SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment to
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission file number 1-13656
OMNI MULTIMEDIA GROUP, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2729490
----------------------------- --------------------
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification No.)
50 Howe Avenue, Millbury, Massachusetts 01527-3298
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(508) 865-4451
(Registrant's telephone number, including area code)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report dated October 18,
1996 as set forth in the pages attached hereto:
1. Amended to include the audited financial statements of Allenbach
Industries, Inc. for the fiscal years ended December 31, 1994 and
1995 and the unaudited pro-forma condensed combined financial
statements of the Registrant.
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
OMNI MULTIMEDIA GROUP, INC.
By: /s/ Paul F. Johnson
------------------------
Paul F. Johnson
Chief Executive Officer
By:/s/ Robert E. Lee
------------------------
Robert E. Lee
Chief Financial Officer and Treasurer
ALLENBACH INDUSTRIES, INC.
FINANCIAL REPORT
DECEMBER 31, 1995
CONTENTS
FORM 8-K/A
ITEM
----
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a. Audited Financial Statements of Allenbach Industries, Inc. for the
fiscal years ended December 31, 1994 and 1995.
b. Unaudited Pro Forma Condensed Combined Financial Statements of the
Registrant
- ------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT 1
- ------------------------------------------------------------------------------
FINANCIAL STATEMENTS
Balance sheets 2 - 3
Statements of operations and retained earnings
(deficit) 4
Statements of cash flows 5 - 6
Notes to financial statements 7 - 13
- ------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Allenbach Industries, Inc.
Carlsbad, California
We have audited the accompanying balance sheets of Allenbach Industries, Inc. as
of December 31, 1995 and 1994 and the related statements of operations, retained
earnings (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Allenbach Industries, Inc. as
of December 31, 1995 and 1994 and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 11 to the
financial statements, the Company has suffered recurring losses from operations
and its total liabilities exceeds its total assets. These conditions raised
substantial doubt about the Company's ability to continue as a going concern. On
October 4, 1996, the Company sold substantially all of its assets to OMNI
MultiMedia Group, Inc. (OMNI) and OMNI also assumed the majority of the
Company's liabilities. The preferred stockholder received common shares of OMNI.
The financial statements do not include any adjustments as a result of this
sale. Since there are no operations remaining after the asset sale, the Company
will be liquidated.
/s/ McGladrey & Pullen, LLP
San Diego, California
December 6, 1996
1
(a.) Audited Financial Statements of Allenbach Industries, Inc. for the fiscal
years ended December 31, 1994 and 1995.
ALLENBACH INDUSTRIES, INC.
BALANCE SHEETS (NOTE 11)
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
ASSETS (NOTE 4) 1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash $ 323,768.00 $ 118,920.00
Trade receivables, less allowance for doubtful
accounts 1995 $149,000; 1994 $170,000
3582,234.00 3619,526.00
Inventories (Note 3) 355,906.00 928,582.00
Prepaid expenses 44,030.00 70,558.00
Deposits 98,473.00 36,657.00
Refundable income taxes 61,000.00 311,000.00
Deferred income taxes (Note 6) 148,000.00
----------------------------------
TOTAL CURRENT ASSETS $ 4,465,411.00 $ 5,233,243.00
----------------------------------
Equipment (Note 5)
Machinery and equipment 3,257,433.00 3,249,221.00
Furniture and fixtures 186,659.00 172,082.00
----------------------------------
3,444,092.00 3,421,303.00
Less accumulated depreciation 2,614,280.00 2,472,724.00
----------------------------------
829,812.00 948,579.00
----------------------------------
$ 5,295,223.00 $ 6,181,822.00
==================================
See Notes to Financial Statements.
2
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
- ------------------------------------------------------------------------------------------------------------------
Current Liabilities
Notes payable (Note 4) $ 2,220,375.00 $ 1,616,667.00
Current maturities of long-term debt (Note 5) 54,048.00 184,801.00
Accounts payable 2,583,189.00 2,386,726.00
Accrued expenses 286,624.00 279,529.00
----------------------------------
TOTAL CURRENT LIABILITIES 5,144,236.00 4,467,723.00
----------------------------------
Long-Term Obligations
Long-term debt, less current maturities (Note 5) 6,266.00 59,707.00
Deferred income taxes (Note 6) - 103,000.00
----------------------------------
6,266.00 162,707.00
----------------------------------
Commitments (Notes 7 and 8)
Stockholders' Equity:
Preferred stock, 5% cumulative, $1,000 par value; convertible; nonvoting;
authorized 750 shares; issued and outstanding
750 shares (Note 7) 750,000.00 750,000.00
Common stock, stated value $.01 per share; authorized
1,000,000 shares; issued and outstanding 100,000 shares 1,000.00 1,000.00
Additional paid-in capital 89,591.00 89,591.00
Retained earnings (deficit) (695,870.00) 710,801.00
----------------------------------
144,721.00 1,551,392.00
----------------------------------
$ 5,295,223.00 $ 6,181,822.00
==================================
3
ALLENBACH INDUSTRIES, INC.
STATEMENTS OF OPERATIONS AND
RETAINED EARNINGS (DEFICIT)
YEARS ENDED DECEMBER 31, 1995 AND 1994
OPERATIONS 1995 1994
- ------------------------------------------------------------------------------------------------------------------
Net sales (Notes 2 and 10) $15,735,622.00 $ 15,592,192.00
Cost of goods sold (Note 10) 13,616,387.00 12,682,074.00
----------------------------------
GROSS PROFIT 2,119,235.00 2,910,118.00
Selling, general and administrative expenses 3,246,086.00 3,581,742.00
----------------------------------
OPERATING (LOSS) (1,126,851.00) (671,624.00)
Interest expense 257,520.00 152,854.00
----------------------------------
NET (LOSS) BEFORE INCOME TAX BENEFIT (1,384,371.00) (824,478.00)
Income tax benefit (Note 6) 15,200.00 362,667.00
----------------------------------
NET (LOSS) $(1,369,171.00) $ (461,811.00)
==================================
RETAINED EARNINGS (DEFICIT)
- ------------------------------------------------------------------------------------------------------------------
Balance, beginning $ 710,801.00 $ 1,210,112.00
Net (loss) (1,369,171.00) (461,811.00)
Dividends on preferred stock, $50 per share (Note 7) (37,500.00) (37,500.00)
----------------------------------
Balance, ending $ (695,870.00) $ 710,801.00
==================================
See Notes to Financial Statements.
4
ALLENBACH INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
- ------------------------------------------------------------------------------------------------------------------
Cash Flows From Operating Activities
Net (loss) $(1,369,171.00) $ (461,811.00)
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Depreciation 404,736.00 411,097.00
Deferred rent expense 16,883.00 (17,789.00)
Provision for doubtful accounts 90,892.00 77,187.00
Deferred income taxes 45,000.00 3,000.00
Changes in components of working capital:
(Increase) decrease in:
Trade receivables (53,600.00) 419,846.00
Inventories 572,676.00 289,073.00
Prepaid expenses 26,528.00 (21,989.00)
Deposits (61,816.00) (9,554.00)
Refundable income taxes 250,000.00 (311,000.00)
Increase (decrease) in:
Accounts payable 196,463.00 569,433.00
Accrued expenses (9,788.00) (21,301.00)
Income taxes payable - (289,000.00)
----------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES
108,803.00 637,192.00
----------------------------------
Cash Flows From Investing Activities, purchase of equipment (285,969.00) (159,270.00)
----------------------------------
See Notes to Financial Statements.
5
ALLENBACH INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
- ------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities
Proceeds from notes payable $ 10,357,780.00 $ 1,720,000.00
Principal payments on notes payable (9,754,072.00) (1,820,000.00)
Principal payments on long-term borrowings (184,194.00) (320,212.00)
Cash dividends paid (37,500.00) (37,500.00)
----------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 382,014.00 (457,712.00)
----------------------------------
NET INCREASE IN CASH 204,848.00 20,210.00
Cash, beginning 118,920.00 98,710.00
----------------------------------
Cash, ending $ 323,768.00 $ 118,920.00
==================================
Supplemental Disclosures Of Cash Flow Information
Cash payments (receipts) for:
Interest $ 252,343.00 $ 142,178.00
==================================
Income taxes, net of refunds 1995 $318,600 $ (317,800.00) $ 234,432.00
==================================
</TABLE>
See Notes to Financial Statements.
6
- --------------------------------------------------------------------------------
ALLENBACH INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
The Company was a provider of computer software duplication, packaging and
assembly services and sold blank diskettes. The Company had two facilities
located in California and one in Minnesota. The Company closed its San Diego
manufacturing facility in June 1995, at which time the operations were
transferred to the Company's other California location. The Company sold to
customers throughout the United States, and extended credit to these customers
in the form of trade receivables. As discussed in Note 11, on October 4, 1996
substantially all the Company's assets were sold and the Company will be
liquidated.
A summary of the Company's significant accounting policies follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheets for cash, trade receivables,
accounts payable and short-term debt approximate fair value due to the immediate
short-term maturity of these financial instruments. Long-term debt is stated at
its approximate fair value, as these instruments are priced at current market
rates.
REVENUE RECOGNITION
Revenue is generally recognized as products are shipped to customers. When
customers, under terms of specific orders, request that the Company procure and
store goods for them, the Company recognizes revenue based on the receipt and
satifactory inspection of the customer's goods and the risk of ownership has
passed to the customer. Service revenue is recognized when services have been
provided.
CASH
The Company maintains its cash accounts primarily in one commercial bank located
in California. Accounts at this bank are insured by the Federal Deposit
Insurance Corporation ("FDIC") up to $100,000. At December 31, 1995, the Company
had an aggregate bank balance in excess of the FDIC insurance limit, but
management does not believe that the risk of loss is significant.
7
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories consist primarily of computer diskettes and are stated at the lower
of cost (first-in, first-out method) or market.
EQUIPMENT
Equipment is stated at cost. Depreciation is computed principally by accelerated
methods over estimated useful lives of five years.
INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
NOTE 2. CONCENTRATIONS
The Company performs ongoing credit evaluations of its customers and generally
does not require collateral. Provisions are made for estimated uncollectible
trade receivables as considered necessary. To date, losses on trade receivables
have been within management's expectations.
Sales for the years ended December 31, 1995 and 1994 include sales to a major
customer (which accounted for 10% or more of the total sales of the Company for
the year). Major customer sales for the years ended December 31, 1995 and 1994
totaled $4,220,907 and $3,701,068, respectively. The related major customer
trade receivable balance at December 31, 1995 and 1994 was $678,219 and
$378,556, respectively. There are no long-term commitments between the Company
and the customer and in 1996 the customer stopped using the Company's services.
8
NOTE 3. INVENTORIES
Inventories as of December 31, 1995 and 1994 consist of the following:
1995 1994
--------------------------------------
Raw materials $ 346,067.00 $ 751,266.00
Work-in-process 6,586.00 83,905.00
Finished goods 3,253.00 93,411.00
--------------------------------------
$ 355,906.00 $ 928,582.00
======================================
NOTE 4. NOTES PAYABLE
The Company has a note payable to a finance company at December 31, 1995 which
is collateralized by substantially all of the Company's assets and personally
guaranteed by the two largest common stockholders of the Company. The note is a
line of credit instrument which bears interest at prime (8.5% at December 31,
1995) plus 4%, allows for advances up to the lesser of 80% of eligible accounts
receivable or $2,500,000 and expires on June 29, 1997. At December 31, 1995,
$2,220,375 was outstanding on this note, with a balance of $279,625 available on
this line of credit.
At December 31, 1994, the Company had two notes payable to a bank which were
paid in 1995.
NOTE 5. LONG-TERM DEBT
Long-term debt at December 31, 1995 and 1994 consists of the following:
<TABLE>
<CAPTION>
1995 1994
--------------------------------------
<S> <C> <C>
Note payable to a finance company, due in monthly installments of $6,085,
including interest at prime (8.5% at December 31, 1995) plus 1.25% through
October 1996, collateralized by equipment $ 52,413.00 $ 117,060.00
Note payable to a finance company, due in monthly installments of $12,080,
including interest at a rate of 8.57% through November 1995,
collateralized by equipment 118,145.00
Other 7,901.00 9,303.00
--------------------------------------
60,314.00 244,508.00
Less current maturities 54,048.00 184,801.00
--------------------------------------
$ 6,266.00 $ 59,707.00
======================================
</TABLE>
9
NOTE 5. LONG-TERM DEBT (CONTINUED)
Aggregate annual maturities required on long-term debt at December 31, 1995 are
as follows:
Years Ending December 31,
- --------------------------------------------------------------------------------
1996 $ 54,048.00
1997 1,907.00
1998 2,225.00
1999 2,134.00
-------------------
$ 60,314.00
===================
NOTE 6. INCOME TAXES
The net income tax benefit for the years ended December 31, 1995 and 1994
consist of the following:
1995 1994
--------------------------------------
Current tax benefit $ 60,200.00 $ 365,667.00
Deferred tax (expense) (45,000.00) (3,000.00)
--------------------------------------
$ 15,200.00 $ 362,667.00
======================================
The difference between the federal statutory income tax rate and the Company's
effective tax rate is primarily due to the valuation allowance provided on
deferred tax assets.
Net deferred tax assets at December 31, 1995 and 1994 consist of the following:
Deferred tax assets: 1995 1994
--------------------------------------
Net operating loss carryforward $ 448,300.00 $ 26,900.00
Allowance for doubtful accounts 59,800.00 68,200.00
Inventory reserve 52,200.00 5,400.00
Accrued vacation 24,100.00 32,100.00
Other 3,600.00 15,400.00
--------------------------------------
588,000.00 148,000.00
Less valuation allowance 430,000.00 -
--------------------------------------
158,000.00 148,000.00
--------------------------------------
Deferred tax liabilities, equipment 158,000.00 103,000.00
--------------------------------------
NET DEFERRED TAX ASSETS $ - $ 45,000.00
======================================
10
NOTE 6. INCOME TAXES (CONTINUED)
The Company has unused net operating loss carryforwards of approximately
$1,100,000 and $915,000 for federal and state income tax reporting purposes,
respectively. The federal carryforward expires in the year 2010. State
carryforwards of $371,000 and $544,000 expire in the years 1999 and 2000,
respectively.
Realization of deferred tax assets is dependent upon significant taxable income
during the period that deductible temporary differences and carryforwards are
expected to be available to reduce taxable income. As the achievement of
required future taxable income is uncertain at December 31, 1995, the Company
has recorded a valuation allowance of $430,000.
NOYE 7. PREFERRED STOCK
On August 22, 1991 the Company sold 750 shares of preferred stock for $750,000
to a corporation. The holder of the preferred stock is entitled to receive
cumulative annual dividends of $50 per share. The preferred shares are
convertible at the option of the holder to common shares at an initial price of
$67.50 per common share and have a liquidation preference of $1,000 per share.
The preferred stockholder has no voting rights; however, the holder is entitled
to elect one director to the board of directors of the Company. As part of the
preferred stock sale, the Company has agreed to certain restrictive covenants
which require the Company to provide information to or obtain the consent of the
preferred stockholder.
The holder of the preferred stock has the right to purchase all, but not less
than all, of the shares of common stock. The period during which this right may
be exercised is from the fourth anniversary of the purchase date through the
sixth anniversary date. The purchase price is to be at fair market value at the
time of exercise. The holder of the preferred stock also has a right of first
refusal to acquire any common shares that may be sold by the holders of the
common stock or the Company. In conjunction with the sale of the Company's
assets subsequent to year end (Note 11), the preferred stockholder chose not to
exercise the right of first refusal to acquire shares of the Company. However,
the preferred stockholder received 10,000 common shares of the purchaser's
parent company, OMNI MultiMedia Group, Inc. ("OMNI").
11
NOTE 8. COMMITMENTS
LEASES
The Company leases its facilities under four noncancelable operating lease
agreements. The lease agreements require aggregate monthly rentals of
approximately $88,000 and expire at various dates through June 2000. Certain of
the leases provide for minimal initial rentals and fixed rental increases during
the life of the lease. Rent expense is being recognized on a straight-line
basis. Total rental expense included in the statements of operations for the
years ended December 31, 1995 and 1994 is approximately $825,800 and $950,000,
respectively.
The Company leases equipment under two noncancelable operating lease agreements
expiring in November 1997 and December 1998 with monthly rentals of
approximately $1,300 and $3,100, respectively.
At December 31, 1995, approximate minimum lease commitments under the above
leases are as follows:
Years Ending December 31,
- --------------------------------------------------------------------------------
1996 $ 733,000.00
1997 734,000.00
1998 717,000.00
1999 649,000.00
2000 325,000.00
-------------------
Total minimum lease commitments $ 3,158,000.00
===================
PHANTOM STOCK PLAN
The Company has adopted a Phantom Stock Plan (the "Plan") to provide an
incentive for key employees and to provide the opportunity for those employees
to participate in future earnings of the Company. The Plan allows for issuance
of shares based on the discretion of the Phantom Stock Committee. The phantom
stock has no rights, but is entitled to receive dividends equal to those
received by the Company's common stock. When shares are surrendered, plan
participants will receive an amount based on the valuation formula in the
agreement on the date of surrender. The value of the shares is determined based
on the Company's past earnings. At December 31, 1995 and 1994 there were 10,000
phantom shares authorized, and the 1,000 shares issued and outstanding at
December 31, 1994 were retired during 1995. There was an accrual for the value
of the issued shares totaling $2,000 at December 31, 1994.
NOTE 9. DEFINED CONTRIBUTION RETIREMENT PLAN
The Company has a defined contribution retirement plan covering employees who
have completed one year of service and who are at least 21 years of age.
Contributions to the Plan are at the discretion of the Board of Directors. The
Company contributed $4,200 and $9,300 to the Plan for the years ended December
31, 1995 and 1994, respectively.
12
NOTE 10. RELATED PARTY TRANSACTIONS
During the year ended December 31, 1994, the Company entered into sales and
purchase transactions totaling $79,363 and $245,697, respectively, with the
holder of its preferred stock. At December 31, 1995 and 1994, there were no
outstanding balances with the holder of its preferred stock.
NOTE 11. MANAGEMENT'S PLANS AND SUBSEQUENT EVENT
The Company incurred a net loss of $1,369,171 for the year ended December 31,
1995 and incurred an additional loss of approximately $1,000,000 (unaudited)
through September 30, 1996. The result of these losses severely diminished the
Company's liquidity and capital resources as total liabilities exceeded total
assets by approximately $700,000 (unaudited) as of September 30, 1996. In
addition to losing its major customer subsequent to December 31, 1995, the
Company had limited success in converting from its existing computer diskette
duplication technology to CD ROM and other current technologies.
As a result, management made the decision to sell the Company or its assets and
on August 1, 1996, the Company entered into an asset purchase agreement with
A.I. Acquisition Corporation ("AIAC"), a subsidiary of OMNI. The acquisition
took the form of an asset sale in which the Company transferred substantially
all of its assets to AIAC in exchange for AIAC's assumption of certain specified
liabilities. The transaction closed on October 4, 1996. No adjustments have been
made to these financial statements as a result of this sale.
NOTE 12. RESTATEMENT
The Company's previously issued December 31, 1995 compiled financial statements
dated March 15, 1996 have been restated to correct errors pertaining to the
adequacy of the Company's inventory reserve and allowance for doubtful accounts.
The net effect of these adjustments increases the Company's previously reported
net loss and reduces retained earnings for the year ended and as of December 31,
1995 by approximately $172,000.
13
(b.) Unaudited Pro Forma Condensed Combined Financial Statements of the
Registrant
The unaudited pro forma condensed combining balance sheet of Omni MultiMedia
Group ("OMG") as of September 28, 1996 assumes that the acquisition of all
assets and assumption of all liabilities of Allenbach Industries, Inc.
("Allenbach") had occurred on the date.
The unaudited pro forma condensed combining statements of operations for the
year ended March 30, 1996 and the six months ended September 28, 1996 present
the results of OMG assuming that Allenbach's acquisition had been consummated as
of the beginning of the period indicated, except that the operating results for
Allenbach's fiscal year ending December 31, 1995 was used to prepare the
unaudited pro forma condensed combining statement of operations for the year
ended March 30, 1996, OMG's fiscal year end.
The unaudited pro forma condensed combining financial statements have been
prepared by OMG and all calculations have been made based upon assumptions
deemed appropriate. The unaudited pro forma condensed combining financial
statements were prepared utilizing the accounting policies of OMG. The
preliminary allocations of the purchase price, which may be subject to certain
adjustments as OMG finalizes the allocations of the purchase price in accordance
with generally accepted accounting principles, are included in the unaudited pro
forma condensed combining financial statements. The purchase price has been
allocated based upon the estimated fair value of the assets and liabilities
acquired. The excess of the purchase price over the fair value of the net assets
acquired has been recorded as an intangible asset (Goodwill) and is being
amortized over 5 years, in accordance with Accounting Principles Board Opinion
No. 16.
The unaudited pro forma financial information does not purport to be indicative
of the results of operations or the financial position which would have actually
been obtained if the acquisition had been consummated on the dates indicated. In
addition, the unaudited pro forma financial information does not purport to be
indicative of results of operations of financial position which may be achieved
in the future.
The unaudited pro forma financial information should be read in conjunction with
OMG's historical consolidated financial statements and notes thereto contained
in the March 30, 1996 Annual Report on Form 10-KSB and the Quarterly Report on
Form 10-QSB for the quarters ended June 29, 1996 and September 28, 1996 and the
audited financial statements of Allenbach presented herein.
OMNI MULTIMEDIA GROUP AND SUBSIDIARIES
PROFORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 28, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------
ASSETS
ACQUIRED
OMNI FROM
MULTIMEDIA ALLENBACH PROFORMA PROFORMA
GROUP INDUSTRIES ADJUSTMENTS COMBINED
----- ---------- ----------- --------
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents $ 9,208,351 $ 20,253 $ - $ 9,228,604
Accounts receivable, net 1,514,187 1,499,644 - 3,013,831
Inventory 1,035,695 223,055 - 1,258,750
Pre-paid expenses and other current assets 760,926 72,394 - 833,320
Refundable income taxes 15,850 - - 15,850
Deferred tax assets, net 101,844 - - 101,844
---------- ---------- ---------- ----------
12,636,853 1,815,346 - 14,452,199
Property and equipment, net 18,320,398 656,355 1 (441,355) 18,535,398
Due from related parties 542,980 - 542,980
Other assets, net 1,068,803 142,011 1 1,685,636 2,896,450
---------- ---------- ---------- ----------
$ 32,569,034 $ 2,613,712 $ 1,244,281 $ 36,427,027
========== ========== ========== ==========
Current liabilities
Accounts Payable $ 1,287,552 $ 2,131,624 $ - $ 3,419,176
Line of Credit 1,150,057 961,565 - 2,111,622
Current portion of long-term debt and
capital lease obligations 2,081,000 17,698 - 2,098,698
Accrued expenses 348,805 307,078 3 390,000 1,045,883
---------- ---------- ---------- ----------
4,867,414 3,417,965 390,000 8,675,379
Long term debt 3,768,784 50,028 - 3,818,812
Capital lease obligations 6,987,378 - - 6,987,378
Deferred tax liability 141,761 - - 141,761
Stockholders' equity
Convertible preferred stock 9 750,000 2 (750,000) 9
Common stock 38,901 1,000 2 (1,000) 38,901
Additional paid-in-capital 20,988,646 89,592 2 (89,592) 20,988,646
Accumulated deficit (4,223,859) (1,694,873) 2 1,694,873 (4,223,859)
---------- ---------- ---------- ----------
16,803,697 (854,281) 854,281 16,803,697
---------- ---------- ---------- ----------
$ 32,569,034 $ 2,613,712 $ 1,244,281 $ 36,427,027
========== ========== ========== ==========
</TABLE>
1. Adjusts assets and liabilities to fair value and record goodwill.
2. Eliminates Allenbach Industries, Inc. equity.
3. Assumption of liabilities in connection with acquisition.
OMNI MULTIMEDIA GROUP AND SUBSIDIARIES
PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 28, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------
ASSETS
ACQUIRED
OMNI FROM
MULTIMEDIA ALLENBACH
GROUP INDUSTRIES
SIX MONTHS SIX MONTHS
ENDED ENDED PROFORMA PROFORMA
9/28/96 9/28/96 ADJUSTMENTS COMBINED
------- ------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $ 4,615,478 $ 4,724,727 $ -- $ 9,340,205
Cost of goods sold 5,871,124 3,968,908 1 (129,081) 9,710,951
------------- -------------- ---------- ------------
Gross profit (loss) (1,255,646) 755,819 129,081 (370,746)
------------- -------------- ---------- ------------
Expenses
Selling expenses 1,615,633 478,288 1 (587) 2,093,334
General and administrative 1,522,597 1,031,858 1,2 128,528 2,682,983
------------- -------------- ---------- ------------
3,138,230 1,510,146 127,941 4,776,317
------------- -------------- ---------- ------------
Income (loss) from operations (4,393,876) (754,327) 1,140 (5,147,063)
------------- -------------- ---------- ------------
Interest expense (425,713) (121,629) -- (547,342)
Interest income 243,366 10,348 -- 253,714
Other income (expense), net (68,774) (2,428) -- (71,202)
============= ============= ========== ============
(251,121) (113,709) -- (364,830)
------------- -------------- ---------- ------------
Income before taxes (4,644,997) (868,036) 1,140 (5,511,893)
Income tax provision -- -- -- --
------------- -------------- ---------- ------------
Net income (loss) $ (4,644,997) $ (868,036) $ 1,140 $ (5,511,893)
============= ============= ========== ============
Primary net loss per share $ (1.17) $ (1.39)
Primary weighted average common
shares outstanding 3,961,591 3,961,591
Fully diluted net loss per share $ (1.05) $ (1.24)
Fully diluted weighted average
common shares outstanding 4,433,449 4,433,449
</TABLE>
1. Reflects depreciation expense after purchase accounting adjustments related
to the acquired fixed assets, based on estimated useful lives of 5 years.
2. Reflects pro forma amortization of goodwill using a 5 year life.
OMNI MULTIMEDIA GROUP AND SUBSIDIARIES
PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED MARCH 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------
ASSETS
ACQUIRED
OMNI FROM
MULTIMEDIA ALLENBACH
GROUP INDUSTRIES
YEAR ENDED YEAR ENDED PROFORMA PROFORMA
3/30/96 12/31/95 ADJUSTMENTS COMBINED
------- -------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $18,929,165 $ 15,735,622 $ -- $34,664,787
Cost of goods sold 14,236,153 13,616,387 1 (279,058) 27,573,482
----------- ------------ -------- -----------
Gross profit 4,693,012 2,119,235 279,058 7,091,305
----------- ------------ -------- -----------
Expenses
Selling 2,014,117 681,621 1 (929) 2,694,809
General and administrative 1,925,448 2,564,465 1,2 255,251 4,745,164
----------- ------------ -------- -----------
3,939,565 3,246,086 254,322 7,439,973
----------- ------------ -------- -----------
Income from operations 753,447 (1,126,851) 24,736 (348,668)
Interest expense (205,254) (257,520) -- (462,774)
Interest income 54,419 -- -- 54,419
Other income (expense), net (55,949) -- -- (55,949)
----------- ------------ -------- -----------
(206,784) (257,520) -- (464,304)
----------- ------------ -------- -----------
Income before income taxes 546,663 (1,384,371) 24,736 (812,972)
Income tax provision (benefit) 222,463 (15,200) 3 (207,263) --
----------- ------------ --------- -----------
Net income (loss) $ 324,200 $(1,369,171) $ 231,999 $ (812,972)
============= ============= ========== ============
Net income (loss) per share $ 0.11 $ (0.28)
Weighted average common shares outstanding 2,926,400 2,926,400
</TABLE>
1. Reflects depreciation expense after purchase accounting adjustments related
to the acquired fixed assets, based on estimated useful lives of 5 years.
2. Reflects pro forma amortization of goodwill using a 5 year life.
3. Reflects adjustment for combined results of operations.
