-----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, KHNlc/zNZwMP4PUiukj0C2X2l9ZKzqQiLaEUICCGkHdBM46++gf9jKSE4J2Os0ak RIe6xOsr1ZveK/hwEvo12A== 0000950147-00-000572.txt : 20000418 0000950147-00-000572.hdr.sgml : 20000418 ACCESSION NUMBER: 0000950147-00-000572 CONFORMED SUBMISSION TYPE: SB-2/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000417 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIMENSIONAL VISIONS INC/ DE CENTRAL INDEX KEY: 0000836809 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 232517953 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SB-2/A SEC ACT: SEC FILE NUMBER: 333-30368 FILM NUMBER: 602650 BUSINESS ADDRESS: STREET 1: 2301 WEST DUNLAP STREET 2: SUITE 207 CITY: PHOENIX STATE: AZ ZIP: 85021 BUSINESS PHONE: 6029971990 MAIL ADDRESS: STREET 1: 8855 N. BLACK CANYON HWY STREET 2: STE 2000 CITY: PHOENIX STATE: AZ ZIP: 85021 SB-2/A 1 AMENDMENT 1 TO FORM SB-2 as Filed With the Securities and Exchange Commission on April 14, 2000 Registration No. 333-30368 ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 1 to FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 DIMENSIONAL VISIONS INCORPORATED (Name of small business issuer in its charter) Delaware 2759 23-2517953 (State of other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) 2301 W. Dunlap Avenue, Suite 207 2301 W. Dunlap Avenue, Suite 207 Phoenix, Arizona 85021 Phoenix, Arizona 85021 (602) 997-1990 (602) 997-1990 (Address and telephone number of (Address and telephone number of principal executive office) principal place of business) Prentice Hall Corporation System, Inc. 1013 Centre Road Wilmington, DE 19805 (302) 998-0595 (Name, address and telephone number of agent for service) ---------- COPIES TO: Lynne Bolduc, Esq. Horwitz & Beam Two Venture Plaza, Suite 350 Irvine, CA 92618 (949) 453-0300 ---------- Approximate Date of Proposed Sale to the Public. As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] ================================================================================ CALCULATION OF REGISTRATION FEE
============================================================================================================= Proposed Maximum Proposed Maximum Amount of Title of Each Class of Number of Shares Offering Price Aggregate Registration Securities to be Registered to be Registered Per Share(1) Offering Price Fee - ------------------------------------------------------------------------------------------------------------- Common Stock, $0.001 par value 855,973 $0.84375 $ 722,227.20 $ 190.67 Common Stock, $0.001 par value, underlying Series D Preferred Stock 750,000 $0.84375(2) $ 632,812.50 $ 167.06 Common Stock, $0.001 par value, underlying Series E Preferred Stock 675,000 $0.84375(3) $ 569,531.25 $ 150.36 Common Stock, $0.001 par value, underlying debt securities 2,434,291 $0.84375(4) $ 2,053,933.03 $ 542.24 Common Stock, $0.001 par value, underlying warrants 7,327,210 $0.84375(5) $ 6,182,333.44 $ 1,632.14 Common Stock, $0.001 par value, underlying Stock Option Plan 1,500,000 $0.84375(6) $ 1,265,625.00 $ 334.13 Total 13,542,474 $11,426,462.42 $ 3,016.60 =============================================================================================================
- ---------- (1) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) and based upon the average of the bid and asked prices for the Common Stock on February 7, 2000, as reported by the OTC Bulletin Board. (2) Represents Common Stock issuable upon conversion of the Company's Series D Preferred Stock. (3) Represents Common Stock issuable upon conversion of the Company's Series E Preferred Stock. (4) Represents Common Stock issuable upon conversion of the Company's debt securities. (5) Represents Common Stock issuable upon exercise of warrants. Pursuant to Rule 416 promulgated under the Securities Act of 1933, this Registration Statement also covers any additional Common Shares which may become issuable by reason of the antidilution provisions of the Warrants. (6) Represents Common Stock issuable upon exercise of options from the Company's 1999 Stock Option Plan. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. PROSPECTUS DIMENSIONAL VISIONS INCORPORATED 13,542,474 SHARES OF COMMON STOCK ($0.001 PAR VALUE) THE OFFERING: This Offering relates to the possible sale, from time to time, by certain stockholders, the "Selling Stockholders," of Dimensional Visions Incorporated of up to 13,542,474 shares of common stock of Dimensional Visions. MARKET FOR THE SHARES: The Common Stock of Dimensional Visions is traded in the over-the-counter electronic bulletin board system, also called the Bulletin Board, under the symbol "DVUI." The closing bid and asked prices for the Common Stock on February 7, 2000, as reported by the Bulletin Board were $0.8125 and $0.875 per share, respectively. THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 3. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IF TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS _____________, 2000 PROSPECTUS SUMMARY THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS. YOU SHOULD ALSO READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE RISK FACTORS AND FINANCIAL STATEMENTS. DIMENSIONAL VISIONS INCORPORATED OFFICES: Dimensional Visions' office and principal place of business is located at 2301 West Dunlap Avenue, Suite 207, Phoenix, Arizona 85021, and its telephone number is (602) 997-1990. OUR BUSINESS: Dimensional Visions creates and delivers Living Image(TM) Solutions for products, packaging and marketing communications . Living Image(TM) Solutions are multi-dimensional (commonly known as "3-D") and/or animated visual effects. These effects are created by viewing multiple images through a series of lenses incorporated into a plastic sheet called lenticular. Viewed in one direction, the lenses allow an individual to see stereo, i.e. multiple, views of an image simultaneously. Stereo views are interpreted by the brain as being in three dimensions. Alternatively, viewed in the other direction, the lenses restrict the view to a particular image that changes as the piece is moved creating an animation effect (i.e., it appears that the picture is moving). Images are printed directly on the lenticular and then incorporated into or onto other products. For example, the images can be applied on products such as mouse pads, children's backpacks, business cards and notebooks. They may also be used on product packaging such as cereal boxes to differentiate the item from other similar products by adding a three-dimensional or animated component to attract the buyer's attention. OUR OBJECTIVE: Our objective is to become a dominant marketer, developer and producer of the Living Image(TM) in the United States and internationally. Currently there are two major competitors who produce similar products. However, we have applied for a patent to protect our particular process. OUR STRATEGY: Our Living Image (TM) Solutions offer multi-dimensional and/or animated images for the promotion marketing industry, advertising and graphic design industry, and original equipment manufacturers (OEMs) throughout the United States. Interested OEMs include manufacturers making products that our images can be affixed to or included in their packaging to alter the traditional flat design. OUR FINANCIAL POSITION: The Company has sustained recurring losses since its inception in 1988. As of June 30, 1999, total liabilities exceeded total assets by $721,555. As of December 31, 1999, total liabilities exceeded total assets by $6,836. Three customers accounted for 89% and 47% of the Living Image(TM) revenue for the fiscal year ended June 30, 1999, and the six months ended December 31, 1999, respectively. Our independent auditors, Gitomer & Berenholz, P.C., expressed substantial doubt regarding the Company's ability to continue as a going concern in the year ended June 30, 1999, financial statements. 1 SELLING STOCKHOLDERS: A list of the shares being registered in this prospectus and the people and entities that own them appears in the "Selling Stockholders" section of this prospectus. THE OFFERING Common Stock Outstanding on February 10, 2000 6,169,607 Common Stock Offered by Selling Stockholders 13,542,474 RISK FACTORS An investment in our shares is very risky, and you should be able to bear a complete loss of your investment. See "Risk Factors" for a detailed discussion of the risks and uncertainties concerning Dimensional Visions' common stock. OTC BULLETIN BOARD SYMBOL DVUI SUMMARY FINANCIAL INFORMATION The following table presents selected historical financial data for Dimensional Visions derived from our Financial Statements. The following data should be read with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements of Dimensional Visions and the notes to the Financial Statements included elsewhere in this prospectus. Six Months Ended Fiscal Year Ended December 31, June 30, ------------------------ ------------------------ 1999 1998 1999 1998 ----------- ----------- --------- --------- (unaudited) (unaudited) (audited) (audited) STATEMENT OF OPERATIONS DATA: Revenue $ 300,418 $ 410,400 $ 741,901 $ 609,392 Net loss $(459,051) $(427,580) $(1,465,812) $(421,659) Net loss per share $( 0.09) $( 0.14) $( 0.39) $( 0.16) December 31, 1999 June 30, 1999 ----------------- ------------- (unaudited) (audited) BALANCE SHEET DATA: Working capital surplus (deficiency) $ 176,478 ($ 603,946) Total assets $ 1,021,112 $ 397,185 Total liabilities $ 1,027,988 $ 1,118,740 Stockholder's deficiency $ (6,876) $ (721,555) 2 RISK FACTORS THE SHARES OFFERED IN THIS PROSPECTUS ARE VERY SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. THESE SHARES SHOULD BE PURCHASED ONLY BY PEOPLE WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. BEFORE PURCHASING THESE SHARES, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND THE OTHER INFORMATION CONCERNING DIMENSIONAL VISIONS AND ITS BUSINESS CONTAINED IN THIS PROSPECTUS. DIMENSIONAL VISIONS HAS INCURRED LOSSES SINCE INCEPTION AND MAY CONTINUE TO INCUR LOSSES IN THE FUTURE. Dimensional Visions has operated at a loss for all of the periods for which financial statements are included in this prospectus. We must be able to garner market share from our competitors and/or establish new markets for our products. As lenticular products are more expensive alternatives to traditional flat images, we must establish market acceptance of the products while simultaneously generating sales into this market. The likelihood of our success depends on our ability to develop and produce multi-dimensional and/or animated print products in various formats and at competitive prices. Difficulties and delays in developing new formats using various lenticulars and new technologies for their application may affect our ability to successfully produce marketable products. Failure to overcome any of the above difficulties may have a materially adverse effect upon our business and could force us to reduce or close operations. No assurance can be given that Dimensional Visions can or will ever operate profitably. See "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business of Dimensional Visions--Market and Penetration" and "--Competition." THE INDEPENDENT AUDITORS HAVE ISSUED A GOING CONCERN OPINION FOR THE FISCAL YEARS ENDED JUNE 30, 1999 AND 1998. The Company's independent auditors have included an explanatory paragraph regarding the Company's ability to continue as a going concern for each of the fiscal years ended June 30, 1999 and 1998. Among the factors cited by the accountants as raising substantial doubt as to the Company's ability to continue as a going concern are the Company's recurring losses from operations and limited sales of its products. DIMENSIONAL VISIONS IS DEPENDENT ON A LIMITED PRODUCT LINE AND HAS A DECLINING BUDGET ALLOCATED TO THE DEVELOPMENT OF NEW PRODUCTS. The Company's product line is composed solely of lenticular-based products. If the Company's share of the market for these products fails to develop to a level sufficient to make the Company profitable, there are no other products available for sale. In this case, the Company would be forced to reduce or close operations. Additionally, the budget allocated to the development of new products has been declining, further reducing the availability of new products to market. DIMENSIONAL VISIONS RELIES ON FEW CUSTOMERS FOR THEIR SALES. WITHOUT THESE REPEATED CUSTOMERS, THE COMPANY WOULD HAVE TO REDUCE OR CLOSE OPERATIONS. For the fiscal year ended June 30, 1999, and the six months ended December 31, 1999, three customers accounted for 89% and 47% of the Living Image(TM) revenue respectively. In addition, two customers accounted for 98% and 94% of the InfoPak, Inc. revenue for the fiscal year ended June 30, 1999, and the six months ended December 31, 1999, respectively. If Dimensional Visions were to lose their repeat customers, then the Company would have to reduce or close operations. WE CANNOT GUARANTEE THAT OUR PRODUCTS WILL SELL SUCCESSFULLY THUS GENERATING SUFFICIENT REVENUE TO CONTINUE OPERATIONS. There can be no assurance that our marketing and sales strategies will be effective and that consumers will buy our products. Our failure to penetrate our targeted markets would have a material adverse effect upon our operations. Market acceptance of our products will depend in part upon our ability to demonstrate the advantages of three-dimensional and/or animated products over similar or competing products described under the previous risk of competition. 3 In addition, our sales strategy contemplates sales to markets that are unfamiliar with multi-dimensional printed images and may not be accepting of these new products. Currently, we don't have any distribution agreements for any of our products in place. See "Business of Dimensional Visions--Market and Penetration" and "--Competition." THERE IS COMPETITION FOR OUR PRODUCTS, AND THERE CAN BE NO ASSURANCE THAT CUSTOMERS WILL CHOOSE OUR PRODUCTS OVER THOSE OF OUR COMPETITORS. CUSTOMERS MAY CHOOSE LESS EXPENSIVE, CONVENTIONAL PRINTS OVER OUR PRODUCTS. We compete with other established businesses that market similar products. Many of these companies have greater capital, marketing and other resources than we do. Also, other means of viewing three-dimensional and/or animated images exist. These other methods may be less expensive or easier to incorporate into other products. Further, traditional printed images are less expensive than our products and may be favored in many, if not most, illustration and promotion contexts. See "Business of Dimensional Visions--Competition." DIMENSIONAL VISIONS DEPENDS ON KEY PERSONNEL FOR CRITICAL MANAGEMENT DECISIONS AND THESE KEY PERSONNEL MAY LEAVE THE COMPANY IN THE FUTURE. Our success depends, to a significant extent, upon a number of key employees, including our C.E.O./President, John McPhilimy, and our Senior Vice President, Bruce D. Sandig. The loss of services of one or more of these employees could have a material adverse effect on our business. We believe that our future success will also depend in part upon our ability to attract, retain, and motivate qualified personnel. Competition for such personnel is intense. There can be no assurance that we can attract and retain such personnel. We have "key person" life insurance on both Mr. McPhilimy and Mr. Sandig. See "Management." DIMENSIONAL VISIONS MAY REQUIRE ADDITIONAL FINANCING FOR ITS BUSINESS THAT COULD DILUTE THE OWNERSHIP OF EXISTING STOCKHOLDERS AND FORCE THE COMPANY TO CURTAIL OR CLOSE OPERATIONS. Our future cash requirements will depend significantly on generating sufficient cash flow from operations to cover our cost of goods sold and operating costs or "burn rate" of approximately $81,000 per month. Although we currently do not have any specific plans or arrangements for financing, if our working capital is insufficient to fund our activities for the next year, it will be necessary to raise additional funds through equity or debt financings. Any equity financings could result in dilution to our stockholders. Debt financing may result in higher interest expense. Any financing, if available, may be on unfavorable terms. If we could not raise adequate funds, we would have to reduce or close our operations. UP TO 13,542,474 SHARES OF COMMON STOCK OF DIMENSIONAL VISIONS WILL BECOME ELIGIBLE FOR PUBLIC SALE IMMEDIATELY THAT COULD HAVE A DEPRESSIVE EFFECT ON THE STOCK. When our registration statement, of which this prospectus is a part, is declared effective by the SEC, 855,973 shares of our common stock will be eligible for immediate resale on the public market and 12,686,501 shares of our common stock underlying warrants, options, preferred stock, and debt securities, upon exercise of the warrants or options or conversion of the preferred stock or debt securities, will be eligible for immediate resale on the public market for our common stock. If a significant number of shares are offered for sale simultaneously, it would have a depressive effect on the trading price of our common stock on the public market. 4 DIMENSIONAL VISIONS' COMMON STOCK IS CURRENTLY CLASSIFIED AS A "PENNY STOCK" WHICH COULD CAUSE INVESTORS TO EXPERIENCE DELAYS AND OTHER DIFFICULTIES IN TRADING SHARES IN THE STOCK MARKET. Dimensional Visions' Common Stock is quoted and traded on the Over-the-Counter Bulletin Board ("Bulletin Board"). As a result, an investor could find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, the stock. In addition, trading in the common stock is covered by what is known as the "Penny Stock Rules." The Penny Stock Rules require brokers to provide additional disclosure in connection with any trades involving a stock defined as a "penny stock," including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith. The regulations governing penny stocks could limit the ability of brokers to sell the shares offered in this prospectus and thus the ability of the purchasers of this Offering to sell these shares in the secondary market. Dimensional Visions' stock will be covered by the Penny Stock Rules until it has a market price of $5.00 per share or more, subject to certain exceptions. THE OFFERING PRICE OF THESE SHARES MAY NOT HAVE ANY RELATIONSHIP TO OUR NET WORTH OR FUTURE TRADING VALUE. The shares being registered in this prospectus were offered at the market price prevailing at the time of the offer. The market price of these shares may have a limited relationship, or no relationship, to our assets, book value, results of operations, or other established criteria of value. The offering price also may not be indicative of the prices that will prevail in the subsequent trading market for our securities. NO DIVIDENDS HAVE BEEN PAID ON COMMON STOCK AND MAY NEVER BE PAID. REQUIRED DIVIDENDS IN ARREARS ON PREFERRED STOCK MUST BE PAID BEFORE ANY DIVIDENDS ARE PAID ON COMMON STOCK. Dimensional Visions has never paid dividends on its Common Stock and does not anticipate paying cash dividends in the foreseeable future. Dimensional Visions is in arrears on dividends required to be paid on its Series A Preferred Stock and Series B Preferred Stock. The unpaid cumulative dividends total approximately $88,000 and must be paid before dividends on common stock can be declared or paid. See "Dividend Policy" and Note 10 of Notes to Consolidated Financial Statements. ALTHOUGH DIMENSIONAL VISIONS HAS PATENTS, THIRD PARTIES MAY DEVELOP SIMILAR OR COMPETITIVE TECHNOLOGY. DIMENSIONAL VISIONS CAN GIVE NO ASSURANCE THAT ITS OWN TECHNOLOGY DOES NOT INFRINGE ON EXISTING PATENTS. Dimensional Visions enters into confidentiality agreements with all persons and entities who or which may have access to our technology. However, no assurance can be given that such agreements, the patents, or any additional patents that may be issued to Dimensional Visions will prevent third parties from developing similar or competitive technology. There can be no assurance that the patents will provide us with any significant competitive advantages, or that challenges will not be instituted against the validity or enforceability of its patents, or if instituted that any such challenges will not be successful. The cost of litigation to uphold the validity and prevent infringement can be substantial. In addition, no assurance can be given that we will have sufficient resources to either institute or defend any action, suit or other proceeding by or against our company with respect to any claimed infringement of patent or other proprietary rights. In the event that we should lose, in the near future, the protection afforded by the patents and any future patents, such event could have a material adverse effect on our operations. Furthermore, there can be no assurance that our own technology will not infringe patent or other rights owned by others or licenses to which may not be available to us. 5 USE OF PROCEEDS No new common shares will be offered as a result of this prospectus. Shares in the amount of 1,526,739 will be issued to current long-term debt holders in exchange of principal and accrued interest totaling $572,530. The debt is comprised of long-term 12% notes maturing on July 31, 2001. Interest is accrued and payable on July 31 of each year. Additional shares in the amount of 907,552 will be issued to current short-term debt holders in exchange of principal and accrued interest totaling $258,508. The debt is comprised of short-term 12% notes with due dates ranging from July 25, 1999 through October 29, 1999. It is estimated that approximately $500,000 will flow into the Company from the exercise of 1,164,500 in the money warrants that expire 120 days after the effective date of this registration. The Company will use a portion of these proceeds to expand its sales force, establish a marketing and promotion department, and fund product marketing. MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS Dimensional Visions' common stock has been quoted on the Bulletin Board under the symbol "DVUI" since January 12, 1998. Prior to January 12, 1998, Dimensional Visions' common stock traded under the symbol "DVGL." The following table sets forth the quarterly high and low bid prices of Dimensional Visions' common stock for the periods indicated, after adjusting such prices for Dimensional Visions' 1-for-25 reverse common stock split which was effective January 15, 1998. Bid quotations represent interdealer prices without adjustment for retail markup, markdown and/or commissions and may not necessarily represent actual transactions. High Low ---- --- FISCAL 1998 First Quarter................................... $ 2 1/2 $ 1 1/8 Second Quarter.................................. 2 1/2 1/2 Third Quarter................................... 2 1/4 1/2 Fourth Quarter.................................. 1 5/8 3/4 FISCAL 1999 First Quarter................................... 1 11/32 27/64 Second Quarter.................................. 21/32 1/4 Third Quarter................................... 7/16 3/16 Fourth Quarter.................................. 27/32 3/16 FISCAL 2000 First Quarter................................... 2 3/16 3/8 Second Quarter.................................. 1 23/32 27/32 Third Quarter................................... 2 3/32 13/16 Fourth Quarter (through April 10, 2000)........ 2 11/32 1 5/16 6 HOLDERS As of April 10, 2000, the number of stockholders of record was 417, not including beneficial owners whose shares are held by banks, brokers and other nominees. Dimensional Visions estimates that it has approximately 3,500 stockholders in total. DIVIDEND POLICY Dimensional Visions has paid no dividends on its common stock since its inception and does not anticipate or contemplate paying cash dividends in the foreseeable future. Pursuant to the terms of Dimensional Visions' Series A Convertible Preferred Stock, a 5% annual dividend is due and owing. Pursuant to the terms of Dimensional Visions' Series B Convertible Preferred Stock, an 8% annual dividend is due and owing. As of June 30, 1999, Dimensional Visions has not declared dividends on Series A or B preferred stock. The unpaid cumulative dividends totaled approximately $88,000. See Note 10 of Notes to Consolidated Financial Statements. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion regarding the financial statements of Dimensional Visions should be read in conjunction with the financial statements of Dimensional Visions included herewith. OVERVIEW Dimensional Visions is engaged in the business of manufacturing multi-dimensional marketing promotional products. SELECTED CONSOLIDATED FINANCIAL DATA You should read the selected consolidated financial data set forth below along with "Management's Discussion and Analysis" and our consolidated financial statements and the related notes. We have derived the consolidated financial data for 1995, 1996, 1997, 1998 and 1999 from our audited consolidated financial statements. We believe the unaudited financial data shown in the table below include all adjustments consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of such information. Operating results for the six months ended December 31, 1999, are not necessarily indicative of the results that may be expected for all of 2000. Potentially dilutive common shares have been excluded from the shares used to compute earnings per share in each loss year because their inclusion would be antidilutive.
Year Ended Year Ended Year Ended Year Ended Year Ended June 30, 1999 June 30, 1998 June 30, 1997 June 30, 1996 June 30, 1995 ------------- ------------- ------------- ------------- ------------- Operation revenue $ 741,901 $ 609,392 $ 551,517 $ 1,083,897 $ 134,028 Net Loss $(1,465,812) $(421,659) $(2,162,134) $(2,035,647) $(1,192,332) Net Loss per share of common stock* $ (.39) $ (.14) $ (1.14) $ (3.34) $ (2.04) Balance Sheet Data: Working Capital (deficit) $ (603,946) $(235,920) $ (107,952) $ 9,528 $ (138,013) Total Assets $ 397,185 $ 920,841 $ 529,520 $ 1,408,919 $ 451,237 Total Liabilities $ 1,118,740 $ 713,539 $ 613,947 $ 673,058 $ 2,502,230 Stockholders' equity (deficiency) $ (721,555) $ 207,302 $ (84,427) $ 735,861 $(2,050,993)
Six Months Ended Six Months Ended December 31, 1999 December 31, 1998 (unaudited) (unaudited) ----------- ----------- Operation revenue $ 300,418 $ 410,400 Net Loss $ (459,051) $ (427,580) Net Loss per share of common stock * $ (.09) $ (.12) Balance Sheet Data: Working Capital (deficit) $ 176,478 $ (161,400) Total Assets $ 1,021,112 $ 1,037,840 Total Liabilities $ 1,027,988 $ 1,245,119 Stockholders' deficiency $ (6,876) $ (207,279) - ---------- * The calculation of earnings per share considers the accumulative dividends in arrears on preferred stock as paid. 8 PLAN TO ADDRESS GOING CONCERN OPINION The Company's independent certified public accountants' report on the Company's consolidated financial statements for the year ended June 30, 1999 contains an explanatory paragraph regarding the Company's ability to continue as a going concern. Among the factors cited by the accountants as raising substantial doubt as to the Company's ability to continue as a going concern are the Company's recurring losses from operations and limited sales of its products. The accountants state that the Company's ability to continue as a going concern is subject to the attainment of profitable operations or obtaining necessary funding from outside sources. The Company has developed a plan to achieve profitability and allay doubts as to its ability to continue as a going concern. This plan includes: (1) increased marketing of its existing products to increase sales; and (2) obtaining long term financing through securities offerings. INCREASED MARKETING. As indicated in the Use of Proceeds, the Company will use a portion of the proceeds acquired from the exercise of warrants to expand its sales force, establish a marketing and promotion department, and fund product marketing. The Company believes these efforts will result in increased sales of its products. LONG TERM FINANCING THROUGH SECURITIES OFFERINGS. The Company has received approximately $1,000,000 net of expenses through the private offering of its Series D and Series E Preferred Stock. Management believes that proceeds from these offerings, together with anticipated cash flow from sales of the Company's products, will be sufficient to support currently anticipated working capital requirements for at least 12 months. At the completion of this registration, the Company will have no debt except for trade payables and equipment leases, thereby increasing cash available for working capital. All existing short- and long-term debt will be converted into shares of the Company's common stock at the effective date of this registration. All debt holders have already elected to make this conversion. FISCAL YEAR ENDED JUNE 30, 1999, AS COMPARED TO FISCAL YEAR ENDED JUNE 30, 1998 RESULTS OF OPERATIONS The net loss for the fiscal year ended June 30, 1999, was $1,465,812 compared with a net loss of $421,659 for the fiscal year ended June 30, 1998. The substantial increase of the net loss is the result of the gain recognized from the sale of the multiple listing product line, a palm-top version of the database used by real estate agents to view all homes for sale in a particular city, of $410,000 for the fiscal year ended June 30, 1998, and the subsequent recognition of bad debt totaling $402,006 for the fiscal year ended June 30, 1999. The purchasers of this product line, which was part of the InfoPak subsidiary, have been unable to secure the funding necessary to maintain and grow their business. In February 1998, we extended the terms of the note from thirty-six months to forty-eight months to give them additional time to secure funding. At that time it appeared that the new company was providing sufficient service to the existing markets to generate the revenue necessary to repay their debts and eventually grow their business. After re-examining their financial situation in June 1999, which showed that they were substantially past due on their payments to all of their creditors including payroll taxes, it was necessary to write-off the remainder of the associated note receivable to bad debt. Additional factors in the increased net loss include an increase in interest and administrative expenses totaling $325,543 for the fiscal year ended June 30, 1999. Prior to fiscal year 1999 the Company had only $75,000 in long-term debt and other debt for only short periods of time. However, beginning in July 1998, the Company began securing $485,000 in long-term debentures and $235,000 in short-term notes to provide operating capital. This additional debt and the expenses associated with securing it were the primary reasons for the increased interest and administrative expenses. Revenue for the fiscal year ended June 30, 1999, was $741,901 compared to revenue of $609,392 for the fiscal year ended June 30, 1998. Approximately $614,000 of total revenue for the fiscal year ended June 30, 1999, was from Dimensional Visions' 3D/animated print products, the Living Image(TM), compared to $323,000 of total revenue for the fiscal year ended June 30, 1998. Dimensional Visions is continuing to increase the percentage of print revenue as 9 a part of total revenue. Sales of products and licensing fees for InfoPak, Inc., which include the palm-top computers and associated database software, are continuing to diminish. Management plans to continue to focus its efforts on growing the revenue generated from the 3D/animated print products. Management believes that sales can be substantially increased with very small increases in its major expense categories. For the fiscal year ended June 30, 1999, the largest expense category was payroll which totaled approximately $400,000 or 54% of net revenue. All upper management is in place and will not need to be expanded to increase sales. The next largest expense category is for professional services including legal and accounting fees and stock related expenses. This group totaled approximately $280,000 or 37% of net revenue for the fiscal year ended June 30, 1999. Approximately half of this was paid with the Company's common stock. Management expects this cost to decrease as stock and other sourcing of funds become unnecessary due to increased sales revenue. The last significant expense is rent which was approximately $63,000 or 8.5% of net revenue for the fiscal year ended June 30, 1999. Expanded facilities are unnecessary for the foreseeable future. On March 1, 1998, Dimensional Visions sold computer hardware through its InfoPak, Inc. subsidiary to a customer for $100,000 and agreed to accept a note for $90,000 with interest at 10% commencing on September 1, 1998. Dimensional Visions has not been able to collect the required monthly payments due on this note. The customer has filed for an arbitration hearing on the basis that Dimensional Visions failed to provide data to support their customer base (see Note 3 to the Consolidated Financial Statements). Dimensional Visions has filed a counter-claim for full payment of the note. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1999, Dimensional Visions had a working capital deficiency of $603,946 compared with a working capital deficiency of $235,920 as of June 30, 1998. The decrease in working capital is largely the result of increased short-term borrowings used as operating funds, the write-off of certain bad debts (see Note 3 to the Consolidated Financial Statements), and the reduction of accounts receivable. During the period ended June 30, 1999, Dimensional Visions raised a total of $720,000 before debt issuance costs of approximately $57,450 through the sale of long and short term debentures. SIX MONTHS ENDED DECEMBER 31, 1999, AS COMPARED TO SIX MONTHS ENDED DECEMBER 31, 1998 RESULTS OF OPERATIONS The net loss for the six months ended December 31, 1999, was $459,051 compared to a net loss of $427,580 for the six months ended December 31, 1998. The Company would have reported an improved six months ended December 31, 1999, compared to the similar period ended December 31, 1998, if the net loss were reduced by the $73,042 attributable to the amortization of the discounted value of the debentures and the $44,975 in interest expense that will be converted to common stock upon the completion of the registration statement. The loss before other income and expenses decreased by over $75,000 for the six months ended December 31, 1999, to $343,939 from $419,458 for the six months ended December 31, 1998. Revenue for the six months ended December 31, 1999, was $300,418 compared to revenue of $410,400 for the six months ended December 31, 1998. Sales of the Company's print products were similar for the periods ended December 31, 1999 and 1998. The contribution of InfoPak revenue decreased by approximately $100,000. The timing of some large orders at the end of the year that were produced and shipped in early January 2000 would have increased the revenue figure for the period ended December 31, 1999, by approximately $79,000. In addition, a substantial amount of executive time was spent on raising capital and improving the Company's financial position. 10 LIQUIDITY AND CAPITAL RESOURCES With the completion of the Series D Preferred and Series E Preferred private placements there is over $570,000 in available cash as of December 31, 1999, and accounts receivable have increased by over $100,000 from the fiscal year ended June 30, 1999. These funds will be used in fiscal years 2000 and 2001 as operating capital and for sales and promotion expenses. The Company extended an offer to its debenture holders and certain creditors to convert their debt to equity in the Company. The offer, which expired on October 15, 1999, permitted the conversion of debt into shares of the Company's common stock at $.375 per share. Interest on the debentures continues to accrue at 12% per annum until the filing of a registration statement is completed. Additionally, certain accounts payable were offered the opportunity to convert their receivables into shares of Dimensional Visions' common stock at $.375 per share. As of December 31, 1999, the entire outstanding balance of $720,000 of debentures and $60,748 of accounts payable have chosen to convert. The $60,748 of accounts payable have already been converted to common stock. As of December 31, 1999, a total of 2,081,995 shares of the Company's common stock would have been issued to convert the accounts payable and the debentures including accrued interest. Dimensional Visions plans to become profitable through increased sales of its Living Image(TM) products while maintaining current or higher gross margins. The Company has a strong relationship with its printer which includes preferential treatment, the ability to quickly produce products requested by customers, and the resources to significantly expand production without a commensurate increase in expenses. We have a growing number of customers who are reordering products on a regular basis which reduces our cost of sales. These customers are also increasing their order quantities indicating a growing acceptance of our 3D/animated products in the market place. YEAR 2000 COMPLIANCE The Company's business operations depend on a network of computer systems. Many of the systems previously used a two digit date field to represent the date and could not have distinguished the Year 1900 from the Year 2000 (commonly referred to as the Year 2000 problem). In addition, the fact that the Year 2000 is a leap year could have created difficulties for some systems. At this date, it appears that the operations of the Company have not been materially adversely affected by any Year 2000 computer-related problems. However, it is still possible that Year 2000 problems could emerge. If the Company or one of its vendors develops problems related to Year 2000 which have not shown up at this date, the operations of the Company may be adversely affected. FLUCTUATIONS IN OPERATING RESULTS; SEASONALITY Annual and quarterly fluctuations in Dimensional Visions' results of operations may be caused by the timing and composition of orders from Dimensional Visions' customers and distribution channels. Dimensional Visions' future results also may be affected by a number of factors, including its ability to offer products at competitive prices and to anticipate customer demands. Dimensional Visions' results may also be affected by economic conditions in the geographical areas in which Dimensional Visions operates. All of the foregoing may result in substantial unanticipated quarterly earnings shortfalls or losses. Due to all of the foregoing, Dimensional Visions believes that period-to-period comparisons of its results of operations are not necessarily meaningful and should not be relied upon as indicative of future performance. AVAILABLE INFORMATION Dimensional Visions is presently subject to the reporting requirements of the Securities Exchange Act of 1934 (the "Exchange Act"). Dimensional Visions has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form SB-2 (together with all amendments and exhibits thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Act") with respect to the securities offered hereby. This prospectus, which constitutes a part of the Registration Statement, omits certain information contained in the Registration Statement on file with the Commission pursuant to the Act and the rules and regulations of the Commission thereunder. The Registration Statement, including the exhibits thereto, may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Copies of such material may be obtained by mail at prescribed rates from the Public Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. Such material may also be accessed electronically by means of the Commission's home page on the Internet at http://www.sec.gov. Dimensional Visions' securities are currently listed on the over-the-counter bulletin board and trading under the symbol "DVUI." 11 BUSINESS OF DIMENSIONAL VISIONS GENERAL Dimensional Visions creates and delivers Living Image(TM) Solutions for products, packaging and marketing communications. Living Image(TM) Solutions are multi-dimensional (commonly known as "3-D") and/or animated visual effects. These effects may be produced in varying sizes to specified customer applications for companies who want to differentiate their products from the competition. The visual effects are created by viewing multiple images through a series of lenses incorporated into a plastic sheet called lenticular . These lenses work as a viewer which self adjusts to whatever distance the viewer is from the image. Viewed in one direction, the lenses allow the individual to see multiple views of an image simultaneously. These multiple views are seen as being in three dimensions. Alternatively, viewed in the other direction, the lenses restrict the view to a particular image that changes as the piece is moved, thus creating an animation effect (i.e., the picture appears to be moving). Our objective is to become a dominant marketer, developer and producer of the Living Image(TM) in the United States and internationally. Our Living Image(TM) Solutions offer multi-dimensional and/or animated images for the promotion marketing industry, advertising and graphic design industry and original equipment manufacturers (OEMs) throughout the United States. InfoPak, Inc. is our one active subsidiary company. InfoPak manufactures and markets a hardware/software PACKAGED product line called the "InfoPakSystem(TM)." This system was designed to handle substantial offline information and databases that may require frequent updating. We have decided to focus all of our resources on our Living Image(TM) product line. During Fiscal Year 1999, we retained Chapman Associates, an investment banking firm, to assist us in the sale of our InfoPak, Inc. subsidiary. To date, we have not found a buyer. We will continue to support the operations of InfoPak until it is sold or our Board of Directors decides to discontinue its operations. Dimensional Visions office and principal place of business is located at 2301 West Dunlap Avenue, Suite 207, Phoenix, Arizona 85021, and its telephone number is (602) 997-1990. OUR HISTORY FISCAL YEARS 1988-1994 In 1988 Dimensional Visions Group, Ltd. (Bulletin Board: DVGL) was incorporated in the state of Delaware. Dimensional Visions was headquartered in Philadelphia, Pennsylvania. At that time, Dimensional Visions created its three-dimensional effects by building model sets and photographing these sets using a robotic controlled camera. These photographed images were then prepared for lithographic printing . The process utilized during this timeframe was very expensive and extremely difficult to consistently reproduce quality images . Throughout this period Dimensional Visions tried unsuccessfully to perfect the robotic camera process. 12 FISCAL YEARS 1995-1997 In 1995 Dimensional Visions acquired InfoPak, Inc. of Phoenix, Arizona ("InfoPak") which is currently our wholly owned subsidiary. InfoPak manufactures and markets a hardware/software package called the "InfoPakSystem(TM)". This system takes existing databases and prepares them for use on a palm-top computer manufactured by InfoPak. It is particularly useful to individuals who need access to information while away from a computer terminal. Therefore, it is marketed to mobile business professionals in the automobile appraisal and real-estate businesses. Automobile appraisal guides are available on the palm-top unit for access at automobile auctions or at car dealership lots. Multiple listing data is similarly available for real estate agents for field access to the home listings. From 1995 to 1997, Dimensional Visions utilized the software development resources of InfoPak to develop the patent-pending software and systematic digital process for its Living Image(TM) Solutions. FISCAL YEARS 1998-1999 In January 1998 we established our current headquarters in Phoenix, Arizona. Under the leadership of a new executive management team, Dimensional Visions was completely restructured including changing our corporate name to Dimensional Visions Incorporated and changing our stock trading symbol from DVGL to DVUI. At the end of 1997, the Company needed to complete private placements of debt and equity to continue operations. As a prerequisite, our investment banking firm, Capital West Investment Group, required the Company to replace the upper level management and effect a 1 for 25 reverse stock split. During this timeframe we sold all of the original robotic photographic equipment to concentrate on the new Living Image(TM) (utilizing very high-end Intel based graphic design computers). Our management team believes that the new process is much more cost effective , reproducable, and has a shorter production cycle than the photographic process formerly used by the Company. We also believe that it better meets the demands of today's market which requires quick turn around of products from inception to delivery. STRATEGY MARKET & PENETRATION Multi-dimensional and/or animated images are being utilized today by Dimensional Visions' clients. The images are used because they combine depth and movement to attract the consumer's attention and potentially increase their sales. Living Image(TM) solutions have and will be (a) integrated onto products (for example: affixed to yearbooks, children's portfolio cover's, etc), (b) integrated onto product packaging (for example: affixed to cereal boxes, CD packages, etc), and (c) integrated onto marketing communications for products and services (for example: affixed to annual reports, etc). We define the market for our Living Image(TM) as the following major markets in the United States: * Specially selected Original Equipment Manufacturers ("OEM's") * Specially selected Promotional Marketing Firms * Specially selected Advertising & Graphics Design Firms (less newspaper, radio and TV) 13 Dimensional Visions believes that the market for Living Image(TM) is in its infancy particularly with the advent of new high-end Intel based graphic design computers and improved lenticular plastic extrusion capabilities. With these advances, coupled with the best-integrated software methodology and marketing strategy, we believe Dimensional Visions can be a market leader. Dimensional Visions estimates that the market universe for its Living Image(TM) is as follows: * ORIGINAL EQUIPMENT MANUFACTURERS: Our revenues for the fiscal year ended June 30, 1999, from the original manufacturers were approximately 52% of our total revenue. * PROMOTION MARKETING INDUSTRY: According to PROMO MAGAZINE article titled The 1998 Annual Report, the estimated 1997 revenue for the promotion marketing industry was $79.5 billion. This article can be found archived on their website at www.promomagazine.com. Dimensional Visions believes that the Premium/Incentives, Point of Purchase, Specialty Printing, and Agencies Net Revenues categories, which account for over $43.7 billion, are potential users of the Living Image(TM) Solutions. Our revenues for the fiscal year ended June 30, 1999 from this market were approximately 48%. * ADVERTISING INDUSTRY: According to Advertising Age article on May 18, 1998, the 1997 advertising revenue in the U.S. totaled over $187.6 billion. The article, titled 1997 U.S. advertising volume (Coen/McCann-Erickson), can be found on their website at www.adage.com. We believe that newspapers, magazines, direct mail, business papers, and miscellaneous other advertising methods are potential users of the Living Image(TM) Solutions. These categories make up over $116.4 billion or 62% of total advertising revenues. PRODUCTION Dimensional Visions controls or supervises all phases of the production of its Living Image(TM) products from the image development and computerized enhancement phases through the color separation and printing phases. Images are provided to us by our clients in many formats including digitally in graphic file formats and photographically in pictures or transparencies. Photographic images are scanned into the computer to be modified and enhanced. Through a proprietary process, several images are composited together to generate a final image that will appear as a three-dimensional and/or animation image when viewed through a lenticular material. "Lenticular" is a plastic optical material that allows the three-dimensional and/or animation image to be viewed without the use of any viewing apparatus such as glasses or hoods. The digital files are forwarded to Travel Tags, our primary printer, or other commercial printer, where, through the lithographic process, the images are printed on a polymer based lenticular material which focuses the multi-dimensional or animation images. Printing is done under the supervision of Dimensional Visions. The lenticular material is supplied by producers in the petrochemical and plastic fabricating industries directly to our printer. Dimensional Visions has no long-term contracts with its printers. 14 COMPETITION Other processes currently are available which allow a viewer to perceive an image in three-dimensions, including those which employ stereoscopic glasses and viewing hoods and other processes, and holograms and other three-dimensional image systems which do not require the use of viewing apparatus. Dimensional Visions is aware of at least two companies, Optigraphics, Inc. and National Graphics, Inc., which compete with our products. Our products may be more expensive than conventional, high quality, two-dimensional prints and for this reason, high quality, conventional processes and methods may be favored for many, if not most, illustration and promotion contexts. Color lenticular images are less expensive than other forms of three-dimensional prints. PATENTS, TRADEMARKS AND PROPRIETARY PROTECTION The Company filed a patent application on February 15, 1999 for its Living Image(TM) software and print system. The Company believes that the patent will issue within two years. Dimensional Visions has received trademark registration of DV3D(R) and has submitted a trademark application for Animotion(TM) and Living Image(TM) which we believe will issue within the next 24 months as well. EMPLOYEES As of the date of this prospectus, we had eight employees, including three in management, one of whom is involved in product development and manufacturing, one in marketing and sales, and one in finance. Dimensional Visions is not a party to any collective bargaining agreements. Dimensional Visions considers its relations with employees to be good. PROPERTIES We lease approximately 4,364 square feet of office space at 2301 W. Dunlap Avenue, Suites 207 and 201 in Phoenix, Arizona. This location serves as our principal executive offices and our current design and production facilities. The lease covering this property terminates on December 31, 2000. The total lease payments for fiscal year 2000 will be $66,600. The lease also requires us to pay all taxes and insurance. LITIGATION In June 1999, Electronic Pricing Guides, Inc., an Arizona corporation ("EPG"), filed a claim against InfoPak and Dimensional Visions at the American Arbitration Association, Dallas, Texas branch, arbitration file number 76 Y 181 00146 99. EPG claimed breach of contract and InfoPak, Inc. filed a counter-claim also seeking breach of contract and breach of promissory note. EPG seeks money damages for lost business in an undiscerned amount. InfoPak seeks money damages in the amount of $85,500 plus interest from March 1, 1998 and $8,000. See Note 3 to the Consolidated Financial Statements. To the best knowledge of our management, there are no other material litigation matters pending or threatened against us. 15 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The directors and officers of Dimensional Visions as of the date of this prospectus are as follows: Name Age Position - ---- --- -------- John D. McPhilimy 56 Director, Chairman of the Board of Directors and Chief Executive Officer Roy D. Pringle 32 Vice President, Chief Financial Officer and Director Bruce D. Sandig 40 Senior Vice President Engineering and Director Susan A. Gunther 49 Director - ---------- Mr. John McPhilimy was appointed as a Director, President, and Chief Executive Officer of Dimensional Visions in November 1997. In January 1998, he was appointed Chairman of the Board. From January 1995 until November 1997, Mr. McPhilimy served as President of Selah Information Systems, Inc., Mesa, Arizona, a company involved in information systems. From March 1992 to December 1995, Mr. McPhilimy served as President of Travel Teller, Inc. Mr. McPhilimy has over 30 years of executive and marketing experience in high-technology industries such as aerospace, air transportation, and electronic telecommunication networks with Bell Helicopter Textron, Aerospatiale, Executive Jet Aviation, Travel Teller Inc., Marketing Works, and Selah Information Systems. Over the last 15 years he has been responsible for implementing marketing strategies of NetJets and Travel Teller, which created the new industries of "nationwide fractional ownership of business jets" and "electronic ticket delivery networks," respectively. Mr. Roy D. Pringle was appointed as Vice President, Chief Financial Officer, and Chief Information Officer of Dimensional Visions in November 1997, and provides overall integrated enterprise-wide financial management systems for Dimensional Visions. Mr. Pringle has worked for InfoPak, Inc. since June 1992. Mr. Pringle holds a master's degree from the American Graduate School of International Management. Prior to joining InfoPak, he was President and founder of a small software company, Signature Software. Mr. Bruce D. Sandig was appointed as a Director of Dimensional Visions in January 1998 and as Senior-Vice President of Creative Design and Production Engineering of Dimensional Visions in November 1997 and provides overall development and integration of the DV3D(R)and Animotion(TM) Multi-Dimensional Images systems. Mr. Sandig was a co-founder of InfoPak in 1992. Mr. Sandig has over 15 years experience in electro-mechanical and software engineering/design with such companies as Universal Propulsion Company, Kroy, Inc., Dial Manufacturing, and Softie, Inc., where he also created several proprietary software games for Nintendo. Ms. Susan A. Gunther has served as Director of Dimensional Visions since January 1998. Since January 1998 she has served as Managing Principal Consultant for Oracle, Inc. She served as Director of Business Processing from March 1995 to December 1997 for AmKor Electronics. There currently are no Committees on the Board of Directors. Directors serve until the next annual meeting or until their successors are qualified and elected. Officers serve at the discretion of the Board of Directors. 16 EXECUTIVE COMPENSATION The following table sets forth the total compensation earned by or paid to Dimensional Visions' Chief Executive Officer for the fiscal year ended June 30, 1999. No officer of Dimensional Visions earned more than $100,000 in the fiscal year ended June 30, 1999.
LONG TERM COMPENSATION ------------------------------------ ANNUAL COMPENSATION Awards Payouts -------------------------------------- ------------------------ ------- Securities Other Annual Restricted Underlying LTIP All Other Salary Bonus Compensation Stock Options/SARs Payouts Compensation Year ($) ($) ($) Awards ($) (#) ($) ($) ---- ------ ----- ------------ ----- ------------ ------- ------------ John D. McPhilimy 1999 $89,250 $0 $0 $0 -- $0 $0
OPTIONS/SAR GRANTS IN THE FISCAL YEAR 1999
INDIVIDUAL GRANTS --------------------------- Number of % of Total Securities Options/SARs Underlying Granted to Option/SARs Employees in Exercise or Base Expiration Name Year Granted (#) Fiscal Year Price ($/Share) Date ---- ---- ----------- ----------- --------------- ---- John D. McPhilimy 1999 0 -- -- --
AGGREGATED OPTIONS/SAR EXERCISES IN THE FISCAL YEAR 1999 AND FY-END OPTION/SAR VALUES
Number of Securities Value of Underlying Exercised Unexercised Shares Options/SARs at FY-End(#) In-the-Money Acquired on Value Exercisable/ Options/SARs at Name Year Exercise(#) Realized Unexercisable FY-End($) ---- ---- ----------- -------- ------------- --------- John D. McPhilimy 1999 -- 0 450,000(E)/0(U) $191,250
17 EMPLOYMENT AND RELATED AGREEMENTS John D. McPhilimy has an employment agreement with Dimensional Visions. The term of the agreement is three years ending in November 2000. Mr. McPhilimy's base compensation is $90,000 per year. The agreement renews by mutual written consent on the thirtieth month of its term for a two year period without further action by either party. The agreement may be terminated by Dimensional Visions for cause. Roy D. Pringle has an employment agreement with Dimensional Visions. The term of the agreement is three years ending in November 2000. Mr. Pringle's base compensation is $72,000 per year. Bruce D. Sandig has an employment agreement with Dimensional Visions. The term of the agreement is three years ending in November 2000. Mr. Sandig's base compensation is $84,000 per year. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Certificate of Incorporation and Bylaws of Dimensional Visions provide that Dimensional Visions will indemnify and advance expenses, to the fullest extent permitted by the Delaware General Corporation Law, to each person who is or was a director, officer or agent of Dimensional Visions, or who serves or served any other enterprise or organization at the request of Dimensional Visions (an "Indemnitee"). Under Delaware law, to the extent that an Indemnitee is successful on the merits of a suit or proceeding brought against him or her by reason of the fact that he or she was a director, officer or agent of Dimensional Visions, or serves or served any other enterprise or organization at the request of Dimensional Visions, Dimensional Visions will indemnify him or her against expenses (including attorneys' fees) actually and reasonably incurred in connection with such action. If unsuccessful in defense of a third-party civil suit or a criminal suit, or if such a suit is settled, an Indemnitee may be indemnified under Delaware law against both (i) expenses, including attorneys' fees, and (ii) judgments, fines and amounts paid in settlement if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of Dimensional Visions, and, with respect to any criminal action, had no reasonable cause to believe his other conduct was unlawful. If unsuccessful in defense of a suit brought by or in the right of Dimensional Visions, where the suit is settled, an Indemnitee may be indemnified under Delaware law only against expenses (including attorneys' fees) actually and reasonably incurred in the defense or settlement of the suit if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of Dimensional Visions except that if the Indemnitee is adjudged to be liable for negligence or misconduct in the performance of his or her duty to Dimensional Visions, he or she cannot be made whole even for expenses unless a court determines that he or she is fully and reasonably entitled to indemnification for such expenses. Also under Delaware law, expenses incurred by an officer or director in defending a civil or criminal action, suit or proceeding may be paid by Dimensional Visions in advance of the final disposition of the suit, action or proceeding upon receipt of an undertaking by or on behalf of the officer or director to repay such amount if it is ultimately determined that he or she is not entitled to be indemnified by Dimensional Visions. Dimensional Visions may also advance expenses incurred by other employees and agents of Dimensional Visions upon such terms and conditions, if any, that the Board of Directors of Dimensional Visions deems appropriate. Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers or persons controlling Dimensional Visions pursuant to the foregoing provisions, in the opinion of the Commission, such indemnification is against public policy as expressed in the Act and is therefore unenforceable. 18 CERTAIN TRANSACTIONS None. STOCK OPTION PLANS 1996 EQUITY INCENTIVE PLAN In June 1996, Dimensional Visions adopted the 1996 Equity Incentive Plan (the "1996 Plan") covering 10,000,000 shares of Dimensional Visions' common stock pursuant to which employees, consultants and other persons or entities who were in a position to make a significant contribution to the success of Dimensional Visions were eligible to receive awards in the form of incentive or non-incentive options, stock appreciation rights, restricted stock or deferred stock. The 1996 Plan will terminate ten years after June 12, 1996, the effective date of the 1996 Plan. The 1996 Plan is administered by the Board of Directors. In its discretion, the Board of Directors may elect to administer the 1996 Plan. Restricted stock entitles the recipients to receive shares of Dimensional Visions' common stock subject to such restriction and condition as the Compensation Committee may determine for no consideration or such considerations as determined by the Compensation Committee. Deferred stock entitles the recipients to receive shares of Dimensional Visions' common stock in the future. As of the date of this prospectus, 5,002,978 shares have been issued pursuant to this plan. The Company has decided that it will not issue any additional shares under the 1996 Plan, but will instead issue options under its 1999 Stock Option Plan. 1999 STOCK OPTION PLAN On November 15, 1999, the Board of Directors of Dimensional Visions adopted the 1999 Stock Option Plan (the "1999 Plan"). This plan was approved by a majority of our stockholders at our January 28, 2000, stockholders' meeting. The purpose of the 1999 Plan is to advance the interests of the Company by encouraging and enabling acquisition of a financial interest in the Company by its officers and other key individuals. The 1999 Plan is intended to aid the Company in attracting and retaining key employees, to stimulate the efforts of such individuals and to strengthen their desire to remain with the Company. A maximum of 1,500,000 shares of the Company's common stock are available to be issued under the 1999 Plan. The option exercise price will be 100% of the fair market value of the Company's common stock on the date the option is granted and will be exercisable for a period not to exceed 10 years from the date of grant. 19 PRINCIPAL STOCKHOLDERS The following table sets forth certain information regarding the shares of Dimensional Visions' outstanding common stock beneficially owned as of the date of this prospectus by (i) each of Dimensional Visions' directors and executive officers, (ii) all directors and executive officers as a group, and (iii) each other person who is known by Dimensional Visions to own beneficially more than 5% of Dimensional Visions' common stock. Amount and Nature Name and Address of of Beneficial Percent Beneficial Owners(1) Ownership(2) Ownership(2) - -------------------- ------------ ------------ John D. McPhilimy 1,000,000(3) 14.0% 1340 W. Elgin Street Chandler, AZ 85224 Bruce D. Sandig 700,000(4) 10.2% 13247 N. 3rd Place Phoenix, AZ 85022 Roy D. Pringle 506,047(5) 7.6% 7186 W. Topeka Drive Glendale, AZ 85308 Susan A. Gunther 75,000(6) 1.2% 26210 S. Lime Drive Queen Creek, AZ 85242 All executive officers and directors as a group (4 persons) 2,281,047 27.0% - ---------- (1) Each person named in the table has sole voting and investment power with respect to all common stock beneficially owned by him or her, subject to applicable community property law, except as otherwise indicated. Except as otherwise indicated, each of such persons may be reached through Dimensional Visions at 2301 W. Dunlap Avenue, Suite 207, Phoenix, Arizona 85021. (2) The percentages shown are calculated based upon the 6,169,607 shares of common stock outstanding as of the date of this prospectus. The numbers and percentages shown include the shares of common stock actually owned as of the date of this prospectus and the shares of common stock that the identified person or group had the right to acquire within 60 days of such date. In calculating the percentage of ownership, all shares of common stock that the identified person or group had the right to acquire within 60 days of the date of this prospectus upon the exercise of options and warrants, or the conversion of preferred stock, are deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by such person or group, but are not deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by any other person. (3) Mr. McPhilimy has warrants to purchase 450,000 shares of Dimensional Visions' common stock at an exercise price of $.20 until October 28, 2003 and warrants to purchase 550,000 shares of common stock at an exercise price of $.25 until January 27, 2005. (4) Mr. Sandig has warrants to purchase 240,000 shares of Dimensional Visions' common stock at an exercise price of $.20 until October 28, 2003 and warrants to purchase 460,000 shares of common stock at an exercise price of $.25 until January 27, 2005. (5) Mr. Pringle owns 6,047 shares of Dimensional Visions' common stock. Also included in the amount are common stock purchase warrants to purchase 210,000 shares of Dimensional Visions' common stock at an exercise price of $.20 until October 28, 2003 and warrants to purchase 290,000 shares of common stock at an exercise price of $.25 until January 27, 2005. (6) Ms. Gunther has warrants to purchase 40,000 shares of Dimensional Visions' common stock at an exercise price of $.50 until October 28, 2003 and warrants to purchase 35,000 shares of common stock at an exercise price of $.25 until January 27, 2005. 20 SELLING STOCKHOLDERS The following table sets forth the number of shares of common stock which may be offered for sale from time to time by the selling stockholders. The shares offered for sale constitute all of the shares of common stock known to Dimensional Visions to be beneficially owned by the selling stockholders. To the best of management's knowledge, none of the selling stockholders has or have any material relationship with Dimensional Visions. Percentage Shares of Common Owned If More Name of Selling Stockholder Stock Offered(1) Than 1% - --------------------------- ---------------- ------- John Arrillaga TTEE of the John Arrillaga Survivor's TR UTA DTD 7/20/77(12) 74,000 1.20 Felix Cisek (15) 48,000 -- Henry J. Cobb 4,179 -- Leon Tad Davis (5)(13) 107,013 1.72 Paul R. Essi 34,400 -- Felco Inc. 300 -- Melissa B. Fell 300 -- Morris B. Fell 200 -- First Fidelity Trust FBO Consulting Solutions, Ltd. (5)(14) 68,000 1.10 Edmund L. Fochtman, Jr. (16) 12,000 -- Foundation Asset Management Inc. Nominee for Baptist Foundation of Arizona as Arizona Nonprofit Corp Agent for Hunsinger Charitable Trust 16,000 -- Four Queens Petroleum 200 -- George J. Frick (17) 24,000 -- Jodi Geiger IRA (18) 12,000 -- Mary F. Hauser 12,000 -- Lorenz A. Hittel 1,847 -- Joe Hrudka (19) 12,000 -- John Huston 12,000 -- Market Pulse Journal 100,000 1.62 Mikko Kallio & Ulla Kallio JT TEN 8,000 -- Mikko Kallio 4,000 -- Robert J. Kelly (20) 603,580 9.10 Owen Family Living Trust Ben G. Owen & Fay Owen TR/UA 2,000 -- Ila Patel (21) 48,000 -- Richard Peery Trusts 7/20/77(22) 90,000 1.46 Raymond A. Quadt (23) 119,938 1.92 W. Scott Schirmer (24) 126,478 2.01 Desmond F. Sheahan 1,847 -- Barbara A. S. Smith 4,800 -- George S. Smith Separate Property Account (25) 125,000 2.03 Eugene L. Snowden (26) 171,386 2.71 William H. Stevens 33,800 -- Scott Ward (27) 15,000 -- Pamela J. Wilson (28) 3,000 -- Douglas T. Yates (29) 16,600 -- Donald John Casey Family Trust (30) 33,750 -- Everyone Counts, Inc. (31) 37,500 -- Charles Wafer (32) 244,500 3.81 Janice Casey Larsen (33) 3,750 -- Michael Shapiro (34) 37,500 -- Mark B. Casey (35) 37,500 -- Robert L. Casey (36) 37,500 -- VMR Profit Sharing Plan & Trust, Leon T. Davis, MD, Trustee (37) 112,500 1.79 Robert H. Kite (38) 1,202,760 16.31 Dennis and Diane Schlegel (39) 39,000 -- Larry L. Peery (40) 64,231 1.03 21 Mark Ward (41) 49,231 -- Edward Conn (42) 6,000 -- Robert Boesel (43) 30,000 -- Southwest Ventures (44) 15,000 -- Keith Denner (45) 15,000 -- Fidelity Insurance Company FBO Vivagy Trust (46) 500,000 7.50 Thomas C. and Marilyn A. Watson Revocable Trust Dated 1/20/99(47) 100,000 1.59 Roy A. Kite III (48) 100,000 1.59 Surinvex International Corp (49) 210,000 3.29 Ronald Evjen (50) 90,697 1.45 Aurora Enterprises, L.L.C Money Purchase Pension Trust, Richard M. Weinroth, Trustee (52) 104,032 1.66 Andrew Revocable Trust dated 5/4/94, William V. Andrew, Trustee (51) 136,032 2.16 Robert B. and Mary K. Lyons, Trustee (53) 40,890 -- Daniel and Robin Rubenstein (54) 104,032 1.66 Glen E. Crotts (55) 400,984 6.10 Richard W. Cooper (56) 82,112 1.31 McCormack Partners, LLC (57) 267,564 4.16 George Reiss (58) 103,924 1.66 New Church Ventures Credit Corporation (59) 415,526 6.31 Kitty Hawk Investments, Inc. (60) 83,105 1.33 Hans C. Peyer (61) 103,774 1.65 David and Dennet Jones, TTEES FBO The Jones Family Trust (63) 41,483 -- Dale Riker (62) 266,961 4.15 Russell H. Richie (64) 199,634 3.13 Nancy Gwen Crotts (65) 39,565 -- Gregory Mastroieni (66) 160,920 2.54 George T. Bard (5) 77,629 1.24 John L. Broan (67) 65,000 1.04 Mitchell and Jodi Geiger (5) 15,800 -- Peter Mizioch (5) 45,257 -- Woodland Management Company (5) 63,000 1.01 Eugene E. Perlow (5) 32,000 -- Ward T. Bell (5) 16,000 -- Ronald D. Austin (5) 16,000 -- Foundation Asset Management (5) 32,000 -- Ryan Schirmer (5) 18,000 -- Marc and Karen Shlossman (5) 16,000 -- Authur W. Lindquist (5) 28,000 -- White Wing Venture (5) 86,800 1.39 Alan G. Otteni (5) 32,000 -- Steve Antol (5) 25,000 -- Herbert, Schenk & Johnsen, P.C. (5) 100,000 1.59 Arlington, LLC (5) 150,000 2.37 Andrew Broan (5) 5,000 -- Kent Casey (5) 40,800 -- Rita and Dave West (5) 5,000 -- Dave Butler (5) 9,600 -- Jerry Blumberg (5) 2,400 -- David Kohler (5) 20,000 -- First Fidelity Trust Limited FBO Taylor Ltd (68) 296,000 4.58 Geraldine Amann (5) 8,293 -- First Fidelity Trust Limited FBO Erin Ltd (69) 306,000 4.73 Epic Ltd (5) 50,000 -- Logan Kohler (5) 10,769 -- Taylor Kohler (5) 10,769 -- Nick Simak (5) 5,000 -- Scott Mampre (5) 5,000 -- James Kohler (5) 5,000 -- 22 Lawrence G. Olson (5) 70,000 1.12 Alice Whitbeck (5) 5,000 -- Ellen Hodges (5) 5,000 -- Larry Duall (5) 10,000 -- Viola M. Streuter (5) 732 -- Zaida, Ltd. Co. (5) 20,000 -- W.B. McKee Securities (5) 9,000 -- Bridgewater Capital Corporation (5) 15,500 Cameron Capital Management Ltd. (5) 2,000 Carlton Capital (5) 2,000 J. Patrick Carter (5) 1,500 Charles J. Dedde (5) 2,800 Stan Dreyfus (5) 1,500 -- First Bermuda Securities, Ltd. (5) 1,500 -- Richard Houlihan (5) 1,500 -- M. Richard Keating (5) 800 -- Peter Lichtman (5) 6,000 -- William Lunde (5) 12,700 -- Ronnie Matlock-Casey (5) 210,000 3.29 Mary Fitzpatrick (5) 145,000 2.30 Steven Peck (5) 40,000 -- J. Buford Salmon (5) 3,000 -- Leslie Singer (5) 50,000 -- Norman Williams (5) 25,000 -- John D. McPhilimy (5)(7) 1,000,000 13.95 Bruce D. Sandig (5)(8) 700,000 10.19 Roy D. Pringle (5)(9) 500,000 7.60 Susan A. Gunther (5)(10) 75,000 1.20 K. Scott Farmer (5)(11) 100,000 1.59 1999 Employee Stock Option Plan (6) 1,500,000 n/a ----------- Total 13,542,474 =========== - ---------- (1) All of these shares are currently restricted under Rule 144 of the Act. (2) Indicates common shares issuable upon conversion of the Company's Series D Preferred Stock. (3) Indicates common shares issuable upon conversion of the Company's Series E Preferred Stock. (4) Indicates common shares issuable upon conversion of debt. (5) Indicates common shares issuable upon exercise of warrants. (6) Indicates common shares issuable upon exercise of options issued under the Plan. (7) John D. McPhilimy is the President and Chief Executive Officer of the Company. (8) Bruce D. Sandig is a Senior Vice President of the Company. (9) Roy D. Pringle is a Vice President and Chief Financial Officer of the Company. (10) Susan A. Gunther is a member of the Board of Directors of the Company. (11) K. Scott Farmer is an employee of the Company. (12) Includes 72,000 shares and 2,000 shares also held in this trust. (13) Includes 43,342 shares in common stock, and also 63,671shares held upon exercise of warrants. (14) Includes 40,000 shares held upon exercise of warrants and 28,000 shares in common stock. (15) Includes 16,000 shares of common stock and 32,000 shares held upon exercise of warrants. (16) Includes 4,000 shares of common stock and 8,000 shares held upon exercise of warrants . (17) Includes 8,000 shares in common stock and 18,000 shares held upon exercise of warrants . (18) Includes 4,800 shares in commons stock and 7,200 shares held upon exercise of warrants. (19) Includes 4,000 shares of common stock and 8,000 shares held upon exercise of warrants. (20) Includes 140,000 shares in common stock, 50,000 shares of preferred stock, 107,875 shares upon conversion of debt and 305,705 shares upon exercise of warrants. (21) Includes 16,000 shares of common stock and 32,000 shares upon exercise of warrants. (22) Includes 72,000 shares in Richard Peery Trustee UTA, 2,000 shares in Richard Peery Separate Property Trust and 16,000 shares in Richard Peery UAD. (23) Includes 34,459 shares held in various trusts and 85,479 shares held upon exercise of warrants . (24) Includes 1,999 shares in common stock and 124,479 shares upon exercise of warrants. (25) Includes 125,000 shares held in various property accounts. (26) Includes 10,000 shares of common stock, 50,000 shares of preferred stock, 31,386 shares upon conversion of debt and 80,000 shares upon exercise of warrants. 23 (27) Includes 10,000 shares of common stock and 5,000 shares upon exercise of warrants. (28) Includes 2,000 shares of common stock and 1,000 shares upon exercise of warrants. (29) Includes 12,000 shares of common stock and 4,600 shares upon exercise of warrants. (30) Includes 22,500 shares of preferred stock and 11,250 shares upon exercise of warrants. (31) Includes 25,000 shares of preferred stock and 12,500 shares upon exercise of warrants. (32) Includes 100,000 shares of preferred stock and 144,500 shares upon exercise of warrants. (33) Includes 2,500 shares of preferred stock and 1,250 shares upon exercise of warrants. (34) Includes 25,000 shares of preferred stock and 12,500 shares upon exercise of warrants. (35) Includes 25,000 shares of preferred stock and 12,500 shares upon exercise of warrants. (36) Includes 25,000 shares of preferred stock and 12,500 shares upon exercise of warrants. (37) Includes 75,000 shares of preferred stock and 37,500 shares upon exercise of warrants. (38) Includes 1,202,760 shares held by various corporations and trusts controlled by Robert Kite, upon exercise of 380,000 warrants, 392,760 shares upon conversion of debt and 430,000 shares upon conversion of preferred stock. (39) Includes 21,000 shares of preferred stock and upon exercise of warrants, and 18,000 shares of preferred stock and upon exercise of warrants held in money purchase plan. (40) Includes 30,000 shares of preferred stock and 34,231 shares upon exercise of warrants. (41) Includes 20,000 shares of preferred stock and 29,231 shares upon exercise of warrants. (42) Includes 4,000 shares of preferred stock and 2,000 shares upon exercise of warrants. (43) Includes 20,000 shares of preferred stock and 10,000 shares upon exercise of warrants. (44) Includes 10,000 shares of preferred stock and 5,000 shares upon exercise of warrants. (45) Includes 10,000 shares of preferred stock and 5,000 shares upon exercise of warrants. (46) Includes 250,000 shares upon conversion of preferred stock and 250,000 shares upon conversion of warrants. (47) Includes 50,000 shares of preferred stock and 50,000 shares upon exercise of warrants. 24 (48) Includes 50,000 shares of preferred stock and 50,000 shares upon exercise of warrants. (49) Includes 105,000 shares of preferred stock and 105,000 shares upon exercise of warrants. (50) Includes 20,000 shares of preferred stock and 70,697 shares upon exercise of warrants. (51) Includes 79,032 shares held upon conversion of debt and 57,000 shares upon exercise of warrants. (52) Includes 79,032 shares held upon conversion of debt and 25,000 shares upon exercise of warrants. (53) Includes 30,890 shares held by the trust upon conversion of debt and 10,000 shares held by Robert Lyons upon exercise of warrants. (54) Includes 79,032 shares held upon conversion of debt and 25,000 shares held upon exercise of warrants. (55) Includes 208,064 shares held by trusts upon conversion of debt and exercise of warrants, and also 192,920 shares held upon conversion of debt and exercise of warrants. (56) Includes 62,844 shares upon conversion of debt and 19,268 shares upon exercise of warrants. (57) Includes 202,564 shares upon conversion of debt and 65,000 shares upon exercise of warrants. (58) Includes 78,924 shares held upon conversion of debt and 25,000 shares held upon exercise of warrants. (59) Includes 315,526 shares held upon conversion of debt and 100,000 shares upon exercise of warrants. (60) Includes 63,105shares held upon conversion of debt and 20,000 shares upon exercise of warrants. (61) Includes 78,774 shares held upon conversion of debt and 25,000 shares upon exercise of warrants. (62) Includes 201,961 shares held upon conversion of debt and 65,000 shares upon exercise of warrants. (63) Includes 31,483 shares held upon conversion of debt in a trust and 10,000 shares upon exercise of warrants. (64) Includes 149,634 shares held upon conversion of debt and 50,000 shares upon exercise of warrants. (65) Includes 29,565 shares held upon conversion of debt and 10,000 shares upon exercise of warrants. (66) Includes 130,920 shares held upon conversion of debt and 30,000 shares upon exercise of warrants. (67) Includes 35,000 shares held by trust upon conversion of warrants. (68) Includes 296,000 shares held in various trusts. (69) Includes 306,000 shares held in various trusts. 25 PLAN OF DISTRIBUTION The shares will be offered and sold by the selling stockholders for their own accounts. Dimensional Visions will not receive any of the proceeds from the sale of the shares pursuant to this prospectus other than from the exercise of warrants or the conversion of debt. Dimensional Visions will pay all of the expenses of the registration of the shares, but shall not pay any commissions, discounts, and fees of underwriters, dealers, or agents. The selling stockholders may offer and sell the shares from time to time in transactions in the over-the-counter market or in negotiated transactions, at market prices prevailing at the time of sale or at negotiated prices. The selling stockholders have advised Dimensional Visions that they have not entered into any agreements, understandings, or arrangements with any underwriters or broker-dealers regarding the sale of their shares, nor is there an underwriter or coordinating broker acting in connection with the proposed sale of shares by the selling stockholders. Sales may be made directly to or through broker-dealers who may receive compensation in the form of discounts, concessions, or commissions from the selling stockholders or the purchasers of the shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). The selling stockholders and any broker-dealers acting in connection with the sale of the shares hereunder may be deemed to be "underwriters' within the meaning of Section 2(11) of the Act, and any commissions received by them and any profit realized by them on the resale of shares as principals may be deemed underwriting compensation under the Act. Under the Exchange Act and the regulations thereunder, any person engaged in a distribution of the shares offered by this prospectus may not simultaneously engage in market making activities with respect to the common stock of Dimensional Visions during the applicable "cooling off" periods prior to the commencement of such distribution. In addition, and without limiting the foregoing, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Rules 10b-6 and 10b-7, which provisions may limit the timing of purchases and sales of common stock by the selling stockholders. Selling stockholders may also use Rule 144 under the Act to sell the shares if they meet the criteria and conform to the requirements of such Rule. 26 DESCRIPTION OF SECURITIES The authorized capital stock of Dimensional Visions currently consists of 100,000,000 shares of common stock, $.001 par value, and 10,000,000 shares of preferred stock, $.001 par value. Dimensional Visions' transfer agent is American Stock Transfer & Trust Corporation, 40 Wall Street, New York, New York 10005. The following summary of certain terms of Dimensional Visions' securities does not purport to be complete and is subject to, and qualified in its entirety by, the provisions of Dimensional Visions' Articles of Incorporation and Bylaws. COMMON STOCK As of the date of this prospectus, there are 6,169,607 shares of common stock outstanding. Holders of common stock are each entitled to cast one vote for each share held of record on all matters presented to stockholders. Cumulative voting is not allowed; hence, the holders of a majority of the outstanding common stock can elect all directors. Holders of common stock are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefor and, in the event of liquidation, to share pro rata in any distribution of Dimensional Visions' assets after payment of liabilities. The Board of Directors is not obligated to declare a dividend and it is not anticipated that dividends will be paid until Dimensional Visions is profitable. Holders of common stock do not have preemptive rights to subscribe to additional shares if issued by Dimensional Visions. There are no conversion, redemption, sinking fund or similar provisions regarding the common stock. All of the outstanding shares of common stock are fully paid and non-assessable and all of the shares of common stock offered hereby will be, upon issuance, fully paid and non-assessable. PREFERRED STOCK SERIES A PREFERRED STOCK The Company's Series A Convertible 5% Preferred Stock, 100,000 shares authorized, is convertible into common stock at the rate of 1.6 shares of common stock for each share of the Series A Preferred. Dividends from date of issue are payable from retained earnings, and have been accumulated on June 30 each year, but have not been declared or paid. The Series A Preferred were issued for the purpose of raising operating funds. As of the date of this prospectus, there are 20,500 shares of Series A Convertible 5% Preferred Stock outstanding. SERIES B PREFERRED STOCK The Company's Series B Convertible 8% Preferred Stock, 200,000 shares authorized, is convertible into common stock at the rate of four shares of common stock for each share of the Series B Preferred. Dividends from date of issue are payable from retained earnings, and have been accumulated on June 30 each year, but have not been declared or paid. The Series B Preferred were issued for the purpose of raising operating fund. Shares of Series B Preferred were issued to holders of warrants to purchase such preferred stock. The funding for the exercise of these warrants was the exchange of 1,907,000 of principal amount of secured and unsecured notes. As of the date of this prospectus, there are 3,500 shares of Series B Convertible 8% Preferred Stock outstanding. 27 SERIES C PREFERRED STOCK The Company's Series C Convertible Preferred Stock is convertible at a rate of 0.4 shares of common stock per share of Series C Preferred and was issued to certain holders of the Company's 10% Secured Notes in lieu of accrued interest. Shares of Series C Preferred were also issued in exchange for $262,750 of interest due under secured and unsecured notes. As of the date of this prospectus, there are 13,442 shares of Series C Convertible Preferred Stock outstanding. SERIES D PREFERRED STOCK The Company's Series D Convertible Preferred Stock is convertible at a rate of two shares of common stock per share of Series D Preferred and were issued for the purpose of raising operating funds. As of the date of this prospectus, there are 375,000 shares of Series D Convertible Preferred Stock outstanding. SERIES E PREFERRED STOCK The Company's Series E Convertible Preferred Stock is convertible at a rate of one share of common stock per share of Series E Preferred and were issued for the purpose of raising operating funds. As of the date of this prospectus, there are 675,000 shares of Series E Convertible Preferred Stock outstanding. SERIES P PREFERRED STOCK The Company's Series P Convertible Preferred Stock is convertible at a rate of 0.4 shares of common stock per share of Series P Preferred. The Series P Preferred was issued on September 2, 1995, to InfoPak stockholders in exchange for (1) all of the outstanding capital stock of InfoPak, (2) as signing bonuses for certain employees and a consultant of InfoPak, and (3) to satisfy InfoPak's outstanding debt obligations to certain stockholders. As of the date of this prospectus, there are 86,640 shares of Series P Convertible Preferred Stock outstanding. WARRANTS AND OPTIONS As of April 11, 2000, there are 7,227,210 warrants issued and outstanding expiring at various times until January 27, 2005. The exercise prices vary from $.10 to $12.50 per share with a weighted average exercise price of $.56 per share. Officers and directors of the Company own 2,275,000 of the 7,227,210 issued and outstanding warrants with a weighted average exercise price of $.23 per share. Other individuals or entities own the other 4,952,210 warrants which have a weighted average exercise price of $.71 per share. There are 395,000 warrants with an exercise price of $.25 that expire 120 days after the effectiveness of a registration statement by the Company. Additionally there are 712,500 warrants with an exercise price of $.50 that expire 120 days after the effectiveness of a registration statement by the Company. There are 100,000 warrants that will be issued quarterly at the rate of 12,500 per quarter to an employee of the Company beginning on May 1, 2000, as long as he remains in the employ of the Company. LEGAL MATTERS The validity of the securities offered hereby will be passed upon for Dimensional Visions by Horwitz & Beam, Irvine, California. EXPERTS The Financial Statements of Dimensional Visions for the fiscal years ended June 30, 1998 and June 30, 1999, included herein and elsewhere in the registration statement, have been included herein and in the registration statement in reliance on the report of Gitomer & Berenholz, P.C., appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. 28 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY YEARS ENDED JUNE 30, 1999 AND 1998 AND SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page ---- Independent Auditors' Report F-2 Consolidated Financial Statements Balance Sheets F-4 Statements of Operations F-5 Statements of Stockholders' Equity (Deficiency) F-6 Statements of Cash Flows F-10 Notes to Consolidated Financial Statements F-14 F-1 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders Dimensional Visions Incorporated and Subsidiary Phoenix, Arizona We have audited the accompanying consolidated balance sheet of dimensional visions incorporated and subsidiary (the "Company") as of June 30, 1999, and the related consolidated statements of operations, stockholders' equity (deficiency), and cash flows for each of the two years in the period ended june 30, 1999. 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 consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Dimensional Visions Incorporated and subsidiary as of June 30, 1999 and the results of their operations and their cash flows for each of the two years in the period ended June 30, 1999 in conformity with generally accepted accounting principles. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has financed its operations primarily through the sale of its securities. As described in note 1 to the consolidated financial statements, the company has suffered recurring losses from operations and has limited sales of its products, which raises substantial doubt about the Company's ability to continue as a going concern. The future of the company as an operating business will depend on its To the Board of Directors and Stockholders Dimensional Visions Incorporated and Subsidiary ability to (1) successfully market its products, (2) obtain sufficient capital contributions and/or financing as may be required to sustain its current operations and fulfill its sales and marketing activities, (3) achieve a level of sales adequate to support the company's cost structure, and (4) ultimately achieve a level of profitability. management's plan concerning these matters are also described in note 1. the consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Gitomer & Berenholz, P.C. Gitomer & Berenholz, P.C. Huntingdon Valley, Pennsylvania October 7, 1999 F-3 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS ASSETS DECEMBER 31, JUNE 30, 1999 1999 ------------ ------------ (unaudited) Current assets Cash $ 573,802 $ 20,019 Notes receivable, net of allowance for bad debts of $402,006 41,663 41,663 Accounts receivable, trade, net of allowance for bad debts of $11,833 186,979 78,068 Inventory 2,128 6,900 Prepaid expenses 9,703 17,896 ------------ ------------ Total current assets 814,275 164,546 ------------ ------------ Equipment Equipment 401,678 401,678 Furniture and fixtures 50,162 50,162 ------------ ------------ 451,840 451,840 Less accumulated depreciation 297,500 279,681 ------------ ------------ 154,340 172,159 ------------ ------------ Other assets Deferred costs 18,833 24,779 Patent rights and other assets 33,664 35,701 ------------ ------------ 52,497 60,480 ============ ============ Total assets $ 1,021,112 $ 397,185 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current liabilities Short-term borrowings $ 235,000 $ 213,767 Current portion of obligations under capital leases 22,638 20,552 Accounts payable, accrued expenses and other liabilities 380,159 534,173 TOTAL CURRENT LIABILITIES 637,797 768,492 ------------ ------------ LONG-TERM DEBT 320,023 268,215 ------------ ------------ OBLIGATIONS UNDER CAPITAL LEASES, NET OF CURRENT PORTION 70,168 82,033 TOTAL LIABILITIES 1,027,988 1,118,740 ------------ ------------ Commitments and contingencies -- -- Stockholders' deficiency Preferred stock - $.001 par value, authorized 10,000,000 shares; issued and outstanding 1,176,582 at December 31, 1999, and 130,810 shares at June 30, 1999 1,177 131 Additional paid-in capital 1,570,344 658,170 ------------ ------------ 1,571,521 658,301 Common stock - $.001 par value, authorized 100,000,000 shares; issued and outstanding 6,025,610 at December 31, 1999 and 5,138,192 shares at June 30, 1999 6,026 5,138 Additional paid-in capital 19,910,192 19,556,402 Deficit (21,266,660) (20,807,608) ------------ ------------ Total stockholders' equity (deficiency) before deferred consulting contracts 221,079 (587,767) Deferred consulting contracts (227,955) (133,788) ------------ ------------ Total stockholders' deficiency (6,876) (721,555) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 1,021,112 $ 397,185 ============ ============ See Notes to Consolidated Financial Statements. F-4 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended December 31, Year Ended June 30, 1999 1998 1999 1998 ----------- ----------- ----------- ----------- (unaudited) (unaudited) Operating revenue $ 300,418 $ 410,400 $ 741,901 $ 609,392 Cost of sales 193,261 245,561 562,711 473,147 ----------- ----------- ----------- ----------- Gross profit 107,157 164,839 179,190 136,245 Operating expenses Engineering and development costs 77,152 97,085 146,480 226,237 Marketing expenses 25,367 168,324 301,630 249,607 General and administrative expenses 348,577 318,888 605,347 395,414 ----------- ----------- ----------- ----------- Total operating expenses 451,096 584,297 1,053,457 871,258 ----------- ----------- ----------- ----------- Loss before other income (expenses) (343,939) (419,458) (874,267) (735,013) ----------- ----------- ----------- ----------- Other income (expenses) Sale of product line -- -- -- 410,000 Interest expense (120,196) (29,420) (207,727) (92,117) Interest income 5,084 21,298 18,188 30,806 Loss on sale/abandonment of leasehold improvements and equipment -- -- -- (35,335) Bad debt expense on notes receivable -- -- (402,006) -- ----------- ----------- ----------- ----------- (115,112) (8,122) (591,545) 313,354 ----------- ----------- ----------- ----------- Net loss (459,051) (427,580) (1,465,812) (421,659) Dividends in arrears on preferred stock (88,050) (73,750) (88,050) (73,750) ----------- ----------- ----------- ----------- Net loss available to common shareholders $ (547,101) $ (501,330) $(1,553,862) $ (495,409) =========== =========== =========== =========== Loss per share Basic and diluted loss per common share $ (.09) $ (.14) $ (.39) $ (.16) =========== =========== =========== =========== Shares used in computing net loss per share 5,759,686 3,617,089 3,973,118 3,073,650 =========== =========== =========== ===========
See Notes to Consolidated Financial Statements. F-5 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred Stock Common Stock ($.001 Par Value) Additional ($.001 Par Value) Additional ---------------- Paid-in -------------------- Paid-in Shares Amount Capital Shares Amount Capital Deficit Total ------- ----- --------- ---------- ------- ----------- ------------ -------- Balance, July 1, 1997 219,378 $ 219 $ 923,209 68,137,872 $68,138 $17,844,144 $(18,920,137) $(84,427) Conversion of 2,500 shares of Series A convertible preferred stock valued at $25,000 into 100,000 pre-split shares of the Company's common stock (2,500) (3) (24,997) 100,000 100 24,900 -- -- Conversion of 81,407 shares Series P convertible preferred stock valued at $203,517 into 814,070 pre-split shares of the Company's common stock (81,407) (81) (203,436) 814,070 814 202,703 -- -- Conversion of 2,150 shares Series S convertible preferred stock valued at $11,500 into 215,000 pre-split shares of the Company's common stock (2,150) (2) (11,498) 215,000 215 11,285 -- -- Conversion of 50,000 of convertible debentures to 1,818,182 pre-split shares of the Company's common stock issued pursuant to a Regulation S offering -- -- -- 1,818,182 1,818 48,182 -- 50,000 Exercise of 1,000,000 warrants to purchase 1,000,000 pre-split shares of the Company's common stock at $.10 per share -- -- -- 1,000,000 1,000 9,000 -- 10,000 Issuance of 50,000 pre-split shares of the Company's common stock to an employee for compensation valued at $2,750 -- -- -- 50,000 50 2,700 -- 2,750 Issuance of 180,000 pre-split shares of the Company's common stock to consultants for services valued at $11,250 -- -- -- 180,000 180 11,070 -- 11,250 The Company sold through a private placement 1,400,000 pre-split shares of the Company's common stock valued at $.05 per share -- -- -- 1,400,000 1,400 68,600 -- 70,000 The Company sold through an offshore placement 1,666,666 pre-split shares of the Company's common stock valued at $.045 per share -- -- -- 1,666,666 1,667 73,333 -- 75,000
F-6 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
Preferred Stock Common Stock ($.001 Par Value) Additional ($.001 Par Value) Additional ---------------- Paid-in -------------------- Paid-in Shares Amount Capital Shares Amount Capital Deficit Total ------- ----- --------- ---------- ------- ----------- ------------ -------- Issuance of 1,500,000 post-split warrants to purchase 1,500,000 shares of the Company's common stock at $.50 per share for a five year period commencing January 1998 to the investment banker connection with private placement of the Company's securities -- -- -- -- -- -- -- -- Issuance of 420,000 warrants to purchase the Company's common stock at $1 per share based on the post-split price for a five year period commencing during October 1997 through January 1998 in connection with a bridge loan that was converted to equity -- -- -- -- -- -- -- -- Issuance of 297,000 post-split warrants to purchase the Company's common stock at prices ranging from approximately $.91 to $.93 per share in connection with the issuance of debentures that were converted to equity for a three year period commencing April 1998 or June 1998. The warrant price was adjusted by the accrued interest on the debenture that was applied against the warrant exercise price -- -- -- -- -- 1,660 -- 1,660 The noteholders converted substantially all the short term loans and related interest through a private placement into 14,921,000 pre-split shares of the Company's common stock valued at $1.50 per share based on the post-split price or $.06 per share at the pre-split price and issued 298,808 post-split warrants to purchase the Company's common stock at $1.50 per share until February 28, 1999 and $2.00 per share until February 28, 2001 -- -- -- 14,921,000 14,921 477,779 -- 492,700
F-7 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
Preferred Stock Common Stock ($.001 Par Value) Additional ($.001 Par Value) Additional ---------------- Paid-in -------------------- Paid-in Shares Amount Capital Shares Amount Capital Deficit Total ------- ----- --------- ---------- ------- ----------- ------------ -------- Issuance of a warrant to purchase 3.53 units each consisting of 16,000 shares of the Company's common stock and 8,000 redeemable common stock purchase warrants to the investment banker in connection with the private placement of the Company's securities at $28,800 per unit for a five year period commencing April 1998 -- -- -- -- -- 28 -- 28 1 for 25 reverse stock split -- -- -- (86,690,419) (86,691) 86,691 -- -- Net loss -- -- -- -- -- -- (421,659) (421,659) ------- ----- --------- ---------- ------- ----------- ------------ -------- Balance, June 30, 1998 133,321 $133 $683,278 3,612,101 $3,612 $18,862,075 $(19,341,796) $207,302 Conversion of 1,500 shares Series B convertible preferred stock valued at $15,000 into 6,000 shares of the Company's common stock (1,500) (1) (14,999) 6,000 6 14,994 -- -- Conversion of 1,011 shares Series C convertible preferred stock valued at $10,110 into 47,390 shares of the Company's common stock (1,011) (1) (10,109) 403 -- 10,110 -- -- Issuance of 1,519,688 shares of the Company's common stock to consultants for services valued at $320,593 -- -- -- 1,519,688 1,520 319,073 -- 320,593 Issuance of 485,000 warrants to purchase 485,000 shares of the Company's common stock at $.50 per share for a three and a half year period commencing January 16, 1998 in connection with the issuance of convertible debentures due July 31, 2001. Black Scholes option pricing model was used to value the warrants -- -- -- -- -- 310,850 -- 310,850
F-8 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
Preferred Stock Common Stock ($.001 Par Value) Additional ($.001 Par Value) Additional ---------------- Paid-in -------------------- Paid-in Shares Amount Capital Shares Amount Capital Deficit Total ------- ----- --------- ---------- ------- ----------- ------------ -------- Issuance of 85,000 warrants to purchase 85,000 shares of the Company's common stock at $.25 per share and issuance of 150,000 warrants to purchase 150,000 shares of the Company's common stock at $.10 per share for a three year period commencing January 25, 1999 in connection with the issuance of convertible debentures due July 1999 through October 1999. The Black Scholes option pricing model was used to value the warrants. -- -- -- -- -- 39,300 -- 39,300 Net loss -- -- -- -- -- -- (1,465,812) (1,465,812) --------------------------------------------------------------------------------------------- Balance, June 30, 1999 130,810 $131 $658,170 5,138,192 $5,138 $19,556,402 $(20,807,608) $(587,767) Conversion of 4,228 shares Series C convertible preferred stock valued at $42,280 into 1,688 shares of the Company's common stock (4,228) (4) (42,276) 1,688 2 42,278 -- -- Exercise of 125,000 warrants to purchase 125,000 shares of the Company's common stock at $.20 per share -- -- -- 125,000 125 24,875 -- 25,000 Exercise of 150,000 warrants to purchase 150,000 shares of the Company's common stock at $.10 per share -- -- -- 150,000 150 14,850 -- 15,000 Issuance of 166,730 shares of the Company's common stock to settle accounts payable valued at $62,398 -- -- -- 166,730 167 62,231 -- 62,398 Issuance of 444,000 shares of the Company's common stock to consultants for services valued at $210,000 -- -- -- 444,000 444 209,556 -- 210,000 Issuance of 375,000 shares of the Company's Series D Preferred Stock 375,000 375 337,125 -- -- -- -- 337,500 Issuance of 675,000 shares of the Company's Series E Preferred Stock 675,000 675 617,325 -- -- -- -- 618,000 Net loss -- -- -- -- -- -- (459,051) (459,051) --------------------------------------------------------------------------------------------- Balance, December 31, 1999 (unaudited) 1,176,582 $1,177 $1,570,344 6,025,610 $6,026 $19,910,192 $(21,266,660) $221,079 =============================================================================================
See notes to financial statements. F-9 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended December 31, Year Ended June 30, ------------------------- ------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ----------- (Unaudited) (Unaudited) Operating activities Net loss $ (459,051) $ (427,580) $(1,465,812) $ (421,659) Adjustments to reconcile net loss to net cash used in operating activities Gain on sale of product line -- -- -- (410,000) Allowance for bad debts on notes Receivable -- -- 402,006 -- Compensation paid to officers/ employees through issuance of warrants and common stock -- -- -- 2,750 Consulting service paid through issuance of warrants and common stock 22,500 13,000 65,593 11,250 Depreciation and amortization of property and equipment 17,819 28,832 46,172 43,117 Amortization of debt discount 73,041 -- 112,132 -- Amortization of other assets and deferred costs 71,316 7,615 36,811 19,856 Interest expense paid through reduction of warrant price to debenture holders -- -- -- 1,660 Interest expense paid through issuance of common stock -- -- -- 73,840 Loss on sale/abandonment of leasehold improvements and equipment -- -- -- 35,335 Transfer of prepaid expenses to Assets sold -- -- -- (10,002) Changes in assets and liabilities which provided (used) cash Accounts receivable, trade (108,911) (14,108) 66,552 (62,319) Inventory 4,772 (13,631) 62,464 109,763 Prepaid supplies and expenses 8,193 (31,357) 7,782 (15,677) Accounts payable, accrued expenses and other liabilities (91,616) 120,182 94,196 26,030 ----------- ----------- ----------- ----------- Net cash used in operating activities (461,937) (317,047) (572,104) (596,056) ----------- ----------- ----------- ----------- Investing activities Payment of obligations under capital lease (9,779) (3,469) (16,477) (19,850) Purchase of equipment -- (58,800) (57,279) (10,200) Deposits -- -- -- (4,100) Notes receivable -- -- -- (90,000) Proceeds from payments on notes receivable -- 18,169 18,169 38,162 ----------- ----------- ----------- ----------- Net cash used in investing activities (9,779) (44,100) (55,587) (85,988) ----------- ----------- ----------- -----------
F-10 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Six Months Ended December 31, Year Ended June 30, ---------------------- ----------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- (Unaudited) (Unaudited) Financing activities Proceeds from Sale of -- -- -- 145,000 Common stock 955,500 -- -- Preferred stock net of offering costs -- -- -- 28 of $94,500 -- -- 235,000 -- Warrant right -- 485,000 485,000 -- Short-term borrowings Long-term debt Reduction in deferred consulting fee contract originally paid in common stock 30,000 -- 100,000 -- Debt obligation note converted to common stock -- -- -- 25,000 Debt obligations converted to common stock net of offering costs of $203,140 in 1998 -- -- -- 418,860 Issuance of common stock in connection with the exercise of warrants 40,000 -- -- 10,000 Proceeds from sale of equipment and Supplies -- -- -- 10,000 Borrowings from factor -- 84,367 195,560 79,500 Payment of debt obligations -- (154,500) (350,060) (100,000) Disbursement of debt issuance costs -- (33,700) (33,700) -- ---------- ---------- ---------- ---------- Net cash provided by financing activities 1,025,500 381,167 631,800 588,388 ---------- ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents 553,783 20,020 4,109 (93,656) Cash, beginning of period 20,019 15,910 15,910 109,566 ---------- ---------- ---------- ---------- Cash, end of period $ 573,802 $ 35,930 $ 20,019 $ 15,910 ========== ========== ========== ========== Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 7,152 $ 22,974 $ 34,957 $ 5,425 ========== ========== ========== ========== Issuance of common stock in connection with consulting services $ 210,000 -- $ 320,593 $ 11,250 ========== ========== ========== ==========
F-11 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 AND SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED) Supplemental disclosure of non-cash investing and financing activities for the six months ended December 31, 1999: The Company issued 1,688 shares of the Company's common stock in connection with the conversion of Series C Convertible Preferred Stock valued at $42,280. The Company issued 444,000 of the Company's common stock to consultants for services valued at $210,000. The Company issued 166,730 of the Company's common stock to settle accounts payable valued at $62,398. Supplemental disclosure of non-cash investing and financing activities for fiscal year 1999: The Company issued 6,403 shares of the Company's common stock in connection with the conversion of convertible preferred stock valued at $25,110 as follows: Converted to Value Common Stock ---------- ---------- Series B Convertible Preferred Stock $ 15,000 6,000 Series C Convertible Preferred Stock 10,110 403 ---------- ---------- $ 25,110 6,403 ========== ========== The Company issued 1,519,688 shares of the Company's common stock to consultants for services valued at $320,593. The Company recorded additional paid-in capital of $350,150 with the issuance of warrants to purchase 920,000 shares of the Company's common stock in connection with the short and long-term debenture financing. F-12 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 AND SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED) Supplemental disclosure of non-cash investing and financing activities for fiscal year 1998: The Company recorded capital lease obligations of $138,912 relating to the acquisition of equipment. In connection with the sale of a product line for $410,000 the Company recorded a note receivable. The Company issued 72,727 shares (1,818,182 pre-split shares) of the Company's common stock in connection with the conversion of $50,000 of convertible debentures to common stock under a Regulation S Securities Subscription Agreement. The Company issued 596,840 shares (14,921,000 pre-split shares) of the Company's common stock in connection with the conversion of $695,840 short-term debt and related interest expense. The Company issued 45,163 shares (1,129,070 pre-split shares) of the Company's common stock in connection with the conversion of convertible preferred stock valued at $240,018 as follows: Converted to Value Common Stock ---------- ---------- Series A Convertible Preferred Stock $ 25,000 100,000 Series P Convertible Preferred Stock 203,518 814,070 Series S Convertible Preferred Stock 11,500 215,000 ---------- ---------- $ 240,018 1,129,070 ========== ========== The Company issued 7,200 shares (180,000 pre-split shares) of the Company's common stock to consultants for services valued at $11,250. The Company issued 2,000 shares (50,000 pre-split shares) of the Company's common stock to employees valued at $2,750 for compensation and/or accrued compensation. F-13 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 1: Summary of Significant Accounting Policies DESCRIPTION OF BUSINESS, FINANCING AND BASIS OF FINANCIAL STATEMENT PRESENTATION Dimensional Visions Incorporated (the "Company" or "DVI") was incorporated in Delaware on May 12, 1988. The Company produces and markets lithographically printed stereoscopic and animation print products. The stockholders of the Company approved a name change effective January 15, 1998 from Dimensional Visions Group, Ltd. to Dimensional Visions Incorporated. The Company, through a wholly-owned subsidiary of InfoPak, Inc. has developed a data delivery system that provides end users with specific industry printed materials by way of a portable hand-held reader. Data is acquired electronically from the data provided by mainframe systems and distributed through a computer network to all subscribers. The Company has financed its operations primarily through the sale of its securities. The Company has had limited sales of its products during the six months ended December 31, 1999 and the years ended June 30, 1999 and 1998. Even though the sales during the past two years have significantly increased over the prior years, the volume of business is not nearly sufficient to support the Company's cost structure. LIQUIDITY AND CAPITAL RESOURCES The Company has incurred losses since inception of $21,266,660 and had working capital of $176,478 as of December 31, 1999 and had a working capital deficiency of $603,946 as of June 30, 1999. The future of the Company as an operating business will depend on its ability to (1) successfully market and sell its products, (2) obtain sufficient capital contributions and/or financing as may be required to sustain its current operations and to fulfill its sales and marketing activities, (3) achieve a level of sales adequate to support the Company's cost structure, and (4) ultimately achieve a level of profitability. Management's plan to address these issues includes (a) redirecting its marketing efforts of the Company's products and substantially increasing sales results, (b) continued exercise of tight cost controls to conserve cash, (c) raising additional long term financing, and (d) selling of its subsidiary. F-14 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 1: Summary of Significant Accounting Policies (Continued) LIQUIDITY AND CAPITAL RESOURCES (Continued) The consolidated financial statements have been prepared on a going concern basis which contemplates the realization and settlement of liabilities and commitments in the normal course of business. The available funds at June 30, 1999, plus the limited revenue is not sufficient to satisfy the present cost structure. Management recognizes that the Company must generate additional resources to enable it to continue operations. Management plans include the continued expansion of the sale of its products and the sale of additional securities. Further, there can be no assurances, assuming the Company successfully raises additional funds that the Company will achieve profitability or positive cash flow from the sale of its products. In the event the Company is not able to secure sufficient funds on a timely basis necessary to maintain its current operations, it may cease all or part of its existing operations and/or seek protection under the bankruptcy laws. CONSOLIDATION POLICY The consolidated financial statements include the accounts of DVI and its wholly-owned subsidiary, InfoPak, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. INVENTORY Inventory is stated at the lower of cost or market. Cost is determined by the first-in, first-out method. Inventory consists of finished goods of $2,128 and $6,900 as of December 31, 1999 and June 30, 1999. EQUIPMENT, DEPRECIATION AND AMORTIZATION Equipment is stated at cost. Depreciation, which includes amortization of assets under capital lease is provided by the use of the straight-line method over the estimated useful lives of the assets as follows: Equipment 5- 7 years Furniture and fixtures 5 years F-15 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 1: Summary of Significant Accounting Policies (Continued) PATENT RIGHTS Costs incurred to acquire patent rights and the related technology are amortized over the shorter of the estimated useful life or the remaining term of the patent rights. In the event that the costs of patent rights and/or acquired technology are abandoned, the write-off will be charged to expenses in the period the determination is made to abandon them. ENGINEERING AND DEVELOPMENT COSTS The Company charges to engineering and development costs items related to bringing improvement to its product. Such costs include salaries and expenses of employees and consultants, the conceptual formulation, design, and testing of the products and creation of prototypes. INCOME TAXES The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. LOSS PER SHARE The Company adopted Statement of Financial Accounting Standards Statement No. 128, "Earnings Per Share" (FAS 128), which is effective for fiscal years ending after December 15, 1997. FAS 128 replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Dilutive earnings per share is very similar to the previously reported fully diluted earnings per share. F-16 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 1: Summary of Significant Accounting Policies (Continued) USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. CONCENTRATION OF CREDIT RISK The Company is subject to credit risk through trade receivables. The Company relies on a limited number of customers for its sales. The Company is in the process of building a customer base for its products and, therefore, the degree of risk is substantially higher until the base grows. The Company also relies on several key vendors to supply plastics and printing services. Although there are a limited number of vendors capable of fulfilling the Company's needs, the Company believes that other vendors could provide for the Company's needs on comparable terms. Abrupt changes could, however, cause a delay in processing and a possible inability to meet sales commitments on schedule, or a possible loss of sales, which would affect operating results adversely. STOCK-BASED COMPENSATION The Company accounts for stock-based awards to employees in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB Opinion No. 25") and has adopted the disclosure-only alternative of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS 123"). F-17 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 1: Summary of Significant Accounting Policies (Continued) INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The financial statements and all information in these notes as of and for the six months ended December 31, 1999 and 1998 are unaudited, but in the opinion of management, have been prepared on the same basis as the audited consolidated financial statements, and include all adjustments necessary for the fair presentation of the results of the interim period. All adjustments reflected in the consolidated financial statements are of a normal recurring nature. The data disclosed in the notes to the consolidated financial statements for this period is also unaudited. Note 2: Cash The Company considers all highly liquid investments, with an original maturity of three months or less when purchased, to be cash equivalents. The Company maintains its cash in banks located in Arizona. The total cash balances are insured by the FDIC up to $100,000 per financial institution. As of December 31, 1999 and June 30, 1999, there were no uninsured balances. As of December 31, 1999 $496,355 was held in a brokerage account which is fully insured. Note 3: Notes Receivable Notes receivable consists of the following: Interest Rate Amount Maturity ---- ------ -------- Sale of Product Line (1) 11% $360,506 September 2001 Sale of InfoReaders (2) 10% 83,163 August 2001 -------- 443,669 Less allowance for bad debts 402,006 -------- $ 41,663 ======== (1) On September 25, 1997, the Company sold one of its product lines for $410,000 (see Note 14). During February 1998, the terms of the note were modified. The payment period was changed to forty-eight months and the interest rate was increased to 11%. Effective September 1998, the modified terms provide for payments to be $11,533 per month. The Company has been unable to collect the required monthly payments. During the year ended June 30, 1999, the Company received three F-18 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 3: Notes Receivable (Continued) installments and a fee of $10,000 which was included as interest income. Management has determined that they are currently unable to collect the amounts due on the note. Accordingly, management has established a 100% allowance against this note. The Company has determined that it does not make economic sense to take back this product line and operate this aspect of the business. The Company will continue to pursue the collection of this note. As of December 31, 1999 no additional funds have been collected. (2) On March 1, 1998, the Company sold InfoReaders (hardware) to a customer for $100,000 and agreed to accept a note for $90,000 with payments commencing on September 1, 1998. The monthly installment is $2,904, including interest at 10% per annum for thirty-six months. The Company has not been able to collect the required monthly payments due on this note. The customer has filed for an arbitration hearing on the basis that the Company failed to provide data to support their customer base and is requesting payment of $1,000,000 for the lost business. The Company made provisions to acquire the data for the customer. However, the customer was unwilling to pay for the acquisition cost of the data and bring their account current. Accordingly, without the updated data and failure to pay the outstanding balance due the Company, there is no reason to support the system. No date has been set for the arbitration hearings. The Company has filed a counter-claim for full payment of the note. The Company has taken a $41,500 allowance against the balance due on the note as of June 30, 1999. The note is personally guaranteed by the sole-shareholder of the customer and the Company expects to collect approximately $50,000 as a result of this personal guarantee. Note 4: Deferred Costs Deferred costs as of December 31, 1999 and June 30, 1999 consists of the following: December 31, 1999 June 30, 1999 ----------------- ------------- Consulting contract $ 227,955 $ 133,788 Debt issuance costs 18,833 24,779 Less consulting contracts classified in the stock- holder deficiency section of the balance sheet (227,955) (133,788) $ 18,833 $ 24,779 ========= ========= F-19 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) On April 5, 1999, the Company entered into a contract with a consultant. The fee for services for 36 months is $287,668 ($7,991 per month), or upon signing of the contract, the Company will issue $255,000 of the Company's common stock. The market value of the common stock on April 5, 1999 was $.1875 per share and 1,360,000 shares of registered common stock was issued (registered under Form S-8). In addition, the warrant price on previously issued 500,000 warrants will be reduced to $.10 per share. In accordance with the terms of the agreement either party may terminate or change the terms of this agreement with 30 days written notice. On May 28, 1999 the term of this agreement was modified and the term was reduced to 22 months. Under the provisions of the contract, the consultant is required to either return the shares or the cash equivalency of the reduction. Accordingly on May 28, 1999, the Company received a $100,000 payment from the consultant. The Company incurred debt issuance costs of $33,700 which is being amortized over 34 months, the term of the Series A convertible debentures. On July 29, 1999, the Company entered into a contract with a consultant. The fee for services for 36 months is $42,304 ($1,175 per month), or upon signing of the contract, the Company will issue $37,500 of the Company's common stock. The market value of the common stock on July 29, 1999 was $.375 per share and 100,000 shares of registered common stock was issued (registered under Form S-8). In accordance with the terms of the agreement either party may terminate or change the terms of this agreement with 30 days written notice. On August 24, 1999 the term of this agreement was modified and the term was reduced to 6 months. Under the provisions of the contract, the consultant is required to either return the shares or the cash equivalency of the reduction. Accordingly on August 24, 1999, the Company received a $30,000 payment from the consultant. On August 10, 1999, the Company entered into a contract with a consultant. The fee for services for 36 months is $169,216 ($4,700 per month), or upon signing of the contract, the Company will issue $150,000 of the Company's common stock. The market value of the common stock on August 10, 1999 was $.50 per share and 300,000 shares of registered common stock was issued (registered under Form S-8). In accordance with the terms of the agreement either party may terminate or change the terms of this agreement with 30 days written notice. F-20 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 5: Patent Rights and Other Assets December 31, 1999 June 30, 1999 ----------------- ------------- Patent rights $58,426 $58,426 Deposits 4,100 4,100 Trademark 225 225 ------- ------- 62,751 62,751 Less accumulated amortization 29,087 27,050 ------- ------- Total $33,664 $35,701 ======= ======= Note 6: Accounts Payable, Accrued Expenses and Other Liabilities December 31, 1999 June 30, 1999 ----------------- ------------- Accounts payable $206,355 $403,837 Accrued expenses Interest 105,615 61,465 Salaries 42,875 63,159 Payroll taxes payable 5,314 5,712 -------- -------- Total $380,159 $534,173 ======== ======== Note 7: Short-Term Borrowings On May 26, 1998, the Company entered into a renewable one year agreement with a factor that provides advances up to $100,000 based on 80% of the face value of accounts receivable factored. As collateral for this funding, the Company has provided a security interest under the Uniform Commercial Code in all of the Company's assets and has guaranteed the collection of the receivable under recourse. Interest is charged at the rate of .0067 per day or 2% a month on outstanding borrowings. As of December 31, 1999 and June 30, 1999, there were no outstanding borrowings under this arrangement. During January through April 1999, the Company received short-term borrowings of $235,000. The loans were 12% convertible debentures, with due dates ranging from July 25, 1999 through October 29, 1999. The terms of the debenture provide for a three month extension if the debenture is not paid on the original due date. During the extension period, interest is calculated at the stated rate plus 3% through the extended due date (15%). As of December 31, 1999 and June 30, 1999, the debentures are convertible into 685,000 shares of the Company's common stock. F-21 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 7: Short-Term Borrowings (Continued) The Company also issued to the debenture holders three year warrants which expire January 25, 2002 to purchase the Company's common stock at $.25 per share for 85,000 warrants and at $.10 per share for 150,000 warrants. The warrants were valued at $39,300 by Black Scholes option pricing model. Accordingly, the debentures were discounted for the value allocated to the warrants and additional paid-in capital was recorded. As of June 30, 1999, additional interest expense of $18,067 was recorded and the remaining unamortized discount was $21,233. As of June 30, 1999, the discounted value of the debenture was $213,767. As of December 31, 1999, the short-term borrowings of $235,000 and related accrued interest is in default. The Company failed to pay the principal and interest payment on the notes. However, the Company extended an offer to the holders of the short-term notes to convert their debt and accrued interest to equity in the Company. The offer which was accepted by all of the existing note holders permits the conversion of debt into shares of the Company's common stock at $.375 per share. Interest on the short-term borrowings continues to accrue at 12% per annum until the filing of a registration statement is completed. Note 8: Long-Term Debt During July through September 1998, the Company through a private placement was able to borrow $485,000 through the issuance of Series A 12% convertible secured debentures. The debentures are due July 31, 2001. Interest is accrued and payable on July 31 of each year and the first interest payment is due July 31, 1999. In the event the Company fails to pay the debenture holders any accrued interest or principal the default rate is 16% from the due date through the date paid. On July 15, 1998, the Company entered into a security agreement with the debenture holders that grants a security interest in substantially all the assets of the Company. As of June 30, 1999, the debentures are convertible into 485,000 shares of the Company's common stock. F-22 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 8: Long-Term Debt (Continued) The Company also issued to the debenture holders three year warrants which expire January 15, 2001 to purchase the Company's common stock at $.50 per share. The warrants were valued at $310,850 by using the Black Scholes option pricing model. Accordingly, the debentures were discounted for the value allocated to the warrants and additional paid-in capital was recorded. As of June 30, 1999 additional interest expense of $94,065 was recorded and the remaining unamortized discount was $216,785. As of December 31, 1999 the remaining unamortized discount was $164,977. As of December 31, 1999 ad June 30, 1999, the discounted value of the debentures was $320,023 and $268,215, respectively. On July 31, 1999, the Company failed to make an interest payment to the debenture holders. The Company extended an offer to the debenture holders to convert their debt and accrued interest to equity in the Company. The offer which was accepted by all of the existing debenture holders permits the conversion of debt into shares of the Company's common stock at $.375 per share. Interest on the debentures continues to accrue at 12% per annum until the filing of a registration statement is completed. Note 9: Leases The company leases certain equipment under a master lease agreement, which are classified as capital leases. The equipment leases have a five year term with an option to acquire the equipment for $1 at the end of the lease term. Leased capital assets included in equipment was as follows: December 31, 1999 June 30, 1999 ----------------- ------------- Equipment $138,912 $138,912 Less accumulated amortization 31,424 21,502 -------- -------- $107,488 $117,410 ======== ======== F-23 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 9: Leases (Continued) Future minimum payments, by year and in the aggregate, under noncancellable capital leases and operating leases with terms of one year or more consist of the following: December 31, 1999 June 30, 1999 Years Ending ----------------- ------------- June 30, 1999 June 30, Capital Leases Operating Leases -------- -------------- ---------------- 2000 $19,700 $39,400 $ 66,600 2001 39,400 39,400 33,800 2002 39,400 39,400 -- 2003 29,550 29,550 -- ------ ------ -------- 128,050 147,750 $100,400 ======== Amounts representing interest 35,244 45,165 ------ ------ Present value of net minimum payments 92,806 102,585 Current portion 22,638 20,552 ------ ------ Long-term portion $70,168 $82,033 ======= ======= The Company's rental expense for operating leases was approximately $69,100 in 1999 and $33,700 in 1998 and for the six months ended December 31, 1999 and 1998 rental expense was $33,668 and $28,604, respectively. Note 10: Commitments and Contingencies The Company has outstanding employment and consulting contracts that expire through June 30, 2001 as follows: Years Ending June 30, Amount --------------------- -------- 2000 $246,000 2001 102,500 -------- $348,500 ======== F-24 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 10: Commitments and Contingencies (Continued) On June 22,1999, a customer filed a lawsuit demanding a claim for loss of value or market share for $1,000,000 under the provision of a distributorship contract that provides for arbitration on a material breach of contract. The suit was amended by the customer on July 6, 1999. To date the Company was never notified of a breach of contract for which the Company has a period of time to remedy the breach under the terms of the distributorship contract. The customer has breached the contract by failing to pay for products, licensing fees and failing to provide the Company with information on the number of updates needed for the units. The Company has filed a counter claim for payment of the entire amount of the note for product received by the customer and the outstanding accounts receivable balance. Management believes that this matter will be resolved favorably and will not have an adverse effect on its financial position. There are no other legal proceedings which the Company believes will have a material adverse effect on its financial position. The Company has not declared dividends on Series A or B Convertible Preferred Stock. The cumulative dividends in arrears through December 31, 1999 and June 30, 1999 was approximately $88,000. Note 11: Common Stock The shareholders of record at the close of business on December 5, 1997, voted on January 15, 1998, to approve a 1 for 25 reverse stock split effective that date. In this report, all per share calculations have been adjusted to give retroactive effect to a 1 for 25 reverse split. As of December 31, 1999, there are outstanding 5,817,210 of non-public warrants to purchase the Company's common stock at prices ranging from $0.10 to $12.50 with a weighted average price of $0.63 per share. As of December 31, 1999, there were 1,176,582 shares of various classes of Convertible Preferred Stock outstanding which can be converted to 1,515,833 shares of common stock. As of December 31, 1999, there were $485,000 of secured debentures which can be converted into 485,000 shares of the Company's common stock and $235,000 of short-term borrowings which can be converted into 685,000 shares of the Company's common stock. F-25 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 11: Common Stock (Continued) The total number of shares of the Company's common stock that would have been issuable upon conversion of the outstanding debt, warrants and preferred stock equaled 8,503,043 shares as of December 31, 1999, and would be in addition to the 6,025,607 shares of common stock outstanding as of December 31, 1999. During August and September 1999, the Company issued 1,688 shares its Common Stock as a result of the conversion of 4,228 shares of Series C Convertible Preferred Stock. During the six months ended December 31, 1999, the Company issued 444,000 shares of its common stock to consultants for services valued at $210,000. During August 1999, the Company issued 166,730 shares of its common stock in lieu of cash to settle $62,398 of accounts payable. On July 15, 1999, the Company issued 90,000 shares of its stock in connection with the exercise of warrants. As of June 30, 1999, there are outstanding 4,746,710 of non-public warrants and options to purchase the Company's common stock at prices ranging from $.20 to $12.50 with a weighted average price of $.2339 per share. As of June 30, 1999, there were 130,810 shares of various classes of Convertible Preferred Stock outstanding which can be converted to 92,524 shares of common stock (see Note 11). As of June 30, 1999, there were short-term convertible debentures which can be converted to 685,000 shares of common stock. As of June 30, 1999, there were Series A convertible debentures which can be converted to 485,000 shares of common stock. The total number of shares of the Company's common stock that would have been issuable upon conversion of the outstanding warrants, options and preferred stock equaled 6,009,234 shares as of June 30, 1999, and would be in addition to the 5,138,192 shares of common stock outstanding as of June 30, 1999. The Company issued during the year ended June 30, 1999, 1,519,688 shares of the Company's common stock to consultants for services (including $133,788 as deferred) valued at $320,593 (average price per share $.21). F-26 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 11: Common Stock (Continued) During July 1997, 1,400,000 shares (pre-split) of the Company's common stock was sold to third parties in a private placement for $70,000 ($.05 per share). On July 14, 1997, the Company issued 1,818,182 (pre-split) shares of the Company's common stock in connection with the conversion of a $50,000 convertible debenture to common stock under a Regulation S offering ($.0275 per share). On September 30, 1997, the Company issued 1,666,666 (pre-split) shares of the Company's common stock to a third party for $75,000 under a Regulation S offering ($.045 per share). On December 30, 1997, the Company issued 1,000,000 (pre-split) shares of the Company's common stock in connection with the exercise of 1,000,000 warrants (pre-split) at $.10 per share. The Company issued 180,000 (pre-split) shares of the Company's common stock to consultants for services valued at $11,250 (average price per share $.0625). The Company issued to an employee 50,000 (pre-split) shares of the Company's common stock for compensation valued at $2,750 ($.055 per share). The Company issued 1,128,800 (pre-split) shares of the Company's common stock in connection with the conversion of preferred stock valued at $240,018. On April 8, 1998, the Company issued 564,840 post-split shares (14,121,000 pre-split shares) of the Company's common stock in connection with the conversion of short-term financing into units. Each unit consists of 16,000 (post-split) shares of the Company's common stock and 8,000 (post-split) redeemable common stock purchase warrants which provides the right to purchase 8,000 shares of the Company's common stock at $1.50 per share until February 28, 1999 and $2.00 per share until February 28, 2001. The unit price is $24,000. The Company sold 35.3 units. On June 12, 1998, the Company issued 800,000 (pre-split) shares of the Company's common stock in connection with the conversion of short-term financing into units, as described in the previous paragraph. The Company sold 2 units for $48,000. The Company raised, through the sale of these units, approximately $695,840 less offering costs of approximately $203,140 for net proceeds to the Company of $492,700. F-27 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 12: Preferred Stock The Company has authorized 10,000,000 shares of $.001 par value per share Preferred Stock, of which the following were issued and outstanding: Allocated Outstanding --------- ----------------------------------- December 31, 1999 June 30, 1999 ----------------- ------------- Series A Preferred 100,000 23,000 23,000 Series B Preferred 200,000 3,500 3,500 Series C Preferred 1,000,000 13,442 17,670 Series D Preferred 375,000 375,000 -- Series E Preferred 1,000,000 675,000 -- Series P Preferred 600,000 86,640 86,640 --------- --------- ------- Total Preferred Stock 3,325,000 1,176,582 130,810 ========= ========= ======= The Company's Series A Convertible 5% Preferred Stock ("Series A Preferred"), 100,000 shares authorized, is convertible into common stock at the rate of 1.6 shares of common stock for each share of the Series A Preferred. Dividends from date of issue are payable from retained earnings, and have been accumulated on June 30 each year, but have not been declared or paid. The Company's Series B Convertible 8% Preferred Stock ("Series B Preferred") is convertible at the rate of 4 shares of common stock for each share of Series B Preferred. Dividends from date of issue are payable on June 30 from retained earnings at the rate of 8% per annum and have not been declared or paid. The Company's Series C Convertible Preferred Stock ("Series C Preferred") is convertible at a rate of 0.4 shares of common stock per share of Series C Preferred. The Company's Series D Convertible Preferred Stock ("Series D Preferred") is convertible at a rate of 2 shares of common stock per share of Series D Preferred. The Company's Series E Convertible Preferred Stock ("Series E Preferred") is convertible at a rate of 1 share of common stock per share of Series E Preferred. The Company's Series P Convertible Preferred Stock ("Series P Preferred") is convertible at a rate of 0.4 shares of common stock for each share of Series P Preferred. F-28 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 12: Preferred Stock (Continued) The Company's Series A Preferred and Series B Preferred were issued for the purpose of raising operating funds. The Series C Preferred was issued to certain holders of the Company's 10% Secured Notes in lieu of accrued interest and also will be held for future investment purposes. The Series P Preferred was issued on September 12, 1995, to InfoPak shareholders in exchange for (1) all of the outstanding capital stock of InfoPak, (2) as signing bonuses for certain employees and a consultant of InfoPak, and (3) to satisfy InfoPak's outstanding debt obligations to certain shareholders. Shares of Series B Preferred were issued to holders of warrants to purchase such preferred stock. The funding for the exercise of these warrants was the exchange of $1,907,000 of principal amount of secured and unsecured notes. Shares of Series C Preferred were also issued in exchange for $262,750 of interest due under the secured and unsecured notes. The Company raised $375,000 net of offering costs of $37,500 through this issuance of 375,000 shares of its Series D Preferred. These shares were issued for the purpose of raising operating funds. The Company raised $675,000 net of offering costs of $57,000 through this issuance of 675,000 shares of its Series E Preferred. These shares were issued for the purpose of raising operating funds. Note 13: Stock Option Plan and Equity Incentive Plan The Company has adopted a stock option plan (the "Plan") covering 1,500,000 shares post-split (increased from 20,000 post-split by the Board of Directors on January 13, 1998) of the Company's common stock $.001 par value, pursuant to which officers, directors, key employees and consultants of the Company are eligible to receive incentive, as well as non-qualified stock options and Stock Appreciation Rights ("SAR's"). The Plan, which has been extended for 10 years by the Board of Directors on January 13, 1998, and expires September 2008, will be administered by the Board of Directors or a committee chosen therefrom. This plan must be formally approved by the stockholders of the Company. Incentive stock options granted under the Plan are exercisable for a period of up to 10 years from the date of grant at an F-29 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 13: Stock Option Plan and Equity Incentive Plan (Continued) exercise price, which is not less than the fair market value of the common stock on the date of the grant, except that the terms of an incentive stock option granted under the Plan to a stockholder owning more than 10% of the outstanding common stock may not exceed five years and the exercise price of an incentive stock option granted to such a stockholder may not be less than 110% of the fair market value of common stock on the date of the grant. Non-qualified stock options may be granted on terms determined by the Board of Directors or a committee designated by the Board of Directors. SAR's which give the holder the privilege of surrendering such rights for the appreciation in the Company's common stock between the time of grant and the surrender, may be granted on any terms determined by the Board of Directors or committee designated by the Board of Directors. No SAR's have been granted. A summary of transactions under this Plan is as follows: Weighted Average Exercise Price Shares Per Share ---------- ---------- Options outstanding July 1, 1997 -- $ -- Grants 1,300,000 $ .93 Cancelled -- -- ---------- ---------- Options outstanding June 30, 1998 1,300,000 .93 Grants -- -- Cancelled (1,300,000) (.93) ---------- ---------- Options outstanding June 30, 1999 -- $ -- ========== ========== Options exercisable at end of year -- $ -- ========== ========== F-30 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 13: Stock Option Plan and Equity Incentive Plan (Continued) The Company on June 13, 1996 adopted the 1996 Equity Incentive Plan (the "Plan") covering 10,000,000 shares of the Company's common stock $.001 par value, pursuant to which officers, directors, key employees and consultants of the Company are eligible to receive incentive, as well as non-qualified stock options, SAR's, and Restricted Stock and Deferred Stock. The Plan, which expires in June 2006, will be administered by the Compensation Committee of the Board of Directors. Incentive stock options granted under the Plan are exercisable for a period of up to 10 years from the date of grant at an exercise price, which is not less than the fair market value of the common stock on the date of the grant, except that the terms of an incentive stock option granted under the Plan to a stockholder owning more than 10% of the outstanding common stock may not exceed five years and the exercise price of an incentive stock option granted to such a stockholder may not be less than 110% of the fair market value of common stock on the date of the grant. Non-qualified stock options may be granted on terms determined by the Compensation Committee of the Board of Directors. SAR's which give the holder the privilege of surrendering such rights for the appreciation in the Company's common stock between the time of grant and the surrender, may be granted on any terms determined by the Compensation Committee of the Board of Directors. Restricted stock awards entitle the recipient to acquire shares for no cash consideration or for consideration determined by the Compensation Committee. The award may be subject to restrictions, conditions and forfeiture as the Committee may determine. Deferred stock award entitles recipient to receive shares in the future. Since inception of this plan in 1996 through December 31, 1999, 5,002,978 shares of common stock has been issued. For the year ended June 30, 1999, 1,519,688 shares of common stock have been issued at prices ranging from $.1875 to $.6562 per share. For the six months ended December 31, 1999, 444,000 shares of common stock have been issued at prices ranging from $.37 to $.625 per share. In addition, as of December 31, 1999, no options or SAR's have been granted. As of June 30, 1998, 7,200 (post-split) shares of common stock have been issued under this plan at prices ranging from $1.50 to $2.00 per share. In addition, as of June 30, 1998, no options or SAR's have been granted. F-31 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 13: Stock Option Plan and Equity Incentive Plan (Continued) If the Company had elected to recognize compensation expense based on the fair value of stock plans as prescribed by FAS No. 123, the Company's net loss and net loss per share would have been increased to the pro forma amounts indicated below: Year Ended June 30, Six Months Ended ------------------ December 31, 1999 1999 1998 ----------------- ---- ---- Net Loss - as reported $(459,051) $(1,465,812) $(421,659) Net Loss - pro forma $(459,051) $(1,465,812) $(855,464) Net Loss per share - as reported ($.08) ($.37) $(.14) Net Loss per share - pro forma ($.08) ($.37) $(.28) The weighted-average fair value at the date of grant for options granted in 1998 was $.93. The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option Pricing Model. The following weighted average assumptions were used: no dividends; expected volatility factor of .99; risk-free interest of 6.25%; and an expected life of five years. The compensation expense and pro forma net loss may not be indicative of amounts to be included in future periods. All references to the number of shares under option and option prices have been adjusted to reflect a 1 for 25 reverse stock split effective January 15, 1998. Note 14: Sale of Product Line On September 25, 1997, the Company sold one of its product lines, the real estate multiple listing data delivery system. The purchase price was $410,000 plus the assumption of a $59,247 contingent liability to a third party. At closing a promissory note for $410,000 was delivered to the Company. The terms of the note provided for 36 monthly installments of $13,330, including interest at 10% per annum, commencing on October 25, 1997. During February 1998, the terms of the note were modified. The payment period was changed to forty-eight months and the interest rate was increased to 11%. Effective September 1998, the modified terms provide for payments to be $11,533 per month. The Company has been unable to collect the required monthly payments and has therefore established a 100% allowance against this note (see Note 3). F-32 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 15: Income Taxes The tax effects of significant items comprising the Company's net deferred taxes as of June 30, 1999 were as follows: Deferred tax assets: Goodwill $ 311,000 Net operating loss carryforwards 6,207,000 ----------- 6,518,000 Deferred tax liabilities Allowance for bad debts 173,000 Equipment 79,000 Patent rights 4,000 ----------- 256,000 Net deferred tax asset 6,262,000 Valuation allowance (6,262,000) ----------- Net deferred tax asset reported $ -- =========== The change in valuation allowance for the year ended June 30, 1999 was increased by approximately $151,000. There was no provision for current income taxes for the years ended June 30, 1999 and 1998. Additionally there was no provision for current income taxes for the six months ended December 31, 1999 and 1998. The federal net operating loss carryforwards of approximately $17,632,000 expires in various years through 2019. In addition the Company has state carryforwards of approximately $2,358,000. The Company has had numerous transactions in its common stock. Such transactions may have resulted in a change in the Company's ownership, as defined in the Internal Revenue Code Section 382. Such change may result in an annual limitation on the amount of the Company's taxable income which may be offset with its net operating loss carryforwards. The Company has not evaluated the impact of Section 382, if any, on its ability to utilize its net operating loss carryforwards in future years. F-33 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 16: Segment of Business Reporting The operations of the Company are divided into the following business segments for financial reporting purposes. * Lithographically printed stereoscopic prints commonly referred to as three-dimensional prints and litho-graphically printed animation. * Hardware and software information and audio playback systems and method products and programs. There are no intersegment or foreign sales. For the period ended December 31, 1999 three customers accounted for approximately 89% of the lithographic sales and two customers accounted for approximately 98% of the hardware and software information and playback systems. For the year ended June 30, 1999 three customers accounted for approximately 47% of the lithographic sales and two customers accounted for approximately 94% of the hardware and software information and playback systems. For the year ended June 30, 1998 three customers accounted for approximately 58% of the lithographic sales and three customers accounted for approximately 87% of the hardware and software information and playback systems. The Company has retained an investment banking firm to assist in the sale of its subsidiary, InfoPak, Inc., which is responsible for the hardware and software information and audio playback systems. To date, a buyer has not been found. The Company will continue to support the operations of InfoPak until it is sold or the Board of Directors decides to discontinue its operations. In the event that InfoPak, Inc. is sold, management does not expect a loss on the sale. Financial information by business segments is as follows: Year ended June 30, 1998 ----------------------------------------------- Hardware Lithographic and Software Consolidated ------------ ------------ ------------ Net customer sales $ 322,940 $ 286,452 $ 609,392 Interest income 422 30,384 30,806 Interest expense 92,117 -- 92,117 Operating loss (627,545) (107,468) (735,013) Segment assets 728,831 192,010 920,841 Depreciation and amortization 9,773 33,343 43,116 F-34 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED JUNE 30, 1999 AND 1998 (Information pertaining to the six months ended December 31, 1999 and 1998 is unaudited) Note 16: Segment of Business Reporting (Continued) Year ended June 30, 1999 ----------------------------------------------- Hardware Lithographic and Software Consolidated ------------ ------------ ------------ Net customer sales $ 613,989 $ 127,912 $ 741,901 Interest income -- 18,188 18,188 Interest expense 207,726 -- 207,726 Operating loss (852,174) (22,093) (874,267) Segment assets 469,526 61,447 530,973 Depreciation and amortization 33,955 12,217 46,172 Bad debt expense on notes receivable -- 402,006 402,006 Six months ended December 31, 1999 ----------------------------------------------- Hardware Lithographic and Software Consolidated ------------ ------------ ------------ Net customer sales $ 278,221 $ 22,197 $ 300,418 Interest income 5,084 -- 5,084 Interest expense 120,196 -- 120,196 Operating loss (199,031) (144,908) (343,939) Segment assets 1,187,491 61,576 1,249,067 Depreciation and amortization 17,646 173 17,819 F-35 You should rely only on the information contained in this document or that we have referred to you. We have not authorized anyone to provide you with information that is different. The delivery of this prospectus and any sale made by this prospectus doesn't imply that there haven't been changes in the affairs of Dimensional Visions since the date of this prospectus. This prospectus does not constitute an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation. ---------- TABLE OF CONTENTS Page ---- Prospectus Summary 1 Risk Factors 3 Use of Proceeds 6 Market for Common Stock and Related Stockholder Matters 6 Dividend Policy 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Business of Dimensional Visions 12 Management 16 Employment and Related Agreements 18 Certain Transactions 19 Principal Stockholders 20 Selling Stockholders 21 Plan of Distribution 26 Description of Securities 27 Legal Matters 28 Experts 28 Financial Statements F-1 ---------- DEALER PROSPECTUS DELIVERY OBLIGATION. Until July 11, 2000 (90 days after the date of this prospectus), all dealers effecting transactions in the registered securities, whether or not participating in the distribution, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters with respect to their unsold allotments or subscriptions. Dimensional Visions Incorporated 13,542,474 Shares of Common Stock ---------- PROSPECTUS ---------- ---------- April 12, 2000 DIMENSIONAL VISIONS INCORPORATED PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Company is required by its Bylaws and Certificate of Incorporation to indemnify, to the fullest extent permitted by law, each person that the Company is permitted to indemnify. The Company's Charter requires it to indemnify such parties to the fullest extent permitted by Sections 102(b)(7) and 145 of the Delaware General Corporation Law. Section 145 of the Delaware General Corporation Law permits the Company to indemnify its directors, officers, employees, or agents against expenses, including attorneys fees, judgments, fines and amounts paid in settlements actually and reasonably incurred in relation to any action, suit, or proceeding brought by third parties because they are or were directors, officers, employees, or agents of the corporation. In order to be eligible for such indemnification, however, the directors, officers, employees, or agents of the Company must have acted in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the Company. In addition, with respect to any criminal action or proceeding, the officer, director, employee, or agent must have had no reason to believe that the conduct in question was unlawful. In derivative actions, the Company may only indemnify its officers, directors, employees, and agents against expenses actually and reasonably incurred in connection with the defense or settlement of a suit, and only if they acted in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation. Indemnification is not permitted in the event that the director, officer, employee, or agent is actually adjudged liable to the Corporation unless, and only to the extent that, the court in which the action was brought so determines. The Company's Certificate of Incorporation permits the Company to indemnify its directors except in the event of: (1) a breach of the duty of loyalty to the Company or its stockholders; (2) an act or omission that involves intentional misconduct or a knowing violation of the law and an act or omission not in good faith; (3) liability arising under Section 174 of the Delaware General Corporation Law, relating to unlawful stock purchases, redemptions, or payment of dividends; or (4) a transaction in which the potential indemnity received an improper personal benefit. Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers, or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Commission, such indemnification is against public policy as expressed in the Act and is therefore unenforceable. ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION SEC Registration Fee $ 2,544 Accounting Fees and Expenses $ 7,500 Legal Fees and Expenses $ 15,000 Printing Expenses $ 7,500 Miscellaneous $ 4,456 --------- Total $ 37,000 ========= II-1 ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES On September 15, 1998, the Company completed a private placement (the "1998 Debt Private Placement") of $485,000 of its Series A 12% convertible secured debentures. The debentures are due July 31, 2001. Interest is accrued and payable on July 31 of each year. The Company also issued to the debenture holders three year warrants which expire January 15, 2001, to purchase the Company's common stock at $.50 per share. The 1998 Debt Private Placement was exempt from the registration provisions of the Securities Act of 1933, as amended (the "Act") by virtue of Section 4(2) of the Act, as transactions by an issuer not involving any public offering. The securities issued pursuant to the 1998 Debt Private Placement were restricted securities as defined in Rule 144 of the Act. The offering generated net proceeds of approximately $451,050. All investors in the 1998 Debt Private Placement were accredited investors as that term is defined in Rule 501 of Regulation D adopted under the Act. On April 29, 1999, the Company completed a private placement (the "1999 Debt Private Placement") of $235,000 of its short-term debt securities. The loans were 12% convertible debentures with due dates ranging from July 25, 1999, through October 29, 1999. The Company also issued to the debenture holders three year warrants which expire January 25, 2002, to purchase the Company's common stock at $.25 per share for 85,000 warrants and $.10 per share for 150,000 warrants. The 1999 Debt Private Placement was exempt from the registration provisions of the Securities Act of 1933, as amended (the "Act") by virtue of Section 4(2) of the Act, as transactions by an issuer not involving any public offering. The securities issued pursuant to the 1999 Debt Private Placement were restricted securities as defined in Rule 144 of the Act. The offering generated net proceeds of approximately $211,500. All investors in the 1999 Debt Private Placement were accredited investors as that term is defined in Rule 501 of Regulation D adopted under the Act. On September 1, 1999, the Company completed a private placement (the "Series D Private Placement") of 375,000 units of its securities (the "Units"), each unit consisting of one share of Series D Convertible Preferred Stock which is convertible into two shares of common stock of the Company and one warrant, exercisable at $0.25 and expiring 120 days after the date of effectiveness of a registration statement of the Company, at $1.00 per Unit, minimum investment $50,000. The Series D Private Placement was exempt from the registration provisions of the Securities Act of 1933, as amended (the "Act") by virtue of Section 4(2) of the Act, as transactions by an issuer not involving any public offering. The securities issued pursuant to the Series D Private Placement were restricted securities as defined in Rule 144 of the Act. The offering generated net proceeds of approximately $357,500. All investors in the Series D Private Placement were accredited investors as that term is defined in Rule 501 of Regulation D adopted under the Act. On December 30, 1999, the Company completed a private placement (the "Series E Private Placement") of 675,000 units of its securities (the "Units"), each unit consisting of one share of Series E Convertible Preferred Stock which is convertible into one share of common stock of the Company and one warrant, exercisable at $0.50 and expiring 120 days after the date of effectiveness of a registration statement of the Company, at $1.00 per Unit, minimum investment $50,000. The Series E Private Placement was exempt from the registration provisions of the Securities Act of 1933, as amended (the "Act") by virtue of Section 4(2) of the Act, as transactions by an issuer not involving any public offering. The securities issued pursuant to the Series E Private Placement were restricted securities as defined in Rule 144 of the Act. The offering generated net proceeds of approximately $618,000. All investors in the Series E Private Placement were accredited investors as that term is defined in Rule 501 of Regulation D adopted under the Act. II-2 ITEM 27. EXHIBITS Exhibit (a) Exhibits 3.1 Certificate of Incorporation, dated May 12, 1988* 3.2 Bylaws* 4.1 Certificate of Designation of Series A Convertible Preferred Stock, dated December 12, 1992* 4.2 Certificate of Designation of Series B Convertible Preferred Stock, dated December 22, 1993* 4.3 Certificate of Designation of Series P Convertible Preferred Stock, dated September 11, 1995* 4.4 Certificate of Designation of Series S Convertible Preferred Stock, dated August 28, 1995* 4.5 Certificate of Designation of Series C Convertible Preferred Stock, dated November 2, 1995* 4.6 Certificate of Designation of Series D and Series E Convertible Preferred Stock, dated August 25, 1999* 4.7 Form of Warrant Agreement to debt holders, dated January 15, 1998* 4.8 Form of Warrant Agreement to debt holders, dated April 8, 1998* 4.9 Form of Warrant Agreement to participants in Private Placement dated April 8, 1998* 4.10 Series A Convertible Secured Debenture* 4.11 Security Agreement for Series A Convertible Secured Debentures* 4.12 12% Convertible Debenture 5.0 Opinion of Horwitz & Beam 10.1 1996 Equity Incentive Plan* 10.2 1999 Stock Option Plan* 10.3 Agreement dated September 25, 1997 by and between InfoPak, Inc., DataNet Enterprises, LLC, and David and Staci Noles* 10.4 Lease Agreement, dated October 27, 1997* = 10.5 Employment Agreement dated August 1, 1998, with John D. McPhilimy* 10.6 Employment Agreement dated November 1, 1997, with Bruce D. Sandig* 10.7 Employment Agreement dated November 1, 1997, with Roy D. Pringle* 21.1 Subsidiaries of the Registrant* 24.1 Consent of Horwitz & Beam (included in their opinion set forth in Exhibit 5 hereto) 24.2 Consent of Gitomer & Berenholz, P.C. 25.1 Power of Attorney (see signature page) 27.1 Financial Data Schedule - ---------- * Previously Filed. ITEM 28. UNDERTAKINGS The undersigned registrant hereby undertakes to: (1) Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of Dimensional Visions pursuant to the foregoing provisions, or otherwise, Dimensional Visions has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Dimensional Visions will, unless in the opinion of its counsel the matter has been settled by controlling precedent submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 (2) File, during any period in which it offers or sells securities, a post effective amendment to this registration statement to: (i) Include any prospectus required by section 10(a)(3) of the Act; (ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and (iii) Include any additional or changed material information on the plan of distribution. For determining liability under the Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. II-4 SIGNATURES In accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorized this Registration Statement to be signed on its behalf by the undersigned, in the City of Phoenix, State of Arizona on April 11, 2000. DIMENSIONAL VISIONS INCORPORATED By: /s/ Roy D. Pringle By: /s/ John D. Mcphilimy ------------------------------ ------------------------------------ Roy D. Pringle, Chief Financial John D. Mcphilimy, President, Chief Executive Officer Officer, Director POWER OF ATTORNEY Each person whose signature appears appoints John D. McPhilimy as his agent and attorney-in-fact, with full power of substitution to execute for him and in his name, in any and all capacities, all amendments (including post-effective amendments) to this Registration Statement to which this power of attorney is attached. In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates stated. Signature Title Date --------- ----- ---- /s/ John D. McPhilimy President, Chief Executive April 11, 2000 - --------------------- Officer, Director John D. McPhilimy * Vice President, Chief April 11, 2000 - --------------------- Financial Officer, Roy D. Pringle Director, Secretary * Senior Vice President, Director April 11, 2000 - --------------------- Bruce D. Sandig * Director April 11, 2000 - --------------------- Susan A. Gunther /s/ John D. McPhilimy - --------------------- * By: John D. McPhilimy Attorney-in-Fact II-5 EX-4.12 2 12% CONVERTIBLE DEBENTURE THIS DEBENTURE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (II) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED UPON ANY DEBENTURE ISSUED IN EXCHANGE FOR THIS DEBENTURE. DIMENSIONAL VISIONS INCORPORATED 12% Convertible Debenture $_______________ Date: _____________ FOR VALUE RECEIVED, Dimensional Visions Incorporated, a Delaware corporation (the "Company") with its principal executive office at 2301 West Dunlap Avenue, Suite 207, Phoenix, Arizona 85021, promises to pay to the order of _______________________, ____________________, ____________________, _______ _______ (the "Payee" or the "Holder of this Debenture") or registered assigns on or before ______________ (the "Maturity Date"), the principal sum of _______________ Dollars ($___________) (the "Principal Amount"), in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, together with interest thereon at the rate of twelve (12%) percent per annum (the "Stated Rate"), payable as hereinafter set forth in cash, or at the option of the Holder of this Debenture, in the Company's Common Stock as provided in Section 4 hereof. Payment of the Principal Amount and interest shall be made at the address designated above or at such other place as the Payee shall have notified the Company in writing at least five (5) days before such payment is due. Payment by the Company pursuant to this Debenture shall be made without setoff or counterclaim and in immediately available funds. The amount of all repayments of principal, interest rates applicable thereto and interest accrued thereon shall be recorded on the records of the Payee and, prior to any transfer of, or any action to collect, this Debenture shall be endorsed on this Debenture. Any such recordation or endorsement shall constitute prima facie evidence of the accuracy of the information so recorded or endorsed, but the failure to record any such amount or rate shall not limit or otherwise affect the obligations of the Company hereunder to make payments of principal or interest when due. All payments by the Company hereunder shall be applied first to pay any interest which is due, but unpaid ("Accrued Interest"), then to reduce the Principal Amount. The Company (i) waives presentment, demand, protest, or notice of any kind in connection with this Debenture and (ii) agrees, in the event of an Event of Default (as defined in Section 2 hereof), to pay to the Holder of this Debenture, on demand, all costs and expenses (including reasonable legal fees) incurred in connection with the enforcement and collection of this Debenture. If the date for any payment due hereunder would otherwise fall on a day which is not a Business Day, such payment or expiration date shall be extended to the next following Business Day with interest payable at the applicable rate specified herein during such extension. "Business Day" shall mean any day other than a Saturday, Sunday, or any day which shall be in the State of Arizona a legal holiday or a day on which banking institutions are authorized by law to close. In the event that for any reason the Company shall fail to pay to the Holder of this Debenture when due all or any portion of the unpaid Accrued Interest or Principal Amount of this Debenture, interest shall accrue and be payable on such due but unpaid amounts at a rate per annum (the "Default Rate") equal to the Stated Rate plus three percent (3%) (but in no event higher than the maximum rate permitted by law) from the date when first due until and including the date when actually collected by the Holder of this Debenture but in no event later than ___________________. In consideration for the loan evidenced by this Debenture the Company shall issue to the Holders of this Debenture warrants to purchase ___________ shares of the Company's common stock, at an exercise price of ________ ($_____) per share (subject to adjustment) (the "Warrant"). 1. CONVERSION OF DEBENTURE. A. CONVERSION. This Debenture is convertible, in whole or in part, at the option of the Holder, into shares of the Company's common stock, par value $.001 (the "Common Stock") at any time prior to the repayment of this Debenture at the rate of One Dollar ($1.00) per share (the "Conversion Price") (i.e., one share of Common Stock for each One Dollar ($1.00) of principal amount converted) subject to adjustment as hereinafter provided. B. ADJUSTMENT BASED UPON STOCK DIVIDENDS, COMBINATION OF SHARES OR RECAPITALIZATION. In the event that the Company shall at any time (i) pay a stock dividend, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its shares of Common Stock any other special capital stock of the Company, the Holder, upon surrender of this Debenture for conversion, shall be entitled to receive the number of shares of Common Stock or other capital stock of the Company which he would have owned or have been entitled to receive after the happening of any of the events described above had this Debenture been converted immediately prior to the happening of such event. C. ADJUSTMENT BASED UPON MERGER OR CONSOLIDATION. In case of any consolidation or merger to which the Company is a party (other than a merger in which the Company is the surviving entity and which does not result in any reclassification of or change in the outstanding Common Stock of the Company), or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, the Holder shall have the right to convert this Debenture into the kind and amount of securities and property receivable upon such consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock into which such Debenture might have been converted immediately prior thereto. D. EXERCISE OF CONVERSION PRIVILEGE. The conversion privilege provided for herein shall be exercisable in whole or in part by the Holder by written notice to the Company and the surrender of this Debenture in exchange for up to the number of shares of Common Stock into which this Debenture is convertible based upon the Conversion Price. If the entire amount of this Debenture is not so exercised, the Company shall issue a new Debenture representing the remaining outstanding Principal Amount. E. CORPORATE STATUS OF SHARES TO BE ISSUED. All shares of the Company's Common Stock which may be issued upon the conversion of this Debenture shall, upon issuance, be fully paid and non-assessable. 2 F. ISSUANCE OF STOCK CERTIFICATE. Upon the conversion of this Debenture, the Company shall in due course issue to the Holder a certificate or certificates representing the number of shares of its Common Stock to which the conversion relates. G. Stamp Taxes, etc. The Company shall pay all documentary, stamp or other transactional taxes attributable to the issuance or delivery of the Common Stock upon conversion of this Debenture; provided, however, that the Company shall not be required to pay any taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificate for such Common Stock in a name other than that of the Holder of this Debenture and the Company shall not be required to issue or deliver any such certificate unless and until the person requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the Company's satisfaction that such tax has been paid. 2. EVENTS OF DEFAULT A. The term "Event of Default" shall mean any of the events set forth in this SECTION 2A: (a) NON-PAYMENT OF OBLIGATIONS. The Company shall default in the payment of the principal or accrued interest of this Debenture as and when the same shall become due and payable, including the aforementioned 90-day extension, whether by acceleration or otherwise. (b) BANKRUPTCY, INSOLVENCY, ETC. The Company shall: (i) become insolvent or generally fail or be unable to pay, or admit in writing its inability to pay, its debts as they become due; (ii) apply for, consent to, o acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Company or any of its property, or make a general assignment for the benefit of creditors; (iii) in the absence of such application, consent or acquiesce in, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Company or for any part of its property; (iv) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Company, and, if such case or proceeding is not commenced by the Company or converted to a voluntary case, such case or proceeding shall be consented to or acquiesced in by the Company or shall result in the entry of an order for relief; or (v) take any corporate or other action authorizing, or in furtherance of, any of the foregoing. (c) JUDGMENTS. A judgment which, with other such outstanding judgments against the Company and its subsidiaries (in each case to the extent not covered by insurance), exceeds an aggregate of One Hundred Thousand Dollars($100,000), shall be rendered against the Company or any subsidiary and, within fifteen (15) days after entry thereof, such judgment shall not have been 3 discharged or execution thereof stayed pending appeal, or, within fifteen (15) days after the expiration of any such stay, such judgment shall not have been discharged. B. ACTION IF BANKRUPTCY. If any Event of Default described in clauses (b)(i) through (v) of Section 2A shall occur, the outstanding principal amount of this Debenture and all other obligations hereunder shall automatically be and become immediately due and payable, without notice or demand. C. ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default (other than any Event of Default described in clauses (b)(i) through (v) of Section 2A) shall occur for any reason, whether voluntary or involuntary, and be continuing, the Holder of this Debenture may, upon notice to the Company, declare all or any portion of the outstanding principal amount of this Debenture together with interest accrued thereon to be due and payable and any or all other obligations hereunder to be due and payable, whereupon the full unpaid principal amount hereof, such accrued interest, and any and all other such obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand, or presentment. D. REMEDIES. Subject to the provisions of Section 2C and 3A hereof, in case any Event of Default shall occur and be continuing, the Holder of this Debenture may proceed to protect and enforce its rights by a proceeding seeking the specific performance of any covenant or agreement contained in this Debenture or the Security Agreement, or in aid of the exercise of any power granted in this Debenture or may proceed to enforce the payment of this Debenture or to enforce any other legal or equitable rights as such Holder. 3. AMENDMENTS AND WAIVERS. A. WAIVERS, AMENDMENTS, ETC. (a) The provisions of this Debenture may from time to time be amended, modified or waived, if such amendment, modification, or waiver is in writing and consented to by the Company and the holders of not less than 50% in principal amount of the Debentures (the "Required Holders"); provided, however, that no such amendment, modification or waiver: (i) which would modify this Section 3A, change the definition of "Required Holders", extend the Maturity Date, or subject the Payee under each Debenture to any additional obligations shall be made without the consent of the Payee of each Debenture, or (ii) which would reduce the amount of any payment or prepayment of principal of or interest on any principal amount payable hereunder (or reduce the principal amount of or rate of interest payable hereunder) shall be made without the consent of the Holder of each Debenture so affected. (b) No failure or delay on the part of the Payee in exercising any power or right under this Debenture shall not operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Company in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Payee shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder. 4 (c) To the extent that the Compan makes a payment or payments to the Payee, and such payment or payments or any part thereof are subsequently for any reason invalidated, set aside, and/or required to be repaid to a trustee, receiver, or any other party under any bankruptcy law, state or federal law, common law, or equitable cause, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. (d) After any waiver, amendment, or supplement under this section becomes effective, the Company shall mail to the Holders of the Debentures a copy thereof. 4. COMMON STOCK IN LIEU OF INTEREST. At the sole discretion of the Holder, the Holder may elect to receive one share of Common Stock for each one dollar of interest due to Holder on any Interest Payment Date (i.e., Common Stock at the rate of $1.00 per share) partially or entirely in lieu of cash payment of interest, by notifying the Company of its election to receive the Common Stock at least five (5) days prior to any Interest Payment Date. The number of shares of Common Stock so issued shall be subject to adjustment in accordance with Section 1B and 1C hereof. 5. MISCELLANEOUS. A. PARTIES IN INTEREST. All covenants, agreements, and undertakings in this Debenture binding upon the Company or the Payee shall bind and inure to the benefit of the successors and permitted assigns of the Company and the Payee, respectively, whether so expressed or not. (a) Registered Holder. The Company may consider and treat the person in whose name this Debenture shall be registered as the absolute owner thereof for all purposes whatsoever (whether or not this Debenture shall be overdue) and the Company shall not be affected by any notice to the contrary. In case of transfer of this Debenture by operation of law, the transferee agrees to notify the Company of such transfer and of its address, and to submit appropriate evidence regarding such transfer so that this Debenture may be registered in the name of the transferee. This Debenture is transferable only on the books of the Company by the Holder hereof, in person or by attorney, on the surrender hereof, duly endorsed. Communications sent to any registered owner shall be effective as against all Holders or transferees of the Debenture not registered at the time of sending the communication. B. Governing Law. This Debenture shall be governed by and construed in accordance with the laws of the State of Delaware without regard to any conflict provisions therein. C. Notices. Unless otherwise provided, all notices required or permitted under this Debenture shall be in writing and shall be deemed effectively given (i) upon personal delivery to the party to be notified, (ii) upon confirmed delivery by Federal Express or other nationally recognized courier service providing next-business-day delivery, or (iii) three (3) business days after deposit with the United States Postal Service, by registered or certified mail, postage prepaid and addressed to the party to be notified, in each case at the address set forth below, or at such other address as such party may designate by written notice to the other party (provided that notice of change of address shall be effective upon receipt by the party to whom such notice is addressed). 5 If sent to Payee, notices shall be sent to the following address: -------------------------------- -------------------------------- -------------------------------- If sent to the Company, notices shall be sent to the following address: Dimensional Visions Incorporated 2301 West Dunlap Avenue Suite 207 Phoenix, Arizona 85201 John D. McPhilimy, President D. WAIVER OF JURY TRIAL. THE PAYEE AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS DEBENTURE OR ANY OTHER DOCUMENT OR INSTRUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE PAYEE OR THE COMPANY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE'S EXTENDING CREDIT PURSUANT TO THIS DEBENTURE. IN WITNESS WHEREOF, this Debenture has been executed and delivered on the date specified above by the duly authorized representative of the Company. DIMENSIONAL VISIONS INCORPORATED By: ------------------------------------- John D. McPhilimy President 6 EX-5 3 OPINION & CONSENT OF HORWITZ & BEAM [LETTERHEAD OF HORWITZ & BEAM] February 10, 2000 DIMENSIONAL VISIONS INCORPORATED Ladies and Gentlemen: This office represents Dimensional Visions Incorporated, a Delaware corporation (the "Registrant") in connection with the Registrant's Registration Statement on Form SB-2 under the Securities Act of 1933 (the "Registration Statement"), which relates to the sale of 13,542,474 shares of the Registrant's Common Stock (the "Shares" or the "Registered Securities") by certain beneficial owners of the Company's shares. In connection with our representation, we have examined such documents and undertaken such further inquiry as we consider necessary for rendering the opinion hereinafter set forth. Based upon the foregoing, it is our opinion that the Registered Securities, when sold as set forth in the Registration Statement, will be legally issued, fully paid and nonassessable. We acknowledge that we are referred to under the heading "Legal Matters" in the prospectus which is a part of the Registration Statement, and we hereby consent to such use of our name in such Registration Statement and to the filing of this opinion as Exhibit 5 to the Registration Statement and with such state regulatory agencies in such states as may require such filing in connection with the registration of the Registered Securities for offer and sale in such states. HORWITZ & BEAM /s/ Horwitz & Beam EX-24.2 4 CONSENT OF GITOMER & BERENHOLZ, P.C. INDEPENDENT AUDITORS' CONSENT We consent to the use of our report dated October 7, 1999, in the Registration Statement on Form SB-2 of Dimensional Visions Incorporated appearing in the prospectus which is part of this Registration Statement. We also consent to the reference to us under the headings "Selected Financial Data" and "Experts" in such prospectus. /s/ Gitomer & Berenholz, P.C. GITOMER & BERENHOLZ, P.C. Huntingdon Valley, Pennsylvania Dated: April 12, 2000 EX-27 5 FINANCIAL DATA SCHEDULE
5 U.S. DOLLARS 6-MOS JUN-30-2000 JUL-01-1999 DEC-31-1999 1 573,802 0 281,975 53,333 2,128 814,275 451,840 297,500 1,021,112 637,797 0 0 1,571,521 6,026 (1,584,423) 1,021,112 300,418 300,418 193,261 193,261 451,096 0 120,196 (459,051) 0 0 0 0 0 (459,051) (0.09) 0
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