UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported) March 8, 2005
--------------------------
Dynasil Corporation of America
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(Exact name of registrant as specified in its charter)
New Jersey 000-27503 22- 1734088
- --------------------------- ---------- -----------
(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification No.)
385 Cooper Road, West Berlin, New Jersey 08091
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (856)-767-4600
Not Applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see
General Instructions A.2. below):
[] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
[] Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
1
Item 2.01. COMPLETION OF ACQUISITION
As previously announced, on March 8, 2005 Dynasil
Corporation of America ("Registrant" or "Dynasil"), acting
through a wholly-owned subsidiary, Optometrics Corporation,
acquired the operating assets and assumed certain
liabilities of Optometrics LLC, a worldwide supplier of
quality optical components including diffraction gratings,
lenses, thin film filters, laser optics, monochromators, and
specialized optical systems and software. Dynasil acquired
almost all of the operating assets of Optometrics LLC
including production equipment, testing equipment, accounts
receivable, inventory, cash, intellectual property, customer
lists, order backlog and leasehold rights. In addition,
Dynasil assumed specific operating liabilities such as
accounts payable, accrued expenses and leasehold
obligations. The acquisition was accounted for under the
purchase method of accounting. The assets acquired from
Optometrics LLC will be operated under the Optometrics
Corporation name. The assets were purchased from Mr. Frank
Denton and Ms. Laura Lunardo for a total of $700,000 in
cash, 300,000 shares of Dynasil common stock, repayment of
Optometrics LLC bank loans totaling $264,750 and a lease on
a "triple-net" basis with customary terms and conditions by
Dynasil and Optometrics Corporation of the building, owned
by Mr. Denton and Ms. Lunardo, where the operations are
currently conducted for an initial eight year term at annual
rent of $114,000, with options to renew for two additional
five year terms. Mr. Denton and Ms. Lunardo had no previous
relationship with Dynasil, its affiliates or directors other
than as a purchaser of fused silica parts from Dynasil and
upon consummation of the acquisition, Ms. Lunardo became
Chief Financial Officer of Dynasil. The acquisition was
funded by $700,000 of proceeds of a private placement by
Dynasil of 700,000 shares of a new series of convertible
preferred stock at a sale price of $1.00 per share to
existing and new shareholders as well as contemporaneous
bank loans made in the ordinary course of business by
Citizens Bank of Massachusetts to Optometrics Corporation
that contained customary terms and provisions for such
loans, including the pledge of Optometrics Corporation's
assets and guarantees of those loans by Dynasil secured by
certain of its assets. Mr. Craig T. Dunham, Dynasil
President and CEO, purchased 263,000 shares of the new
series of preferred stock for an aggregate purchase price of
$263,000. A Current Report on Form 8-K was filed on March
14, 2005 to report this transaction and a copy of the press
release was attached as Exhibit 99 to that Report on Form 8-
K dated March 14, 2005.
Item 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN
OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A
REGISTRANT
The information set forth under Item 2.01 is incorporated
herein by reference.
Item 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
As previously reported, on March 8, 2005 Dynasil sold
700,000 shares of a Series A 10% Cumulative Convertible
Preferred Stock in a private placement. The stock was sold
at a price of $1.00 per share. No
2
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underwriting discounts or commissions were paid in
connection with the sale and costs incurred to complete the
offering totaled $10,000. The securities were offered and
sold only to accredited investors within the meaning of Rule
501(a) under the Securities Act of 1933, as amended (the
"Act"), in a transaction conducted section 4(2) of the Act
and Regulations D thereunder. Each share of preferred stock
carries a 10% per annum dividend and is convertible to
2.2222 shares of common stock at any time by the holders,
subject to adjustment for certain subsequent sales of common
stock or securities convertible into or exchangeable for
common stock, and is callable after two years by Dynasil at
a redemption price of $1.00 per share. Proceeds from the
preferred stock sale were used to acquire the assets of
Optometrics LLC and working capital.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of businesses acquired
- Independent's Auditor's report - Optometrics LLC
- Balance sheets - Optometrics LLC
- Statements of Income - Optometrics LLC
- Statements of Member's Equity - Optometrics LLC
- Statements of Cash Flow- Optometrics LLC
- Notes to Financial Statements - Optometrics LLC
(b) Pro Forma financial information
- Unaudited Actual Condensed Consolidated Balance Sheet
of Dynasil Corporation of America, as of March 31, 2005
- Unaudited Pro Forma Condensed Consolidated Statement of
Operations of Dynasil Corporation of America for the six
months ending March 31, 2005 and the twelve months ending
September 30, 2004.
- Notes to the Unaudited Pro Forma Consolidated Financial
Information.
(c) Exhibits
2.1 Asset purchase agreement, dated as of February 17,
2005 between Dynasil Corporation of America, Optometrics
LLC, Frank Denton, and Laura Lunardo.
2.2 Lease agreement dated March 8, 2005 between Dynasil
Corporation of America, Optometrics Corporation, and
Optometrics Holdings LLC.
3.1 Copy of Certificate of Incorporation, including form
of Amendment to create Series A 10% Cumulative Convertible
Preferred Stock*
23.1 Consent of Belanger & Company, P.C.
99.1 Dynasil Corporation of America press release dated
March 9, 2005.*
* Previously filed with the Securities and Exchange
Commission as an exhibit to the registrant's Current Report
of Form 8-K filed on March 14, 2005 and incorporated by
reference herein.
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(a) Financial Statements of businesses acquired
Optometrics LLC Report and Financial Statements for the
Years Ended December 31, 2004 and 2003
Independent Auditor's Report
To the Members
Optometrics LLC
Ayer, Massachusetts
We have audited the accompanying balance sheets of
Optometrics LLC (the "Company") as of December 31, 2004 and
2003, and the related statements of income, members' equity
and cash flows for the years then ended. 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 U.S. 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 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 Optometrics LLC at December 31, 2004 and 2003,
and the results of its operations and its cash flows for the
years then ended in conformity with accounting principles
generally accepted in the United States of America.
Belanger & Company, P.C.
Chelmsford, Massachusetts
April 25, 2005
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Optometrics LLC
Balance Sheets
December 31, 2004 and 2003
ASSETS Notes 2004 2003
- ------ ----- ------ ------
CURRENT ASSETS:
Cash and equivalents 1,10 $ 95,868 $ 46,544
Accounts receivable (less
allowance for doubtful
accounts of $39,494
and $11,213, respectively) 1,9 303,235 320,350
Inventory 1,2 434,802 408,556
Prepaid expenses 89,836 77,278
--------- ----------
Total current assets 923,741 852,728
--------- ----------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment -
at cost 1,3 524,453 459,040
Less: accumulated depreciation
and amortization 220,121 140,879
--------- ----------
Property, plant and equipment -
net 304,332 318,161
OTHER ASSETS:
Deferred financing costs, net 7,588 10,939
--------- ----------
Total other assets 7,588 10,939
--------- ----------
TOTAL ASSETS $ 1,235,661 $ 1,181,828
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Demand notes payable 4 $ 147,513 $ 222,513
Current portion of long-term debt 5 84,552 138,183
Accounts payable and accrued
expenses 255,332 189,535
--------- ----------
Total current liabilities 487,397 550,231
--------- ----------
LONG-TERM LIABILITIES:
Note payable to related party 7 106,915 71,692
Long-term debt 5 69,866 155,229
--------- ----------
Total long-term liabilities 176,781 226,921
--------- ----------
MEMBERS' EQUITY 571,483 404,676
--------- ----------
TOTAL LIABILITIES AND MEMBERS' EQUITY $ 1,235,661 $ 1,181,828
=========== ===========
See accompanying notes which are an integral part of these
financial statements.
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Optometrics LLC
Statements of Income
For the Years Ended December 31, 2004 and 2003
Notes 2004 2003
----- ------ ------
NET SALES 1,9 $ 3,062,380 $ 2,555,567
COST OF SALES 1,743,875 1,491,696
----------- -----------
GROSS PROFIT 1,318,505 1,063,871
----------- -----------
OPERATING EXPENSES:
General and administrative 7 410,293 343,153
Research and development 184,302 187,380
Marketing and selling 1 254,136 197,173
----------- -----------
Total 848,731 727,706
----------- -----------
OPERATING INCOME 469,774 336,165
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (38,107) (42,508)
Other (4,622) (5,184)
----------- -----------
Total (42,729) (47,692)
----------- -----------
NET INCOME $ 427,045 $ 288,473
=========== ===========
See accompanying notes which are an integral part of these
financial statements.
Optometrics LLC
Statements of Members' Equity
For the Years Ended December 31, 2004 and 2003
Balance, December 31, 2002 $ 316,698
Capital contributions -
Net income 288,473
Distributions (200,495)
-----------
Balance, December 31, 2003 $ 404,676
Capital contributions -
Net income 427,045
Distributions (260,238)
-----------
Balance, December 31, 2004 $ 571,483
===========
See accompanying notes which are an integral part of these
financial statements.
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Optometrics LLC
Statements of Cash Flows
For the Years Ended December 31, 2004 and 2003
2004 2003
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 427,045 $ 288,473
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 84,249 73,489
(Increase) decrease in:
Accounts receivable 17,114 (60,235)
Inventory (26,245) 55,861
Prepaid expenses and other assets (12,558) 5,157
Increase (decrease) in:
Accounts payable and accrued expenses 65,795 (33,536)
Amount due to related party 35,223 8,152
--------- ---------
Net cash provided by operating activities 590,623 337,361
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant
and equipment (67,068) (60,998)
--------- ---------
Net cash used for investing activities (67,068) (60,998)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under
demand notes payable (75,000) 30,000
Proceeds from long-term debt - 10,341
Repayment of long-term debt (138,993) (134,960)
Deferred financing costs - (6,182)
Distributions (260,238) (200,495)
--------- ---------
Net cash provided by (used for)
financing activities (474,231) (301,296)
--------- ---------
INCREASE (DECREASE) IN CASH
AND EQUIVALENTS 49,324 (24,933)
CASH AND EQUIVALENTS, BEGINNING OF YEAR 46,544 71,477
--------- ---------
CASH AND EQUIVALENTS, END OF YEAR $ 95,868 $ 46,544
========= =========
SUPPLEMENTAL DISCLOSURE TO THE
STATEMENT OF CASH FLOWS:
Interest paid $ 38,933 $ 32,901
========= =========
Non-cash investing transactions:
Equipment additions through
capital leases 10,341
=========
See accompanying notes which are an integral part of these
financial statements.
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Optometrics LLC
Notes to Financial Statements
For the Years Ended December 31, 2004 and 2003
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature of Operations - Optometrics LLC (the "Company")
designs and manufactures optical components and
instruments. The Company operates from one location in
the United States. The Company markets its products
worldwide to original equipment manufacturers and end
users, both directly and through several overseas agents
and distributors.
Summary of Significant Accounting Policies
Basis of Presentation - The 2004 financial statements
include the accounts of Optometrics LLC. The financial
statements are expressed in U.S. dollars and are
prepared in accordance with accounting principles
generally accepted in the United States of America.
Description of Company Formation - Effective September
24, 2001, Optometrics LLC was organized as a limited
liability company in accordance with the provisions of
Massachusetts General Laws Chapter 156C. As a limited
liability company, each member's liability is limited to
the assets of the Company. The Company was acquired
through the purchase of a wholly-owned subsidiary of
Optometrics Corporation by the managers of the
subsidiary. The Company commenced operations on October
23, 2001.
Fair Value of Financial Instruments - The carrying value
of cash and equivalents, accounts receivable, accounts
payable and demand notes payable approximates fair value
due to the short-term nature of these instruments. The
carrying value of long-term debt approximates fair value
due to variable interest rates or a fixed rate that
approximates the variable interest rate. See Note 5 for
its carrying amount, effective interest rate and
maturity.
Cash and Equivalents - The Company considers all highly
liquid securities purchased with original maturities of
3 months or less to be cash equivalents. The Company
maintains its cash accounts in commercial banks located
in Massachusetts, in amounts that at times may exceed
federally insured limits. The Company has not
experienced any losses in such accounts.
Inventory - Inventory is stated at the lower of cost
(first-in, first-out method) or market.
Property, Plant and Equipment - Property, plant and
equipment is recorded at cost. Leased equipment is
recorded at the present value of the minimum lease
payments required during the lease
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period. Depreciation and amortization are provided over
the estimated useful lives of the assets or minimum
lease terms (three to forty years) using the straight-
line method. Expenditures for major renewals and
betterments which extend the useful lives of property
and equipment are capitalized; expenditures for
maintenance and repairs are charged to expense as
incurred.
Deferred Financing Costs - Costs related to obtaining
debt financing have been deferred and are being
amortized using the straight-line method over the
approximate repayment periods of the related debt (five,
ten and twenty years). Accumulated amortization
approximated $9,200 and $5,800 at December 31, 2004 and
2003, respectively. The carrying value of deferred
financing costs is reviewed whenever events or
circumstances indicate that the carrying value may not
be recoverable.
Advertising Costs - The Company expenses advertising
costs as incurred. Advertising expense was
approximately $95,800 and $84,800 for the years ended
December 31, 2004 and 2003, respectively.
Revenue Recognition - Revenue from sales of product is
recognized upon shipment. Shipping and handling costs
are classified separately from revenues and are included
in the cost of sales. Provisions for uncollectible
trade receivables are estimated based upon both specific
identification and a percentage of total receivables
using a historical average. Past due trade receivables
are charged off when management determines that all
reasonable attempts for collection have been exhausted.
Income Taxes - The Company is a limited liability
company and is not a taxpaying entity for federal and
state purposes, thus no income tax expense has been
recorded in the statements. Income of the Company is
taxed to the members in their respective returns.
Research and Development - Research and development
costs are expensed as incurred. Total research and
development expenses amounted to $184,302 and $187,380
for the years ended December 31, 2004 and 2003,
respectively.
Use of Estimates - The preparation of the financial
statements in accordance with generally accepted
accounting principles requires management to make
assumptions regarding estimates reported in these
financial statements. These estimates primarily include
allowance for doubtful accounts, the useful lives of
property, plant and equipment and reserves for obsolete
inventory, among others. These assumptions could change
based on future experience and, accordingly, actual
results may differ from these estimates.
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2. INVENTORY
At December 31, 2004 and 2003, inventory consisted of
the following:
2004 2003
------ ------
Raw materials $155,703 $203,508
Work-in-process 126,670 58,591
Finished goods 152,429 146,457
---------- ---------
Total $434,802 $408,556
========== =========
3. PROPERTY, PLANT AND EQUIPMENT
At December 31, 2004 and 2003, property, plant and
equipment consisted of the following:
2004 2003
------ ------
Leasehold improvements $ 18,874 $ 18,276
Machinery and equipment 478,429 428,752
Furniture and fixtures 27,150 12,012
---------- ---------
Total $ 524,453 $459,040
========== =========
Property, plant and equipment include certain
capitalized leases. The following is a schedule, by
year, of the future minimum payments under these leases,
together with the present value of the net minimum
payments as of December 31, 2004:
Year ending December 31, Amount
2005 $ 17,885
2006 8,652
2007 2,874
2008 and thereafter 0
Total minimum lease payments 29,411
Less amount representing interest 3,326
---------
Total present value of minimum payments 26,085
Less current portion of such obligations 14,552
---------
Long-term obligations with interest
rates ranging from 5.5% to 13.0% $ 11,533
=========
Depreciation and amortization of fixed assets amounted
to $79,242 and $70,137 for the years ended December 31,
2004 and 2003, respectively.
At December 31, 2004 and 2003, the capitalized cost of
leased machinery and equipment approximated $103,790 and
the related accumulated amortization approximated
$55,785 and $36,405, respectively. Amortization expense
is included in depreciation expense at December 31, 2004
and 2003.
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4. DEMAND NOTES PAYABLE
Demand notes payable at December 31, 2004 and 2003
consisted of a line of credit. The line of credit is
with a U.S. bank and provides for borrowings up to
$350,000 at the bank's prime rate plus 0.5% (5.75% and
4.5% at December 31, 2004 and 2003, respectively).
Borrowings under the line of credit are collateralized
by all accounts receivable, inventory, plant and
equipment, patents and trademarks of the Company and
expire in June 2005. At December 31, 2004, $147,513 was
outstanding and $202,487 was available under the line of
credit. The line of credit is cross-collateralized
with certain other long-term debt (See note 5).
5. LONG-TERM DEBT
The notes payable to banks contain certain restrictive
covenants concerning, among other things, additional
indebtedness and capital expenditures. The bank loans
are guaranteed by the two Members of the Company and are
cross-collateralized with assets of a related party (See
Note 7). The term note between the Company and a U.S.
bank contains certain restrictive covenants. As of
December 31, 2004, management is not aware of any
violations of the covenants.
Subordinated note is owed to a corporation in which the
Members of the Company have an interest.
Long-term debt at December 31, 2004, is due as follows:
2005, $84,552; 2006, $67,262; 2007, $2,605; and
thereafter, $0.
At December 31, 2004 and 2003, long-term debt consisted
of the following:
2004 2003
Subordinated note. Note is uncollateralized and payable
in twelve quarterly installments through October 2004.
Interest accrues at 4.5% and is payable
quarterly in arrears. $ - $ 52,253
Term loan due to a bank. Note is due in October 2006
and is payable in 60 monthly installments of principal and
interest, commencing November 2001. Interest accrues at U.S.
prime rate plus 1% (5.0% at December 31, 2004). It is
collateralized by accounts receivable, inventory and plant
and equipment of the Company and is guaranteed personally
by the Members. 128,333 198,333
Capital lease obligations for various equipment.
Effective interest rates range from 5.5% to 13.0%;
payable monthly in varying amounts through July 2007;
collateralized by related equipment. 26,085 42,826
-------- -------
Total 154,418 293,412
Less current portion 84,552 138,183
-------- -------
Long-term debt $ 69,866 $155,229
======== =======
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6. COMMITMENTS
The Company leases certain buildings and equipment under
long-term operating leases expiring on various dates
through fiscal 2012 . Minimum lease payments under
noncancelable operating leases are: 2005, $88,797;
2006, $80,828; 2007, $79,326; 2008, $79,326; 2009,
$77,250 and, thereafter, $231,750.
7. RELATED PARTY TRANSACTIONS
On December 23, 2002, land and buildings and the related
mortgages were transferred at cost to Optometrics
Holdings LLC. On that same date, Optometrics LLC
executed an agreement to lease the building from
Optometrics Holdings LLC for a period of ten years at an
annual rental, as amended in June 2004, of $77,250.
Optometrics Holdings LLC is also owned by the Company's
Members.
A note payable to Optometrics Holdings LLC was incurred
for an amount equal to the excess of mortgages assumed
over the net value of property transferred at December
23, 2002. Liabilities assumed by Optometrics Holdings
LLC are cross-collateralized with those of the Company
(see Note 5), are subject to certain covenants and are
personally guaranteed by the Members of the Company.
Rent expense for operating leases was $106,564 and
$127,796 for the years ended December 31, 2004 and 2003,
respectively, of which $92,562 and $114,000 was paid to
Optometrics Holdings LLC for the years ended December
31, 2004 and 2003, respectively.
8. EMPLOYEE BENEFITS PLAN
The Company has adopted a 401(k) savings plan covering
substantially all of the employees of the Company. The
plan is subject to certain minimum age and length of
service requirements. The Company has the option to
make discretionary contributions to the plan on behalf
of the participants. The Company contributed $36,450
and $30,562 to the plan for the years ended December 31,
2004 and 2003, respectively.
9. CONCENTRATIONS
In 2004, domestic sales represented approximately 72% of
total sales. At December 31, 2004, two U.S. segment
customers accounted for approximately 28% of sales and
ten customers accounted for 57% of accounts receivable.
10.CREDIT RISK
The Company maintains its cash accounts at a financial
institution
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located in Massachusetts. Accounts are insured by the
Federal Deposit Insurance Corporation up to $100,000.
At December 31, 2004, the Company had no uninsured cash
balances.
11.SUBSEQUENT EVENTS
On March 8, 2005, the Company sold substantially all of
its assets to Dynasil Corporation.
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(b) Unaudited Pro Forma Condensed Consolidated Financial
Information
Introduction
On March 8, 2005, Dynasil completed its acquisition of
certain assets and liabilities of Optometrics LLC
(Optometrics) in a transaction accounted for as a purchase
business combination. As consideration for the acquisition,
Dynasil issued 300,000 shares of its common stock valued at
approximately $68,400, paid $700,000 in cash to certain
Optometrics LLC members, agreed to lease certain real estate
owned by Optometrics' members and incurred acquisition-
related costs of approximately $109,546. The purchase price
of approximately $877,946 has been allocated to the tangible
and identifiable intangible assets acquired and liabilities
assumed on the basis of their estimated fair values.
The unaudited pro forma condensed consolidated statements of
operations for the year ended September 30, 2004 and for the
six months ended March 31, 2005 have been prepared to give
effect to the acquisition as if it had occurred on October
1, 2003. The unaudited actual condensed consolidated balance
sheets as of March 31, 2005 was prepared to give effect to
the acquisition since it had already occurred as of March
31, 2005.
The historical consolidated financial statements of
Optometrics have been prepared in accordance with U.S.
generally accepted accounting principles.
The unaudited pro forma adjustments are based on preliminary
estimates, available information and certain assumptions and
may be revised as additional information becomes available.
The unaudited pro forma condensed consolidated financial
information is not intended to represent Dynasil's financial
position or results of operations for any future period.
Since Dynasil and Optometrics were not under common control
or management for any period presented, the unaudited pro
forma condensed consolidated financial results may not be
comparable to, or indicative of, future performance.
This unaudited pro forma condensed consolidated financial
information should be read in conjunction with the
historical financial statements of Dynasil as well as the
Optometrics LLC statements included in this report.
Dynasil's historical consolidated financial statements can
be found in its Annual Report on Form 10-K filed on December
21, 2004.
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UNAUDITED ACTUAL CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31
Consolidated
ASSETS Dynasil Optometrics Eliminations Dynasil
Current assets
Cash and equivalents $322,228 $ 90,611 $ $ 412,839
Accounts receivable, net 416,224 354,468 770,692
Intercompany receivable 0 41,084 b (41,084) 0
Inventory 458,049 403,083 861,132
Other current assets 21,535 102,238 123,773
--------- ---------- ---------- ----------
Total current assets 1,218,036 991,484 (41,084) 2,168,436
Property, Plant and Equipment,
net 370,858 406,507 777,365
Investment in Subsidiaries 668,400 0 a (668,400) 0
Other Assets
Deferred financing costs 1,617 16,978 18,595
Intangibles 0 78,414 78,414
--------- ---------- ---------- ----------
Total other Assets 1,617 95,392 97,009
TOTAL ASSETS $ 2,258,911 $ 1,493,383 ($ 709,484) $ 3,042,810
--------- ---------- ---------- ----------
Consolidated
LIABILITIES Dynasil Optometrics Eliminations Dynasil
Current Liabilities
Note payable to bank $ 0 $ 250,000 $ $ 250,000
Current portion of
long-term debt 120,000 35,746 155,746
Accounts payable 226,688 86,341 313,029
Intercompany payable 41,084 b (41,084) 0
Accrued expenses 167,861 163,397 331,258
--------- ---------- ---------- ----------
Total current liabilities 555,633 535,484 (41,084) 1,050,033
Long-term Debt, net 428,889 285,565 714,454
Stockholders' Equity
Common Stock 2,277 668,400 a(668,400) 2,277
Preferred Stock 690,000 0 690,000
Additional paid in capital 1,343,421 0 1,343,421
Retained earnings 225,033 3,934 228,967
--------- ---------- ---------- ----------
2,260,731 672,334 2,264,665
Less treasury stock
at cost (986,342) 0 (986,342)
--------- ---------- ---------- ----------
Total Stockholders' Equity 1,274,389 672,334 1,278,323
--------- ---------- ---------- ----------
TOTAL LIABILITIES AND STOCK-
HOLDERS' EQUITY $2,258,911 $ 1,493,383 ($ 709,484) $3,042,810
========= ========== ======== =========
See accompanying notes to the unaudited pro forma condensed
consolidated financial statements.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2005
ProForma
Acquisition Pro Forma
Dynasil Optometrics Adjustments Dynasil
Sales $ 1,659,221 $ 1,561,838 $ $3,221,059
Cost of sales 1,256,058 899,804 c,f 11,075 2,166,937
--------- ---------- ---------- ----------
Gross profit 403,163 662,034 (11,075) 1,054,122
Selling, general and
administrative expense 372,403 449,047 a,e,g,h 90,279 911,729
Income (Loss)
from operations 30,760 212,987 (101,354) 142,393
Other income (expense):
Interest expense, net 15,941 16,135 b 7,055 39,131
Other expenses 0 44,994 e (44,994) 0
--------- ---------- ---------- ----------
Total other income
(expense) 15,941 61,129 (37,939) 39,131
Income (Loss) before
taxes 14,819 151,858 (63,415) 103,262
Provision for
Income Taxes 0 0 d 9,502 9,502
--------- ---------- ---------- ----------
Net income (loss) $ 14,819 $ 151,858 ($ 72,917) $ 93,760
Net income (loss) per share- Basic $0.03
Diluted $0.02
See accompanying notes to the unaudited pro forma condensed
consolidated financial statements.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2004
ProForma
Acquisition Pro Forma
Dynasil Optometrics Adjustments Dynasil
Sales $ 2,296,264 $ 2,942,173 $ $ 5,238,437
Cost of sales 1,759,736 1,698,967 c.f 11,466 3,470,169
--------- ---------- ---------- ----------
Gross profit 536,528 1,243,206 (11,466) 1,768,268
Selling, general and
administrative
expense 676,976 707,189 a,e,g,h 235,032 1,619,197
--------- ---------- ---------- ----------
Income (Loss) from
operations (140,448) 536,017 (246,498) 149,071
Other income (expense):
Interest expense, net 35,433 41,578 b 9,555 86,566
Other expenses 0 55,294 e (55,294) 0
--------- ---------- ---------- ----------
Total other income
(expense) 35,433 96,872 (45,739) 86,566
Income (Loss) before
taxes (175,881) 439,145 (200,759) 62,505
Provision for
Income Taxes 0 0 d 24,747 24,747
--------- ---------- ---------- ----------
Net income (loss) ($ 175,881) $ 439,145 ($ 225,506) $ 37,758
--------- ---------- ---------- ----------
Basic and diluted net income per share $0.01
See accompanying notes to the unaudited pro forma condensed
consolidated financial statements.
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Information
Note 1 - Pro Forma Adjustments and Assumptions
The following adjustments have been reflected in the
unaudited pro forma condensed consolidated financial
information:
The Optometrics acquisition has been accounted for
under the purchase method pursuant to the provisions of
SFAS No. 141, Business Combinations. Accordingly, the
identifiable net tangible and separately identifiable
intangible assets acquired and liabilities assumed were
recognized at their estimated fair values as of the
date of combination. Certain assets and liabilities
that were not included in the business combination have
been excluded. The unaudited pro forma adjustments
herein
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are based on preliminary estimates of fair value by an
independent appraiser for major equipment items. The
final allocation of the purchase price, when completed,
may differ materially from the preliminary purchase
price allocation herein. The consolidated balance
sheet as presented above is actual since the
acquisition has already been recorded. Refer to the
Company's 10-QSB report previously filed on May 16,
2005 and incorporated herein by reference.
The total consideration paid and preliminary purchase
price allocation are as follows:
Purchase price:
Cash consideration paid at closing $ 700,000
Purchase price paid at closing in shares 68,400
of Dynasil common stock
Estimated costs and expenses 109,546
---------
Total consideration $877,946
The purchase price paid at closing in shares of Dynasil
common stock was valued in accordance with Emerging
Issues Task Force Issue No. 99-12, Determination of the
Measurement Date for the Market price of Acquirer
Securities Issued in a Purchase Business Combination
(EITF 99-12) based on the average closing price of
Dynasil common stock two days prior and two days after
the measurement date, or the date the acquisition was
publicly announced by Dynasil. The purchase price
attributable to the 300,000 shares of Dynasil common
stock has been allocated to the par value and
additional paid in capital line items in the unaudited
Actual Condensed Consolidated Balance sheets.
Purchase price allocation:
Fair market value of net tangible assets $ 799,532
of Optometrics
Intangible Asset- Acquired Customer Base 78,414
----------
Total consideration $877,946
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Information
a) To reflect Optometrics' members' distributions as
salary expense.
b) To reflect the additional interest expense that would
have been incurred as a result of increased borrowings that
were partly used to fund the acquisition of Optometrics.
c) To reflect the difference in depreciation of property,
plant and equipment based upon the fair market valuation
placed on those assets at acquisition date.
d) To reflect an estimate of the Massachusetts state tax
expense that Optometrics would have incurred had it been a
corporation
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rather than a limited liability company during the period(s)
reflected in the pro forma condensed consolidated financial
statements.
e) To reclassify certain Optometrics expenses.
f) To reflect the difference in rent expense for the
impact of the new lease agreement negotiated by Dynasil for
the Optometrics' facilities.
g) To reverse the effect of an extraordinary event of
litigation and the legal costs associated with the event
that would not likely have happened had the Dynasil
acquisition of Optometrics not taken place.
h) To reflect the amortization expense related to the
identifiable intangible assets associated with the
acquisition of Optometrics. Identifiable assets are being
amortized using the straight-line method over an estimated
useful life of 7 years.
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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.
DYNASIL CORPORATION OF AMERICA
Date: May 24, 2005 By: /s/ Craig Dunham
--------------------------
Craig Dunham
President and Chief Executive Officer
EXHIBIT INDEX
2.1 Asset purchase agreement, dated as of February 17,
2005 between Dynasil Corporation of America, Optometrics
LLC, Frank Denton, and Laura Lunardo.
2.2 Lease agreement dated March 8, 2005 between Dynasil
Corporation of America, Optometrics Corporation, and
Optometrics Holdings LLC.
3.1 Copy of Certificate of Incorporation, including form of
Amendment to create Series A 10% Cumulative Convertible
Preferred Stock *
23.1 Consent of Belanger & Company, P.C.
99.1 Dynasil Corporation of America press release dated
March 9, 2005.*
* Previously filed with the Securities and Exchange
Commission as an exhibit to the registrant's Current Report
of Form 8-K filed on March 14, 2005 and incorporated by
reference herein.
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