SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K(A)
Amendment Number 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported): August 26, 1996
VERSUS TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-17500 22-2283745
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
2320 W. Aero Park Ct., Traverse City, Michigan 49686
(Address of principal executive offices) (Zip Code)
Registrant`s telephone number, including area code:(616) 946-5868
(Former name or former address, if changed since last report.)
N/A
This report amends Form 8-K filing on September 11, 1996.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Olmsted on Form 8-K amended to
provide as follows:
Independent Auditor`s Report, Audited Balance Sheet,
Statements of Income and Cash Flows for fiscal year
ended September 30, 1995.
OLMSTED ENGINEERING, CO.
Financial Statements
September 30, 1995
(With Independent Auditors` Report Thereon)
Independent Auditors` Report
The Board of Directors and Stockholders
Olmsted Engineering, Co.:
We have audited the accompanying balance sheet of Olmsted
Engineering, Co. as of September 30, 1995, and the related
statements of operations, stockholders` equity, and cash flows
for the year ended September 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 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 Olmsted Engineering, Co. as of September 30, 1995, and the
results of its operations and its cash flows for the year then
ended, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
August 16, 1996
Princeton, New Jersey
OLMSTED ENGINEERING,CO.
Balance Sheet
September 30, 1995
=============================================================
Assets
_____________________________________________________________
Current assets:
Cash and cash equivalents $ 59,393
Trade accounts receivable, net of allowance
for doubtful accounts of $10,772
(note 9) 269,923
Notes receivable, net (note 1) 17,537
Prepaid expenses and other assets 6,199
_____________________________________________________________
Total current assets 353,052
_____________________________________________________________
Property and equipment (note 2) 317,986
Accumulated depreciation and amortization 206,882
_____________________________________________________________
Net property and equipment 111,104
_____________________________________________________________
Other assets:
Notes receivable, net (note 1) 22,989
Investment in affiliate (note 9) 101,978
Software development costs, net of accumulated
amortization of $868,974 (note 1) 372,363
_____________________________________________________________
$ 961,486
=============================================================
============================================================
Liabilities and Stockholders` Equity
____________________________________________________________
Current liabilities:
Accounts payable $ 77,361
Accrued expenses 49,790
Line-of-credit (note 3) 142,098
Notes payable (note 4) 78,139
____________________________________________________________
Total current liabilities 347,388
____________________________________________________________
Commitments and contingencies
Stockholders` equity (note 5):
Common stock, $.01 par value, authorized
500,000 shares issued 412,944 shares 4,129
Preferred stock, $100 par value, authorized
30,000 shares: issued 24,096 shares 2,409,600
Preferred stock Series A, $100 par value,
authorized 10,000 shares: issued
1,500 shares 150,000
Additional paid-in capital 359,549
Accumulated deficit (2,309,180)
_____________________________________________________________
Total stockholders` equity 614,098
_____________________________________________________________
Commitments and contingencies (notes 7, 10 and 12)
$ 961,486
=============================================================
See accompanying notes to financial statements.
OLMSTED ENGINEERING, CO.
Statement of Operations
Year ended September 30, 1995
============================================================
Net sales $ 1,540,659
Costs of sales 680,764
____________________________________________________________
Gross profit 859,895
Selling and administrative expenses 689,971
____________________________________________________________
Operating income 169,924
Gain from sale of equipment 916
Interest income 3,877
Interest expense (24,781)
____________________________________________________________
Income before income taxes 149,936
Income taxes (note 8) 68,614
____________________________________________________________
Net income $ 81,322
============================================================
See accompanying notes to financial statements
<TABLE>
OLMSTED ENGINEERING, CO.
Statement of Stockholders` Equity
Year ended September 30, 1995
================================================================================================================
<CAPTION>
Preferred Additional
Common Preferred Stock paid-in Accumulated
Shares Stock Shares Stock Shares Series A capital deficit Total
________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
September 30, 1994 343,333 $ 3,433 24,096 $ 2,409,600 1,500 $ 150,000 304,849 (2,390,502) 477,380
Issuance of
common stock 69,611 696 - - - - 54,700 - 55,396
Net income - - - - - - - 81,322 81,322
________________________________________________________________________________________________________________
Balance at
September 30, 1995 412,944 $ 4,129 24,096 $ 2,409,600 1,500 $ 150,000 359,549 (2,309,180) 614,098
================================================================================================================
See accompanying notes to financial statements
</TABLE>
<TABLE>
OLMSTED ENGINEERING, CO.
Statement of Cash Flows
Year ended September 30, 1995
===========================================================================
<S> <C>
Cash flows from operating activities:
Net income $ 81,322
Adjustments to reconcile net income to net cash provided
by operating activities:
Bad debts 54,801
Depreciation and amortization 151,444
Deferred income taxes 50,550
Gain on sale of equipment (916)
Stock issued as compensation 25,000
Changes in operating assets and liabilities:
Increase in accounts receivable (223,804)
Increase in notes receivable (13,012)
Decrease in prepaid expenses and other assets 3,602
Increase in accounts payable 34,517
Increase in accrued expenses 39,937
___________________________________________________________________________
Net cash provided by operating activities 203,441
___________________________________________________________________________
Cash flows from investing activities:
Purchases of property and equipment (74,683)
Proceeds from sale of equipment 5,132
Investment in affiliate (101,978)
___________________________________________________________________________
Net cash used in investing activities (171,529)
___________________________________________________________________________
Cash flows from financing activities:
Proceeds from issuance of stock 30,396
Net repayments on line-of-credit (50,009)
Repayments of notes payable (18,990)
___________________________________________________________________________
Net cash used in financing activities (38,603)
___________________________________________________________________________
Net decrease in cash and cash equivalents (6,691)
Cash and cash equivalents, beginning of year 66,084
___________________________________________________________________________
Cash and cash equivalents, end of year $ 59,393
===========================================================================
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 20,564
Cash paid during the year for income taxes 2,800
===========================================================================
See accompanying notes to financial statements.
</TABLE>
(1) Summary of Significant Accounting Policies
Description of Business
Olmsted Engineering, Co. (the Company) was incorporated in
1976, in the State of Michigan, and writes complex software
programs for the computer-aided design and computer-aided
manufacturing (CAD/CAM) industry. The Company resells its
own and third party software, and services system needs
throughout North America. The Company also provides
software programming services to an affiliated Company.
Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposits. For
the purpose of the Statement of Cash Flows, the Company
classifies all highly liquid investments with maturity of
three months or less at the time of purchase as cash
equivalents.
Investment in Affiliate
Investment in affiliate consists of marketable securities of
a company affiliated through common ownership and control
and is accounted for under the equity method. See note 9.
Trade Accounts Receivable
Trade accounts receivable arise from the Company`s sales of
its own and third party software and the performance of
programming services and are stated net of allowance for
doubtful accounts of $10,772 as of September 30, 1995.
Notes Receivable
In connection with certain sales of software, the Company
has installment notes receivable totaling $40,526 at
September 30, 1995, which has been reduced by an allowance
of for doubtful accounts of $9,397. The notes are due in
various payment terms, carry interest at rates of
approximately 8.0 percent, and mature at various dates
through June 1999.
Property and Equipment
Property and equipment are stated at cost. Depreciation is
calculated using the straight-line method over the estimated
useful lives of the assets which range from 5 to 7 years.
The costs of leasehold improvements are amortized using the
straight-line method over the shorter of their estimated
useful lives or the lease term.
(1) Continued
Revenue Recognition
Revenue from software product sales is recognized when the
related goods are shipped and the obligations of the
Company have been satisfied. Revenues from maintenance
agreements and programming services are recognized as
earned.
Software Development Costs
During the year ended September 30, 1989, the Company
capitalized certain costs related to the development of the
Company`s ACU.CARV software. The costs were capitalized
after the Company established commercial and technical
feasibility for the product in accordance with Statement of
Financial Accounting Standard No. 86, Accounting for
Software Development Costs. Amortization of these costs
commenced when the product was made available for general
release to customers and is being computed using the
straight-line method over a period of ten years.
Income Taxes
The Company is subject to federal and state income taxes on
its net annual earnings.
Income taxes are accounted for under the asset and
liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between financial statement carrying amounts of
existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using the
enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is
recognized in income during the period that includes the
enactment date.
Concentration of Risks
Financial instruments that potentially expose the Company
to concentration of credit risk consist primarily of trade
accounts receivable and notes receivable. The Company
extends uncollateralized credit to customers, substantially
all of whom are in businesses in the trade area.
Pervasiveness of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual
results could differ from those estimates.
(2) Property and Equipment
Property and equipment consisted of the following:
Computer equipment $ 193,857
Office equipment 36,412
Shop equipment 22,274
Vehicles 24,724
Leasehold improvements 40,719
- -----------------------------------------------------------------------
317,986
Accumulated depreciation and amortization (206,882)
- -----------------------------------------------------------------------
Net property and equipment $ 111,104
=======================================================================
(3) Line-of-Credit
The Company has an outstanding balance of $142,098 at
September 30, 1995 on a $250,000 line-of-credit facility
from a bank. The line-of-credit bears interest at prime
plus 1.5 percent (9.0 percent as of September 30, 1995),
payable monthly. The line-of-credit is secured by all the
assets of the Company and by certain marketable securities
and bonds owned by a former stockholder.
(4) Notes Payable
Notes payable consisted of:
Notes payable - individual:
$1,400 per month which includes interest at 8.9%
per annum, unsecured $ 3,394
Note payable - stockholder:
Demand note bearing interest at 6% per annum,
unsecured 74,745
- -----------------------------------------------------------------------
$ 78,139
- -----------------------------------------------------------------------
(5) Capital Stock
The outstanding capital stock of the Company at September
30, 1995 consisted of 1,500 shares of preferred stock
Series A, 24,906 shares of preferred stock, and 412,944
shares of common stock.
(5) Continued
Each share of preferred stock Series A is: (1)entitled to
an annual dividend of 10 percent, non-cumulative,
(2)entitled to liquidation preferences above all other
classes of stock, (3)not entitled to vote, except in
certain circumstances, and (4)redeemable in whole or part
by the Company through cash equal to the par value of such
shares plus an amount equal to all dividends thereon
declared but unpaid as of the date fixed for redemption.
Each share of preferred stock is: (1)Entitled to an annual
dividend of 5 percent, non-cumulative, (2)Entitled to
liquidation preferences above the class of common stock,
(3)not entitled to vote, except in certain circumstances,
and (4)redeemable in whole or part by the Company through
cash equal to the par value of such shares plus an amount
equal to all dividends thereon declared but unpaid as of
the date fixed for redemption.
As of September 30, 1995, the Company has granted to
stockholders, options to purchase 85,000 shares of its
common stock at price of $2.00 per share. These options
may be exercised at any time and expire on December 1,
1996.
(6) Defined Contribution Plan
The Company sponsors a defined contribution plan, available
to substantially all employees. Participants may
contribute from 1 percent to 15 percent of their annual
compensation to the plan subject to IRS limitations. The
Company does not make any matching contributions to the
plan.
(7) Leases
The Company is obligated under a non-cancelable operating
lease for office space. The lease is for a three-year term
and expires in March 1996. Rental expense under this lease
was $48,000 for fiscal year 1995. Future minimum lease
payments under operating leases as of September 30, 1995
are $24,000 which is due in the year ending September 30,
1996.
(8) Income Taxes
Income taxes for the year ended September 30, 1995
consisted of:
Current Deferred Total
U.S. Federal $ - 50,550 50,550
State 18,064 18,064
- -------------------------------------------------------------------------
$ 18,064 50,550 68,614
=========================================================================
Income tax expense for the year ended September 30, 1995
differed from the amounts computed by applying the U.S.
federal income tax rate of 34 percent to pretax income
primarily due to the impact of state taxes and meals and
entertainment expense disallowances.
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and
deferred tax liabilities at September 30, 1995 are as
follows:
Deferred tax
asset:
Net operating loss carryforwards $ 823,000
Less valuation allowance (692,000)
- -----------------------------------------------------------------------
Deferred tax assets, net of valuation allowance 131,000
- -----------------------------------------------------------------------
Deferred tax
liabilities:
Furniture and equipment 5,000
Software development costs 126,000
- -----------------------------------------------------------------------
Total deferred
liabilities 131,000
- ------------------------------------------------------------------------
Net deferred tax
assets $ -
========================================================================
As of October 1, 1994, the Company had recorded
approximately $50,550 as a net deferred tax asset arising
primarily from net operating losses which the Company
believed were more-likely-than not to be recoverable. This
net deferred tax asset was composed of deferred tax assets
in excess of deferred liabilities of approximately $741,000
less a valuation allowance of approximately $690,450. The
full amount of this deferred tax asset was realized during
the year ended September 30, 1995 as a reduction of the
current income tax liability.
(8) Continued
As of September 30, 1995, the Company has recorded a
valuation allowance of $692,000 against its deferred tax
assets. In assessing the realizability of deferred tax
assets, management considers whether it is more likely than
not that some portion or all of the deferred tax assets
will not be realized. As of September 30, 1995, management
of the Company believes that it is more likely than not
that these deferred tax assets will not be realized.
At September 30, 1995, the Company has net operating loss
carryforwards for federal income tax purposes of
approximately $2,243,000 which are available to offset
future federal taxable income, if any, through 2010.
(9) Related Party Transactions
The Company obtains a substantial portion of its sales from
Versus Technology, Inc. (Versus) which is affiliated
through common ownership and management control. During
the year ended September 30, 1995, the Company made sales
to Versus of $709,000 and had related receivables at year-
end of $198,000.
In July 1995, the Company made a loan of $100,000 to Versus
secured by a promissory note bearing interest of 8 percent
due in semi-annual installments. The Company also received
warrants to purchase 50,000 shares of the common stock of
Versus at a price of $0.50 per share. The warrants are
exercisable on January 1, 1996 and expire on June 30, 2000.
On September 29, 1995, the Company converted its $100,000
promissory note and related accrued interest of $1,978 into
509,889 shares of the common stock of the Versus.
The Company accounts for its investment in Versus common
stock under the equity method of accounting as the Company
has the ability to significantly influence the operations
of Versus through common management and members of the
board of directors. As the shares were acquired on
September 29, 1995, the earnings/losses from this
investment for the year ended September 30, 1995 were not
significant.
(10) Contingencies
The Company is subject to legal proceedings and claims
which arise in the ordinary course of its business. In the
opinion of management, the amount of ultimate liability
with respect to these actions will not materially affect
the financial position of the Company.
(10) Continued
The Company is a co-defendant with one of the Company`s
officers in stockholder litigation pending in Michigan
Circuit Court, wherein the plaintiffs alleged that the
Company and the officers reneged on oral promises made in
connection with a private placement of the Company`s common
stock to the plaintiffs. Damages have not been specified.
The Company and the Company`s officer deny the allegations
and intend to defend against the claim.
(11) Fair Value of Financial Instruments
The following table represents the carrying amounts and the
estimated fair values of the Company`s financial
instruments at December 31, 1995 in accordance with
Statement of Financial Accounting Standards No. 107,
Disclosure About Fair Value of Financial Instruments.
1995
--------------------------
Carrying Fair
Amounts Value
- -------------------------------------------------------------------
Financial
assets:
Cash and cash equivalents $ 59,393 59,393
Trade accounts receivable 269,923 269,923
Notes receivable 40,526 40,526
Investment in affiliate 101,978 245,000
Financial
liabilities:
Accounts payable 77,361 77,361
Accrued expenses 49,790 49,790
Line-of-credit 142,098 142,098
Notes payable 78,139 78,139
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments:
Cash and cash equivalents, trade accounts
receivable, accounts payable, line-of-credit, and
notes payable: the carrying amounts approximate
fair values because of the relatively short
duration of those instruments.
Notes Receivable: The fair value is estimated as
the future expected cash flows discounted by a
market rate of interest.
Investment in affiliate: The fair value is
estimated based upon the quoted market price of
the Versus common stock.
(12) Pending Business Combination
In August 1995, the Company entered into an agreement
with Versus, wherein the Company has the right to merge
into Versus in exchange for Versus common stock. The
Company`s right to merge into Versus expires on July 31,
1997, or within a sixty days of quarterly filings made
with the Securities and Exchange Commission, in which
Versus meets certain financial goals. The merger is
subject to certain conditions, including the receipt of
an independent valuation of the Company and approval from
the majority stockholder.
(b) Pro forma Consolidated Financial Statements for
Versus Technology, Inc. and Olmsted Engineering, Co. on Form
8-K amended to provide as follows:
Unaudited Consolidated Balance Sheet and Statement of
Operations for fiscal year ended October 31, 1995, and
for the nine months ended July 31, 1996.
On August 26, 1996, a wholly-owned subsidiary of
the Registrant, was merged into Olmsted Engineering Co.
(`Olmsted`) The Registrant received the shares of Olmsted in
exchange for a net consideration of 6,000,000 shares of the
Registrant`s common stock.
The occurrence of the merger was conditioned, inter
alia, on the Registrant`s raising at least $4,500,000 net of
commissions through a private placement of its common
stock. As of the date of the merger, the Registrant closed
the sale of 11,335,000 shares of common stock in a private
offering to accredited investors at a price of $.5 per
share. Because the merger was contingent upon that
financing, the private placement is included in pro forma financial
information.
While the private placement and the merger were completed on
August 26, 1996, the unaudited pro forma financial information is
presented as if the private placement and the merger had occurred
before the fiscal period for the income statements and as of the
balance sheet date for the balance sheet.
Versus` and Olmsted as fiscal year ends were September 30, 1995
and October 31, 1995, respectively. Versus` and Olmsted`s interim
fiscal nine month ends were June 30 and July 31, 1996, respectively.
Pro forma financial statements assume that each company had the same
fiscal periods, as the one month difference was not considered to be
material.
Other pro forma assumptions:
1. Historical pro forma financial statements are based
on conditions that existed as of August 26,1996.
2. Pro forma financial statements assumes completion of
the Private Placement and the consummation of the
merger as if the private placement and the merger occurred
before the fiscal period for the income statements and as of
the balance sheet date for the balance sheets.
3. The book value of Olmsted Engineering Co.`s assets
on August 26, 1996 is equal to the fair market
value.
4. Stock options and warrants are not included in pro
forma earnings per share calculation due to anti-
dilutive effect on pro forma loss years.
5. Earnings per share was calculated based on pro forma
consolidated weighted average shares outstanding of
22,785,430, and 36,045,003 in fiscal 1995 and
fiscal 9 months ended July 31, 1996, respectively.
6. Assumed full exchange of six million shares.
shares
<TABLE> VERSUS TECHNOLOGY, INC. AND OLMSTED ENGINEERING CO.
Pro Forma Consolidated Balance Sheet
October 31, 1995
==========================================================================================================
A S S E T S
Versus Olmsted Debit Credit Pro Forma
Current Assets 10/31/95 9/30/95 Eliminating/Adj. Entries Consolidated
__________________________________________________________________________________________________________
<C> <C> <C> <C> <C>
Cash and Cash equivalents $1,998,000 $ 59,000 $5,251,000(3) $7,308,000
Trade Accounts Receivable (net of
allowance for doubtful accounts) 88,000 270,000 183,000(5) 175,000
Notes receivable - current 18,000 18,000
Assets held for sale 3,000 - 3,000
Inventories 11,000 - - 11,000
Prepaid expenses and other
current assets 79,000 6,000 85,000
__________________________________________________________________________________________________________
Total current assets 2,179,000 353,000 5,251,000 183,000 7,600,000
Investment in Olmsted 3,255,000(1) 3,255,000(2) -
Investment in Versus - 102,000 102,000(4) -
Property and equipment - net 3,000 111,000 114,000
Deferred charges and
other assets (net) 253,000 395,000 648,000
Goodwill 2,794,000(2) 2,794,000
__________________________________________________________________________________________________________
Total assets $2,435,000 $961,000 $11,300,000 $3,540,000 $11,156,000
==========================================================================================================
LIABILITIES AND SHAREHOLDERS` EQUITY
==========================================================================================================
Debit Credit Pro Forma
Current liabilities: Versus Olmsted Eliminating/Adj Entries Consolidated
Accounts payable $508,000 $ 77,000 $183,000(5) $ 402,000
Accrued expenses 395,000 50,000 40,000(3) 485,000
Line-of-credit 142,000 142,000
Deferred revenue 9,000 9,000
Deferred gain - current
Notes payable, current portion 110,000 78,000 188,000
__________________________________________________________________________________________________________
Total current liabilities 1,022,000 347,000 183,000 40,000 1,226,000
Notes payable, long term 339,000 339,000
__________________________________________________________________________________________________________
Total liabilities 1,361,000 347,000 183,000 40,000 1,565,000
Shareholders` equity
Common stock, $.01 par
25,000,000 shares authorized, $100,000(3)
18,910,697 o/s 190,000 65,000(1) 355,000
Common stock, $.01 par value
500,000 shares: issued 412,944
shares 4,000 4,000(2)
Treasury Stock 102,000(4) 102,000(2) -
Preferred Stock $100 par value,
authorized 30,000 shares:
issued 24,096 shares 2,409,000 2,409,000(2) -
Preferred Stock, Series A, $100 par
value, authorized 10,000 shares:
issued 1,500 shares 150,000 150,000(2) -
Additional paid-in capital 23,410,000 360,000 360,000(2) 3,190,000(1) 31,711,000
5,111,000(3) 5,111,111
Paid in Capital from Treasury Stock 51,000(2) 51,000
Accumulated deficit (22,526,000) (2,309,000) 2,309,000(2) (22,526,000)
__________________________________________________________________________________________________________
Total shareholders` equity 1,074,000 614,000 3,025,000 10,928,000 9,591,000
Total liability & shareholders equity $2,435,000 $ 961,000 $3,208,000 $10,968,000 $11,156,000
==========================================================================================================
1 Eliminating entry to adjust for purchase of 100% equity interest in Olmsted Engineering.
2 Goodwill generated by offsetting purchase price of Olmsted (6,000,000 common shares @$.50 +
509,888 treasury shares @ $.50 = $3,254,944) against FMV of Olmsted`s net assets ($614,000)
and consequent elimination of Olmsted`s equity.
3 Gross proceeds of $5,667,500 net of from offering net of commission and expenses of $456,818
with offsetting entries
to Common Stock and Additional Paid-In-Capital.
4 Retirement into treasury stock of shares of Versus held by Olmsted.
5 Elimination entry to adjust for inter-company receivables and payables.
</TABLE>
<TABLE> VERSUS TECHNOLOGY, INC. AND OLMSTED ENGINEERING CO.
Pro Forma Consolidated Balance Sheet
July 31, 1996
==========================================================================================================
A S S E T S
<CAPTION> Versus Olmsted Debit Credit Pro Forma
Current Assets 7/31/96 6/30/96 Eliminating/Adj. Entries Consolidated
__________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Cash and Cash equivalents $ 223,000 $119,000 $5,251,000(3) $5,593,000
Cash held for appeal 207,000 207,000
Trade Accounts Receivable (net of
allowance for doubtful accounts) 67,000 191,000 41,000(5) 217,000
Notes receivable - current 55,000 55,000
Assets held for sale 3,000 - 3,000
Inventories 45,000 3,000 48,000
Prepaid expenses and other
current assets 114,000 4,000 118,000
__________________________________________________________________________________________________________
Total current assets 659,000 372,000 5,251,000 41,000 6,241,000
Investment in Olmsted 3,255,000(1) 3,255,000(2) -
Investment in Versus - 102,000 102,000(4) -
Property and equipment - net 65,000 397,000 462,000
Deferred charges and
other assets (net) 273,000 273,000
Goodwill 2,747,000(2) 2,747,000
__________________________________________________________________________________________________________
Total assets $ 997,000 $ 871,000 $11,253,000 $3,398,000 $ 9,723,000
==========================================================================================================
LIABILITIES AND SHAREHOLDERS` EQUITY
==========================================================================================================
Debit Credit Pro Forma
Current liabilities: Versus Olmsted Eliminating/Adj Entries Consolidated
Accounts payable $287,000 $ 9,000 $ 41,000(5) $ 255,000
Accrued expenses 377,000 26,000 40,000(3) 443,000
Line-of-credit 89,000 89,000
Other liabilities 4,000 4,000
Notes payable, current portion 50,000 50,000
__________________________________________________________________________________________________________
Total current liabilities 718,000 124,000 41,000 40,000 841,000
Notes payable, long term 339,000 75,000 414,000
Other 11,000 11,000
__________________________________________________________________________________________________________
Total liabilities 1,057,000 210,000 41,000 40,000 1,266,000
Shareholders` equity
Common stock, $.01 par
25,000,000 shares authorized, $100,000(3)
18,910,697 o/s 189,000 65,000(1) 355,000
Common stock, $.01 par value
500,000 shares: issued 412,944
shares 4,000 4,000(2)
Treasury Stock 102,000(4) 102,000(2) -
Preferred Stock $100 par value,
authorized 30,000 shares:
issued 24,096 shares 2,410,000 2,410,000(2) -
Preferred Stock, Series A, $100 par
value, authorized 10,000 shares:
issued 1,500 shares 150,000 150,000(2) -
Additional paid-in capital 23,484,000 359,000 359,000(2) 3,190,000(1)
5,111,000(3) 31,785,000
Paid in Capital from Treasury Stock 51,000(2) 51,000
Accumulated deficit (23,733,000) (2,262,000) 2,262,000(2) (23,733,000)
__________________________________________________________________________________________________________
Total shareholders` equity (59,000) 661,000 3,025,000 10,881,000 8,457,000
Total liability & shareholders equity $ 997,000 $ 871,000 $3,066,000 $10,921,000 $ 9,723,000
==========================================================================================================
1 Eliminating entry to adjust for purchase of 100% equity interest in Olmsted Engineering.
2 Goodwill generated by offsetting purchase price of Olmsted (6,000,000 common shares @$.50 +
509,888 treasury shares @ $.50 = $3,254,944) against FMV of Olmsted`s net assets ($614,000)
and consequent elimination of Olmsted`s equity.
3 Gross proceeds of $5,667,500 net of from offering net of commission and expenses of $456,818
with offsetting entries
to Common Stock and Additional Paid-In-Capital.
4 Retirement into treasury stock of shares of Versus held by Olmsted.
5 Elimination entry to adjust for inter-company receivables and payables.
</TABLE>
<TABLE>
VERSUS TECHNOLOGY, INC. and OLMSTED ENGINEERING, CO.
Pro Forma Consolidated Statement of Operations
For the Fiscal Year ending October 31, 1995
============================================================================================================
Debit Credit Pro Forma
Versus Olmsted Eliminating Entries Consolidated
____________________________________________________________________________________________________________
<C> <C> <C> <C> <C>
Revenues $989,000 $1,644,000 $720,000(1) $1,913,000
Cost of Sales (500,000) ( 394,000) $337,000(1) (557,000)
____________________________________________________________________________________________________________
Gross Margin 489,000 1,250,000 720,000 337,000 1,356,000
Operating expenses (3,799,000) (969,000) 186,000(2) (4,954,000)
Other income (expense) 813,000 (21,000) 792,000
Provision for income taxes (84,000) (84,000)
____________________________________________________________________________________________________________
Net income (loss) $(2,497,000) $176,000 $906,000 $337,000 $(2,890,000)
============================================================================================================
Weighted average
shares outstanding 5,450,430 22,785,430
Net loss per common and
common equivalent share:
Primary ($.46) ($.12)
Fully diluted ($.46) ($.12)
(1) Eliminating entry to adjust for inter-company revenues and expenses.
(2) To give effect for goodwill amortization.
</TABLE>
<TABLE>
VERSUS TECHNOLOGY, INC. and OLMSTED ENGINEERING, CO.
Pro Forma Consolidated Statement of Operations
For the 9 months ended July 31, 1996
============================================================================================================
<CAPTION> July-96 June-96 Debit Credit Pro Forma
Versus Olmsted Eliminating Entries Consolidated
____________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Revenues $160,000 $1,165,000 $611,000 (1) $714,000
Cost of Sales (124,000) (295,000) 409,000 (1) ( 10,000)
____________________________________________________________________________________________________________
Gross Margin 36,000 870,000 611,000 409,000 704,000
Operating Expenses (1,253,000) (814,000) 140,000 (2) (2,207,000)
Other income (expense) 9,000 (10,000) (1,000)
Provision for income taxes - -
____________________________________________________________________________________________________________
Net income (loss) $(1,208,000) $46,000 $751,000 $409,000 $(1,504,000)
============================================================================================================
Weighted average
shares outstanding 18,710,003 36,045,003
Net loss per common and
common equivalent share
Primary (0.06) (0.04)
Fully diluted (0.06) (0.04)
(1) Eliminating entry to adjust for inter-company revenues and expenses.
(2) To give effect for goodwill amortization.
</TABLE
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
VERSUS TECHNOLOGY, INC.
(Registrant)
By: GARY T. GAISSER
_________________
Gary T. Gaisser
President and Chief Executive Officer
By: DEBRA A. BOYER
__________________
Debra A. Boyer
Chief Financial Officer and
Principal Accounting Officer
October 8, 1996
10
OLMSTED ENGINEERING, CO.
Notes to the Financial Statements
September 30, 1995
32
(Continued)
</TABLE>
