Attached files
| file | filename |
|---|---|
| EX-23.1 - EXHIBIT 23.1 - NUMEREX CORP /PA/ | ex23-1.htm |
| 8-K/A - FORM 8-K (AMENDMENT NO. 1) - NUMEREX CORP /PA/ | t79781_8ka.htm |
| EX-99.3 - EXHIBIT 99.3 - NUMEREX CORP /PA/ | ex99-3.htm |
| EX-99.1 - EXHIBIT 99.1 - NUMEREX CORP /PA/ | ex99-1.htm |
Exhibit 99.2
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
OMNILINK SYSTEMS INC. AND SUBSIDIARY
Index to Consolidated Financial Statements
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Unaudited Condensed Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013
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1 |
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Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013
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2 |
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Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013
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3 |
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Unaudited Notes to the Condensed Consolidated Financial Statements
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4 |
OMNILINK SYSTEMS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
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March 31,
2014 |
December 31, 2013
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ASSETS
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||||||||
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CURRENT ASSETS
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||||||||
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Cash and cash equivalents
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166,326 | 269,548 | ||||||
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Accounts receivable, less allowance for doubtful accounts of
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||||||||
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$212,760 and $188,069
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2,321,760 | 3,016,705 | ||||||
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Inventories
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986,288 | 918,553 | ||||||
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Prepaid expenses and other current assets
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598,117 | 445,991 | ||||||
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Deferred costs
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210,000 | 154,693 | ||||||
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TOTAL CURRENT ASSETS
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4,282,491 | 4,805,490 | ||||||
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Property and equipment, net of accumulated depreciation and
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amortization of $8,306,728 and $8,174,612
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1,714,783 | 1,419,031 | ||||||
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Patents, net of acummulated amortization of $16,086 and $13,746
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257,379 | 253,602 | ||||||
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Other non-current assets
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96,246 | 90,640 | ||||||
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TOTAL ASSETS
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$ | 6,350,899 | $ | 6,568,763 | ||||
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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||||||||
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CURRENT LIABILITIES
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Accounts payable
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$ | 1,826,390 | $ | 1,969,482 | ||||
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Accrued expenses
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777,420 | 985,142 | ||||||
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Deferred revenue
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277,384 | 272,572 | ||||||
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Line of credit
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960,926 | 1,670,150 | ||||||
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Long-term debt - current portion
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800,000 | 800,004 | ||||||
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TOTAL CURRENT LIABILITIES
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4,642,119 | 5,697,350 | ||||||
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Long-term debt, net of current portion
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2,384,819 | 1,266,656 | ||||||
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Deferred rent
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160,368 | 169,604 | ||||||
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TOTAL LIABILITIES
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7,187,306 | 7,133,610 | ||||||
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COMMITMENTS AND CONTINGENCIES
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REDEEMABLE
PREFERRED STOCK
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Redeemable preferred stock - Series B-2, $0.00002 par value;
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14,000,000 shares authorized; 13,046,530 shares issed and
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outstanding at March 31, 2014 and December 31, 2013;
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liquidation preference of $2,160,000 as of March 31, 2014
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and December 31, 2013
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2,160,000 | 2,160,000 | ||||||
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Redeemable preferred stock - Series B-1, $0.00002 par value;
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35,000,000 shares authorized; 32,864,988 shares issed and
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outstanding at March 31, 2014 and December 31, 2013;
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liquidation preference of $5,569,038 as of March 31, 2014
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and December 31, 2013
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5,569,038 | 5,569,038 | ||||||
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Redeemable preferred stock - Series B, $0.00002 par value;
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15,000,000 shares authorized; 14,243,934 shares issed and
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outstanding at March 31, 2014 and December 31, 2013;
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liquidation preference of $10,881,545 as of March 31, 2014
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and December 31, 2013
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10,923,252 | 10,923,252 | ||||||
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Preferred stock - Series A, $0.00002 par value 3,000,000 shares
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authorized; 2,903,207 shares issued and outstanding at March
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31, 2014 and December 31, 2013; liquidation preference of
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$621,286 as of March 31, 2014 and December 31, 2013
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664,891 | 664,891 | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
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Common stock, $0.00002 par value; 150,000,000 shares
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authorized; 20,544,090 and 19,872,590 shares issued and
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outstanding at March 31, 2014 and Decmber 31, 2013
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480 | 480 | ||||||
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Treasury stock - common, at cost, 671500 shares at March
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31, 2014 and December 31, 2013
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(66,001 | ) | (66,001 | ) | ||||
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Additional paid-in capital
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4,513,607 | 4,507,591 | ||||||
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Accumulated deficit
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(24,601,674 | ) | (24,324,098 | ) | ||||
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TOTAL
REDEEMABLE PREFERRED STOCK STOCKHOLDERS’ DEFICIT
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(836,407 | ) | (564,847 | ) | ||||
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TOTAL
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
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$ | 6,350,899 | $ | 6,568,763 | ||||
The accompanying notes are an integral part of these financial statements
| Page 1 |
OMNILINK SYSTEMS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
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Three Months Ended
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March 31,
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2014
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2013
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Revenue
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$ | 2,844,509 | $ | 3,374,277 | ||||
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Cost of revenue
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1,128,858 | 1,157,939 | ||||||
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Gross profit
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1,715,651 | 2,216,338 | ||||||
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Operating expenses (income):
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Sales and marketing
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201,997 | 239,931 | ||||||
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Research and development
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659,821 | 831,269 | ||||||
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General and administrative
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1,078,107 | 1,062,869 | ||||||
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Gain on sale of monitoring equipment
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(37,835 | ) | (74,564 | ) | ||||
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Total operating expenses
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1,902,090 | 2,059,505 | ||||||
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Operating (loss) income
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(186,439 | ) | 156,833 | |||||
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Interest expense
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91,135 | 42,724 | ||||||
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Net (loss) income
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$ | (277,574 | ) | $ | 114,109 | |||
The accompanying notes are an integral part of these financial statements
| Page 2 |
OMNILINK SYSTEMS, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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Three Months Ended
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March 31,
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2014
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2013
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Cash flows from operating activities:
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Net (loss) income
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$ | (277,574 | ) | $ | 114,109 | |||
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Adjustments to reconcile net income (loss) to net cash
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used in operating activities:
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Provision for bad debt
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30,000 | 30,000 | ||||||
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Depreciation and amortization
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202,954 | 153,218 | ||||||
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Stock-based compensation
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6,016 | 14,784 | ||||||
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Gain on sale of asset
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(37,835 | ) | (74,564 | ) | ||||
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Deferred rent adjustment
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(9,236 | ) | 8,705 | |||||
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Changes in assets and liabilities:
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Accounts receivable
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664,945 | (586,354 | ) | |||||
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Inventories
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(67,735 | ) | (17,085 | ) | ||||
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Prepaid
expenses and other assets
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(213,040 | ) | (125,222 | ) | ||||
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Accounts payable
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(143,092 | ) | 27,286 | |||||
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Accrued expenses
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110,443 | 17,700 | ||||||
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Deferred revenue
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4,812 | 115,863 | ||||||
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Net
cash used in operating activities
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270,658 | (321,560 | ) | |||||
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Cash flows from investing activities
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Sale of equipment
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40,103 | 79,038 | ||||||
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Purchase of property and equipment
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(498,636 | ) | (134,742 | ) | ||||
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Development of patents
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(6,117 | ) | (13,285 | ) | ||||
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Net cash used in investing activities
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(464,650 | ) | (68,989 | ) | ||||
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Cash flows from financing activities
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Borrowings on long-term debt
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1,000,000 | - | ||||||
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Payments made on long term debt
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(200,001 | ) | (200,001 | ) | ||||
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Net borrowings on line of credit
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(709,229 | ) | 356,833 | |||||
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Net cash provided by financing activities
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90,770 | 156,832 | ||||||
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Net decrease in cash and cash equivalents
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(103,222 | ) | (233,717 | ) | ||||
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Cash and cash equivalents, beginning of the year
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269,548 | 251,087 | ||||||
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Cash and cash equivalents, end of period
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$ | 166,326 | $ | 17,370 | ||||
The accompanying notes are an integral part of these financial statements.
| Page 3 |
OMNILINK SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Omnilink Systems, Inc. (the “Company,” “our,” “we”) is a leader in the location based services industry. The Company’s judicial and commercial solutions provide the real-time location of people and valuable assets through a unique combination of cellular and global positioning satellite (GPS) technology. Through this technological advance, our solutions can locate people or assets even in situations where GPS alone does not work. Omnilink judicial solutions are used by government agencies and community corrections organizations across the country to monitor the location of offenders in alternative sanctions programs. With our single-unit monitoring device, officers can even assign “mobile exclusion zones” that send alerts if offenders get too close to victims or criminal cohorts. Our commercial solutions provide the real-time location of people, such as Alzheimer patients or lone workers, and assets, such as vehicles and bank bags, when their safety and security are of paramount importance. While most of our arrangements are not contractually long-term in nature, low customer turnover and increasing numbers of deployed devices have created a base of recurring revenue.
We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the Rules and Regulations issued by the Securities and Exchange Commission, or SEC, as applicable. These financial statements include all of our accounts and those of our wholly-owned subsidiaries. We have eliminated intercompany transactions and balances in consolidation.
Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted, although we believe that the disclosures made are adequate to make the information not misleading. In the opinion of management, the accompanying financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, considered necessary for a fair presentation of our financial position as of March 31, 2014 and our operating results and cash flows for the interim periods presented. The accompanying condensed consolidated balance sheet as of December 31, 2013 was derived from our audited financial statements, but does not include all disclosures required by GAAP. The financial information presented herein should be read in conjunction with our audited financial statements for the year ended December 31, 2013 which includes information and disclosures not included in these condensed consolidated financial statements.
The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual results may differ materially from these estimates. Operating results for the three months ended March 31, 2014 may not be indicative of the results that may be expected for the year ending December 31, 2014 or any future periods.
NOTE B – INVENTORY
Inventory consisted of the following:
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March 31,
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December 31,
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2014
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2013
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Work-in-progress
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$ | 77,811 | $ | 77,997 | ||||
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Finished goods
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908,477 | 840,556 | ||||||
| $ | 986,288 | $ | 918,553 | |||||
| Page 4 |
OMNILINK SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE C – SUBSEQUENT EVENTS
On May 5, 2014, we closed on a merger with Numerex Corp. (“Numerex”), a leading provider of interactive and on-demand machine-to-machine (referred to as M2M), technology and service, offered on a subscription basis, used in the development and support of M2M solutions for the consumer, enterprise and government markets worldwide and enabling the Internet of Things (IoT). For the year ended December 31, 2013, Numerex generated total sales of $77.8 million, which included subscription based revenues of $51.6 million, and the sale of M2M devices and hardware of $26.2 million. Our technology, product offerings, and strategic alliances in the fast-growing security and safety, tracking and monitoring market segments will improve Numerex’s competitive position. The acquisition will also enable synergistic growth opportunities in the commercial, government and consumer markets. The sale price paid by Numerex was equal to $37.5 million in cash (subject to the adjustments set forth in the merger agreement). The transaction was funded through cash-on-hand and a $25.0 million term loan.
| Page 5 |