<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 17, 1996
------------
Polish Telephones and Microwave Corporation
------------------------------------------------------
(Exact name of registrant as specified in its Charter)
Texas 0-24622 75-2433637
- --------------------------- ----------- ---------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
433 East Las Colinas Boulevard, Suite 815, Irving, Texas 75039
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 831-8722
--------------
-------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Telereunion, Inc. Balance Sheet -
December 31, 1995 2
Vextro de Mexico, S.A. de C.V. and affiliated
Company Financial Statements -
December 31, 1995 6
Polish Telephones and Microwave Corporation
Pro Forma Consolidated Condensed
Financial Statements -
December 31, 1995 22
Telereunion, Inc. Balance Sheet -
March 31, 1996 30
Vextro de Mexico, S.A. de C.V. and affiliated
Company Financial Statements -
March 31, 1996 32
Polish Telephones and Microwave Corporation
Pro Forma Consolidated Condensed
Financial Statements -
March 31, 1996 40
Signature Page 47
</TABLE>
1
<PAGE>
(logo)BDO BDO Seidman, LLP Houston, Texas 77002-4501
Accountants and Consultants Telephone (713)659-6551
Fax (713)659-3238
REPORT OF INDEPENDENT AUDITORS
Telereunion, Inc.
Houston, Texas
We have audited the accompanying balance sheet of Telereunion, Inc., as of
December 31, 1995. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement 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 balance sheet if free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall balance sheet
presentation. We believe that our audit of the balance sheet provides a
reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Telereunion, Inc. as of December
31, 1995, in conformity with generally accepted accounting principles.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
Houston, Texas
April 12, 1996
2
<PAGE>
TELEREUNION, INC.
BALANCE SHEET
DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
<S> <C>
CURRENT:
Cash $ 9,734
Receivable from stockholder (Note 3) 74,716
-------
Total assets $84,450
-------
-------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES $ -
-------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY
Common stock (par value $.001, 60,000
shares authorized, 3,315,002 issued and
outstanding) 3,315
Additional paid-in capital 81,135
-------
$84,450
-------
-------
</TABLE>
See accompanying notes to balance sheet
3
<PAGE>
TELEREUNION, INC.
NOTES TO BALANCE SHEET
DECEMBER 31, 1995
NOTE 1 - NATURE OF BUSINESS AND BASIS OF PRESENTATION
Telereunion, Inc. (the Company) is a Delaware corporation formed on March
6, 1995. The Company, which has 3,315,002 shares of common stock issued and
outstanding, has had no business operations. The Company was formed for the
purpose of being merged with Vextro de Mexico, S.A. de C.V. and Servicios
Corporativos, S.A. de C.V. (collectively, "Vextro"), Mexican corporations, in
in connection with Vextro's proposed redomestication, at which time the
Company will succeed to all of the business operations, properties and rights
and assume all of the obligations and liabilities of Vextro.
NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS No. 123). SFAS No. 123 encourages entities to
adopt the fair value method in place of the provisions of Accounting
Principles Board Opinion No. 125, "Accounting for Stock Issued to Employees"
(APB No. 125), for all arrangements under which employees receive shares of
stock or other equity instruments of the employer or the employer incurs
liabilities to employees in amounts based on the price of its stock. The
Company has not yet determined if they will adopt SFAS No. 123. However,
if the Company does not adopt SFAS No. 123, they will be required to provide
additional disclosures beginning in 1996 providing pro forma effects as if
the Company had elected to adopt SFAS No. 123.
NOTE 3 - RELATED PARTY TRANSACTIONS
Prior to December 31, 1995, Telereunion, Inc. incurred expenses totalling
$74,716 on behalf of and reimbursable by Vextro relating to the proposed
merger (see Notes 4 and 6). These advances are not interest bearing and due
on demand.
NOTE 4 - COMMITMENTS
Effective June 15, 1995, the Company entered into a consulting agreement
with an individual whereby the individual will render merger and acquisitions
advice to the Company for $8,000 per month. The agreement is in effect
indefinitely, and can be terminated by either party with 30 days notice.
Effective August 1, 1995, the Company entered into another consulting
agreement with a consulting company whereby the consulting company will render
advice relating to the exploitation of private network services in Mexico for
$8,500 per month, plus $1,000 overhead expense fee. The agreement is in
effect indefinitely, and can be terminated by either party with 30 days notice.
4
<PAGE>
TELEREUNION, INC.
NOTES TO BALANCE SHEET
DECEMBER 31, 1995
NOTE 5 - STOCK OPTIONS AND WARRANTS
During September 1995, the Company entered into stock option agreements
with various individuals, including stockholders of the Company, which allows
the holders to purchase a total of 454,908 shares of the Company's common
stock at an exercisable price of $.65 per share. At December 31, 1995, all
the options were outstanding and expire in September 2005 (see Note 6).
At December 31, 1995, the Company had outstanding warrants which allows
the holders to purchase 663,000 shares of the Company's stock at $.65 per
share and are exercisable in 25% increments based on the Company attaining
specified levels of net income and expire during July 2005, if the conditions
for vesting are not met. The warrants also terminate in the event of a
merger, recapitalization or reorganization to the extent that they had not
yet vested at that time.
NOTE 6 - SUBSEQUENT EVENTS
In April 1996, the Company acquired 1,616,667 shares of capital stock of
Vextro de Mexico, S.A. de C.V. and 9,700 shares of Corporativos Vextro, S.A.
de C.V. for $81,194 and $2,000, resprectively, which represents a 97%
ownership in each company.
Since the Company had no operations at the time of its acquistion of
Vextro, pro forma revenues and net income, as if the acquisition has occurred
at earlier dates, would not differ materially from Vextro's historical
financial position and operating results.
The Company has entered into a letter of intent with a subsidiary of a
public company, in which that entity would acquire all of the issued and
outstanding stock of the Company for common and preferred stock and stock
warrants.
The preffered stock of the public company to be issued would be non-
voting and have no dividend rights. The aggregate liquidation preferance,
as defined, would be payable to the Company upon its attainment of a specified
level of net equity or net income criteria achievable over an 18 month period.
The preferred stock warrants contain vesting rights and become exercisable
upon the attainment of a specified level of net equity over an 18 month
period and on common stock warrants upon achieving scheduled earnings per
share criteria. The preferred stock warrants expire in 18 months, if
conditions for vesting are not met within that period and the common stock
warrants expire, whether vested or exercisable, 7 years after the closing
of the proposed transactions.
In addition, as part of the letter of intent, all outstanding stock
options and warrants of the Company will be converted to stock options and
warrants of the public company. It is anticipated that 220,248 stock options
will be issued at an exercise price of $1.35 expiring in 10 years; and that
the 663,000 warrants outstanding at December 31, 1995 will terminate.
5
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Vextro de Mexico, S.A. de C.V. and Affiliated Company
Mexico City, Mexico
We have audited the accompanying combined balance sheets of Vextro de Mexico,
S.A. de C.V. and affiliated company, as of December 31, 1995 and 1994 and the
related combined 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 auditing standards generally
accepted in the United States. 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 combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Vextro de
Mexico, S.A. de C.V. and affiliated company at December 31, 1995 and 1994, and
the combined results of operations, and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States.
/s/ BDO Seidman
Mexico City
April 12, 1996
6
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
COMBINED BALANCE SHEETS AS OF DECEMBER 31, 1995 AND 1994
(In U.S. Dollars)
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
ASSETS:
CURRENT:
Cash and cash equivalents $ 84,167 $ 252,505
Trade accounts receivable, less allowance
for doubtful accounts of $ 19,000
and $ 6,000 973,726 1,087,258
Inventories 1,504,193 1,290,414
Income taxes receivable 43,942 133,540
Prepaid expenses and other 114,373 102,481
-------------- --------------
Total current assets 2,720,401 2,866,198
-------------- --------------
PROPERTY AND EQUIPMENT, less accumulated
depreciation and amortization
(Notes 2 and 3) 356,797 177,128
DEFERRED INCOME TAXES (NOTE 5) 197,023 79,569
OTHER ASSETS 4,467 9,362
-------------- --------------
$ 3,278,688 $ 3,132,257
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to the combined financial statements.
7
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
COMBINED BALANCE SHEETS AS OF DECEMBER 31, 1995 AND 1994
(In U.S. Dollars)
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 1,664,911 $ 1,682,698
Accrued liabilities 482,807 308,979
Capital lease obligations (Note 3) - 24,330
Customer prepayments 332,577 90,198
Dividends payable 156,205 -
Deferred income taxes (Note 5) 391,863 324,108
Employees' profit sharing payable 2,674 -
-------------- --------------
Total current liabilities 3,031,037 2,430,313
ACCRUED EMPLOYEE BENEFITS (NOTE 1) 27,808 23,655
-------------- --------------
Total liabilities 3,058,845 2,453,968
-------------- --------------
COMMITMENTS AND CONTINGENCIES (NOTES 6 AND 9)
STOCKHOLDERS' EQUITY
Common stock, $ .30 par value; 333,000
shares authorized 99,900 99,900
Legal reserve (Note 6) 19,980 1,145
Retained earnings (Note 6) 96,460 573,741
Effect of foreign currency translation(Note 1) 3,503 3,503
-------------- --------------
Total stockholders' equity 219,843 678,289
-------------- --------------
$ 3,278,688 $ 3,132,257
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to the combined financial statements.
8
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(In U.S. Dollars)
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
NET SALES $ 5,184,044 $ 8,315,908
COST OF SALES 3,235,014 4,535,645
-------------- --------------
GROSS PROFIT 1,949,030 3,780,263
SELLING, GENERAL AND ADMINISTRATIVE 1,582,346 2,423,046
-------------- --------------
OPERATING INCOME 366,684 1,357,217
-------------- --------------
OTHER (EXPENSE) INCOME:
Translation (loss) gain (Notes 1 and 4) (156,243) 5,613
Interest income 25,161 23,863
Interest expense (157,169) (25,754)
Professional and consulting fees (Note 4) (470,300) -
Other 88,067 40,629
-------------- --------------
Total other (expense) income, net (670,484) 44,351
-------------- --------------
(LOSS) INCOME BEFORE INCOME TAXES AND
EMPLOYEES' PROFIT SHARING (303,800) 1,401,568
INCOME TAX (BENEFIT) EXPENSE (NOTE 5) (4,233) 383,632
EMPLOYEES' PROFIT SHARING 2,674 -
-------------- --------------
NET (LOSS) INCOME $ (302,241) $ 1,017,936
-------------- --------------
-------------- --------------
NET (LOSS) INCOME PER COMMON SHARE $ (2.27) $ 7.65
-------------- --------------
-------------- --------------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 133,000 133,000
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to the combined financial statements.
9
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(In U.S. Dollars)
<TABLE>
<CAPTION>
Retained Effect
Common Stock Legal Earnings of Foreign
------------------------ Reserve (Deficit) Currency
Shares Amount (Note 6) (Note 6) translation Total
-------- ----------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1993 33,000 $ 9,900 $ 1,145 $ (444,195) $ 5,283 $ (427,867)
Issuance of shares of common stock at
par, for cash on August 22, 1994 300,000 90,000 - - (1,780) 88,220
Net income for the year - - - 1,017,936 - 1,017,936
------- ---------- ---------- ------------ --------- -----------
BALANCE, December 31, 1994 333,000 $ 99,900 1,145 $ 573,741 $ 3,503 $ 678,289
Transfer to legal reserve (Note 6) - - 18,835 (18,835) - -
Dividends payable - - - (156,205) - (156,205)
Net loss for the year - - - (302,241) - (302,241)
------- ---------- ---------- ------------ --------- -----------
BALANCE, December 31, 1995 333,000 $ 99,900 $ 19,980 $ 96,460 $ 3,503 $ 219,843
------- ---------- ---------- ------------ --------- -----------
------- ---------- ---------- ------------ --------- -----------
</TABLE>
See accompanying notes to the combined financial statements.
10
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(In U.S. Dollars)
(Decrease) Increase in Cash and Cash Equivalents
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
CASH (LOSS) FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) income $ (302,241) $ 1,017,936
Adjustments to reconcile net income to net
cash provided by operating activities:
Allowance for doubtful accounts 13,000 (4,000)
Depreciation and amortization 76,000 36,102
Allowance for inventory obsolescence 2,859 6,727
Accrued employee benefits 4,153 9,468
Deferred income taxes (49,699) 349,731
Employees' profit sharing 2,674 -
Changes in assets and liabilities:
Trade accounts receivable 100,532 (420,909)
Taxes receivable 89,598 135,808
Inventories (216,638) (625,057)
Prepaid expenses and other (6,997) 87,570
Trade accounts payable (17,787) (147,925)
Accrued liabilities 173,828 (84,971)
Customer prepayments 242,379 (275,023)
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 111,661 85,457
-------------- --------------
NET CASH USED IN INVESTING ACTIVITIES:
Capital expenditures (255,669) (68,752)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock - 88,220
Capital lease payments (24,330) (39,782)
-------------- --------------
NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES (24,330) 48,438
-------------- --------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (168,338) 65,143
CASH AND CASH EQUIVALENTS, at beginning of period
In U.S. Dollars 124,395 -
In local currency 82,359 117,951
Effect of exchange rate changes on cash 45,751 69,411
-------------- --------------
CASH AND CASH EQUIVALENTS, at
end of period $ 84,167 $ 252,505
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to the combined financial statements.
11
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 1- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
The Company was incorporated in Mexico on October 21, 1986, and conducts
substantially all of its business in Mexico. At the time of its inception,
operations were primarily in the distribution and sale of electrical material
and telephone cabling and equipment, including multiline switchboards and fax
machines. In 1993 the Company expanded its operations to include the
distribution and installation of telecommunications equipment. Presently, the
Company's principal operation is concentrated in the sale of sophisticated
telecommunications equipment. Small telephone and telecommunications equipment
is sold through Mexican distributors and affiliates.
During the third quarter of 1994, the Company established its integrated
systems division. This division is focused on the design, lease, service,
manufacturing and installation of private telecommunication networks and
related equipment, including data, voice and imaging systems.
Basis of Presentation
The accompanying combined financial statements present the combined
financial position and results of operations of Vextro de Mexico, S.A. DE C.V.
("Vextro") and Servicios Corporativos Vextro, S.A. de C.V. ("Servicios"),
Servicios is engaged in rendering administrative, technical and commercial
services to Vextro and has identical shareholder ownership as in Vextro. All
intercompany balances and transactions have been eliminated.
Translation of Foreign Currency
Although the Company maintains its books and records in the local currency
(i.e., the Mexican Peso), its transactions are principally conducted in U.S.
dollars, and consequently, the U.S. dollars its functional currency.
Accordingly, its assets and liabilities have been remeasured at year-end and
period-end exchange rates, except inventories, equipment and stockholders'
equity accounts which have been remeasured at historical rates. The
statements of operations have been remeasured at average rates of exchange for
the year and the period, except cost of sales and depreciation, which have been
remeasured at historical rates. The Company's initial cumulative remeasurement
adjustment has been recorded as a separate component of stockholders' equity at
January 1, 1993.
Translation gain (loss) result from 1) realized exchange gain (loss) on
foreign currency during the year and 2) the effects of the devaluation of the
Mexican Peso to the U.S. Dollar on the Company's Mexican Peso denominated net
monetary assets and liabilities during the year.
12
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 1- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all
highly liquid instruments purchased with a maturity of three months or less to
be cash equivalents. At December 31, 1994 the Company had approximately $
61,000, in short-term investments included in cash equivalents. All cash
deposits are with Mexican banks and, accordingly, are subject to the Mexican
Central Bank guarantees in the event such banks experience bankruptcy or other
financial difficulties.
Inventories
The Company's inventories consist primarily of telephone, computer and
telecommunication equipment and related parts and supplies. Inventories are
stated at the lower of cost or market. Cost is determined by the first-in,
first-out (FIFO) method.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method for financial and income tax reporting purposes.
Expenditures for small tools, maintenance and repairs are expensed as incurred.
Revenue Recognition
Revenue is recognized at the time the equipment is shipped or the service
is provided.
(Loss) Income per Common Share
(Loss) income per common share is computed by dividing the net (loss)
income by the weighted average number of common shares outstanding, or assumed
outstanding during each year presented.
13
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 1- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Employee Benefits
In accordance with Federal labor law in the resolution of "National
commissions for employees' profit sharing", employees are entitled to 10% of
the fiscal profits from operations of the Company (i.e. Servicios Corporativos
Vextro, S.A. de C.V., which was all the employees of the Company) for each tax
period, which are computed in accordance with the income tax law in force.
During the year ended December 31, 1995 the Company recognized $ 2,674 in
profit sharing expense and, during the year ended December 31, 1994, there was
no profit sharing expense recognized because Servicios incurred a fiscal loss
from operations.
Under Mexican Law, employees with fifteen years or more of service to the
Company are entitled to seniority premiums in the event that their employment
is terminated by the Company. Accordingly, seniority premiums are recognized
as expenses as these premiums accrue. The Company's accrued benefits amounted
to approximately $ 4,000, $ 10,000 for the years ended December 31, 1995 and
1994, based on salaries in effect as of those dates. The Company has
recognized related accrued liabilities of approximately $ 28,000 and $ 24,000
at December 31, 1995 and 1994, respectively.
The Mexican Federal Labor Law also requires companies to provide indemnity
compensation to employees in the event of dismissal, based upon certain length
of service requirements. The Company charges such compensation to income in
the year in which it becomes payable (see Note 9).
Income Taxes
Vextro de Mexico, S.A. de C.V. and Servicios each file individual income
tax returns. Accordingly, the taxes on income in the accompanying financial
statements reflect the individual company combine tax effects.
Accounting estimates
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles which requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. The actual results could differ from those
estimates.
14
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 1- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concluded)
New Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 "Accounting for Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS No. 121). SFAS
No. 121 requires, among other things, that impairment losses on assets to be
held, and gains or losses from assets that are expected to be disposed of, be
included as a component of income from continuing operations. The Company will
adopt SFAS No. 121 in 1996 and its implementation is not expected to have a
material effect on the combined financial statements.
NOTE 2- PROPERTY AND EQUIPMENT
The Company's property and equipment at December 31, 1995 and 1994
consisted of the following:
<TABLE>
<CAPTION>
Estimated
useful lives
(years) 1995 1994
------------ ---------- ----------
<S> <C> <C> <C>
Vehicles (Note 3) 5 $ 73,147 $ 106,252
Data processing equipment 4 192,951 46,497
Furniture and fixtures 10 100,181 63,718
Machinery and equipment 10 24,951 23,567
Leasehold improvements 20 99,346 32,789
---------- ----------
490,576 272,823
Less- Accumulated depreciation and amortization (133,779) (95,695)
---------- ----------
Net property and equipment $ 356,797 $ 177,128
---------- ----------
---------- ----------
</TABLE>
15
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 3- OBLIGATIONS UNDER CAPITAL LEASE
The Company's obligations under capital lease related to four vehicle
lease agreements. The interest rate of 23.62% per annum, is fixed for the term
such obligations. The leased vehicles with a book value of $ 34,504 at
December 31, 1994 are pledged as collateral for these obligations. All
obligations under these leases were completed during the year ended December
31, 1995.
NOTE 4.- OTHER NON-OPERATING EXPENSES
During 1995, the Company initiated extensive efforts in preparation for a
potential public offering in the U.S., including due dilligence efforts on
previously identified acquisiton candidates, which were to be acquired
simultaneously with the Initial Public Offering.
Pursuant to these efforts, the Company incurred significant professional
fees, including attorney, accounting and consulting fees, considered as special
projects not part of the Company's normal operations. These fees totaling
approximately $ 470,000 were charged against operations as non-operating
expenses for the year ended December 31, 1995 since those efforts were not
successful.
In addition, the Company realized exchange losses totaling approximately
$ 43,000 on $ 135,000 in payments of such professional fees payables as of
December 31, 1995. Such realized exchange losses have been classified in
translation loss in the accompanying statement of operations for the year ended
December 31, 1995.
NOTE 5- INCOME TAXES
The components of the net current deferred tax liability at December 31,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Allowance for doubtful accounts $ 6,487 $ 2,088
Customer prepayments 113,076 30,667
-------------- --------------
Gross current deferred tax asset 119,563 32,755
Differences in basis of inventory (511,426) (356,863)
-------------- --------------
Net current deferred tax liability $ (391,863) $ (324,108)
-------------- --------------
-------------- --------------
</TABLE>
16
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 5- INCOME TAXES (Continued)
The components of the long-term deferred tax assets at December 31, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Net operating loss carryforward $ 209,389 $ 63,042
Differences between net book value of property
and equipment for financial statement and tax
reporting purposes (24,602) 6,119
Differences in accrued employee benefits for
financial statement and tax reporting
purposes 12,236 10,408
-------------- --------------
Net long-term deferred tax asset $ 197,023 $ 79,569
-------------- --------------
-------------- --------------
</TABLE>
The components of income tax (benefit) expense at December 31, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Federal:
Deferred $ (49,699) $ 349,731
Tax on assets:
Current 45,466 33,901
-------------- --------------
$ (4,233) $ 383,632
-------------- --------------
-------------- --------------
</TABLE>
In accordance with the Mexican Tax Law, a Company is subject to taxes
based upon the greater of 34% of taxable income and 1.8% and 2% of net assets
during the years ended December 31, 1995 and 1994, respectively, as defined in
the Tax Law.
17
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 5- INCOME TAXES (Continued)
Deferred income taxes result from differences in the recognition of
revenues and expenses for tax and financial reporting purposes. A significant
difference relates to the treatment of inventories under the Mexican Tax Law.
Under this law, the cost of sales for financial statement purposes is not
deductible for tax purposes, instead, inventory purchases are deductible for
tax purposes in the year in which they are made. The sources of those
differences and the related tax effects are as follows:
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Allowance for doubtful accounts $ (4,399) $ 58,201
Change in deferred tax assets on net
operating loss carryforward (146,347) 71,649
Differences in basis of inventory 154,563 128,057
Differences in basis of property and
equipment for financial statement
and tax reporting purposes 30,721 2,482
Differences in accrued employee benefits
for financial statement and tax
return purposes (1,828) (4,166)
Customer prepayments (82,409) 93,508
-------------- --------------
Deferred income tax (benefit) expense $ (49,699) $ 349,731
-------------- --------------
-------------- --------------
</TABLE>
The effective tax rates on income before taxes differs from the Mexican
federal statutory rate. The following summary reconciles taxes at the maximum
federal statutory rate with the effective rates:
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Income taxes at the Mexican statutory rate (34%) 34%
Increase (decrease) in tax rate resulting from:
Permanent differences-
Translation loss 17% -
Inflation tax adjustments (14%) (12%)
Non-deductible items 15% 3%
Tax on assets 15% 2%
------ ------
(1%) 27%
------ ------
------ ------
</TABLE>
18
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 5- INCOME TAXES (Concluded)
In accordance with Mexican income tax law, the Company may carryforward a
tax loss for ten years. The Company utilized approximately $ 37,800 of net
operating loss carryforward to offset taxable income for the year ended
December 31, 1994. At December 31, 1995, the Company had available operating
loss carryforwards of approximately $ 616,000 which will expire as follows:
<TABLE>
<CAPTION>
Amount
-------------
<S> <C>
2004 $ 181,000
2005 435,000
-------------
$ 616,000
-------------
-------------
</TABLE>
NOTE 6- RETAINED EARNINGS
Under Mexican Law, the Company is required to make on annual transfer of
5% of its net income after taxes from retained earnings, subsequent to the year
earned, to a legal reserve until the legal reserve is at least equal to 20% of
the Company's capital stock. A transfer with respect to net income earned in
1994 amounting to $ 18,835 was made in 1995.
Additionally, under Mexican Law, dividends paid from previously taxed
earnings are free of tax. Retained earnings at December 31, 1995 include
approximately $ 82,552, and $ 133,000 respectively, of previously taxed
earnings which can be distributed to the Company's shareholders free of taxes.
In the event dividends are paid from earnings which have not been previously
taxed, a company's liability on such dividends would be at a 34% tax rate
multiplied by a factor of 1.515. Capital stock reductions in excess of capital
contributions, in accordance with the procedures established by the Mexican
Income Tax Law, are subject to the same tax treatment as dividends (See Note
10).
NOTE 7- CONCENTRATION OF CREDIT RISK
The Company makes substantially all of its sales to customers located in
Mexico. Mexican sales are entered into using the Company's established price
list, which is primarily stated in U.S. Dollars, converted to Mexican Pesos at
the then prevailing exchange rate. Accordingly, from, the time of a sale
until the subsequent collection of the receivable, the Company is exposed to
foreign currency risk in the event of any further devaluation of the Mexican
Peso.
19
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 7- CONCENTRATION OF CREDIT RISK (Concluded)
During the years ended December 31, 1995 and 1994, the Company derived
revenues from a single customer representing 22% and 50% of total revenues,
respectively. Likewise, during the year ended December 31, 1995 the Company
made purchases from two suppliers representing 76% and 17%. During the year
ended December 31, 1994 the Company made purchases from a single supplier
representing 78%, of its total purchases.
NOTE 8- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
The Company made payments of interest and taxes during the years ended
December 31, 1995 and 1994 as follows:
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Interest $ 156,756 $ 25,753
Tax on assets (see Note 5) 45,466 33,901
</TABLE>
NOTE 9- COMMITMENTS AND CONTINGENCIES
Leases
The Company leases its office building under an operating lease that
expires in 1998. Under the terms of the lease, the Company is obligated to
make minimum rental payments totalling $ 37,964 in 1996, 1997 and 1998.
Rent expense for the years ended December 31, 1995 and 1994 was $ 30,425
and $ 27,294, respectively.
Contingent Severance Compensation
Under the terms of the Mexican Labor Law, employees who are dismissed
without just cause, as defined, are entitled to severance compensation. The
required amount of severance pay is three months salary plus twenty days salary
for each year of service of the employee. To date, the Company has not
experienced terminations having a material affect on its financial position and
results from operations and, consequently, has not provided a contingency
reserve for future severance compensation.
20
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 10- SUBSEQUENT EVENT
On April 12, 1996, the shareholders approved a reduction of its
outstanding shares of capital stock of Vextro de Mexico, S.A. de C.V. from
330,000 shares to 50,000 shares ($ 90,000 and $ 15,000, respectively) through
the Company's purchase and cancellation of 280,000 shares of stock from the
shareholders for a consideration totaling $ 68,113 (Using the exchange rate of
7.6 Mexican Pesos to the U.S. Dollars as of the date of the transaction in
1996).
On April 13, 1996, the Company's shareholders approved the issuance of
1,616,667 shares of additional capital stock of Vextro de Mexico, S.A. de C.V.
for sale to Telereunion, Inc., a U.S. holding company, for $ 81,194 and
9,700 aditional shares of stock of Servicios for sale to Telereunion for $
2,000. Consequently, the Company is now 97% owned by Telereunion, Inc. and
3% by the current shareholders of the Company.
For financial reporting purposes, the Company will be deemed the acquiring
entity and this transaction will be recorded as an "equity restructuring.
Since Telereunion, Inc. had no operations at the time of its acquisition of the
Company, proforma revenues and as if acquisition has occurred at earlier dates,
would not differ materially from the Company's historical financial position
and operating results.
21
<PAGE>
(Logo) HOFFMAN, McBRYDE & CO., P.C.
Certified Public Accountants
DALLAS, TEXAS
INDEPENDENT ACCOUNTANTS' REPORT
April 30, 1996
The Board of Directors and Stockholders
Polish Telephones And Microwave Corporation
We have reviewed the pro forma adjustments reflecting the transactions
described in Note 1 and the application of those adjustments to the historical
amounts in the accompanying pro forma consolidated condensed balance sheet at
December 31, 1995, and the related pro forma consolidated condensed statement
of operations for the year ended December 31, 1995. The historical
consolidated condensed financial statements are derived from the historical
consolidated financial statements of Polish Telephones And Microwave
Corporation, which were audited by us and on which we have issued our report
dated March 27, 1996, the financial statement of Telereunion, Inc. and the
combined financial statements of Vextro De Mexico, S.A. De C.V. and Affiliated
Company, which were audited by other accountants and are incorporated by
reference. Such pro forma adjustments are based upon management's assumptions
described in Note 2. Our review was conducted in accordance with standards
established by the American Institute of Certified Public Accountants.
A review is substantially less in scope than an examination, the objective of
which is the expression of an opinion on management's assumptions, the pro
forma adjustments and the application of those adjustments to historical
financial information. Accordingly, we do not express such an opinion.
The objective of this pro forma financial information is to show what the
significant effects on the historical information might have been had the
transactions occurred at an earlier date. However, the pro forma consolidated
condensed financial statements are not necessarily indicative of the results of
operations or related effects on financial position that would have been
attained had the above-mentioned transactions actually occurred earlier.
Based on our review, nothing came to our attention that caused us to believe
that management's assumptions do not provide a reasonable basis for presenting
the significant effects directly attributable to the above-mentioned
transactions described in Note 1, that the related pro forma adjustments do not
give appropriate effect to those assumptions, or that the pro forma column does
not reflect the proper application of those adjustments to the historical
financial statement amounts in the pro forma consolidated condensed balance
sheet at December 31, 1995, and the related pro forma consolidated condensed
statement of operations for the year ended December 31, 1995.
/S/ Hoffman, McBryde & Co., P.C.
HOFFMAN, MCBRYDE & CO., P.C.
22
<PAGE>
POLISH TELEPHONES AND MICROWAVE CORPORATION
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
PRO FORMA
PTMC TELEREUNION VEXTRO ADJUSTMENTS PRO FORMA
--------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 173,255 $ 9,734 $ 84,167 $ (68,113) (1) $ 199,043
Short term investments 3,471,615 - - - 3,471,615
Accounts receivable 104,891 74,716 973,726 (74,716) (2) 1,078,617
Inventories 411,000 - 1,504,193 1,915,193
Other current assets 133,052 - 158,315 291,367
--------- ------- --------- --------- ----------
Total current assets 4,293,813 84,450 2,720,401 (142,829) 6,955,835
Property and equipment, net 153,798 - 356,797 510,595
Excess of cost over net assets
of businesses acquired - - - (72,208) (3) 2,700,622
2,772,830 (4)
Deferred income tax - - 197,023 197,023
Other assets 50,320 - 4,467 - 54,787
--------- ------- --------- --------- ----------
$ 4,497,931 $ 84,450 $3,278,688 $ 2,557,793 $ 10,418,862
--------- ------- --------- --------- ----------
--------- ------- --------- --------- ----------
</TABLE>
(continued)
See accountants' review report and notes to pro forma consolidated
condensed financial statements.
23
<PAGE>
POLISH TELEPHONES AND MICROWAVE CORPORATION
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
DECEMBER 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PRO FORMA
PTMC TELEREUNION VEXTRO ADJUSTMENTS PRO FORMA
--------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Current liabilities:
Accounts payable $ 178,705 $ - $1,664,911 - $ 1,843,616
Accrued liabilities 33,835 - 485,481 - 519,316
Dividends payable - - 156,205 - 156,205
Customer prepayments - - 332,577 - 332,577
Deferred income tax - - 391,863 - 391,863
--------- ----------- --------- ----------- ----------
Total current liabilities 212,540 - 3,031,037 - 3,243,577
Accrued employee benefits - - 27,808 - 27,808
Minority interests 695,446 - - $ 4,806 (3) 700,252
Stockholder's equity:
Preferred stock - - - - -
Series A preferred stock - - - -
Series B non-voting, non-partici-
pating preferred stock - - - 380 (4) 380
Common stock 1,890 3,315 99,900 (84,810) (1) 3,495
(15,090) (3)
1,605 (4)
(3,315) (4)
Additional paid-in capital 8,113,238 81,135 - (81,135) (4) 10,968,533
2,855,295 (4)
Effect of foreign currency translation - - 3,503 (3,503) (3) -
Unpaid capital subscriptions (600,000) - - (600,000)
Legal reserve - - 19,980 (19,980) (3) -
Retained earnings (deficit) (3,925,183) 96,460 16,697 (1) (3,925,183)
(74,716) (2)
- (38,441) (3)
--------- ----------- --------- ----------- ----------
3,589,945 84,450 219,843 2,552,987 6,447,225
--------- ----------- --------- ----------- ----------
$ 4,497,931 $ 84,450 $3,278,688 $ 2,557,793 $ 10,418,862
--------- ----------- --------- ----------- ----------
--------- ----------- --------- ----------- ----------
</TABLE>
See accountants' review report and notes to pro forma consolidated
condensed financial statements.
24
<PAGE>
POLISH TELEPHONES AND MICROWAVE CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRO FORMA
PTMC TELEREUNION VEXTRO ADJUSTMENTS PRO FORMA
--------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $ 1,108,473 $ - $5,184,044 $ 6,292,517
Cost of revenues 619,431 - 3,235,014 3,854,445
--------- ----------- --------- ----------- ----------
Gross profit 489,042 - 1,949,030 2,438,072
Selling, general and administrative
expense 1,397,688 - 1,582,346 $ 74,716 (2) 3,054,750
--------- ----------- --------- ----------- ----------
Income (loss) from operations (908,646) - 366,684 (74,716) (616,678)
Interest expense (1,639) - (157,169) (158,808)
Other income (expense) 230,587 - (515,989) (285,402)
--------- ----------- --------- ----------- ----------
Loss before income taxes
and minority interests (679,698) - (306,474) (74,716) (1,060,888)
Provision for income tax
expense (benefit) 28,051 - (4,233) (23,818)
Utilization of loss carry forwards (28,051) - - 28,051
--------- ----------- --------- ----------- ----------
Loss before minority interests (679,698) - (302,241) (74,716) (1,056,655)
Minority interests in subsidiaries' losses 6,633 - - 11,309 (3) 17,942
--------- ----------- --------- ----------- ----------
Net loss $ (673,065) $ - $ (302,241) $ (63,407) $ (1,038,713)
--------- ----------- --------- ----------- ----------
--------- ----------- --------- ----------- ----------
Net loss per common and common equivalent share $ (0.27)
----------
Weighted average number of common and common equivalent shares outstanding 3,846,742
----------
</TABLE>
See accountants' review report and notes to pro forma consolidated
condensed financial statements.
25
<PAGE>
POLISH TELEPHONES AND MICROWAVE CORPORATION
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND THE YEAR ENDED DECEMBER 31, 1995
1. PRO FORMA ADJUSTMENTS
The adjustments applied to the historical amounts in the accompanying pro
forma consolidated condensed financial statements of Polish Telephones And
Microwave Corporation (the Company) are as follows:
(1) Adjustment to reflect the subsequent retirement of 280,000 shares of
common stock of Vextro De Mexico, S.A. De C.V. (Vextro) and 2,700
shares of common stock of its affiliated company (Affiliate) in
exchange for $68,113.
(2) Adjustment to reflect the subsequent reclassification of amounts due
to Telereunion, Inc. (Telereunion) from one of its stockholders for
expenses incurred in connection with the proposed merger to
administrative expense of Vextro.
(3) Adjustment to reflect the subsequent issuance to Telereunion of
1,616,667 shares of common stock (97%) of Vextro and 9,700 shares of
common stock (97%) of Affiliate in exchange for $81,194 and $2,000,
respectively, and the consolidation of the financial statements of
Telereunion, Vextro and Affiliate.
(4) Adjustment to reflect the proposed issuance by the Company of 380,000
shares of Series B non-voting, non-participating preferred stock and
1,605,000 shares of its common stock in exchange for all of the
outstanding shares of common stock of Telereunion in connection with
the proposed reverse triangular merger, and the consolidation of the
financial statements of the Company, Telereunion and their
subsidiaries.
2. SUMMARY OF SIGNIFICANT ASSUMPTIONS
Significant management assumptions underlying the pro forma adjustments
described in Note 1. are as follows:
a. The capital stock transactions of Vextro and Affiliate, the
acquisition by Telereunion of 97% of the common stock of Vextro and
Affiliate and the execution of the proposed reverse triangular merger
by which Telereunion will become a wholly-owned subsidiary of the
26
<PAGE>
Company have been reflected retroactively as though the transactions
occurred as of December 31, 1995, for presentation in the pro forma
consolidated condensed balance sheet, and as of January 1, 1995, for
presentation in the pro forma consolidated condensed statement of
operations.
b. The Company will finalize and close an agreement with Telereunion for
a reverse triangular merger, which provides that the Company will
create a wholly-owned subsidiary which will merge with and into
Telereunion in exchange for all of the outstanding shares of ownership
of Telereunion being converted into the following securities of the
Company:
(1) 380,000 shares of Series B non-voting, non-participating
preferred stock, par value $.001, which is preferred only with
respect to redemption or liquidation at par upon the attainment
of certain equity increase or cash flow goals.
(2) 1,605,000 shares of common stock.
(3) warrants for the purchase of 95,000 shares and 2,500,000 shares
of common stock (Series A warrants and Series B warrants,
respectively).
The Series A warrants will be exercisable at a price equal to the
average closing price of the Company's common stock as quoted on
the NASDAQ exchange for the twenty days preceding December 22,
1995 (agreed by the parties to be $2.19 per share), if, within
eighteen months of the closing of the agreement, (a) the bid
price for the Company's common stock on the NASDAQ exchange is
$12.00 per share or higher for ninety consecutive days, or (b)
the net consolidated shareholders' equity of the Company
increases at least $5,000,000 from the date of the closing. The
warrants expire after the eighteen month period if neither
condition is met and unconditionally after seven years from the
date of the closing.
The Series B warrants will be exercisable at $2.19 per share
forty percent (1,000,000 shares) upon the Company achieving
fully-diluted earnings per share of $.315, an additional forty
percent (total 2,000,000 shares) upon the Company achieving
fully-diluted earnings per share of $.458, and the final twenty
percent (total 2,500,000 shares) upon the Company achieving
fully-diluted earnings per share of $.75. Only the number of
shares under the Series B warrants which would be exercisable are
given weight in calculating fully-diluted earnings per share,
whether or not they are dilutive, and earnings are measured
before charges for depreciation, amortization and any charges
resulting from the vesting of warrants related to the merger.
The Series B warrants become fully exercisable upon the bid price
for the Company's common stock on the NASDAQ exchange being
$12.00 per share or higher for ninety consecutive days, and they
expire unconditionally after seven years from the date of the
closing.
27
<PAGE>
Also as part of the agreement, outstanding options to purchase
454,908 shares of Telereunion common stock at a price of $.65 per
share will be converted into options to purchase 216,618 shares
of common stock of the Company at $1.35 per share. The options
will expire in ten years after the date of the closing.
Outstanding warrants for the purchase of 663,000 shares of
Telereunion common stock will be terminated upon closing of the
agreement.
c. The merger transaction described above is valued at an assumed market
price of $1.78 per share of common stock of the Company, which was the
closing price on the NASDAQ exchange on December 27, 1995( the day
before the press release announcing the plan for merger), and the par
value of the Series B non-voting, non-participating preferred stock,
which are issued in exchange for all of the shares of ownership of
Telereunion. The transaction is accounted for as a purchase.
d. The net book values of the net assets of Telereunion and its
subsidiaries approximate their fair market values, and the amount by
which the value of the Company's securities issued in connection with
the merger transaction exceed the net book values of the net assets of
Telereunion and its subsidiaries is recorded as an asset and presented
as the excess of cost over net assets of businesses acquired.
3. COMMON AND PREFERRED STOCKS
After the closing of the merger transaction described above, the Company
would have the following capitalization as of December 31, 1995:
<TABLE>
<CAPTION>
<S> <C>
Preferred stock, $.001 par value; 4,000,000 shares
authorized, no shares issued and outstanding,
without defined preference rights $ -
Series A preferred stock, $.001 par value; 1,000,000
shares authorized, no shares issued and outstanding,
preference rights limited to liquidation of the Company -
Series B preferred stock, $.001 par value; 380,000
shares authorized, issued and outstanding, preference
rights limited to redemption and liquidation of the
Company under specified conditions 380
Common stock, $.001 par value; 10,000,000 shares
authorized, 3,495,442 shares issued and outstanding 3,495
28
<PAGE>
Additional paid-in capital 10,968,533
Unpaid capital subscriptions (600,000)
Accumulated deficit (3,925,183)
-----------
Total stockholders' equity $ 6,447,225
-----------
-----------
</TABLE>
4. NET LOSS PER COMMON AND COMMON EQUIVALENT SHARE
The net loss per common and common equivalent share is based on the
weighted average number of shares of common stock outstanding, including
the shares issued in connection with the merger transaction described
above as though they were outstanding for the entire year. Common
equivalent shares include stock options for 196,394 shares granted at
prices below the average fair market (trading) price of $2.34 per share,
as if they were outstanding for the entire year, calculated by the
treasury stock method for the period prior to actual issuance, and the
Series A warrants, the Series B warrants and the stock options to be
issued in connection with the merger transaction, all exercisable at
prices below the average fair market price and calculated by the treasury
stock method.
29
<PAGE>
TELEREUNION, INC.
BALANCE SHEET
MARCH 31, 1996
ASSETS
<TABLE>
<CAPTION>
<S> <C>
CURRENT:
Cash $ 7,656
Receivable from stockholder 76,794
----------
Total Assets $ 84,450
----------
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES $ -
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock (par value $.001, 60,000,000
shares authorized, 3,315,002 issued and
outstanding) 3,315
Additional paid-in capital 81,135
----------
$ 84,450
----------
----------
</TABLE>
See accompanying notes to balance sheet
30
<PAGE>
TELEREUNION, INC.
NOTES TO BALANCE SHEET
MARCH 31, 1996
NOTE 1 - NATURE OF BUSINESS AND BASIS OF PRESENTATION
Telereunion, Inc. (the Company) is a Delaware corporation formed on March
6, 1995. The Company, which has 3,315,002 shares of common stock issued and
outstanding, has had no business operations. The Company was formed for the
purpose of being merged with Vextro de Mexico, S.A. de C.V. and Servicios
Corporativos, S.A. de C.V. (collectively, "Vextro"), Mexican corporations, in
in connection with Vextro's proposed redomestication, at which time the Company
will succeed to all of the business operations, properties and rights and
assume all of the obligations and liabilities of Vextro.
NOTE 2 - RELATED PARTY TRANSACTIONS
Prior to March 31, 1996, Telereunion, Inc. incurred expenses totalling
$76,794 on behalf of and reimbursable by Vextro relating to the proposed
merger. These advances are not interest bearing and due on demand.
31
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
COMBINED BALANCE SHEET AS OF MARCH 31, 1996
(In U.S. Dollars)
<TABLE>
<CAPTION>
March 31,
1996
------------
<S> <C>
ASSETS:
Current:
Cash and cash equivalents $ 115,353
Trade accounts receivable, less allowance for
doubtful accounts of $ 19,400 947,802
Inventories 943,628
Income taxes receivable 50,251
Prepaid expenses and other 119,798
------------
2,176,832
------------
Property and Equipment, less accumulated
depreciation and amortization (Note 1) 447,418
Deferred Income Taxes (Note 2) 31,646
------------
Other Assets 5,353
------------
$ 2,661,249
------------
------------
</TABLE>
See accompanying notes to the combined financial statements.
32
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
COMBINED BALANCE SHEET AS OF MARCH 31, 1996
(In U.S. Dollars)
<TABLE>
<CAPTION>
March 31,
1996
------------
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $ 1,678,854
Accrued liabilities 417,189
Capital lease obligations 42,491
Customer prepayments 41,153
Dividend payable 132,802
Deferred income taxes (Note 2) 300,242
------------
Total current liabilities 2,612,731
------------
Accrued Employee Benefits 12,669
------------
Total Liabilities 2,625,400
------------
Commitments and Contingencies
Stockholders' Equity
Common stock, $.30 par value; 333,000
shares authorized 99,900
Legal reserve 19,980
Accumulated (losses) earnings (87,534)
Effect of foreign currency translation 3,503
------------
Total stockholders' equity 35,849
------------
$ 2,661,249
------------
------------
</TABLE>
See accompanying notes to the combined financial statements.
33
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
COMBINED STATEMENT OF OPERATION
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(In U.S. Dollars)
<TABLE>
<CAPTION>
March 31,
1996
------------
<S> <C>
Net Sales $ 1,616,703
Cost of Sales 1,187,856
------------
Gross Profit 428,847
Selling, General and Administrative expenses 410,919
------------
Operating Income 17,928
------------
Other (Expenses) Income:
Translation loss (Note 3) (207,249)
Interest income 1,537
Interest expense (31,735)
Other (Note 4) 114,119
------------
Total other expenses, net (123,328)
------------
Loss Before Income Taxes and
Employees' Profit Sharing (105,400)
Income Tax Expense (Note 2) 101,997
------------
Net Loss $ (207,397)
------------
------------
Net Loss Per Common Share $ (1.56)
------------
------------
Weighted Average Number of Common
Shares Outstanding 133,000
------------
------------
</TABLE>
See accompanying notes to the combined financial statements.
34
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
COMBINED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(In U.S. Dollars)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
March 31,
1996
------------
<S> <C>
Cash (Loss) Flows From Operating Activities:
Net Loss $ (207,397)
Adjustments to reconcile net income to net
cash provided by operating activities:
Allowance for doubtful accounts 400
Depreciation and amortization 23,487
Accrued employee benefits (15,139)
Deferred income taxes 73,756
Changes in assets and liabilities:
Trade accounts receivable 25,524
Taxes receivable (6,309)
Inventories 560,565
Prepaid expenses and other (6,311)
Trade accounts payable 13,943
Accrued liabilities (65,618)
Customer prepayments (291,424)
Employees' profit sharing (2,674)
------------
Net Cash Provided by Operating Activities 102,803
------------
Net Cash Used in Investing Activities:
Capital expenditures (114,108)
------------
Cash Flows From Financing Activities:
Capital lease payments 42,491
------------
Net Cash Provided by Financing Activities 42,491
------------
Net Increase in Cash and Cash Equivalents 31,186
Cash and Cash Equivalents, at beginning of period
In U.S. Dollars 53,643
In local currency 28,202
Effect of exchange rate changes on cash 2,322
------------
Cash and Cash Equivalents, at end of period $ 115,353
------------
------------
</TABLE>
See accompanying notes to the combined financial statements.
35
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 1- PROPERTY AND EQUIPMENT
The Company's property and equipment at March 31, 1996 consisted of the
following:
<TABLE>
<CAPTION>
Estimated
useful lives
(years) 1996
------------ ----------
<S> <C> <C>
Vehicles 5 $ 133,454
Data processing equipment 4 202,370
Furniture and fixtures 10 102,193
Machinery and equipment 10 64,848
Leasehold improvements 20 101,819
----------
604,684
Less- Accumulated depreciation and amortization (157,266)
-----------
Net property and equipment $ 447,418
-----------
-----------
</TABLE>
NOTE 2- INCOME TAXES
The components of the net current deferred tax liability at March 31, 1996
is as follows:
<TABLE>
<CAPTION>
1996
-----------
<S> <C>
Allowance for doubtful accounts $ 6,600
Customer prepayments 13,992
-----------
Gross current deferred tax asset 20,592
Differences in basis of inventory (320,834)
-----------
Net current deferred tax liability $(300,242)
-----------
-----------
</TABLE>
36
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 2- INCOME TAXES (Continued)
The components of the long-term deferred tax assets at March 31, 1996 are as
follows:
<TABLE>
<CAPTION>
1996
-----------
<S> <C>
Net operating loss carryforward $ 81,386
Differences between net book value of property and
equipment for financial statement and tax
reporting purposes (55,314)
Differences in accrued employee benefits for
financial statement and tax reporting purposes 5,574
-----------
Net long-term deferred tax asset $ 31,646
-----------
-----------
</TABLE>
The components of income tax expense at March 31, 1996 are as follows:
<TABLE>
<CAPTION>
1996
-----------
<S> <C>
Federal:
Deferred $ 73,756
Tax on assets:
Current 28,241
-----------
$ 101,997
-----------
-----------
</TABLE>
In accordance with the Mexican Tax Law, a Company is subject to taxes
based upon the greater of 34% of taxable income and 1.8% of net assets during
the period ended March 31, 1996, as defined in the Tax Law.
37
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 2- INCOME TAXES (Concluded)
Deferred income taxes result from differences in the recognition of
revenues and expenses for tax and financial reporting purposes. A significant
difference relates to the treatment of inventories under the Mexican Tax Law.
Under this law, the cost of sales for financial statement purposes is not
deductible for tax purposes, instead, inventory purchases are deductible for
tax purposes in the year in which they are made. The sources of those
differences and the related tax effects are as follows:
<TABLE>
<CAPTION>
1996
-----------
<S> <C>
Allowance for doubtful accounts $ (113)
Change in deferred tax assets on net
operating loss carryforward 128,003
Differences in basis of inventory (190,592)
Differences in basis of property and
equipment for financial statement
and tax reporting purposes 30,721
Differences in accrued employee benefits
for financial statement and tax
return purposes 6,662
Customer prepayments 99,084
-----------
Deferred income tax expense $ 73,756
-----------
-----------
</TABLE>
NOTE 3- TRANSLATION LOSS
The amount of $207,249 show in the income statement as translation loss is
generated mainly by the exchange rate loss originated during the first quarter
ended March 31, 1996.
The exchange rate loss generated, as mentioned before, is the consequence of
liquidating liabilities that the company assumed in foreign exchange at a
higher exchange rate than the one used at the time they were assumed. The main
supplier in foreign exchange (dollars) to which payments were made during the
quarter ended March 31, 1996 was Northern Telecom (Nortel).
38
<PAGE>
VEXTRO DE MEXICO, S.A. DE C.V. AND AFFILIATED COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
(In U.S. Dollars)
NOTE 4- OTHER INCOME
The item defined as other income in the income statement, includes the
cancellation of an account payable for $144,000 (approx.) to Southwire Company,
a foreign supplier with which the Company had a dispute two years ago (March
1994), that resulted in stopping the payments to this supplier as a right to
set off. After a fraudulent collection of Southwire from a Letter of Credit
that the Company had opened for them, the Company has not received any legal or
extra-legal (written or verbal claim) for that amount of money that was claimed
by the Company to offset the damages suffered as a result of the dispute.
The amount reflected in the other income line of the income statement is
$94,923 (Pesos $711,360 at an exchange rate of Ps. $7.5526/dollar) as of date
of these financial statements.
39
<PAGE>
POLISH TELEPHONES AND MICROWAVE CORPORATION
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
MARCH 31, 1996
ASSETS
<TABLE>
<CAPTION>
PRO FORMA
PTMC TELEREUNION VEXTRO ADJUSTMENTS PRO FORMA
--------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 510,082 $ 7,656 $ 115,353 $ (68,113) (1) $ 564,978
Short term investments 2,909,524 - - - 2,909,524
Accounts receivable 190,870 76,794 947,802 (76,794) (2) 1,138,672
Inventories 440,520 - 943,628 1,384,148
Other current assets 131,399 - 170,049 301,448
--------- ------- --------- --------- ----------
Total current assets 4,182,395 84,450 2,176,832 (144,907) 6,298,770
Property and equipment, net 151,181 - 447,418 598,599
Excess of cost over net assets
of businesses acquired - - - 106,980 (3) 2,879,810
2,772,830 (4)
Deferred income tax - - 31,646 31,646
Other assets 207,085 - 5,353 - 212,438
--------- ------- --------- --------- ----------
$ 4,540,661 $ 84,450 $2,661,249 $ 2,734,903 $ 10,021,263
--------- ------- --------- --------- ----------
--------- ------- --------- --------- ----------
</TABLE>
(continued)
See notes to pro forma consolidated condensed financial statements.
40
<PAGE>
POLISH TELEPHONES AND MICROWAVE CORPORATION
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
MARCH 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PRO FORMA
PTMC TELEREUNION VEXTRO ADJUSTMENTS PRO FORMA
--------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Current liabilities:
Accounts payable $ 349,538 $ - $1,678,854 - $ 2,028,392
Accrued liabilities 43,854 - 459,680 - 503,534
Dividends payable - - 132,802 - 132,802
Customer prepayments - - 41,153 - 41,153
Deferred income tax - - 300,242 - 300,242
--------- ----------- --------- ----------- ----------
Total current liabilities 393,392 - 2,612,731 - 3,006,123
Accrued employee benefits - - 12,669 - 12,669
Minority interests 738,431 - - - 738,431
Stockholder's equity:
Preferred stock - - - - -
Series A preferred stock - - - -
Series B non-voting, non-partici-
pating preferred stock - - - $ 380 (4) 380
Common stock 1,890 3,315 99,900 (84,810) (1) 3,495
(15,090) (3)
1,605 (4)
(3,315) (4)
Additional paid-in capital 8,113,238 81,135 - (81,135) (4) 10,968,533
2,855,295 (4)
Effect of foreign currency translation - - 3,503 (3,503) (3) -
Unpaid capital subscriptions (600,000) - - (600,000)
Legal reserve - - 19,980 (19,980) (3) -
Retained earnings (deficit) (4,106,290) (87,534) 16,697 (1) (4,108,368)
(76,794) (2)
- 145,553 (3)
--------- ----------- --------- ----------- ----------
3,408,838 84,450 35,849 2,734,903 6,264,040
--------- ----------- --------- ----------- ----------
$ 4,540,661 $ 84,450 $2,661,249 $ 2,734,903 $ 10,021,263
--------- ----------- --------- ----------- ----------
--------- ----------- --------- ----------- ----------
</TABLE>
See notes to pro forma consolidated condensed financial statements.
41
<PAGE>
POLISH TELEPHONES AND MICROWAVE CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
MARCH 31, 1996
<TABLE>
<CAPTION>
PRO FORMA
PTMC TELEREUNION VEXTRO ADJUSTMENTS PRO FORMA
--------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $ 509,238 $ - $1,616,703 $ 2,125,941
Cost of revenues 318,161 - 1,187,856 1,506,017
--------- ----------- --------- ----------- ----------
Gross profit 191,077 - 428,847 619,924
Selling, general and administrative
expense 401,544 - 410,919 $ 76,794 (2) 889,257
--------- ----------- --------- ----------- ----------
Income (loss) from operations (210,467) - 17,928 (76,794) (269,333)
Interest expense (1,647) - (31,735) (33,382)
Other income (expense) 38,544 - (91,593) (53,049)
--------- ----------- --------- ----------- ----------
Loss before income taxes
and minority interests (173,570) - (105,400) (76,794) (355,764)
Provision for income tax
expense (benefit) 11,605 - 101,997 113,602
Utilization of loss carry forwards (4,457) - - (4,457)
--------- ----------- --------- ----------- ----------
Loss before minority interests (180,718) - (207,397) (76,794) (464,909)
Minority interests in subsidiaries' losses (390) - - 8,526 (3) 8,136
--------- ----------- --------- ----------- ----------
Net loss $ (181,108) $ - $ (207,397) $ (68,268) $ (456,773)
--------- ----------- --------- ----------- ----------
--------- ----------- --------- ----------- ----------
Net loss per common and common equivalent share $ (0.10)
----------
Weighted average number of common and common equivalent shares outstanding 4,628,357
----------
</TABLE>
See notes to pro forma consolidated condensed financial statements.
42
<PAGE>
POLISH TELEPHONES AND MICROWAVE CORPORATION
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1996 AND THE YEAR ENDED DECEMBER 31, 1996
1. PRO FORMA ADJUSTMENTS
The adjustments applied to the historical amounts in the accompanying pro
forma consolidated condensed financial statements of Polish Telephones And
Microwave Corporation (the Company) are as follows:
(1) Adjustment to reflect the subsequent retirement of 280,000 shares of
common stock of Vextro De Mexico, S.A. De C.V. (Vextro) and 2,700
shares of common stock of its affiliated company (Affiliate) in
exchange for $68,113.
(2) Adjustment to reflect the subsequent reclassification of amounts due
to Telereunion, Inc. (Telereunion) from one of its stockholders for
expenses incurred in connection with the proposed merger to
administrative expense of Vextro.
(3) Adjustment to reflect the subsequent issuance to Telereunion of
1,616,667 shares of common stock (97%) of Vextro and 9,700 shares of
common stock (97%) of Affiliate in exchange for $81,194 and $2,000,
respectively, and the consolidation of the financial statements of
Telereunion, Vextro and Affiliate.
(4) Adjustment to reflect the proposed issuance by the Company of 380,000
shares of Series B non-voting, non-participating preferred stock and
1,605,000 shares of its common stock in exchange for all of the
outstanding shares of common stock of Telereunion in connection with
the proposed reverse triangular merger, and the consolidation of the
financial statements of the Company, Telereunion and their
subsidiaries.
2. SUMMARY OF SIGNIFICANT ASSUMPTIONS
Significant management assumptions underlying the pro forma adjustments
described in Note 1. are as follows:
a. The capital stock transactions of Vextro and Affiliate, the
acquisition by Telereunion of 97% of the common stock of Vextro and
Affiliate and the execution of the proposed reverse triangular merger
by which Telereunion will become a wholly-owned subsidiary of the
43
<PAGE>
Company have been reflected retroactively as though the transactions
occurred as of March 31, 1996, for presentation in the pro forma
consolidated condensed balance sheet, and as of January 1, 1996, for
presentation in the pro forma consolidated condensed statement of
operations.
b. The Company will finalize and close an agreement with Telereunion for
a reverse triangular merger, which provides that the Company will
create a wholly-owned subsidiary which will merge with and into
Telereunion in exchange for all of the outstanding shares of ownership
of Telereunion being converted into the following securities of the
Company:
(1) 380,000 shares of Series B non-voting, non-participating
preferred stock, par value $.001, which is preferred only with
respect to redemption or liquidation at par upon the attainment
of certain equity increase or cash flow goals.
(2) 1,605,000 shares of common stock.
(3) warrants for the purchase of 95,000 shares and 2,500,000 shares
of common stock (Series A warrants and Series B warrants,
respectively).
The Series A warrants will be exercisable at a price equal to the
average closing price of the Company's common stock as quoted on
the NASDAQ exchange for the twenty days preceding December 22,
1995 (agreed by the parties to be $2.19 per share), if, within
eighteen months of the closing of the agreement, (a) the bid
price for the Company's common stock on the NASDAQ exchange is
$12.00 per share or higher for ninety consecutive days, or (b)
the net consolidated shareholders' equity of the Company
increases at least $5,000,000 from the date of the closing. The
warrants expire after the eighteen month period if neither
condition is met and unconditionally after seven years from the
date of the closing.
The Series B warrants will be exercisable at $2.19 per share
forty percent (1,000,000 shares) upon the Company achieving
fully-diluted earnings per share of $.315, an additional forty
percent (total 2,000,000 shares) upon the Company achieving
fully-diluted earnings per share of $.458, and the final twenty
percent (total 2,500,000 shares) upon the Company achieving
fully-diluted earnings per share of $.75. Only the number of
shares under the Series B warrants which would be exercisable are
given weight in calculating fully-diluted earnings per share,
whether or not they are dilutive, and earnings are measured
before charges for depreciation, amortization and any charges
resulting from the vesting of warrants related to the merger.
The Series B warrants become fully exercisable upon the bid price
for the Company's common stock on the NASDAQ exchange being
$12.00 per share or higher for ninety consecutive days, and they
expire unconditionally after seven years from the date of the
closing.
44
<PAGE>
Also as part of the agreement, outstanding options to purchase
454,908 shares of Telereunion common stock at a price of $.65 per
share will be converted into options to purchase 216,618 shares
of common stock of the Company at $1.35 per share. The options
will expire in ten years after the date of the closing.
Outstanding warrants for the purchase of 663,000 shares of
Telereunion common stock will be terminated upon closing of the
agreement.
c. The merger transaction described above is valued at an assumed market
price of $1.78 per share of common stock of the Company, which was the
closing price on the NASDAQ exchange on December 27, 1995( the day
before the press release announcing the plan for merger), and the par
value of the Series B non-voting, non-participating preferred stock,
which are issued in exchange for all of the shares of ownership of
Telereunion. The transaction is accounted for as a purchase.
d. The net book values of the net assets of Telereunion and its
subsidiaries approximate their fair market values, and the amount by
which the value of the Company's securities issued in connection with
the merger transaction exceed the net book values of the net assets of
Telereunion and its subsidiaries is recorded as an asset and presented
as the excess of cost over net assets of businesses acquired.
3. COMMON AND PREFERRED STOCKS
After the closing of the merger transaction described above, the Company
would have the following capitalization as of March 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
Preferred stock, $.001 par value; 4,000,000 shares
authorized, no shares issued and outstanding,
without defined preference rights $ -
Series A preferred stock, $.001 par value; 1,000,000
shares authorized, no shares issued and outstanding,
preference rights limited to liquidation of the Company -
Series B preferred stock, $.001 par value; 380,000
shares authorized, issued and outstanding, preference
rights limited to redemption and liquidation of the
Company under specified conditions 380
Common stock, $.001 par value; 10,000,000 shares
authorized, 3,495,442 shares issued and outstanding 3,495
45
<PAGE>
Additional paid-in capital 10,968,533
Unpaid capital subscriptions (600,000)
Accumulated deficit (4,108,368)
-----------
Total stockholders' equity $ 6,264,040
-----------
-----------
</TABLE>
4. NET LOSS PER COMMON AND COMMON EQUIVALENT SHARE
The net loss per common and common equivalent share is based on the
weighted average number of shares of common stock outstanding, including
the shares issued in connection with the merger transaction described
above as though they were outstanding for the entire period. Common
equivalent shares include stock options for 196,394 shares granted at
prices below the average fair market (trading) price of $3.28 per share,
as if they were outstanding for the entire period, calculated by the
treasury stock method for the period prior to actual issuance, and the
Series A warrants, the Series B warrants and the stock options to be
issued in connection with the merger transaction, all exercisable at
prices below the average fair market price and calculated by the treasury
stock method.
46
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Polish Telephones and Microwave Corporation
-------------------------------------------
(Registrant)
August 1, 1996 /s/ Gary Panno
- --------------- -------------------------------------------
Gary Panno
Chief Executive Officer
47
