SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K/A
Current Report
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PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
May 24, 1996
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VIDEONICS, INC.
(Exact name of Registrant as specified in its charter)
California 0-25036 77-0118151
(State or jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
1370 Dell Ave, Campbell, California 95008
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 866-8300
--------------------
This report on form 8-K/A, contains 21 pages.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Items 7 (a) and (b) are hereby amended and restated to read as follows:
(a) Financial Statements of KUB Systems..............................4 - 15
- -----------------------------------
Report of Independent Accountants.........................................5
(b) Unaudited Pro Forma Financial Information............................16
Pro Forma Combined Balance Sheet as of March 31, 1996....................17
Pro Forma Combined Income Statement for the Year
Ended December 31, 1995..................................................18
Pro Forma Combined Income Statement for the Three
Months Ended March 31, 1996..............................................19
Notes to Pro Forma Combined Financial Statements....................20 - 21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
VIDEONICS, INC.
Registrant
August 6, 1996
Date
By: /s/ James A. McNeill
James A. McNeill
Vice President of Finance,
Chief Financial Officer and
Assistant Secretary
(Principal Accounting Officer
and Authorized Signatory)
<PAGE>
KUB Systems, Inc.
(A company in the development stage)
Report and Financial Statements
September 30, 1995 and 1994
<PAGE>
To the Board of Directors
and Shareholders of Kub Systems, Inc.
August 30, 1995
Report of Independent Accountants
November 27, 1995
To the Board of Directors
and Shareholders of KUB Systems, Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations, of shareholders' deficit and of cash flows present fairly, in all
material respects, the financial position of KUB Systems, Inc. (a company in the
development stage) at September 30, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended, and the period from
inception (February 1992) through September 30, 1995 in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is in the development stage and has incurred
losses since inception and has a net capital deficit. Consequently, there is
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
PRICE WATERHOUSE L.L.P.
<PAGE>
KUB Systems, Inc.
(A company in the development stage)
Balance Sheet
The accompanying notes are an integral part of these financial statements.
September 30,
1995 1994
Assets
Current assets:
Cash ................... $40,000 $1,112,000
Accounts receivable .... 94,000 --
Prepaid expenses ....... 5,000 5,000
Inventory .............. 607,000 421,000
Total current assets 746,000 1,538,000
Property and equipment, net 145,000 182,000
Total assets ....... $ 891,000 $1,720,000
Liabilities, Mandatorily Redeemable Convertible
Preferred Stock and Shareholders' Deficit
Current liabilities:
Accounts payable ............................... $ 231,000 $ 85,000
Commitments (Note 6)
Mandatorily redeemable convertible preferred stock:
Series A, no par value ......................... 1,972,000 1,787,000
Series B, no par value ......................... 2,916,000 2,651,000
Series C, no par value ......................... 1,042,000 --
Total mandatorily redeemable convertible
preferred stock .......................... 5,930,000 4,438,000
Shareholders' deficit:
Common stock, no par value; 30,000,000
shares authorized; 4,035,572 shares
issued and outstanding ................................ 11,000 11,000
Accretion of mandatorily redeemable convertible
preferred stock redemption value .............. (930,000) (438,000)
Deficit accumulated during development stage ...... (4,351,000) (2,376,000)
Total shareholders' deficit ................... (5,270,000) (2,803,000)
Total liabilities, mandatorily redeemable convertible
preferred stock and shareholders' deficit ...... $891,000 $1,720,000
<PAGE>
KUB Systems, Inc
(A company in the development stage)
Statement of Operations
The Accompanying Notes Are An Integral Part
Of These Financial Statements.
Period From
Inception
(February 1992)
Year Ended . Through
September 30, September 30,
1995 1994 1995
Sales ................. $ 301,000 $ -- $301,000
Cost Of Sales .........................237,000 -- 237,000
Gross Profit ...........................64,000 -- 64,000
Operating Expenses:
Research And Development ..... 1,257,000 915,000 2,709,000
Sales And Marketing .......... 621,000 566,000 1,187,000
General And Administrative ... 179,000 174,000 594,000
Total Operating Expenses 2,057,000 1,655,000 4,490,000
Loss From Operations ............ (1,993,000) (1,655,000) (4,426,000)
Interest Income ................. 18,000 35,000 75,000
Net Loss $(1,975,000) $(1,620,000) $(4,351,000)
<PAGE>
KUB Systems, Inc.
(A company in the development stage)
Statement of Shareholders' Deficit
For the Period from Inception (February 1992) through September 30, 1995
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Accretion of
mandatorily
redeemable
convertible Deficit
preferred accumulated
stock during the
Common stock redemption development
Shares Amount value stage Totals
<S> <C> <C> <C> <C> <C>
Issuance of common stock for cash in February and March
at $0.003 per share ............................................. 5,137,300 $ 15,000 $ -- $ -- $ 15,000
Accretion of mandatorily redeemable convertible preferred
stock redemption value .......................................... -- -- (9,000) -- (9,000)
Net loss ........................................................... -- -- -- (63,000) (63,000)
Balances at September 30, 1992 ..................................... 5,137,300 15,000 (9,000) (63,000) (57,000)
Accretion of mandatorily redeemable convertible preferred stock
redemption value ................................................ -- -- (134,000) -- (134,000)
Net loss ........................................................... -- -- -- (693,000) (693,000)
Balances at September 30, 1993 ..................................... 5,137,300 15,000 (143,000) (756,000) (884,000)
Repurchase of common stock in October at $0.003 per share .......... (1,101,728) (4,000) -- -- (4,000)
Accretion of mandatorily redeemable convertible preferred stock
redemption value ................................................ -- -- (295,000) -- (295,000)
Net loss ........................................................... -- -- -- (1,620,000) (1,620,000)
Balances at September 30, 1994 ..................................... 4,035,572 11,000 (438,000) (2,376,000) (2,803,000)
Accretion of mandatorily redeemable convertible preferred stock
redemption value ................................................ -- -- (492,000) -- (492,000)
Net loss ........................................................... -- -- -- (1,975,000) (1,975,000)
Balance at September 30, 1995 ...................................... 4,035,572 $ 11,000 $(930,000) $(4,351,000) $(5,270,000)
</TABLE>
<PAGE>
KUB Systems, Inc.
(A company in the development stage)
Statement of Cash Flows
Increase (Decrease) in Cash
The accompanying notes are an integral partof these financial statements.
<TABLE>
<CAPTION>
Period from
inception
(February 1992)
Year ended through
September 30, September 30,
1995 1994 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ............................... $(1,975,000) $(1,620,000) $(4,351,000)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Depreciation ....................... 60,000 38,000 111,000
Changes in assets and liabilities:
Accounts receivable .............. (94,000) -- (94,000)
Prepaid expenses ................. -- (1,000) (5,000)
Inventory ........................ (186,000) (356,000) (607,000)
Accounts payable ................. 146,000 3,000 231,000
Net cash flows used by operating
activities .................. (2,049,000) (1,936,000) (4,715,000)
Cash flows used by investing activities:
Purchase of property and equipment ............. (23,000) (130,000) (256,000)
Cash flows from financing activities:
Proceeds from sale of common stock ............. -- -- 15,000
Repurchase of common stock ..................... -- (4,000) (4,000)
Proceeds from sale of mandatorily redeemable
convertible preferred stock .................. 1,000,000 2,525,000 5,000,000
Net cash flows from financing activities 1,000,000 2,521,000 5,011,000
Net change in cash ................................ (1,072,000) 455,000 40,000
Cash at beginning of period ....................... 1,112,000 657,000 --
Cash at end of period ............................. $ 40,000 $ 1,112,000 $ 40,000
Supplemental disclosure of non-cash financing activities:
Accretion of mandatorily redeemable convertible
preferred stock redemption value ..................$492,000 $295,000 $930,000
</TABLE>
<PAGE>
KUB Systems, Inc.
(A company in the development stage)
Notes to Financial Statements
September 30, 1995 and 1994
1. THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
KUB Systems, Inc. (the Company) was incorporated in California in
February 1992 to develop and market video equipment systems which include
production applications requiring digital image processing and video storage. As
the Company is in the development stage, the accompanying statement of
operations should not be regarded as typical for a normal operating period.
The Company has incurred a cumulative loss of $4,351,000 since
inception. Management believes additional financing will be required to enable
the Company to continue operations through September 30, 1996 and believes
adequate financing will be available from existing and new investors.
REVENUE RECOGNITION The Company provided systems to customers for an
evaluation period; no revenue is recognized until acceptance by the
customer.
CONCENTRATION OF CREDIT RISK Financial instruments which potentially
subject the Company to concentrations of credit risk consist
principally of cash and accounts receivable. The Company's cash at
September 30, 1995 included $40,000 deposited with one bank. The
Company's accounts receivable are derived from sales to customers
located in the United States and Germany and are denominated in U.S.
dollars.
During fiscal 1995, the Company had three customers representing over 10%
of sales.
INVENTORY
Inventory is stated at the lower of first-in, first-out cost or market.
PROPERTY AND EQUIPMENT Property and equipment are stated at cost,
less accumulated depreciation, and depreciated using the straight-
line method over the estimated useful lives of the assets, generally
four years.
RESEARCH AND DEVELOPMENT COSTS Research and development costs are
charged to expense as incurred.All costs incurred to establish the
technological feasibility of software to be sold, leased or
otherwise marketed are expensed as research and development costs.
Costs incurred subsequent to the establishment of technological
feasibility, and prior to the general release of the product to the
public, are capitalized. To date the Company has not capitalized any
costs as such amounts have not been significant.
<PAGE>
INCOME TAXES
The Company utilizes Statement of Financial Accounting Standards No. 109
(FAS 109), "Accounting for Income Taxes." FAS 109 requires an asset and
liability approach that recognizes deferred tax assets and liabilities for
the expected future tax consequences of events that have been recognized in
the Company's financial statements or tax returns. In estimating future tax
consequences, FAS 109 generally considers all expected future events other
than enactments of changes in the tax law or rates.
2. BALANCE SHEET DETAIL
September 30,
1995 1994
Inventory:
Raw materials ............... $ 267,000 $ 205,000
Work-in-progress ............ 200,000 91,000
Finished goods .............. 140,000 125,000
$ 607,000 $ 421,000
Property and equipment:
Equipment $ ................. 236,000 $ 213,000
Furniture and fixtures ...... 20,000 20,000
256,000 233,000
Less: accumulated depreciation (111,000) (51,000)
$ 145,000 $ 182,000
<PAGE>
3. MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK
The Company has authorized 20,000,000 shares of preferred stock at
September 30, 1995, 7,506,127 of which has been designated Series A mandatorily
redeemable convertible preferred stock ("Series A"), 4,658,671 has been
designated Series B mandatorily redeemable convertible preferred stock ("Series
B"), and 4,000,000 has been designated Series C mandatorily redeemable
convertible preferred stock ("Series C"). A summary of preferred stock issuances
is as follows:
<TABLE>
<CAPTION>
Mandatorily Redeemable Convertible Preferred Stock
Series A Series B Series C
<S> <C> <C> <C> <C> <C> <C>
Shares Amount Shares Amount Shares Amount
Issuance of Series A for cash ............... 520,833 $ 50,000 -- $ -- -- $ --
Accretion of redemption value ............... -- 9,000 -- -- -- --
Balance at September 30, 1992 ............... 520,833 59,000 -- -- -- --
Issuance of Series A for cash ............... 6,985,294 1,425,000 -- -- -- --
Accretion of redemption value ............... -- 134,000 -- -- -- --
Balance at September 30, 1993 ............... 7,506,127 1,618,000 -- -- -- --
Issuance of Series B for cash ............... -- -- 4,658,671 2,525,000 -- --
Accretion of redemption value ............... -- 169,000 -- 126,000 -- --
Balance at September 30, 1994 ............... 7,506,127 1,787,000 4,658,671 2,651,000 -- --
Issuance of Series C for cash ............... -- -- -- -- 4,000,000 1,000,000
Accretion of redemption value ............... -- 185,000 -- 265,000 -- 42,000
Balance at September 30, 1995 ............... 7,506,127 $1,972,000 4,658,671 $2,916,000 4,000,000 $1,042,000
</TABLE>
The holders of Series A, B and C have certain rights as follows:
VOTING
Holders of Series A have voting rights equal to holders of common stock
on an if-converted basis and, voting together as a class, are entitled to elect
two members of the Board of Directors. Holders of Series B and Series C (voting
together as a separate class) have voting rights equal to holders of common
stock on an if-converted basis and, voting together as a class, are entitled to
elect one member of the Board of Directors. Holders of common stock, voting
together as a class, are entitled to elect two members of the Board of
Directors.
<PAGE>
REDEMPTION
At any time after September 30, 1997, upon the election of the holders
of at least 70% of the outstanding shares of Series A, B and C (voting together
as single class), the Company must redeem Series A, B and C at a redemption
price of $0.204 per share, $0.542 per share and $0.25 per share, respectively,
plus the greater of (i) the amount of declared unpaid dividends with respect to
such shares, or (ii) an amount equal to that amount which would result in the
holder of such share realizing a 10% annually compounded return on the purchase
price. Such redemption will be paid in three installments over the two-year
period following the redemption election by the Series A, B and C shareholders.
Shareholders' deficit has been charged to accrete for the redemption value of
the Series A, B and C with a corresponding increase in the recorded carrying
value of the Series A, B and C.
LIQUIDATION
In the event of any liquidation, dissolution or winding up of the
Company, the holders of Series A, B and C are entitled to receive, prior and in
preference to any distribution to holders of common stock, an amount equal to
$0.204, $0.542 and $0.25 per share, respectively, plus any declared but unpaid
dividends. After such distribution, the remaining assets of the Company shall be
distributed among the holders of common stock, and Series A, B and C on an
if-converted basis. If available funds upon liquidation are insufficient to
provide for full preferential distribution to Series A, B and C, the available
funds shall be distributed ratably among the holders of Series A, B and C in
proportion to the relative aggregate preferential amounts.
DIVIDENDS
No dividend shall be declared or paid with respect to common stock
unless an equivalent dividend has been paid with respect to the Series A, B and
C.
CONVERSION
Series A, B and C are convertible at the option of the holders into
shares of common stock at any time, subject to adjustment for antidilution, or
will be automatically converted upon (i) an initial public offering of the
Company's common stock with a per share price of at least $2.00 and aggregate
proceeds in excess of $5,000,000, or (ii) the election of the holders of at
least 70% of the outstanding shares of Series A, B and C (voting together as a
single class). The Company has reserved 7,506,127, 4,658,671 and 4,000,000
shares of common stock for issuance upon the conversion of the Series A, B and
C, respectively.
<PAGE>
4. EMPLOYEE STOCK OPTION PLAN
In December 1993, the Board of Directors adopted the 1993 Stock Option
Plan (the "Plan"). The Plan provides for the granting of stock options to
employees, officers, directors, consultants, independent contractors, and
advisors of the Company. Options granted under the Plan may be either incentive
stock options (ISO) or nonqualified stock options. Incentive stock options may
be granted only to employees (including officers and directors who are also
employees) of the Company. Nonqualified stock options may be granted to
employees, officers, directors, consultants, independent contractors and
advisors of the Company, provided such consultants, independent contractors and
advisors render bona fide services not in connection with the offer and sale of
securities in a capital-raising transaction. The options generally vest over
five years.
Options under the Plan may be granted for periods of up to ten years
and at prices no less than 85% of the estimated fair value of the shares on the
date of grant as determined by the Board of Directors, provided, however, that
(i) the exercise price of an ISO shall not be less than 100% of the estimated
fair value of the shares on the date of grant and (ii) the exercise price of an
ISO granted to a 10% shareholder shall not be less than 110% of the estimated
fair value of the shares on the date of grant and are for periods not to exceed
five years. A total of 2,117,600 shares of common stock have been reserved for
grant under the Plan. Options become exercisable at such times and under such
conditions as determined by the Board of Directors. Plan activity is as follows:
<TABLE>
<CAPTION>
Shares Options Outstanding
Available Number of Price
for Grant Shares Per share
<S> <C> <C> <C>
Shares authorized ................................................. 2,117,600 -- --
Options granted ................................................... (513,500) 513,500 $0.02-$0.06
Options canceled .................................................. 51,000 (51,000) $0.02-$0.06
Options exercised ................................................. -- -- --
Balance at September 30, 1994 ..................................... 1,655,100 462,500 $0.02-$0.06
Options granted ................................................... (1,180,000) 1,180,000 $0.025-$0.06
Options canceled .................................................. 807,500 (807,500) $0.025-$0.06
Options exercised ................................................. -- --
Balance at September 30, 1995 ..................................... 1,282,600 835,000 $0.02-$0.06
</TABLE>
At September 30, 1995, 130,500 options were vested and exercisable
5. INCOME TAXES
No provision for income taxes has been recorded because the Company has
incurred net operating losses since inception.
At September 30, 1995, the Company had net operating loss carryforwards
of approximately $3,500,000 for federal income tax purposes. The loss
carryforwards are available to reduce future taxable income and begin to expire
in 2007.
Gross deferred tax assets of approximately $1,700,000 and $1,000,000 at
September 30, 1995 and 1994, respectively, are fully reserved due to the
uncertainty of realization and consist primarily of net operating losses and
start up expenses which have been capitalized for income tax purposes. The
amount of net operating loss carryforwards available to reduce taxable income
will be impaired or limited in certain circumstances. Events which could cause
such an impairment include, but are not limited to, a cumulative change in the
Company's stock ownership of more than 50% over a three year period. Management
believes such an ownership change has not occurred during the year ended
September 30, 1995, but has occurred in previous years.
<PAGE>
6. COMMITMENTS
In July 1995, the Company entered into an operating lease agreement for
its primary facility. The lease term commenced on September 1, 1995 and expires
on August 31, 1996. Future minimum lease payments under this noncancelable
operating lease as of September 30, 1995 are $60,000. The Company had no other
operating leases.
Facilities rent expense for the years ended September 30, 1995 and 1994
were $64,000 and $33,000, respectively.
7. SUBSEQUENT EVENT
On October 9, 1995, the Company issued $500,000 of 10% convertible,
promissory bridge notes to its Series C mandatorily redeemable convertible
preferred stockholders. The notes may be converted into the Company's
mandatorily redeemable convertible preferred stock, Series C, at a price of
$0.25 per share. The notes are due at the earlier of 180 days from issuance or
the written request of at least 75% of the note holders. As further
consideration, the Company issued warrants to purchase Series C mandatorily
redeemable convertible preferred stock at an exercise price of $0.25 per share.
The warrants are exercisable for up to seven years from issuance.
<PAGE>
VIDEONICS INC. AND KUB SYSTEMS
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The pro forma balance sheet as of March 31, 1996 gives effect to the acquisition
of KUB Systems by Videonics Inc., as if the acquisition had occurred on March
31, 1996. The pro forma combined balance sheet is based on the balance sheet of
Videonics Inc., as of March 31, 1996 and on the balance sheet of KUB Systems as
of March 31, 1996.
The pro forma combined income statements for the year ended December 31, 1995
and the three months ended March 31, 1996 give effect to the transaction as
though it had occurred on January 1, 1995 and on January 1, 1996, respectively.
The pro forma combined income statements, for the year ended December 31, 1995,
are based on historical financial income statements of Videonics Inc., for its
year ended December 31, 1995 and KUB Systems Inc., for its year ended September
30, 1995. The pro forma results for the three month period ended March 31, 1996,
are based on the historical financial income statements of Videonics Inc., and
KUB Systems for the three months ended March 31, 1996.
The pro forma combined financial statements give effect to the acquisition
transaction using the purchase method of accounting and the assumptions and
adjustments described in the accompanying notes to the pro forma combined
financial statements.
The pro forma statements may not be indicative of the results that would have
occurred if the combination had been in effect on the dates indicated or which
may be obtained in the future. The pro forma statements should be read in
conjunction with the consolidated financial statements of Videonics Inc., and
the financial statements of KUB Systems.
<PAGE>
The accompanying notes are an integral
part of these financials
1
VIDEONICS, INC.
PRO FORMA COMBINED BALANCE SHEET
(in thousands - unaudited)
March 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Pro Forma
Adjustments Pro Forma
Videonics KUB Amount Key Combined
ASSETS
Current assets:
Cash and cash equivalents ...................... $ 6,576 $ 107 $ (457) (1)(2) $ 6,226
Marketable securities .......................... 4,708 4,708
Accounts receivable, net ....................... 3,076 16 (16) (2) 3,076
Inventories .............................. 7,115 393 (117) (2) 7,391
Deferred income taxes .......................... 1,410 1,410
Prepaid income taxes ........................... 164 164
Prepaids and other current assets .............. 329 6 335
-------- -------- -------- --------
Total current assets ........................ 23,378 522 (590) 23,310
Property and equipment, net ....................... 1,392 139 (6) (2) 1,525
Other assets ...................................... 11 11
Intangibles ....................................... 2,562 2,562
-------- -------- -------- --------
Total assets ................................ $ 27,343 $ 661 $ (596) $ 27,408
======== ======== ======== ========
LIABILITIES
Current liabilities:
Notes Payable ................................. $ 500 $ 799 (799) (2) $ 500
Accounts payable .............................. 1,346 342 (342) (2) 1,346
Accrued expenses .............................. 714 65 (3) 779
------ ------ ------ ------
Total current liabilities .................. 2,560 1,141 (1,076) 2,625
------ ------ ------ ------
SHAREHOLDERS' EQUITY
Common stock, no par value:
Authorized: 30,000 shares
Issued and outstanding: 5,351
shares at December 31, 1995 ............... 19,644 5,011 (5,011) (4) 19,644
Retained earnings ............................... 5,139 (5,491) 5,491 (4) 5,139
-------- -------- -------- --------
Total shareholders' equity ................ 24,783 (480) 480 24,783
-------- -------- -------- --------
Total liabilities and
shareholders' equity ................... $ 27,343 $ 661 $ (596) $ 27,408
======== ======== ======== ========
</TABLE>
<PAGE>
VIDEONICS, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Pro Forma
Adjustments Pro Forma
Videonics KUB Amount Key Combined
Net revenues ..............................$ 33,561 $ 301 $ 33,862
Cost of revenues ........................... 17,160 237 17,397
-------- -------- -------- --------
Gross profit .......................16,401 64 16,465
-------- -------- -------- --------
Operating expenses ..........................11,590 2,057 13,647
-------- -------- -------- --------
Operating income (loss) ............ 4,811 (1,993) 2,818
-------- -------- -------- --------
Other income (expense), net ................. 732 18 $ (15) (A) 735
-------- -------- -------- --------
Income (loss) before
income taxes ........................5,543 (1,975) (15) 3,553
Provision for (benefit from)
income taxes ..............................1,797 (645) (B) 1,152
-------- -------- -------- --------
Net income (loss) ................$ 3,746 $(1,975) $ 630 $ 2,401
======== ======== ======== ========
Net income per share ......................$ 0.65 $ 0.41
======== ========
Weighted average shares
outstanding ...............................5,791 5,791
======== ========
</TABLE>
<PAGE>
VIDEONICS, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED March 31, 1996
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Pro Forma
Adjustments Pro Forma
Videonics KUB Amount Key Combined
Net revenues ..................................... $ 7,059 $ 21 $ 7,080
Cost of revenues ................................. 3,558 6 3,564
------- ------- ------- -------
Gross profit ............................ 3,501 15 3,516
------- ------- ------- -------
Operating expenses ............................... 2,897 384 3,281
------- ------- ------- -------
Operating income (loss) ................. 604 (369) 235
------- ------- ------- -------
Other income (expense), net ...................... 98 1 $(4) (A) 95
------- ------- ------- -------
Income (loss) before
income taxes ............................ 702 (368) (4) 330
Provision for (benefit from)
income taxes .................................. 253 (134) (B) 119
------- ------- ------- -------
Net income (loss) ....................... $ 449 $ (368) 130 $211
======= ======= ======= =======
Net income per share ............................. $ 0.08 $ 0.04
======= =======
Weighted average shares
outstanding ................................... 5,900 5,900
======= =======
</TABLE>
<PAGE>
VIDEONICS INC. AND KUB SYSTEMS
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(In thousands - Unaudited )
The following adjustments are incorporated in the pro forma combined balance
sheet as of March 31, 1996:
1. Cash portion of purchase price ................................. $ (350)
2. Elimination of KUB assets and liabilities not purchased:
Cash .............................................................. (107)
Accounts receivable ............................................... (16)
Inventories ....................................................... (117)
Property and equipment ............................................ (6)
Notes payable ..................................................... 799
Accounts payable .................................................. 342
3. Liabilities assumed in acquisition ............................. (65)
4. Elimination of KUB shareholders' equity:
Common stock ...................................................... 5,011
Retained earnings ................................................. (5,491)
$ -
<PAGE>
VIDEONICS INC. AND KUB SYSTEMS
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(In thousands - Unaudited )
The following adjustments are incorporated in the pro forma combined income
statements:
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, 1995 March 31, 1996
----------------- --------------
<S> <C> <C>
A ...Reduction of interest income to reflect
reduced available cash ...... 15 4
B ...Adjustment to tax provision based
on pro forma adjustments (645) (134)
<PAGE>
</TABLE>
