SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange of 1934
Date of Report September 22, 1997
DCX, Inc.
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(Exact name of registrant as specified in its charter)
Colorado 0-14273 84-0868815
- ------------- ----------- -------------------
(State of (Commission (IRS Employer
incorporation) File Number) Identification No.)
3002 North State Highway 83, Franktown, CO 80116-0569
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 688-6070
Not Applicable
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
- ---------------------------------------------
On September 22, 1997, DCX, Inc. ("the Corporation") acquired all the
outstanding shares of PlanGraphics, Inc. ("PGI"), a Maryland corporation located
in Frankfort, Kentucky, in exchange for a total of 2,631,145 shares of the
Corporation's no par value common stock at a price of $1.52 per share as set in
the acquisition agreement which is filed as Exhibit 2.1a with this Form 8-K. The
purchase price was based upon, among other things, what the Company believes is
purchase price valuations paid for other companies in industries similar to
PlanGraphics. In addition, the Corporation provided working capital to PGI
subsequent to the executing the acquisition agreement.
Effective upon completion of the closing, the Corporation has agreed to increase
the size of its Board of Directors from four to seven members and appoint John
C. Antenucci (President and Chairman of PlanGraphics) and two additional persons
nominated by Mr. Antenucci as three, including Mr. Antenucci, of the seven
directors of the Company. Furthermore, the Corporation has agreed to appoint one
additional person jointly nominated by Mr. Carreker, President and CEO of the
Corporation, and Mr. Antenucci as the seventh of the seven members, with all
appointees serving until the next annual shareholders' meeting. The Company has
also agreed to renominate Mr. Antenucci and these three additional newly
appointed directors of the Corporation to be elected for a full one-year term at
its next annual shareholders' meeting. The additional directors have not yet
been appointed.
The Corporation has agreed to register all of the shares to be issued in
connection with the acquisition. The Corporation agreed to appoint John C.
Antenucci President and Vice Chairman. Mr. Antenucci, 51, is founder, President
and CEO of PlanGraphics, Inc., a company specializing in the design and
implementation of geographic information systems, since 1979. Mr. Antenucci is a
former president of AF/FM International, a professional association for the
mapping industry. He is also a former member of the Academy of Sciences on
National Mapping, an advisor to Ohio State University's Center for Mapping and
editor of the leading textbook on GIS.
Item 5. Press Release
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A copy of the Corporation's press release, dated September 24, 1997, is provided
as an attachment to this Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Financial Statements of business acquired.
PLANGRAPHICS, INC.
AUDITED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND
YEAR ENDED DECEMBER 31, 1995
2
INDEPENDENT AUDITORS' REPORT
- ----------------------------
Board of Directors
PlanGraphics, Inc.
Frankfort, Kentucky
We have audited the accompanying balance sheets of PlanGraphics, Inc. as of
September 30, 1996 and December 31, 1995, and the related statements of income,
changes in stockholders' equity, and cash flows for the nine months ended
September 30, 1996 and the year ended December 31, 1995. 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PlanGraphics, Inc. at
September 30, 1996 and December 31, 1995, and the results of its operations and
cash flows for the nine months ended September 30, 1996 and the year ended
December 31, 1995, in conformity with generally accepted accounting principles.
/S/ Eskew & Graham
-------------------------
Lexington, Kentucky
August 26, 1997
3
PLANGRAPHICS, INC.
BALANCE SHEETS
September 30 December 31
1996 1995
------------ ------------
ASSETS
Cash $ 59,870 $ 437,198
Accounts receivable - billed contract fees 1,363,697 976,294
Accounts receivable - unbilled contract fees 766,321 735,738
Accounts receivable - other 84,588 66,913
Deferred tax asset 36,000 160,000
----------- -----------
Total current assets $ 2,310,476 $ 2,376,143
Premises and equipment (net of accumulated
depreciation of $860,953 and $579,808, respectively) 2,650,728 466,577
Other assets 174,099 138,648
Goodwill 155,416 165,271
----------- -----------
TOTAL ASSETS $ 5,290,719 $ 3,146,639
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Accounts payable $ 560,230 $ 259,645
Bank overdraft 0 385,429
Notes payable - current portion 337,507 954,292
Obligation under capital leases - current portion 115,308 64,429
Accrued expenses 631,482 321,017
Deferred revenue 428,291 744,824
Other liabilities 15,389 11,682
----------- -----------
Total current liabilities $ 2,088,207 $ 2,741,318
Notes payable 1,229,840 691,126
Obligation under capital leases 2,041,154 72,761
----------- -----------
Total liabilities $ 5,359,201 $ 3,505,205
Stockholders' Equity (Deficit):
Common stock, no par value; voting; 100,000
shares authorized; 97,175 shares issued and
outstanding$ 153,928 $ 153,928
Common stock, no par value; non-voting; 110,000
shares authorized; 110,396 and 111,980 issued
and outstanding in 1996 and 1995, respectively 328,035 342,850
Accumulated deficit (550,445) (855,344)
----------- -----------
Total stockholders' equity (deficit) $ (68,482) $ (358,566)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,290,719 $ 3,146,639
See notes to financial statements.
4
PLANGRAPHICS, INC.
STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND
YEAR ENDED DECEMBER 31, 1995
1996 1995
----------- -----------
Contract revenues $ 7,985,750 $ 7,838,201
Costs and expenses:
Salaries and employee benefits $ 4,208,219 $ 4,770,217
Direct contract costs 1,582,377 1,355,552
Marketing and proposal expenses 317,659 409,914
Other operating expenses 1,112,216 985,692
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Total cost and expenses $ 7,220,471 $ 7,521,375
Operating income $ 765,279 $ 316,826
Other income and (expenses):
Interest income$ 416 $ 0
Interest expense (297,064) (225,220)
Other income 12,737 8,493
----------- -----------
Total other income and (expenses) $ (283,911) $ (216,727)
Income before income taxes $ 481,368 $ 100,099
Income tax expense 176,469 50,450
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NET INCOME $ 304,899 $ 49,649
See notes to financial statements.
5
PLANGRAPHICS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND
YEAR ENDED DECEMBER 31, 1995
Total
Stockholders'
Common Stock Accumulated Equity
Voting Non-Voting Deficit (Deficit)
------ ---------- ------- ---------
Balance January 1, 1995 $ 153,928 $ 353,718 $ (904,993) $ (397,347)
Issuance of 500 shares of common
stock 0 4,000 0 4,000
Retirement of 1,433 shares of
common stock 0 (14,868) 0 (14,868)
Net income 0 0 49,649 49,649
--------- --------- --------- ---------
Balances, December 31, 1995 $ 153,928 $ 342,850 (855,344) $(358,566)
Issuance of 817 shares of common
stock 0 5,765 0 5,765
Retirement of 2,401 shares of
on stock 0 (20,580) 0 (20,580)
Net income 0 0 304,899 304,899
--------- --------- --------- ---------
BALANCES, SEPTEMBER 30, 1996 $ 153,928 $ 328,035 $(550,445) $ (68,482)
See notes to financial statements.
6
PLANGRAPHICS, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND
YEAR ENDED DECEMBER 31, 1995
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES: ----------- -----------
Net income $ 304,899 $ 49,649
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 290,999 157,761
Deferred taxes 124,000 38,000
Change in assets and liabilities:
Accounts receivable (435,661) (279,816)
Other assets (35,450) 31,790
Accounts payable 300,585 (71,300)
Accrued expenses 310,466 85,711
Deferred revenue (316,533) 604,403
Other current liabilities 3,707 9,799
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Net cash provided by operating activities $ 547,012 $ 625,997
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment $ (365,296) $ (268,398)
----------- -----------
Net cash used in investing activities $ (365,296) $ (268,398)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease (increase) in bank overdraft $ (385,429) $ 245,999
Repayment of notes payable (78,072) (95,022)
Payments on obligations under capital lease (80,728) (65,052)
Issuance of common stock 5,765 4,000
Retirement of common stock (20,580) (14,868)
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Net cash (used in) provided by financing activities $ (559,044) $ 75,057
Net (decrease) increase in cash $ (377,328) $ 432,656
Cash at beginning of period 437,198 4,542
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CASH AT END OF PERIOD $ 59,870 $ 437,198
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest expense $ 292,863 $ 233,457
Income taxes $ 6,455 $ 5,600
NON-CASH TRANSACTIONS:
Acquisition of building under capitalized lease
obligation $ 2,100,000 $ 0
See notes to financial statements.
7
.
PLANGRAPHICS, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND
YEAR ENDED DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Nature of Operations - The Company is an independent consulting firm
specializing in the design and implementation of Geographic Information Systems
(GIS) as well as advisory services in the United States and foreign markets. The
customer base consists primarily of utilities, government agencies, and land and
resource management organizations.
B. Estimates in the Financial Statements - 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 date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
C. Cash - For purposes of reporting cash flows, cash includes cash on hand
and deposits in banks.
D. Revenue and Cost Recognition - Revenues from contracts are recognized on
the percentage-of-completion method, measured by the percentage of costs
incurred to date to estimated total costs for each contract.
Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as supplies, tools, repairs
and depreciation costs. General and administrative costs are charged to expense
as incurred. Provisions for estimated losses on uncompleted contracts are made
in the period in which such losses are determined. Changes in job performance,
job conditions, and estimated profitability may result in revisions to costs and
income and are recognized in the period in which the revisions are determined.
E. Premises and Equipment - Premises and equipment are recorded at
acquisition cost. Provisions for depreciation are based on annual rates
calculated to amortize the cost of depreciable assets over their estimated
economic lives. Depreciation is computed by both the straight-line and
double-declining-balance methods.
F. Investment in Partnership - The Company holds a minority interest in
a limited partnership. The investment is recorded at cost, adjusted for the
Company's pro rata share of income, loss and cash distributions and is included
in other assets on the balance sheet.
G. Goodwill - Goodwill represents the excess of the cost over the fair
value of its net assets acquired at the date of acquisition and is being
amortized on the straight-line method over fifteen years.
H. Deferred Revenue - Deferred revenue represents amounts received under
certain contracts in excess of revenue recognized.
I. Marketing Expense - The Company charges all marketing expenses to
operations when incurred. No amounts have been established for any future
benefits related to these expenditures.
8
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
J. Income Taxes - The Company uses the liability method for computing
deferred income taxes. Under the liability method, deferred taxes are based on
the change in the deferred tax liability or asset established for the expected
future tax consequences of differences in the financial reporting and tax bases
of assets and liabilities. The differences relate principally to accrued
vacation and net operating loss carryforwards.
K. Change in Fiscal Year - During 1996, the Company changed its fiscal year
end from December 31 to September 30.
2. CASH DEPOSITS
The Company maintains amounts of cash in related and unrelated bank
deposits which, at times, may exceed federally insured limits. The Company has
not experienced any losses in such accounts. The Company believes it is not
exposed to any significant credit risk on cash and cash equivalents.
3. CONTRACT RECEIVABLES
Contract receivables at September 30, 1996 and December 31, 1995 consist of
the following:
1996 1995
Contract receivables:
Billed $ 1,363,697 $ 976,294
Unbilled 703,318 678,066
Retained 63,003 57,672
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$ 2,130,018 $ 1,712,032
4. PREMISES AND EQUIPMENT
The Company's premises and equipment at September 30, 1996 and December 31,
1995 are summarized as follows:
1996 1995
Land and building under capital lease $ 2,100,000 $ 0
Equipment under capital lease 310,253 310,253
Furniture, fixtures and equipment 1,101,428 736,132
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$ 3,511,681 $ 1,046,385
Accumulated depreciation (860,953) (579,808)
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$ 2,650,728 $ 466,577
9
4. PREMISES AND EQUIPMENT (CONTINUED)
Depreciation expense was $281,144 and $144,621 for the nine months ended
September 30, 1996 and year ended December 31, 1995, respectively.
5. NOTES PAYABLE
Notes payable at September 30, 1996 and December 31, 1995, represent the
outstanding balances of notes payable to a commercial bank and to a minority
shareholder.
The notes payable to the commercial bank consist of two fully drawn lines
of credit which aggregate $850,000. The first line originated December 5, 1990,
and was last renewed June 10, 1996 in the amount of $650,000. It bears a demand
feature with interest at the prime rate plus 1% and matured June 10, 1997.
Interest payments are made monthly. Collateral consists of a security agreement
dated December 5, 1990, on all equipment and accounts receivable of the Company,
a stock pledge agreement on 40,000 shares of capital stock held by the majority
shareholder, and an assignment of a $500,000 life insurance policy on the life
of the majority shareholder. The second line originated December 5, 1990, and
was last renewed June 10, 1996 in the amount of $200,000. Interest on this line
is fixed at 9.5% and is due on demand. This line is secured by the December 5,
1990 security agreement and a Guaranty Agreement dated April 2, 1992 from a
minority shareholder. Total amounts outstanding under these notes were $850,000
at September 30, 1996 and December 31, 1995. The loan agreement dated June 10,
1996 includes certain restrictions on liquidation or disposal of assets, capital
expenditures, additional indebtedness, payments to guarantors, capital
transactions, dividend payments and other such agreements, all of which have
been complied with at September 30, 1996.
The $650,000 line was subsequently renegotiated on April 25, 1997 and
includes quarterly interest and principal reduction of $5,000 per month for
eleven months with remaining principal due at maturity, April 24, 1998. The
$200,000 line was renegotiated June 6, 1997 for 60 days with principal and
interest due at maturity. All terms and conditions of the June 10, 1996 loan
agreement remain in effect.
The notes payable to a minority shareholder consist of an installment note
which originated July 26, 1991 in the amount of $330,000, and was renewed
December 21, 1994 in the amount of $284,732 and five demand notes of various
dates and amounts aggregating $550,000 which along with outstanding interest
were combined into one promissory note dated December 21, 1994. The installment
note bears a fixed interest rate of 10% and is secured by a proxy on 32,400
shares of Company stock owned by the majority shareholder. The promissory note
bears interest at the prime rate. Both notes mature December 21, 1998 and are
subject to covenants prohibiting further issuance of voting stock and other such
agreements. Total amounts outstanding under these related party notes were
$717,347 and $795,418 at September 30, 1996 and December 31, 1995, respectively.
10
5. NOTES PAYABLE (CONTINUED)
Principal payments on all notes payable due subsequent to September 30,
1996 are as follows:
Due September 30, 1997 $ 337,507
1998 747,817
1999 482,023
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$ 1,567,347
6. OBLIGATION UNDER CAPITAL LEASES
The Company leases its main office facility from a related party, Capitol
View Development, LLC, under a triple net commercial lease beginning January
1996. The majority shareholder of PlanGraphics, Inc. owns approximately ten
percent of Capitol View Development. The lease includes an annual base rent
increasing over the term of the lease plus an adjustment based on Capitol View
Development's rate of interest on its loan. The initial lease term is for a
period of fifteen years with five renewal options for a term of one year each.
Annual rental payments approximate $320,000 per year.
The Company also leases certain equipment under capital leases from a
related party. Original lease terms are for five years.
The following is a schedule, by years, of future minimum payments required
under these leases, together with their present value as of September 30, 1996.
Land and
Building Equipment Total
September 30, 1997 $ 314,255 $ 67,090 $ 381,345
1998 327,261 26,576 353,837
1999 330,218 2,656 332,874
2000 335,635 0 335,635
2001 337,089 0 337,089
Thereafter 2,837,559 0 2,837,559
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$ 4,482,017 $ 96,322 $ 4,578,339
Less: amount representing interest (2,414,556) (7,321) (2,421,877)
------------ ------------- ------------
Present value of minimum lease
payments $ 2,067,461 $ 89,001 $ 2,156,462
11
7. OPERATING LEASE COMMITMENTS
The Company leases certain office facilities and certain furniture and
equipment under various operating leases. Lease terms range from one to five
years.
Minimum annual lease commitments at September 30, 1996 are as follows:
September 30, 1997 $ 125,058
1998 105,387
1999 83,578
2000 5,295
2001 1,094
-------------
$ 320,412
Rental expense for nine months ending September 30, 1996 and year ended
December 31, 1995 totaled $136,078 and $196,907, respectively.
8. MAJOR CUSTOMER
A significant portion of the Company's contract revenue was derived
directly or indirectly from contracts with a major customer, a gas and electric
utility company located in the northeastern United States. Accounts receivable
from this customer aggregated $315,598 and $96,505 at September 30, 1996 and
December 31, 1995, respectively. Gross and deferred revenue from these contracts
were as follows:
1996 1995
Gross revenue $ 2,777,922 $ 2,720,816
Deferred revenue 303,650 554,635
9. BACKLOG
The following schedule shows a reconciliation of approximate backlog
representing signed contracts in existence at September 30, 1996:
Balance, December 31, 1995 $ 8,840,877
Contract adjustments 1,417,932
New contracts, 1996 4,932,291
-------------
$ 15,191,100
Less: contract revenue earned, 1996 (7,985,750)
-------------
Balance, September 30, 1996 $ 7,205,350
The Company's backlog at July 31, 1997 is approximately $4,522,000.
12
10. PROFIT SHARING PLAN
The Company has a qualified profit sharing plan with a 401(k) deferred
compensation provision covering substantially all employees. The plan allows
employees to defer up to twenty percent of their annual salary with a tiered
matching contribution by the Company up to 1.75%. Additional contributions are
at the Company's discretion. The expense charged to operations for the plan was
$41,113 and $35,219 for the nine months ended September 30, 1996 and the year
ended December 31, 1995, respectively.
11. INCOME TAXES
The provision for income taxes for the nine months ended September 30, 1996
and the year ended December 31, 1995 consists of the following:
1996 1995
Current $ 52,469 $ 12,450
Deferred 124,000 38,000
------------ ------------
$ 176,469 $ 50,450
The provision for income taxes differs from the amount computed by applying
statutory rates principally due to nondeductible meals and entertainment
expenses.
The Company's deferred tax assets and liabilities at September 30, 1996 and
December 31, 1995 are shown below. No valuation allowance for the realization of
deferred tax assets is considered necessary.
1996 1995
Total deferred tax assets $ 36,000 $ 160,000
Total deferred tax liabilities 0 0
----------- -----------
Net deferred tax asset $ 36,000 $ 160,000
12. GOING CONCERN CONTINGENCY
As shown in the accompanying financial statements, the Company had a
stockholders' deficit of $68,482 and $358,566 and an accumulated deficit of
$550,445 and $855,344 as of September 30, 1996 and December 31, 1995,
respectively. Although the Company has been profitable during the nine months
ended September 30, 1996 and the year ended December 31, 1995, its ability to
continue as a going concern is dependent on either their ability to continue to
successfully control their costs or their ability to obtain the necessary
funding to continue its operations.
Management has developed a plan identifying excess costs and has developed
strategies to reduce costs where feasible. Additionally, the Company has
successfully identified an investor with access to capital markets with the
ability and intent to provide the capital necessary for the Company to continue
as a going concern (see Note 16).
13
13. STOCKHOLDERS' EQUITY
The Company's articles of incorporation authorize the issuance of 110,000
non-voting common stock shares. As shown on the balance sheet, the Company
inadvertently issued more shares than were authorized at September 30, 1996 and
December 31, 1995. At August 26, 1997, the Company has corrected the error by
repurchasing certain non-voting shares.
14. COMMON STOCK REPURCHASE COMMITMENTS
In October 1996, the Company and a shareholder entered into a stock
repurchase agreement whereby the Company agreed to repurchase the shareholder's
18,271 non-voting common shares over a three year period at prices that
approximate the appraised value of the shares as of December 31, 1995, the most
recent valuation date. The Company's total repurchase obligation over the three
years subsequent to September 30, 1996 is as follows:
Year ended September 30, 1997 $ 44,364
1998 40,417
1999 43,638
---------
$ 128,419
In March 1997, a former shareholder of a company acquired by the Company
under a Stock Exchange Agreement (the Agreement) exercised his option under the
Agreement to sell 25% of his 10,154 non-voting common shares received under the
Agreement to the Company at a price of $14.43 per share, the appraised value of
the Company's shares as of September 30, 1996. Under the terms of the Agreement,
the Company has elected to pay the purchase price in twelve equal monthly
installments beginning April 1, 1997. Additionally, the former shareholder has
the option of selling a maximum of 25% of the shares received under the
Agreement annually to the Company at the appraised value of the common shares as
of the end of the previous fiscal year.
Additionally, all Company common shares issued and outstanding are subject
to a right of first refusal held by the Company to repurchase the shares in the
event the shareholder desires to transfer ownership of the shares.
15. SUBSEQUENT EVENTS
On May 7, 1997, the Board of Directors approved a 5-for-1 stock split to be
effected in the form of a dividend to shareholders of record on May 7, 1997. The
stock split will become effective upon approval by the shareholders of an
increase in the number of common shares authorized. References in the
accompanying financial statements to the number of shares issued and outstanding
have not been restated to reflect the pending stock split.
14
15. SUBSEQUENT EVENTS (CONTINUED)
On May 7, 1997, the Board of Directors approved a non-qualified stock
option plan for outside directors and employees of the Company. The Board
reserved 21,500 pre-split shares (107,500 post-split shares) for issuance under
the plan. On June 26, 1997, the Board granted the option to purchase 3,100
pre-split (15,500 post-split) of non-voting common shares to certain employees
at an exercise price of $7.10 per pre-split share ($1.42 per post-split share).
Such price represents approximately 50% of the most recent appraised value of a
common stock share at the date of grant. Additionally, on June 26, 1997, the
Board granted the option to purchase 8,400 pre-split shares (42,000 post-split
shares) of non-voting common shares to certain employees at an exercise price of
$12.27 per pre-split share ($2.45 per post-split share). Such price represents
approximately 85% of the most recent appraised value of a common stock share at
the date of grant. Approximately 4,025 pre-split shares (20,125 post-split
shares) become exercisable one year from the date of grant and the remainder
become exercisable two years from the date of grant. The options terminate five
years from the date of grant. The reservation of shares for issuance and the
granting of options under the plan are subject to the shareholders' approval of
an increase in the number of common shares authorized.
16. PENDING MERGER
On August 12, 1997, the Company entered into an Acquisition Agreement with
DCX, Inc., a publicly held defense contracting company, whereby the Company
agreed to exchange 100% of the Company's issued and outstanding common stock for
2,631,145 shares of DCX, Inc. common stock. It is anticipated that the agreement
will be consummated on or about September 10, 1997.
Additionally, as of August 26, 1997, DCX, Inc. has advanced the Company
$250,000 under three promissory notes in accordance with the terms of a loan
agreement dated July 30, 1997. The amounts advanced bear interest at 13% per
annum, payable monthly. The principal amount is due at maturity, June 30, 1998.
Collateral for the notes consists of a second lien on substantially all assets
of the Company and a security interest in, and pledge of 15,000 pre-split shares
(75,000 post-split shares) of the Company's voting common stock held by the
majority shareholder.
15
(b) Pro Forma Financial Information.
DCX, INC. and Subsidiary
Pro Forma Consolidated Financial Statements (Unaudited)
The accompanying unaudited pro forma consolidated financial statements give
effect to the acquisition by DCX, Inc. (the "Company" or "DCX") of 100% of the
outstanding common stock of PlanGraphics, Inc. ("PlanGraphics") pursuant to the
agreement between the parties; to reflect the issuance of 2,631,145 of the
Company's common stock and are based on the estimates and assumptions set forth
herein under the purchase method of accounting. The unaudited pro forma
information has been prepared utilizing the historical financial statements and
notes thereto, which are incorporated by reference herein. The unaudited pro
forma financial data does not purport to be indicative of t he results which
actually would have been obtained had the purchase been effected on the date
indicated or of the results which may be obtained in the future. The unaudited
pro forma financial statements should be read in conjunction with the financial
statements.
The pro forma consolidated balance sheet assumes the acquisition was consummated
at June 30, 1997. The accompanying unaudited pro forma statement of income has
been derived from the statement of income of the Company for the nine month
period ended June 30,1 997 and PlanGraphics for the nine month period ended June
30, 1997, and such information adjusted to give effect to the proposed
acquisition as if the proposed acquisition had occurred as of the beginning of
the period presented.
16
DCX, INC AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
DCX, Inc. PlanGraphics Pro Forma Consolidated
Actual Actual Adjustments Pro Forma
ASSETS
Cash and cash equivalents $ 183,447 $ 10,016 $ $ 193,463
Accounts receivable 1,703,845 2,018,353 3,722,198
Inventories 1,213,121 0 1,213,121
Prepaid and other 272,828 125,945 398,773
------------ ------------ ------------ ------------
Total current assets $ 3,373,241 $ 2,154,314 $ $ 5,527,555
Property and equipment 1,206,419 2,802,617 4,009,036
Other assets 46,310 197,715 244,025
Goodwill 0 145,561 4,496,842b,c 4,642,403
------------ ------------ ------------ ------------
TOTAL ASSETS $ 4,625,970 $ 5,300,207 $ 4,496,842 $ 14,423,019
LIABILITIES AND
STOCKHOLDERS' EQUITY
Notes payable $ 907,708 $ 1,109,645 $ $ 2,017,353
Accounts payable 888,445 713,500 1,601,945
Accrued expenses and other liabilities 161,961 869,067 400,000b 1,431,028
Accrued litigation settlement 521,000 0 521,000
Deferred revenues 0 156,044 156,044
------------ ------------ ----------- ------------
Total current liabilities $ 2,479,114 $ 2,848,256 $ 400,000 $ 5,727,370
Notes payable 0 514,400 514,400
Obligations under capital leases 0 2,068,176 2,068,176
----------- ------------ ----------- ------------
Total liabilities $ 2,479,114 $ 5,430,832 $ 400,000 $ 8,309,946
Stockholders' Equity:
Preferred stock $ 0 $ 0 $ 0 $ 0
Common stock 5,545,806 434,454 3,564,886a,d 9,545,146
Additional paid in capital 329,384 0 329,384
Subscriptions receivable (179,000) 0 (179,000)
Accumulated deficit (3,549,334) (565,079) 531,956d,e 3,582,457
------------ ------------- ----------- ------------
Total stockholders' equity $ 2,146,856 $ (130,625) $ 4,096,842 $ 6,113,073
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,625,970 $ 5,300,207 $ 4,496,842 $ 14,423,019
See the accompanying Headnote and Notes to Pro Forma Consolidated Financial Statements
17
DCX, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
PlanGraphics,
DCX, Inc. Inc.
Nine Months Nine Months
June 30, 1997 June 30, 1997 Proforma Consolidated
Actual Actual Adjustments Pro Forma
Revenue $ 3,964,929 $ 6,764,206 $ 0 $ 10,729,135
Cost of revenue 3,530,824 2,175,170 0 5,705,994
------------ ------------ ------------ ------------
Gross profit $ 434,105 $ 4,589,036 $ 0 $ 5,023,141
General and administrative 702,705 4,280,089 224,842 5,207,636
------------ ------------ ------------ ------------
Income (loss)from operations $ (268,600) $ 308,947 $ (224,842) $ (184,495)
Other income (expense):
Interest expense $ (101,622) $ (314,029) $ 0 $ (415,651)
Miscellaneous 415,562 0 0 415,562
------------ ------------ ------------ ------------
Total other $ 313,940 $ (314,029) $ 0 $ (89)
Net income before income taxes
and extraordinary item $ 45,430 $ (5,082) $ (224,842) $ (184,584)
Income taxes 0 10,130 0 10,130
------------ ------------ ------------ ------------
Net income before extraordinary
item $ 45,340 $ (15,212) $ (224,842) $ (194,714)
Extraordinary item: gain on
extinguishment of debt 267,050 0 0 267,050
------------ ------------ ------------ ------------
NET INCOME $ 312,390 $ (15,212) $ (224,842) $ 72,336
See the accompanying Headnote and Notes to Pro forma consolidated Financial Statements
DCX, Inc. and Subsidiary
Notes to Pro Forma Consolidated Financial Statements
a. To record the issuance of 2,631,145 shares of DCX, Inc. common stock (NPV)
at the agreed upon rate of $1.52 per share.
b. To record the liability for transaction costs.
c. To record the purchase of PlanGraphics and the related goodwill.
d. To eliminate the capital accounts of PlanGraphics upon consolidation with
DCX, Inc.
e. To record the amortization of goodwill over a 15 year period.
18
(c) Exhibits
2. Plan of acquisition, reorganization, arrangement, liquidation or succession:
2.1a Acquisition Agreement (without schedules) dated August 12, 1997 between
DCX, Inc. (purchaser) and PlanGraphics, Inc. (seller).
SIGNATURES
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 hereunto duly authorized.
DCX, Inc.
(Registrant)
October 7, 1997, 1997 /S/ Fred Beisser
--------------------------------------------
(Signature)
Frederick G. Beisser
Secretary, Treasurer & Vice President -
Finance & Accounting
19
PRESS RELEASE
DCX, INC. BECOMES GEOGRAPHIC INFORMATION SYSTEMS (GIS) INDUSTRY COMPETITOR
WITH FIRST MAJOR ACQUISITION.
DCX, Inc. Completes Purchase of PlanGraphics, Inc.,
Nation's Leading GIS Provider
FRANKTOWN, Colorado, September 24, 1997 --DCX, Inc., - (NASDAQ: DCXI) today
announced that it has completed its acquisition of PlanGraphics, Inc. of
Frankfort, Ky. The transaction involved the exchange of DCX common stock valued
at slightly more than $4 million plus the injection of nearly $1,000,000 in
working capital in exchange for all the outstanding stock of PlanGraphics, Inc.
Privately held PlanGraphics, is the nation's leading independent advisory
services GIS firm in the $8.2 billion worldwide GIS industry. DCX will have
approximately 9.4 million shares outstanding following the closing of the
PlanGraphics transaction. Mr. John Antenucci, President of PlanGraphics, will be
appointed President and a director. As previously reported, the size of the
board will be increased; additional members have not yet been identified.
This acquisition completes the first step by DCX President and CEO Stephen
Carreker to transform DCX into a fully integrated GIS service provider,
lessening its historic reliance on defense business. GIS combines interactive
computer map displays with database management software to display geographic
information - "PlanGraphics has successfully expanded into GIS systems
integration and is expected to continue achieving high growth rates," said Mr.
Carreker. "The company brings immediate value to DCX in the form of
international reputation and contacts. No other U.S. company possesses the
objectivity, comprehensive experience, and expertise in GIS technologies, user
needs and solutions."
Approximately 30% of PlanGraphics' revenues are derived from state and local
government customers; 45% from utilities, and the balance from private and
industrial sectors. Commercial clients include IBM, Space Imaging Corp.,
Analytical Surveys, Inc., Unisys Corp., Lockheed Martin Corp., Hughes Corp. and
Harris Corp., in addition to a number of international public and private
customers. Formed in 1979, PlanGraphics is headquartered in Frankfort, Ky. and
maintains offices in Denver, Silver Spring, Md., Brisbane, Australia, Muscat,
Oman and Buenos Aires, Argentina. The firm has 100 employees. For the nine
months ended June 30, 1997, PlanGraphics recorded $6.7 million in while DCX
reported $4.0 million and net income of $312,390. DCX currently designs and
manufactures electronic cables for various aerospace/defense applications. DCX
was founded and is currently headquartered in Douglas County, south of Denver.
Some of the statements in this Press Release contain predictions and other
forward-looking statements that involve a number of risks and uncertainties.
While this outlook represents our current judgment on a future direction of the
business, actual results may differ materially from any future action suggested
in this report. The accuracy of these statements cannot be guaranteed as they
are subject to a variety of risks including, but not limited to, future economic
conditions, new developments and other factors.
- End -
POC: Bruce Haun at B. Edward Haun & Co., Financial Communications, 303 595-4667
For Release at 6:30 a.m. Mountain Time, September 24, 1997
20