<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 7, 1998
(Date of earliest event reported)
Vidikron Technologies Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 33-33997 #13-3499909
- ------------------------------- -------------- -----------------------
(State or other jurisdic- (Commission (IRS Employer
tion of Incorporation or file number) Identification Number)
organization
1 Evertrust Plaza 11th Floor Jersey City, NJ 07302
(Address of principal executive offices) (Zip Code)
(201) 938-0099
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Item 7 is amended in its entirety as follows:
Item 7. Financial Statements and Exhibits
Item 7(a): Financial Statements of Business Acquired.
The financial statements of the business acquired which are included herein are
summarized as follows:
The audited consolidated balance sheets of the Vidikron Industries S.p.A.
video business (consisting of the assets and liabilities utilized in the video
business, the business acquired) and subsidiary as of December 31, 1996 and 1997
and the audited consolidated statements of operations, Parent Company
deficiency, and cash flows for the years ended December 31, 1996 and 1997;
Item 7(b): Pro forma Financial Information
Consolidated Statements of Operations for the years from December 31, 1996 and
1997
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders of Vidikron Technologies Group, Inc.:
We have audited the accompanying consolidated balance sheets of the video
business (a line of business more fully described in Note 1 to the financial
statements) (the "Video Business") of Vidikron Industries S.p.A. (the "Parent
Company") and subsidiary as of December 31, 1997 and 1996 and the related
consolidated statements of operations, Parent Company deficiency, and cash
flows for the years then ended. These financial statements are the
responsibility of the Parent Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We did
not audit the financial statements of Vidikron of America, Inc. ("The
Consolidated Subsidiary"), which statements reflect total assets constituting
48% and 42%, respectively, of consolidated total assets at December 31, 1997
and 1996, and total revenues constituting 68% and 58%, respectively, of
consolidated total revenues for the years then ended. Those statements were
audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for The Consolidated
Subsidiary is based solely on the report of such other auditors.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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
audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements present fairly, in all material respects,
the financial position of the Video Business as of December 31, 1997 and 1996
and the results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared from the separate
records maintained by the Parent Company and may not necessarily be indicative
of the conditions that would have existed or the results of operations if the
Video Business had been operated as an unaffiliated company. As discussed in
Note 1, portions of certain income and expenses represent allocations of items
that are applicable to the Parent Company as a whole.
Deloitte & Touche, S.p.A.
Milan, Italy
June 25, 1999
F-1
<PAGE>
VIDIKRON INDUSTRIES S.p.A. VIDEO BUSINESS
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31,
--------------------------------
1997 1996
--------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ............................ $ 82,287 $ 159,073
Accounts receivable - net ............................ 3,259,804 2,306,879
Inventories .......................................... 3,004,122 2,824,424
Deferred taxes ....................................... 120,803 73,529
Other current assets ................................. 386,697 692,323
------------ ------------
Total Current Assets .............................. 6,853,713 6,056,228
PROPERTY AND EQUIPMENT .................................. 863,057 867,774
Less: Accumulated Depreciation .......................... 346,529 337,696
------------ ------------
Net Property and Equipment ........................... 516,528 530,078
OTHER ASSETS ............................................ 50,913 44,859
------------ ------------
TOTAL ASSETS ...................................... $ 7,421,154 $ 6,631,165
============ ============
LIABILITIES AND PARENT COMPANY DEFICIENCY
CURRENT LIABILITIES:
Accounts payable ..................................... $ 3,679,723 $ 3,890,302
Accrued liabilities .................................. 704,211 634,172
Credit Line .......................................... 4,059,616 3,566,646
------------ ------------
Total Current Liabilities ......................... 8,443,550 8,091,120
------------ ------------
LONG-TERM LIABILITIES
Other Long-Term Liabilities .......................... 173,264 252,617
------------ ------------
Total Long-term Liabilities .......................... 173,264 252,617
------------ ------------
TOTAL LIABILITIES ....................................... 8,616,814 8,343,737
MINORITY INTEREST ....................................... 84,092 63,260
PARENT COMPANY DEFICIENCY
Cumulative translation adjustment ....................... 28,473 (2,404)
Divisional equity ....................................... (1,141,663) (1,656,172)
Accumulated deficit ..................................... (166,562) (117,256)
------------ ------------
Total Parent Company Deficiency ...................... (1,279,752) (1,775,832)
------------ ------------
TOTAL LIABILITIES AND PARENT COMPANY DEFICIENCY ......... $ 7,421,154 $ 6,631,165
============ ============
</TABLE>
See the accompanying notes which are an integral
part of these consolidated financial statements.
F-2
<PAGE>
VIDIKRON INDUSTRIES S.p.A. VIDEO BUSINESS
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended
December 31,
-------------------------------
1997 1996
-------------- --------------
REVENUE ............................... $16,266,865 $17,994,755
COST OF SALES ......................... 10,535,058 12,307,574
----------- -----------
GROSS PROFIT .......................... 5,731,807 5,687,181
OPERATING EXPENSES
General and administrative ......... 4,259,769 4,036,368
Salaries ........................... 764,533 874,271
Depreciation ....................... 124,130 113,041
----------- -----------
Total Operating Expenses .............. 5,148,432 5,023,680
----------- -----------
INCOME FROM OPERATIONS ................ 583,375 663,501
----------- -----------
OTHER INCOME (EXPENSE)
Minority interest .................. (20,832) (49,439)
Other income ....................... 88,631 50,015
Interest expense ................... (593,326) (586,518)
----------- -----------
Other income/(expense) ................ (525,527) (585,942)
----------- -----------
Income before income taxes ............ 57,848 77,559
Provision for income taxes ............ 107,154 230,635
----------- -----------
Net Loss .............................. $ (49,306) $ (153,076)
=========== ===========
See the accompanying notes which are an integral
part of these consolidated financial statements.
F-3
<PAGE>
VIDIKRON INDUSTRIES S.p.A. VIDEO BUSINESS
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR YEARS ENDED December 31, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
-------------- ---------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss .......................................................... $ (49,306) $ (153,076)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation expense ............................................ 124,130 113,041
Minority Interest ............................................... 20,832 49,439
Other non-cash expenses ......................................... 21,321 (7,816)
Changes in operating assets and liabilities: ....................
Accounts receivable ............................................ (952,925) 1,006,473
Inventories .................................................... (179,698) 136,728
Deferred Taxes ................................................. (47,274) (73,529)
Other current assets ........................................... 305,626 285,822
Other long term assets ......................................... (6,054) 36,861
Accounts payable and accrued liabilities ....................... (140,540) (486,591)
Other long-term liabilities .................................... (79,354) 19,180
---------- ------------
Net cash provided by/(used in) operating activities ................ (983,242) 926,532
---------- ------------
Cash Flows from Investing Activities:
Purchase of equipment ........................................... (131,900) (149,659)
---------- ------------
Net cash used in investing activities .............................. (131,900) (149,659)
---------- ------------
Cash Flows provided by/(used in) Financing Activities:
Adjustment to divisional equity ................................. 514,509 (1,025,838)
Cumulative translation adjustment ............................... 30,877 (2,404)
Increase in credit lines ........................................ 492,970 133,481
---------- ------------
Net cash provided by/(used in) financing activities ................ 1,038,356 (894,761)
---------- ------------
Net decrease in cash ............................................... (76,786) (117,888)
Cash at the Beginning of the Year .................................. 159,073 276,961
Cash at the End of the Year ........................................ $ 82,287 $ 159,073
========== ============
Cash paid for interest ............................................. $ 81,135 $ 67,192
Cash paid for income taxes ......................................... $ 169,070 $ 109,666
</TABLE>
See the accompanying notes which are an integral
part of these consolidated financial statements.
F-4
<PAGE>
VIDIKRON INDUSTRIES S.p.A. VIDEO BUSINESS
CONSOLIDATED STATEMENTS OF PARENT COMPANY DEFICIENCY
<TABLE>
<CAPTION>
Cumulative
Translation Divisional Accumulated
Adjustment Equity Deficit Total
------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
January 1, 1996 ............................ $ -- $ (630,334) $ 35,820 $ (594,514)
Net Loss ................................... (153,076) (153,076)
Cumulative Translation Adjustment .......... (2,404) (2,404)
Total Comprehensive Loss .................. (155,480)
Adjustment to Divisional Equity ............ (1,025,838) (1,025,838)
------------ ------------
December 31, 1996 .......................... (2,404) (1,656,172) (117,256) (1,775,832)
Net Loss ................................... (49,306) (49,306)
Change in Cumulative Translation Adjustment 30,877 30,877
------------
Total Comprehensive Loss .................. (18,429)
Adjustment to Divisional Equity ............ 514,509 514,509
------------ ------------
December 31, 1997 .......................... $ 28,473 $ (1,141,663) $ (166,562) $ (1,279,752)
======== ============ ========== ============
</TABLE>
See the accompanying notes which are an integral
part of these consolidated financial statements.
F-5
<PAGE>
Vidikron Industries S.p.A.
Video Business
Notes to Consolidated Financial Statements
December 31, 1997
1. Basis of Presentation:
The Video Business of Vidikron Industries S.p.A. ("the Video Business"),
which is based in Misinto, Italy, and its 85%-owned subsidiary in the United
States, Vidikron of America, Inc. ("The Consolidated Subsidiary"), includes the
assets and liabilities related to the marketing and distribution of home
theater systems and related equipment. On December 7, 1998, Vidikron
Industries, S.p.A. ("The Parent Company") sold substantially all of its assets
with respect to the Video Business to Vidikron Technologies Group, Inc.
(formerly Projectavision, Inc.) (See Note 10). The Video Business has no
separate legal existence apart from Vidikron Industries, S.p.A.
The historical consolidated financial statements of the Video Business do
not necessarily reflect the results of operations or financial position that
would have existed if the Video Business were an independent company. The
Parent Company incurred certain company-wide expenses such as legal,
accounting, tax, interest, and other general and administrative expenses that
have been allocated to the Video Business using proportional allocation methods
on a consistent basis. General and administrative expenses related to such
charges were approximately $575,000 and $524,000 for the years ended 1997 and
1996, respectively. All material intercompany accounts and transactions have
been eliminated in consolidation.
2. Summary of Significant Accounting Policies
Nature of Business: The Video Business is engaged in one industry segment
and is a marketer and distributor of high-end home theater projection systems
and related support equipment primarily in Europe and, through The Consolidated
Subsidiary. in the United States and the Far East.
Revenue Recognition: Revenue is recognized when goods are shipped or
services are performed.
Cash and Cash Equivalents: The Video Business considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.
Concentrations of Credit Risk: Concentrations of credit risk with respect
to trade accounts receivable are limited. No one customer accounts for a
significant portion of The Video Business' trade accounts receivable portfolio.
As a result, The Video Business does not consider itself to have any
significant concentrations of credit risk. During 1997 and 1996, one customer
accounted for approximately 9% and 5%, respectively, of gross revenues.
The Video Business' financial instruments consist primarily of cash, which
is invested in money market accounts, accounts receivable, and accounts
payable. The Video Business considers the book value of these instruments to be
indicative of their respective fair value. The Video Business places its
temporary cash investments with high credit quality institutions to limit its
exposure.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Property and Equipment: Property and equipment is stated at cost, net of
accumulated depreciation and amortization. Depreciation and amortization of
assets is computed using the straight-line method over the estimated useful
lives of the related assets which range from 3-10 years. Leasehold improvements
are amortized over their estimated useful life or the life of the lease,
whichever is shorter. Impairment losses are recognized when expected future
cash flows are less than the assets' carrying value.
F-6
<PAGE>
Vidikron Industries S.p.A.
Video Business
Notes to Consolidated Financial Statements -- (Continued)
December 31, 1997
2. Summary of Significant Accounting Policies -- (Continued)
Maintenance and repair costs are charged to expense as incurred and
renewals and improvements that extend the useful life of the assets are
capitalized. Upon sale or retirement, the cost and related accumulated
depreciation and amortization are eliminated from the respective accounts and a
resulting gain or loss is reported as income or expense.
Research and Development: Research and product development costs are
charged to expense as incurred.
Advertising: Advertising costs are charged to expense as incurred.
Income Taxes: Income taxes are accounted for using the liability method of
accounting for income taxes as provided in Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (Statement No. 109). In
general, this statement provides for the recognition of deferred tax assets and
liabilities for the tax effect of differences between the tax basis of assets
and liabilities and their carrying values for financial reporting.
3. Fair Value of Financial Instruments
At December 31, 1996 and 1997, the fair values of cash, cash equivalents,
accounts receivable, investments, and accounts payable approximated their
carrying values because of the short-term nature of these accounts.
4. Accounts Receivable
At December 31, 1996 and 1997, the allowance for doubtful accounts was
$107,000 and $86,000 respectively.
5. Inventories
The Video Business values inventories at lower of cost or market. Cost is
determined on the first in first out method. Inventories consist of the
following:
December 31
-----------------------------
1997 1996
------------- -------------
Parts ................... $ 364,968 $ 329,541
Work in Process ......... 686,173 743,305
Finished Goods .......... 1,952,981 1,747,548
---------- ----------
Total .................. $3,004,122 $2,820,394
6. Related Parties
The Video Business uses space owned by two of The Parent Company's
officers and directors and purchases certain components used in the manufacture
of certain projectors and certain manufactured projectors from Novavision,
S.p.A., a company owned by two of the Parent Company's officers and directors.
During 1997 and 1996 respectively, the Consolidated Subsidiary had purchases of
$367,000 and $951,000 with Novavision, S.p.A.
Included in credit lines are cash advances, totaling approximately $2.7
million and $2.8 million at December 31, 1997 and 1996 respectively for working
capital and capital expenditures, which have been drawn under the Parent
Company's lines of credit. They are payable to The Parent Company on demand.
Interest expense of approximately $505,000 and $524,000 for 1997 and 1996
respectively was allocated by The Parent Company to the Video Business. In
management's opinion, the recorded amounts for the transactions described above
are reasonable. However, the amounts disclosed may not represent the amounts
that would have been reported had these transactions occurred with third
parties at "arm's length."
F-7
<PAGE>
Vidikron Industries S.p.A.
Video Business
Notes to Consolidated Financial Statements --(Continued)
December 31, 1997
7. Bank Debt
At December 31, 1997, The Consolidated Subsidiary had a line of credit
agreement with a bank that provides for borrowings up to $ 1,500,000, was
secured by substantially all of its assets, and was guaranteed by The Parent
Company. Interest is payable monthly and accrues at The Subsidiary's option of
the bank's prime rate or LIBOR plus 250 basis points, with the bank's prime
rate currently being used. At December 31, 1997, The Consolidated Subsidiary
had $1,370,000 of borrowings under this line. The line of credit agreement
expires on June 30, 1999 and places certain restrictive covenants upon The
Consolidated Subsidiary, the most restrictive of which requires The
Consolidated Subsidiary to maintain a ratio of total liabilities to tangible
net worth, as defined. At December 31, 1997, The Consolidated Subsidiary was
not in compliance with certain financial covenants contained in the agreement
and obtained a waiver.
At December 31, 1996, The Consolidated Subsidiary had a line of credit
with a bank that provided for borrowings under four lines of credit and
provides for borrowings up to $ 1,375,000 and was secured by substantially all
of the its assets, all of which accrue interest at the bank's prime rate plus
1%. At December 31, 1996 The Consolidated Subsidiary had $ 684,000 of total
borrowings under these lines.
8. Foreign Currency Translation:
The functional currency of the Video Business' Italy operations is the
lira, the local currency. As a result, assets and liabilities are translated at
period-end exchange rates and revenues and expenses are translated at the
average rates. Foreign currency gains and losses arising from transactions are
included in operations, but were not significant in fiscal 1997 or 1996. Equity
accounts are translated at the rate of exchange in effect when the transactions
giving rise to the balances took place.
9. Income Taxes
The components of income tax expense/(benefit) for The Consolidated
Subsidiary are as follows:
Year ended December 31
---------------------------
1997 1996
------------- -----------
Current
Federal ................. $ 120,013 $125,354
State and local ......... 34,415 36,464
--------- --------
$ 154,428 $161,818
Deferred
Federal ................. $ (36,621) $ 53,310
State and local ......... (10,653) 15,507
--------- --------
(47,274) 68,817
--------- --------
$ 107,154 $230,635
As of December 31, 1997 and 1996, The Consolidated Subsidiary's recorded
net deferred tax asset of $120,803 and $73,529, respectively relates principally
to temporary differences associated with the allowance for doubtful accounts,
inventory, and accrued liabilities.
10. Subsequent Events
On January 26, 1998,Vidikron Technologies Group, Inc. (formerly
Projectavision, Inc.) announced that it entered into an agreement with the
Parent Company to acquire substantially all of its assets with respect to the
F-8
<PAGE>
Vidikron Industries S.p.A.
Video Business
Notes to Consolidated Financial Statements -- (Continued)
December 31, 1997
10. Subsequent Events -- (Continued)
Video Business, including its 85% ownership in The Consolidated Subsidiary. The
transaction closed on December 7, 1998. In connection and simultaneously with
the December 7, 1998 transaction, Vidikron Technologies Group, Inc. also
acquired the remaining 15% of The Consolidated Subsidiary directly from the
holders thereof, who were employees of The Consolidated Subsidiary and who are
now employees of Vidikron Technologies Group, Inc. Additionally, on December
28, 1998, the lender to The Consolidated Subsidiary sent notice of their
intention to accelerate the loan due to the breach of a change in control
covenant. The Consolidated Subsidiary has entered into a forebearance agreement
with the lender which expired on July 15, 1999. Negotiations with the lender
have been ongoing, with the lender exercising its right of setoff against the
Consolidated Subsidiary's funds in accounts maintained by the lender on July
20, 1999. The right of setoff was temporarily stayed until July 26, 1999 when
the lender reinstituted it. Vidikron Technologies Group, Inc. is seeking to
raise additional capital and substitute a new facility to pay down this
obligation.
F-9
<PAGE>
VIDIKRON TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The accompanying unaudited pro forma condensed Statements of Operations
for the years ended December 31, 1997 and 1996 give effect to (i) the
acquisition of the Video Business of Vidikron Industries, S.p.A. (the "Video
Business") and (ii) the related financings including the equity transactions.
The historical information included in the unaudited pro forma condensed
financial statements of operations have been presented as if the transactions
had been consummated on January 1, 1996.
The unaudited pro forma condensed financial information does not purport
to be indicative of the results of operations which would have actually been
obtained if the acquisition had been consummated on the date indicated. In
addition, the unaudited pro forma condensed financial information does not
purport to be indicative of the results of operations which may result in the
future.
The unaudited pro forma condensed financial information has been prepared
by Vidikron Technologies Group, Inc. (the "Company") based upon assumptions
deemed appropriate by the Company's management. Certain of the most significant
assumptions are set forth under the notes to pro forma combined condensed
financial statements.
The unaudited pro forma condensed financial information should be read in
conjunction with the Company's historical consolidated financial statements and
notes thereto contained in the 1998 Annual Report on Form 10-K/A.
F-10
<PAGE>
VIDIKRON TECHNOLOGIES GROUP, INC. (FORMERLY PROJECTAVISION, INC.)
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Vidikron Technologies
Group, Inc. Video Business
----------------------- ----------------
For the Year Ended December 31, 1997
<S> <C> <C>
REVENUE ................................... $ 1,017,645 $16,266,865
-------------- -----------
COST OF SALES ............................. 990,044 10,535,058
-------------- -----------
GROSS PROFIT .............................. 27,601 5,731,807
OPERATING EXPENSES
General and administrative ............... 3,230,742 4,259,769
Salaries ................................. 1,518,695 764,533
Legal fees ............................... 1,347,146 --
Depreciation and amortization ............ 608,355 124,130
Research and development ................. 1,240,578 --
Patent and license expense ............... 283,030 --
-------------- -----------
Total Operating Expenses .................. 8,228,546 5,148,432
-------------- -----------
LOSS FROM OPERATIONS ...................... (8,200,945) 583,375
OTHER INCOME (EXPENSE)
(Provision for)/recovery of allow-
ances on advances ....................... (100,000) --
Minority Interest ........................ -- (20,832)
Other Income ............................. -- 88,631
Interest income .......................... 167,855 --
Interest expense -- Notes ................ (117,524) (593,326)
Interest expense -- Other................. (39,306) --
-------------- -----------
Other income/(expense) -- Net ............. (88,975) (525,527)
-------------- -----------
Pretax Income/(Loss) ...................... (8,289,920) 57,848
Provision for Income Taxes ................ -- 107,154
-------------- -----------
Net Income/(Loss) ......................... (8,289,920) (49,306)
============== ===========
Dividends on Preferred Stock .............. (3,157,266) --
-------------- -----------
Net Loss Attributable to Common
Shareholders ............................. (11,447,186) (49,306)
============== ===========
Net Loss per Share Attributable to Com-
mon Shareholders ......................... $ (25.48)
==============
AVERAGE NUMBER OF SHARES
OUTSTANDING .............................. 449,222
==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Purchase Accounting Pro Forma
Adjustments Financing Consolidated
--------------------- ------------------- -----------------
<S> <C> <C> <C>
REVENUE ................................... $ -- $ -- $ 17,284,510
----------- ------------ -------------
COST OF SALES ............................. -- -- 11,525,102
----------- ------------ -------------
GROSS PROFIT .............................. -- -- 5,759,408
OPERATING EXPENSES
General and administrative ............... -- -- 7,490,511
Salaries ................................. -- -- 2,283,228
Legal fees ............................... -- -- 1,347,146
Depreciation and amortization ............ 435,098(1) -- 1,167,583
Research and development ................. -- -- 1,240,578
Patent and license expense ............... -- -- 283,030
------------- ------------ -------------
Total Operating Expenses .................. 435,098 -- 13,812,076
------------- ------------ -------------
LOSS FROM OPERATIONS ...................... (435,098) -- (8,052,668)
-------------
OTHER INCOME (EXPENSE)
(Provision for)/recovery of allow-
ances on advances ....................... -- -- (100,000)
Minority Interest ........................ -- -- (20,832)
Other Income ............................. -- -- 88,631
Interest income .......................... -- -- 167,858
Interest expense -- Notes ................ -- (150,000)(2) (860,850)
Interest expense -- Other ................ -- -- (39,306)
------------- ------------ -------------
Other income/(expense) -- Net ............. -- (150,000) (764,502)
------------- ------------ -------------
Pretax Income/(Loss) ...................... (435,098) (150,000) (8,817,170)
Provision for Income Taxes ................ -- -- 107,154
------------- ------------ -------------
Net Income/(Loss) ......................... (435,098) (150,000) (8,924,324)
============= ============ =============
Dividends on Preferred Stock .............. -- 1,700,166(3) (1,457,100)
------------- -------------- -------------
Net Loss Attributable to Common
Shareholders ............................. (435,098) 1,550,166 $ (10,381,424)
============= ============== =============
Net Loss per Share Attributable to Com-
mon Shareholders ......................... $ (23.11)
=============
AVERAGE NUMBER OF SHARES
OUTSTANDING .............................. 449,222
=============
</TABLE>
See Notes to Pro Forma Financial Information
F-11
<PAGE>
VIDIKRON TECHNOLOGIES GROUP, INC. (FORMERLY PROJECTAVISION, INC.)
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Vidikron Technologies
Group, Inc. Video Business
----------------------- ----------------
For the Year Ended December 31,
1996
<S> <C> <C>
REVENUE .................................... $ 150,000 $17,994,755
-------------- -----------
COST OF SALES .............................. -- 12,307,574
-------------- -----------
GROSS PROFIT ............................... 150,000 5,687,181
OPERATING EXPENSES
General and administrative ................ 2,179,132 4,036,368
Salaries .................................. 1,266,287 874,271
Legal fees ................................ 1,017,909 --
Depreciation and amortization ............. 91,284 113,041
Research and development .................. 2,389,329 --
Patent and license expense ................ 362,967 --
-------------- -----------
Total Operating Expenses ................... 7,306,908 5,023,680
-------------- -----------
LOSS FROM OPERATIONS ....................... (7,156,908) 663,501
OTHER INCOME (EXPENSE)
(Provision for)/recovery of allow-
ances on advances ........................ 109,166 --
Minority Interest ......................... -- (49,439)
Other Income .............................. -- 50,015
Interest income ........................... 458,979 --
Interest expense -- Notes ................. (352,049) (586,518)
Interest expense -- Other ................. (3,868,016) --
-------------- -----------
Other income/(expense) -- Net .............. (3,651,920) (585,942)
-------------- -----------
Pretax Income/(Loss) ....................... (10,808,828) 77,559
Equity in Loss of Unconsolidated Affili-
ate ....................................... (72,065) --
Provision for Income Taxes ................. -- 230,635
-------------- -----------
Net Income/(Loss) .......................... (10,880,893) (153,076)
============== ===========
Dividends on Preferred Stock ............... (2,635,331) --
-------------- -----------
Net Loss Attributable to Common
Shareholders .............................. (13,516,224) (153,076)
============== ===========
Net Loss per Share Attributable to Com-
mon Shareholders .......................... $ (39.79)
==============
AVERAGE NUMBER OF SHARES
OUTSTANDING ............................... 339,668
==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Purchase Accounting Pro Forma
Adjustments Financing Consolidated
--------------------- ------------------ -----------------
For the Year Ended December 31,
1996
<S> <C> <C> <C>
REVENUE .................................... $ -- $ -- $ 18,144,755
----------- ------------- -------------
COST OF SALES .............................. -- -- 12,307,574
----------- ------------- -------------
GROSS PROFIT ............................... -- -- 5,837,181
OPERATING EXPENSES
General and administrative ................ -- -- 6,215,500
Salaries .................................. -- -- 2,140,558
Legal fees ................................ -- -- 1,017,909
Depreciation and amortization ............. 435,098(1) -- 639,423
Research and development .................. -- -- 2,389,329
Patent and license expense ................ -- -- 362,967
------------- ------------- -------------
Total Operating Expenses ................... 435,098 -- 12,765,686
------------- ------------- -------------
LOSS FROM OPERATIONS ....................... (435,098) -- (6,928,505)
-------------
OTHER INCOME (EXPENSE)
(Provision for)/recovery of allow-
ances on advances ........................ -- -- 109,166
Minority Interest ......................... -- -- (49,439)
Other Income .............................. -- -- 50,015
Interest income ........................... -- -- 458,979
Interest expense -- Notes ................. -- (75,000(2) (1,013,567)
Interest expense -- Other ................. -- -- (3,868,016)
------------- --------------- -------------
Other income/(expense) -- Net .............. -- (75,000) (4,312,862)
------------- --------------- -------------
Pretax Income/(Loss) ....................... (435,098) (75,000) (11,241,367)
Equity in Loss of Unconsolidated Affili-
ate ....................................... -- -- (72,065)
Provision for Income Taxes ................. -- -- 230,635
------------- --------------- -------------
Net Income/(Loss) .......................... (435,098) (75,000) (11,544,067)
============= =============== =============
Dividends on Preferred Stock ............... -- 1,178,231(3) (1,457,100)
------------- --------------- -------------
Net Loss Attributable to Common
Shareholders .............................. (435,098) 1,103,231 $ (13,001,167)
============= =============== =============
Net Loss per Share Attributable to Com-
mon Shareholders .......................... $ (38.28)
=============
AVERAGE NUMBER OF SHARES
OUTSTANDING ............................... 339,668
=============
</TABLE>
See Notes to Pro Forma Financial Information
F-12
<PAGE>
VIDIKRON TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The unaudited pro forma condensed statements of operations for the years
ended December 31, 1997 and December 31, 1996 is derived from the historical
audited financial statements of the Company included in the 1997 Annual Report
on Form 10-K. Financial statements of the Video Business of Vidikron
Industries, S.p.A. for the fiscal years ended December 31, 1997 and 1996 are
contained herein. The pro forma financial information includes adjustments to
reflect the purchase of the Video Business of Vidikron Industries S.p.A. by
Vidikron Technologies Group, Inc. on December 7, 1998 including the
consideration paid and the resulting goodwill. The unaudited pro forma
condensed financial information does not purport to be indicative of the
results of operations if the acquisition had been consummated on the date
indicated or which may be obtained in the future. Other than described below,
the unaudited proforma condensed financial statements do not reflect any costs
associated with operational changes resulting from the transactions.
On December 7, 1998 the Company acquired substantially all of the assets
of Vidikron Industries, S.p.A. relating to its video business, including all of
the common stock in its U.S. distribution subsidiary, Vidikron of America, Inc.
for $ 9.4 million. The transaction was completed through a combination of $4.7
million in cash, $1.0 million in notes from the seller, the issuance of $1.2
million of common stock of the Company, and the assumption of $2.5 million in
liabilities from the seller. The $1.0 million in Notes are interest-free for
the first six months and carry interest at 15% annually thereafter. The Company
obtained the cash used for the purchase through the issuance of $6.0 million in
Notes for cash (i) to certain of the existing owners of the Company's Series D,
E, F, and G Preferred Stock, (ii) to the existing owner of all of its
outstanding 8% Convertible Debt, and (iii) to other investors. These Notes were
subsequently converted into Series I Preferred Stock in the Company. The
acquisition was accounted for as a purchase, with goodwill equal to
approximately $6.9 million. The proforma statements of operations assume that
the financing and purchase were consummated as of January 1, 1996.
(1) The amortization period for the $6.9 million in goodwill is 15 years.
(2) The $1.0 million in Notes from Vidikron Industries S.p.A. are
interest-free for the first six months and 15% annually thereafter.
(3) The $6.0 million in notes carry an annual interest rate of 9%.
Item 7 (c) Exhibits.
2.1 The Agreement of Purchase and Sale of Assets, dated January 20, 1998,
by and between Vidikron Technologies Group, Inc. (formerly Projectavision,
Inc.), and Vidikron Industries, S.p.A. was previously filed as an exhibit to
Projectavision, Inc.'s annual report on Form 10-K for the year ended December
31, 1997 that was filed on March 31, 1998. The Amended Agreement of Purchase
and Sale of Assets between the parties dated December 7, 1998 was previously
filed as an exhibit to Vidikron Technologies Group, Inc. (formerly
Projectavision, Inc.) annual report on Form 10-K for the year ended December
31, 1998 that was filed on April 15, 1999. Schedules to this Amended Agreement
were not filed but will be provided to the Commission supplementally upon
request.
F-13
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Vidikron Technologies Group, Inc.
Date: July 28, 1999
By: /s/ Phillip Siegel
-------------------------------------------
Phillip Siegel
Chief Executive Officer
By: /s/ Stuart Barlow
-------------------------------------------
Stuart Barlow
V.P. Finance (principal financial officer)
