-----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, IkFLkZwmrea9XxbDiGg32Rj8bVmvaAkt+Hzk2/5GciiCzqwyT1oGrgDebDjU5Y37 XJvCe5Dw4k48cK2ev31uLA== /in/edgar/work/0000950137-00-004238/0000950137-00-004238.txt : 20000927 0000950137-00-004238.hdr.sgml : 20000927 ACCESSION NUMBER: 0000950137-00-004238 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000818 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000925 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAUPHIN TECHNOLOGY INC CENTRAL INDEX KEY: 0000832489 STANDARD INDUSTRIAL CLASSIFICATION: [3570 ] IRS NUMBER: 870455038 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 033-21537-D FILM NUMBER: 728173 BUSINESS ADDRESS: STREET 1: 800 E NORTHWEST STREET 2: STE 950 CITY: PALATINE STATE: IL ZIP: 60067 BUSINESS PHONE: 8473584406 MAIL ADDRESS: STREET 1: 800 E NORTHWEST HIGHWAY SUITE 950 CITY: PALATINE STATE: IL ZIP: 60067 8-K/A 1 c57610a1e8-ka.txt AMENDMENT #1 TO CURRENT REPORT 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 18, 2000 Commission File Number: 333-35808 DAUPHIN TECHNOLOGY, INC. ------------------------ (Exact name of Registrant as specified in its charter) ILLINOIS 3570 87-0455038 - ------------------------------------------------------------------------------------------ (State or Other Jurisdiction (Primary Standard (I.R.S. Employer Number) of Incorporation or Organization) Industrial Classification Identification No.)
800 E. Northwest Hwy., Suite 950, Palatine, IL 60067 ---------------------------------------------------- (Address of principal executive offices, including Zip Code) (847) 358 4406 -------------- (Registrant's telephone number, including area code) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On August 28, 2000 Dauphin Technology, Inc. (the "Company"), filed a Form 8-K to report, through its wholly-owned subsidiary, ADD Acquisition Corp. ("Acquisition Corp"), the August 18, 2000 acquisition of substantially all of the assets of T & B Design, Inc. (f/k/a Advanced Digital Designs, Inc.)("ADD"), Advanced Technologies, Inc. ("ATI"), and 937 Plum Grove Road Partnership ("937") pursuant to an Asset Purchase Agreement by and among the Company, Acquisition Corp., ADD, ATI, 937 and the stockholders of ADD and ATI and partners of 937. Pursuant to Item 7 of the Form 8-K, Dauphin Technology, Inc. indicated that it would file certain financial information no later than the date required by Item 7 of Form 8-K. This Amendment No. 1 is being filed to provide such financial information. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Business Acquired The following combined financial statements of ADD, ATI and 937 are included as Exhibit 99.1 to the Current Report on Form 8-K and are incorporated herein by this reference: Independent Auditors' Report Combined Balance Sheets as of December 31, 1997, 1998 and 1999 and June 30, 2000 Combined Statements of Earnings for the years ended December 31, 1997, 1998 and 1999 and for the six months ended June 30, 1999 and 2000 Combined Statements of Stockholders' Equity for the three years ended December 31, 1999 and the six months ended June 30, 2000 Combined Statements of Cash Flows for the years ended December 31, 1997, 1998 and 1999 and the six months ended June 30, 1999 and 2000 Notes to Combined Financial Statements (b) Pro forma Financial Information The following unaudited pro forma financial information of the Company is included as Exhibit 99.2 to the Current Report on Form 8-K and are incorporated herein by reference: Introduction to Unaudited Pro Forma Condensed Combined Financial Information Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 1999 3 (b) Pro forma Financial Information - continued Unaudited Pro Forma Condensed Combined Statement of Operations for the six months ended June 30, 2000 Unaudited Condensed Combined Balance Sheet as of June 30, 2000 Notes to Unaudited Pro Forma Condensed Combined Financial Information (c) Exhibits The Exhibits that are filed with the Current Report on Form 8-K are set forth in the Exhibit Index to this Current Report on Form 8-K. 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. Dauphin Technology, Inc. Dated: September 25, 2000 By: /s/ Harry L. Lukens, Jr. ------------------------ Harry L. Lukens, Jr. Chief Financial Officer 4 EXHIBIT INDEX Exhibit Number Exhibit - ------ ------- 2.1 Asset Purchase Agreement, by and among the Company, ADD Acquisition Corp., T & B Design, Inc. (f/k/a Advanced Digital Designs, Inc.), Advanced Technologies, Inc., 937 Plum Grove Road Partnership, the Stockholders of T & B Design, Inc. and Advanced Technologies, Inc. and the partners of 937 Plum Grove Road Partnership, dated August 18, 2000. (previously filed) 2.2 Escrow Agreement, dated August 18, 2000, by and between ADD Acquisition Corp., a subsidiary of Dauphin Technology, Inc., T & B Design, Inc. f/k/a Advanced Digital Designs, Inc., an Illinois corporation, Anthony Vitucci and Bruce Karsten, and National City Bank of Michigan/Illinois. (previously filed) 99.1 The following combined financial statements of T & B Design, Inc. (f/k/a Advanced Digital Designs, Inc.), Advanced Technologies, Inc. and 937 Plum Grove Road Partnership: Independent Auditors' Report Combined Balance Sheets as of December 31, 1997, 1998 and 1999 and June 30, 2000 Combined Statements of Earnings for the years ended December 31, 1997, 1998 and 1999 and the six months ended June 30, 1999 and 2000 Combined Statements of Stockholders' Equity for the three years ended December 31, 1999 and six months ended June 30, 2000 Combined Statements of Cash Flows for the years ended December 31, 1997, 1998 and 1999 and the six months ended June 30, 1999 and 2000 Notes to Combined Financial Statements 99.2 The following unaudited pro forma financial information of Dauphin Technology, Inc.: Introduction to Unaudited Pro Forma Condensed Combined Financial Information Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 1999 Unaudited Pro Forma Condensed Combined Statement of Operations for the six months ended June 30, 2000 Unaudited Condensed Combined Balance Sheet as of June 30, 2000 Notes to Unaudited Pro Forma Condensed Combined Financial Information EX-99.1 2 c57610a1ex99-1.txt COMBINED FINANCIAL STATEMENTS 1 EXHIBIT 99.1 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors Advanced Digital Designs, Inc., Advanced Technologies, Inc., and 937 Plum Grove Road Partnership We have audited the accompanying combined balance sheets of Advanced Digital Designs, Inc., Advanced Technologies, Inc., and 937 Plum Grove Road Partnership as of December 31, 1999, 1998, and 1997 and the related combined statements of earnings and cash flows for the three years 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 combined financial position of Advanced Digital Designs, Inc., Advanced Technologies, Inc., and 937 Plum Grove Road Partnership as of December 31, 1999, 1998, and 1997 and the combined results of their operations and their combined cash flows for the three years then ended, in conformity with accounting principles generally accepted in the United States of America. GRANT THORNTON LLP Chicago, Illinois June 19, 2000, except for note D, as to which the date is August 18, 2000 2 ADVANCED DIGITAL DESIGNS, INC., ADVANCED TECHNOLOGIES, INC., AND 937 PLUM GROVE ROAD PARTNERSHIP COMBINED BALANCE SHEETS DECEMBER 31, ================================================================================
June 30, June 30, ASSETS 1999 1998 1997 2000 1999 ---------- ---------- ---------- ---------- ---------- (unaudited) (unaudited) Current assets Cash $ 64,645 $ 87,685 $ 30,913 $ 226,752 $ 170,639 Trade accounts receivable 1,004,957 481,497 422,335 508,895 453,534 ---------- ---------- ---------- ---------- ---------- Total current assets 1,069,602 569,182 453,248 735,647 624,173 Building, equipment, furniture, and fixtures Building 362,102 362,102 - 362,102 362,102 Computer equipment 95,806 86,017 57,998 111,811 91,461 Other equipment, furniture, and fixtures 23,331 23,331 5,906 23,331 23,331 ---------- ---------- ---------- ---------- ---------- 481,239 471,450 63,904 497,244 476,894 Less accumulated depreciation 91,957 48,098 9,063 116,195 70,027 ---------- ---------- ---------- ---------- ---------- 389,282 423,352 54,841 381,049 406,867 ---------- ---------- ---------- ---------- ---------- TOTAL ASSETS $1,458,884 $ 992,534 $ 508,089 $1,116,696 $1,031,040 ========== ========== ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 32,000 $ 22,000 $ 28,000 $ 32,000 $ 22,000 Accrued expenses and other current liabilities 36,640 54,675 61,858 35,180 26,419 Current maturities of long-term debt 23,760 23,760 - 23,760 23,760 ---------- ---------- ---------- ---------- ---------- Total current liabilities 92,400 100,435 89,858 90,940 72,179 Long-term debt, less current maturities 241,337 243,967 - 239,974 242,649 Other long-term liabilities 8,164 8,164 - 10,864 8,164 ---------- ---------- ---------- ---------- ---------- Total liabilities 341,901 352,566 89,858 341,778 322,992 Stockholders' equity 1,116,983 639,968 418,231 774,918 708,048 ---------- ---------- ---------- ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,458,884 $ 992,534 $ 508,089 $1,116,696 $1,031,040 ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these statements. 3 ADVANCED DIGITAL DESIGNS, INC., ADVANCED TECHNOLOGIES, INC., AND 937 PLUM GROVE ROAD PARTNERSHIP COMBINED STATEMENTS OF EARNINGS YEARS ENDED DECEMBER 31, ================================================================================
June 30, June 30, 1999 1998 1997 2000 1999 ----------- ----------- ----------- ----------- ----------- (unaudited) (unaudited) Consulting revenue $ 3,234,435 $ 3,169,311 $ 1,964,786 $ 1,684,283 $ 1,574,476 Cost of revenue 1,230,785 1,091,282 379,177 601,090 553,571 ----------- ----------- ----------- ----------- ----------- Gross profit 2,003,650 2,078,029 1,585,609 1,083,193 1,020,905 Selling, general and administrative expenses 218,808 100,944 122,051 135,363 41,955 ----------- ----------- ----------- ----------- ----------- Earnings from operations 1,784,842 1,977,085 1,463,558 947,830 978,950 Other (expense) income Interest expense, net (8,522) (7,802) 11,756 (2,287) (4,466) Miscellaneous 54,022 60,043 - 26,992 25,539 ----------- ----------- ----------- ----------- ----------- Total other income 45,500 52,241 11,756 24,705 21,073 ----------- ----------- ----------- ----------- ----------- Income before taxes 1,830,342 2,029,326 1,475,314 972,535 1,000,023 Income taxes 33,327 22,527 4,785 14,600 31,943 ----------- ----------- ----------- ----------- ----------- NET INCOME $ 1,797,015 $ 2,006,799 $ 1,470,529 $ 957,935 $ 968,080 =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these statements. 4 ADVANCED DIGITAL DESIGNS, INC., ADVANCED TECHNOLOGIES, INC., AND 937 PLUM GROVE ROAD PARTNERSHIP COMBINED STATEMENT OF STOCKHOLDERS' EQUITY THREE YEARS ENDED DECEMBER 31, 1999 ================================================================================ Additional paid-in Retained capital earnings Total ----------- ----------- ----------- Balance at January 1, 1997 $ 166,702 $ - $ 166,702 Net earnings - 1,470,529 1,470,529 Dividends paid - (1,219,000) (1,219,000) ----------- ----------- ----------- Balance at December 31, 1997 166,702 251,529 418,231 Net earnings - 2,006,799 2,006,799 Capital contribution 134,938 - 134,938 Dividends paid - (1,920,000) (1,920,000) ----------- ----------- ----------- Balance at December 31, 1998 301,640 338,328 639,968 Net earnings (unaudited) - 968,080 968,080 Dividends paid (unaudited) - (900,000) (900,000) ----------- ----------- ----------- Balance at June 30, 1999 (unaudited) $ 301,640 $ 406,408 $ 708,048 =========== =========== =========== Balance at December 31, 1998 $ 301,640 $ 338,328 $ 639,968 Net earnings - 1,797,015 1,797,015 Dividends paid - (1,320,000) (1,320,000) ----------- ----------- ----------- Balance at December 31, 1999 301,640 815,343 1,116,983 Net earnings (unaudited) - 957,935 957,935 Dividends paid (unaudited) - (800,000) (800,000) Buyout of principal (unaudited) - (500,000) (500,000) ----------- ----------- ----------- Balance at June 30, 2000 (unaudited) $ 301,640 $ 473,278 $ 774,918 =========== =========== =========== The accompanying notes are an integral part of these statements. 5 ADVANCED DIGITAL DESIGNS, INC., ADVANCED TECHNOLOGIES, INC., AND 937 PLUM GROVE ROAD PARTNERSHIP COMBINED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, ================================================================================
June 30, June 30, 1999 1998 1997 2000 1999 ----------- ----------- ----------- ----------- ----------- (unaudited) (unaudited) Cash flows from operating activities Net income $ 1,797,015 $ 2,006,799 $ 1,470,529 $ 957,935 $ 968,080 Adjustments to reconcile net income to net Cash provided by operating activities Depreciation 43,859 39,035 8,318 24,238 21,929 Change in operating assets and liabilities Trade accounts receivable (523,460) (59,162) (422,335) 496,062 27,963 Accounts payable 10,000 (6,000) 28,000 - - Accrued expenses and other current liabilities (18,035) (7,183) 61,858 (1,460) (28,256) ----------- ----------- ----------- ----------- ----------- Total adjustments (487,636) (33,310) (324,159) 518,840 21,636 ----------- ----------- ----------- ----------- ----------- Net cash provided by operating activities 1,309,379 1,973,489 1,146,370 1,476,775 989,716 Cash flows from investing activities Additions to building equipment, furniture, and fixtures (9,789) (407,546) (63,159) (16,005) (5,444) ----------- ----------- ----------- ----------- ----------- Net cash used in investing activities (9,789) (407,546) (63,159) (16,005) (5,444) Cash flows from financing activities Payments on long-term debt - net (2,630) 275,891 - 1,337 (1,318) Dividends paid (1,320,000) (1,920,000) (1,219,000) (800,000) (900,000) Buyout of principal - - - (500,000) - Capital contribution - 134,938 166,702 - - ----------- ----------- ----------- ----------- ----------- Net cash used in financing activities (1,322,630) (1,509,171) (1,052,298) (1,298,663) (901,318) ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in cash (23,040) 56,772 30,913 162,107 82,954 Cash at beginning of year 87,685 30,913 - 64,645 87,685 ----------- ----------- ----------- ----------- ----------- Cash at end of year $ 64,645 $ 87,685 $ 30,913 $ 226,752 $ 170,639 =========== =========== =========== =========== =========== Supplemental disclosure of cash flow information Cash paid during the year for Interest $ 20,263 $ 18,713 $ - $ 10,084 $ 10,129 Income taxes 33,327 22,527 4,785 - -
The accompanying notes are an integral part of these statements. 6 ADVANCED DIGITAL DESIGNS, INC., ADVANCED TECHNOLOGIES, INC., AND 937 PLUM GROVE ROAD PARTNERSHIP NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998, AND 1997 ================================================================================ NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies applied in the preparation of the accompanying combined financial statements for Advanced Digital Designs, Inc., Advanced Technologies, Inc., and 937 Plum Grove Road Partnership (collectively, the "Company") follows: INDUSTRY OPERATIONS AND CONCENTRATION OF CREDIT RISK The Company specializes in three main areas: design services, which include hardware, firmware, and software; process methodology consulting; and intellectual property development. The Company services the communications, computer, video, automotive, medical, and other industries. Three of the Company's customers accounted for approximately 85%, 82%, and 83% of total revenues for the years ended December 31, 1999, 1998, and 1997, respectively. Total outstanding receivables for those three customers at December 31, 1999, 1998, and 1997 was $680,963, $279,450, and $272,135, respectively, representing approximately 68%, 58%, and 64% of the total accounts receivable as of December 31, 1999, 1998, and 1997, respectively. PRINCIPLES OF COMBINATION The accompanying combined financial statements include the accounts of Advanced Digital Designs, Inc., Advanced Technologies, Inc., and 937 Plum Grove Road Partnership, based on common ownership. All significant intercompany accounts and transactions have been eliminated. ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. BUILDING, EQUIPMENT, FURNITURE, AND FIXTURES Building, equipment, furniture, and fixtures are recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. 7 ADVANCED DIGITAL DESIGNS, INC., ADVANCED TECHNOLOGIES, INC., AND 937 PLUM GROVE ROAD PARTNERSHIP NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1999, 1998, AND 1997 ================================================================================ NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Income Taxes The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. As such, the Company's net income is treated for Federal and State of Illinois income tax purposes substantially as if the Company were a partnership. The net income of the Company is reportable in the stockholders' individual Federal and state income tax returns. Accordingly, the Company is not liable for any Federal or state income tax, except for Illinois replacement tax, during this period. REVENUE RECOGNITION Revenue is recognized when the service is performed. ================================================================================ NOTE B - EMPLOYEE BENEFIT PLANS The Company established a 401(k) retirement plan for eligible employees on April 1, 1998, in accordance with Section 401(k) of the Internal Revenue Code. Employees are permitted to make annual contributions through salary deductions up to 15% of their annual salary. The Company does not have a match policy in place. ================================================================================ NOTE C - LONG-TERM OBLIGATIONS Long-term obligations consist of the following at December 31:
June 30, June 30, 1999 1998 1997 2000 1999 -------- -------- -------- -------- -------- (unaudited) (unaudited) Notepayable to bank, dated January 26, 1998, at a fixed rate of 7.5%, with a payment of $1,907 plus interest to be made monthly, for a term of 15 years with an amortization not to exceed 30 years $265,097 $267,727 $ - $263,734 $266,409 Less current maturities 23,760 23,760 - 23,760 23,760 -------- -------- -------- -------- -------- $241,337 $243,967 $ - $239,974 $242,649 ======== ======== ======== ======== ========
8 ADVANCED DIGITAL DESIGNS, INC., ADVANCED TECHNOLOGIES, INC., AND 937 PLUM GROVE ROAD PARTNERSHIP NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 1999, 1998, AND 1997 ================================================================================ NOTE C - LONG-TERM OBLIGATIONS - CONTINUED Annual maturities of long-term obligations as of December 31, 1999, are as follows: 2000 $ 23,760 2001 23,760 2002 23,760 2003 23,760 2004 23,760 Thereafter 146,297 -------- $265,097 ======== ================================================================================ NOTE D -SUBSEQUENT EVENT On August 18, 2000, the Company sold substantially all of its assets to Dauphin Technology, Inc. for $6,000,000. EX-99.2 3 c57610a1ex99-2.txt UNAUDITED PRO FORMA FINANCIAL INFORMATION 1 EXHIBIT 99.2 INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION The following unaudited pro forma condensed combined financial information presented below reflects the effect of the acquisition of T & B Design, Inc. (f/k/a Advanced Digital Designs, Inc.), Advanced Technologies, Inc. and 937 Plum Grove Road Partnership (collectively "ADD") by Dauphin Technology, Inc., and reflects management's present estimate of pro forma adjustments, including a preliminary estimate of the purchase price allocations, which ultimately may be different. This pro forma information has been prepared utilizing historical financial statements of the Company and ADD. The unaudited pro forma condensed combined statements of operations give effect to the acquisition as if the transaction was consummated as of the beginning of each period reported, utilizing the results of operations for the twelve months ended December 31, 1999 and the six months ended June 30, 2000 for the Company and ADD. This information should be read in conjunction with the historical financial statements and notes thereto. The pro forma financial data have been included as required by the rules and regulations of the Securities and Exchange Commission and are provided for comparative purposes only. The pro forma financial data do not purport to be indicative of the results which actually would have been obtained if the acquisition had occurred on the date indicated or of those results which may be obtained in the future. 2 DAUPHIN TECHNOLOGY, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999
Pro forma Dauphin ADD Adjustments Pro Forma ------------ ------------ ------------ ------------ Revenue $ 2,279,058 $ - $ - $ 2,279,058 Consulting Revenue - 3,234,435 - 3,234,435 Cost of Revenue 4,833,601 1,230,785 - 6,064,386 ------------ ------------ ------------ ------------ Gross profit (loss) (2,554,543) 2,003,650 - (550,893) Selling, General and Administrative Expenses 4,173,095 218,808 1,141,000(1) 5,532,903 Research and Development 510,287 - - 510,287 ------------ ------------ ------------ ------------ Earnings (loss) from Operations (7,237,928) 1,784,842 (1,141,000) (6,594,083) Interest expense (2,099,179) (8,522) - (2,107,701) Interest income 30,800 - - 30,800 Other income - 54,022 - 54,022 ------------ ------------ ------------ ------------ Earnings (loss) before Taxes (9,306,304) 1,830,342 (1,141,000) (8,616,962) Income Taxes - 33,327 - 33,327 ------------ ------------ ------------ ------------ Net income (loss) $ (9,306,304) $ 1,797,015 $ (1,141,000) $ (8,650,289) ============ ============ ============ ============ Basic and diluted loss per share $ (0.20) $ (0.19) ============ ============ Weighted average number of common shares outstanding 46,200,408 46,200,408 ============ ============
3 DAUPHIN TECHNOLOGY, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000
Pro forma Dauphin ADD Adjustments Pro Forma ------------ ------------ ------------ ------------ Revenue $ 16,041 $ - $ - $ 16,041 Consulting Revenue - 1,684,283 - 1,684,283 Cost of Revenue 123,411 601,090 - 724,501 ------------ ------------ ------------ ------------ Gross profit (loss) (107,370) 1,083,193 - 975,823 Selling, General and Administrative Expenses 1,820,049 135,363 570,500(1) 2,525,912 Research and Development 250,858 - - 250,858 ------------ ------------ ------------ ------------ Earnings (loss) from Operations (2,178,277) 947,830 (570,500) (1,800,947) Interest expense (1,817,141) (2,287) - (1,819,428) Interest income 13,810 - - 13,810 Other income - 26,992 - 26,992 ------------ ------------ ------------ ------------ Earnings (loss) before Taxes (3,981,608) 972,535 (570,500) (3,579,573) Income Taxes - 14,600 - 14,600 ------------ ------------ ------------ ------------ Net income (loss) $ (3,981,608) $ 957,935 $ (570,500) $ (3,594,173) ============ ============ ============ ============ Basic and diluted loss per share $ (0.07) $ (0.06) ============ ============ Weighted average number of common shares outstanding 57,005,361 57,005,361 ============ ============
4 DAUPHIN TECHNOLOGY, INC. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET JUNE 30, 2000
Pro forma Dauphin ADD Adjustments Pro Forma ----------- ----------- ----------- ----------- CURRENT ASSETS Cash $ 4,014,815 $ 226,752 $(6,000,000)(2) $ 514,815 2,500,000 (3) (226,752)(2) Accounts receivable-Trade 533,394 508,895 (508,895)(2) 533,394 Allowance for Bad Debts (428,599) - (428,599) Accounts receivable-Employee 118 - 118 Inventory 3,446,828 - 3,446,828 Reserve for obsolescence (1,945,296) - (1,945,296) Prepaid expense 101,834 - 101,834 ----------- ----------- ----------- ----------- 5,723,094 735,647 (4,235,647) 2,223,094 INVESTMENTS IN RELATED PARTY 290,000 - 290,000 PROPERTY AND EQUIPMENT Building - 362,102 37,898 (2) 400,000 Manufacturing and warehouse equipment 624,690 - 624,690 Leasehold improvements 407,186 - 407,186 Plastic molds for the Orasis 696,862 - 696,862 Computer equipment 249,732 111,811 (1,811)(2) 359,732 Furniture, fixtures and other equipment 101,357 23,331 (8,331)(2) 116,357 ----------- ----------- ----------- ----------- 2,079,827 497,244 27,756 2,604,827 Accumulated depreciation (912,776) (116,195) 116,195 (2) (912,776) ----------- ----------- ----------- ----------- 1,167,051 525,000 143,951 1,692,051 GOODWILL - - 5,500,000 (2) 5,500,000 ----------- ----------- ----------- ----------- $ 7,180,145 $ 1,116,696 $ 1,408,304 $ 9,705,145 =========== =========== =========== ===========
5 DAUPHIN TECHNOLOGY, INC. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET -CONTINUED JUNE 30, 2000
Pro forma Dauphin ADD Adjustments Pro Forma ------------ ------------ ------------ ------------ CURRENT LIABILITIES Accounts payable $ 211,694 $ 32,000 $ (32,000)(2) $ 211,694 Accrued expenses 121,742 47,101 (47,101)(2) 146,742 25,000 (2) Current portion of long-term debt 127,249 23,760 (23,760)(2) 127,249 ------------ ------------ ------------ ------------ 460,685 102,861 (77,861) 485,685 LONG TERM DEBT 150,399 239,974 6,000,000 (2) 150,399 (6,000,000)(2) (239,974)(2) OTHER LONG-TERM LIABILITIES - 10,864 (10,864) - SHAREHOLDERS' EQUITY Preferred stock - - - Common stock 57,960 - 649 (3) 58,609 Warrants 1,649,180 - 1,649,180 Paid-in capital 47,670,265 - 2,499,351 (3) 50,169,616 Accumulated deficit (42,808,344) - (42,808,344) Retained earnings - 762,997 (762,997)(2) - ------------ ------------ ------------ ------------ 6,569,061 762,997 1,737,003 9,069,061 ------------ ------------ ------------ ------------ $ 7,180,145 $ 1,116,696 $ 1,408,304 $ 9,705,145 ============ ============ ============ ============
6 NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION PRO FORMA ADJUSTMENTS The following pro forma adjustments have been made to the unaudited condensed consolidated statements of operations for the year ended December 31, 1999 and the six months ended June 30, 2000. (1) To record amortization expense of goodwill using a useful life of five years and to record depreciation expense using useful lives ranging from five to twenty-five years, as if the acquisition had been completed as of January 1, 1999. (2) To record the purchase of assets of ADD and to eliminate the debt. (3) To record the drawdown of $2.5 million and the issuance of 648,618 shares. The total purchase price for the acquisition will be allocated to acquired assets based on estimates of their fair values. The excess of the total purchase price over the allocations of fair value to the net assets acquired will be recorded as goodwill, which was calculated as follows for purposes of the pro forma presentations herein: Purchase considerations $6,000,000 Direct acquisition costs 25,000 ---------- Total purchase price 6,025,000 Less: tangible assets acquired Building 400,000 Computer equipment 110,000 Other equipment 15,000 ---------- Goodwill $5,500,000 ========== On July 31, 2000, the Company issued a drawdown notice to Techrich International Limited in connection with the common stock purchase agreement dated April 9, 2000, evidencing an equity draw down facility between the Company and Techrich. The common stock purchase agreement is more fully described in the Company's Prospectus Statement filed on Form S-1 dated July 21, 2000. During the first 11 days of the drawdown period, Techrich purchased 648,618 shares of the Company's common stock. These purchases resulted in aggregate proceeds of $2,500,000 being paid to the Company. These proceeds were used in the acquisition of ADD. -----END PRIVACY-ENHANCED MESSAGE-----