Exhibit 2.3
Wire One Technologies, Inc
Unaudited Pro Forma Financial Information
In July, 2001, Wire One Technologies, Inc. ("Wire One") acquired the assets
and certain liabilities of Advanced Acoustical Concepts, Inc. ("AAC"), an
Ohio-based designer of audiovisual conferencing systems. The total consideration
was $793,750, which was paid in the form of Company common stock valued at the
time of acquisition. On the date of the acquisition, the assets and certain
liabilities of AAC were recorded at their fair values, with the excess purchase
consideration allocated to goodwill.
The following unaudited pro forma combined financial statements include the
historical financial statements of Wire One and AAC as of and for the six months
ended June 30, 2001 and for the year ended December 31, 2000. The unaudited pro
forma combined financial statements give effect to the acquisition as if it had
occurred on June 30, 2001 for purposes of the unaudited pro forma combined
balance sheet, and on January 1, 2000 for purposes of the unaudited pro forma
combined statement of operations.
The pro forma adjustments are based on preliminary estimates and certain
assumptions that Wire One and AAC believe are reasonable under the
circumstances. With respect to the acquisition, the preliminary allocation of
the purchase price to assets and liabilities of AAC reflects the assumption that
assets and liabilities are carried at historical amounts which approximate fair
market value. The actual allocation of the purchase price may differ from that
reflected in the unaudited pro forma financial statements after a more extensive
review of the fair market values of the assets and liabilities has been
completed as of the acquisition date. When such a review is completed, a portion
of the purchase price may be ascribed to intangible assets (other than goodwill)
that have shorter amortization lives than the life ascribed to goodwill in
preparing the accompanying pro forma financial statements. Thus, the resulting
incremental amortization charges, if any, from that portion of the purchase
price ascribed to other intangible assets could be materially different from the
amortization expense presented in the pro forma financial statements. Severance,
office closings and other exit costs related to or arising from the acquisition
were not material.
The following unaudited pro forma combined financial statements are based
on assumptions and include adjustments as explained in the accompanying notes.
These unaudited pro forma combined financial statements are not necessarily
indicative of the actual financial results that would have occurred if the
transaction described above had been effective on and as of the dates indicated
and may not be indicative of operations in future periods or as of future dates.
WIRE ONE TECHNOLOGIES, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 2001
Historical Pro Forma
---------------------------- Pro Forma Combined
Wire One AAC Adjustments Company
------------ ------------ ------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 983,781 $ 64,270 $ 1,048,051
Accounts receivable-net 30,411,374 726,977 31,138,351
Inventory 10,613,891 413,289 11,027,180
Deferred income taxes 200,000 -- 200,000
Other current assets 1,772,187 118,431 1,890,618
------------ ------------ ------------ ------------
Total current assets 43,981,233 1,322,967 -- 45,304,200
Furniture, equipment and leasehold improvements-net 9,394,660 362,039 9,756,699
Goodwill-net 37,439,341 -- 2,419,557(1) 39,858,898
Other assets 373,826 4,409 378,235
------------ ------------ ------------ ------------
Total assets $ 91,189,060 $ 1,689,415 $ 2,419,557 $ 95,298,032
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loan payable $ 6,878,433 $ -- $ 6,878,433
Accounts payable 12,811,257 2,358,657 15,169,914
Accrued expenses 1,761,427 168,985 1,930,411
Deferred revenue 7,810,096 312,897 8,122,993
Customer deposits 112,958 220,254 333,212
Current portion of long term debt
and capital lease obligations 65,063 225,766 290,830
------------ ------------ ------------ ------------
Total current liabilities 29,439,234 3,286,559 -- 32,725,793
------------ ------------ ------------ ------------
Capital lease obligations, less current portion -- 28,663 -- 28,663
------------ ------------ ------------ ------------
Total liabilities 29,439,234 3,315,222 -- 32,754,456
Commitments
Stockholders' Equity:
Common stock 2,140 50,000 (49,985)(1) 2,155
Additional paid-in capital 86,772,047 143,581 650,154(1) 87,565,782
Accumulated deficit (25,024,361) (1,819,388) 1,819,388(1) (25,024,361)
------------ ------------ ------------ ------------
Total stockholders' equity 61,749,826 (1,625,807) 2,419,557 62,543,576
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity $ 91,189,060 $ 1,689,415 $ 2,419,557 $ 95,298,032
============ ============ ============ ============
The accompanying notes are an integral part of these
unaudited pro forma financial statements.
Wire One Technologies, Inc
Unaudited Pro Forma Combined Statement of Operations
For The Year Ended December 31, 2000
Historical Pro Forma
----------------------------- Pro Forma Combined
Wire One AAC Adjustments Company
------------ ------------ ------------ ------------
Net revenues $ 56,033,239 $ 10,199,099 $ -- $ 66,232,338
Cost of revenues 37,773,624 7,436,456 45,210,080
------------ ------------ ------------ ------------
Gross margin 18,259,615 2,762,643 -- 21,022,258
------------ ------------ ------------ ------------
Operating expenses:
Selling 14,551,283 2,595,396 17,146,679
General & administrative 4,121,303 917,919 5,039,222
Amortization of goodwill 1,500,857 -- 161,304(2) 1,662,161
------------ ------------ ------------ ------------
Total operating expenses 20,173,443 3,513,315 161,304 23,848,062
------------ ------------ ------------ ------------
Loss from operations (1,913,828) (750,672) (161,304) (2,825,804)
------------ ------------ ------------ ------------
Other (income) expense:
Net interest (income) expense (236,930) 369,860 132,930
Other 343,792 20,818 364,610
------------ ------------ ------------ ------------
Total other expenses, net 106,862 390,678 -- 497,540
------------ ------------ ------------ ------------
Loss before income taxes (2,020,690) (1,141,350) (161,304) (3,323,344)
Income tax provision 511,239 -- -- 511,239
------------ ------------ ------------ ------------
Net loss (2,531,929) (1,141,350) (161,304) (3,834,583)
------------ ------------ ------------ ------------
Deemed dividends on Series A
convertible perferred stock 13,723,206 -- -- 13,723,206
------------ ------------ ------------ ------------
Net loss attributable to common stockholders $(16,255,135) $ (1,141,350) $ (161,304) $(17,557,789)
============ ============ ============ ============
Net loss per share:
Basic $ (1.27) $ (1.04) $ -- $ (1.35)
============ ============ ============ ============
Diluted $ (1.27) $ (1.04) $ -- $ (1.35)
============ ============ ============ ============
Weighted average shares outstanding:
Basic 12,817,158 1,100,000 (954,571) 12,962,587
============ ============ ============ ============
Diluted 12,817,158 1,100,000 (954,571) 12,962,587
============ ============ ============ ============
The accompanying notes are an integral part of these
unaudited pro forma financial statements.
Wire One Technologies, Inc
Unaudited Pro Forma Combined Statement of Operations
For The Six Months Ended June 30, 2001
Historical Pro Forma
----------------------------- Pro Forma Combined
Wire One AAC Adjustments Company
------------ ------------ ------------ ------------
Net revenues $ 40,707,108 $ 4,287,328 $ -- $ 44,994,436
Cost of revenues 27,810,639 3,157,541 30,968,180
------------ ------------ ------------ ------------
Gross margin 12,896,469 1,129,787 -- 14,026,256
------------ ------------ ------------ ------------
Operating expenses:
Selling 11,977,120 1,094,129 13,071,249
General & administrative 3,159,693 389,479 3,549,172
Amortization of goodwill 1,270,722 -- 80,652(2) 1,351,374
------------ ------------ ------------ ------------
Total operating expenses 16,407,535 1,483,608 80,652 17,971,795
------------ ------------ ------------ ------------
Loss from operations (3,511,066) (353,821) (80,652) (3,945,539)
------------ ------------ ------------ ------------
Other expense:
Net interest expense 277,814 285,928 563,742
Other 21,761 1,559 23,320
------------ ------------ ------------ ------------
Total other expenses, net 299,575 287,487 -- 587,062
------------ ------------ ------------ ------------
Loss before income taxes (3,810,641) (641,308) (80,652) (4,532,601)
Income tax provision -- -- -- --
------------ ------------ ------------ ------------
Net loss (3,810,641) (641,308) (80,652) (4,532,601)
------------ ------------ ------------ ------------
Deemed dividends on Series A
convertible perferred stock 4,433,904 -- -- 4,433,904
------------ ------------ ------------ ------------
Net loss attributable to common stockholders $ (8,244,545) $ (641,308) $ (80,652) $ (8,966,505)
============ ============ ============ ============
Net loss per share:
Basic $ (0.46) $ (0.58) $ -- $ (0.50)
============ ============ ============ ============
Diluted $ (0.46) $ (0.58) $ -- $ (0.50)
============ ============ ============ ============
Weighted average shares outstanding:
Basic 17,752,240 1,100,000 (954,571) 17,897,669
============ ============ ============ ============
Diluted 17,752,240 1,100,000 (954,571) 17,897,669
============ ============ ============ ============
The accompanying notes are an integral part of these
unaudited pro forma financial statements.
Wire One Technologies, Inc
Notes to Unaudited Pro Forma Combined Financial Statements
(1) Records the goodwill associated with the acquisition of AAC as the sum of
the purchase consideration of $793,750 and the stockholders' deficit of AAC as
of June 30, 2001 which totaled ($1,625,807).
(2) Records the amortization of goodwill. The goodwill is amortized on a
straight-line basis over 15 years.