<PAGE> 1
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): November 13, 1996
American Phoenix Group, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 0-26110 13-3768554
(STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) FILE NUMBER) IDENTIFICATION NUMBER)
5 Park Plaza, Suite 1260, Irvine, CA 92714
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (714) 224-2525
(FORMER NAME OR FORMER ADDRESS IF CHANGED SINCE LAST REPORT)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial Statements
1. Financial statements of Tetherless Access Asia Limited for
the period ended June 30, 1996
2. Financial statements of Tetherless Access Ltd. for the
periods ended December 31, 1995 and 1994
(b) Pro Forma Financial Information
Pro forma financial information giving effect to the
consummation of the Agreement
(c) Exhibits*
(1) Plan and Agreement of Reorganization dated October 24,
1996, by and between Registrant, TAAL and the Shareholders
(Schedules to this agreement, which are in standard form, have
been ommitted but will be furnished to the Commission upon
request)
(2) Agreement dated November 4, 1996, between Registrant,
Rubywell Pty, Ltd. and Marine Turbine Australia Pty, Ltd. and
related deed and promissory note
(3) Deed between Registrant and Capital Finance Corporation
and related Promissory Note in the principal amount of
$8,600,000 in connection with Registrant's sale of the Note
Portfolio
- ------------------------
* Previously filed
ITEM 8. CHANGE IN FISCAL YEAR.
Under the Agreement, Registrant acquired from the TAAL Shareholders all
issued and outstanding shares of TAAL. The transaction was accounted for as a
reverse acquisition with TAAL being the surviving entity for accounting
purposes. As a result, Registrant changed its fiscal year from August 31 to June
30 to conform to the fiscal year end of TAAL.
Registrant's next periodic report will be the Quarterly Report on Form
10-Q for the fiscal quarter ended December 31, 1996 which will be filed on or
before the date required under the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder. No transition report is
required to be filed.
2
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereto duly authorized.
Date: January 16, 1997
AMERICAN PHOENIX GROUP, INC.
By: s/ Daniel France
-------------------------
Daniel France
Chief Financial Officer
<PAGE> 4
TETHERLESS ACCESS ASIA LIMITED
(ACN 069064642)
FINANCIAL STATEMENTS
PERIOD ENDED
30th JUNE 1996
<PAGE> 5
TETHERLESS ACCESS ASIA LIMITED
DIRECTORS' REPORT
The Directors present the following report for the period 13 April 1995 (date of
incorporation) to 30 June 1996.
Directors
The names and particulars of the Directors of the Company in office at the date
of this report are:
<TABLE>
<CAPTION>
Appointed Resigned
--------- --------
<S> <C> <C>
Michael John Anseli 13/4/95 30/7/95
Graeme Litfie 30/7/95
Timothy Todhunter 30/7/95
Carl Christopher Wilson 30/7/95
Bruce Pilley 13/4/95
John Bardin Davis 13/4/95
</TABLE>
Details of Directors Experience and Qualifications
Carl Christopher Wilson - Non Executive Director
B.A., B.Comm, A.S.I.A., has over fifteen years experience in the areas of
research of industrial companies, corporate advice, stockbroking and fund
management. Mr Wilson is a Director of The Greenchip Emerging Growth Limited
Group, Greenchip Resources Limited, Greenchip Development Capital Limited,
Greenchip Investments Limited, Tetherless Access Limited (U.S.A.) and Enterprise
Solutions Limited (U.S.A.).
Timothy Lempriere Todhunter - Non Executive Director
M.A. (Hons) Cantab. and Fellow of the Australian Institute of Management.
Mr Todhunter has twenty six years experience in the Information
Technology Industry and is a director of The Australia Institute and The
Australian Retirement Fund. Mr Todhunter is the immediate past President,
Council of Textile and Fashion Industries of Australia.
Graeme Little - Non Executive Director
B.Ec., LLB has over seventeen years experience in the areas of corporate
regulation, corporate advice, stockbroking, takeovers and fund management. Mr
Little is a Director of The Greenchip Emerging Growth Limited Group, Greenchip
Resources Limited, Greenchip Development Capital Limited, Greenchip Investments
Limited and Mount Wellington Gold N.L..
Bruce Roy Pilley
Mr Pilley has extensive experience in the financial services industry,
principally as an adviser to private and public companies. He has coordinated
numerous syndications of professional investors and institutions in various
capital raisings. He was recently responsible for the coordination of
development capital funding for Enterprise Solutions Asia Pacific Limited.
<PAGE> 6
John Bardin Davis
LL.B., B.Econ. has been principally involved as a Business and Investment
Consultant in assessing opportunities and raising investment capital both
privately and via prospectus issues. He has practised as a Solicitor in
Australia since 1978, specializing in commercial and investment law and
taxation. Mr Davis is a director of Derivative Fund Management Limited, a
licensed dealer and manager of the publicly listed Princeton Precious Metals
Fund and the Diversified Managed Futures Fund.
Directors' Meetings
<TABLE>
<CAPTION>
Number of Meetings held Number of
Name of Director Whilst a Director Meetings Attended
---------------- ----------------- -----------------
<S> <C> <C>
Michael John Ansell 2 2
Graeme Little 11 10
Timothy Todhunter 11 10
Carl Christopher Wilson 11 10
Bruce Pilley 12 12
John Bardin Davis 12 12
</TABLE>
Number of Directors meetings held during the year was 12.
Principal Activities
The principal activities of the Company include the development and production
of wireless data communication technology and investment in a U.S.A. corporation
which developed the wireless data communications technology.
Review of Operations
The Company made good progress in developing and producing a wireless
communications product which is commercially viable in the world market. A
number of potential markets and customers have been identified. Discussions with
these customers in respect of dealing in this wireless technology, are in a
number of cases relatively advanced.
Significant Changes in State of Affairs
The Company was incorporated on the 13th April 1995. This therefore is the
initial reporting period. There has been no significant changes in the Company's
state of affairs in the period ended 30 June 1996 other than the provision of
equity and debt funding to its U.S.A. investee and the other matters noted in
the Subsequent Events note on page 3.
Results of Operations
<PAGE> 7
The net loss of the Company for the financial period ended 30 June 1996 after
the provision for tax was $651,271.
Likely Developments
It is expected that the Company will continue to expand and develop it
operations worldwide as a wholly owned subsidiary of American Phoenix Group Inc.
Dividends
The Directors do not recommend payment of a final dividend and no dividend has
been paid since the incorporation of the Company.
Significant After Balance Date Events
Since 30 June 1996, the Company has called for repayment of the loan to a
Related Body Corporate. The Related Body Corporate was unable to repay the loan.
As a result and pursuant to the loan agreement, the Company became entitled to
all the assets and liabilities of the Related Body Corporate including all
Intellectual Property.
An agreement has been negotiated between the Company's shareholders and American
Phoenix Group Inc., a U.S.A. NASDAQ listed company, whereby American Phoenix
Group Inc., will acquire all the issued shares of the Company, thereby making
the Company a 100% owned subsidiary of American Phoenix Group Inc.
Share Options
There are no outstanding share options issued by the Company.
Directors Shareholding:
<TABLE>
<CAPTION>
Shares Owned Shares Owned
Directly Beneficially
-------- ------------
<S> <C> <C>
Graeme Little 0 30,459,068
Timothy Todhunter 0 1,031,439
Carl Christopher Wilson 0 30,459,068
John Bardin Davis 0 9,890,000
Bruce Pilley 0 9,890,000
</TABLE>
No share options have been granted to any Director as a consequence of being a
Director. All options held by Directors either directly or indirectly are as a
result of options being granted on the same basis as to all other investors.
Indemnification of Directors and Officers
<PAGE> 8
During the financial period no insurance premium was paid in respect to a
contract insuring its Directors or senior employees against a liability of a
nature that is required to be disclosed under subsection 309A(3) of the
Corporations Law.
Directors Benefits:
Other than already referred elsewhere in this report, no Director of the Company
has received or become entitled to receive a benefit (other than a benefit
included in the aggregate amount of emoluments received or due and receivable by
Directors shown in the accounts) by reasons of a contract made payable by the
Company or by a related corporation with the Director or with a firm of which he
is a member or with a company in which he has a substantial interest except any
benefit that may be deemed to accrue to Mr B. Pilley by reason of professional
consulting fees paid in the ordinary course of business to Mallar Holdings Pty
Ltd a company in which he has a beneficial holding.
Signed in accordance with a resolution of the directors
/s/ Timothy Todhunter /s/ Bruce Pilley
- ------------------------------ ------------------------------
Director Director
Date: 11th November 1996
Melbourne
<PAGE> 9
TETHERLESS ACCESS ASIA LIMITED
BALANCE SHEET AS AT 30 JUNE 1996
<TABLE>
<CAPTION>
1996
Notes $
<S> <C> <C>
CURRENT ASSETS
Cash 201,211
------------
TOTAL CURRENT ASSETS 201,211
------------
NON CURRENT ASSETS
Investments 2 4,650,672
Receivables 3 1,559,202
Property Plant and Equipment 4 25,829
------------
TOTAL NON CURRENT ASSETS 6,235,703
------------
TOTAL ASSETS 6,436,914
------------
CURRENT LIABILITIES
Creditors and Borrowings 5,000
------------
TOTAL CURRENT LIABILITIES 5,000
------------
TOTAL LIABILITIES 5,000
------------
NET ASSETS 6,431,914
============
SHAREHOLDERS' EQUITY
Share Capital 5 2,313,834
Reserves 6 4,769,351
Accumulated Losses (651,271)
------------
TOTAL SHAREHOLDERS' EQUITY 6,431,914
============
</TABLE>
<PAGE> 10
TETHERLESS ACCESS ASIA LIMITED
PROFIT AND LOSS STATEMENT
FOR THE PERIOD ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
1996
Notes $
<S> <C> <C>
Operating Revenue 7 5,111
============
Operating Profit/(Loss) Before Income Tax (651,271)
Income Tax Attributable to Operating
Profit/(Loss) 9 0
------------
Operating Profit/(Loss) After Income Tax (651,271)
Retained Profits/(Accumulated Losses)
at the beginning of the financial period 0
------------
Retained Profits/(Accumulated Losses)
at the end of the financial period (651,271)
============
</TABLE>
<PAGE> 11
TETHERLESS ACCESS ASIA LIMITED
NOTES TO AND FORMING PART OF THE
ACCOUNTS FOR THE PERIOD ENDED 30 JUNE 1996
1 Statement of Accounting Policies
The principal accounting policies adopted by Tetherless Access Asia Ltd are
stated in order to assist in a general understanding of the financial
statements. These policies have been consistently applied except as otherwise
indicated.
The Company is not a reporting entity because, in the Directors' opinion, there
are unlikely to exist users who are unable to command the preparation of reports
tailored so as to satisfy specifically all of their information needs and these
financial statements are therefore "special purpose financial reports" that have
been prepared solely to meet the requirements of the members.
The financial statements have been drawn up in accordance with Schedule 5 of the
Corporations Law and applicable Accounting Standards. The company has applied
Accounting Standard AASB 1025: "Application of the Reporting Entity Concept and
Other Amendments" and therefore there is no requirement to apply other
accounting standards and other mandatory professional reporting requirements
(Urgent Issue Group Consensus Views). The Company has prepared the accounts in
accordance with all accounting standards except for AASB 1026: "Statement of
Cash Flows", AASB 1017: "Related Party Disclosures", and AASB 1005: "Financial
Reporting by Segments".
(a) Basis of Accounting
The financial statements have been prepared on the historical cost basis and
except where stated do not take into account current valuations of non-current
assets. The financial statements have been prepared on a going concern basis
which contemplates continuity of normal business activities and the realization
of assets and settlements of liabilities in the ordinary course of business. The
Directors believe this basis to be appropriate. However, as the Company is in
the developmental stage the ongoing financial viability of the Company is
dependent on further financial support from shareholders and external
financiers.
(b) Depreciation and Amortization of Property, Plant and Equipment
Items of property, plant and equipment are depreciated over their estimated
Useful lives using the straight line method.
(c) Income Tax
Income tax has been brought to account using a method of tax effect accounting
whereby income tax expense/(benefit) for the period is calculated on the
accounting profit/(loss) after adjusting for items, which as a result of their
treatment under income tax legislation, create permanent differences between
that profit/(loss) and the taxable
<PAGE> 12
income/(loss). The tax effect of timing differences which arises from the
recognition in the accounts of items of revenue and expenses in periods
different from those in which they are assessable or allowable for income tax
purposes, are represented in the balance sheet as "future income tax benefits"
or "provision for deferred income tax", as the case may be at current tax rates.
A future income tax benefit is only carried forward as an asset where
realization of the benefit can be regarded as being assured beyond reasonable
doubt
(d) Investments
Long term investments which were not purchased for resale purposes are stated at
cost and reflected as non current assets.
(e) Comparatives
Comparative figures are not presented as the company was incorporated on 13th
April 1995 and these are the first financial statements prepared.
(f) Formation Costs
Due to the uncertainty in quantifying the benefit that is likely to accrue from
formation costs, all formation costs have been expensed during the period they
were incurred.
2 Investments
<TABLE>
<CAPTION>
1996
$
<S> <C>
Unlisted shares at cost:
In related bodies corporate 4,482,328
The above investment represents payments made for a 26%
interest in Tetherless Access USA Limited ("TAL USA").
TAL USA's principal activity is the
development of wireless communication products.
Investment in China Satellite Launch Agents
HK Limited - at cost 168,344
------------
4,650,672
------------
</TABLE>
3 Receivables
<TABLE>
<CAPTION>
1996
$
<S> <C>
Promissory Note receivable from:
Related bodies corporate - TAL USA 294,109
Convertible Promissory Note receivable from:
Related bodies corporate - TAL USA 1,265,093
------------
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
<S> <C>
1,559,202
------------
</TABLE>
Refer note 11 for latest developments in regard to the TAL USA Receivables.
4 Property Plant and Equipment
<TABLE>
<CAPTION>
1996
$
<S> <C>
Office Furniture & Equipment 30,220
Less Accumulated Depreciation (4,391)
------------
25,829
------------
</TABLE>
5 Share Capital
<TABLE>
<CAPTION>
1996
$
<S> <C>
Authorised:
2,000,000,000 Ordinary Shares at $0.05 each 100,000,000
------------
Issued:
46,276,674 Ordinary Shares at $0.05 each 2,313,834
------------
</TABLE>
6 Reserves
<TABLE>
<CAPTION>
1996
$
Share Premium Account
<S> <C>
Shares were issued at various premiums throughout
the period. As at 30th June 1996 the balance
of the share premium account was 4,769,351
============
</TABLE>
7 Operating Loss Before Tax
<TABLE>
<CAPTION>
1996
$
Operating loss before income tax has been determined after;
<S> <C>
(a) Crediting as revenue:
Interest - other persons 5,111
(b) Charging as expense:
Depreciation of office furniture and equipment 4,391
Audit Fee 5,000
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
<S> <C>
Formation Costs written off 235,234
============
</TABLE>
8 Directors Income
<TABLE>
<CAPTION>
1996
$
<S> <C>
Total income received or receivable by Directors
including amounts receivable from related
bodies corporate 88,000
============
</TABLE>
Number of Directors of the Company whose total income falls within the
following bands
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$0 - $9,999 5
$80,000 - $89,999 1
</TABLE>
No payments were made in relation to retirement benefits for Directors.
9 Income Tax
The amount provided in respect of income tax expense/(benefit) differs from the
amount prima facie expense/(benefit) on operating profit(loss).
The difference is reconciled as follows.
<TABLE>
<CAPTION>
<S> <C>
Prima facie tax (benefit) on Operating Loss (234,457)
(Calculated at 36%)
Add Back Permanent Differences - Formation Costs
Expensed in the accounts not claimable for income tax 85,404
Current Year Tax Losses not tax recognized 149,053
------------
Income Tax Expense Benefit 0
------------
</TABLE>
The above tax loss has not been brought to account as a future income tax
benefit as realization cannot be virtually assured.
10 Commitments
Non-cancellable operating leases not provided for with a term of more
than one year-
<TABLE>
<CAPTION>
Payable:
<S> <C>
Not later than one year 31,169
Later than one year but not later than 2 years 7,792
------------
38,961
</TABLE>
<PAGE> 15
------------
The Company is committed to pay a further HK$3,000,000 (AUS$489,540) to China
Satellite Launch Agents HK Ltd (C.S.L.A.L.) as part of the investment in China
Satellite Launch. This payment is dependant on C.S.L.A.L. achieving established
levels of national; frequencies within China, and upon the granting of specific
licences to C.S.L.A.L..
11 Significant After Balance Date Events
Since 30 June 1996, the Company has called for repayment of the loan to a
Related Body Corporate. The Related Body Corporate was unable to repay the loan.
As a result and pursuant to the loan agreement, the Company became entitled to
all the assets and liabilities of the Related Body Corporate including all
Intellectual Property.
An agreement has been negotiated between the Company's shareholders and American
Phoenix Group Inc., a U.S.A. NASDAQ listed company, whereby American Phoenix
Group Inc., will acquire all the issued shares of the Company, thereby making
the Company a 100% owned subsidiary of American Phoenix Group Inc.
<PAGE> 16
TETHERLESS ACCESS ASIA LIMITED
STATEMENT BY DIRECTORS
As detailed in Note 1 to the Accounts, the Directors consider that the Company
is not a reporting entity as in their opinion there are unlikely to exist any
users dependent on general purpose financial statements for information which
would be useful for them in making and evaluating decisions about the allocation
of scarce resources.
These accounts are regarded as "special purpose financial reports" which have
been prepared solely to meet the reporting obligations of the Corporations Law.
In the opinion of the Directors:-
1
(a) the accompanying Profit and Loss Account and Balance Sheet are drawn up so
as to give a true and fair view of the result of the Company for the period
ended 30 June 1996, and the state of affairs of the Company as at 30 June 1996.
(b) as at the date of this statement, there are reasonable grounds to believe
that the Company will be able to pay its debts as and when they fall due.
However, as the Company is in the development stage, the ongoing financial
viability of the Company is dependant on further financial support from
shareholders and external financiers.
2 The accounts of the company have been made out in accordance with applicable
Accounting Standards to the extent indicated in Note 1 to the Accounts.
Dated at Melbourne this 11th day of November 1996. Signed in accordance with a
resolution of the Directors:
/s/ Timothy Todhunter
- ------------------------------ Director
/s/ Bruce Pilley
- ------------------------------ Director
<PAGE> 17
Pannell Kerr Forster
Chartered Accountants
INDEPENDENT AUDIT REPORT
TO THE MEMBERS OF TETHERLESS ACCESS ASIA LIMITED
Scope
30 June 1996
We have audited the financial statements, being a special purpose financial
report, of Tetherless Access Asia Limited for the year ended 30 June 1996
comprising the Profit and Loss Account, Balance Sheet and Directors' Statement.
The company's directors are responsible for the preparation and presentation of
the financial statements and the information contained therein and have
determined that the basis of accounting used and described in Note 1 to the
financial statements is appropriate to meet the requirements of the Corporations
Law and the needs of the members. We have conducted an independent audit of the
financial statements in order to express an opinion to the members of the
company on their preparation and presentation. No opinion is expressed as to
whether the accounting policies used, and described in Note 1, are appropriate
to the needs of the members.
The financial statements have been prepared for distribution to members for the
purpose of fulfilling the directors' financial reporting requirements under the
Corporations Law. We disclaim any assumption of responsibility for any reliance
on this report or on the financial statements to which it relates to any person
other than the members, or for any purpose other than that for which it was
prepared.
Our audit has been conducted in accordance with Australian Auditing Standards.
Our procedures included examination, on a test basis, of evidence supporting the
amounts and other disclosures in the financial statements and the evaluation of
significant accounting estimates. These procedures have been undertaken to form
an opinion as to whether, in all material respects, the financial statements are
presented fairly in accordance with the accounting policies described in Note I
to the financial statements. (These policies do not require the application of
all Accounting Standards and UIG Consensus Views)
The audit opinion expressed in this report has been formed on the above basis.
Audit Opinion
In our opinion, subject to the effects if any, on the accounts of the matters
referred to in the preceding paragraph, the financial statements of Tetherless
Access Asia Limited for the year ended 30 June 1996 are properly drawn up:
<PAGE> 18
(a) so as to give a true and fair view, in accordance with the basis of
accounting policies described in Note 1 to the financial statements, of the
matters required by Divisions 4, 4A and 4B of Part 3.6 of the Corporations Law
to be dealt with in the financial statements;
(b) in accordance with the provisions of the Corporations Law; and
(c) in accordance with applicable Accounting Standards. As the company has
applied AASB 1025: "Application of the Reporting Entity Concept and Other
Amendments", other Accounting Standards have only been applied to the extent
described in Note 1 to the financial statements. (Similarly, as the company is a
non-reporting entity, UIG Consensus Views have only been applied to the extent
described in Note 1)
/s/ PANNELL KERR FORSTER /s/ G P Andreola
- ------------------------------ ------------------------------
PANNELL KERR FORSTER G P Andreola
Chartered Accountants Partner
A Victorian Partnership 11 November 1996
Melbourne
<PAGE> 19
TETHERLESS ACCESS, LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
<PAGE> 20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Tetherless Access, Ltd.
We have audited the accompanying balance sheets of Tetherless Access, Ltd. (a
company in the development stage) as of December 31, 1995 and 1994 and the
related statements of operations, of shareholders equity and of cash flows for
the years then ended and for the period from inception (March 29, 1990) through
December 31, 1995. 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.
As explained in Note 7, the Directors of the Company resolved on September 15,
1996 to transfer the assets of the Company to the holders of certain secured
promissory notes in satisfaction of amounts due, due to the Company's inability
to meet its obligations under these notes.
In our opinion, the accompanying balance sheets and the related statements of
operations, of shareholders' equity and of cash flows present fairly, in all
material respects, the financial position of Tetherless Access, Ltd. (a company
in the development stage), at December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended and for the period from
inception (March 29, 1990) through December 31, 1995, in conformity with
generally accepted accounting principles.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Jose, California
December 3, 1996
<PAGE> 21
TETHERLESS ACCESS, LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1994
ASSETS
<S> <C> <C>
Current assets:
Cash $ 227,000 $ 180,000
Receivable from founder (Note 3) -- 25,000
Accounts receivable 195,000 --
Inventories (Note 2) 272,000 --
Prepaid expenses and other current assets 26,000 36,000
----------- -----------
Total current assets 720,000 241,000
Property and equipment, net (Note 2) 282,000 141,000
Deposits 12,000 --
----------- -----------
$ 1,014,000 $ 382,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 157,000 $ 58,000
Accrued liabilities 207,000 70,000
Current portion of capitalized lease obligation (Note 4) 22,000 14,000
----------- -----------
Total current liabilities 386,000 142,000
----------- -----------
Capitalized lease obligation, less current portion (Note 4) 28,000 29,000
----------- -----------
Total liabilities 414,000 171,000
----------- -----------
Commitments (Note 4)
Shareholders' equity (Note 5):
Common stock, no par value, 50,000,000 shares
authorized; 11,914,321 and 9,485,000 shares
issued and outstanding 7,940,000 1,521,000
Common stock subscriptions receivable (3,599,000) --
Deficit accumulated during development stage (3,741,000) (1,310,000)
----------- -----------
Total shareholders' equity 600,000 211,000
----------- -----------
$ 1,014,000 $ 382,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 22
<TABLE>
<CAPTION>
TETHERLESS ACCESS,LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENTS OF OPERATIONS
Period from
inception
(March 29,
1990)
Year Ended through
December 31, December 31,
1995 1994 1995
<S> <C> <C> <C>
Sales $ 241,000 $ -- $ 266,000
Cost of sales 165,000 -- 165,000
----------- ----------- -----------
Gross profit 76,000 -- 101,000
----------- ----------- -----------
Operating expenses:
Selling, general and administrative 1,110,000 409,000 1,633,000
Research and development 1,400,000 742,000 2,235,000
----------- ----------- -----------
Total operating expenses 2,510,000 1,151,000 3,868,000
----------- ----------- -----------
Loss from operations (2,434,000) (1,151,000) (3,767,000)
Interest income 10,000 26,000 26,000
Interest expense (7,000) (3,000) --
----------- ----------- -----------
Net loss $(2,431,000) $(1,128,000) $(3,741,000)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 23
TETHERLESS ACCESS, LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (MARCH 29, 1990) THROUGH DECEMBER 31, 1995
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK DURING
COMMON STOCK SUBSCRIPTIONS DEVELOPMENT
SHARES AMOUNT RECEIVABLE STAGE TOTAL
<S> <C> <C> <C> <C> <C>
Capital contribution from founders 6,000,000 $ 6,000 $ -- $ -- $ 6,000
Net loss -- -- -- (3,000) (3,000)
----------- ---------- ----------- ----------- -----------
Balance at December 31, 1990 6,000,000 6,000 -- (3,000) 3,000
Issuance of common stock for services 10,000 1,000 -- -- 1,000
Net loss -- -- -- (3,000) (3,000)
----------- ---------- ----------- ----------- -----------
Balance at December 31, 1991 6,010,000 7,000 -- (6,000) 1,000
Issuance of common stock for services 20,000 1,000 -- -- 1,000
Net loss -- -- -- (79,000) (79,000)
----------- ---------- ----------- ----------- -----------
Balance at December 31, 1992 6,030,000 8,000 -- (85,000) (77,000)
Net loss -- -- -- (97,000) (97,000)
----------- ---------- ----------- ----------- -----------
Balance at December 31, 1993 6,030,000 8,000 -- (182,000) (174,000)
Issuance of common stock for cash 3,450,000 1,500,000 -- -- 1,500,000
Issuance of common stock for services 5,000 3,000 -- -- 3,000
Services provided for common stock subscriptions -- 10,000 -- -- 10,000
Net loss -- -- -- (1,128,000) (1,128,000)
----------- ---------- ----------- ----------- -----------
Balance at December 31, 1994 9,485,000 1,521,000 -- (1,310,000) 211,000
Issuance of common stock previously subscribed 20,000 -- -- -- --
Issuance of common stock for services 28,600 20,000 -- -- 20,000
Repurchase of common stock from founder (2,500,000) (3,000) -- -- (3,000)
Issuance of common stock for cash at $0.001 per share 2,320,000 2,000 -- -- 2,000
Issuance of common stock for cash at $0.625 per share 640,000 400,000 -- -- 400,000
Common stock subscriptions at $1.25 per share -- 6,000,000 (6,000,000) -- --
Issuance of common stock subscribed 1,920,721 -- 2,401,000 -- 2,401,000
Net loss -- -- -- (2,431,000) (2,431,000)
----------- ---------- ----------- ----------- -----------
Balance at December 31, 1995 11,914,321 $7,940,000 $ 3,599,000 $(3,741,000) $ 600,000
=========== ========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 24
TETHERLESS ACCESS, LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(MARCH 29,
1990)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
1995 1994 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(2,431,000) $(1,128,000) $(3,741,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 58,000 29,000 89,000
Common stock issued in exchange for services 20,000 13,000 35,000
Changes in assets and liabilities:
Accounts receivable (195,000) -- (195,000)
Inventories (272,000) 1,000 (272,000)
Prepaid expenses and deposits 10,000 (36,000) (26,000)
Deposits (12,000) -- (12,000)
Accounts payable 99,000 43,000 157,000
Accrued liabilities 137,000 33,000 207,000
----------- ----------- -----------
Net cash used in operating activities (2,586,000) (1,045,000) (3,758,000)
----------- ----------- -----------
Cash flows from investing activities resulting from the
acquisition of property and equipment (174,000) (120,000) (301,000)
----------- ----------- -----------
Cash flows from financing activities:
Payment of loans -- (50,000) --
Receivable from founder 25,000 (24,000) --
Payables to founders -- (86,000) --
Principal payments on capitalized lease obligations (18,000) (2,000) (20,000)
Proceeds from issuance on common stock, net of
repurchases 2,800,000 1,500,000 4,306,000
----------- ----------- -----------
Net cash provided by financing activities 2,807,000 1,338,000 4,286,000
----------- ----------- -----------
Net increase in cash 47,000 173,000 227,000
Cash at beginning of period 180,000 7,000 --
----------- ----------- -----------
Cash at end of period $ 227,000 $ 180,000 $ 227,000
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for taxes $ 1,000 $ 1,000 $ 5,000
Interest paid 7,000 3,000 10,000
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES:
Acquisition of property and equipment under
capitalized lease obligation $ 25,000 $ 45,000 $ 70,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 25
TETHERLESS ACCESS, LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Tetherless Access, Ltd. (the "Company"), was incorporated in California on
March 29, 1990 to develop products for the wireless data communications
market. Since commencing activities in 1990, the Company has been in the
development stage and its operations have principally involved research and
development, market analysis and other business planning activities. The
Company's first revenues from product sales were generated in late 1995;
however, since such revenues are not significant, the Company is still
considered to be in the development stage at December 31, 1995.
THE FOLLOWING IS A SUMMARY OF THE COMPANY'S SIGNIFICANT ACCOUNTING
POLICIES:
LIQUIDITY AND FINANCIAL VIABILITY
The Company has accumulated a deficit of $3,741,000 for the period from its
inception through December 31, 1995. During 1995, the Company obtained a
financing commitment from certain shareholders to invest an additional
$6,000,000 in the Company in exchange for 4,800,000 shares of Common Stock,
payable in monthly installments on an as-needed basis. Through December 31,
1995, the Company had received $2,401,000 under this commitment. In March
1996, the Company obtained additional financing commitments from certain
shareholders on the same terms as above aggregating $8,000,000 including
amounts previously committed, but not yet received. The commitment expires
December 31, 1996.
In May 1996, the Company obtained financing of $1,000,000 under a secured
convertible promissory note repayable on May 2, 1998. In connection with
this note, the Company issued 1,540,000 shares to the lender in
consideration for an option to purchase 25% of the lender's outstanding
stock at a price of $0.25 (Australian dollars) and for the lender's
agreement to enter into a distribution agreement with the Company.
In June 1996, the Company obtained additional financing of $3,000,000 from
the same lender under a secured promissory note repayable on June 17, 1998.
The $1,000,000 and $3,000,000 notes were each secured by an interest in the
Company's tangible and intangible property. Both notes contained certain
covenants relating to the financial position of the Company.
On September13, 1996, the lender made demand for immediate payment of the
notes (see Note 7).
<PAGE> 26
TETHERLESS ACCESS, LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in accordance 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 revenue and expenses
during the reported period. Actual results could differ from those
estimates.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of bank deposits and
accounts receivables. The Company places its cash primarily in checking and
market rate accounts. Two customers accounted for 37% and 33%,
respectively, of sales in 1995. Receivables from these customers total
$89,000 and $79,000 at December 31, 1995. The Company performs ongoing
evaluations of its customers' financial condition and maintains an
allowance for uncollectible accounts receivable based upon the expected
collectibility of all accounts receivable.
REVENUE RECOGNITION
Revenue from product sales is recognized upon product shipment provided no
significant obligations remain and collectibility is probable.
INVENTORIES
Inventories are stated at the lower of cost, using the first-in, first-out
method, or market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets of
three to five years. Leasehold improvements are amortized over the shorter
of their estimated useful lives or the lease term.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the expected tax
consequences of temporary differences between the tax bases of assets and
liabilities and their financial statement reported amounts.
<PAGE> 27
TETHERLESS ACCESS, LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
Balance Sheet Components
<TABLE>
<CAPTION>
December 31,
1995 1994
<S> <C> <C>
Inventories:
Raw materials $ 225,000 $ -
Finished goods 47,000 -
--------- --------
$ 272,000 $ -
========= ========
Property and equipment:
Equipment and other $ 237,000 $159,000
Furniture and fixtures 118,000 13,000
Software 16,000 -
--------- --------
371,000 172,000
Accumulated depreciation (89,000) (31,000)
--------- --------
$ 282,000 $141,000
========= ========
</TABLE>
3. RELATED PARTY TRANSACTIONS
In March 1994, the Company loaned $25,000 to a founder in exchange for a 4%
promissory note secured by 57,500 shares of the Company's Common Stock. The
note and accrued interest were repaid in full in 1995.
During 1995, approximately $89,000 of the Company's sales were to a
shareholder. Accounts receivable at December 31, 1995 from this shareholder
were $89,000, which were paid in full in 1996.
4. COMMITMENTS
During 1995, the Company entered into a three-year noncancelable operating
lease for its facility. In 1995 and 1994, the Company entered into
agreements to lease equipment aggregating $25,000 and $45,000, respectively
which have been recorded as capitalized leases.
Rent expense on operating leases totaled $88,000 and $27,000 in 1995 and
1994, respectively.
<PAGE> 28
TETHERLESS ACCESS, LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
Future minimum lease payments under operating and capitalized leases are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31 OPERATING CAPITALIZED
<S> <C> <C> <C>
1996 $191,000 $ 27,000
1997 146,000 25,000
1998 128,000 4,000
1999 - 3,000
2000 - 2,000
-------- ----------
Total minimum lease payments $465,000 61,000
========
Less: amount representing interest 11,000
----------
Present value of minimum lease payments 50,000
Less: current portion 22,000
----------
Long-term portion of capitalized lease obligations $ 28,000
==========
</TABLE>
5. SHAREHOLDERS' EQUITY
In March 1990, the founders of the Company contributed certain intellectual
property and cash to the Company aggregating $4,000 and $2,000,
respectively, in exchange for 6,000,000 shares of Common Stock. In 1991 and
1992, the Company issued 10,000 and 20,000 shares of Common Stock,
respectively, valued at $0.05 per share in exchange for services. In 1994,
the Company issued 5,000 shares of Common Stock valued at $0.50 per share
to an employee in exchange for services.
In January 1994, the Company issued 3,450,000 shares of Common Stock to an
independent investor in exchange for cash of $1,500,000. The Company has
the right of first refusal to purchase the shares, except in the event of a
merger, the sale of all of the Company's assets or an initial public
offering of the Company's Common Stock.
During 1994, certain employees and consultants provided services to the
Company in exchange for a subscription for the issuance of 20,000 shares of
Common Stock. Such services were valued at $10,000, and the 20,000 shares
were issued in 1995.
During 1995, the Company issued 28,600 shares of Common Stock valued at
$20,000 to certain employees and a consultant in exchange for services
provided to the Company.
In February 1995, the Company repurchased 2,500,000 shares of Common Stock
from a founder at $0.001 per share.
<PAGE> 29
TETHERLESS ACCESS, LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
A total of 2,960,000 shares of Common Stock have been sold to investors
subject to the Company's right of first refusal to purchase the shares,
except in the event of an initial public offering of the Company's Common
Stock.
During 1995, certain shareholders (see Note 1) committed to purchase
4,800,000 shares of Common Stock for $1.25 per share through March 1996.
The total amount of $6,000,000 is paid in monthly installments on an
as-needed basis. Through December 31, 1995, the Company had received
$2,401,000 and issued 1,920,721 shares of Common Stock under this
commitment.
STOCK OPTION PLAN
The 1993 Stock Option Plan (the "Plan"), as amended, authorizes the Board
of Directors to grant incentive stock options and nonstatutory stock
options to employees, directors and consultants to purchase up to 3,200,000
shares of Common Stock. Under the Plan, incentive stock options are granted
at a price that is not less than 100% of the fair market value of the stock
on the date of grant, as determined by the Board of Directors. Nonqualified
stock options are granted at a price that is not less than 85% of the fair
market value of the stock on the date of grant, as determined by the Board
of Directors.
Generally, options granted under the Plan are exercisable on and after the
date of grant. Any unvested shares which the optionee has purchased and
holds are subject to the Company's right to repurchase from the optionee at
the optionee's cost per share, in the event the optionee attempts to
dispose of such shares or in the event of the optionee's termination of
employment with or without cause. The Company's repurchase right lapses as
shares subject to an option become vested. Generally, shares subject to
options granted under the Option Plan vest at the rate of 1/4th of the
shares on the first anniversary of the grant date of the option, and an
additional 1/48th of the shares upon completion of each succeeding full
month of continuous employment thereafter until all shares are vested.
In February 1995, the Company granted to the Chairman of the Board of
Directors and Chief Executive Officer options to purchase 1,200,000 shares
at an exercise price of $0.001 per share. These options vest at the rate of
1/24th for each full month of employment after the date of the grant.
Options are exercisable for a period of ten years.
<PAGE> 30
TETHERLESS ACCESS, LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
A summary of stock option activity is as follows:
<TABLE>
<CAPTION>
SHARES OPTIONS PRICE PER
AVAILABLE OUTSTANDING SHARE
<S> <C> <C> <C>
Balance as of December 31, 1993 3,200,000 - -
Granted (1,475,000) 1,675,000 $0.50
Canceled 475,000 (475,000) $0.50
---------- ---------
Balance as of December 31, 1994 2,200,000 1,000,000 $0.50
Granted (2,061,000) 2,061,000 $0.001-$1.25
Canceled 500,000 (500,000) $0.50
---------- ---------
Balance as of December 31, 1995 639,000 2,561,000 $0.001-$1.25
========== =========
</TABLE>
At December 31, 1995, 887,541 options to purchase shares were vested.
WARRANTS
At December 31, 1995, warrants to purchase 50,000 shares of Common Stock at
$0.50 per share were outstanding. The warrants expire in 2005.
6. INCOME TAXES
No provision for federal and state income taxes has been recorded as the
Company has incurred net operating losses since inception. Deferred tax
assets of approximately $1,518,000 and $522,000 at December 31, 1995 and
1994, respectively, are fully reserved due to the uncertainty of
realization and consist primarily of deferred compensation, R&D credits,
and accumulated losses.
At December 31, 1995, the Company had federal and state net operating loss
carryforwards of $3,477,000 and $3,469,000, respectively, available to
reduce future taxable income. Such carryforwards expire through 2010. The
income tax benefit from the utilization of net operating loss carryforwards
may be limited in certain circumstances including, but not limited to,
cumulative stock ownership changes of more than 50% over a three year
period. Such a change in ownership may have occurred in connection with
stock offerings in 1994 and 1995, and the Company is currently assessing
possible restrictions on the use of its net operating loss carryforward as
a result of such possible changes in ownership. There can be no assurance
that the Company's net operating loss carryforward will be available for
use in the future.
<PAGE> 31
TETHERLESS ACCESS, LTD.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
7. SUBSEQUENT EVENTS
On September 13, 1996, the holder of the secured convertible promissory
note dated May 2, 1996 in the face amount of $1,000,000 and the secured
promissory note dated June 17, 1996 in the face amount of $3,000,000 made
demand for immediate payment of the notes. The Company's indebtedness at
September 13, 1996 under these notes was a total principal amount of
$2,215,000, plus accrued and unpaid interest.
Due to the Company's inability to pay the amounts due under the notes, the
Directors resolved on September 15, 1996 to transfer to the lender all
assets of the Company, which represented the secured collateral under the
notes, in satisfaction of the amounts outstanding. The historical cost of
the collateral transferred was less than the amounts due under the notes.
<PAGE> 32
INDEX
American Phoenix Group, Inc. and Tetherless Access Asia Limited -
Unaudited Pro Forma Combining Condensed Balance Sheets
as of September 30, 1996
Tetherless Access Asia Limited and Tetherless Access, Ltd. -
Unaudited Combined Statements of Operations for the three
months ended September 30, 1996 and 1995
Tetherless Access Asia Limited and Tetherless Access, Ltd. -
Unaudited Combined Statements of Operations for the three
months ended September 30, 1996 and 1995
Tetherless Access Asia Limited and Tetherless Access, Ltd. -
Unaudited Combined Statements of Operations for the twelve
months ended September 30, 1996
Notes to Pro Forma Combining Condensed Financial Statements
Audited Financial Statements of Tetherless Access Asia Limited -
June 30, 1996
Audited Financial Statements of Tetherless Access, Limited -
December 31, 1995 and 1994
<PAGE> 33
AMERICAN PHOENIX GROUP, INC.
AND TETHERLESS ACCESS ASIA LIMITED
UNAUDITED PRO FORMA COMBINING CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
American Tetherless
Phoenix Access Asia Pro Forma
Group, Inc. Limited (1) Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 648,021 $ 114,288 $ $ 762,309
Inventory 442,472 442,472
Accounts receivable 123,936 123,936
Subscriptions receivable 1,664,540 1,664,540
Prepaid expenses 15,416 15,416
Net assets of discontinued operations 9,902,596 9,902,596
Investment in Barlile Corp. 150,000 150,000
------------ ----------- ------------ -------------
TOTAL CURRENT ASSETS 10,700,617 2,360,652 13,061,269
PROPERTY AND EQUIPMENT, Net 46,526 545,586 592,112
OTHER ASSETS
Funds held in escrow 230,000 230,000
Insurance escrow deposit 150,000 150,000
Other deposits 69,190 84,860 154,050
Intellectual property 315 315
Investments 137,984 137,984
------------ ----------- ------------ -------------
449,190 223,159 672,349
------------ ----------- ------------ -------------
$ 11,196,333 $ 3,129,397 $ $ 14,325,730
============ =========== ============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 2,206,159 $ $ (4) $ 2,206,159
Accounts payable and accrued expenses 1,004,418 289,977 1,294,395
Reserve for rescission/guarantee 526,000 526,000
------------ ----------- ------------ -------------
TOTAL CURRENT LIABILITIES 3,736,577 289,977 4,026,554
LIABILITIES TO BE SATISFIED BY THE ISSUANCE OF SHARES
OF COMMON STOCK 2,177,000 (2,177,000)(4)
STOCKHOLDERS' EQUITY
Preferred stock - authorized 10,000,000 shares,
$.01 par value , issued and outstanding -
8,000,000 shares (pro forma) 80,000 (2) 80,000
Common stock - authorized 50,000,000 shares,
$.001 par value, issued and outstanding
15,913,686 shares (pro forma) 19,119 3,490,125 (3,493,330)(2),(4) 15,914
Additional paid-in capital 21,717,639 6,942,776 (10,863,672)(2),(4) 17,796,743
Accumulated deficit (16,454,002) (7,593,481) 16,454,002 (2) (7,593,481)
------------ ----------- ------------ -------------
TOTAL STOCKHOLDERS' EQUITY 5,282,756 2,839,420 2,177,000 10,299,176
------------ ----------- ------------ -------------
$ 11,196,333 $ 3,129,397 $ $ 14,325,730
============ =========== ============ =============
</TABLE>
See accompanying Notes to Pro Forma Combining Condensed Financial Statements.
<PAGE> 34
TETHERLESS ACCESS ASIA LIMITED AND TETHERLESS ACCESS, LTD.
UNAUDITED COMBINED CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Tetherless Tetherless
Access Asia Access
Limited Limited Combined
------- ------- --------
<S> <C> <C> <C>
REVENUES $ $ 108,381 $ 108,381
--------- --------- -----------
COSTS AND EXPENSES
Cost of sales 96,039 96,039
Selling, general and administrative 262,664 653,649 916,313
Research and development 213,921 213,921
--------- --------- -----------
TOTAL COSTS AND EXPENSES 262,664 963,609 1,226,273
--------- --------- -----------
LOSS FROM OPERATIONS (262,664) (855,228) (1,117,892)
--------- --------- -----------
OTHER INCOME 1,050 1,050
--------- --------- -----------
NET LOSS $(261,614) $(855,228) $(1,116,842)
========= ========= ===========
NET LOSS PER SHARE $ (0.10)
===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 11,560,000
===========
</TABLE>
See accompanying Notes to Pro Forma Combining Condensed Financial Statements.
<PAGE> 35
TETHERLESS ACCESS ASIA LIMITED AND TETHERLESS ACCESS, LTD.
UNAUDITED COMBINED CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Tetherless Tetherless
Access Asia Access
Limited Limited Combined
------- ------- --------
<S> <C> <C> <C>
REVENUES $ $ 38,200 $ 38,200
-------- --------- -----------
COSTS AND EXPENSES
Cost of sales 23,169 23,169
Selling, general and administrative 32,026 594,185 626,211
Research and development 31,011 31,011
-------- --------- -----------
TOTAL COSTS AND EXPENSES 32,026 648,365 680,391
-------- --------- -----------
LOSS FROM OPERATIONS (32,026) (610,165) (642,191)
-------- --------- -----------
OTHER INCOME 2,262 2,262
-------- --------- -----------
NET LOSS $(32,026) $(607,903) $ (639,929)
======== ========= ===========
NET LOSS PER SHARE $ (0.06)
===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 11,560,000
===========
</TABLE>
See accompanying Notes to Pro Forma Combining Condensed Financial Statements.
<PAGE> 36
TETHERLESS ACCESS ASIA LIMITED AND TETHERLESS ACCESS, LTD.
UNAUDITED COMBINED CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (639,929) $(1,116,842)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 15,610 39,881
Increase (decrease) in:
Accounts receivable (600) (11,217)
Inventory (211,293) 150,011
Prepaid expenses (49,742) 99,431
Accounts payable and accrued expenses (18,629) (205,212)
---------- -----------
Net cash used in operating activities (904,583) (1,043,948)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in other assets (90,943)
Purchases of furniture and equipment (6,312) (274,469)
---------- -----------
Net cash provided by (used) in investing activities (6,312) (365,412)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of loans (5,027) (5,497)
Sale of common stock 1,153,820 1,345,213
---------- -----------
Net cash provided by financing activities 1,148,793 1,339,716
---------- -----------
NET INCREASE IN CASH 237,898 (69,644)
CASH, Beginning of period 333,574 183,932
---------- -----------
CASH, End of period $ 571,472 $ 114,288
========== ===========
</TABLE>
See accompanying Notes to Pro Forma Combining Condensed Financial Statements.
<PAGE> 37
AMERICAN PHOENIX GROUP, INC. AND SUBSIDIARIES
AND TETHERLESS ACCESS ASIA LIMITED
UNAUDITED PRO FORMA COMBINING CONDENSED STATEMENTS OF OPERATIONS
TWELVE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Tetherless Tetherless
Access Asia Access American
Limited Limited TAAL & TAL Phoenix Pro Forma
("TAAL") ("TAL") Combined Group, Inc. (3) Adjustments Combined
-------- ------- -------- --------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
REVENUES $ $ 683,627 $ 683,627 $ $ $ 683,627
--------- ----------- ----------- ------------ ----------- -----------
COSTS AND EXPENSES
Cost of sales 560,762 560,762 560,762
Selling, general and administrative 466,831 4,820,222 5,287,053 5,287,053
Research and development 514,434 514,434 514,434
--------- ----------- ----------- ------------ ----------- -----------
TOTAL COSTS AND EXPENSES 466,831 5,895,418 6,362,249 6,362,249
--------- ----------- ----------- ------------ ----------- -----------
LOSS FROM OPERATIONS (466,831) (5,211,791) (5,678,622) (5,678,622)
--------- ----------- ----------- ------------ ----------- -----------
OTHER INCOME 3,520 8,778 12,298 12,298
--------- ----------- ----------- ------------ ----------- -----------
NET LOSS $(463,311) $(5,203,013) $(5,666,324) $ $ $(5,666,324)
========= =========== =========== ============ =========== ===========
NET LOSS PER SHARE $ (0.49)
===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 11,560,000
===========
</TABLE>
See accompanying Notes to Pro Forma Combining Condensed Financial Statements.
<PAGE> 38
AMERICAN PHOENIX GROUP, INC. AND SUBSIDIARIES
AND TETHERLESS ACCESS ASIA LIMITED
NOTES TO UNAUDITED PRO FORMA COMBINING CONDENSED
FINANCIAL STATEMENTS
1. Tetherless Access Asia Limited ("TAAL) balance sheet as of September
30, 1996 included the assets and liabilities of Tetherless Access
Limited ("TAL"). TAAL foreclosed on delinquent obligations due from its
affiliate, TAL. Pursuant to the foreclosure, TAAL succeeded to the
assets and liabilities of TAL.
2. To reflect the issuance of 8,000,000 shares of APG's Preferred Stock,
4,000,000 shares of APG's common stock, a reverse split of 2:1 and the
elimination of the accumulated deficit of APG.
3. The transaction is accounted for as a reverse acquisition whereby APG
which is the legal acquirer is considered, for accounting purposes, to
be the acquiree, thus, the historical result of operations of APG is
not included in the combined statement of operations.
4. The "Liabilities to be satisfied by the issuance of shares of common
stock" and the balance of the "Note payable" are assumed to be settled
through the issuance of 4,354,000 and 850,000 shares of common stock,
respectively.
