Board of Directors upon
recommendation of the Audit Committee.
Representatives of Gitomer & Berenholz, P.C. are expected to
attend the meeting and will have the opportunity to make a statement if they so
choose and to respond to appropriate questions.
22
<PAGE> 24
PROPOSAL 3
AUTHORIZATION OF ADDITIONAL SHARES OF COMMON STOCK
AND PREFERRED STOCK
BACKGROUND
As of the date of this Proxy Statement, the Company has
2,033,902 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-two thousand two hundred and fifty (52,250)
shares of First Series A Convertible 5% Preferred Stock, at $.001 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 $.001
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 $.001 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 forty-eight thousand eight hundred
seventy-nine (548,879) shares of Fourth Series P Convertible Participating
Preferred Stock at $.001 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 $.001
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;
23
<PAGE> 25
7. Seventeen million nine hundred sixty-six thousand
ninety eight (17,966,098) 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 66,597,212.
The Company's 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 expired
on December 8, 1995.
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, shareholders in exchange for all of the outstanding capital stock of
InfoPak, on September 12, 1995. Certain financial information with regard to
the acquisition of InfoPak 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 100,000,000 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 100,000,000 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:
The total number of shares of stock which the corporation
shall have authority to issue is One Hundred and Ten Million
(110,000,000), consisting of Ten Million (10,000,000) shares
24
<PAGE> 26
of Preferred Stock, all of the par value of ($.001), and One
Hundred Million (100,000,000) shares of Common Stock, all of a
par value of ($.001).
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,
17,701,098 shares were issued and outstanding at January 1, 1996. The proposed
amendment to the Certificate of Incorporation would increase the number of
authorized shares of common stock from 20,000,000 to 100,000,000. 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, 836,855 shares
were issued and outstanding at January 11, 1996. 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
25
<PAGE> 27
the extent that the 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 acquirer seeking to obtain control in order to break up and
auction off the Company's component parts or otherwise act in non- beneficial
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.
26
<PAGE> 28
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 are 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.
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 Annual
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.
1996 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 1996 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 July 1,
1996.
The Company's audited financial statements for 1994 and 1995
are incorporated by reference from the Company's 1995 Annual Report.
27
<PAGE> 29
APPENDIX I
<TABLE>
<S> <C>
A. InfoPak, Inc.'s audited financial statements for 1994 and 1993.
B. InfoPak, Inc.'s unaudited financial statements for the six months ended June 30, 1995.
C. Dimensional Visions Group, Ltd. Pro Forma Consolidated Statement of Operation.
</TABLE>
28
<PAGE> 30
INFOPAK, INC.
FINANCIAL STATEMENTS
WITH
INDEPENDENT AUDITORS' REPORT
YEARS ENDED DECEMBER 31, 1994 AND 1993
BILLER, FRITH-SMITH & ARCHIBALD Certified Public Accountants
<PAGE> 31
CONTENTS
<TABLE>
<CAPTION>
Page
------
<S> <C>
Independent auditors' report 1
Financial statements
Balance sheet 2
Statements of operations and deficit 3
Statements of cash flows 4
Notes to financial statements 5-8
</TABLE>
BILLER, FRITH-SMITH & ARCHIBALD Certified Public Accountants
<PAGE> 32
[BILLER, FRITH-SMITH & ARCHIBALD LETTERHEAD]
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 operations and deficit, and cash flows
for the two years 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 two
years then ended in conformity with generally accepted accounting principles.
BILLER, FRITH-SMITH & ARCHIBALD
Tarzana, California
May 4, 1995
<PAGE> 33
2
INFOPAK, INC.
BALANCE SHEET
DECEMBER 31, 1994
<TABLE>
<CAPTION>
ASSETS
------
<S> <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
-----------
Deposits 1,140
-----------
$ 640,615
===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS
----------------------------
<S> <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 (464,277)
-----------
Total stockholders' deficit (413,566)
-----------
$ 640,615
===========
</TABLE>
See accompanying accountants' audit report and notes to financial statements
<PAGE> 34
3
INFOPAK, INC.
STATEMENTS OF OPERATIONS AND DEFICIT
YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Revenue from sales $ 2,199,089 $ 3,493,402
Cost of goods sold 1,457,054 2,300,138
------------ ------------
Gross profit 742,035 1,193,264
------------ ------------
Selling and marketing expenses 631,908 803,871
General and administrative 243,437 286,177
------------ ------------
875,345 1,090,048
------------ ------------
(Loss) income before taxes and other expenses (133,310) 103,216
Interest expense 33,436 15,399
------------ ------------
(Loss) income before income taxes (166,746) 87,817
Provision for income taxes - -
------------ ------------
Net (loss) income (166,746) 87,817
Deficit, beginning of year (297,531) (385,348)
------------ ------------
Deficit, end of year $ (464,277) $ (297,531)
============ ============
</TABLE>
See accompanying accountants' audit report and
notes to financial statements
<PAGE> 35
4
INFOPAK, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (166,746) $ 87,817
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Depreciation and amortization 48,069 43,000
Changes in assets and liabilities:
Notes and other receivables 355,243 (499,355)
Supplies and samples 1,119 (1,119)
Inventory (259,982) -
Prepaid expenses - 1,746
Deposits - 390
Accounts payable 26,220 (21,767)
Accrued expenses 26,483 267,114
----------- ------------
Net cash provided by operating activities 30,406 (122,174)
----------- ------------
Cash flows from investing activities:
Cash purchases of property and equipment (11,235) (22,038)
----------- ------------
Net cash used in investing activities (11,235) (22,038)
----------- ------------
Cash flows from financing activities:
Proceeds from employee loans - 64,074
Proceeds from notes payable 28,655 107,136
Repurchase of common stock (5,155) -
Issuance of common stock - 5,866
----------- ------------
Net cash provided by financing activities 23,500 177,076
----------- ------------
Net increase in cash 42,671 32,864
Cash, beginning of year 31,422 (1,442)
----------- ------------
Cash, end of year $ 74,093 $ 31,422
=========== ============
Supplemental disclosure of cash flows information:
Cash paid during the period for:
Interest $ 21,802 $ -
=========== ==========
Income taxes $ - $ -
=========== ==========
</TABLE>
See accompanying accountants' audit report and notes to financial statements
<PAGE> 36
5
INFOPAK, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994 AND 1993
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.
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.
2. NOTES AND OTHER RECEIVABLES
During the year ended December 31, 1994, the Company did not
advance any additional funds to employees/shareholders. The
amounts are recorded as notes receivable from the
employees/shareholders with interest calculated annually at 6%
and not to exceed specified amounts. Repayment is to begin
when certain conditions are met.
<PAGE> 37
6
INFOPAK, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994 AND 1993
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>
Depreciation expense for the years ended December 31, 1994 and
1993 were $48,069 and $43,000, respectively.
5. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<S> <C>
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>
<PAGE> 38
7
INFOPAK, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994 AND 1993
5. LONG-TERM DEBT (continued)
Future maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1995 $ 175,000
Thereafter 527,894
-----------
$ 702,894
===========
</TABLE>
6. 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.
7. INCOME TAXES
The Company has a tax liability to the state of Arizona for
the minimum state income tax of $50 for each of the years
ended December 31, 1994 and 1993. 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.
8. 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 and 1993.
<PAGE> 39
8
INFOPAK, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994 AND 1993
8. COMMITMENTS AND CONTINGENCIES (continued)
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)
9. 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 5)
<PAGE> 40
INFOPAK, INC.
BALANCE SHEET
JUNE 30, 1995
(Unaudited)
ASSETS
<TABLE>
<S> <C>
Current assets
Cash $ 357,961
Accounts receivable, trade net of allowance
for doubtful accounts $15,000 68,820
Inventory 116,896
------------
Total current assets 543,677
------------
Property and equipment, net of
accumulated depreciation of $135,172 96,547
------------
Deposits 1,140
------------
$ 641,364
============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Current portion of long-term debt $ 175,000
Accounts payable, accrued expenses and other
liabilities 133,058
Royalties payable 201,132
------------
509,190
------------
Long term debt, net of current portion 467,201
------------
Stockholders' deficiency
Common stock, $.01 par value, 40,000,000 shares
authorized, 5,206,131 shares issued and outstanding 52,061
Additional paid-in capital 248,650
Deficit (635,738)
------------
(335,027)
------------
Total liabilities and stockholders' deficiency $ 642,364
============
</TABLE>
See notes to financial statements.
1
<PAGE> 41
INFOPAK, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(Unaudited)
<TABLE>
<S> <C>
Operating revenue $ 558,590
Cost of goods sold 325,693
----------
Gross profit 232,897
----------
Operating expenses
Engineering and development 124,574
Marketing 70,588
General and administration 199,473
----------
Total operating expenses 394,635
----------
Loss before interest expense (161,738)
Interest expense, net 9,723
----------
Net loss $ (121,461)
========
</TABLE>
See notes to financial statements.
2
<PAGE> 42
INFOPAK, INC.
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995
(Unaudited)
<TABLE>
<S> <C> <C>
Cash flow from operating activities
Net loss $ (171,461)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization 23,612
Changes in assets and liabilities
Accounts receivable, trade 60,792
Inventory 143,086
Accounts payable, accrued expenses and
other liabilities (39,201)
Royalties payable 22,104
------------
Net cash provided by operations 38,932
------------
Cash flow from investing activities
Purchase of equipment (1,321)
------------
Net cash used in investing activities (1,321)
------------
Cash flow from financing activities
Reduction of long-term debt (3,743)
Sale of common stock 250,000
------------
Net cash provided by financing activities 246,257
------------
Net increase in cash 283,868
Cash, beginning of period $ 74,093
------------
Cash, end of period $ 357,961
============
Supplemental disclosure of cash flows information
Cash paid during the period for
Interest $ -
=================
Income taxes $ -
=================
</TABLE>
See notes to financial statements.
3
<PAGE> 43
INFOPAK, INC.
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995
(Unaudited)
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation of interim financial statements
In the opinion of management, the interim financials
statements reflect all adjustments of a normal recurring
nature necessary for a fair statement of the results for the
six months ended June 30, 1995. The current period results of
operations are not necessarily indicative of results which
ultimately will be reported for year ending December 31, 1995.
Line of business
The Company is in the business of manufacturing and marketing
hardware and software information and recordable microchip and
audio playback systems and method products and programs.
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.
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.
Effective June 1, 1995, the Company, as a result of a sale of
common stock to a foreign shareholder was no longer eligible
to be taxed as a S-corporation, accordingly, from that date,
the Company will be taxed as a C-corporation.
4
<PAGE> 44
INFOPAK, INC.
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995
(Unaudited)
Note 2. INVENTORY
Inventory consists of finished goods.
Note 3. PROPERTY, EQUIPMENT AND DEVELOPMENT COSTS
Property, equipment and development costs consist of the
following:
<TABLE>
<S> <C> <C> <C>
Machinery $ 22,804 $ 13,320 $ 9,484
Furniture and fixtures 1,994 1,894 100
Software development 8,913 5,079 3,833
Hardware development 198,009 114,879 83,130
-------- -------- -------
$231,719 $135,172 $96,547
======== ======== =======
</TABLE>
Depreciation expense for the six months ended June 340, 1995
was $23,612.
Note 4. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<S> <C>
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. 185,767
--------
642,201
Current maturities 175,000
--------
</TABLE>
Future maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Year Ending June 30,
--------------------
<S> <C>
1995 $ 175,000
Thereafter 467,201
---------
$ 642,201
=========
</TABLE>
5
<PAGE> 45
INFOPAK, INC.
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995
(Unaudited)
Note 5. COMMON STOCK
On June 1, 1995, the Company sold 135,000 shares for $250,000
to a foreign investor.
Note 6. COMMITMENTS AND CONTINGENCIES
Lease
The Company has a month-to-month, non-capitalized 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 1995.
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 June 30, 1995, there have been no
bonuses paid.
Note 7. SUBSEQUENT EVENTS
On September 12, 1995, the shareholders of the Company
exchanged all of their outstanding stock for shares in
Dimensional Visions Group, Ltd. Certain liabilities were
excluded from the merger transaction and were canceled by the
Company as follows:
<TABLE>
<S> <C>
Commissions payable $ 31,924
Royalties payable 210,132
Loans payable, employees 151,884
---------
$ 384,940
=========
</TABLE>
In addition, notes payable of $281,434 and accrued interest of
$65,379 due to certain shareholders of InfoPak, Inc. were
canceled and Dimensional Visions Group, Ltd. Issued 31,379
shares of its stock in exchange for the cancellation of the
obligations.
6
<PAGE> 46
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 $1,250,000 and the issuance of an additional 31,379 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.
1
<PAGE> 47
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1995
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
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 42,748(1) 124,111
--------- ---------- -----------
Other assets
Patent rights and other assets 53,398 43,750(2)
1,140(1) 98,288
Goodwill 910,791(1)
78,477(3)
36,866(4) 1,026,134
--------- ---------- -----------
53,398 1,071,024 1,124,422
--------- ---------- -----------
Total assets $ 451,237 $1,556,732 $ 2,007,969
========= ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Notes payable
Employees $ - $ 73,729(1) $ 73,729
Other 50,000 - 50,000
Accounts payable, accrued expenses and other liabilities 404,489 36,866(4)
------------ ---------- -----------
73,939(1) 515,294
Total current liabilities 454,489 184,534 639,023
------------ ---------- -----------
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 77 549(1) 626
Additional paid-in capital 772,423 1,371,649(1) 2,144,072
------------ ---------- -----------
772,500 1,372,198 2,144,698
Common stock 16,936 - 16,936
Additional paid-in capital 11,881,927 - 11,881,927
Deficit (14,722,356) - (14,722,356)
------------ ---------- -----------
Total stockholders' equity (deficiency) (2,050,993) 1,372,198 (678,795)
------------ ---------- -----------
Total liabilities and stockholders' equity (deficiency) $451,237 $1,556,732 $ 2,007,969
============ ========== ===========
</TABLE>
The accompanying notes to pro forma consolidated financial statements
are an integral part of this statement.
2
<PAGE> 48
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Results of
Operations of Pro Forma
Historical InfoPak, Inc. Adjustments Pro Forma
---------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Operating revenue $ 134,028 $2,199,997 $ - $ 2,334,025
------- ---------- --------- -----------
Operating expenses
Cost of sales 241,240 1,395,276 (81,682)(5) 1,554,834
Research and development costs 299,267 238,378 6,664 (6) 544,309
Marketing expenses 120,359 184,494 2,917 (6) 307,770
General and administrative expenses 460,680 401,595 6,664 (6)
205,227 (7) 1,074,166
----------- ---------- --------- -----------
Total operating expenses 1,121,546 2,219,743 139,790 3,481,079
---------- ---------- ---------- -----------
Loss before other income (expenses) (987,518) (19,746) (139,790) (1,147,054)
---------- ---------- --------- -----------
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) ($127,769) ($1,364,981)
========== ========== ========= ===========
Loss per share ($.08)
===========
Weighted average number of shares 16,476,769
===========
outstanding
</TABLE>
The accompanying notes to pro forma consolidated financial statements
are an integral part of this statement.
3
<PAGE> 49
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, by the issuance of 500,000 shares of
Series P Convertible Preferred Stock valued at $1,250,000
($2.50 per share) and the issuance of an additional 31,379
shares of Series P Preferred Stock relating to the
cancellation of Notes Payable and related accrued interest of
InfoPak, Inc. valued at $78,448. In connection with the
acquisition of InfoPak, Inc., the Company incurred legal fees
of $36,866. The net assets acquired are as follows:
<TABLE>
<S> <C>
Assets
Cash and cash equivalent $275,632
Receivables
Trade 8,867
Employees 44,078
Inventory 114,383
Equipment 42,804
Deposit 1,140
--------
486,904
--------
Liabilities
Notes payable, employees 73,729
Accounts payable, accrued expenses
and other liabilities 43,531
--------
117,260
--------
Net assets acquired $369,644
========
</TABLE>
As a result of the excess purchase price paid for InfoPak,
Inc. and costs incurred, the Company accordingly recorded
Goodwill of $1,026,134. The Series P Convertible Preferred
Stock was valued at $2.50 per share based upon the price at
which the Company was able to sell 3,000,000 shares of its
Common Stock on September 5, 1995 through a Regulation S
Offering which was $.25 per share.
(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 31,379 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.
4
<PAGE> 50
DIMENSIONAL VISIONS GROUP, LTD. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 1995
(Unaudited)
(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 historical results of operations of InfoPak,
Inc. for 12 monthly periods from July 1, 1994 through June 30,
1995.
5
<PAGE> 51
[FRONT SIDE OF PROXY CARD]
P
R DIMENSIONAL VISIONS GROUP, LTD.
O
X PROXY SOLICITED BY THE BOARD OF DIRECTORS
Y ANNUAL MEETING OF STOCKHOLDERS - MARCH 20, 1996
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 Annual Meeting of Stockholders of the Company, to be held at 9:00 a.m.,
(local time), at the offices of Clark, Ladner, Fortenbaugh & Young located at
One Commerce Square, 2005 Market Street, Philadelphia, Pennsylvania 19106 on
March 20, 1996, and at any adjournment or postponement thereof. Said proxies
are authorized and directed to vote as indicated with respect to the following
matters:
1. Election of Directors, For all nominies listed below ____
(Except as marked to the contrary).
Withhold authority to vote for all nominies listed below. ____
George S. Smith, Steven M. Peck and Sean F. Lee.
(Instructions: To withhold authority to vote for any individual nominee write
that nominee's name in the space provided.)
- --------------------------------------------------------------------------------
2. To ratify the appointment of Gitomer & Berenholz, P.C. as _ FOR
the Company's independent auditors. _ AGAINST
_ ABSTAIN
<PAGE> 52
<TABLE>
<S> <C>
3. To consider and vote upon a proposal to amend the Company's _ FOR
Certificate of Incorporation to authorize additional shares of _ AGAINST
common stock and preferred stock of the Company. _ ABSTAIN
</TABLE>
4. To transact such other business as may properly come before this meeting.
<PAGE> 53
[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 elcection of the
three nominees to the Board of Directors, FOR the ratification of Gitomer &
Berenholz, P.C.as the Company's independent auditors, and FOR the authorization
of additional shares of common stock and preferred stock of the Company, 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 ANNUAL MEETING OF THE STOCKHOLDERS TO BE HELD MARCH 20, 1996 AND A COPY OF
THE 1995 ANNUAL REPORT OF DIMENSIONAL VISIONS GROUP, LTD.
Dated: , 1996
-----------------------------
-----------------------------------------
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.
