<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): July 31, 1996
Commission File No: 0-19195
AMERICAN DENTAL TECHNOLOGIES, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 38-2905258
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
28411 Northwestern Highway, Suite 1100 48034-5541
Southfield, Michigan
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(810) 353-5300
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
As of July 31, 1996, following consummation of the Merger described in
Item 2 below, the Board of Directors of American Dental Technologies, Inc.
("ADT") consists of four incumbent directors: William D. Myers, Anthony D.
Fiorillo, J. Bernard Machen and Bertrand R. Williams, Sr., and four former
Texas Airsonics, Inc. ("Texas Air") directors: Ben J. Gallant, Wayne A. Johnson
II, Charles A. Nichols and John E. Vickers III. A ninth director may be
appointed, but has not been identified. William D. Myers and Ben J. Gallant
have executed a Voting Agreement dated February 23, 1996 providing generally
for the voting of their respective shares of ADT common stock for the election
of William D. Myers and Ben J. Gallant to the board of directors of ADT. The
voting agreement will terminate on the earlier of a mutual agreement to
terminate or immediately following the conclusion of the third annual meeting
of the stockholders of ADT after July 31, 1996.
Upon consummation of the Merger, ADT established an executive committee
consisting of Anthony D. Fiorillo, the President and Chief Executive Officer of
ADT, and Ben J. Gallant, the President and Chief Executive Officer of the
wholly owned Texas Airsonics, Inc. subsidiary. The executive committee has the
same power as the President and Chief Executive Officer of ADT, a position
formerly held solely by Mr. Fiorillo. Messrs. Fiorillo and Gallant report to
the ADT Board of Directors. Deadlocks on management decisions by this committee
will be decided by the entire ADT Board of Directors.
The following table sets forth certain information regarding the ownership
of ADT common stock as of July 31, 1996, before and after the Merger, by the
persons listed who are known by ADT to own beneficially 5% or more of ADT's
outstanding shares of common stock, by each of the current directors and
executive officers of ADT, and by all of ADT's directors and executive officers
as a group.
<TABLE>
<CAPTION>
Pre-Merger Post-Merger
Number of Percent of Number of Percent of
Name Shares(1) Class(2) Shares (1) Class(2)
<S> <C> <C> <C> <C>
William D. Myers, M.D.,
Chairman of the Board (3) 4,711,469 27.1 4,711,469 16.4
William D. Maroney (4) 3,253,182 18.5 3,253,182 11.2
Michael F. Radner 2,705,529 15.8 2,705,529 9.5
Anthony D. Fiorillo, President, Chief
Executive Officer, Chief
Operating Officer and a Director 571,666 3.5 571,666 2.0
Bertrand R. Williams, Sr., Director 34,458 (7) 34,453 (7)
J. Bernard Machen, Director 1,875 (7) 1,875 (7)
Diane M. Miller
Chief Financial Officer 140,000 (7) 140,000 (7)
Terry D. Myers, Director of
Education and Training (5) 550,082 3.4 550,082 2.0
Johannes Homolko, Director of
European Operations 87,656 (7) 87,656 (7)
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Pre-Merger Post-Merger
Number of Percent of Number of Percent of
Name Shares(1) Class(2) Shares (1) Class(2)
<S> <C> <C> <C> <C>
Thomas M. Waugh
Vice President - Operations 66,667 (7) 66,667 (7)
Raymond F. Winter
Secretary 93,639 (7) 93,639 (7)
Texas Airsonics, Inc. (6) 3,445,832 18.6 0 0
Ben J. Gallant, President and
Chief Executive Officer of ADT's
Texas Airsonics, Inc. subsidiary
and a Director 743,019 4.6 3,767,456 13.7
Charles A. Nichols,
Director 27,288 (7) 1,993,850 7.3
Wayne A. Johnson II,
Director 9,520 (7) 871,519 3.2
John E. Vickers III,
Director 165,975 1.0 518,600 1.9
Denics Co., Ltd. 860,240 5.4 1,689,055 6.2
All executive officers and directors
as a group (10 persons prior to and
13 persons after the Merger) 6,350,165 34.4 12,890,337 43.1
</TABLE>
(1) The column sets forth shares of ADT common stock which are deemed to be
"beneficially owned" by the persons named in the table under Rule 13d-3 of
the SEC, including shares of ADT common stock that may be acquired upon
the exercise of stock options or common stock purchase warrants that are
presently exercisable or become exercisable within 60 days as follows:
William D. Myers and spouse- 1,381,126 shares; William D. Maroney and
spouse - 1,611,110 shares; Michael F. Radner - 1,139,125 shares; Anthony
D. Fiorillo - 566,666 shares; Bertrand R. Williams, Sr. - 3,125 shares; J.
Bernard Machen - 1,875 shares; Diane M. Miller - 140,000 shares; Terry D.
Myers - 137,564 shares; Johannes Homolko - 87,656 shares; Thomas M. Waugh
- 66,667 shares; Raymond F. Winter - 72,333 shares; and all executive
officers and directors as a group - 2,475,137 (Pre-Merger) and 2,457,012
shares (Post-Merger). The column excludes shares of ADT common stock that
may be acquired upon the exercise of the following Merger Warrants
(defined in Item 2 below) that will become exercisable August 1, 1997:
Ben J. Gallant - 1,851,458 shares; Charles A. Nichols - 1,203,863 shares;
Wayne A. Johnson II - 527,687 shares; John E. Vickers III - 215,865 shares
and Denics - 507,372 shares. Each of the persons named in the table has
sole voting and investment power with respect to all shares beneficially
owned by them, except as described in the following footnotes.
(2) Except as noted below, for purposes of calculating the percentage of ADT
common stock beneficially owned, the shares issuable to each person under
stock options or common stock purchase warrants exercisable currently or
within 60 days are considered outstanding and added to the shares of ADT
common stock actually outstanding.The number of shares
<PAGE> 4
outstanding prior to the Merger was 16,006,795 and the number outstanding
immediately following the Merger was 27,436,570.
(3) Includes 1,496,287 shares of ADT common stock and 922,222 common stock
purchase warrants owned jointly with and/or individually by his spouse.
(4) Includes 1,265,436 shares of ADT common stock and 1,611,110 common stock
purchase warrants owned by his spouse.
(5) Includes 397,133 shares of ADT common stock owned by his spouse.
(6) The Pre-Merger column includes shares owned individually by Texas Air's
officers and directors, Ben J. Gallant, John E. Vickers III, Charles A.
Nichols, and Wayne A. Johnson II, respectively, and warrants for 2,500,000
shares of ADT common stock issued to Texas Air that were canceled when the
Merger described in Item 2 was consummated.
(7) Less than one percent.
- --------------------
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
At the close of business on July 31, 1996, Texas Air was merged with and
into ADT Merger Corp. ("Sub"), a wholly owned subsidiary of ADT, and Texas
Air's separate existence ceased (the "Merger"). Concurrently, Sub changed its
name to Texas Airsonics, Inc. The Merger was effected pursuant to the Restated
Agreement and Plan of Reorganization and associated Restated Agreement of
Merger, dated as of November 22, 1995, by and among ADT, Sub and Texas Air
(collectively referred to herein as the "Merger Agreement"), which was the
result of negotiations between the representatives of ADT and Texas Air.
On July 31, 1996, the effective date of the Merger, pursuant to the Merger
Agreement, each issued and outstanding share of Texas Air common stock was
converted into the right to receive 5.425 shares of ADT common stock together
with a warrant to purchase 3.321 shares of ADT common stock at a purchase price
of $1.4104 per share for a period commencing August 1, 1997 and ending July 31,
1999 (a "Merger Warrant"). On July 31, 1996, there were 2,106,871 shares of
Texas Air common stock outstanding. No fractional shares of ADT common stock
will be issued because of the Merger or upon exercise of the Merger Warrants.
A cash payment will be made (based on the closing sale price of ADT common
stock as reported by the Nasdaq SmallCap Market on July 31, 1996 or, in the
case of a Merger Warrant, on the date of exercise) in lieu of any fractional
share to which a stockholder might otherwise be entitled.
ADT develops, manufactures and markets high technology dental products
designed for general dentistry. ADT's primary products are KCP(R) cavity
preparation systems and PulseMaster(R) pulsed dental lasers. Texas Air
develops, manufactures and markets high precision micro abrasive systems for
dentistry and numerous industrial applications. Texas Air's primary product
lines are KCP cavity preparation systems for dentistry and air abrasive jet
machining ("AJM") systems for industrial applications. Texas Air has the
exclusive manufacturing rights for the KCP dental systems worldwide, except for
Japan and the Pacific Rim, through 2003. ADT is the exclusive distributor of
all KCP dental products manufactured by Texas Air and has been Texas Air's
primary customer since 1991. ADT's purchases of KCP units and related parts
from Texas Air were $3,663,000, $1,852,000 and $3,367,000 for the years ended
December 31, 1995, 1994 and 1993, respectively. The assets of Texas Air
acquired by ADT in the Merger consist primarily of inventory, cash, accounts
receivable, a modern 21,000 square foot manufacturing facility and related
equipment located in Corpus Christi, Texas. ADT intends for Texas Air to
continue operations following the Merger.
<PAGE> 5
On February 12, 1993, ADT acquired the manufacturing rights for all dental
air abrasive products from Texas Air in exchange for 165,975 shares of
restricted ADT common stock and entered into a subcontract with Texas Air to
manufacture such products for ADT. ADT also obtained the rights to patents,
patent applications and other proprietary intellectual property from Ben J.
Gallant, the President of Texas Air, in exchange for $160,000 to be paid in
four annual installments of $40,000 commencing April 1994 and $640,000 of
restricted common stock to be issued in four annual installments. The number
of shares to be issued each year is based upon the average market value of
ADT's common stock during the last five trading days immediately prior to April
18th for each of the four years in the period ending April 18, 1996. Mr.
Gallant has received 705,666 shares of ADT common stock pursuant to this
arrangement. ADT also paid a monthly consulting fee of $8,333 under the
February 1993 agreement to Mr. Gallant for technical advice on manufacturing,
product safety, product serviceability, field testing and warranty
satisfaction. This consulting arrangement terminated in June 1996.
On September 30, 1994, ADT amended its sub-contract manufacturing
agreement for air abrasive products with Texas Air to extend the term of that
agreement through December 2003. In exchange, Texas Air reduced its price on
the products being sold to ADT; increased ADT's accounts payable credit limit
to $1.5 million; and agreed to share research and development, legal, and
marketing costs related to air abrasive products. At December 31, 1995,
$792,000 was outstanding for accounts payable and Texas Air's share of research
and development, legal, and marketing costs was $895,000. ADT's obligations to
Texas Air are secured by a pledge of ADT's air abrasive patent rights. ADT has
minimum purchase commitments of approximately $1,650,000 for 1996, and no
purchase commitments thereafter. In consideration of the price reductions,
credit limit increase and the agreements between the parties, on November 1,
1994, ADT issued Texas Air warrants to purchase 1,000,000 shares of ADT common
stock at $2.00 per share, exercisable through October 31, 1996 and Texas Air
became a 5% owner. In August 1995, ADT extended the exercise period of these
warrants to August 1, 1998. When the Merger was consummated, the manufacturing
agreement and these warrants to purchase 1,000,000 shares of ADT common stock
were canceled.
On August 7, 1995, ADT obtained a $1,500,000 loan from Texas Air with
interest payable at prime. Interest is due on a quarterly basis. A principal
payment of $200,000 due May 1, 1996 was paid and the balance, which was
originally due on August 1, 1996, was extended following a $200,000 principal
payment on August 1, 1996. Approximately $1,410,000 of these loan proceeds
have been deposited with the court to stay enforcement of a judgment against
ADT in the Alameda Superior Court, Oakland, California, pending an appeal of
that case. However, that case was recently settled and ADT anticipates the
funds will be released by the court and the loan repaid. ADT's obligations to
Texas Air are secured by a pledge of all ADT's assets. Simultaneously, ADT
granted Texas Air warrants to acquire up to 1,500,000 shares of ADT common
stock at an exercise price of $1.00 per share, exercisable any time between
January 1, 1996 and August 1, 1998. These warrants to acquire 1,500,000 shares
of ADT common stock were canceled when the Merger was consummated.
On June 10, 1993, ADT agreed with Denics Co., Ltd. ("Denics") to form a
joint venture to distribute dental products in certain Asian and Pacific
markets. Under the terms of the agreement, as amended in July and August 1993,
ADT granted Denics territorial manufacturing rights for all dental laser and
air abrasive products owned by ADT, in Japan. In consideration, Denics
provided ADT with a $3,000,000 non-refundable, prepaid royalty payment. By
mutual agreement, the formation of the contemplated joint venture, which is to
exist for an initial term of ten years, has been delayed. During 1993, ADT
issued Denics convertible Series A preferred stock in exchange for $2,000,000
in loans made to ADT during 1993. In April 1994, Denics converted all 860,240
shares of Series A preferred stock into 860,240 shares of ADT common stock and
became a 5% owner. As of December 31, 1995, ADT also has $800,000 outstanding
under a $1,000,000 note payable to Denics. Interest is payable each June 30
and December 31 at 3% above the discount rate in Japan (0.5% at December 31,
1995). Principal payments of $200,000 are payable each June 30.
<PAGE> 6
Borrowings are secured by an assignment of ADT's Japanese patent rights and
related technologies. ADT had accounts receivable from Denics of $640,059 at
December 31, 1995. ADT earned royalty payments from Denics or its affiliates
for dental laser units sold in Japan and certain Asian and Pacific markets, net
of foreign taxes, of $261,000 and $285,000 during the years ended December 31,
1995 and 1994, respectively. ADT realized $3,671,568, $3,320,300 and $306,855
during the years ended December 31, 1995, 1994 and 1993, respectively, from the
sale of KCP units, lasers and related parts to Denics. Denics was a 7%
stockholder of Texas Air prior to the Merger.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
Report of Independent Auditors
Board of Directors
Texas Airsonics, Inc.
We have audited the accompanying balance sheets of Texas Airsonics, Inc. as of
December 31, 1995, 1994 and 1993, and the related statements of operations,
stockholders' equity, and cash flows for the 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Texas Airsonics, Inc. at
December 31, 1995, 1994 and 1993, and the results of its operations and cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Detroit, Michigan
February 16, 1996
<PAGE> 7
Texas Airsonics, Inc.
Statements of Operations
<TABLE>
<CAPTION>
Years ended December 31
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net sales (Note 4) $4,391,001 $2,709,971 $3,695,121
Cost of sales 2,628,695 1,370,111 1,828,678
---------- ---------- ----------
Gross profit 1,762,306 1,339,860 1,866,443
Selling, general and administrative (Note 4) 1,455,949 697,449 668,075
Research and development 272,000 4,658 1,550
---------- ---------- ----------
Income from operations 34,357 637,753 1,196,818
Other income (expense):
Manufacturing technology rights (Note 4) 1,039,575
Interest and other 70,030 30,881 21,527
Interest expense (58,362) (12,085) (20,398)
Gain (loss) on investments (Note 2) 33,194 (182,572) (547,988)
---------- ---------- ----------
Income before federal income taxes 79,219 473,977 1,689,534
Income taxes (Note 6) 33,500 173,000 599,300
---------- ---------- ----------
Net income $ 45,719 $ 300,977 $1,090,234
========== ========== ==========
</TABLE>
See accompanying notes.
<PAGE> 8
Texas Airsonics, Inc.
Balance Sheets
<TABLE>
<CAPTION>
December 31
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 724,831 $ 728,735 $1,055,025
Accounts receivable (Notes 3 and 4) 1,844,085 780,451 569,306
Inventories (Note 3) 640,667 528,023 357,810
Prepaid expenses and other current assets 33,342 11,323 13,833
Note receivable (Note 4) 1,500,000
Deferred taxes (Note 6) 64,800
Federal income taxes receivable (Note 6) 159,444
---------- ---------- ----------
Total current assets 4,902,369 2,113,332 1,995,974
Property and equipment, net (Note 1) 817,647 419,241 390,861
Intangibles and other assets:
Intellectual property rights, net (Note 4) 163,510 176,577 189,644
Investments (Note 2) 66,390 491,587
Other 500 1,975 2,966
---------- ---------- ----------
Total intangibles and other assets 164,010 244,942 684,197
---------- ---------- ----------
Total assets $5,884,026 $2,777,515 $3,071,032
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
December 31
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,465,051 $ 255,294 $ 114,872
Current maturities of long-term
debt (Note 3) 803,329 66,159 78,281
Note payable (Note 3) 30,000
Taxes payable 35,292 63,784 98,734
Deferred compensation 87,300
Federal income taxes payable (Note 6) 87,446 556,844
Deferred taxes (Note 6) 11,700
Other liabilities 31,444 8,022 1,011
---------- ---------- ----------
Total current liabilities 2,346,816 510,705 937,042
Long-term debt, less current
maturities (Note 3) 690,000 53,328 118,864
Stockholders' equity:
Common stock, no par value, and paid-in
capital, 50,000,000 shares authorized,
shares outstanding 2,106,871 in 1995,
1,971,871 in 1994 and 1,884,094 in 1993 2,155,568 1,362,868 1,080,222
Retained earnings 1,046,088 1,205,060 1,284,904
---------- ---------- ----------
3,201,656 2,567,928 2,365,126
Less treasury stock-at cost
(427,473 shares in 1995 and 1994
and 425,250 shares in 1993) (Note 5) (354,446) (354,446) (350,000)
---------- ---------- ----------
Total stockholders' equity 2,847,210 2,213,482 2,015,126
---------- ---------- ----------
Total liabilities and stockholders' equity $5,884,026 $2,777,515 $3,071,032
========== ========== ==========
</TABLE>
See accompanying notes.
<PAGE> 9
Texas Airsonics, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
Years ended December 31
1995 1994 1993
----------- --------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 45,719 $ 300,977 $ 1,090,234
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Compensatory stock options 42,700 101,850
Manufacturing rights (1,039,575)
Depreciation and amortization 80,591 64,937 60,185
Deferred taxes 76,500 (64,800) 8,200
Provision for investment losses 182,572 547,988
Gain on sale of investments (33,194)
Changes in operating assets and liabilities:
Accounts receivable (1,055,994) (211,145) (257,797)
Inventory (112,644) (170,213) 47,425
Prepaid expenses (22,019) 2,510 (12,484)
Accounts payable 1,209,757 140,422 20,771
Taxes payable (28,492) (34,950) 97,964
Other liabilities 23,422 7,011 1,011
Federal income taxes payable (254,530) (469,398) 443,222
----------- ---------- -----------
Net cash provided by (used in) operating activities (28,184) (252,077) 1,108,994
INVESTING ACTIVITIES
Proceeds from sale of investments 99,584
Purchases of property and equipment (465,930) (78,759) (293,292)
Receivable from ADT (1,500,000)
Other 1,475 (500)
----------- ---------- -----------
Net cash used in investing activities (1,864,871) (79,259) (293,292)
FINANCING ACTIVITIES
Proceeds from bank borrowings 1,490,000
Proceeds from issuance of common stock 750,000 250,900 2,300
Dividends paid (204,691) (138,196)
Payments on notes payable (146,158) (77,658) (127,943)
Purchase of treasury stock (30,000)
----------- ---------- -----------
Net cash provided by (used in) financing activities 1,889,151 5,046 (125,643)
----------- ---------- -----------
Net increase (decrease) in cash (3,904) (326,290) 690,059
Cash at beginning of year 728,735 1,055,025 364,966
----------- ---------- -----------
Cash at end of year $ 724,831 $ 728,735 $ 1,055,025
=========== ========== ===========
</TABLE>
See accompanying notes.
<PAGE> 10
Texas Airsonics, Inc.
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
COMMON STOCK
AND PAID-IN CAPITAL TREASURY STOCK
---------------------- RETAINED ---------------------
SHARES AMOUNT EARNINGS SHARES AMOUNT TOTAL
---------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993 1,654,094 $ 869,372 $ 194,670 (425,250) $(350,000) $ 714,042
Net income for 1993 1,090,234 1,090,234
Exercise of stock options 230,000 210,850 210,850
---------- ---------- ---------- -------- --------- ----------
Balance at December 31, 1993 1,884,094 1,080,222 1,284,904 (425,250) (350,000) 2,015,126
Net income for 1994 300,977 300,977
Dividends paid (Note 5) (380,821) (380,821)
Sale of common stock from
treasury 27,777 194,446 (27,777) 55,554 250,000
Exercise of stock options 90,000 88,200 88,200
Purchases of common stock (30,000) 30,000 (60,000) (60,000)
---------- ---------- ---------- -------- --------- ----------
Balance at December 31, 1994 1,971,871 1,362,868 1,205,060 (427,473) (354,446) 2,213,482
Net income for 1995 45,719 45,719
Dividends paid (Note 5) (204,691) (204,691)
Sale of common stock 125,000 750,000 750,000
Exercise of stock options 10,000 42,700 42,700
---------- ---------- ---------- -------- --------- ----------
Balance at December 31, 1995 2,106,871 $2,155,568 $1,046,088 (427,473) $(354,446) $2,847,210
========== ========== ========== ======== ========= ==========
</TABLE>
See accompanying notes.
<PAGE> 11
Texas Airsonics, Inc.
Notes To Financial Statements
December 31, 1995
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Texas Airsonics, Inc. (the "Company") develops and manufactures air abrasive
products for dentistry and various other industrial applications.
INVENTORIES
Inventories are stated at the lower of cost, determined by the first-in,
first-out method, or market. Inventories consist of abrasive powders and raw
materials used in the manufacture of the Company's air abrasive products.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation for financial
reporting and income tax purposes is computed using accelerated methods over
the estimated useful lives of the assets.
At December 31, property and equipment consisted of the following:
<TABLE>
<CAPTION>
Useful
1995 1994 1993 Lives
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Land $ 30,000 $ 30,000 $ 30,000
Building 643,524 236,860 236,860 31 years
Office furniture and equipment 74,015 50,584 42,611 5-7 years
Machinery and equipment 333,407 304,178 239,076 5-7 years
Leasehold improvements 9,885 9,885 9,885 7 years
Automobiles 31,994 31,994 26,310 5 years
---------- ---------- ----------
1,122,825 663,501 584,742
Accumulated depreciation 305,178 244,260 193,881
---------- ---------- ----------
$ 817,647 $ 419,241 $ 390,861
========== ========== ==========
</TABLE>
INCOME TAXES
Income tax expense is based on income as reported in the statements of
operations. When income and expenses are recognized in different periods for
tax purposes, deferred taxes are provided in the financial statements.
INTANGIBLE ASSETS
Intangible assets consist of intellectual property rights and patents and are
stated at cost less accumulated amortization. The Company is amortizing
manufacturing and technology rights over 15 years and patents over 5 years.
Accumulated amortization was $133,314, $120,247 and $105,689 at December 31,
1995, 1994 and 1993, respectively.
INVESTMENTS
Investments are accounted for in accordance with Statement of Financial
Accounting Standards Number 115 "Accounting for Certain Investments in Debt and
Equity Securities" ("Statement 115"). The Company's investments are considered
available for sale as defined in Statement 115 and are stated at fair value.
<PAGE> 12
Texas Airsonics, Inc.
Notes To Financial Statements
December 31, 1995
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of the accompanying 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.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's cash, accounts receivable, note receivable, and
investments approximates their carrying value due to their short term nature.
The fair value of the Company's notes payable approximates their carrying value
based on the Company's incremental borrowing rates as compared to similar types
of current borrowing arrangements.
2. INVESTMENTS
Investments consist of unregistered and restricted shares of common stock of
American Dental Technologies, Inc. (ADT). The Company is restricted from
trading the common stock of ADT for two years from the date of its acquisition
under the provisions of the Securities and Exchange Commission's rule 144;
accordingly, the carrying value of the common stock upon receipt was recorded
at a discount from the trading value of related registered and unrestricted
shares of ADT common stock.
The decrease in the fair value of the ADT common stock is considered other than
temporary by the Company and, accordingly, changes in the valuation allowance
have been included in operations in the accompanying financial statements. The
valuation allowance on investments approximated $584,000 and $548,000 at
December 31, 1994 and 1993, respectively.
In December 1995, an officer of the Company purchased the remaining shares of
ADT common stock from the Company for approximately $96,000.
The following summarizes the Company's investment activities:
<TABLE>
<CAPTION>
COMMON STOCK OF
AMERICAN DENTAL TECHNOLOGIES, INC.
SHARES FAIR VALUE
--------- ----------
<S> <C> <C>
Balance at December 31, 1992 131,148 $ 389,575
Shares received in 1993 (Note 4) 165,975 650,000
Decline in fair value in 1993 (547,988)
---------- ----------
Balance at December 31, 1993 297,123 491,587
Dividend of shares (Note 5) (131,148) (242,625)
Decline in fair value in 1994 (182,572)
---------- ----------
Balance at December 31, 1994 165,975 66,390
Sale of shares in 1995 (165,975) (66,390)
---------- ----------
Balance at December 31, 1995 -- $ --
========== ==========
</TABLE>
<PAGE> 13
Texas Airsonics, Inc.
Notes To Financial Statements
December 31, 1995
3. NOTES PAYABLE AND LONG-TERM DEBT
At December 31, 1995, 1994 and 1993 long-term debt consisted of the following:
<TABLE>
<CAPTION>
1995 1994 1993 Collateral
---------- -------- -------- ----------
<S> <C> <C> <C> <C>
Note payable to bank, bearing
interest at the bank's prime rate
(8.5% at December 31, 1995), Inventory and
payable in quarterly installments accounts
of $200,000, plus interest $1,490,000 receivable
Note payable to Bank,
bearing interest at 9%,
payable in monthly
installments of $2,117, Certain
including interest $ 10,374 $ 33,511 equipment
Note payable to Finance
Company, bearing interest
at 8%, payable in monthly
installments of $488,
including 1992 Ford
interest 3,329 9,113 13,634 Explorer
Note payable to former
stockholder bearing
interest at 6%, payable in
annual installments of
$50,000, plus interest 100,000 150,000 Stock acquired
---------- -------- --------
1,493,329 119,487 197,145
Less: Current portion 803,329 66,159 78,281
---------- -------- --------
Non-current portion $ 690,000 $ 53,328 $118,864
========== ======== ========
</TABLE>
At December 31, 1994 the Company had a noninterest bearing, unsecured $30,000
note outstanding which was paid on April 1, 1995. The note comprised a portion
of the consideration for redemption of 30,000 shares of the Company's common
stock (Note 5).
4. TRANSACTIONS AND AGREEMENTS WITH AMERICAN DENTAL TECHNOLOGIES
In April 1992, the Company entered into an agreement which provides American
Dental Technologies, Inc. ("ADT") the exclusive perpetual right to market and
sell the Company's air abrasive dental products. In conjunction with this
agreement the Company assigned present and future patent rights related to air
abrasive dental products to ADT. In exchange for this right the Company
received $300,000 in cash and 131,148 shares of restricted ADT common stock.
ADT maintained a lien against the restricted stock issued to the Company as
security for the Company's agreement to manufacture 500 KCP units through 1993.
Therefore, the Company recorded the fair value of the restricted stock,
$389,575, as deferred revenue at December 31, 1992.
In February 1993, the Company sold its manufacturing rights for all dental air
abrasive products to ADT in exchange 165,975 shares of restricted ADT common
stock. In connection therewith, ADT terminated its lien and related production
contingency included in the 1992 agreement. The Company recognized the revenue
deferred at December 31, 1992 of $389,575 together with the fair value
($650,000) of the 165,975 shares received in connection with the sale of its
manufacturing rights during the first quarter of 1993.
<PAGE> 14
Texas Airsonics, Inc.
Notes To Financial Statements
December 31, 1995
4. TRANSACTIONS AND AGREEMENTS WITH AMERICAN DENTAL TECHNOLOGIES (CONTINUED)
On September 30, 1994, the Company and ADT extended the terms of an existing
exclusive manufacturing rights agreement for air abrasive products through
December 2003 and ADT agreed in exchange for a reduction in the price of
products sold to ADT and an increase in ADT's credit limit with the Company to
$1,500,000. ADT's obligations to the Company are secured by a pledge of ADT's
air abrasive patent rights. ADT has a minimum purchase commitment of
approximately $1,650,000 for 1996, and no purchase commitments thereafter. On
November 1, 1994, ADT issued the Company warrants to purchase 1,000,000 shares
of ADT common stock at $2 per share, exercisable through October 31, 1996.
In August 1995, the Company loaned ADT $1,500,000. The note bears interest at
the Company's bank's prime rate (8.5% at December 31, 1995) and is due August
1, 1996. The note is secured by all assets, including intangible assets, of
ADT.
The Company's accounts receivable and sales include the following amounts with
ADT:
<TABLE>
<CAPTION>
Accounts Accounts
Payable Receivable Sales
-------- ---------- ----------
<S> <C> <C> <C>
1995 $895,000 $1,687,000 $3,663,000
1994 678,000 1,852,000
1993 479,000 3,367,000
</TABLE>
As a result of the agreements with ADT, the Company's continued operations are
dependent upon ADT's ability to market and sell the Company's products. ADT's
failure or inability to meet its purchase commitments with the Company would
have a material adverse effect on the Company.
During the fourth quarter of 1995 the Company signed an agreement to merge with
ADT whereby each issued and outstanding share of the Company's common stock
would be exchanged for 11,429,775 shares of ADT's common stock and warrants to
purchase 6,996,919 additional shares of ADT common stock at $1.00 per share,
exercisable for three years. The merger is subject to shareholder approval of
both companies and is expected to be completed in the second quarter of 1996.
The merger will be accounted for using the purchase method.
In addition, as part of the 1994 agreement, the Company agreed to reimburse ADT
for a portion of future research and development costs related to dental air
abrasive products, legal costs related to air abrasive technologies and
marketing expenses of new products. In 1995, the Company's share of these
expenses approximated $895,000.
5. STOCKHOLDERS' EQUITY
During 1994, the Company purchased 30,000 shares of its outstanding common
stock for $60,000. The Company re-issued 27,777 shares of this stock for
$250,000 to Denics, Co., Ltd. ("Denics").
The Company declared and paid a cash dividend of 10 cents per share in October
1995 and 7 cents per share and a noncash dividend of ADT common stock in 1994.
Stockholders received 67 shares of ADT stock for each 1,000 shares of Company
stock owned (Note 2).
Pursuant to an agreement entered into on April 6, 1995, Denics subscribed for
125,000 shares of common stock of the Company at a price of $6 per share.
Denics also obtained an option to purchase 83,333 shares at $6 per share on or
before January 1, 1996 and 83,333 shares at $6 per share on or before July 1,
1996. Denics was appointed exclusive distributor for the sale and distribution
of industrial air abrasive products in Japan and the Pacific Rim through
October 1, 1996.
<PAGE> 15
Texas Airsonics, Inc.
Notes To Financial Statements
December 31, 1995
6. INCOME TAXES
Significant components of the provision for federal income taxes are as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
Current (credit) $(43,000) $237,800 $591,100
Deferred (credit) 76,500 (64,800) 8,200
--------- -------- --------
$33,500 $173,000 $599,300
========= ======== ========
</TABLE>
Deferred taxes consist principally of differences in the timing of recognizing
losses on investments held for financial reporting and federal income tax
purposes.
A reconciliation of income tax computed at the federal statutory rates to
income tax expense is:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- ------
<S> <C> <C> <C>
Tax at statutory rate 34.0% 34.0% 34.0%
Investment losses 32.0
Sale of marketing rights (35.0)
Compensation 2.5 6.0
Intangibles and other 8.3 (.2)
----- ----- ------
42.3% 36.5% 36.8%
===== ===== ======
</TABLE>
The Company paid income taxes of $156,000, $130,000 and $74,000 in 1995, 1994
and 1993, respectively.
7. STOCK OPTIONS
Stock option activity is summarized as follows:
<TABLE>
<CAPTION>
Number of Shares
----------------
<S> <C>
Outstanding at December 31, 1992 15,000
Options granted 305,000
Options exercised 230,000
-------
Outstanding at December 31, 1993 90,000
Options exercised 90,000
-------
Outstanding at December 31, 1994
Options granted 10,000
Options exercised 10,000
-------
Outstanding at December 31, 1995 --
=======
</TABLE>
In 1993, the Company granted 200,000 options which had an exercise price of
$.01 to the Company's President in consideration for the acquisition of the
intellectual property rights of the industrial air abrasive technologies used
by the Company. The difference between the fair value of the Company's common
stock and the exercise price of the stock options ($194,000) was capitalized as
intellectual property rights on the date of grant.
In 1993 and 1995 the Company granted 105,000 and 10,000 options, respectively,
with exercise prices of $.01 to certain of its employees and directors. The
Company accounts for stock option grants in accordance with APB No. 25
"Accounting for Stock Issued to Employees" and accordingly, recognized
compensation expense in the accompanying financial statements for the
difference between the fair value of the shares and the option's exercise price
of $101,850 and $42,700 in 1993 and 1995, respectively.
<PAGE> 16
Texas Airsonics, Inc.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
---------- -----------
<S> <C> <C>
Net sales $1,409,628 $ 1,015,906
Cost of sales 841,573 534,673
---------- -----------
Gross profit 568,055 481,233
Selling, general and administrative 214,476 162,495
---------- -----------
Income from operations 353,579 318,738
Other income (expense)
Other 38,341 4,822
Interest expense (32,664) (457)
---------- -----------
Income before income taxes 359,256 323,103
Income tax 122,803 95,546
---------- -----------
Net income $ 236,453 $ 227,557
========== ===========
</TABLE>
See notes to unaudited condensed financial statements.
<PAGE> 17
Texas Airsonics, Inc.
Condensed Balance Sheets
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 404,191 $ 724,831
Accounts receivable 2,017,470 1,844,085
Inventories 507,545 640,667
Prepaid expenses and other current assets 22,250 33,342
Note receivable 1,500,000 1,500,000
Prepaid federal income tax 109,481 159,444
------------ -----------
Total current assets 4,560,937 4,902,369
Property and equipment, net 806,629 817,647
Intangible assets 160,243 163,510
Other assets 65,289 500
------------ -----------
Total assets $ 5,593,098 $ 5,884,026
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,170,794 $ 1,465,051
Current maturities of long term debt 801,921 803,329
Other liabilities 141,420 78,436
------------ -----------
Total current liabilities 2,114,135 2,346,816
Long term debt, less current maturities 490,000 690,000
Stockholders' equity:
Common stock, no par value, and paid in
capital 50,000,000 shares authorized
shares outstanding 2,106,871
in 1996 and 1995 2,155,568 2,155,568
Accumulated earnings 1,187,841 1,046,088
Less treasury stock (354,446) (354,446)
------------ -----------
Total stockholders' equity 2,988,963 2,847,210
------------ -----------
Total liabilities and stockholders' equity $ 5,593,098 $ 5,884,026
============ ===========
</TABLE>
See notes to unaudited condensed financial statements.
<PAGE> 18
Texas Airsonics, Inc.
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
1996 1995
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 236,453 $ 227,557
Adjustments to reconcile net income
to net cash provided by (used in) operating activities:
Depreciation 16,580 13,374
Amortization 3,267 3,267
Changes in operating assets and liabilities:
Increase in accounts receivable (173,385) (490,805)
(Increase) decrease in inventory 133,122 (11,610)
(Increase) decrease in prepaid expenses 11,092 (10,797)
(Increase) decrease in federal income tax receivable 49,963 (11,727)
Increase in other assets (64,789)
Decrease in accounts payable (294,257) (9,434)
Increase (decrease) in other non-current liabilities (33,124) 66,196
------------- -----------
Net cash used in operating activities (115,078) (223,979)
INVESTING ACTIVITIES
Purchases of property and equipment (5,562) (19,857)
------------- -----------
Net cash used in investing activities (5,562) (19,857)
FINANCING ACTIVITIES:
Payments on notes payable (200,000) (30,000)
------------- -----------
Net cash used in financing activities (200,000) (30,000)
------------- -----------
Decrease in cash (320,640) (273,836)
Cash at beginning of period 724,831 728,735
------------- -----------
Cash at end of period $ 404,191 $ 454,899
============= ===========
</TABLE>
See notes to unaudited condensed financial statements.
<PAGE> 19
Texas Airsonics, Inc.
Notes to Condensed Financial Statements
March 31, 1996 (Unaudited)
1. BASIS OF PRESENTATION AND OTHER ACCOUNTING INFORMATION
BASIS OF PRESENTATION
The accompanying unaudited condensed financial statement of Texas Airsonics,
Inc. (the "Company") have been prepared by management in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered for a fair presentation have been included.
The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results to be expected for other quarters of 1996
for the year ended December 31, 1996. The accompanying unaudited condensed
financial statements should be read with the annual consolidated financial
statements and notes for the fiscal year ended December 31, 1995.
INVENTORIES
Inventories consist of abrasive powders and raw materials used in the
manufacture of the Company's air abrasive products.
PROPERTY AND EQUIPMENT
Accumulated depreciation aggregated $308,107 at March 31, 1996 and $305,178 at
December 31, 1995.
INTANGIBLE ASSETS
Accumulated amortization aggregated $136,581 at March 31, 1996 and $133,314 at
December 31, 1995.
2. TRANSACTIONS AND AGREEMENTS WITH AMERICAN DENTAL TECHNOLOGIES, INC.
("ADT")
During the fourth quarter of 1995, the Company signed an agreement to merge
with ADT whereby each issued and outstanding share of the Company's common
stock would be exchanged for 11,429,775 shares of ADT's common stock and
warrants to purchase 6,996,919 additional shares of ADT common stock at $1.00
per share, exercisable for three years. The merger is subject to shareholder
approval of both companies and is expected to be completed in the quarter of
1996. The merger will be accounted for as a purchase.
In August 1995, the Company loaned ADT $1,500,000. The note bears interest at
prime (8.25% at March 31, 1996). A principal payment of $200,000 plus accrued
interest is due May 1, 1996. The remaining principal and accrued interest is
due from ADT on August 1, 1996. The note is secured by all of ADT's assets.
3. STOCKHOLDERS' EQUITY
During March 1996, the Company declared a cash dividend of $94,700, $0.045
cents per share, to be paid in April 1996.
<PAGE> 20
(b) Pro Forma Financial Information
The following unaudited pro forma condensed combined statements of
operations for the year ended December 31, 1995, the three month period ended
March 31, 1996 and the unaudited pro forma condensed combined balance sheets as
of December 31, 1995 and March 31, 1996, respectively, give effect to the
conversion of the outstanding shares of Texas Air Common Stock into shares of
ADT Common Stock at a conversion ratio of 5.425 shares of ADT Common Stock for
each outstanding share of Texas Air Common Stock as if the proposed Merger had
occurred on January 1, 1995 and January 1, 1996 and December 31, 1995 and March
31, 1996, respectively. The pro forma information is based on the financial
statements of ADT and Texas Air, giving effect to the proposed Merger under the
purchase method of accounting and the assumptions and adjustments described in
the accompanying notes to the pro forma financial statements.
These unaudited pro forma condensed combined financial statements may not
be indicative of the results that actually would have occurred if the Merger
had been in effect on the dates indicated or which may be obtained in the
future. The unaudited pro forma condensed combined financial statements should
be read in conjunction with the audited financial statements for the year ended
December 31, 1995, the unaudited financial statements for the three months
ended March 31, 1996, and notes thereto of Texas Air and ADT which are included
herewith.
American Dental Technologies, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
<TABLE>
<CAPTION>
Year Ended December 31, 1995
----------------------------
Pro Forma Pro Forma
ADT Texas Air Adjustments Combined
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $13,325,536 $4,391,001 $(3,663,000)(a) $14,053,537
Cost of sales 7,038,930 2,628,695 (3,371,800)(a) 6,354,065
58,240(g)
----------- ---------- ----------- -----------
Gross profit 6,286,606 1,762,306 (349,440) 7,699,472
Selling, general and administrative 6,956,223 1,455,949 393,242(d) 8,792,347
(13,067)(e)
Research and development 784,319 272,000 1,056,319
----------- ---------- ----------- -----------
Income (loss) from operations (1,453,936) 34,357 (729,615) (2,149,194)
Other income (expense):
Royalty income:
Related party 261,000 261,000
Other 30,806 30,806
Other income (1,621) 70,030 (52,150)(b) 16,259
Interest expense (110,415) (58,362) 52,150 (b) (116,627)
Gain on investment 33,194 (33,194)(f)
----------- ---------- ----------- -----------
Income (loss) before income taxes (1,274,166) 79,219 (762,809) (1,957,756)
Income tax 33,500 (33,500)(h)
----------- ---------- -----------
Net profit (loss) $(1,274,166) 45,719 (729,309) (1,957,756)
=========== ========== =========== ===========
Income (loss) from continuing
operations per common share $(0.08) $0.02 $(0.07)
=========== ========== ===========
Weighted average number of common
and dilutive common equivalent
shares outstanding 15,346,716 2,000,803 26,776,491
=========== ========== ===========
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
<PAGE> 21
American Dental Technologies, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
<TABLE>
<CAPTION>
Three Months Ended March 31, 1996
---------------------------------
Pro Forma Pro Forma
ADT Texas Air Adjustments Combined
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales $5,254,047 $1,409,628 $(1,269,280)(a) $5,394,395
Cost of sales 2,855,426 841,573 (1,260,280)(a) 2,447,947
11,228 (g)
---------- --------- ----------- ----------
Gross profit 2,398,621 568,055 (20,228) 2,946,448
Selling, general
and administrative 1,669,058 214,476 98,311 (d) 1,978,578
(3,267)(e)
Research and development 234,350 234,350
---------- --------- ----------- ----------
Income (loss) from operations 495,213 353,579 (115,272) 733,520
Other income (expense):
Other (4,640) 38,341 (32,664)(b) 1,037
Interest expense (42,263) (32,664) 32,664 (b) (42,263)
---------- --------- ----------- ----------
Income before income taxes 448,310 359,256 (115,272) 692,294
Income tax 122,803 (122,803)(h)
---------- --------- ----------- ----------
Net income $448,310 $236,453 $ 7,531 $ 692,294
========== ========= =========== ==========
Income from continuing
operations per common share $ 0.03 $ 0.11 $ 0.02
========== ========= ==========
Weighted average number of
common and dilutive common
equivalent shares outstanding 17,258,826 2,106,871 30,037,588
========== ========= ==========
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
<PAGE> 22
American Dental Technologies, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
<TABLE>
<CAPTION>
December 31, 1995
-----------------
Pro Forma Pro Forma
ADT Texas Air Adjustments Combined
---------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 1,665,718 $ 724,831 $ (10,000)(e) $ 2,380,549
Accounts receivable 1,944,293 1,844,085 (1,771,910)(b) 2,016,468
Inventories 1,905,856 640,667 2,546,523
Prepaid expenses and other
current assets 534,074 192,786 (21,789)(b) 705,071
Loan receivable 1,500,000 (1,500,000)(b)
------------ ---------- ----------- ------------
Total current assets 6,049,941 4,902,369 (3,303,699) 7,648,611
Prepaid foreign taxes 225,000 225,000
Long-term deposits 1,410,267 500 1,410,767
Property and equipment, net 262,042 817,647 1,079,689
Intangible assets 5,037,446 163,510 (163,510)(e) 10,936,077
5,898,631 (c)
------------ ---------- ----------- ------------
Total assets $ 12,984,696 $5,884,026 $ 2,431,422 $ 21,300,144
============ ========== =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to related parties $ 1,700,000 $(1,500,000)(b) $ 200,000
Note payable to bank $ 803,329 803,329
Accounts payable 3,723,922 1,465,051 (1,771,910)(b) 3,417,063
Compensation and employee benefits 346,668 346,668
Taxes other than income 607,177 35,292 642,469
Other accrued liabilities 1,109,464 43,144 (21,789)(b) 1,130,819
------------ ---------- ----------- ------------
Total current liabilities 7,487,231 2,346,816 (3,293,699) 6,540,348
Deferred royalty income from related party 3,000,000 3,000,000
Note payable to related party, less
current portion 600,000 600,000
Note payable, less current portion 690,000 690,000
Other non-current liabilities 64,993 64,993
Stockholders' equity:
Common stock 157,387 2,155,568 (2,041,270)(c) 271,685
Additional paid in capital 31,288,188 8,458,033 (c) 39,746,221
Accumulated earnings (deficit) (29,613,103) 1,046,088 (872,578)(c) (29,613,103)
(173,510)(e)
Treasury stock (354,446) 354,446 (c)
------------ ----------- ----------- ------------
Total stockholders' equity 1,832,472 2,847,210 5,725,121 10,404,803
------------ ---------- ----------- ------------
Total liabilities and stockholders' equity $ 12,984,696 $5,884,026 $ 2,431,422 $ 21,300,144
============ ========== =========== ============
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
<PAGE> 23
American Dental Technologies, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
<TABLE>
<CAPTION>
March 31, 1996
--------------
Pro Forma Pro Forma
ADT Texas Air Adjustments Combined
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 1,146,490 $ 404,191 $ (10,000)(e) $ 1,540,681
Accounts receivable 3,291,466 2,017,470 (1,933,284)(b) 3,375,652
Inventories 1,381,223 507,545 1,888,768
Prepaid expenses and
other current assets 418,975 131,731 (21,154)(b) 529,552
Loan receivable 1,500,000 (1,500,000)(b)
----------- ---------- ---------- -----------
Total current assets 6,238,154 4,560,937 (3,464,438) 7,334,653
Prepaid foreign taxes 300,000 300,000
Long-term deposits 1,410,267 1,410,267
Property and equipment, net 217,953 806,629 1,024,582
Intangible assets 4,958,047 225,532 (160,243)(e) 10,776,948
5,753,612 (c)
----------- ---------- ---------- -----------
Total assets $13,124,421 $5,593,098 $2,128,931 $20,846,450
=========== ========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to related parties $ 1,700,000 $ (1,500,000)(b) $ 200,000
Note payable $ 801,921 801,921
Accounts payable 3,881,185 1,170,795 (1,933,284)(b) 3,118,696
Compensation and employee benefits 335,260 335,260
Taxes other than income 611,127 611,127
Other accrued liabilities 664,363 141,420 (21,154)(b) 784,629
----------- ---------- ---------- -----------
Total current liabilities 7,191,935 2,114,136 (3,454,438) 5,851,633
Deferred royalty income from related party 3,000,000 3,000,000
Note payable to related party, less
current portion 600,000 600,000
Note payable, less current portion 490,000 490,000
Other non-current liabilities 51,704 51,704
Stockholders' equity:
Common stock 157,387 2,155,568 (2,041,270)(c) 271,685
Additional paid in capital 31,288,188 8,458,033 (c) 39,746,221
Accumulated earnings (deficit) (29,164,793) 1,187,840 (1,017,597)(c) (29,164,793)
(170,243)(e)
Less treasury stock (354,446) 354,446 (c)
----------- ---------- ---------- -----------
Total stockholders' equity 2,280,782 2,988,962 5,583,369 10,853,113
Total liabilities and
stockholders' equity $13,124,421 $5,593,098 $2,128,931 $20,846,450
=========== ========== ========== ===========
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
<PAGE> 24
American Dental Technologies, Inc.
Notes To Pro Forma Condensed Combined Financial Statements (Unaudited)
Basis Of Presentation
The unaudited pro forma condensed combined statements of operations for the
year ended December 31, 1995 and the three months ended March 31, 1996 reflect
the acquisition of Texas Air by ADT as if it had occurred on January 1, 1995
and January 1, 1996, respectively. The unaudited pro forma condensed combined
balance sheets at December 31, 1995 and March 31, 1996 reflect the acquisition
as if it occurred on those dates.
This pro forma information does not purport to indicate the results of
operations or financial position which would have actually occurred if the
Merger had been effected on the dates indicated or which may be obtained in the
future.
Pro Forma Adjustments
The pro forma financial information reflects the acquisition of Texas Air as if
it was accounted for as a purchase, whereby all of the outstanding common stock
of Texas Air was acquired in exchange for 11,429,775 shares of ADT common stock
and Merger Warrants to purchase 6,996,919 additional shares of ADT common stock
at $1.4104 per share. The common stock to be issued has been valued at $0.75
per share in the pro forma financial statements, its average market price for
the five days preceding and five days following signing of the Merger
Agreement. The Merger Warrants to acquire common stock shares have no recorded
value in the pro forma financial statements, as their exercise price ($1.4104)
exceeded the average market price of ADT's common stock ($0.75) and are not
exercisable until one year and one day following the effective time. The total
purchase price of $8,572,331 has been allocated for each of the dates presented
as follows:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Assets acquired $ 5,422,855 $ 5,710,516
Liabilities acquired (2,604,136) (3,036,816)
Goodwill 5,753,612 5,898,631
------------ -------------
Purchase price $ 8,572,331 $ 8,572,331
============ =============
</TABLE>
The carrying value of the assets and liabilities of Texas Air approximates
their fair values and therefore have not been adjusted in the preceding pro
forma financial statements. The preceding unaudited pro forma condensed
combined financial statements include adjustments to increase (decrease) pro
forma combined net income (loss) from continuing operations available for
common shares or increase (decrease) pro forma combined stockholders' equity,
as follows:
(a) Elimination of intercompany net sales and cost of sales.
(b) Elimination of intercompany balances including the accounts payable and
accounts receivable; note payable, note receivable and related accrued
interest; and intercompany interest income and expense.
(c) Adjustment to record goodwill and apply purchase accounting. Goodwill
will be amortized on a straight-line basis over 15 years.
(d) Amortization of the goodwill resulting from the Merger.
(e) Adjustment to eliminate Texas Air's intangible assets and related
amortization. The Texas Air intangible assets include certain patent
rights being transferred to an entity owned by the Texas Air stockholders.
(f) Elimination of gain on sale of investment in ADT common stock held by
Texas Air.
(g) Royalty on sale of industrial air abrasive products.
(h) Elimination of income tax expense due to pro forma loss or utilization of
income tax net operating loss carryforwards.
<PAGE> 25
(c) Exhibits
2.1 Restated Agreement and Plan of Reorganization and
associated Restated Merger Agreement dated as of November 22,
1996, among American Dental Technologies, Inc., ADT Merger Corp.
and Texas Airsonics, Inc. (Incorporated herein by reference to
ADT's Registration Statement No. 333-6663, Annex A to the Joint
Proxy Statement/Prospectus).
3.1 Certificate of Incorporation of American Dental
Technologies, Inc. filed on November 21, 1989, with amendments,
filed with the Delaware Secretary of State and effective on
January 12, 1990; May 15, 1991; June 4, 1991; June 1, 1993; and
July 29, 1996.
10.1 Voting Agreement between William D. Myers and Ben J.
Gallant (Incorporated herein by reference to ADT's Registration
Statement No. 333-6663, Exhibit 9.1 to the Joint Proxy
Statement/Prospectus).
23.1 Consent of Independent Auditors, Ernst & Young LLP
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 hereunto duly authorized.
AMERICAN DENTAL TECHNOLOGIES, INC.
(Registrant)
Anthony D. Fiorillo
President and Chief Executive Officer
Dated: August 9, 1996
<PAGE> 26
INDEX TO EXHIBITS
to July 31, 1996 8-K
Exhibit No.
3.1 Certificate of Incorporation of American Dental Technologies, Inc.
filed on November 21, 1989, with amendments, filed with the
Delaware Secretary of State and effective on January 12, 1990; May
15, 1991; June 4, 1991; June 1, 1993; and July 29, 1996
23.1 Consent of Independent Auditors, Ernst & Young LLP
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
ADL CONSOLIDATED, INC.
-------------------------------------
FIRST. The name of this corporation shall be:
ADL CONSOLIDATED, INC.
SECOND. Its registered office in the State of Delaware is to be
located at 1013 Centre Road, in the City of Wilmington, County of New Castle
19805, and its registered Agent at such address is CORPORATION SERVICE COMPANY.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is: Ten Million (10,000,000) shares with a par value of
One Cent ($.01) per share, amounting to One Hundred Thousand Dollars
($100,000).
FIFTH. The name and address of the incorporator is as follows:
Mary T. Reed
Corporation Service Company
1013 Centre Road
Wilmington, DE 19805
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
SEVENTH. No director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Corporation or breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct of a knowing
violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which director derived an
improper personal benefit. No amendment to or repeal of this Article Seventh
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment.
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore
named, has executed, signed and acknowledged this certificate of incorporation
this 21st day of November A.D. 1989.
Mary T. Reed
Incorporator
<PAGE> 2
CERTIFICATE OF MERGER
OF
American Dental Laser Incorporated
American Dental Laser - International, Inc.
American Dental Laser - Canada, Inc.
American Dental Laser - Europe, Inc.
American Dental Laser - United States, Inc.
into
ADL Consolidated, Inc.
-------------------------------------------
The undersigned corporation, ADL Consolidated, Inc.,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the constituent
corporations of the merger is as follows:
<TABLE>
<CAPTION>
NAME STATE OF INCORPORATION
<S> <C>
ADL Consolidated, Inc. (surviving corporation) Delaware
American Dental Laser Incorporated Michigan
American Dental Laser - International, Inc. Michigan
American Dental Laser - Canada, Inc. Michigan
American Dental Laser - Europe, Inc. Michigan
American Dental Laser - United States, Inc. Michigan
</TABLE>
SECOND: That a Plan and Agreement of Merger between the parties to the
merger has been approved, adopted, certified, executed and acknowledged by each
of the constituent corporations in accordance with the requirements of
subsection (c) of section 252 of the General Corporation Law of the State of
Delaware and Chapter 7 of the Michigan Business Corporation Act.
THIRD: The name of the surviving corporation of the merger is ADL
Consolidated, Inc.
FOURTH: The Certificate of Incorporation of ADL Consolidated, Inc., a
Delaware corporation, shall be the Certificate of Incorporation of the
surviving corporation, except that the Certificate of Incorporation of ADL
Consolidated, Inc., as the surviving corporation, shall be amended as set forth
on Exhibit A hereto pursuant to the Plan and Agreement of Merger and effective
upon consummation of the merger.
FIFTH: That the executed Plan and Agreement of Merger is on file at the
principal place of business of the surviving corporation. The address of said
principal place of business is 280 North Woodward, Suite 216, Birmingham,
Michigan 48011.
SIXTH: That a copy of the Plan and Agreement of Merger has been
furnished without cost to all stockholders of all constituent corporations.
SEVENTH: The authorized capital stock of each foreign corporation which
is a party to the merger is as follows;
<TABLE>
<CAPTION>
Par Value per
Share or state-
ment that
Number shares are
Corporation Class of Shares without value
<S> <C> <C> <C>
American Dental Laser Incorporated Common 100,000 $1.00
American Dental Laser - International, Inc. Common 100,000 $ .10
American Dental Laser - Canada, Inc. Common 100,000 $ .10
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
American Dental Laser - Europe, Inc. Common 100,000 $ .10
American Dental Laser - United States, Inc. Common 100,000 $1.00
</TABLE>
EIGHTH: The surviving corporation may be served with process in the
State of Delaware in any proceeding for enforcement of any obligation of
Delaware, as well from the merger, including any suit or other proceeding to
enforce the right of any stockholder as determined in appraisal proceedings
pursuant to the provisions of Section 262 of the General Corporation Law of the
State of Delaware, and it does hereby irrevocably appoint the Secretary of
State of the State of Delaware as its agent to accept service of process in any
such suit or other proceeding. The address to which a copy of such process
shall be mailed by the Secretary of State of Delaware is c/o Corporation
Service Company, 1013 Centre Road, Wilmington, Delaware 19805 until the
surviving corporation shall have hereafter designated in writing to the said
Secretary of State a different address for such purpose.
Dated: January 12, 1990 ADL Consolidated, Inc.
(a Delaware corporation)
By: Daniel S. Goldsmith
President
ATTEST:
BY: Daniel S. Goldsmith
Secretary
<PAGE> 4
EXHIBIT A
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
OF ADL CONSOLIDATED, INC.
----------------------------------------------
The Certificate of Incorporation of ADL Consolidated, Inc., a Delaware
corporation, shall be amended as follows:
(a) Article One is hereby amended to read as follows:
FIRST. The name of this corporation shall be:
AMERICAN DENTAL LASER, INC.
(b) By adding a new Article Eight, with shall read as follows:
EIGHTH. (a) At all meeting of the stockholders of the Corporation, each
holder of record of Common Stock shall be entitled to one vote for each share
of such class of stock standing in his name on the books of the Corporation
subject to the right of the Board of Directors to determine a record date at
any particular meeting. Cumulative voting shall not be permitted at any
election of directors.
(b) The affairs of this Corporation shall be conducted by a
Board of Directors. Except as otherwise provided by this Article Eight, the
number of directors of the Corporation, shall be fixed from time to time by the
vote of a majority of the entire Board; provided, however, that the number of
directors shall not be reduced so as to shorten the term of any director at the
time in office. Commencing with the effective date of this Amendment to the
Certificate of Incorporation, the directors of the Corporation shall be divided
into three classes; Class I, Class II and Class III, each such class, as nearly
as possible, to have the same number of directors. The term of office of the
initial Class I directors shall expire at the annual election of directors by
the stockholders of the Corporation in 1991, the term of the office of the
initial Class II directors shall expire at the annual election of directors by
the stockholders of the Corporation in 1992, and the term of the office of the
initial Class III directors shall expire at the annual election of directors by
the stockholders of the Corporation in 1993, or in each case thereafter when
their respective successors are elected by the stockholders and qualify. At
each annual election of directors by the stockholders of the Corporation held
after the effective date of this Amendment to the Certificate of Incorporation,
the directors chosen to succeed those whose terms are then expired shall be
identified as being of the same class as the directors they succeed and shall
be elected by the stockholders of the Corporation for a term expiring at the
third succeeding annual election of directors, or thereafter when their
respective successors in each case are elected by the stockholders and qualify.
(c) In case of an increase in the number of directors, the
additional directors may be elected by the Board of Directors and such
directorships thereby created shall be apportioned among the classes of
directors so as to maintain such classes as nearly equal in number as possible.
In case of vacancies in the Board of Directors, a majority of the remaining
directors in the Class of Directors in such vacancy occurs, may elect directors
to fill such vacancy.
(d) Special meetings of stockholders of the Corporation may be
called only by the Board of Directors pursuant to a resolution approved by a
majority of the entire Board of Directors, upon not less than ten (10) nor more
than fifty (50) days' written notice.
(e) Notwithstanding any other provisions of the Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding that a
lesser percentage may be specified by law, this Certificate of Incorporation or
the By-Laws of the Corporation), the provisions of this Article Eight may not
be repealed or amended in any respect, nor may any provision be adopted
inconsistent with this Article Eight unless such action is approved by the
affirmative vote of the holders of eighty (80%) percent of the total shares of
stock of the Corporation then outstanding and entitled to vote thereon.
(c) By adding a new Article Nine, which shall read as follows:
<PAGE> 5
NINTH. Where stockholder approval is required by applicable state law for
any of the following transactions, the vote required for such approval shall be
the affirmative vote of the holders of at least eighty (80%) percent of the
voting power of the outstanding shares:
(a) Any plan of merger;
(b) Any plan of exchange;
(c) Any sale, lease, transfer or other disposition of all
or substantially all of this Corporation's property and assets, including its
goodwill, not in the usual and regular course of its business;
(d) Any dissolution of this Corporation;
(e) Any amendment to, or repeal of, a By-Law or By-Laws
lawfully proposed by a stockholder or stockholders holding at least the
required statutory voting power; or
(f) Any amendment to, or repeal of, all or any portion of
this Article Nine; provided, however, that if the then current or a preexisting
Board of Directors of this Corporation shall by resolution adopted at a meeting
of the Board of Directors have approved one of the enumerated matters (other
than dissolution of this Corporation or an amendment of this Article Nine to
alter the eighty (80%) percent dissolution vote) and shall have determined to
recommend it for approval by the holders of shares entitled to vote on the
matter, then the vote required shall be the affirmative vote of the holders of
at least a majority of the voting power of the outstanding shares.
<PAGE> 6
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMERICAN DENTAL LASER, INC.
American Dental Laser, Inc. (the "Company"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Company,
resolutions were duly adopted proposing and declaring advisable the following
amendment to the Certificate of Incorporation of the Company:
RESOLVED, that Article FOURTH of the Company's Certificate of
Incorporation, as amended and restated, be amended to read in full
as follows:
"FOURTH: The aggregate number of shares which the Company
shall have authority to issue is 35,000,000 to be divided into (a)
25,000,000 shares of Common Stock, par value $.01 per share, and
(b) 10,000,000 shares of Preferred Stock, par value $.01 per
share.
The Board of Directors is hereby empowered to cause the Preferred
Stock to be issued from time to time for such consideration as it
may from time to time fix, and to cause such Preferred Stock to be
issued in series with such voting powers, designations,
preferences and relative, participating, optional or other special
rights, if any, or the qualifications, limitations or restrictions
thereof, as designated by the Board of Directors in the resolution
providing for the issue of such series. Shares of Preferred Stock
of any one series shall be identical in all respects."
SECOND: That thereafter, pursuant to resolution of the Board of
Directors, a special meeting of the stockholders of the Company was duly called
and held, upon notice in accordance with Section 222 of the General Corporation
law of the State of Delaware, at which meeting the necessary number of shares
as required by statute was voted in favor of the amendment.
THIRD: That the foregoing Amendment to the Certificate of
Incorporation was duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of the Company shall not be reduced under or
by reason of said amendment.
IN WITNESS WHEREOF, said American Dental Laser, Inc. has caused this
Certificate to be signed by Daniel S. Goldsmith, its President, and attested by
Walter J. Goldsmith, its Secretary, this 10th day of May, 1991.
AMERICAN DENTAL LASER, INC.
By: Daniel S. Goldsmith
President
Attest:
Walter J. Goldsmith
Secretary
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMERICAN DENTAL LASER, INC.
- --------------------------------------------------------------------------------
AMERICAN DENTAL LASER, INC. (the "Corporation"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said Corporation, pursuant to the
provisions of Section 141 of the General Corporation Law of the State of
Delaware, adopted via unanimous consent resolution in lieu of a meeting of the
Board of Directors the following resolutions:
RESOLVED: that the Corporation, pursuant to the provisions of
Section 242 of the General Corporation Law of the State of
Delaware, hereby amends Article Eighth (c) of its Certificate of
Incorporation to read as follows:
"EIGHTH. (c) In case of an increase in the number
of directors, the additional directors may be elected
by the Board of Directors and such directorships
thereby created shall be apportioned among the classes
of directors so as to maintain such classes as nearly
equal in number as possible. In case of vacancies in
any of the classes of directors, a majority of all the
remaining directors in all classes may elect such
directors to fill any such vacancies in any class."
RESOLVED, that the proposed amendment to the Company's
Certificate of Incorporation be submitted to a written consent of
the stockholders entitled to vote thereon, pursuant to the
provisions of Section 228 of the General Corporation Law of the
State of Delaware and that such amendment is hereby declared
advisable to the shareholders by the Board of Directors.
SECOND: That the aforesaid amendment to Article Eighth (c) of the
Certificate of Incorporation of the Corporation has been consented to by the
required percentage of stockholders in accordance with Section 228 of the
General Corporation Law of Delaware, and prompt written notice has been given
to those stockholders who have not consented in writing to the aforesaid
amendment, as also provided for in Section 228 of the General Corporation Law
of Delaware.
THIRD: That the foregoing Amendment to the Certificate of Incorporation
was duly adopted in accordance with the applicable provision of Sections 242
and 228 of the General Corporation Law of Delaware.
IN WITNESS WHEREOF, said Corporation has caused this Certificate to be
signed by Daniel S. Goldsmith, its President, and attested by Walter J.
Goldsmith, its Secretary, this 1st day of June 1991.
AMERICAN DENTAL LASER, INC.
By: Daniel S. Goldsmith
President
ATTEST:
Walter J. Goldsmith
Secretary
<PAGE> 8
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMERICAN DENTAL LASER, INC.
------------------------------------------------------------
AMERICAN DENTAL LASER, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST. That the Board of Directors of said corporation, at a meeting
duly convened and held, adopted the following resolution:
RESOLVED that the Board of Directors hereby declares it advisable and in
the best interest of the Company that Article FIRST of the Certificate of
Incorporation be amended to read as follows:
FIRST. The name of this corporation shall be:
American Dental Technologies, Inc.
SECOND. That the said amendment has been consented to and authorized by
the holders of a majority of the issued and outstanding stock entitled to vote
by written consent given in accordance with the provisions of Section 228 of
the General Corporation Law of the State of Delaware.
THIRD. That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, SAID CORPORATION HAS caused this Certificate to be
signed by Anthony D. Fiorillo, its President and attested by Raymond F. Winter,
its Secretary, this 25th day of May A.D. 1993.
Anthony D. Fiorillo, President
Attested by: Raymond F. Winter, Secretary
<PAGE> 9
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMERICAN DENTAL TECHNOLOGIES, INC.
-------------------------------------------------------------------------
AMERICAN DENTAL TECHNOLOGIES, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Company"), DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said Company at a meeting duly
convened and held, adopted the following resolution:
RESOLVED that the Board of Directors hereby declares it advisable and in
the best interest of the Company that Article Fourth of the certificate of
Incorporation be amended to read as follows:
FOURTH: The aggregate number of shares which the Company shall have
authority to issue is 60,000,000 to be divided into (a) 50,000,000 shares of
Common Stock, par value $.01 per share, and (b) 10,000,000 shares of Preferred
Stock, par value $.01 per share.
SECOND: That said amendment was duly authorized by the holders of a
majority of the issued and outstanding stock entitled to vote at the Company's
1996 annual stockholders' meeting, which was called and held pursuant to
written notice in accordance with the applicable provisions of Section 222 of
the General Corporation Law of the State of Delaware.
THIRD: That the aforementioned amendment was duly adopted in accordance
with the applicable provisions of Sections 222 and 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by its Secretary, this 29th day of July A.D. 1996.
Authorized Officer
Name: Raymond F. Winter, Secretary
<PAGE> 1
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the registration statements
pertaining to the Amended and Restated Long-Term Incentive Plan (Form S-8 No.
33-86062 and Form S-8 No. 33-66552) and the Non-Qualified Stock Option Plan and
the Stock Option Plan for Employees (Form S-8 No. 33-52664) of American Dental
Technologies, Inc. of our report dated February 16, 1996 with respect to the
financial statements of Texas Airsonics, Inc. included in this Current Report
(Form 8-K).
August 9, 1996
Ernst & Young LLP
