-----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, TswMEw7WpbFlm/K2OBLDEP6XAkkmWZ2zROT/JCRq3Yg6kimsf+a9ITg9a1LNYuCN P4NSkpSUP4NIVLQ6UQDojw== /in/edgar/work/20000816/0000899243-00-001986/0000899243-00-001986.txt : 20000922 0000899243-00-001986.hdr.sgml : 20000922 ACCESSION NUMBER: 0000899243-00-001986 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000609 ITEM INFORMATION: FILED AS OF DATE: 20000816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZYDECO ENERGY INC CENTRAL INDEX KEY: 0000908246 STANDARD INDUSTRIAL CLASSIFICATION: [1311 ] IRS NUMBER: 760404904 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-22076 FILM NUMBER: 704051 BUSINESS ADDRESS: STREET 1: 635 WEST CAMPBELL RD STREET 2: SUITE 130 CITY: RICHARDSON STATE: TX ZIP: 75080 BUSINESS PHONE: 7136592222 MAIL ADDRESS: STREET 1: 1710 TWO ALLEN CENTER STREET 2: 1200 SMITH STREET CITY: HOUSTON STATE: TX ZIP: 77002-4312 FORMER COMPANY: FORMER CONFORMED NAME: TN ENERGY SERVICES ACQUISITION CORP DATE OF NAME CHANGE: 19930701 8-K/A 1 0001.txt FORM 8-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A-1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 16, 2000 (JUNE 9, 2000) ZYDECO ENERGY, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 0-22076 76-0404904 (STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER OF INCORPORATION) IDENTIFICATION NO.) 635 WEST CAMPBELL ROAD, SUITE 130 RICHARDSON, TEXAS 75080 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (972)783-0284 This Form 8-K/A-1 amends Item 7 of the Form 8-K of Zydeco Energy, Inc. ("Zydeco") filed on June 19, 2000 by supplying certain financial information regarding the acquisition of DataVoN Inc. ("DataVoN") by Zydeco on June 9, 2000. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements The required financial statements of DataVoN (except for the financial statements of DataVoN for the three months ended March 31, 2000 and 1999, which are attached hereto as Annex A, and incorporated herein by reference) were previously filed. (b) Pro Forma Financial Information The pro forma financial information of Zydeco, attached hereto as Annex B, give effect to the acquisition by Zydeco of DataVoN, and are incorporated herein by reference. (c) Exhibits 3.1 Certificate of Designations of Series A Convertible Preferred Stock of Zydeco (incorporated by reference to Form 8-K (File No. 0-22076) filed with the SEC on June 19, 2000). 10.1 Agreement and Plan of Merger among Zydeco Energy, Inc., DVN Acquisition Corporation and DataVoN Inc. dated as of May 23, 2000 (incorporated by reference to Form 8-K (File No. 0-22076) filed with the SEC on May 24, 2000). 99.1 Press Release of Zydeco Energy, Inc. dated May 23, 2000 (incorporated by reference to Form 8-K (File No. 0-22076) filed with the SEC on May 24, 2000). 99.2 Press Release of Zydeco Energy, Inc. dated June 9, 2000 (incorporated by reference to Form 8-K (File No. 0-22076) filed with the SEC on June 19, 2000). 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Zydeco Energy, Inc. By: /s/ Hugh D. Simpson ------------------------------------- Hugh D. Simpson President and Chief Executive Officer Date: August 16, 2000 3 ANNEX A 4 DATAVON INC. (Formerly HR Partners, Inc.) Balance Sheets (Unaudited)
MARCH 31, DECEMBER 31, ASSETS 2000 1999 ---------------- ---------------- Current assets: Cash and cash equivalents $ 1,234,549 394,740 Certificates of deposit 96,290 -- Accounts receivable 12,000 621,535 Vendor deposit 212,009 360,000 Deferred tax asset 67,390 16,947 Prepaid expenses 143,090 -- Other 15,234 29,889 ---------------- ---------------- Total current assets 1,780,562 1,423,111 Certificates of deposit -- 96,290 Property and equipment, net 653,061 147,845 ---------------- ---------------- $ 2,433,623 1,667,246 ================ ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of note payable for equipment 474,908 -- Accounts payable 518,358 305,375 Unearned revenue 495,503 493,882 Accrued liabilities and other 262,020 326,108 Customer deposit 38,800 360,000 Current installments of obligations under capital leases 21,086 22,432 ---------------- ---------------- Total current liabilities 1,810,675 1,507,797 Note payable for equipment, excluding current portion $ 44,010 -- Obligations under capital leases, excluding current installments 58,824 61,049 ---------------- ---------------- Total liabilities 1,913,509 1,568,846 Stockholders' equity: Common stock, no par value; 1,000,000 shares authorized, issued and outstanding in 2000 and 1999 1,000 1,000 Additional paid in capital 366,867 -- Retained earnings 152,247 97,400 ---------------- ---------------- Total stockholders' equity 520,114 98,400 Contingency (note 5) ---------------- ---------------- $ 2,433,623 1,667,246 ================ ================
See accompanying notes to financial statements. 5 DATAVON INC. (Formerly HR Partners, Inc.) Statements of Income (Unaudited)
Three Months Ended March 31, 2000 1999 ----------------- ------------------ Net service revenue 2,503,202 1,656,091 Operating expenses: Cost of services 1,244,690 1,136,153 Selling and marketing 7,631 266,459 General and administrative 344,685 93,991 Amortization of unearned stock compensation 366,867 -- Depreciation and amortization 14,360 4,018 ----------------- ------------------ Total operating expenses 1,978,233 1,500,621 ----------------- ------------------ Operating income 524,969 155,470 Interest income 8,872 -- Interest expense 7,802 101 ----------------- ------------------ Income before state income tax 526,039 155,369 State income tax 23,745 6,990 ----------------- ------------------ Net income $ 502,294 148,379 ================= ================== Net income per common share: Basic and diluted $ 0.50 0.15 ================= ================== Weighted average common shares outstanding: Basic 1,000,000 1,000,000 ================= ================== Diluted 1,006,245 1,000,000 ================= ================== Pro forma data (note 3): Income taxes $ 194,525 57,440 ----------------- ------------------ Net income $ 331,514 97,929 ================= ================== Net income per common share: Basic and diluted $ 0.01 -- ================= ================== Weighted average common shares outstanding: Basic 39,813,855 39,813,855 ================= ================== Diluted 40,062,493 39,813,855 ================= ==================
See accompanying notes to financial statements. 6 DATAVON INC. (Formerly HR Partners, Inc.) Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 2000 1999 -------------- --------------- Cash flows from operating activities: Net income $ 502,294 148,379 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,360 4,018 Amortization of unearned stock compensation 366,867 -- Deferred tax benefit (50,443) -- Changes in operating assets and liabilities: Accounts receivable 609,535 (28,272) Customer deposit (321,200) -- Accounts payable and accrued liabilities 166,104 165,811 Unearned revenue 1,621 (65,526) Vendor deposit 147,991 -- Prepaid expenses (143,090) -- Other current assets 14,655 (16,399) -------------- --------------- Net cash provided by operating activities 1,308,694 208,011 -------------- --------------- Cash flows from investing activities: Capital expenditures (17,867) (1,861) -------------- --------------- Net cash used in investing activities (17,867) (1,861) -------------- --------------- Cash flows from financing activities: Proceeds from notes payable to related parties -- 9,997 Principal payments on obligations under capital leases (3,571) -- Payments of dividends (447,447) (178,669) -------------- --------------- Net cash used in financing activities (451,018) (168,672) -------------- --------------- Net increase in cash and cash equivalents 839,809 37,478 Cash and cash equivalents at beginning of period 394,740 159,996 -------------- --------------- Cash and cash equivalents at end of period 1,234,549 197,474 ============== =============== Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 1,205 -- ============== =============== Supplemental disclosure of noncash investing and financing activities: Purchase of equipment in exchange for note payable $ 518,918 -- ============== ===============
See accompanying notes to financial statements. 7 DataVoN Inc. (Formerly HR Partners, Inc.) Notes to Financial Statements March 31, 2000 and 1999 (Unaudited) (1) Description of Business and Basis of Financial Reporting DataVoN Inc. (DataVoN) was formed in November 1997 for the purpose of becoming a provider of high-quality Internet Protocol (IP) bandwidth capacity to a number of major domestic and international carriers and IP providers desiring to employ the benefits of Voice over Internet Protocol (VoIP) technology as well as other enhanced IP services. DataVoN began operations in January 1998. DataVoN changed its name from HR Partners, Inc. to DataVoN Inc. in January 2000. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting solely of normal recurring adjustments) considered necessary to present fairly the financial position, results of operations and cash flows of DataVoN. Interim period results are not necessarily indicative of the results to be achieved for an entire year. These interim unaudited financial statements should be read in conjunction with the audited financial statements of DataVoN for the year ended December 31, 1999 included in the Form 8-K filed by Zydeco Energy, Inc. with the Securities and Exchange Commission on June 19, 2000. (2) Stock Compensation In March 2000, DataVoN adopted a stock option plan. Under the plan, DataVoN may grant to officers, directors, consultants and employees options to purchase shares of DataVoN's common stock. In March 2000, DataVoN increased its authorized common stock to 1,100,000 shares, and granted options to purchase 63,356 shares of its common stock with an exercise price of $19.50 per share. These options have a 10 year life and vest over a three year period, subject to certain exceptions. Stock compensation totaling approximately $5.2 million is being recognized over the vesting period. 8 DataVoN Inc. (Formerly HR Partners, Inc.) Notes to Financial Statements March 31, 2000 and 1999 (Unaudited) (3) Subsequent Event On June 9, 2000, DataVoN merged (the Merger) with Zydeco Energy, Inc. (Zydeco), a public company. Shareholders of DataVoN received shares of Zydeco equal to a majority of the shares of Zydeco outstanding after the transaction. Accordingly, the business combination will be accounted for as a reverse acquisition of Zydeco by DataVoN using the purchase method. Accordingly, the historical financial statements of DataVoN prior to the Merger will become the financial statements of the registrant, and the results of operations of Zydeco will be combined with DataVoN concurrent with the Merger. The purchase price is approximately $28 million, a substantial portion of which is goodwill that will be amortized to expense over a five year period. In connection with the Merger, DataVoN merged into a C corporation. The unaudited pro forma income statement data for the three months ended March 31, 2000 and 1999 are based upon the historical income statements and give effect to pro forma income taxes as if DataVoN was a C corporation for the entire duration of both periods. In connection with the Merger, DataVoN's shareholders received 32,623,855 shares of common stock and 7,190 shares of preferred stock of Zydeco. The preferred shares will automatically convert into 7,190,000 common shares when sufficient additional common shares of Zydeco are authorized by its stockholders, and vote with the Zydeco common shares on an as if converted basis on all matters, except as required by law. Pro forma weighted average common shares outstanding during the periods presented have been adjusted based on the share conversion ratio used in the Merger. The preferred shares are included in pro forma weighted average common shares outstanding during the periods presented for both basic and diluted net income per share on an as if converted basis since DataVoN's shareholders currently have the ability to authorize sufficient additional common shares of Zydeco and the shareholder authorization is essentially a formality. (4) Note payable In March 2000, the Company entered into a note payable arrangement with a vendor for the purchase of equipment. The note bears interest at 9% and requires monthly payments of $44,010 through April 1, 2001. (5) Contingency DataVoN is currently involved in litigation with a former sales agent in regards to commissions allegedly owed to the former commissioned agent by DataVoN. DataVoN has countersued the former agent for $230,000 owed by the former agent to DataVoN. The litigation is in its early stages and no determination of the 9 DataVoN Inc. (Formerly HR Partners, Inc.) Notes to Financial Statements March 31, 2000 and 1999 (Unaudited) outcome is possible at this time. The former agent alleges maximum economic damages of approximately $4 million. Management of DataVoN is vigorously defending against this claim. No reserve for the claim, or receivable for the counterclaim, has been established for this litigation as of March 31, 2000. 10 ANNEX B 11 ZYDECO ENERGY, INC. AND SUBSIDIARIES Introduction to Unaudited Pro Forma Combined Financial Information On June 9, 2000, DataVoN merged with Zydeco. Under the terms of the merger, each outstanding share of DataVoN common stock was converted into 39.81385 shares of Zydeco common stock. A portion of DataVoN common stock has initially been converted into shares of Zydeco convertible preferred stock. This preferred stock has voting rights equivalent to the number of common shares into which it is convertible and will automatically convert into common shares upon shareholder approval to increase the number of authorized Zydeco common shares. Zydeco intends to issue a proxy statement in the near term to obtain shareholder approval to increase its authorized common shares. Zydeco will be the surviving legal entity in the merger. However, for accounting purposes, DataVoN is deemed to be the acquiror and, accordingly, the merger will be accounted for as a "reverse acquisition" of Zydeco under the purchase method of accounting. Under this method of accounting, the combined company's historical results of operation for periods prior to the merger will be DataVoN's historical results. On the date of the merger, the assets and liabilities of Zydeco are recorded at their estimated fair values, with the preponderance of the purchase price allocated to goodwill. The pro forma adjustments are based on preliminary estimates. The actual allocation of the purchase price may differ from that reflected in the unaudited pro forma combined financial information upon completion of the analysis of the fair values of the assets acquired and liabilities assumed. The following unaudited pro forma combined financial information gives effect to the merger of Zydeco and DataVoN as if the transaction had occurred on March 31, 2000, for purposes of the unaudited pro forma combined balance sheet, and on January 1, 1999 for purposes of the unaudited pro forma combined statements of operations. Such information is derived from and should be read in conjunction with, the separate historical financial statements of Zydeco and DataVoN as filed with the Securities and Exchange Commission. The unaudited pro forma combined financial information does not purport to be indicative of the results of operations or financial position which actually would have occurred if the merger had been consummated at January 1, 1999 or as of March 31, 2000, or of the results of operations or financial position which may be obtained in the future. The combined company has a significant amount of goodwill that will be subject to an impairment test. As a result, an impairment of goodwill may be required in the near term, and if so required, could be material to results of operations and financial condition. 12 ZYDECO ENERGY, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED BALANCE SHEET MARCH 31, 2000
Pro Forma Pro Forma DataVoN Zydeco Adjustments Combined --------------------------------------------------------------------- [Note 1] Current assets: Cash and cash equivalents $ 1,234,549 684,613 - 1,919,162 Certificates of deposit 96,290 - - 96,290 Accounts receivable 12,000 8,935 - 20,935 Vendor deposit 212,009 - - 212,009 Deferred tax asset 67,390 - 491,876 (d) 559,266 Prepaid expenses 143,090 - - 143,090 Other 15,234 73,923 - 89,157 ---------------------------------------------------------------------- Total current assets 1,780,562 767,471 491,876 3,039,909 Property and equipment, net 653,061 899,055 (599,083) (b) 953,033 Investment in Wavefield Imaging Technology - 654,914 - 654,914 Goodwill - - 26,573,488 (b) 26,573,488 Other assets - 113,470 - 113,470 ---------------------------------------------------------------------- 653,061 1,667,439 25,974,405 28,294,905 ---------------------------------------------------------------------- $ 2,433,623 2,434,910 26,466,281 31,334,814 ====================================================================== Current liabilities: Current portion of note payable for equipment $ 474,908 -- -- 474,908 Accounts payable 518,358 244,554 170,000 (b) 932,912 Unearned revenue 495,503 - - 495,503 Accrued liabilities and other 262,020 32,061 - 294,081 Customer deposit 38,800 - - 38,800 Current installments of obligations under capital leases 21,086 - - 21,086 ---------------------------------------------------------------------- Total current liabilities 1,810,675 276,615 170,000 2,257,290 Note payable for equipment, excluding current portion 44,010 - - 44,010 Obligations under capital leases, less current installments 58,824 - - 58,824 ---------------------------------------------------------------------- Total liabilities 1,913,509 276,615 170,000 2,360,124 ---------------------------------------------------------------------- Stockholders' equity: Convertible preferred stock - - 7 (c) 7 Common stock 1,000 11,338 (11,338) (a) 43,962 42,962 (c) Additional Paid in Capital 366,867 24,531,668 (24,531,668) (a) 28,932,020 644,123 (d) (41,670) (c) 27,962,700 (b) Unrealized loss on investments - (22,445) 22,445 (a) - Retained earnings (deficit) 152,247 (21,898,114) 21,898,114 (a) - (152,247) (d) Less: Treasury stock - (464,152) 464,152 (a) (1,299) (1,299) (c) ---------------------------------------------------------------------- Total stockholders' equity 520,114 2,158,295 26,296,281 28,974,690 ---------------------------------------------------------------------- $ 2,433,623 2,434,910 26,466,281 31,334,814 ======================================================================
See accompanying notes to unaudited proforma combined financial information. 13 ZYDECO ENERGY, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
PRO FORMA PRO FORMA DATAVON ZYDECO ADJUSTMENTS COMBINED -------------------------------------------------------------------- [Note 2] Revenues: Net service revenue $ 2,503,202 - - 2,503,202 Oil and gas sales - 21,169 - 21,169 -------------------------------------------------------------------- Total revenues 2,503,202 21,169 - 2,524,371 -------------------------------------------------------------------- Operating expeneses: Exploration expenses: Geological and geophysical - (506) - (506) Dry hole and other costs - 267 - 267 Production costs - 3,871 - 3,871 Cost of services 1,244,690 - - 1,244,690 Selling and marketing 7,631 - - 7,631 Research and development - (187) - (187) General and administrative 711,552 147,730 - 859,282 Depreciation, depletion and amortization 14,360 18,668 1,328,674 (a) 1,361,702 -------------------------------------------------------------------- Total operating expenses 1,978,233 169,843 1,328,674 3,476,750 -------------------------------------------------------------------- Operating income (loss) 524,969 (148,674) (1,328,674) (952,379) Interest income 8,872 14,404 - 23,276 Interest expense 7,802 - - 7,802 -------------------------------------------------------------------- Income before income taxes 526,039 (134,270) (1,328,674) (936,905) Income taxes 23,745 - 125,128 (b) 148,873 -------------------------------------------------------------------- Net income (loss) $ 502,294 (134,270) (1,453,802) (1,085,778) ==================================================================== Net income (loss) per common share: Basic $ 0.50 (0.01) (0.02) ============================ =========== Diluted $ 0.50 (0.01) (0.02) ============================ =========== Weighted average common shares outstanding: Basic 1,000,000 10,044,096 49,857,951 (c) ============================ =========== Diluted 1,006,245 10,044,096 49,857,951 (c) ============================ ===========
See accompanying notes to unaudited proforma combined financial information. 14 ZYDECO ENERGY, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999
Pro Forma Pro Forma DataVoN Zydeco Adjustments Combined ---------------------------------------------------------------- [Note 2] Revenues: Net service revenue $ 8,273,472 - - 8,273,472 Oil and gas sales - 187,366 - 187,366 Gain on sales of properties - 136,130 - 136,130 Other - 14,625 - 14,625 ------------------------------------------------------------- Total revenues 8,273,472 338,121 - 8,611,593 ------------------------------------------------------------- Operating expenses: Exploration expenses: Geological and geophysical - 170,885 - 170,885 Impairment of unproved properties - 750,000 - 750,000 Dry hole and other costs - 1,369,053 - 1,369,053 Production costs - 18,453 - 18,453 Cost of services 6,059,472 - - 6,059,472 Impairment of Investment in Wavefield Imaging Technology - 200,000 - 200,000 Selling and marketing 692,525 - - 692,525 Research and development - 157,909 - 157,909 General and administrative 673,880 679,003 - 1,352,883 Depreciation, depletion and amortization 16,072 316,705 5,314,696 (a) 5,647,473 ------------------------------------------------------------- Total operating expenses 7,441,949 3,662,008 5,314,696 16,418,653 ------------------------------------------------------------- Operating income (loss) 831,523 (3,323,887) (5,314,696) (7,807,060) Interest income 33,509 49,485 - 82,994 Interest expense 21,729 124 - 21,853 ------------------------------------------------------------- Income (loss) before income taxes and extraordinary item 843,303 (3,274,526) (5,314,696) (7,745,919) Income taxes 37,356 - - (b) 37,356 ------------------------------------------------------------- Income (loss) before extraordinary item $ 805,947 (3,274,526) (5,314,696) (7,783,275) ============================================================= Income (loss) before extraordinary item per common share --basic and diluted $ 0.81 (0.32) (0.16) ============================== ============= Weighted average common shares outstanding --basic and diluted 1,000,000 10,345,096 50,158,951 (c) ============================== =============
See accompanying notes to unaudited proforma combined financial information. 15 ZYDECO ENERGY, INC. AND SUBSIDIARIES Notes to Unaudited Pro Forma Combined Financial Information 1. Unaudited Pro Forma Combined Balance Sheet Adjustments The following summarizes the unaudited pro forma balance sheet adjustments: a. This adjustment records the elimination of Zydeco's historical stockholders' equity. b. This adjustment records the reverse acquisition of Zydeco by DataVoN. The purchase price of $28.1 million includes (a) the fair value of Zydeco's outstanding common shares based on the five-day average traded market price of $2.5313 for Zydeco common stock with May 23, 2000, the date the merger was agreed and announced, as the midpoint, (b) the fair value of Zydeco's outstanding warrants and options and (c) the estimated merger costs. c. This adjustment records the recapitalization of DataVoN based on the par value of Zydeco capital stock. d. This adjustment records the elimination of DataVoN's retained earnings and establishment of deferred income taxes since, as a result of the merger, DataVoN converted from an S corporation to a C corporation. The deferred tax asset of $491,876 recognized has been recorded directly to the combined company's additional paid-in capital for pro forma purposes. This amount will be recognized in the historical statement of operations as a deferred tax benefit in the period that includes the consummation date. 2. Unaudited Pro Forma Combined Statements of Operations Adjustments The following summarizes the unaudited pro forma statements of operations adjustments: a. This adjustment records the effect on deprecation and amortization of the balance sheet adjustments discussed in Note. 1.b. above. The goodwill will be amortized over five years. b. This adjustment recognizes consolidated federal income tax expense of the combined company, including the effects of treating DataVoN's results as a C corporation. For the year ended December 31, 1999, no pro forma adjustment is provided because of the book loss that exists after the add- back of nondeductible goodwill amortization. 16 ZYDECO ENERGY, INC. AND SUBSIDIARIES Notes to Unaudited Pro Forma Combined Financial Information c. Weighted average shares outstanding on a pro forma basis is based on the exchange ratio of 39.81385 shares of Zydeco common stock for each share of DataVoN common stock outstanding. The shares of Zydeco convertible preferred stock are included in both the basic and diluted loss per share computations based on the 7,190,000 shares of Zydeco common shares the preferred stock is automatically converted into when sufficient additional common shares are authorized by the combined company's shareholders. The inclusion is based on the fact that the former DataVoN shareholders currently have the ability to authorize sufficient additional common shares of Zydeco and the stockholders' authorization is essentially a formality. 17 -----END PRIVACY-ENHANCED MESSAGE-----