<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 26, 2000
PARAVANT INC.
-------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Florida 0-28114 59-2209179
------- ------- ----------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
</TABLE>
89 Headquarters Plaza North, Suite 1421, Morristown, NJ 07960
------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 631-6190
------------------------------
------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Paravant Inc. ("Paravant") hereby amends Items 7(a) and 7(b) of its
current report on Form 8-K filed with the Securities and Exchange Commission on
June 9, 2000 with respect to the acquisition of all of the outstanding shares of
capital stock of Triplex Systems Corporation, a Maryland corporation
("Triplex"), from Harry J. Binck, David E. Bowles and John B. Dillon, to supply
certain financial statements and pro forma financial information that were not
available at the time of filing.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired. The following financial
statements of Triplex are included herein:
Triplex Systems Corporation Financial Statements as of and for
the six months ended March 31, 2000 (unaudited) and the year
ended December 31, 1999 (audited) (included as pages F-1 to
F-11 of this Form 8-K/A Amendment No. 1).
(b) Pro Forma Financial Information. The following pro forma financial
information is included herein:
Paravant Inc. Unaudited Pro Forma Condensed Combined Balance
Sheet as of March 31, 2000 and Income Statements for the year
ended September 30, 1999 and six months ended March 31, 2000
(included as pages F-12 to F-19 of this Form 8-K/A Amendment
No. 1).
(c) Exhibits. The following Exhibits are filed as a part of this
report:
2.1 Stock Purchase Agreement dated as of May 26, 2000,
by and among Paravant Inc., Harry J. Binck, David E. Bowles
and John B. Dillon (incorporated by reference to Item 2.1 of
Paravant's Form 8-K filed on June 9, 2000).
23.1 Consent of KPMG LLP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 8 , 2000 PARAVANT INC.
--- (Registrant)
By: /s/ John C. Zisko
______________________________________
John C. Zisko
Vice President and Chief Financial Officer
2
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS:
Triplex Systems Corporation:
Independent Auditors' Report F-1
Financial Statements:
Balance Sheets as of December 31, 1999 and March 31, 2000 (unaudited) F-2
Statements of Income for the year ended December 31, 1999 and for the
six months ended March 31, 1999 and 2000 (unaudited) F-3
Statements of Stockholders' Equity for the year ended December 31, 1999 and
for the six months ended March 31, 2000 (unaudited) F-4
Statements of Cash Flows for the year ended December 31, 1999 and for the
six months ended March 31, 1999 and 2000 (unaudited) F-5
Notes to Financial Statements F-6 - F-11
PRO FORMA FINANCIAL INFORMATION:
Unaudited Pro Forma Condensed Combined Financial Information F-12
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2000 F-13 - F-14
Unaudited Pro Forma Condensed Combined Statement of Income for the
Year Ended September 30, 1999 F-15
Unaudited Pro Forma Condensed Combined Statement of Income for the
Six Months Ended March 31, 2000 F-16
(Unaudited) Notes to Pro Forma Condensed Combined Financial Statements F-17 - F-19
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Triplex Systems Corporation:
We have audited the accompanying balance sheet of Triplex Systems Corporation as
of December 31, 1999, and the related statements of income, stockholders' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Triplex Systems Corporation as
of December 31, 1999, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
/s/ KPMG LLP
June 30, 2000
F-1
<PAGE>
TRIPLEX SYSTEMS CORPORATION
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1999 2000
------------ ---------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $2,254,232 $2,526,572
Accounts receivable, net of allowance for doubtful accounts
of $300 in 1999 and $300 (unaudited) in 2000 468,541 470,598
Inventories (note 2) 567,648 696,639
Prepaid expenses and other current assets 12,063 11,594
---------- ----------
Total current assets 3,302,484 3,705,403
Property and equipment, net (note 3, 6, and 7) 226,231 207,469
Other assets 4,276 4,276
---------- ----------
Total assets $3,532,991 $3,917,148
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of capital lease obligation (note 6) $ 8,780 $ 8,780
Current installments of long-term debt (note 7) 15,752 15,752
Line of credit (note 4) 165,000 165,000
Notes payable to stockholders (note 5) 487,612 487,612
Accounts payable 112,633 187,237
Accrued expenses:
Compensation and benefits 85,451 --
Interest due to stockholders (note 5) 39,009 45,409
Other 66,289 37,829
Deferred revenue 59,510 101,504
---------- ----------
Total current liabilities 1,040,036 1,049,123
Capital lease obligation, excluding current installments (note 6) 3,668 1,549
Long-term debt, excluding current installments (note 7) 46,024 42,185
---------- ----------
Total liabilities 1,089,728 1,092,857
---------- ----------
Stockholders' equity:
Common stock, $.01 par value; 1,00,000 shares authorized;
40,000 shares issued and outstanding 400 400
Additional paid-in capital 80,600 80,600
Retained earnings 2,362,263 2,743,291
---------- ----------
Total stockholders' equity 2,443,263 2,824,291
Commitments and contingency (notes 6 and 9)
---------- ----------
Total liabilities and stockholders' equity $3,532,991 $3,917,148
========== ==========
</TABLE>
See accompanying notes to financial statements
F-2
<PAGE>
TRIPLEX SYSTEMS CORPORATION
Statements of Income
<TABLE>
<CAPTION>
FOR THE FOR THE THREE MONTHS
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, -------------------------
1999 1999 2000
------------ --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Revenues:
Product sales $4,505,965 $1,369,820 $ 893,571
Services 692,643 203,498 179,007
---------- ---------- ----------
Total revenues 5,198,608 1,573,318 1,072,578
Cost of products and services 2,110,023 671,253 448,217
---------- ---------- ----------
Gross profit 3,088,585 902,065 624,361
---------- ---------- ----------
Operating expenses:
Research and development 481,748 96,255 91,508
General and administrative 440,272 106,317 119,094
Sales and marketing 164,329 35,992 38,815
---------- ---------- ----------
Total operating expenses 1,086,349 238,564 249,417
---------- ---------- ----------
Income from operations 2,002,236 663,501 374,944
---------- ---------- ----------
Other income (expense):
Interest income 49,903 9,343 17,569
Interest expense ($39,009, $9,340
(uanudited) and $6,400 (unaudited)
to stockholders) (note 5) (60,732) (14,756) (11,959)
Other 1,880 458 474
---------- ---------- ----------
(8,949) (4,955) 6,084
---------- ---------- ----------
Net income $1,993,287 $ 658,546 $ 381,028
========== ========== ==========
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
TRIPLEX SYSTEMS CORPORATION
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ---------- -------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 $360 $ 640 $ 810,200 $ 811,200
Issuance of common stock for 40 79,960 -- 80,000
cash at $20 per share
Net income -- -- 1,993,287 1,993,287
Distributions to stockholders -- -- (441,224) (441,224)
---- ------- ---------- ----------
Balance at December 31, 1999 400 80,600 2,362,263 2,443,263
Net income (unaudited) -- -- 381,028 381,028
---- ------- ---------- ----------
Balance at March 31, 2000 (unaudited) $400 $80,600 $2,743,291 $2,824,291
==== ======= ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
TRIPLEX SYSTEMS CORPORATION
Statements of Cash Flows
<TABLE>
<CAPTION>
FOR THE FOR THE THREE MONTHS
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, --------------------------
1999 1999 2000
------------ --------------------------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $1,993,287 $ 658,546 $ 381,028
Adjustments to reconcile net income to net
cash flows provided by operating activities:
Depreciation and amortization 84,248 18,579 18,762
Increase (decrease) in cash caused by changes in:
Accounts receivable (195,038) (311,623) (2,057)
Inventories 136,653 214,231 (128,991)
Prepaid expenses and other current assets (12,009) (7,451) 469
Accounts payable (21,727) (13,930) 74,604
Accrued expenses:
Compensation and benefits 20,220 (3,231) (85,451)
Interest due to stockholders 39,009 9,340 6,400
Other 29,565 5,788 (28,460)
Deferred revenue (75,055) (11,561) 41,994
---------- ---------- ----------
Net cash provided by operating activities 1,999,153 558,688 278,298
---------- ---------- ----------
Cash flows from investing activity--
Purchases of property and equipment (83,069) (5,934) --
---------- ---------- ----------
Cash flows from financing activities:
Repayments on capital lease obligations (10,369) (2,436) (3,907)
Repayments on long-term debt (13,406) (3,587) (2,051)
Net repayments on line of credit (10,000) -- --
Repayments on notes payable to shareholders (224,000) -- --
Proceeds from issuance of common stock 80,000 -- --
Distributions to shareholders (441,224) -- --
---------- ---------- ----------
Net cash used by financing activities (618,999) (6,023) (5,958)
---------- ---------- ----------
Net increase in cash and cash equivalents 1,297,085 546,731 272,340
Cash and cash equivalents at beginning of year 957,147 957,147 2,254,052
---------- ---------- ----------
Cash and cash equivalents at end of year $2,254,232 $1,503,878 $2,526,392
========== ========== ==========
Supplemental disclosure of cash flow information--
Interest paid $ 21,723 $ 5,416 $ 5,559
========== ========== ==========
Supplemental disclosure of noncash investing
and financing activities--
The Company entered into a capital lease
obligation for equipment $ 17,403 $ -- $ --
========== ========== ==========
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
TRIPLEX SYSTEMS CORPORATION
Notes to Financial Statements
December 31, 1999
(All information as of March 31, 2000 and for the six months ended
March 31, 1999 and 2000 is unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BUSINESS AND OPERATIONS
Triplex Systems Corporation ("Triplex" or the "Company"), founded in
1987, develops and markets products to serve the high performance data
acquisition, processing, storage and archiving application
environments. The Company believes that all of its material operations
are part of the data acquisition, processing, storage, and archiving
application environments and it currently reports a single industry
segment. The Company's products are primarily provided to the foreign
and domestic government intelligence industry. Major customers include
the Maryland Procurement Office, Transportation Officer, General
Dynamics, the Boeing Company and the Republic of Singapore.
(b) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include interest earning deposits with
original maturities of 90 days or less.
(c) INVENTORIES
Inventories are stated at the lower of cost or market, determined on a
weighted average cost. The Company provides an allowance for
obsolescence as it becomes unusable or obsolete.
(d) PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is provided
using the straight-line method over the estimated useful lives of the
related assets ranging from three to seven years. Equipment under
capital leases are stated at the present value of minimum lease
payments and are amortized using the straight-line method over the
shorter of the lease term or the estimated useful lives of the assets.
(e) REVENUE RECOGNITION
The Company recognizes revenue when an order has been received, the
product has been shipped or services have been rendered, pricing is
fixed and collectibility is reasonably assured. Revenue on service
contracts is recognized on a straight line basis over the life of the
service contract.
(f) RESEARCH AND DEVELOPMENT
Research and development costs are expensed in the period incurred.
F-6 (Continued)
<PAGE>
TRIPLEX SYSTEMS CORPORATION
Notes to Financial Statements
December 31, 1999
(All information as of March 31, 2000 and for the six months ended
March 31, 1999 and 2000 is unaudited)
(g) INCOME TAXES
The Company has elected by unanimous consent of its shareholders to be
taxed under the provisions of Subchapter S of the Internal Revenue
Code. Under such election, the Company's federal and state taxable
income or loss are reportable by shareholders on their individual
income tax returns. Therefore, no provision or liability for income
tax has been included in these financial statements.
(h) 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 disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
(i) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses approximate fair
value due to the short-term maturities of these assets and
liabilities. The carrying amount of the line of credit, notes payable
to stockholders and obligation under capital leases approximates fair
value since the effective interest rate applicable to such obligation
approximates current market interest rates and associated credit risk.
(j) CONCENTRATION OF CREDIT RISK
The Company's financial instruments that are subject to concentrations
of credit risk consist primarily of cash equivalents and trade
accounts receivable which are generally not collateralized. The
Company's policy is to place its cash and cash equivalents with high
credit quality financial institutions in order to limit the amount of
credit exposure. The Company extends credit to its customers primarily
in the government intelligence industry on an unsecured basis on terms
it establishes for individual customers.
F-7 (Continued)
<PAGE>
TRIPLEX SYSTEMS CORPORATION
Notes to Financial Statements
December 31, 1999
(All information as of March 31, 2000 and for the six months ended
March 31, 1999 and 2000 is unaudited)
(k) INTERIM FINANCIAL INFORMATION
The financial statements as of March 31, 2000 and for the three months
ended March 31, 1999 and 2000 are unaudited but reflect only normal
and recurring adjustments which are, in the opinion of management,
necessary for the fair presentation of financial position and results
of operations. Operating results for the three months ended March 31,
1999 and 2000 are not necessarily indicative of the results that may
be expected for the full year.
(l) RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes
accounting and reporting standards for derivative instruments,
including derivative instruments embedded in other contracts, and for
hedging activities. In June 1999, the FASB issued SFAS No. 137, which
amended the implementation date for SFAS No. 133 to be effective for
all fiscal quarters of all fiscal years beginning after June 15, 2000.
This statement is not expected to affect the Company as the Company
currently does not have any derivative instruments or hedging
activities.
(2) INVENTORIES
Inventories as of December 31, 1999 and March 31, 2000 consist of:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
-------------- -------------
(UNAUDITED)
<S> <C> <C>
Raw materials $234,620 $191,742
Work in process 89,546 328,855
Finished goods 258,482 190,042
-------- --------
582,648 710,639
Less allowance for obsolete inventory 15,000 14,000
-------- ---------
$567,648 $ 696,639
======== =========
</TABLE>
F-8 (Continued)
<PAGE>
TRIPLEX SYSTEMS CORPORATION
Notes to Financial Statements
December 31, 1999
(All information as of March 31, 2000 and for the six months ended
March 31, 1999 and 2000 is unaudited)
(3) PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 1999 and March 31, 2000 consists
of:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------- -----------
(UNAUDITED)
<S> <C> <C>
Furniture and fixtures $ 56,236 $ 56,236
Vehicles 88,230 88,230
Computer software 91,607 91,607
Equipment including amounts related to capital leases of
$34,318 in 1999 and $34,418 (unaudited) in 2000
437,132 437,132
-------- ---------
673,205 673,205
Less accumulated depreciation and amortization, including
amounts related to capital leases of $13,053 in 1999
and $14,583 (unaudited) in 2000 446,974 465,736
-------- --------
Property and equipment, net $226,231 $207,469
======== ========
</TABLE>
(4) LINE OF CREDIT
The Company has an unsecured line of credit with a bank totaling $250,000
which is due on demand, and bears interest at prime plus one percent (9.5%
at December 31, 1999). Outstanding borrowings under the line of credit were
$165,000 as of December 31, 1999 and $165,000 (unaudited) as of March 31,
2000.
(5) RELATED PARTY TRANSACTIONS
The Company has 5.25% unsecured notes payable to stockholders, due on
demand. Notes payable to stockholders totaled $487,612 as of December 31,
1999, and accrued interest payable to stockholders totaled $39,009 as of
December 31, 1999 and $45,409 (unaudited) as of March 31, 2000.
Interest expense to stockholders was $39,009 for the year ended December
31, 1999 and $9,340 (unaudited) and $6,400 (unaudited) for the three months
ended March 31, 1999 and 2000, respectively.
F-9 (Continued)
<PAGE>
TRIPLEX SYSTEMS CORPORATION
Notes to Financial Statements
December 31, 1999
(All information as of March 31, 2000 and for the six months ended
March 31, 1999 and 2000 is unaudited)
(6) LEASES
The Company leases certain equipment under a capital lease that expires in
May 2001. The Company also leases its office and certain equipment under
noncancellable operating leases.
Minimum future lease payments under capital and operating leases as of
December 31, 1999 for each of the next two years and in the aggregate are:
<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING DECEMBER 31, LEASE LEASE
-------------------------------------------------------------- ------- ---------
<S> <C> <C>
2000 $ 9,576 $42,504
2001 3,749 --
------- -------
Total minimum lease payments 13,325 $42,504
=======
Less amount representing interest 877
-------
Present value of net minimum lease payment 12,448
Current portion of obligations under capital lease 8,780
-------
Obligation under capital lease $ 3,668
=======
</TABLE>
Total rental expense was approximately $62,000 for the year ended
December 31, 1999 and approximately $15,000 (unaudited) and $16,000
(unaudited) for the three months ended March 31, 1999 and 2000,
respectively.
(7) LONG-TERM DEBT
Long-term debt as of December 31, 1999 and March 31, 2000 consists of:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------ -----------
(UNAUDITED)
<S> <C> <C>
7.25% note payable to bank, payable in monthly installments of $821,
including interest, through July 2003; secured
by a vehicle. $30,888 $28,969
7.25% note payable to bank, payable in monthly installments of $821,
including interest, through July 2003; secured
by a vehicle. 30,888 28,968
------- -------
61,776 57,973
Less current installments of long-term debt 15,752 15,752
------- -------
Long term debt, excluding of current installments $46,024 $42,185
======= =======
</TABLE>
F-10 (Continued)
<PAGE>
TRIPLEX SYSTEMS CORPORATION
Notes to Financial Statements
December 31, 1999
(All information as of March 31, 2000 and for the six months ended
March 31, 1999 and 2000 is unaudited)
The aggregate maturities of long term debt for each of the four years
subsequent to December 31, 1999 are as follows: 2000, $15,752; 2001,
$16,932; 2002, $18,202; and 2003, $10,890.
(8) EMPLOYEE BENEFIT PLAN
The Company has a 401(k) plan (the "Plan") for all full time employees of
the Company. The Company may make discretionary contributions to the Plan
on behalf of employees that meet certain contribution eligibility
requirements defined under the terms of the Plan. The Company incurred
expenditures of approximately $11,000 related to the Plan for the year
ended December 31, 1999.
(9) CONTINGENCIES
In the ordinary course of business, the Company is party to certain legal
proceedings. Based upon information presently available, management
believes the ultimate resolution of all legal matters of which it is
currently aware will not have a material adverse effect on the Company's
financial statements.
(10) SUBSEQUENT EVENT
On May 26, 2000, the Company entered into an agreement to sell its common
stock to Paravant Inc. Under the terms of the agreement, the shareholders
of Triplex would receive approximately $6.4 million in cash, a $250,000 in
six month notes receivable, warrants to purchase 120,000 common shares of
Paravant Inc., and a contingent cash earn-out. Under the earn-out
agreement, the Company's shareholders will receive 60% of earnings before
interest and taxes in excess of $1,525,000 and $1,725,000 for the fiscal
years ending September 30, 2001 and 2002, respectively.
F-11
<PAGE>
PARAVANT INC.
Unaudited Pro Forma Condensed Combined Financial Information
The accompanying unaudited pro forma condensed combined financial information
provides information about the impact of the acquisition of Triplex Systems
("Triplex") by Paravant Inc. (the "Company") on May 26, 2000 as if the
transaction had been consummated on March 31, 2000 for purposes of the unaudited
pro forma condensed combined balance sheet as of March 31, 2000 and on October
1, 1998 for purposes of the unaudited pro forma condensed combined statements of
income for the periods ended September 30, 1999 and March 31, 2000.
F-12
<PAGE>
PARAVANT INC.
Unaudited Pro Forma Condensed Combined Balance Sheet
March 31, 2000
<TABLE>
<CAPTION>
HISTORICAL
--------------------------- PRO FORMA
ASSETS COMPANY TRIPLEX ADJUSTMENTS PRO FORMA
--------------------------------------------- ------- ------- ----------- ---------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 3,158,860 2,526,572 -- 5,685,432
Marketable securities 1,035,080 -- -- 1,035,080
Accounts receivable, net 5,595,876 470,598 -- 6,066,474
Costs and estimated earnings in excess --
of billings on uncompleted contracts 4,231,474 -- -- 4,231,474
Inventories 4,269,086 696,639 -- 4,965,725
Prepaid expenses and other current assets 241,513 11,594 -- 253,107
Deferred income taxes 1,290,905 -- -- 1,290,905
----------- --------- --------- ----------
Total current assets 19,822,794 3,705,403 -- 23,528,197
Property and equipment, net 2,593,200 207,469 -- 2,800,669
Demonstration pool and custom molds 539,077 -- -- 539,077
Intangible assets, net 4,836,453 -- -- 4,836,453
Employee note receivable 215,685 -- -- 215,685
Other assets 1,405,821 4,276 -- 1,410,097
Goodwill 10,962,110 -- 4,201,591 3a 15,163,701
----------- --------- --------- ----------
Total assets $40,375,140 3,917,148 4,201,591 48,493,879
=========== ========= ========= ==========
</TABLE>
F-13
<PAGE>
PARAVANT INC.
Unaudited Pro Forma Condensed Combined Balance Sheet
March 31, 2000
<TABLE>
<CAPTION>
HISTORICAL
--------------------------- PRO FORMA
LIABILITIES AND EQUITY COMPANY TRIPLEX ADJUSTMENTS PRO FORMA
--------------------------------------------- ------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Current liabilities:
Line of credit $ -- 165,000 6,327,360 3b 6,492,360
Current maturities of notes payable to
related parties 985,000 487,612 250,000 3c 1,722,612
Current maturities of capital lease
obligations 19,200 8,780 -- 27,980
Current maturities of long-term debt -- 15,752 -- 15,752
Accounts payable 1,407,596 187,237 -- 1,594,833
Billings in excess of costs and estimated --
earnings on uncompleted contracts 111,531 -- -- 111,531
Provision for losses on contracts in process 306,151 -- -- 306,151
Accrued expenses and other current liabilities 1,433,033 184,742 216,022 3d 1,833,797
----------- --------- ---------- ----------
Total current liabilities 4,262,511 1,049,123 6,793,382 12,105,016
Notes payable to related parties, excluding
current installments 959,983 -- -- 959,983
Capital lease obligations, excluding
current installments 55,268 1,549 -- 56,817
Long-term debt, excluding current
installments 956,418 42,185 -- 998,603
Deferred compensation 1,369,718 -- -- 1,369,718
Deferred income taxes 127,324 -- -- 127,324
----------- --------- ---------- ----------
Total liabilities 7,731,222 1,092,857 6,793,382 15,617,461
----------- --------- ---------- ----------
Stockholders' equity:
Common stock 264,601 400 (400) 3e 264,601
Additional paid-in capital 21,711,196 80,600 (80,600) 3e 21,943,696
-- -- 232,500 3f --
Retained earnings 11,053,033 2,743,291 (2,743,291) 3e 11,053,033
----------- --------- ---------- ----------
33,028,830 2,824,291 (2,591,791) 33,261,330
Less treasury stock, at cost (384,912) -- -- (384,912)
----------- --------- ---------- ----------
Total stockholders' equity 32,643,918 2,824,291 (2,591,791) 32,876,418
----------- --------- ---------- ----------
Total liabilities and stockholders' equity $40,375,140 3,917,148 4,201,591 48,493,879
=========== ========= ========== ==========
</TABLE>
F-14
<PAGE>
PARAVANT INC.
Unaudited Pro Forma Condensed Combined Statement of Income
Year ended September 30, 1999
<TABLE>
<CAPTION>
HISTORICAL
--------------------------- PRO FORMA
COMPANY TRIPLEX ADJUSTMENTS PRO FORMA
------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Contract revenues $42,279,478 5,198,608 -- 47,478,086
Costs of contract revenues 20,840,615 2,110,023 -- 22,950,638
----------- --------- ---------- ----------
Gross profit 21,438,863 3,088,585 -- 24,527,448
----------- --------- ---------- ----------
Sales and marketing 2,296,097 164,329 -- 2,460,426
Research, development, and engineering 2,536,530 481,748 -- 3,018,278
General and administrative expenses 4,400,561 440,272 -- 4,840,833
Amortization expense 1,968,649 -- 544,852 4a 2,513,501
----------- --------- ---------- ----------
Total selling and administrative expense 11,201,837 1,086,349 544,852 12,833,038
----------- --------- ---------- ----------
Income from operations 10,237,026 2,002,236 (544,852) 11,694,410
Other income (expense):
Interest expense (777,076) (60,732) (543,373) 4b (1,381,181)
Interest income 60,416 49,903 -- 110,319
Miscellaneous 159,234 1,880 -- 161,114
----------- --------- ---------- ----------
Income before income taxes 9,679,600 1,993,287 (1,088,225) 10,584,662
Income taxes 3,793,958 -- 352,974 4c 4,146,932
----------- --------- ---------- ----------
Net income $ 5,885,642 1,993,287 (1,441,199) 6,437,730
=========== ========= ========== ==========
Basic earnings per share $ 0.42 0.46
=========== ==========
Diluted earnings per share $ 0.41 0.45
=========== ==========
Weighted average number of common
shares outstanding 13,978,583 13,978,583
Plus incremental shares from assumed
conversion of options and warrants 413,669 413,669
----------- ----------
Weighted average number of common
shares outstanding and dilutive
potential common shares outstanding 14,392,252 14,392,252
=========== ==========
</TABLE>
F-15
<PAGE>
PARAVANT INC.
Unaudited Pro Forma Condensed Combined Statement of Income
Six months ended March 31, 2000
<TABLE>
<CAPTION>
HISTORICAL
--------------------------- PRO FORMA
COMPANY TRIPLEX ADJUSTMENTS PRO FORMA
------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Contract revenues $15,599,835 2,463,642 -- 18,063,477
Costs of contract revenues 8,163,655 990,723 -- 9,154,378
----------- --------- -------- ---------
Gross profit 7,436,180 1,472,919 -- 8,909,099
----------- --------- -------- ----------
Sales and marketing 996,615 89,484 -- 1,086,099
Research, development, and engineering 1,085,999 239,877 -- 1,325,876
General and administrative expenses 3,185,284 288,262 -- 3,473,546
Amortization expense 1,016,363 -- 272,426 4a 1,288,789
----------- --------- -------- ----------
Total selling and administrative expense 6,284,261 617,623 272,426 7,174,310
----------- --------- -------- ----------
Income from operations 1,151,919 855,296 (272,426) 1,734,789
Other income (expense):
Interest expense (93,891) (56,471) (265,749) 4b (416,111)
Interest income 245,963 33,378 -- 279,341
Miscellaneous 9,120 1,955 -- 11,075
----------- --------- -------- ----------
Income before income taxes 1,313,111 834,158 (538,175) 1,609,094
Income taxes 627,667 -- 115,433 4c 743,100
----------- --------- -------- ----------
Net income $ 685,444 834,158 (653,608) 865,994
=========== ========= ======== =========
Basic earnings per share $ 0.04 0.05
=========== =========
Diluted earnings per share $ 0.04 0.05
=========== ==========
Weighted average number of common
shares outstanding 17,539,163 17,539,163
Plus incremental shares from assumed
conversion of options and warrants 504,674 4,937 4d 509,611
----------- ----------
Weighted average number of common
shares outstanding and dilutive
potential common shares outstanding 18,043,837 18,048,774
=========== ==========
</TABLE>
F-16
<PAGE>
PARAVANT INC.
Notes to Unaudited Pro Forma Condensed
Combined Financial Statements
(1) BASIS OF PRESENTATION
The pro forma condensed consolidated financial statements are unaudited
and give effect to the acquisition of TriPlex Systems Corporation
("TriPlex") on May 26, 2000 by Paravant Inc. (the "Company"). The
unaudited pro forma condensed combined financial statements are based on
the historical financial statements of the Company and TriPlex giving
effect to the transactions under the purchase method of accounting and
the assumptions and adjustments discussed below. The Company has made
preliminary estimates of fair value for the net assets acquired from
Triplex and has allocated the purchase price using these estimates. These
unaudited pro forma condensed combined financial statements may not be
indicative of the financial position or results of operations that
actually would have occurred if the combination had been in effect on
October 1, 1998 or March 31, 2000 or which may be obtained in the future.
The pro forma financial statements should be read in conjunction with the
audited financial statements of the Company, contained the Company's Form
10-K for the year ended September 30, 1999, and Form 10-Q for the six
months ended March 31, 2000, and the financial statements of Triplex
contained elsewhere herein.
The Company's fiscal year ends on September 30, while Triplex's fiscal
year ends on December 31. The unaudited pro forma condensed combined
balance sheet includes the March 31, 2000 balance sheet for each company.
The unaudited pro forma condensed consolidated statement of income for
the year ended September 30, 1999 includes the statement of income for
the year ended September 30, 1999 for the Company and the year ended
December 31, 1999 for Triplex. The unaudited pro forma condensed combined
statement of income for the six months ended March 31, 2000 includes the
statement of income for the six months ended March 31, 2000 for both
companies.
(2) ACQUISITION OF TRIPLEX
On May 26, 2000, the Company acquired all the outstanding common stock of
Triplex. The purchase price consisted of (i) $6,327,360 in cash (financed
through the Company's existing line of credit), (ii) $250,000 in six
month notes payable, with interest payable at prime (9.5% at May 26,
2000), (iii) 120,000 warrants to purchase Company common stock at $2.75
per share (valued at $232,500 using the Black Scholes method and assuming
an estimated life of 5 years, 6.3% risk free interest rate and 75%
volatility and (iv) a contingent earn-out payment payable over the next
two years. Under the earn-out agreement, Triplex shareholders will
receive 60% of earnings before interest and taxes in excess of $1,525,000
and $1,725,000 for the fiscal years ending September 30, 2001 and 2002
respectively. Any payments made under the contingent earn-out agreement
will be accounted for as additional purchase price and included in
goodwill when paid.
The transaction will be accounted for as an asset purchase for tax
purposes. Accordingly, there are no deferred taxes in the opening
balance sheet of the acquired company.
Distributions of approximately $2 million were made to Triplex
shareholders prior to the acquisition by Paravant Inc.
(3) ADJUSTMENTS TO PRO FORMA CONDENSED COMBINED BALANCE SHEET
The following describes the pro forma adjustments made to arrive at the
pro forma consolidated balance sheet as of March 31, 2000 as if the
acquisition was consummated on such date.
F-17
<PAGE>
PARAVANT INC.
Notes to Unaudited Pro Forma Condensed
Combined Financial Statements
(a) Record excess of purchase price over estimated fair value of net
assets acquired as follows:
<TABLE>
<S> <C>
Purchase price:
Cash paid with line of credit borrowings $ 6,327,360
Notes payable 250,000
Transaction costs 216,022
Fair value of warrants issued 232,500
--------------
7,025,882
Estimated fair value of net assets acquired as of March 31, 2000 (2,824,291)
---------------
Goodwill $ 4,021,591
===============
</TABLE>
(b) Record payment of cash of $6,327,360, financed through the Company's
existing line of credit.
(c) Record $250,000 of notes payable to Triplex shareholders.
(d) Record $216,022 of transaction in costs.
(e) Remove historical amounts of Triplex stockholders equity.
(f) Record fair value of $232,500 related to 120,000 warrants issued to
Triplex shareholders as additional consideration for common shares
acquired.
(4) ADJUSTMENTS TO PRO FORMA STATEMENTS OF INCOME
The following describes the pro forma adjustments included in the
unaudited pro forma condensed combined statements of income for the year
ended September 30, 1999 and six months ended March 31, 2000 as if the
acquisition was consummated on October 1, 1998.
(a) Record amortization ($544,852 in 1999 and $272,426 in 2000) over a 10
year period for goodwill as follows:
<TABLE>
<S> <C>
Purchase price:
Cash paid with line of credit borrowings $ 6,327,360
Notes payable 250,000
Transaction costs 216,022
Fair value of warrants issued 232,500
---------------
7,025,882
Estimated fair value of net assets acquired as of May 26, 2000 (1,577,360)
---------------
Goodwill $ 5,448,522
===============
</TABLE>
F-18
<PAGE>
PARAVANT INC.
Notes to Unaudited Pro Forma Condensed
Combined Financial Statements
(b) Record interest expense associated with line of credit ($6,327,360
at 8.4%, or $531,498 in 1999 and $265,749 in 2000) and notes
payable ($250,000 at 9.5%, or $11,875 in 1999 and $-0- in 2000).
(c) Record income taxes at 39% associated with Triplex changing from an
S corporation to a C corporation, net of deductions for
amortization and interest recorded in (a) and (b) above.
(d) Record the dilutive effect in 2000 for the warrants issued in
connection with the acquisition. Such warrants were anti-dilutive
in 1999.
F-19
<PAGE>
PARAVANT INC.
INDEX TO EXHIBITS FILED WITH FORM 8-K
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
------- ----------------------
<S> <C>
2.1 Stock Purchase Agreement dated as of May 26, 2000, by and
among Paravant Inc., Harry J. Binck, David E. Bowles and John
B. Dillon (incorporated by reference to Item 2.1 of Paravant's
Form 8-K filed on June 9, 2000).
23.1 Consent of KPMG LLP.
</TABLE>
