EXHIBIT 99.3
Unaudited Pro Forma Condensed Consolidated Financial Statements
The following unaudited pro forma consolidated statements of operation
reflect the consolidated results of operations of APA Optics, Inc. (APA) for the
year ended March 31, 2002 and the nine months ended December 31, 2002 with those
of Computer System Products, Inc. (CSP) under the assumptions set forth in the
accompanying notes. The unaudited pro forma consolidated balance sheet combines
the APA and CSP balance sheets as of December 31, 2002 giving effect to the
transaction as if the transaction had occurred for the statements of operation
as of the beginning of the periods presented and for the balance sheet
presentations.
The pro forma adjustments are based upon available information and upon
certain assumptions that management believes are reasonable. The pro forma
financial statements and accompanying notes should be read in conjunction with
the historical statements and the notes thereto.
The unaudited pro forma condensed consolidated financial statements are
provided for informational purposes only in response to Securities and Exchange
Commission ("SEC") requirements and do not purport to represent what APA's
financial position or results of operations would actually have been if the
transaction had in fact occurred at such dates or to project APA's financial
position or results of operations for any future date or period.
APA OPTICS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2002
---------------------------
APA Optics CSP Pro Forma APA Optics
Historical Historical Adjustments Pro Forma
------------- ------------ ------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 27,721,495 $ 3,742 $ (3,678,000) (a) $ 23,893,495
(150,000) (a)
(3,742) (a)
Accounts receivable 33,502 690,069 (305,498) (a) 418,073
Inventories 106,327 1,300,690 (73,451) (a) 1,333,566
Prepaid expenses 120,033 39,381 (39,381) (a) 120,033
Bond reserve funds 50,000 -- 50,000
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Total current assets 28,031,357 2,033,882 (4,250,072) 25,815,167
Property, plant and equipment, net 3,565,919 555,628 (152,830) (a) 3,968,717
Other assets 619,336 49,018 2,500,683 (a) 3,120,019
(49,018) (a)
------------------------------------------ -------------
Total assets $ 32,216,612 $ 2,638,528 $ (1,951,237) $ 32,903,903
========================================== =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Note payable to bank $ -- $ 3,202,782 $ (3,202,782) (a) $ --
Current portion of capital lease obligations -- 65,445 -- (a) 65,445
Current portion of loans payable to vendors -- 260,873 -- (a) 260,873
Current portion of long-term debt 1,795,026 -- 1,795,026
Notes payable to shareholders -- 576,220 150,000 (a) --
(576,220) (a)
(150,000) (a)
Accounts payable 131,641 628,962 (389,582) (a) 371,021
Accounts payable - affiliate -- 687,612 (687,612) (a) --
Accrued expenses 261,908 196,235 (161,928) (a) 296,215
------------------------------------------ -------------
Total current liabilities 2,188,575 5,618,129 (5,018,124) 2,788,580
Capital lease obligations, net of current portion -- 107,676 (23,336) (a) 84,340
Loans payable to vendors, net of current portion -- 58,527 (55,581) (a) 2,946
Long-term debt 229,305 -- -- (a) 229,305
Shareholders' equity (deficit):
Common stock 118,723 368 (368) (a) 118,723
Additional paid-in capital 51,595,262 800,000 (800,000) (a) 51,595,262
Accumulated deficit (21,915,253) (3,946,172) 3,946,172 (a) (21,915,253)
------------------------------------------ -------------
Total shareholders' equity (deficit) 29,798,732 (3,145,804) 3,145,804 29,798,732
------------------------------------------ -------------
Total liabilities and shareholders' equity (deficit) $ 32,216,612 $ 2,638,528 $ (1,951,237) $ 32,903,903
========================================== =============
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS
APA OPTICS, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
For the Nine Months Ended December 31, 2002
-----------------------------------------------------------
APA Optics CSP Pro Forma APA Optics
Historical Historical Adjustments Pro Forma
------------ ------------ ------------ ------------
Revenues $ 152,025 $12,307,602 $ -- $12,459,627
Costs and expenses:
Cost of sales 2,030,730 10,583,892 -- 12,614,622
Research and development 1,050,025 -- -- 1,050,025
Selling, general and administrative 1,014,573 3,915,669 -- 4,930,242
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4,095,328 14,499,561 -- 18,594,889
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Loss from operations (3,943,303) (2,191,959) -- (6,135,262)
Interest income 300,795 -- -- 300,795
Interest expense (79,716) (387,966) 62,149 (b) (405,533)
Gain of sale of assets -- 1,000,000 -- 1,000,000
Vendor settlements -- 195,038 -- 195,038
Other expense -- (2,818) -- (2,818)
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221,079 804,254 62,149 1,087,482
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Loss before income taxes (3,722,224) (1,387,705) 62,149 (5,047,780)
Income taxes 1,000 -- -- 1,000
-----------------------------------------------------------
Net loss $(3,723,224) $(1,387,705) $ 62,149 $(5,048,780)
===========================================================
Net loss per share:
Basic and diluted $ (0.31) -- -- $ (0.43)
===========================================================
Weighted average shares outstanding:
Basic and diluted 11,874,371 -- -- 11,874,371
===========================================================
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS
APA OPTICS, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
For the Year Ended March 31, 2002
---------------------------------
APA Optics CSP Pro Forma APA Optics
Historical Historical Adjustments Pro Forma
------------ ------------ ------------ ------------
Revenues $ 595,955 $27,600,983 $ -- $28,196,938
Costs and expenses:
Cost of sales 3,545,519 21,267,731 -- 24,813,250
Research and development 1,114,051 -- -- 1,114,051
Selling, general and administrative 1,733,846 7,981,259 -- 9,715,105
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6,393,416 29,248,990 -- 35,642,406
-----------------------------------------------------------
Loss from operations (5,797,461) (1,648,007) -- (7,445,468)
Interest income 1,193,525 -- -- 1,193,525
Interest expense (132,263) (582,701) 15,026 (b) (699,938)
Gain of sale of assets -- -- -- --
Vendor settlements -- 662,050 -- 662,050
Other expense -- (11,946) -- (11,946)
-----------------------------------------------------------
1,061,262 67,403 15,026 1,143,691
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Loss before income taxes (4,736,199) (1,580,604) 15,026 (6,301,777)
Income taxes 2,000 -- -- 2,000
-----------------------------------------------------------
Net loss $(4,738,199) $(1,580,604) $ 15,026 $(6,303,777)
===========================================================
Net loss per share:
Basic and diluted $ (0.40) -- -- $ (0.53)
===========================================================
Weighted average shares outstanding:
Basic and diluted 11,896,976 -- -- 11,896,976
===========================================================
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
Balance Sheet
(a) To record acquisition and to eliminate items not purchased or assumed.
--- Acquired the assets at fair value and assumed certain liabilities:
Assets $ 2,014,609
Liabilities (837,292)
-------------
Excess of assets over liabilities $ 1,177,317
Payment for assets
(including note forgiveness) (3,678,000)
-------------
Excess purchase price (goodwill) $ 2,500,683
-------------
The allocation of purchase price to goodwill
is preliminary.
Income Statement
(b) To record elimination of related party interest expense on notes payable
to stockholders and affiliates.