-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, SQMiZYSgX0Br3pgLcnBduIzIeaY2u2PGW1fpZJOYjcPyLrqeCdzmGg5O9aUHGIz1 IX8kZedMh90UtF7vNbz9mA== 0000950148-95-000358.txt : 19950627 0000950148-95-000358.hdr.sgml : 19950627 ACCESSION NUMBER: 0000950148-95-000358 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950425 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950626 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPORTS TECH INC CENTRAL INDEX KEY: 0000014280 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 880085608 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-16730 FILM NUMBER: 95549181 BUSINESS ADDRESS: STREET 1: 1700 E DESERT INN RD #307 CITY: LAS VEGAS STATE: NV ZIP: 89109 BUSINESS PHONE: 7027357774 MAIL ADDRESS: STREET 1: 400 CORPORATE POINTE SUITE 780 CITY: CULVER CITY STATE: CA ZIP: 90280 FORMER COMPANY: FORMER CONFORMED NAME: BRISTOL HOLDINGS INC DATE OF NAME CHANGE: 19920518 FORMER COMPANY: FORMER CONFORMED NAME: BRISTOL GAMING CORP DATE OF NAME CHANGE: 19890518 FORMER COMPANY: FORMER CONFORMED NAME: BRISTOL SILVER MINES CO DATE OF NAME CHANGE: 19801201 8-K/A 1 FORM 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15 (d) of The Securities Exchange Act of 1934 Date Of Report: April 25, 1995 SPORTS-TECH, INC. (Exact Name of Registrant as specified in its Charter) Nevada 0-16730 88-0085608 - ---------------------------------- -------------------------- ------------------- (State or other jurisdiction of (Commission File No.) (IRS Employer Identification corporation) No.)
400 Corporate Pointe, Suite 780 Culver City, CA 90230 - --------------- ----- (Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 310-342-2800 2 Item 7(a) Financial Statements of Businesses Acquired Included herein are the following reports and financial statements of Stephen Dunn & Associates, Inc.: (i) Auditor's Report, dated June 2,1995. (ii) Balance Sheets as of December 31, 1994 and 1993. (iii) Statements of Income for the years ended December 31, 1994, 1993 and 1992. (iv) Statements of Shareholder's Equity for the years ended December 31, 1994, 1993 and 1992. (v) Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992. (vi) Notes to the Financial Statements. (vii) Balance Sheet as of March 31, 1995 ( Unaudited). (viii) Statements of Operations for the Three Months ended March 31, 1995 and 1994 (Unaudited). (ix) Statement of Shareholder's Equity for the Three Month period Ended March 31, 1995 (Unaudited) (x) Statements of Cash Flows for the Three Months ended March 31, 1995 and 1994 (Unaudited). (xi) Notes to the Unaudited Financial Statements for the Three Months ended March 31, 1995 and 1994. Item 7( b) Unaudited Pro Forma Financial Information The unaudited pro forma financial information presented in this section has been prepared to reflect the Unaudited Combined Balance Sheet and Unaudited Statements of Operations of SPORTS- TECH. Inc. ("SPORTS-TECH"), Alliance Media Corporation ("Alliance") and Stephen Dunn & Associates, Inc.("SDA") as if they had been one entity for the nine months ended March 31, 1995 and the twelve months ended June 30, 1994. The information contained in these unaudited combined financial statements include pro forma adjustments to reflect the net proceeds from the sale of common stock by Alliance, the acquisition of SDA by Alliance and the acquisition, by merger, of Alliance by SPORTS-TECH, Inc. In accordance with generally accepted accounting principles, the merger will be accounted for as a purchase of Alliance. Consequently, the purchase price, including the fair value of the shares issued in connection with the merger, obligations assumed and merger costs, will be allocated to the assets and rights acquired, based upon their respective fair values. Such allocation will be based upon evaluations which are still in process. For purposes of the accompanying unaudited pro forma financial statements, the pro forma adjustments have been reflected on an estimated basis using preliminary information available. No assurance can be given that the pro forma adjustments will not differ materially from the amounts ultimately determined. The unaudited pro forma combined financial statements should be read in conjunction with the respective historical consolidated financial statements and related notes of SPORTS-TECH, which have been previously filed with the Commission, and the financial statements and related notes of SDA, which are included herein. The revenues and results of operations of the acquired businesses included in the summary are not considered by management to be indicative of the anticipated results of the business for periods subsequent to the acquisitions by 3 the SPORTS-TECH, nor are they considered to be indicative of the results of operations which might have been attained for the periods presented. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned hereto duly authorized. SPORTS-TECH, INC. Date: June 25, 1995 By: /s/ Martin S. McDermut --------------------------------------------- Name: Martin S. McDermut Title: Vice President and Chief Financial Officer 4 STEPHEN DUNN & ASSOCIATES, INC. __________ REPORT ON AUDITED FINANCIAL STATEMENTS As Of December 31, 1994 And 1993 For The Years Ended December 31, 1994, 1993 And 1992 __________ 5 REPORT OF INDEPENDENT ACCOUNTANTS __________ To the Shareholder Stephen Dunn & Associates, Inc. We have audited the balance sheets of Stephen Dunn & Associates, Inc. as of December 31, 1994 and 1993, and the related statements of income, shareholder's equity and cash flows for the three years ended December 31, 1994, 1993 and 1992. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Stephen Dunn & Associates, Inc. as of December 31, 1994 and 1993, and the results of its operations and its cash flows for the years ended December 31, 1994, 1993 and 1992 in conformity with generally accepted accounting principles. /s/ COOPERS & LYBRAND LLP Los Angeles, California June 2, 1995 6 STEPHEN DUNN & ASSOCIATES, INC. BALANCE SHEETS As Of December 31, 1994 And 1993 __________
1994 1993 ---- ---- A S S E T S: Current assets: Cash $164,910 $137,204 Accounts receivable, less allowance for doubtful accounts of $8,000 and $6,000 in 1994 and 1993, respectively 1,473,712 1,095,493 Prepaid expenses and other current assets 58,818 27,079 --------- --------- Total current assets 1,697,440 1,259,776 Property and equipment - at cost, less accumulated depreciation of $702,842 and $536,171 in 1994 and 1993, respectively - Note 2 352,309 434,536 Deposits 23,452 23,452 --------- --------- Total assets $2,073,201 $1,717,764 ========= =========
LIABILITIES AND SHAREHOLDER'S EQUITY: Current liabilities: Accounts payable $195,203 $80,463 Accrued wages and payroll taxes 262,586 189,103 Accrued expenses and other current liabilities 70,956 64,927 Loan payable, shareholder - Note 3 - 293,626 Current portion of long-term debt - Note 5 78,353 78,353 Income taxes payable 55,270 1,065 Deferred income taxes - Note 8 30,600 26,900 -------- ------- Total current liabilities 692,968 734,437 -------- ------- Long-term liabilities: Long-term debt, less current portion - Note 5 10,517 88,870 Deferred income taxes - Note 8 - 1,400 Other taxes and licenses - Note 6 72,000 76,300 -------- ------- Total long-term liabilities 82,517 166,570 -------- ------- Commitments and contingencies - Notes 6 and 7 Shareholder's equity: Common stock: Authorized - 1,000 shares of no par common stock; issued and outstanding - 400 shares 400 400 Loan receivable, shareholder (167,523) - Retained earnings 1,464,839 816,357 --------- ------- Total shareholder's equity 1,297,716 816,757 --------- ------- Total liabilities and shareholder's equity $2,073,201 $1,717,764 ========= =========
The accompanying notes are an integral part of these financial statements. 2 7 STEPHEN DUNN & ASSOCIATES, INC. STATEMENTS OF INCOME For The Years Ended December 31, 1994, 1993 And 1992 __________
1994 1993 1992 ---- ---- ---- Net sales $13,595,763 $11,338,654 $11,251,180 Cost of sales 9,448,130 7,926,589 7,654,771 ----------- ----------- ----------- Gross profit 4,147,633 3,412,065 3,596,409 Operating expenses 2,987,315 2,586,092 2,387,680 ----------- ----------- ----------- Income from operations 1,160,318 825,973 1,208,729 ----------- ----------- ----------- Other income (expense): Interest income 7,485 15,553 11,499 Interest expense (36,855) (50,640) (58,556) -------- -------- --------- Total other expense (29,370) (35,087) (47,057) -------- -------- --------- Income before officer's salary 1,130,948 790,886 1,161,672 Officer's salary 434,061 451,050 1,308,200 -------- -------- --------- Income (loss) before income taxes and cumulative effect 696,887 339,836 (146,528) Provision for income tax expense 48,405 20,376 5,596 -------- -------- --------- Income (loss) before cumulative effect 648,482 319,460 (152,124) Cumulative effect adjustment, for the change in income tax accounting - Note 8 - (16,900) - -------- -------- --------- Net income (loss) $648,482 $302,560 ($152,124) ======== ======== =========
The accompanying notes are an integral part of these financial statements. 3 8 STEPHEN DUNN & ASSOCIATES, INC. STATEMENTS OF SHAREHOLDER'S EQUITY For The Years Ended December 31, 1994, 1993 And 1992 __________
Common Loans To Retained Stock Shareholder Earnings Total --------- ----------- -------- ------- Balance, January 1, 1992 $400 $665,921 $666,321 Net loss - (152,124) (152,124) ---- -------- -------- Balance, December 31, 1992 400 513,797 514,197 Net income - 302,560 302,560 ---- -------- -------- Balance, December 31, 1993 400 816,357 816,757 Net income - 648,482 648,482 Loans to shareholder - ($167,523) (167,523) ---- --------- -------- -------- Balance, December 31, 1994 $400 ($167,523) $1,464,839 $1,297,716 ==== ========= ========== ==========
The accompanying notes are an integral part of these financial statements. 4 9 STEPHEN DUNN & ASSOCIATES, INC. STATEMENTS OF CASH FLOWS For The Years Ended December 31, 1994, 1993 And 1992 __________
1994 1993 1992 -------- -------- ------- Cash flows from operating activities: Net income (loss) $648,482 $302,560 ($152,124) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation 166,671 153,438 148,825 Provision for doubtful accounts 2,000 - (6,000) (Increase) decrease in: Accounts receivable (380,219) (128,204) 39,947 Prepaid expense and other current assets (31,739) (15,430) 56,226 Increase (decrease) in: Accounts payable 114,740 (72,112) 32,116 Accrued wages and payroll taxes 73,483 (596,201) 581,609 Accrued expenses and other current liabilities 6,029 (6,228) 48,498 Income taxes payable 54,205 (4,135) 3,565 Deferred income taxes 2,300 28,300 - Other taxes and licenses (4,300) 23,700 27,100 ----- ------ ------ Net cash provided by (used in) operating activities 651,652 (314,312) 779,762 ------- ------- ------- Cash flows from investing activities: Purchase of equipment (84,444) (37,449) (82,589) ------ ------ ------ Net cash used in investing activities (84,444) (37,449) (82,589) ------ ------ ------ Cash flows from financing activities: Payments by shareholder (293,626) (493,577) (318,681) Loans to shareholder (167,523) 306,055 403,238 Repayment of notes payable (78,353) (70,493) (78,601) Repayment of bank credit line borrowings - - (200,000) ------ ------ ------- Net cash used in financing activities (539,502) (258,015) (194,044) ------- ------- ------- Net increase (decrease) in cash 27,706 (609,776) 503,129 Cash at beginning of year 137,204 746,980 243,851 ------- ------- ------- Cash at end of year $164,910 $137,204 $746,980 ======= ======= ======= Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $37,050 $47,650 $50,357 Income taxes 4,065 6,629 2,031
The accompanying notes are an integral part of these financial statements. 5 10 STEPHEN DUNN & ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS As Of December 31, 1994 And 1993 For The Years Ended December 31, 1994, 1993 And 1992 __________ 1. Significant Accounting Policies: The Company provides telemarketing and other services related to fund-raising campaigns for non-profit entities located throughout the United States. Recognition Of Revenue: Revenues from on-site campaigns are earned when pledged cash is received. Revenues from off-site campaigns are earned when the Company's services have been provided. Property And Depreciation: Property and equipment are reported at cost. Expenditures which improve or extend the life of the asset are capitalized, while maintenance and repairs which do not appreciably extend the useful lives of the related assets are charged to expense as incurred. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Income Taxes: The Company has elected to be taxed under the provision of Subchapter S of the Internal Revenue Code and as a result the Company's federal taxable income or loss and tax credits are passed through to the individual shareholder. However, the Company does have a liability for income taxes on its net income in prior years to the extent of the built-in gain which existed at the time of the S Corporation election - see Note 6. Some states either do not recognize the Company's "S" Corporation status or require income taxes at a reduced rate. The income tax provision relates to income taxes due on taxable income for those states plus deferred taxes related primarily to the differences that exist between the financial statement and the tax bases of the assets and liabilities. These differences are primarily a result of differences in depreciation methods and the use of the cash basis of accounting for tax reporting. Cash And Cash Equivalents: For purposes of the Statements of Cash Flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Continued 6 11 STEPHEN DUNN & ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS, Continued As Of December 31, 1994 And 1993 For The Years Ended December 31, 1994, 1993 And 1992 __________ 2. Property And Equipment: Property and equipment consist of the following:
1994 1993 -------- -------- Office furniture and equipment $805,383 $766,358 Automobile 26,581 26,581 Leasehold improvements 223,187 177,768 ------- ------- 1,055,151 970,707 Less, Accumulated depreciation (702,842) (536,171) -------- ------- $352,309 $434,536 ======= =======
Depreciation expense for the years ended December 31, 1994, 1993 and 1992 was $166,671, $153,438 and $148,825, respectively. 3. Related Party: The Company was indebted to its sole shareholder in the amount of $293,626 as of December 31, 1993. Interest was payable at 10%. This amount was repaid in 1994. The debt at December 31, 1993 included unpaid interest of $331. Interest expense for the years ended December 31, 1994, 1993 and 1992 was $9,799, $30,808 and $27,632, respectively. The Company advanced funds to its sole shareholder in the amount of $166,179 as of December 31, 1994. The advance accrues interest at 10% per annum, does not have a specified maturity date, and is reflected as a reduction in Shareholder's Equity. At December 31, 1994 the advance included unpaid interest of $1,344. Interest income for the year ended December 31, 1994 was $1,344. Continued 7 12 STEPHEN DUNN & ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS, Continued As Of December 31, 1994 And 1993 For The Years Ended December 31, 1994, 1993 And 1992 __________ 3. Related Party, Continued: The Company leases its corporate business premises in Venice, California from its sole shareholder requiring monthly rental payments of $9,905 through January 1994 and $11,805 until the lease term expires on January 1, 1999, with an option for renewal at such time. The Company incurs all costs of insurance, maintenance and utilities. Total rent paid by the Company to its sole shareholder for the years ended December 31, 1994, 1993 and 1992 was $139,754, $118,854 and $118,854, respectively. Future minimum rental payments for this lease are as follows: 1995 $141,654 1996 141,654 1997 141,654 1998 141,654 ------- $566,616 =======
4. Concentrations Of Credit Risk: The Company maintains cash deposits with primarily one financial institution amounting to $254,051 and $222,837, respectively, at December 31, 1994 and 1993. These deposits are insured for up to $100,000 by the U.S. Federal Deposit Insurance Corporation. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Company's customer base, and their dispersion across many different geographical regions within the United States. At December 31, 1994, the Company had no significant concentrations of credit risk. 5. Long-Term Debt: During the year ended December31, 1993, the Company refinanced two loans into a single bank loan. The bank note payable requires monthly principal payments of $6,529 plus interest based on the bank's prime rate of interest (8.5% and 6.0% at December 31, 1994 and 1993, respectively) plus 1.75%. The note matures on January 15, 1996. The note is collateralized by substantially all of the Company's assets and is guaranteed by the shareholder. The debt to shareholder is subordinate to the bank debt. The bank loan contains financial covenants including current ratio and working capital, debt/net worth, capital expenditure limits and cash flows. Continued 8 13 STEPHEN DUNN & ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS, Continued As Of December 31, 1994 And 1993 For The Years Ended December 31, 1994, 1993 And 1992 __________ 5. Long-Term Debt, Continued: Maturity of the bank note payable is as follows:
Year Ended December 31, ------------ 1995 $78,353 1996 10,517 ------ 88,870 Less current maturities 78,353 ------ $10,517 ======
The Company also has available an unsecured $350,000 line of credit at December 31, 1994 and 1993. There were no borrowings from the line at December 31, 1994 and 1993. Total interest incurred during the years ended December 31, 1994, 1993 and 1992 on bank borrowings was $17,089, $16,611 and $24,279, respectively. 6. Commitments And Contingencies: Effective October 1, 1990, the Company elected to be taxed as an S Corporation. As a result, the Company is required to pay taxes on the built-in gain which existed when the Company converted from a C Corporation to an S Corporation. The Company estimates that the minimum tax on the built-in gain was $25,500. The actual liability may be higher if goodwill for tax purposes is determined to have existed at October 1, 1990. A provision for the minimum expected liability has been made. Interest and penalties of $15,045 and $12,500 have been estimated and recorded at December 31, 1994 and 1993, respectively. Subsequent to December 31, 1994, the Company will be taxed as a C Corporation - see Note 9. Continued 9 14 STEPHEN DUNN & ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS, Continued As Of December 31, 1994 And 1993 For The Years Ended December 31, 1994, 1993 And 1992 __________ 7. Lease Commitments: In addition to leasing corporate office space (Note 3), the Company leases office space in Berkeley, California, requiring monthly rental payments of $9,135. The lease term expired on October 22, 1994 and was extended to January 31, 1996 at $9,610 per month. There are no further options to renew this lease. Total rent paid by the Company for this location for the years ended December 31, 1994, 1993 and 1992 was $110,570, $109,575 and $109,519, respectively. Future minimum rental payments for this lease are as follows: 1995 $115,320 1996 9,610 -------- $124,930 ========
The Company also leases office space in New York, requiring monthly rental payments of $550. Total rent paid by the Company for this location for the years ended December 31, 1994, 1993 and 1992 was $6,600, $6,006, and $5,800, respectively. 8. Income Taxes: Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". The cumulative effect of the change in accounting principle is included in determining net income for 1993. The financial statements for prior years have not been restated. As of December 31, 1994 and 1993, deferred state tax liabilities recognized for taxable temporary differences totalled $30,600 and $39,800, respectively. Deferred state tax assets recognized for deductible temporary differences and capital loss carryforwards as of December 31, 1993 totalled $11,500, net of a valuation allowance of $2,100; there were no deferred state tax assets or valuation allowances recognized as of December 31, 1994. Continued 10 15 STEPHEN DUNN & ASSOCIATES, INC. NOTES TO FINANCIAL STATEMENTS, Continued As Of December 31, 1994 And 1993 For The Years Ended December 31, 1994, 1993 And 1992 __________ 8. Income Taxes, Continued: The provision for state income taxes consists of the following components:
December 31, ------------------------------------ 1994 1993 1992 ---- ---- ---- Current taxes $5,596 $46,105 $8,976 Deferred taxes 2,300 11,400 - ------- ------ ------ $48,405 $20,376 $5,596 ======= ======= ======
The Company has a capital loss carryforward of $10,000 available for offset against future capital gains. 9. Subsequent Events: On April 25, 1995, all of the outstanding common stock of the Company was acquired by Alliance Media Corporation and subsequently by Sports-Tech, Inc. upon consummation of the merger between STI Merger Corporation, a wholly owned subsidiary of Sports-Tech, Inc. and Alliance Media Corporation. The Company has consequently changed its fiscal year-end from December 31 to June 30, and as a result of the acquisition the Company will be taxed as a C Corporation. 16 STEPHEN DUNN & ASSOCIATES, INC. INTERIM FINANCIAL STATEMENTS AS OF MARCH 31, 1995 AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 17 STEPHEN DUNN & ASSOCIATES, INC. BALANCE SHEET March 31, 1995 (Unaudited) ASSETS: Current assets: Cash $ 445,897 Accounts receivable, less allowance for doubtful accounts of $6,000 1,578,099 Prepaid expenses and other current assets 70,636 ---------- Total current assets 2,094,632 Property and equipment - at cost, less accumulated depreciation of $744,504 317,958 Deposits 23,452 ---------- Total assets $2,436,042 ========== LIABILITIES & SHAREHOLDER'S EQUITY: Current liabilities: Accounts payable $ 30,745 Accrued wages and payroll taxes 628,413 Accrued expenses and other current liabilities 165,508 Current portion of long-term debt 78,353 Income taxes payable 55,270 Deferred income taxes 30,600 ---------- Total current liabilities 988,889 Long-term liabilities: Long-term debt, less current portion 90,929 Other taxes and licenses 72,000 ---------- Total liabilities 1,151,818 Commitments and contingencies Shareholder's equity: Common stock: Authorized - 1,000 shares of no par common stock; issued and outstanding - 400 shares 400 Retained earnings 1,450,003 Loan receivable, shareholder (166,179) ---------- Total shareholder's equity 1,284,224 ---------- Total liabilities and shareholder's equity $2,436,042 ==========
The accompanying notes are an integral part of these financial statements. 18 STEPHEN DUNN & ASSOCIATES, INC. STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 1995 and 1994 (Unaudited)
1995 1994 ---------- ---------- Net sales $3,551,095 $2,857,471 Cost of sales 2,588,125 2,143,347 ---------- ---------- Gross Profit 962,970 714,124 Operating expenses 867,127 664,165 ---------- ---------- Income from operations 95,843 49,959 Interest expense 2,164 4,743 ---------- ---------- Income before officers' salary 93,679 45,216 Officer's salary 108,515 108,515 ---------- ---------- Loss before income taxes (14,836) (63,299) Provision for income tax expense - - ---------- ---------- Net loss $ (14,836) $ (63,299) ========== ==========
The accompanying notes are an integral part of these financial statements. 19 STEPHEN DUNN & ASSOCIATES, INC. STATEMENT OF SHAREHOLDER'S EQUITY For The Three Month Period Ended March 31, 1995 (Unaudited)
Common Retained Loans to Stock Earnings Shareholder Total ------- ---------- ----------- ---------- Balance, December 31, 1994 $400 $1,464,839 $(167,523) $1,297,716 Net loss (14,836) (14,836) Payments by shareholder 1,344 1,344 ---- ---------- --------- ---------- Balance, March 31, 1995 $400 $1,450,003 $(166,179) $1,284,224 ==== ========== ========= ==========
The accompanying notes are an integral part of these financial statements. 20 STEPHEN DUNN & ASSOCIATES, INC. STATEMENTS OF CASH FLOWS For The Three Month Periods Ended March 31, 1995 and 1994 (Unaudited)
1995 1944 --------- -------- Cash flows from operating activities: Net loss $ (14,836) $(63,299) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation 41,952 41,668 (Increase) decrease in: Accounts receivable (104,387) (77,905) Prepaid expenses and other current assets (11,818) 2,921 Increase (decrease) in: Accounts payable (164,458) (488) Accrued wages and payroll taxes 365,827 404,397 Accrued expenses and other current liabilities 94,552 35,649 --------- -------- Net cash provided by operating activites 206,832 342,943 Cash flows from investing activities: Purchase of equipment (7,601) (57,404) --------- -------- Net cash used in investing activities (7,601) (57,404) Cash flows from financing activities: Loans to shareholder (5,725) Payments by shareholder 1,344 Borrowings on bank line of credit 100,000 350,000 Payments on bank line of credit (19,588) (19,588) --------- -------- Net cash provided by financing activities 81,756 324,687 --------- -------- Net increase in cash 280,987 610,226 Cash at beginning of peroid 164,910 137,204 --------- -------- Cash at end of period $ 445,897 $747,430 ========= ========
The accompanying notes are an integral part of these financial statements. 21 STEPHEN DUNN & ASSOCIATES. INC. NOTES TO INTERIM FINANCIAL STATEMENTS For The Three Months Ended March 31, 1995 and 1994 (Unaudited) 1. General The interim financial statements included herein were prepared by the Company without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The Company believes that the disclosures are adequate to make the information presented not misleading. The interim financial statements reflect all adjustments that are, in the opinion of management, necessary for the fair presentation of the results for the interim periods presented. All adjustments are of a recurring nature. These interim financial statements should be read in conjunction with the financial statements as of December 31, 1994 and 1993 and for the three years in the period ended December 31, 1994 and notes thereto also included in the Report on Form 8-K/A-1. 2. Subsequent Event On April 25, 1995, all the outstanding common stock of the Company was acquired by Alliance Media Corporation and subsequently by SPORTS-TECH, Inc. upon consummation of the merger between STI Merger Corporation, a wholly-owned subsidiary of SPORTS-TECH, Inc. and Alliance Media Corporation. The Company has consequently changed its fiscal year end from December 31 to June 30 and a result of the acquisition of the Company will be taxed as a C corporation. 22 SPORTS-TECH, Inc., Alliance Media Corporation and Stephen Dunn & Associates, Inc. Pro Forma Condensed Combined Balance Sheet as of March 31, 1995 and Pro Forma Condensed Combined Statements of Operations For The Nine Months Ended March 31, 1995 And The Twelve Months Ended June 30, 1994 (Unaudited) 23 SPORTS-TECH, Inc., Alliance Media Corporation and Stephen Dunn & Associates, Inc. Unaudited Pro Forma Condensed Combined Balance Sheet March 31, 1995
Historical Pro Forma ------------------------------------------------------ ----------------------------------- Alliance Stephen Dunn SPORTS-TECH Media & Associates, Inc. Corporation Inc. Adjustments Combined ------------ ----------- ------------ ----------- ----------- ASSETS Current assets: Cash and cash equivalents $1,163,005 $ 14,174 $ 445,897 $ 7,250 (1) $ 1,630,326 Accounts receivable 6,940 5,547 1,578,099 1,590,586 Other current assets 8,278 70,636 78,914 ---------- -------- ---------- ---------- ----------- Total current assets 1,178,223 19,721 2,094,632 7,250 3,299,826 Property and equipment, net 68,521 317,958 386,479 Investment in land 756,125 756,125 Cost in excess of net assets 7,051,360 (2) 7,051,360 Other assets 6,444 221,469 23,452 (221,469)(3) 29,896 ---------- -------- ---------- ---------- ----------- Total assets 2,009,313 241,190 2,436,042 6,837,141 11,523,686 ========== ======== ========== ========== =========== LIABILITIES & STOCKHOLDERS EQUITY Current liabilities: Note payable to bank 78,353 78,353 Note payable other 90,000 90,000 Trade accounts payable 5,844 236,469 30,745 424,971 (4) 698,029 Accrued expenses 161,152 61,638 793,921 70,000 (4) 1,086,711 Income taxes payable 55,270 55,270 Payable to former owner 1,784,221 (5) 1,784,221 Deferred income taxes 30,600 30,600 ---------- -------- ---------- ---------- ----------- Total current liabilities 256,996 298,107 988,889 2,279,192 3,823,184 Payable to former owner 3,000,000 (6) 3,000,000 Note payable to bank 90,929 90,929 Other taxes and licenses 72,000 72,000 ---------- -------- ---------- ---------- ----------- Total liabilities 256,996 298,107 1,151,818 5,279,192 6,986,113 Stockholders' Equity: Common Stock 59,123 1,800 400 40,300 (7) 101,623 Additional paid-in capital 6,053,475 34,747 2,708,009 (7) 8,796,231 Retained Earnings (Accumulated Deficit) (4,224,812) (93,464) 1,450,003 (1,356,539)(8) (4,224,812) Treasury stock (135,469) (135,469) Loan receivable, shareholder (166,179) 166,179 (9) -- ---------- -------- ---------- ---------- ----------- Total Stockholders' Equity 1,752,317 (56,917) 1,284,224 1,557,949 4,537,573 ---------- -------- ---------- ---------- ----------- Total Liabilities and Stockholders' Equity $2,009,313 $241,190 $2,436,042 $6,837,141 $11,523,686 ========== ======== ========== ========== ===========
See accompanying notes to unaudited proforma condensed combined balance sheet. 24 SPORTS-TECH, Inc., Alliance Media Corporation and Stephen Dunn & Associates, Inc. Notes To Unaudited Pro Forma Condensed Combined Balance Sheet The unaudited pro forma condensed combined balance sheet presents the historical balance sheets and pro forma adjustments had the capitalization of Alliance Media Corporation ("Alliance"), the acquisition of Stephen Dunn & Associates, Inc. ("SDA") and the merger of Alliance and SPORTS-TECH. Inc. ("SPORTS-TECH") taken place as of March 31, 1995. The pro forma purchase accounting adjustments are summarized as follows: 1. Reflects the net cash proceeds from the issuance of common shares of Alliance, net of the initial cash payment related to the acquisition of SDA. 2. Reflects the $5,186,722 excess of initial acquisition payments, note payable and acquisition costs of SDA over net assets acquired; and the $1,864,638 excess of the value of 1,845,000 restricted shares issued in connection with the acquisition of Alliance and related investment banking and professional fees over the net assets acquired. 3. Reflects reclassification of deferred common stock issuance costs and elimination of deferred acquisition costs. 4. Reflects the accounts payable and accrued expenses due relating to the issuance of common stock and the merger of the companies. 5. Reflects the current portion of note payable and current payable relating to the acquisition of SDA. 6. Reflects the long term portion of note payable relating to the acquisition of SDA. 7. Reflects the issuance of SPORTS-TECH common shares, net of issuance costs, relating to the acquisition of Alliance and SDA, and the elimination of equity accounts. 8. Reflects the elimination of equity accounts. 9. Reflects the repayment of the shareholder note. 25 SPORTS-TECH, Inc., Alliance Media Corporation and Stephen Dunn & Associates, Inc. Unaudited Pro Forma Condensed Combined Statements of Operations For The Nine Months Ended March 31, 1995
Historical Pro Forma --------------------------------------- ---------------------------- Alliance Stephen Dunn SPORTS-TECH, Media & Associates Inc. Corporation Inc. Adjustments Combined ------------ ----------- ------------ ----------- -------- Net sales $10,148,696 $10,148,696 Costs and expenses: Cost of sales 7,176,173 7,176,173 Selling, general and administrative $ 734,515 $93,464 2,667,769 $ (91,311)(1) 3,404,437 Depreciation and amortization 31,456 104,169 324,868 (2) 460,493 ---------- -------- ----------- --------- ----------- Total costs and expenses 765,971 93,464 9,948,111 233,557 11,041,103 Income (loss) from operations (765,971) (93,464) 200,585 (233,557) (892,407) ---------- -------- ----------- --------- ----------- Other income (expense): Interest income 10,490 7,485 17,975 Interest expense (18,276) (27,283) (293,951)(3) (339,510) Gains from sales of securities 1,339,073 1,339,073 Other, net 318 1,590 1,908 ---------- -------- ----------- --------- ----------- Total other income (expense) 1,331,605 - (18,208) (293,951) 1,019,446 Income from continuing operations before discontinued operations and income taxes 565,634 (93,464) 182,377 (527,508) 127,039 Provision for income tax expense - - 24,202 - 24,202 ---------- -------- ----------- --------- ----------- Income from continuing operations before discontinued operations 565,634 (93,464) 158,175 (527,508) 102,837 Discontinued operations: Loss from discontinued operations (293,751) (293,751) Gain on disposal of discontinued operation 644,829 644,829 ---------- -------- ----------- --------- ----------- Net income (loss) $ 916,712 ($93,464) $ 158,175 ($527,508) $ 453,915 ========== ======== =========== ========= =========== Income per share: From continuing operations $ 0.10 $ 0.01 From discontinued operations 0.06 0.03 ---------- ----------- Total $ 0.16 $ 0.04 ========== =========== Weighted average common and common equivalent shares outstanding 5,837,216 (4) 10,087,216 ========== =========== See accompanying notes to unaudited pro forma condensed statements of operations.
26 SPORTS-TECH, Inc., Alliance Media Corporate and Stephen Dunn & Associates, Inc. Unaudited Pro Forma Condensed Combined Statements of Operations For The Twelve Months Ended June 30, 1994
Historical Pro Forma ---------------------------------------- --------------------------- Alliance Stephen Dunn SPORTS-TECH, Media & Associates, Inc. Corporation Inc. Adjustments Combined ----------- ----------- ----------- ----------- ----------- Net sales $12,684,529 $12,684,529 Cost and expenses: Cost of sales 9,005,768 9,005,768 Selling, general and administrative $ 1,675,207 $ 33,227 2,743,129 $(855,851)(1) 3,595,712 Related party charges 21,000 21,000 Depreciation and amortization 418,344 154,522 56,757 (2) 629,623 ----------- -------- ----------- --------- ----------- Total costs and expenses 2,114,551 33,227 11,903,419 (799,094) 13,252,103 Income (loss) from operations (2,114,551) (33,227) 781,110 799,094 (567,574) Other income (expense) Interest income 4,732 4,732 Interest expense (7,476) (53,257) (374,523)(3) (435,256) Gains from sales of securities 937,365 937,365 Dividend income 7,237 7,237 Other, net (21,104) (21,104) ----------- -------- ----------- --------- ----------- Total other income (expense) 916,022 - (48,525) (374,523) 492,974 Income (loss) from continuing operations before discontinued operations and income taxes (1,198,529) (33,227) 732,585 424,571 (74,600) Provision (credit) for federal income tax on continuing operations (13,600) 44,579 30,979 ----------- -------- ----------- --------- ----------- Income (loss) from continuing operations before discontinued operations (1,184,929) (33,227) 688,006 424,571 (105,579) Loss from discontinued operations (1,624,958) (1,624,958) ----------- -------- ----------- --------- ----------- Net income (loss) $(2,809,887) $(33,227) $ 688,006 $ 424,571 $(1,730,537) =========== ======== =========== ========= =========== Loss per share: From continuing operations $(0.22) $(0.01) From discontinued operations (0.31) (0.17) ----------- ----------- Totals $(0.53) $(0.18) =========== =========== Weighted average common and common equivalent shares outstanding 5,336,135 (4) 9,586,135 =========== =========== See accompanying notes to unaudited pro forma condensed combined statements of operations.
27 SPORTS-TECH, Inc., Alliance Media Corporation and Stephen Dunn & Associates, Inc. Notes To Unaudited Pro Forma Condensed Combined Statements of Operations The unaudited pro forma condensed combined statements of operations combine the results of operations of SPORTS-TECH for its fiscal year ended June 30, 1994 with the results of operations of SDA for the twelve months then ended and the results of operations of Alliance from inception (January 1, 1994) to June 30,1994; and the results of operations of SPORTS-TECH for the nine months ended March 31, 1995 with the results of operations of SDA and Alliance for the nine months then ended. The revenues and results of operations of the acquired businesses included in the summary are not considered by management to be indicative of the anticipated results of the business for periods subsequent to the acquisitions by the Company, nor are they considered to be indicative of the results of operations which might have been attained for the periods presented. The pro forma purchase accounting adjustments reflect the effect on the combined results for the respective periods as if the merger had taken place at the beginning of such periods. The adjustments are summarized as follows: 1. Reflects salary adjustments to reflect revised Stephen Dunn employment contract; and general and administrative expense estimated for the consolidated company. 2. Reflects amortization of excess of cost over net assets acquired. For purposes of these pro forma statements amortization periods of fifteen years have been utilized. Actual amortization may vary depending on fair values ultimately assigned to the assets and rights acquired. 3. Reflects interest expense on acquisition indebtedness and elimination of interest on loans to SDA shareholder. 4. Pro forma primary and fully diluted earnings per share include the effect of the issuance of 4,250,000 shares in connection with the merger. -----END PRIVACY-ENHANCED MESSAGE-----