-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VZTh2xQi1ujISTVuV0pov/7Ol7am8PXFRCf/wl+tdEufdx2Dj7Eoh4rjLM9+Niqr OOlkk/dE/Dp8phoxadbLfQ== 0000944209-98-000219.txt : 19980204 0000944209-98-000219.hdr.sgml : 19980204 ACCESSION NUMBER: 0000944209-98-000219 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971121 ITEM INFORMATION: FILED AS OF DATE: 19980203 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIEW TECH INC CENTRAL INDEX KEY: 0000746210 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 770312442 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-25940 FILM NUMBER: 98520509 BUSINESS ADDRESS: STREET 1: 3760 CALLE TECATE STREET 2: STE A CITY: CAMARILLO STATE: CA ZIP: 93012 BUSINESS PHONE: 8054828277 8-K/A 1 AMEND. #1 ON FORM 8-K/A DATED 11/21/1997 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A-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) NOVEMBER 21, 1997 VIEW TECH, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 0-25940 77-0312442 (STATE OR OTHER JURISDICTION (COMMISSION FILE (I.R.S. EMPLOYER OF INCORPORATION) NUMBER) IDENTIFICATION NO.) 3760 CALLE TECATE, SUITE A, CAMARILLO CALIFORNIA 93012 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (805) 482-8277 NOT APPLICABLE (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) EXPLANATORY NOTE: Pursuant to Item 7, this Form 8-K/A amends Item 7 of View Tech, Inc.'s ("View Tech") Current Report on Form 8-K filed on December 5, 1997, to provide the financial statements of the business acquired and the pro forma financial information required by Item 7. The remaining Items have not been amended and have not been restated in this Form 8-K/A. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Page Number ----------- (a) Financial Statements of Business Acquired-Vermont Telecommunications Network Services, Inc. 1. Independent Auditors' Report 3 Balance Sheet as of December 31, 1996 4 Statement of Income and Retained Earnings for the Year Ended December 31, 1996 5 Statement of Cash Flows for the Year Ended December 31, 1996 6 Notes to Financial Statements 7 Supplemental Schedule - Selling, General and Administrative 11 2. Independent Accountants' Compilation Report 12 Balance Sheet as of September 30, 1997 (unaudited) 13 Statement of Income and Retained Earnings for the Nine Months Ended September 30, 1997 (unaudited) 14 Statement of Cash Flows for the Nine Months ended September 15 30, 1997 (unaudited) Supplemental Schedule - Selling, General and Administrative 16 (b) Pro Forma Financial Information 1. Pro Forma Condensed Combined Balance Sheet as of September 30, 1997 (unaudited) 17 Pro Forma Statement of Operations for the Twelve Months Ended December 31, 1996 (unaudited) 18 Pro Forma Statement of Operations for the Nine Months Ended September 30, 1997 (unaudited) 19 Notes to Pro Forma Financial Statements 20 Signature Page 22 (c) Exhibits. Exhibit Index 23 23.1 Consent of McSoley McCoy & Co., filed herewith 24 99.1 Press release announcing completion of the acquisition, dated November 13, 1997. 25
INDEPENDENT AUDITORS' REPORT ---------------------------- Vermont Telecommunications Network Services, Inc. Burlington, Vermont We have audited the accompanying balance sheet of Vermont Telecommunications Network Services, Inc. as of December 31, 1996, and the related statement of income and retained earnings 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 Vermont Telecommunications Network Services, Inc. as of December 31, 1996, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ McSoley McCoy & Co. October 10, 1997 Vermont Reg. No. 92-349 VERMONT TELECOMMUNICATIONS NETWORK SERVICES Statement of Income and Retained Earnings For the Year Ended December 31, 1996 ASSETS ------ Current assets: Cash and cash equivalents (note 6) $ 297,563 Accounts receivable, less allowance for doubtful accounts of $67,460 at December 31, 1996 (note 5) 716,177 Due from officers and employees 43,094 Deposits 5,735 Investments 50,738 ---------- Total current assets 1,113,307 Property and equipment, net (note 2) 56,764 Covenant not to compete, net (note 3) 42,597 ---------- TOTAL ASSETS $1,212,668 ========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 1,808 Accrued wages and withholdings 166,445 Accrued profit sharing contribution (note 10) 49,134 Sales tax payable 151 Current installments of long-term debt (note 4) 28,753 Due to affiliate 6,663 Other accrued expenses 4,103 ---------- Total current liabilities 257,057 Long-term debt, less current installments (note 4) 25,427 Stockholders' equity: Common stock, $1 par 100 shares authorized, 75 issued and outstanding 75 Additional paid in capital in excess of par 24,925 Retained earnings 930,184 Treasury stock, 25 shares, at cost (25,000) ---------- Total stockholders' equity 930,184 ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,212,668 ==========
See auditors' report and notes to financial statements. VERMONT TELECOMMUNICATIONS NETWORK SERVICES Statement of Income and Retained Earnings For the Year Ended December 31, 1996 Revenue from product sales $ 83,830 Cost of goods sold 62,887 ---------- Gross profit on product sales 20,943 ---------- Revenue from commissions (note 5) 2,431,026 Commissions paid to salespeople 738,091 ---------- Gross profit on commissions 1,692,935 ---------- Total gross profit 1,713,878 Selling, general and administrative expenses (notes 7, 8 and 10) 971,869 ---------- Income from operations 742,009 ---------- Other income and (expense) Interest income 14,584 Interest expense (7,204) Dividend income 1,593 Miscellaneous income 11,216 ---------- Total other income 20,189 ---------- Net income 762,198 Retained earnings, beginning of year 639,520 Less: dividends declared 471,534 ---------- Retained earnings, end of year $ 930,184 ==========
See auditors' report and notes to financial statements. VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC. Statement of Cash Flows For the Year Ended December 31, 1996 Cash flows from operating activities: Net Income $ 762,198 --------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 36,953 Changes in assets and liabilities: Increase in accounts receivable (278,664) Increase in due from officers and employees (1,966) Increase in deposits (2,715) Decrease in accounts payable (1,952) Increase in accrued wages 119,297 Increase in accrued profit sharing 12,086 Increase in sales tax payable 86 Increase in other accrued expenses 4,103 --------- Total adjustments (112,772) --------- Net cash provided by operating activities 649,426 --------- Cash flows from investing activities: Purchase of investments (50,738) Purchase of property and equipment (13,315) --------- Net cash used by investing activities (64,053) --------- Cash flows from financing activities: Principal payments on long-term debt (26,949) Dividends declared (471,534) --------- Net cash used by financing activities (498,483) --------- Net increase in cash and cash equivalents 86,890 Cash and cash equivalents, beginning of year 210,673 --------- Cash and cash equivalents, end of year $ 297,563 ========= Supplemental cash flow information: Interest expense 7,204 Income taxes 150
See auditors' report and notes to financial statements. VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC. Notes to Financial Statements 1) Summary of Significant Accounting Policies ------------------------------------------ A summary of the Company's significant accounting policies consistently applied in the accompanying financial statements follows: a) Organization and Purpose ------------------------ The Company operates as an authorized sales agent for NYNEX corporation, selling telephone network service in Vermont, New Hampshire, western Massachusetts and upstate New York. b) Basis of Accounting ------------------- Assets and liabilities are recorded and revenues and expenses are recognized using the accrual basis of accounting. Revenue is recognized when orders are signed by customers. c) Property and Equipment ---------------------- Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the assets' useful lives ranging from 5 to 31.5 years. d) Covenant Not To Compete ----------------------- The covenant not to compete is stated at cost. Amortization is calculated using the straight-line method over the period of seven years. e) Income Taxes ------------ The Company has elected to be taxed as an S Corporation under the provisions of the Internal Revenue Code. Under those provisions, taxable income from the Corporation is generally taxed to the shareholders rather than the Company. The Company uses the cash basis of accounting for income tax purposes. f) Cash Equivalents ---------------- The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of money market funds. VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC. Notes to Financial Statements Summary of Significant Accounting Policies (continued) ------------------------------------------- g) 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. h) Investments ----------- Investments consist of 900 shares of NYNEX common stock, stated at cost, which approximates market value. 2) Property and Equipment ---------------------- Property and equipment and accumulated depreciation as of December 31, 1996 is as follows: Computer equipment $ 59,534 Office furniture 19,262 Office equipment 24,426 Leasehold improvements 2,509 -------- 105,731 Less accumulated depreciation 48,967 -------- Property and equipment, net $ 56,764 ========
Depreciation expense for the year ended December 31, 1996 was $15,655. 3) Covenant Not To Compete ----------------------- The Company has a covenant with Vermont Telephone Service and Supply Company which prohibits Vermont Telephone Service and Supply Co. from acting as a sales agent of NYNEX. This covenant expires in October, 1998 and is stated at $42,597, net of accumulated amortization of $106,492 at December 31, 1996. VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC. Notes to Financial Statements 4) Long-term Debt -------------- Long-term debt at December 31, 1996 consisted of the following: Note payable requiring monthly payments of $2,619 including interest at 6.5%, through October, 1998 $54,180 Less current installments 28,753 ------- Long-term debt, less current installments $25,427 =======
5) Major Customer -------------- Substantially all of the Company's revenue is derived either directly or indirectly from the Company's relationship as a sales agent for NYNEX. Substantially all of the accounts receivable consist of commissions earned from NYNEX. The Company has a contract with NYNEX through December 31, 1998. Termination or non-renewal of the contract could have a negative impact on the Company's ability to continue as a going concern. 6) Concentration of Credit Risk ---------------------------- At December 31, 1996, the Company maintained a cash balance which exceeded federally insured limits by $243,748. 7) Leases ------ The Company leases an automobile under an operating lease requiring monthly payments of $599 through February 1998. The Company also leases office space under three lease agreements expiring on varying dates through September 1997. Rent expense for the year ended December 31, 1996 amounted to $29,603. 8) Related Party Transactions -------------------------- The Company is related through common ownership to North American Telecommunications. During the year ended December 31, 1996 the Company provided administrative and management services to North American Telecommunications at no charge. VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC. Notes to Financial Statements 9) Line of Credit -------------- The Company has a line of credit agreement with a local bank with a maximum borrowing limit of $100,000. There were no borrowings outstanding on the line at December 31, 1996. 10) Employee Benefit Plan --------------------- The Company has a discretionary, noncontributory profit sharing plan that covers substantially all administrative employees. Contributions to the plan amounted to $49,134 in 1996. 11) Commitments ----------- The Company has an agreement with a salesperson through 1997 under which the salesperson receives a base salary of $36,500. This salesperson is also eligible to receive commissions. 12) Sale of Operating Assets ------------------------ On July 25, 1997, the Company signed a letter of intent to sell substantially all of its operating assets to View Tech, Inc. Under the agreement, the Company will cease operations. The parties executed a definitive purchase and sale agreement during October 1997. VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC. Supplemental Schedule of Selling, Administrative Expenses For the Year Ended December 31, 1996 Advertising and promotion $ 1,973 Amortization 21,298 Auto expense - officer 8,869 Auto expense - other 13,358 Bad debt expense 67,460 Bank charges and brokerage fees 2,578 Contract labor 6,243 Contributions 3,738 Depreciation 15,655 Dues & subscriptions 2,456 Education and training 1,010 Employee benefits 999 Equipment lease 702 Insurance - group 57,884 Insurance - officer's life 948 Insurance - other 1,258 Office supplies 18,946 Profit sharing contribution 49,134 Profit sharing administration 1,619 Maintenance and repairs - other 6,287 Meals and entertainment 10,088 Miscellaneous 1,629 Postage and shipping 6,535 Professional fees 14,758 Referral fees 3,246 Rent 29,603 Salaries and wages - administrative 258,693 Salaries and wages - officers 244,580 Salaries and wages - sales 10,067 Taxes - payroll 78,987 Taxes - property 826 Taxes - other 150 Telephone 16,317 Travel 9,988 Utilities 3,987 -------- Total $971,869 ========
See auditors' report. INDEPENDENT ACCOUNTANTS' REPORT ------------------------------- Vermont Telecommunications Network Services, Inc. Burlington, Vermont We have compiled the accompanying balance sheet of Vermont Telecommunications Network Services, Inc. as of September 30, 1997, and the related statement of income and retained earnings and cash flows for the nine months then ended, and the accompanying schedules of selling, general and administrative expenses, which are presented only for supplementary analysis purposes, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of financial statements information that is the representation of management. We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them. Management has elected to omit substantially all of the disclosures required by generally accepted accounting principles. If the omitted disclosures and statement were included in the financial statements, they might influence the user's conclusions about the Company's financial position, results of operations, and cash flows. Accordingly, these financial statements are not designed for those who are not informed about such matters. /s/ McSoley McCoy & Co. January 21, 1998 Vermont Reg. No. 92-349 VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC. Balance Sheets September 30, 1997 ASSETS ------ Current assets: Cash and cash equivalents $214,445 Accounts receivable, less allowance for doubtful accounts of $40,000 357,517 Due from officers and employees 47,330 Inventory 3,971 Deposits 660 -------- Total current assets 623,923 Property and equipment, net 129,847 Covenant not to compete, net 26,623 -------- TOTAL ASSETS $780,393 ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 34,577 Accrued wages and withholdings 120,800 Current installments of long-term debt 30,186 Sales tax payable 179 Other accrued expenses 349 -------- Total current liabilities 186,091 Long-term debt, less current installments 3,042 Stockholders' equity: Common stock, $1 par value, 100 shares authorized, 75 issued and outstanding 75 Additional paid in capital in excess of par 24,925 Retained earnings 591,260 Treasury stock, 25 shares, at cost (25,000) -------- Total stockholders' equity 591,260 -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $780,393 ========
See accountants' compilation report. VERMONT TELECOMMUNICATIONS NETWORK SERVICES Statement of Income and Retained Earnings For the Nine Months Ended September 30, 1997
Quarter Year Ended to September 30 Date ------------ ---------- Revenue from product sales $ 28,615 $ 78,782 Cost of goods sold 16,267 71,231 -------- ---------- Gross profit on product sales 12,348 7,551 -------- ---------- Revenue from commissions 539,174 1,671,596 Commissions paid to salespeople 107,668 441,522 -------- ---------- Gross profit on commissions 431,506 1,230,074 -------- ---------- Total gross profit 443,854 1,237,625 Selling, general and administrative expenses 372,218 917,881 -------- ---------- Income from operations 71,636 319,744 -------- ---------- Other income and (expense) Interest income 802 8,199 Interest expense (114) (402) Dividend income 85 1,168 Miscellaneous income 1,622 6,693 -------- ---------- Total other income 2,395 15,658 -------- ---------- Net income 74,031 335,402 Retained earnings, beginning of period 547,279 930,184 Less: dividends declared 30,050 674,326 -------- ---------- Retained earnings, end of period $591,260 $ 591,260 ======== ==========
See accountants' compilation report. VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC. Statement of Cash Flows For the Nine Months Ended September 30, 1997 Cash flows from operating activities: Net Income $ 335,402 --------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 35,302 Changes in assets and liabilities: Decrease in accounts receivable 358,660 Increase in inventory (3,971) Increase in due from officers and employees (4,236) Decrease in deposits 5,075 Increase in accounts payable 32,769 Decrease in due to affiliate (6,663) Decrease in accrued wages and withholdings (45,645) Decrease in accrued profit sharing (49,134) Increase in sales tax payable 28 Decrease in other accrued expenses (3,754) --------- Total adjustments 318,431 --------- Net cash provided by operating activities 653,833 --------- Cash flows from investing activities: Purchase of property and equipment (92,411) Sale of investments 50,738 --------- Net cash used by investing activities (41,673) --------- Cash flows from financing activities: Principal payments on long-term debt (20,952) Dividends declared (674,326) --------- Net cash used by financing activities (695,278) --------- Net decrease in cash and cash equivalents (83,118) Cash and cash equivalents, beginning of period 297,563 --------- Cash and cash equivalents, end of period $ 214,445 ========= Supplemental cash flow information: Interest expense 402 Income taxes 554
See accountants' report. VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC. Supplemental Schedule of Selling, Administrative Expenses For the Nine Months Ended September 30, 1997
Quarter Year Ended to September 30 Date ------------ ---------- Advertising and promotion $ 1,073 $ 6,747 Amortization 5,325 15,974 Auto expense - officer 2,005 8,292 Auto expense - other 6,175 11,563 Bank charges and brokerage fees 529 1,710 Contract labor 2,874 7,068 Contributions - 587 Depreciation 7,569 19,335 Dues & subscriptions 695 1,119 Employee benefits - 2,732 Insurance - group 8,575 29,750 Insurance - officer's life 256 768 Insurance - other 161 191 Office supplies 4,167 16,272 Profit sharing contribution - 575 Profit sharing administration - 1,060 Maintenance and repairs - other 2,247 5,903 Meals and entertainment 5,479 13,726 Miscellaneous 305 935 Postage and shipping 752 3,943 Professional fees 31,515 46,566 Referral fees 4,025 8,091 Rent 13,766 30,966 Salaries and wages - administrative 78,049 216,033 Salaries and wages - officers 87,462 262,385 Salaries and wages - sales 62,886 68,867 Taxes - payroll 19,403 76,899 Taxes - property 241 711 Taxes - other - 554 Telephone 21,990 35,028 Travel 3,718 20,500 Utilities 976 3,031 -------- -------- Total $372,218 $917,881 ======== ========
See accountants' report. VIEW TECH, INC. PRO FORMA CONDENSED COMBINED BALANCE SHEET SEPTEMBER 30, 1997 (UNAUDITED)
Pro Forma Pro Forma View Tech VTNSI Adjustments Combined ------------- ---------- ------------ ------------- ASSETS: Current Assets: Cash and cash equivalents.............................. $ 1,456,544 $214,445 $ -- $ 1,670,989 Accounts receivable, net............................... 12,668,364 357,517 13,025,881 Inventory.............................................. 2,283,540 -- 2,283,540 Other current assets................................... 437,213 51,961 489,174 ----------- -------- ---------- ----------- Total Current Assets.............................. 16,845,661 623,923 17,469,584 Property and equipment, net................................. 2,907,949 129,847 3,037,796 Excess of cost over net assets acquired, net................ 1,548,606 -- 2,258,740 (3) 3,807,346 Other assets................................................ 438,617 26,623 465,240 ----------- -------- ---------- ----------- $21,740,833 $780,393 $2,258,740 $24,779,966 =========== ======== ========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities: Accounts payable....................................... $ 7,452,954 $ 34,577 $ 200,000 (3) $ 7,687,531 Short-term bank debt - lines of credit................. 3,220,496 -- 2,000,000 (3) 5,220,496 Note payable........................................... -- -- 250,000 (3) 250,000 Current portion of capital lease obligations........... 487,497 -- 487,497 Other current liabilities.............................. 2,795,858 151,514 2,947,372 ----------- -------- ---------- ----------- Total Current Liabilities......................... 13,956,805 186,091 2,450,000 16,592,896 ----------- -------- ---------- ----------- Long -Term Liabilities 465, 271 3,042 -- 468,313 ----------- -------- ---------- ----------- Stockholders' Equity: Common stock, par value $0.01.......................... 639 75 (69) (2) 645 Additional paid-in capital............................. 12,732,439 24,925 375,069 (2) 13,132,433 Treasury stock......................................... -- (25,000) 25,000 (2) -- Retained earnings (deficit)............................ (5,414,321) 591,260 (591,260) (2) (5,414,321) ----------- -------- ---------- ----------- 7,318,757 591,260 (191,260) 7,718,757 ----------- -------- ---------- ----------- $21,740,833 $780,393 $2,258,740 $24,779,966 =========== ======== ========== ===========
See notes to the pro forma condensed combined financial statements. VIEW TECH, INC. PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED)
Twelve Months Ended December 31, 1996 ---------------------------------------------------------------------- Pro Forma View Tech VTNSI Combined ------------------ ---------------- ------------------ Revenues $36,948,232 $2,514,856 $39,463,088 Operating Expenses: Costs of goods sold................... 18,370,747 62,887 18,433,634 Selling, general & administrative (3). 18,512,898 1,709,960 20,335,795 Merger costs.......................... 2,563,573 -- 2,563,573 ----------- ---------- ----------- 39,447,218 1,772,847 41,333,002 ----------- ---------- ----------- Income (Loss) from Operations........... (2,498,986) 742,009 (1,869,914) Other Income (Expenses) (3)............. (660,799) 20,189 (840,610) ----------- ---------- ----------- Income (Loss) before Income Taxes....... (3,159,785) 762,198 (2,710,524) Provision for Income Taxes(5)........... (172,434) -- (172,434) ----------- ---------- ----------- Net Income (Loss)....................... $(2,987,351) $ 762,198 $(2,538,090) =========== ========== =========== Earnings (Loss) Per Share............... $ (.57) $ (.48) =========== =========== Weighted Average Shares Outstanding (4)......................... 5,262,243 5,324,355 =========== ===========
See notes to the pro forma condensed combined financial statements. VIEW TECH, INC. PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
Nine Months Ended September 30, 1997 ------------------------------------ Pro Forma View Tech VTNSI Combined ------------------ --------------- ------------------ Revenues $35,232,704 $1,750,378 $36,983,082 Operating Expenses: Costs of goods sold................... 16,901,135 71,231 16,972,366 Selling, general & administrative (3). 18,030,310 1,359,403 19,474,416 ----------- ---------- ----------- 34,931,445 1,430,634 36,446,782 ----------- ---------- ----------- Income from Operations.................. 301,259 319,744 536,300 Other Income (Expenses) (3)............. (194,990) 15,658 (329,332) ----------- ---------- ----------- Income before Income Taxes.............. 106,269 335,402 206,968 Provision for Income Taxes (5).......... 4,512 -- 4,512 ----------- ---------- ----------- Net Income (Loss)....................... $ 101,757 $ 335,402 $ 202,456 =========== ========== =========== Earnings Per Share...................... $ .02 $ .03 =========== =========== Weighted Average Shares Outstanding(4).......................... 6,323,135 6,369,719 =========== ===========
See notes to the pro forma condensed combined financial statements. VIEW TECH, INC. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) 1. FISCAL PERIODS The pro forma data presented herein is derived from the consolidated balance sheet and consolidated statement of operations of View Tech as of December 31, 1996 and for the twelve months then ended, and from the unaudited consolidated balance sheet as of September 30, 1997 and the consolidated statement of operations for the nine months then ended. The financial data presented for Vermont Telecommunications Network Services, Inc. ("VTNSI") is derived from the audited financial statements of VTNSI for the year ended December 31, 1996 and from the compiled financial statements for the nine months ended September 30, 1997. View Tech acquired VTNSI, effective November 1, 1997 and completed the transaction on November 21, 1997. The acquisition was accounted for by View Tech utilizing the purchase method accounting. 2. STOCKHOLDERS' EQUITY The pro forma adjustments to common stock, paid in capital, treasury stock and retained earnings as of September 30, 1997 reflect the elimination of the equity accounts of VTNSI as a result of applying purchase accounting and the issuance of 62,112 shares of View Tech common stock valued at $6.44 in connection with the acquisition. 3. ACQUISITION PRICE AND GOODWILL The pro forma adjustments shown in the accompanying consolidated balance sheet as of September 30, 1997 and in the consolidated statement of operations for the twelve months ended December 31, 1996 and the nine months ended September 30, 1997, include the effects of the acquisition as follows: (a) the issuance of 62,112 shares of View Tech common stock valued at $6.44 per share, or $400,000; (b) payment of $2 million in cash, which was obtained under View Tech's revolving line of credit, the issuance of a promissory note for $250,000 and the interest expense related to such borrowings; (c) the recording of estimated goodwill of $2,258,740, and (d) the amortization of goodwill of $112,937 and $84,703, for the twelve months and nine months ended December 31, 1996 and September 30, 1997, respectively. The total estimated goodwill recognized of $2,258,740 resulting from the acquisition of VTNSI will be amortized on a straight line basis over 20 years. Pursuant to the Asset Purchase Agreement, dated November 21, 1997 (the "Purchase Agreement"), as of the closing date, the seller received a contingent note payable of $250,000. The Company is obligated to pay such contingent note if VTNSI achieves operating income during calendar 1998 equal to or greater than $700,000. In addition, the seller is entitled to receive 40% of all operating income generated by VTNSI in excess of $900,000 for each of the years ending December 31, 1998, 1999 and 2000. The pro forma information presented herein do not show the effects of such contingent payments due to the fact that there can be no assurance that such operating results can or will be achieved. VIEW TECH, INC. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 4. WEIGHTED AVERAGE SHARES OUTSTANDING The weighted average number of shares shown in the statement of operations for the twelve months and nine months ended December 31, 1996 and September 30, 1997 includes the actual weighted average shares outstanding for View Tech for each period and the effects of issuing the 62,112 shares of View Tech common stock in connection with the acquisition of VTNSI. 5. PROVISION FOR INCOME TAXES VTNSI was an S Corporation and as such VTNSI was generally not subject to federal income taxes. Instead the sole stockholder was taxed on his respective share of VTNSI income at the stockholder's individual federal and state income tax rates. Accordingly, there was no provision for federal income taxes recorded by VTNSI for the year ended and nine months ended December 31, 1996 and September 30, 1997, respectively. The operating results for each period presented do not include a pro forma provision for income taxes due to the fact that View Tech, during such periods, had net operating loss carryforwards to offset the tax provision relating to such results. 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. VIEW TECH, INC. January 31, 1998 /s/ David A. Kaplan - ---------------- --------------------------- Date David A. Kaplan Senior Vice President of Finance and Operations EXHIBIT INDEX
Sequentially Exhibit No. Description Numbered Page - ------------------------------------------------------------------------------------------------ 23.1 Consent of McSoley McCoy & Co., filed herewith 23 99.1 Press release announcing completion of the acquisition, dated 24 November 13, 1997.
EX-23.1 2 CONSENT OF MCSOLEY MCCOY & CO. EXHIBIT 23.1 ------------ The Board of Directors Vermont Telecommunications Network Services, Inc. We consent to the inclusion of our report dated October 10, 1997, with respect to the balance sheets of Vermont Telecommunications Network Services, Inc. as of December 31, 1996, and the related statements of income and retained earnings and cash flows for the year ended December 31, 1996, which report appears in the Form 8-K of View Tech, Inc. to be filed on or about January 30, 1998. We also consent to the inclusion of our compilation report dated January 21, 1998, with respect to the balance sheet of Vermont Telecommunications Network Services, Inc. as of September 30, 1997, and the related statements of income and retained earnings, and cash flows for the nine months then ended, which report appears in the Form 8-K of View Tech, Inc. to be filed on or about January 30, 1998. The report states that management has elected to omit substantially all disclosures required by generally accepted accounting principles. /s/ McSoley McCoy & Co. January 30, 1998 EX-99.1 3 PRESS RELEASE DATED 11/13/1997 EXHIBIT 99.1 ------------ CONTACTS: Robert G. Hatfield Meredith Mendola Chief Executive Officer Senior Account Associate VIEW TECH, INC. ROURKE.MS&L (805) 482-8277 (617) 267-1909 x346 FOR IMMEDIATE RELEASE VIEW TECH SIGNS AGREEMENT TO ACQUIRE VERMONT TELECOMMUNICATIONS NETWORK SERVICES, INC. - ACQUISITION ALLOWS GEOGRAPHIC EXPANSION IN BELL ATLANTIC TERRITORY - CAMARILLO, CA - November 13, 1997 - View Tech, Inc. (Nasdaq: VUTK) today announced it has agreed to acquire Vermont Telecommunications Network Services, Inc. ("Network Services") of Burlington, Vermont, an agent selling Bell Atlantic services in New England and Upstate New York. As a result of this acquisition, Network Services will become a wholly owned View Tech subsidiary, expanding View Tech's offices to 20 nationwide and increasing the Company's customer base and geographic presence. Under the terms of the agreement, View Tech will purchase substantially all the assets of Network Services for a combination of $2.65 million in cash, a note and common stock. The purchase price also includes assumption of certain Network Services liabilities and contingent payments of up to $750,000 over three years if certain earnings are achieved. The acquisition, which is expected to close by mid-November, is subject to final due diligence and a financing contingency. "The acquisition of Network Services continues the execution of View Tech's strategic plan outlined at mid-year," said Paul C. O'Brien, View Tech's chairman of the board. "We are particularly pleased that Network Services' President and Chief Executive Officer Zoltan B. Keve will join View Tech. He brings a proven track record and industry knowledge which will complement our management team, while reinforcing our relationship with Bell Atlantic." Network Services is an Authorized Sales Agent for Bell Atlantic in Vermont, New Hampshire, Upstate New York and western Massachusetts. It currently has four offices and 28 employees, including a dedicated sales force of 14. Through these new offices, View Tech will not only sell Bell Atlantic services, but will also market its voice, video and data communications equipment to Network Services' installed customer base. In 1996, Network Services' operating income was $762,198 on revenues of $2.4 million. "We expect that this acquisition will make it possible for View Tech to offer bundled communications solutions and expert customer service to many new business customers," said Robert G. Hatfield, chief executive officer of View Tech. "By expanding into new geographic regions, View Tech plans to become a leading national presence in our rapidly growing market niche." - more - ABOUT VIEW TECH, INC. - --------------------- View Tech, Inc., with headquarters in Camarillo, CA, together with its wholly owned subsidiary, USTeleCenters, Inc., headquartered in Boston, MA, is a leading, single-source provider of voice, video and data equipment, network services and bundled communications solutions for mid-size business customers nationwide. The Company has equipment distribution partnerships with PictureTel Corporation, Ascend Communications and Northern Telecom, markets UUNET's Internet access under the name USTeleNet and markets network services through agency agreements with Bell Atlantic, BellSouth, GTE, Southwestern Bell and Sprint. The acquisition of Network Services is subject to the satisfaction of a number of conditions including, among others, completion of due diligence. Statements expressing the beliefs and expectations of management regarding future performance are forward-looking statements and involve known factors, risks and uncertainties which may cause the Company's actual results in future periods to differ materially from forecasted results. These factors, risks and uncertainties, include, but are not limited to: the Company's ability to consummate successfully future mergers and acquisitions and to realize the benefits of these strategic opportunities; the Company's ability to achieve integration of product lines, distinct corporate cultures and sales and marketing operations and to retain key personnel; and the Company's ability to manage effectively its business in a rapidly changing regulatory and technological environment and within diverse geographic areas. These risk factors are detailed from time to time in the Company's filings with the Securities and Exchange Commission. Actual results may differ materially from management's expectations. ### -----END PRIVACY-ENHANCED MESSAGE-----