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EXHIBIT 99.2
99.2 Unaudited pro forma condensed combined financial statements as of and for
the year ended December 31, 2004
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Unaudited Pro Forma Condensed Combined Financial Statements
as of and for the Year Ended December 31, 2004.
On April 1, 2005, a wholly owned subsidiary of Rescon Technology, Inc., a Nevada
corporation ("Rescon"), merged with Nayna Networks, Inc., a Delaware corporation
("Nayna") pursuant to an Agreement and Plan of Merger between Rescon and Nayna
(the "Agreement"). In the Merger Rescon issued 32,249,947 shares of its
restricted common stock to the stockholders of Nayna and issued options to
purchase 3,475,763 shares of its restricted common stock and warrants to
purchase 88,600 shares of its restricted stock, in exchange for 100% of Nayna's
issued and outstanding shares of common stock, options and warrants.
As a result of the Merger, Rescon continued as the surviving corporation and the
stockholders of Nayna became stockholders of Rescon. The stockholders of Rescon
prior to the Merger now own approximately 9.92 % of the issued and outstanding
shares of Rescon common stock after the Merger. If all options and warrants
issued pursuant to the Merger were exercised, the stockholders of Rescon would
own approximately 9.02% of the issued and outstanding shares of Rescon common
stock. The stockholders of Nayna prior to the Merger now own approximately
90.08% of the issued and outstanding shares of Rescon common stock after the
Merger. If all of the options and warrants issued pursuant to the Merger were
exercised, the stockholders of Nayna would own approximately 90.98% of the
issued and outstanding shares of Rescon common stock. Pursuant to the Agreement,
Rescon changed its name to Nayna Networks, Inc.
The following unaudited pro forma condensed combined financial information gives
effect to the merger of Rescon and Nayna. The unaudited pro forma condensed
combined balance sheet combines the financial position of Rescon at November 30,
2004 (as reflected in the Form 10-QSB filed by Rescon for its quarter ended
November 30, 2004, the most recent fiscal quarter preceding December 31, 2004)
and Nayna at December 31, 2004 as if the acquisition had been consummated on
December 31, 2004. The unaudited pro forma condensed combined statement of
operations for the year ended December 31, 2004 combines the results of
operations of Rescon and Nayna for the year ended December 31, 2004, as if the
acquisition had occurred on January 1, 2004.
The unaudited pro forma condensed combined financial information presented is
based on preliminary estimates, available information and certain assumptions
and may be revised as additional information becomes available. The unaudited
pro forma condensed combined financial information is not intended to represent
what financial results of operations would actually have been if the acquisition
had occurred on those dates or to project financial results of operations for
any future period. Since Rescon and Nayna were not under common control or
management for the period January 1, 2004 to December 31, 2004, the unaudited
pro forma condensed combined financial results may not be comparable to, or
indicative of, future performance.
This unaudited pro forma condensed combined financial information should be read
in conjunction with the historical consolidated financial statements of Rescon
and Nayna. Rescon's historical financial statements can be found in Rescon's
Annual Report on Form 10-KSB filed on January 26, 2005 and Rescon's Quarterly
Report on Form 10-QSB filed on January 26, 2005. Nayna's historical financial
statements can be found as Exhibit 99.1 to this Current Report on Form 8-K/A.
UNAUDITED PRO FORMA CONDENSED
COMBINED BALANCE SHEET
(000's)
as at as at PRO FORMA
December 31, 2004 November 30, 2004 ADJUSTMENTS PRO FORMA
NAYNA RESCON (NOTE #3) COMBINED
----------------- ----------------- ------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 709 $ 2 $ (2) $ 709
Restricted cash $ 49 49
Accounts receivable, net 160 -- 160
Inventory -- 0
Prepaid expenses 35 20 (20) 35
----------------- ----------------- ------------ ------------
Total current assets 953 22 (22) 953
Property and equipment, net 798 24 (24) 798
Other assets 16 760 -760 16
----------------- ----------------- ------------ ------------
Total assets $ 1,767 $ 806 $ (806) $ 1,767
================= ================= ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 655 $ 25 $ (25) 655
Accrued liabilities 535 -- 535
Current portion - notes payable & equipment leases 727 -- 727
Due to related parties -- 691 (691) 0
----------------- ----------------- ------------ ------------
Total current liabilities 1,918 716 (716) 1,918
Minority Interest (1) 1 0
Note Payable 298 298
Convertible note payable, net 922 922
Stockholders' equity (deficit)
Preferred stock 20 -- 20
Common stock 80 0 0 80
Additonal paid in capital 51,911 6,342 (6,342) 51,911
Deficit accumulated prior to development stage (4,468) 4,468 0
Deficit accumulated during the development stage (53,382) (1,784) 1,784 (53,382)
----------------- ----------------- ------------ ------------
Stockholders' equity (deficit) (1,371) 90 (90) (1,371)
----------------- ----------------- ------------ ------------
Total liabilities and stockholders' deficit $ 1,767 $ 806 $ (806) $ 1,767
================= ================= ============ ============
UNAUDITED PRO FORMA CONDENSED
COMBINED STATEMENT OF OPERATIONS
(000's) except share and per share data
for the twelve months for the twelve months PRO FORMA
ending December 31, 2004 ending November 30, 2004 ADJUSTMENTS PRO FORMA
NAYNA RESCON (NOTE #3) COMBINED
------------------------ ------------------------ ------------ ------------
Sales $ -- $ -- $ -- $ --
Cost of sales 0 -- -- 0
------------------------ ------------------------ -------------- ------------
Gross profit -- -- -- --
------------------------ ------------------------ -------------- ------------
Operating expenses:
Engineering 2,971 -- -- 2,971
Sales and marketing 1,011 -- -- 1,011
General and administrative 1,069 697 (697) 1,069
------------------------ ------------------------ ------------ ------------
Total operating expenses 5,051 697 (697) 5,051
------------------------ ------------------------ ------------ ------------
Loss from operations (5,051) (697) 697 (5,051)
Loss on sales of assets (12) (12)
Other income 14 -- 14
Interest expense (40) -- (40)
Impairment of goodwill related to 0
acquisitions (9) (9)
------------------------ ------------------------ ------------ ------------
Net loss $ (5,098) $ (697) $ 697 $ (5,098)
======================== ======================== ============ ============
Net loss per share, basic $ (0.34)
============
Net loss per share, diluted $ (0.27)
============
Weighted average shares used in computing
net loss per share, basic 14,792,553
============
Weighted average shares used in computing
net loss per share, diluted 18,712,946
============
The accompanying notes are an integral part of these pro forma condensed
combined financial statements.
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NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION
1. SUMMARY OF TRANSACTION
On April 1, 2005, a wholly owned subsidiary of Rescon Technology, Inc., a Nevada
corporation ("Rescon"), merged with Nayna Networks, Inc., a Delaware corporation
("Nayna") pursuant to an Agreement and Plan of Merger between Rescon and Nayna
(the "Agreement"). In the Merger Rescon issued 32,249,947 shares of its
restricted common stock to the stockholders of Nayna and issued options to
purchase 3,475,763 shares of its restricted common stock and warrants to
purchase 88,600 shares of its restricted stock, in exchange for 100% of Nayna's
issued and outstanding shares of common stock, options and warrants.
2. UNAUDITED PRO FORMA COMBINED NET LOSS PER SHARE
Basic net loss per share and shares used in computing the net loss per share for
the year ended December 31, 2004 are based upon the historical weighted average
common shares outstanding plus the shares issued in connection with the Merger.
Dilutive net loss per share would give effect to the dilutive effect of common
stock equivalents consisting of restricted stock and warrants. Potentially
dilutive securities have been excluded from the computation of net loss per
share as its effect would be antidilutive. The 32,249,947 shares of common stock
issued in connection with the Merger have been included in the calculation of
pro forma basic and diluted net loss per share as follows:
Nayna Networks, Inc.
NOTE2:
UNAUDITED PRO FORMA CONDENSED
Calculation of basic and fully diluted shares
Series A Series B Series C Series D Common
Nayna balance as at December 31, 2003 15,000,000 7,999,997 4,680,647 0 20,512,289
Pre-merger post-reverse split Rescon 3,552,557
Conversion to common (15,000,000) (7,999,997) (4,680,647) 27,680,644
Issuance of Series D on July 2004 19,531,247
Issuance on purchase of Accordion asset on August 2004 300,000
Exercise of employee stock options on September 2004 301,158
Issuance on purchase of DC7
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Total basic shares as at December 31, 2004 0 0 0 19,531,247 52,346,648
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as converted to common 47,301,090
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Total fully diluted shares as at December 31, 2004 0 0 0 66,832,337 52,346,648
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0
Weighted
Average
as converted Weighted as converted
Total to Rescon Average to Rescon
Nayna balance as at December 31, 2003 48,192,933 9,586,346 48,192,933 9,586,346
Pre-merger post-reverse split Rescon 3,552,557 3,552,557
onversion to common 0 0 0 0
Issuance of Series D on July 2004 19,531,247 3,885,078 8,138,020 1,618,782
Issuance on purchase of Accordion asset on August 2004 300,000 59,675 100,000 19,892
Exercise of employee stock options on September 2004 301,158 59,905 75,290 14,976
Issuance on purchase of DC7 46,502,040 9,250,000
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Total basic shares as at December 31, 2004 118,379,935 22,841,003 56,506,242 14,792,553
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as converted to common 47,301,090 9,408,944 19,708,788 3,920,393
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Total fully diluted shares as at December 31, 2004 165,681,025 32,249,947 76,215,030 18,712,946
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3. PRO FORMA ADJUSTMENTS
The pro forma adjustments are based on management's preliminary estimates, which
may change as additional information is obtained, and eliminate the historical
assets, liabilities and equity of Rescon that will not be part of the combined
company after the Merger.
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