<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(AMENDMENT NO.1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
NOVEMBER 2, 1999
Date of Report (Date of Earliest Event Reported)
ARDIS TELECOM & TECHNOLOGIES, INC.
STATE OF DELAWARE 0-22636 2801677
(State or other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
8100 JETSTAR DRIVE
SUITE 100
IRVING, TEXAS 75063
(Address of Principal Executive Offices) (Zip Code)
972.929.1920
(Registrant's Telephone Number, Including Area Code)
<PAGE>
The undersigned registrant hereby amends the following "Item 7.
Financial Statements and Exhibits" of its Current Report on Form 8-K filed on
November 17, 1999, dated November 2, 1999, to include the following:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following Financial Statements of Business Acquired
are annexed hereto:
Balance Sheets at September 30, 1999 (unaudited) and
December 31, 1998
Statements of Operations for the Nine Months Ended
September 30, 1999 (unaudited) and 1998 (unaudited) and
the Year Ended December 31, 1998
Statement of Shareholder's Deficit for the Nine Months
Ended September 30, 1999 (unaudited) and the Year Ended
December 31, 1998
Statements of Cash Flows for the Nine Months Ended
September 31, 1999 (unaudited) and 1998 (unaudited) and
the Year Ended December 31, 1998
(b) The following Pro Forma Financial Information is annexed
hereto:
Pro Forma Condensed Balance Sheet at July 31, 1999
(unaudited)
Pro Forma Condensed Statement of Operations for the
Nine Months Ended July 31, 1999 (unaudited)
Pro Forma Condensed Statement of Operations for the
Year Ended October 31, 1998
(c) Exhibits.
2.1 Asset Purchase Agreement dated, November 2, 1999
between Ardis Telecom & Technologies, Inc.,
Dial-Thru International Corporation, a Delaware
corporation, Dial-Thru International
Corporation, a California corporation and John
Jenkins, previously filed as Exhibit 2.1 to
Ardis' Form 8-K filed November 17, 1999 and
incorporated by reference herein.
23.1 Consent of King, Griffin & Adamson P.C.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ARDIS TELECOM & TECHNOLOGIES, INC.
Date: January 14, 2000 By: /s/ Roger D. Bryant
--------------------------------
Roger D. Bryant, Chairman
3
<PAGE>
DIAL-THRU INTERNATIONAL CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-2
FINANCIAL STATEMENTS
Balance Sheets at September 30, 1999 (unaudited) and December 31, 1998 F-3
Statements of Operations for the nine months ended September 30, 1999 (unaudited) and
1998 (unaudited) and the year ended December 31, 1998 F-4
Statement of Shareholder's Deficit for the nine months ended September 30, 1999
(unaudited) and the year ended December 31, 1998 F-5
Statements of Cash Flows for the nine months ended September 30, 1999 (unaudited) and
1998 (unaudited) and the year ended December 31, 1998 F-6
Notes to Financial Statements F-8
PRO FORMA FINANCIAL STATEMENTS
Pro Forma Condensed Balance Sheet at July 31, 1999 (unaudited) F-15
Pro Forma Condensed Statement of Operations for the Nine Months Ended July 31, 1999
(unaudited) F-16
Pro Forma Condensed Statement of Operations for the Year Ended October 31, 1998 F-17
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
DIAL-THRU INTERNATIONAL CORPORATION
We have audited the accompanying balance sheet of Dial-Thru
International Corporation as of December 31, 1998 and the related statements of
operations, shareholder's deficit, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Dial-Thru International
Corporation as of December 31, 1998, and the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ KING GRIFFIN & ADAMSON P.C.
KING GRIFFIN & ADAMSON P.C.
Dallas, Texas
November 23, 1999
F-2
<PAGE>
DIAL-THRU INTERNATIONAL CORPORATION
BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
-------
(UNAUDITED)
September 30, December 31,
1999 1998
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 38,126 $ 54,526
Accounts receivable trade, net of allowance for doubtful
accounts of $149,564 and $34,564 in 1999
and 1998, respectively 560,189 582,646
Accounts receivable - other 8,928 8,928
Related party receivable 6,393 1,477,681
Prepaid and other current assets 1,458 7,149
------------ ------------
Total current assets 615,094 2,130,930
Property and equipment, net 520,871 655,430
Intangible assets, net 9,750 12,750
------------ ------------
Total assets $ 1,145,715 $ 2,799,110
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities
Current portion of capital lease obligation $ 56,266 $ 90,711
Accounts payable 856,952 1,501,290
Accrued liabilities 68,325 91,168
Customer deposit - 848,748
Other payable 135,500 145,500
------------ ------------
Total current liabilities 1,117,043 2,677,417
Related party payable 381,735 383,675
Capital lease obligation, less current portion - 32,610
------------ ------------
Total liabilities 1,498,778 3,093,702
------------ ------------
Shareholder's deficit
Common stock, no par value; 1,000,000 shares authorized;
100,000 shares issued and outstanding 2,500 2,500
Accumulated deficit (355,563) (297,092)
------------ ------------
Total shareholder's deficit (353,063) (294,592)
------------ ------------
Total liabilities and shareholder's deficit $ 1,145,715 $ 2,799,110
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
DIAL-THRU INTERNATIONAL CORPORATION
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
AND THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
1999 1998 1998
------------ -------------- ------------
<S> <C> <C> <C>
Net revenues $ 4,831,596 $ 2,891,405 $ 4,826,514
Cost of revenues 3,967,269 2,350,829 3,931,103
------------ -------------- ------------
Gross profit 864,327 540,576 895,411
Operating expenses 896,512 660,754 946,184
------------ -------------- ------------
Operating loss (32,185) (120,178) (50,773)
Interest income 472 2,615 2,916
Other income - - 495
Interest expense (26,758) (28,466) (48,002)
------------ --------------- ------------
Loss before taxes (58,471) (146,029) (95,364)
Provision for income taxes - - -
------------ -------------- ------------
Net loss $ (58,471) $ (146,029) $ (95,364)
------------ -------------- ------------
------------ -------------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
DIAL-THRU INTERNATIONAL CORPORATION
STATEMENT OF SHAREHOLDER'S DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
AND THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Common Stock
---------------------- Accumulated
Shares Amount Deficit Total
--------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1998 100,000 $ 2,500 $ (201,728) $ (199,228)
Net loss - - (95,364) (95,364)
--------- -------- ---------- -----------
Balance at December 31, 1998 100,000 2,500 (297,092) (294,592)
Net loss (unaudited) - - (58,471) (58,471)
--------- -------- ----------- ------------
Balance at September 30, 1999 (unaudited) 100,000 $ 2,500 $ (355,563) $ (353,063)
--------- -------- ----------- ------------
--------- -------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
DIAL-THRU INTERNATIONAL CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
AND THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
1999 1998 1998
------------ ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss from operations $ (58,471) $ (146,029) $ (95,364)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 151,915 96,832 144,400
Bad debt expense 115,000 10,000 10,000
Changes in operating assets and liabilities:
Accounts receivable trade (92,543) (198,370) (433,696)
Accounts receivable - other - (8,928) (8,928)
Prepaid and other current assets 5,691 29,655 70,765
Accounts payable (644,338) 488,249 1,150,218
Accrued liabilities (22,843) 53,751 78,685
Customer deposit (5,076) 988,590 848,748
Other payable (10,000) 145,500 145,500
------------ ------------ -----------
Cash flows provided by (used in)
operating activities (560,665) 1,459,250 1,910,328
------------ ------------ -----------
Cash flows from investing activities:
Purchases of property and equipment (14,356) (418,825) (445,885)
Purchases of intangible assets - (15,000) (15,000)
------------ ------------ -----------
Cash flows used in investing activities (14,356) (433,825) (460,885)
------------ ------------ -----------
Cash flows from financing activities
Payments on capital leases (67,055) (35,571) (56,679)
Borrowings from (payments to) related party (1,940) 109,225 109,225
(Advances to) payments from related party 627,616 (1,058,541) (1,477,681)
------------ ------------ -----------
Cash flows provided by (used in)
financing activities 558,621 (984,887) (1,425,135)
Net increase (decrease) in cash (16,400) 40,538 24,308
Cash, beginning of period 54,526 30,218 30,218
------------ ------------ -----------
Cash, end of period $ 38,126 $ 70,756 $ 54,526
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<TABLE>
<S> <C> <C> <C>
Supplemental disclosures for cash flow information:
Cash paid during the period for:
Interest $ 8,075 $ 6,167 $ 10,103
------------ ------------ -----------
------------ ------------ -----------
Income taxes $ - $ - $ -
------------ ------------ -----------
------------ ------------ -----------
Supplemental non-cash investing and financing information:
Other payables relieved through assumption of
liability by related party as satisfaction of
outstanding receivable $ 843,672 $ - $ -
------------ ------------ -----------
------------ ------------ -----------
Capital lease obligations incurred $ - $ 180,000 $ 180,000
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
DIAL-THRU INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED) AND 1998 (UNAUDITED) AND THE
YEAR ENDED DECEMBER 31, 1998
1. NATURE OF OPERATIONS
Dial Thru International Corporation (the "Company" or "DTI"), a California
corporation incorporated on April 25, 1997, provides international call
back and dial thru telephone services. The Company operates in a number of
countries including South Africa, Germany, and South Korea. DTI is based in
Los Angeles, California.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERIM FINANCIAL INFORMATION
In the opinion of management, the accompanying interim financial
statements, which have not been audited, reflect all adjustments
necessary to present fairly the results for the interim period. All of
the accounting adjustments reflected in the accompanying interim
financial statements are of a normal recurring nature. These interim
financial statements should be read in conjunction with the Company's
annual financial statements.
The accompanying interim financial statements have been prepared on
the accrual basis of accounting in accordance with U.S. generally
accepted accounting principles for interim financial information, which
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities as of September 30, 1999, and revenues and
expenses for the nine month periods ended September 30, 1999 and 1998.
Actual results may differ from the estimates and assumptions used. The
results of operations for the nine month periods presented are not
necessarily indicative of the results to be expected for the full years.
CASH EQUIVALENTS
For purposes of reporting cash flows, cash equivalents include all highly
liquid investments with an original maturity of three months or less.
ACCOUNTS RECEIVABLE
The Company extends unsecured credit in the normal course of business to
certain of its customers. Management has provided an allowance for
doubtful accounts which reflects its opinion of amounts which may
ultimately become uncollectible. In the event of non-performance of
accounts receivable, the maximum exposure to the Company is the recorded
amount shown on the balance sheet.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Property and equipment under
capital leases are stated at the lower of fair value or the present value
of minimum lease payments. Expenditures for maintenance and repairs are
charged directly against income. Major renewals and betterments are
capitalized.
Depreciation on property and equipment is calculated on the straight-line
method for financial reporting purposes, with useful lives ranging from 3
to 5 years. Property and equipment held under capital leases are amortized
straight-line over the shorter of the lease term or estimated useful life
of the asset.
INCOME TAXES
F-8
<PAGE>
The Company has elected to be taxed under the provisions of Subchapter S of
the Internal Revenue Code. Under those provisions, the Company does not pay
federal corporate income taxes on its taxable income. Instead, the
stockholders are liable for individual federal income taxes on their
respective share of taxable income. Accordingly, federal income taxes are
not reflected in the accompanying financial statements.
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 reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities as of the date of the
financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
F-9
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
REVENUE RECOGNITION
The Company records revenue based on minutes of customer usage. The Company
records payments received in advance for prepaid services as deferred
revenue until such related services are provided.
3. PROPERTY AND EQUIPMENT
Property and equipment at September 30, 1999 and December 31, 1998 consists
of the following:
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1999 1998
------------ -----------
<S> <C> <C>
Telephone switch equipment $ 537,809 $ 524,307
Furniture and fixtures 8,700 8,700
Computer equipment 101,244 100,390
Software 180,000 180,000
------------ -----------
827,753 813,397
Less accumulated depreciation and amortization (306,882) (157,967)
------------ -----------
$ 520,871 $ 655,430
------------ -----------
------------ -----------
</TABLE>
At September 30, 1999 and December 31, 1998, the gross amount of software
and related accumulated amortization recorded under capital leases was as
follows:
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Software, at cost $ 180,000 $ 180,000
Less accumulated amortization (80,000) (35,000)
------------- ------------
$ 100,000 $ 145,000
------------- ------------
------------- ------------
</TABLE>
F-10
<PAGE>
Amortization of assets held under capital leases is included with
depreciation expense. Depreciation and amortization expense for the nine
months ended September 30, 1999 and 1998 and the year ended December 31,
1998 was $151,915 (unaudited), $96,832 (unaudited) and $144,400,
respectively.
4. NOTE PAYABLE - OFFICER
The Company has a note payable to an officer totaling $381,735 (unaudited)
and $383,675 at September 30, 1999 and December 31, 1998, respectively. The
note bears interest at 10% per annum and payments are made as cash flow
permits with the total balance due no later than December 31, 2001.
F-11
<PAGE>
5. COMMITMENTS AND CONTINGENCIES
LEASES
The Company is obligated under a capital lease for software used in
operating the business that expires May 31, 2000. The Company also leases
its office facility under an operating lease with an initial two-year term
expiring in 1999. The Company moved locations in 1999 and entered into
another operating lease expiring in 2000. Rental expense for operating
leases was $47,432 (unaudited) and $67,814 for the nine months ended
September 30, 1999 and the year ended December 31, 1998, respectively.
Future minimum lease payments under noncancelable operating leases
(including the office facility lease agreement entered into in 1999) and
future minimum capital lease payments as of December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
--------- -----------
<S> <C> <C>
Year ending December 31,
1999 $ 100,172 $ 50,627
2000 33,391 82,020
---------- -----------
Total minimum lease payments 133,563 $ 132,647
-----------
Less amount representing interest (at 11.45%) (10,242)
----------
Present value of net minimum
capital lease payments 123,321
Less current installments of obligations
under capital leases (90,711)
----------
Obligations under capital leases,
excluding current installments $ 32,610
----------
</TABLE>
GUARANTEES
As of September 30, 1999, the Company is obligated as guarantor on a note
to a related party for $600,000. $500,000 of the note has been subsequently
paid by the related party, and the remaining $100,000 balance is due on
January 31, 2000.
6. RELATED PARTY TRANSACTIONS
The Company paid certain expenses for a related party in 1998 resulting in
a related party receivable totaling $1,477,681 at December 31, 1998. The
receivable was paid down to approximately $6,000 in 1999 through cash
payments to the Company, payment by the related party of certain of the
Company's expenses, and the assumption of a payable due from the Company to
an unrelated party.
F-12
<PAGE>
7. BUSINESS AND CREDIT CONCENTRATIONS
The Company has four (unaudited) customers that accounted for 59%
(unaudited) of sales for the nine months ended September 30, 1999 and had
one customer that accounted for 34% of sales for the year ended December
31, 1998. At September 30, 1999 and December 31, 1998, these customers
accounted for 74% (unaudited) and 16% (unaudited), respectively, of total
accounts receivable.
8. YEAR 2000 (UNAUDITED)
The Year 2000 problem is the result of computer programs being written
using two digits rather than four to define the applicable year. During the
year ended December 31, 1998, the Company developed and implemented a plan
to address the Year 2000 problem, including the evaluation of the Year 2000
readiness of its consultants, vendors, and suppliers, and developed
contingency plans where necessary. Management believes its computer systems
and applications are Year 2000 compliant.
9. SUBSEQUENT EVENT
On November 2,1999, DTI entered into an asset purchase agreement with Ardis
Telecom and Technologies, Inc. (Ardis), a reporting public company and a
Delaware corporation, whereby substantially all assets and liabilities of
DTI were acquired by Dial-Thru International Corporation, a Delaware
corporation and wholly-owned subsidiary of Ardis, in exchange for common
stock of Ardis.
F-13
<PAGE>
(b) Pro Forma Financial Information.
The unaudited pro forma condensed balance sheet of Ardis Telecom &
Technologies, Inc. (the "Company") and Dial-Thru International Corporation
("DTI") as of July 31, 1999, reflects this acquisition as if it had
occurred on July 31, 1999. The acquisition has been accounted for using
the purchase method of accounting.
The unaudited pro forma condensed statements of operations for the year
ended October 31, 1998 and the nine months ended July 31, 1999 reflect the
acquisition as if it had occurred on November 1, 1997.
The unaudited pro forma condensed balance sheet and statements of
operations should be read in conjunction with the separate historical
financial statements of the Company and DTI, and related notes
appearing elsewhere in this document. The historical statements of
operations for DTI included in these pro forma financial statements are
for the year ended December 31, 1998 and nine months ended September 30,
1999. The pro forma financial information is not necessarily indicative of
the results that would have been reported had such events actually
occurred on the dates specified, nor is it necessarily indicative of the
future results of the combined entities.
F-14
<PAGE>
ARDIS TELECOM & TECHNOLOGIES, INC.
PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED)
July 31, 1999
<TABLE>
<CAPTION>
Ardis Telecom & Dial-Thru Pro-Forma
Technologies, Inc. Intl. Corp. Adjustments Pro-Forma
------------------ ----------- ----------- ---------
ASSETS
<S> <C> <C> <C> <C>
Current assets
Cash $ 2,800,307 $ 38,126 $ - $ 2,838,433
Accounts receivable, net 274,621 560,189 - 834,810
Accounts receivable, other 27,151 8,928 - 36,079
Related party receivable - 6,393 - 6,393
Inventory 116,522 - - 116,522
Deposits 170,347 - - 170,347
Prepaid expenses and other 111,041 1,458 - 112,499
Current portion of long-term receivable 267,555 - - 267,555
------------ -------------- ------------- ------------
Total current assets 3,767,544 615,094 - 4,382,638
------------ -------------- ------------- ------------
Property and equipment, net 1,050,350 520,871 - 1,571,221
Long-term receivable, net of current portion 228,581 - - 228,581
Other assets 29,401 9,750 - 39,151
Goodwill - - 1,290,563 (A) 1,290,563
------------ -------------- ------------- ------------
Total assets $ 5,075,876 $ 1,145,715 $ 1,290,563 $ 7,512,154
============ ============== ============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable - current $ 162,000 $ - $ - $ 162,000
Current portion of capital lease obligation - 56,266 - 56,266
Trade accounts payable 179,951 856,952 - 1,036,903
Accrued liabilities 117,240 68,325 - 185,565
Deferred revenue 12,743 - - 12,743
Other payable - 135,500 - 135,500
------------ -------------- ------------- ------------
Total current liabilities 471,934 1,117,043 - 1,588,977
Related party payable - 381,735 - 381,735
Note payable - long-term 602,500 - - 602,500
Stockholders' equity
Common stock 24,938,974 2,500 935,000 (B) (C) 25,876,474
Retained earnings (20,937,532) (355,563) 355,563 (B) (20,937,532)
------------ -------------- ------------- ------------
Total stockholders' equity 4,001,442 (353,063) 1,290,563 4,938,942
------------ -------------- ------------- ------------
Total liabilities and stockholders' equity $ 5,075,876 $ 1,145,715 $ 1,290,563 $ 7,512,154
============ ============== ============= ============
</TABLE>
F-15
<PAGE>
ARDIS TELECOM & TECHNOLOGIES, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
For the nine month period ended July 31, 1999
<TABLE>
<CAPTION>
Ardis Telecom & Dial-Thru Pro-Forma
Technologies, Inc. Intl. Corp. Adjustments Pro-Forma
------------------ ----------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES
Prepaid phone cards $ 2,888,846 $ - $ - $ 2,888,846
Net revenues of call back and dial thru telephone
services - 4,831,596 - 4,831,596
------------- ------------- ------------ -------------
Total revenues 2,888,846 4,831,596 - 7,720,442
COSTS AND EXPENSES
Prepaid phone cards 2,691,738 - - 2,691,738
Cost of call back and dial thru telephone
services - 3,967,269 - 3,967,269
Operating expenses 2,354,230 896,512 24,198 (A) 3,274,940
------------- ------------- ------------ -------------
Total cost of revenues 5,045,968 4,863,781 24,198 9,933,947
------------- ------------- ------------ -------------
Net operating loss (2,157,122) (32,185) (24,198) (2,213,505)
OTHER INCOME (EXPENSES)
Interest expense (81,187) (26,758) - (107,945)
Interest income 116,823 472 - 117,295
------------- ------------- ------------ -------------
Total other expenses 35,636 (26,286) - 9,350
------------- ------------- ------------ -------------
NET LOSS FROM CONTINUING OPERATIONS (2,121,486) (58,471) (24,198) (2,204,155)
DISCONTINUED OPERATIONS
Income (loss) from operations of software
business, net of taxes of $0 218,376 - - 218,376
Gain on sale of software business, net of taxes
of $0 4,760,537 - - 4,760,537
------------- ------------- ------------ -------------
Net income/(loss) $ 2,857,427 $ (58,471) $ (24,198) $ 2,774,758
============= ============= ============ =============
EARNINGS (LOSS) PER SHARE - Basic and diluted:
Continuing operations (0.31) (0.28)
Discontinued operations 0.73 0.64
------------- ----------
Net earnings 0.42 0.36
============= ==========
SHARES USED IN THE CALCULATION
OF PER SHARE AMOUNTS:
Basic common shares 6,782,250 7,782,250
Dilutive impact of stock options and warrants - -
------------- ----------
Diluted common shares 6,782,250 7,782,250
============= ==========
</TABLE>
F-16
<PAGE>
ARDIS TELECOM & TECHNOLOGIES, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
For the year ended October 31, 1998
<TABLE>
<CAPTION>
Ardis Telecom & Dial-Thru Pro-Forma
Technologies, Inc. Intl. Corp. Adjustments Pro-Forma
------------------ ----------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES
Prepaid phone cards $ 2,189,113 $ - $ - $ 2,189,113
Net revenues of call back and dial thru
telephone services - 4,826,514 - 4,826,514
------------- ------------- ----------- -------------
Total revenues 2,189,113 4,826,514 - 7,015,627
COSTS AND EXPENSES
Prepaid phone cards 2,154,962 - - 2,154,962
Cost of call back and dial thru telephone services - 3,931,103 - 3,931,103
Operating expenses 1,399.054 946,184 32,264(A) 2,377,502
------------- ------------- ----------- -------------
Total cost of revenues 3,554,016 4,877,287 32,264 8,463,567
------------- ------------- ----------- -------------
Net operating loss (1,364,903) (50,773) (32,264) (1,447,940)
OTHER INCOME (EXPENSES)
Interest expense (155,318) (48,002) - (203,320)
Interest income 54,535 2,916 - 57,451
Other income - 495 - 495
Loss on disposal of USC (1,155,385) - - (1,155,385)
------------- ------------- ----------- -------------
Total other expenses (1,256,168) (44,591) - (1,300,759)
------------- ------------- ----------- -------------
NET LOSS FROM CONTINUING OPERATIONS (2,621,071) (95,364) (32,264) (2,748,699)
DISCONTINUED OPERATIONS
Income (loss) from operations of software
business, net of taxes of $0 (103,091) - - (103,091)
Gain on sale of software business, net of taxes
of $0 - - - -
------------- ------------- ----------- -------------
Net loss $ (2,724,162) $ (95,364) $ (32,264) $ (2,851,790)
============= ============= =========== =============
EARNINGS (LOSS) PER SHARE - Basic and diluted:
Continuing operations (0.37) (0.34)
Discontinued operations (0.01) (0.01)
------------- ------------
Net loss (0.38) (0.35)
============= ============
SHARES USED IN THE CALCULATION
OF PER SHARE AMOUNTS:
Basic common shares 7,095,937 8,095,937
Dilutive impact of stock options and warrants - -
------------- -------------
Diluted common shares 7,095,937 8,095,937
============= =============
</TABLE>
F-17
<PAGE>
Notes to Pro Forma Financial Statements
1. Pro Forma Condensed Balance Sheet
For purposes of determining the pro forma effect of the DTI acquisition,
the pro forma adjustments described below have been made on the unaudited
historical balance sheet of the Company.
(A) Goodwill
Excess of the consideration given for the acquisition
of DTI over the net assets acquired $ 1,290,563
(B) Acquired deficit
To eliminate DTI equity acquired
i Common stock $ 2,500
ii Retained deficit $ 355,563
(C) Issuance of 1,000,000 shares of common stock in
association with the acquisistion of DTI $ (937,500)
F-18
<PAGE>
2. Pro Forma Condensed Statements of Operations
For purposes of determining the pro forma effect of the DTI acquisition,
the pro forma adjustments described below have been made on the unaudited
historical statements of operations of the Company and DTI for the nine
month period ended July 31, 1999, and to the audited historical
statements of operations of the Company and DTI for the year ended
October 31, 1998 as if the acquisition had occurred as of November 1, 1997.
<TABLE>
<CAPTION>
Year ended Nine months ended
October 31, 1998 July 31, 1999
---------------- -------------
<S> <C> <C>
(A) Amortization
Pro forma amortization of goodwill is
calculated using the straight-line method
over an estimated useful life of 40 years
Amortization of goodwill recorded in
connection with the acquisition of DTI $ 32,264 $ 24,198
</TABLE>
F-19
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in (1) the Registration
Statement on Form S-8 (Registration No. 333-86749) pertaining to 1,975,000
shares of ARDIS Telecom & Technologies, Inc. common stock issuable pursuant
to its Amended Stock Option Plan and certain compensation contracts, and (2)
the Registration Statement on Form S-8 (Registration No. 333-23313)
pertaining to 1,200,000 shares of ARDIS Telecom & Technologies, Inc. common
stock issuable pursuant to its Amended Stock Option Plan, and (3) the
Registration Statement (Form S-3 No. 333-33523) pertaining to 863,364 shares
of ARDIS Telecom & Technologies, Inc. common stock, of our report dated
November 23, 1999, with respect to the financial statements of Dial Thru
International Corporation for the year ended December 31, 1998.
/s/ KING GRIFFIN & ADAMSON P.C.
-------------------------------
KING GRIFFIN & ADAMSON P.C.
Dallas, Texas
January 14, 2000