EX-99.2 4 v022431_ex99-2.txt -------------------------------------------------------------------------------- EXHIBIT 99.2 99.2 Unaudited pro forma condensed combined financial statements as of and for the year ended December 31, 2004 -------------------------------------------------------------------------------- Unaudited Pro Forma Condensed Combined Financial Statements as of and for the Year Ended December 31, 2004. On April 1, 2005, a wholly owned subsidiary of Rescon Technology, Inc., a Nevada corporation ("Rescon"), merged with Nayna Networks, Inc., a Delaware corporation ("Nayna") pursuant to an Agreement and Plan of Merger between Rescon and Nayna (the "Agreement"). In the Merger Rescon issued 32,249,947 shares of its restricted common stock to the stockholders of Nayna and issued options to purchase 3,475,763 shares of its restricted common stock and warrants to purchase 88,600 shares of its restricted stock, in exchange for 100% of Nayna's issued and outstanding shares of common stock, options and warrants. As a result of the Merger, Rescon continued as the surviving corporation and the stockholders of Nayna became stockholders of Rescon. The stockholders of Rescon prior to the Merger now own approximately 9.92 % of the issued and outstanding shares of Rescon common stock after the Merger. If all options and warrants issued pursuant to the Merger were exercised, the stockholders of Rescon would own approximately 9.02% of the issued and outstanding shares of Rescon common stock. The stockholders of Nayna prior to the Merger now own approximately 90.08% of the issued and outstanding shares of Rescon common stock after the Merger. If all of the options and warrants issued pursuant to the Merger were exercised, the stockholders of Nayna would own approximately 90.98% of the issued and outstanding shares of Rescon common stock. Pursuant to the Agreement, Rescon changed its name to Nayna Networks, Inc. The following unaudited pro forma condensed combined financial information gives effect to the merger of Rescon and Nayna. The unaudited pro forma condensed combined balance sheet combines the financial position of Rescon at November 30, 2004 (as reflected in the Form 10-QSB filed by Rescon for its quarter ended November 30, 2004, the most recent fiscal quarter preceding December 31, 2004) and Nayna at December 31, 2004 as if the acquisition had been consummated on December 31, 2004. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2004 combines the results of operations of Rescon and Nayna for the year ended December 31, 2004, as if the acquisition had occurred on January 1, 2004. The unaudited pro forma condensed combined financial information presented is based on preliminary estimates, available information and certain assumptions and may be revised as additional information becomes available. The unaudited pro forma condensed combined financial information is not intended to represent what financial results of operations would actually have been if the acquisition had occurred on those dates or to project financial results of operations for any future period. Since Rescon and Nayna were not under common control or management for the period January 1, 2004 to December 31, 2004, the unaudited pro forma condensed combined financial results may not be comparable to, or indicative of, future performance. This unaudited pro forma condensed combined financial information should be read in conjunction with the historical consolidated financial statements of Rescon and Nayna. Rescon's historical financial statements can be found in Rescon's Annual Report on Form 10-KSB filed on January 26, 2005 and Rescon's Quarterly Report on Form 10-QSB filed on January 26, 2005. Nayna's historical financial statements can be found as Exhibit 99.1 to this Current Report on Form 8-K/A. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (000's)
as at as at PRO FORMA December 31, 2004 November 30, 2004 ADJUSTMENTS PRO FORMA NAYNA RESCON (NOTE #3) COMBINED ----------------- ----------------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 709 $ 2 $ (2) $ 709 Restricted cash $ 49 49 Accounts receivable, net 160 -- 160 Inventory -- 0 Prepaid expenses 35 20 (20) 35 ----------------- ----------------- ------------ ------------ Total current assets 953 22 (22) 953 Property and equipment, net 798 24 (24) 798 Other assets 16 760 -760 16 ----------------- ----------------- ------------ ------------ Total assets $ 1,767 $ 806 $ (806) $ 1,767 ================= ================= ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 655 $ 25 $ (25) 655 Accrued liabilities 535 -- 535 Current portion - notes payable & equipment leases 727 -- 727 Due to related parties -- 691 (691) 0 ----------------- ----------------- ------------ ------------ Total current liabilities 1,918 716 (716) 1,918 Minority Interest (1) 1 0 Note Payable 298 298 Convertible note payable, net 922 922 Stockholders' equity (deficit) Preferred stock 20 -- 20 Common stock 80 0 0 80 Additonal paid in capital 51,911 6,342 (6,342) 51,911 Deficit accumulated prior to development stage (4,468) 4,468 0 Deficit accumulated during the development stage (53,382) (1,784) 1,784 (53,382) ----------------- ----------------- ------------ ------------ Stockholders' equity (deficit) (1,371) 90 (90) (1,371) ----------------- ----------------- ------------ ------------ Total liabilities and stockholders' deficit $ 1,767 $ 806 $ (806) $ 1,767 ================= ================= ============ ============
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (000's) except share and per share data
for the twelve months for the twelve months PRO FORMA ending December 31, 2004 ending November 30, 2004 ADJUSTMENTS PRO FORMA NAYNA RESCON (NOTE #3) COMBINED ------------------------ ------------------------ ------------ ------------ Sales $ -- $ -- $ -- $ -- Cost of sales 0 -- -- 0 ------------------------ ------------------------ -------------- ------------ Gross profit -- -- -- -- ------------------------ ------------------------ -------------- ------------ Operating expenses: Engineering 2,971 -- -- 2,971 Sales and marketing 1,011 -- -- 1,011 General and administrative 1,069 697 (697) 1,069 ------------------------ ------------------------ ------------ ------------ Total operating expenses 5,051 697 (697) 5,051 ------------------------ ------------------------ ------------ ------------ Loss from operations (5,051) (697) 697 (5,051) Loss on sales of assets (12) (12) Other income 14 -- 14 Interest expense (40) -- (40) Impairment of goodwill related to 0 acquisitions (9) (9) ------------------------ ------------------------ ------------ ------------ Net loss $ (5,098) $ (697) $ 697 $ (5,098) ======================== ======================== ============ ============ Net loss per share, basic $ (0.34) ============ Net loss per share, diluted $ (0.27) ============ Weighted average shares used in computing net loss per share, basic 14,792,553 ============ Weighted average shares used in computing net loss per share, diluted 18,712,946 ============
The accompanying notes are an integral part of these pro forma condensed combined financial statements. -------------------------------------------------------------------------------- NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 1. SUMMARY OF TRANSACTION On April 1, 2005, a wholly owned subsidiary of Rescon Technology, Inc., a Nevada corporation ("Rescon"), merged with Nayna Networks, Inc., a Delaware corporation ("Nayna") pursuant to an Agreement and Plan of Merger between Rescon and Nayna (the "Agreement"). In the Merger Rescon issued 32,249,947 shares of its restricted common stock to the stockholders of Nayna and issued options to purchase 3,475,763 shares of its restricted common stock and warrants to purchase 88,600 shares of its restricted stock, in exchange for 100% of Nayna's issued and outstanding shares of common stock, options and warrants. 2. UNAUDITED PRO FORMA COMBINED NET LOSS PER SHARE Basic net loss per share and shares used in computing the net loss per share for the year ended December 31, 2004 are based upon the historical weighted average common shares outstanding plus the shares issued in connection with the Merger. Dilutive net loss per share would give effect to the dilutive effect of common stock equivalents consisting of restricted stock and warrants. Potentially dilutive securities have been excluded from the computation of net loss per share as its effect would be antidilutive. The 32,249,947 shares of common stock issued in connection with the Merger have been included in the calculation of pro forma basic and diluted net loss per share as follows: Nayna Networks, Inc. NOTE2: UNAUDITED PRO FORMA CONDENSED Calculation of basic and fully diluted shares
Series A Series B Series C Series D Common Nayna balance as at December 31, 2003 15,000,000 7,999,997 4,680,647 0 20,512,289 Pre-merger post-reverse split Rescon 3,552,557 Conversion to common (15,000,000) (7,999,997) (4,680,647) 27,680,644 Issuance of Series D on July 2004 19,531,247 Issuance on purchase of Accordion asset on August 2004 300,000 Exercise of employee stock options on September 2004 301,158 Issuance on purchase of DC7 ----------------------------------------------------------------------------------------------------------------------------- Total basic shares as at December 31, 2004 0 0 0 19,531,247 52,346,648 ============================================================================================================================= as converted to common 47,301,090 ----------------------------------------------------------------------------------------------------------------------------- Total fully diluted shares as at December 31, 2004 0 0 0 66,832,337 52,346,648 ============================================================================================================================= 0 Weighted Average as converted Weighted as converted Total to Rescon Average to Rescon Nayna balance as at December 31, 2003 48,192,933 9,586,346 48,192,933 9,586,346 Pre-merger post-reverse split Rescon 3,552,557 3,552,557 onversion to common 0 0 0 0 Issuance of Series D on July 2004 19,531,247 3,885,078 8,138,020 1,618,782 Issuance on purchase of Accordion asset on August 2004 300,000 59,675 100,000 19,892 Exercise of employee stock options on September 2004 301,158 59,905 75,290 14,976 Issuance on purchase of DC7 46,502,040 9,250,000 ---------------------------------------------------------------------------------------------------------------------- Total basic shares as at December 31, 2004 118,379,935 22,841,003 56,506,242 14,792,553 ====================================================================================================================== as converted to common 47,301,090 9,408,944 19,708,788 3,920,393 ---------------------------------------------------------------------------------------------------------------------- Total fully diluted shares as at December 31, 2004 165,681,025 32,249,947 76,215,030 18,712,946 ======================================================================================================================
3. PRO FORMA ADJUSTMENTS The pro forma adjustments are based on management's preliminary estimates, which may change as additional information is obtained, and eliminate the historical assets, liabilities and equity of Rescon that will not be part of the combined company after the Merger. --------------------------------------------------------------------------------