PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed balance sheet as of March
31, 1996, and the unaudited pro forma combined condensed statements of
operations for the year ended December 31, 1995 and for the three month period
ended March 31, 1996 combine the historical financial statements of Digital
Recorders, Inc. and Transit-Media GmbH after giving effect to the acquisition.
The pro forma combined condensed balance sheet gives effect to the acquisition
as if it had occurred on March 31, 1996, and the pro forma combined condensed
statements of operations for the year ended December 31, 1995 and for the three
months ended March 31, 1996 give effect to the acquisition as if it had occurred
at the beginning of the period presented, by the purchase method of accounting.
The purchase price of the acquisition will be allocated to the tangible and
intangible assets and liabilities acquired based upon their respective fair
values as of the date of acquisition. The allocation of the aggregate purchase
price reflected in the pro forma combined condensed financial statements is
preliminary and based upon assumed acquisition dates of January 1, 1995 and
March 31, 1996 for the pro forma statement of operations and the pro forma
balance sheet, respectively. The final allocation of the purchase price is
contingent upon the final valuation of the acquired assets; however, that
allocation is not expected to differ materially from the preliminary allocation.
The pro forma adjustments and combined amounts are provided for informational
purposes only. The pro forma financial information presented is not necessarily
indicative of either future results of operations or the results that might have
occurred had the acquisition been consummated on the indicated dates.
DIGITAL RECORDERS, INC.
PRO FORMA BALANCE SHEET
MARCH 31, 1996
Digital Transit-
Recorders, Media Pro Forma
Assets Inc. GmbH Adjustments Pro Forma
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Current assets:
Cash and cash equivalents $ 909,170 - (35,000)(a) 874,170
Investments 1,957,307 - - 1,957,307
Trade accounts receivable 1,752,327 - - 1,752,327
Inventories 1,180,442 - - 1,180,442
Prepaids and other current assets 169,859 10,996 - 180,855
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Total current assets 5,969,105 10,996 (35,000) 5,945,101
Intangible assets, net 1,876,410 - 106,792 (b) 1,983,202
Other assets, net 310,694 10,907 - 321,601
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$ 8,156,209 21,903 71,792 8,249,904
==================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued
expenses 818,384 31,989 - 850,373
Bank borrowings - 97,303 - 97,303
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Total current liabilities 818,384 129,292 - 947,676
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Total liabilities 818,384 129,292 947,676
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Stockholders' equity:
Preferred stock 35 - - 35
Common stock 267,407 33,855 (33,855)(c) 267,407
Additional paid-in capital 12,552,708 - - 12,552,708
Property held for resale (550,000) - - (550,000)
Translation adjustment - 2,771 (2,771)(c) 0
Retained earnings (deficit) (4,932,325) (144,015) 108,418(b)(c) (4,967,922)
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Net stockholders' equity 7,337,825 (107,389) 71,792 7,302,228
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$ 8,156,209 21,903 71,792 8,249,904
==================================================================
See accompanying notes to unaudited pro forma financial data.
DIGITAL RECORDERS, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
Digital Transit-
Recorders, Media Pro Forma
Inc. GmbH Adjustments Pro Forma
-------------------------------------------------------------
Net sales $ 6,362,429 - - 6,362,429
Cost of sales 3,170,171 - - 3,170,171
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Gross profit 3,192,258 - - 3,192,258
Selling, general and admin.
expenses 2,865,626 163,442 28,478(b) 3,057,546
Research and development expenses 379,870 - - 379,870
-------------------------------------------------------------
Operating income (loss) (53,238) (163,442) (28,478) (245,158)
Other income 208,141 2,669 - 210,810
-------------------------------------------------------------
Income (loss) before income taxes 154,903 (160,773) (28,478) (34,348)
Income taxes 10,000 - - 10,000
-------------------------------------------------------------
Net income (loss) $ 144,903 (160,773) (28,478) (44,348)
=============================================================
Net income (loss) per common and
common equivalent share $ 0.00 (3.22) - (0.08)
=============================================================
Weighted average number of common
and common equivalent shares
outstanding 2,652,892 50,000 - 2,652,892
=============================================================
See accompanying notes to unaudited pro forma financial data.
DIGITAL RECORDERS, INC.
PRO FORMA INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1996
Digital Transit-
Recorders, Media Pro Forma
Inc. GmbH Adjustments Pro Forma
-------------------------------------------------------------
Net sales $ 1,750,568 - - 1,750,568
Cost of sales 763,787 - - 763,787
-------------------------------------------------------------
Gross profit 986,781 - - 986,781
Selling, general and admin.
expenses 746,549 64,735 7,119(b) 818,403
Research and development expenses 87,732 - - 87,732
-------------------------------------------------------------
Operating income (loss) 152,500 (64,735) (7,119) 80,646
Other income (expense) 45,362 (113) - 45,249
-------------------------------------------------------------
Income (loss) before income taxes 197,862 (64,848) (7,119) 125,895
Income taxes 10,000 - - 10,000
-------------------------------------------------------------
Net income (loss) $ 187,862 (64,848) (7,119) 115,895
=============================================================
Net income (loss) per common and
common equivalent share $ 0.06 (1.30) - 0.03
=============================================================
Weighted average number of common
and common equivalent shares
outstanding 2,674,075 50,000 - 2,674,075
=============================================================
See accompanying notes to unaudited pro forma financial data.
DIGITAL RECORDERS, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA
MARCH 31, 1996
1)
(a) Represents the total amount of cash paid for the acquisition.
(b) Intangible assets from the acquisition totalled $142,389, which were
amortized $28,478 during the year ended December 31, 1995 and $7,119
during the quarter ended March 31, 1996. Such intangible assets are
being amortized on a straight-line basis over five years.
(c) Since the transaction was recorded by the purchase method of
accounting, the equity of the seller was eliminated.
2) The assets and liabilities of Transit-Media GmbH are translated at the
current exchange rates at March 31, 1996, while income and expenses are
translated at average rates for the period presented.