EXHIBIT 99.2
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The accompanying unaudited pro forma combined condensed financial
statements are based upon the historical condensed balance sheets and condensed
statements of operations of the Company and Steiner. The unaudited pro forma
combined condensed balance sheet has been prepared as if the acquisition
occurred on June 30, 1998. The unaudited pro forma combined condensed financial
statements of operations for the year ended December 31, 1997 and for the six
months ended June 30, 1998 have been prepared as if the acquisition had occurred
on January 1, 1997. The statements are based on accounting for the business
combination as a reverse acquisition, whereby the Company will be the surviving
corporate entity, but Steiner is the accounting acquirer. As Steiner is the
accounting acquirer in a transaction accounted for as a purchase in accordance
with generally accepted accounting principles, the purchase price has been
allocated to the Company's assets and liabilities based upon preliminary
estimates of their respective fair values. The pro forma information may not be
indicative of the results that actually would have occurred if the Merger had
been in effect from and on the dates indicated or which may be obtained in the
future.
UNAUDITED PRO FORMA COMBINED
CONDENSED BALANCE SHEET
JUNE 30, 1998
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
METRO TEL STEINER-ATLANTIC ADJUSTMENTS COMBINED
---------- ---------------- ----------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 475,508 $ 828,390 $ 1,303,898
Accounts receivable - net 486,144 1,021,213 1,507,357
Inventory 1,434,147 2,767,624 $ 149,314 (1) 4,351,085
Other assets 78,766 228,245 307,011
------------- ------------ ------------------ ----------
Total current assets 2,474,565 4,845,472 149,314 7,469,351
Fixed assets - net 151,346 146,461 297,807
Deferred income taxes 133,000 (46,000) (9) 87,000
Goodwill 763,628 (763,628) (2) 313,917
313,917 (3)
Other assets 9,676 148,651 158,327
------------ ----------- ------------------ ----------
Total assets $ 3,532,215 $ 5,140,584 $ (346,397) $ 8,326,402
============ ============= ============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 1,000,000 $ 324,678(15)
(1,324,678)(16)
Current portion of long-term debt 200,000 148,258(16) 348,258
Accounts payable and accrued liabilities $ 713,260 1,391,222 2,104,482
Customer deposits 389,371 389,371
------------------ ----------- ------------------ -----------
Total current liabilities 713,260 2,980,593 (851,742) 2,842,111
Deferred income taxes 5,000 5,000
Long-term debt 216,613 1,176,420(16) 1,393,033 (17)
Stockholders' equity:
Common stock at par 52,007 169,750 (169,750) (4) 172,531
120,524 (5)
Treasury stock (68,750) (68,750)
Additional paid-in capital 2,152,423 381,104 (6) 2,533,527
Retained earnings 678,275 1,773,628 (678,275) (6) 1,448,950
(324,678)(15)
------------ ------------- ------------ -------------
Total stockholders' equity 2,813,955 1,943,378 (671,075) 4,086,258
------------ ------------- ------------ -------------
Total liabilities and stockholders' equity $ 3,532,215 $ 5,140,584 $ (346,397) $ 8,326,402
============ ============= ============ =============
The accompanying notes are an integral part of the Unaudited Pro Forma Combined
Condensed Financial Statements.
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UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997 SIX MONTHS ENDED JUNE 30, 1998
------------------------------------------------------ -----------------------------------------------------
HISTORICAL HISTORICAL PRO FORMA PRO FORMA HISTORICAL HISTORICAL PRO FORMA PRO FORMA
METRO TEL STEINER-ATLANTIC ADJUSTMENTS COMBINED METRO TEL STEINER-ATLANTIC ADJUSTMENTS COMBINED
---------- ---------------- ----------- --------- ---------- ---------------- ----------- ----------
Net sales 4,148,930 $ 14,093,632 $18,242,562 $ 1,820,035 $ 7,747,321 $9,567,356
Cost of sales 2,531,317 10,344,113 $ 159,650(7) 13,035,080 1,320,783 5,856,339 7,177,122
--------- ---------- -------- ---------- --------- --------- ---------
Gross profit 1,617,613 3,749,519 (159,650) 5,207,482 499,252 1,890,982 2,390,234
Selling, general 1,252,585
and administrative 3,474,421 (25,133)(8) 3,951,873 919,475 1,698,058 $(12,567)(10) 1,929,966
(750,000)(11) (375,000)(11)
(300,000)(12)
Research and
development 218,155 218,155 116,566 116,566
------- ------- ------- -------
Operating
income (loss) 146,873 275,098 615,483 1,037,454 (536,789) 192,924 687,567 343,702
Interest expense 60,940 162,166(14) 223,106 26,509 69,290(14) 95,799
Interest and
other income 8,939 295,967 304,906 4,826 277,778 282,604
----- ------- ------- ----- ------- -------
Income (loss)
before tax 155,812 510,125 453,317 1,119,254 (531,963) 444,193 618,277 530,507
Income tax
expense (benefit) 65,300 363,763(9) 429,063 (162,900) 367,055(9) 204,155
------ ------- ------- --------- ------- -------
Net income
(loss) 90,512 $ 510,125 $ 89,554 690,191 $(369,063) $ 444,193 $ 251,222 $ 326,352
====== ============ ========== ========== ========== =========== ========== ===========
Weighted
average shares
outstanding
Basic 2,051,268 4,820,954(5) 6,872,222 2,054,046 4,820,954(5) 6,875,000
Diluted 2,074,668 4,820,954(5) 6,895,622 2,054,046 4,869,554(13) 6,923,600
Earnings (loss)
per common share
Basic 0.04 $ 0.10 $ (0.18) $ 0.05
Diluted 0.04 0.10 (0.18) 0.05
The accompanying notes are an integral part of the Unaudited Pro Forma Combined
Condensed Financial Statements.
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NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(1) Adjustment for purchase accounting applied to the Company's net assets
acquired by Steiner.
(2) Adjustment to eliminate goodwill recorded on the Company's historical
financial statements.
(3) To reflect excess of cost over acquired net assets. Such goodwill and
related amortization is subject to possible adjustment resulting from
completion of the valuation of the Company's assets and liabilities.
(4) To reflect elimination of Steiner Common Stock at par deemed purchased
by the Company.
(5) To reflect issuance of 4,720,954 shares of the Company's common stock to
former Steiner stockholders and 100,000 shares to the Company's
financial advisor.
(6) To reflect elimination of the Company's historical retained earnings and
adjustment to additional paid-in-capital for purchase accounting.
(7) Adjustment for additional cost of goods sold due to write-up of the
Company's inventory in purchase accounting.
(8) To reflect elimination of amortization on historical Company goodwill of
$29,817 and new amortization on excess of purchase price over acquired
net assets of the Company of $4,684 using an estimated life of 15 years.
(9) The estimated tax effect on the pro forma adjustments and the combined
operations.
(10) To reflect elimination of amortization on historical Company goodwill of
$14,909 and new amortization on excess of purchase price over acquired
net assets of the Company of $2,342 using an estimated life of 15 years.
(11) Adjustment for executive compensation excluding the agreed upon salary
to be paid to Michael J. Steiner after consummation of the transaction.
(12) To reflect elimination of $300,000 of non-recurring transaction costs.
(13) To reflect issuance of 4,720,954 shares of the Company's common stock to
former Steiner stockholders and 100,000 shares to the Company's
financial advisor and an adjustment of 48,600 shares for the assumed
exercise of outstanding stock options of the Company.
(14) Adjustment for additional interest expense incurred on debt used by
Steiner to pay undistributed S-corporation earnings to Steiner
shareholders per the Merger Agreement.
(15) To reflect additional debt and payment of undistributed S-corporation
earnings to Steiner shareholders.
(16) Adjustment to reclassify existing debt arrangements to term loan.
(17) Does not include borrowings subsequent to June 30, 1998.
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COMPARATIVE PER SHARE DATA (UNAUDITED)
The following table presents, as of the dates and for the periods
indicated on the basis indicated in the footnote to the table, the: (a) book
value per common share and (b) income (loss) from continuing operations per
common share: (i) on a historical basis for each of the Company and Steiner, and
(ii) on a pro forma basis for the Company for determining book value, assuming
the Merger had been effective at June 30, 1998, and for determining income
(loss), assuming the Merger had been effective at January 1, 1997. The following
data should be read in conjunction with the historical financial statements and
the Selected Pro Forma Combined Condensed Financial Statements of the Company
and Steiner included elsewhere in this Proxy Statement. See "INDEX TO FINANCIAL
STATEMENTS".
PER SHARE OF COMMON STOCK
---------------------------------------
BOOK VALUE(1) INCOME (LOSS)(1)
------------- ----------------
THE COMPANY - HISTORICAL
As of June 30, 1998 and for the year then ended.......................... 1.37 (.17)
STEINER - HISTORICAL
As of December 31, 1997 and for the year then ended...................... .73 .11
For the six months ended June 30, 1997................................... .08
As of June 30, 1998 and for the six months then ended.................... .41 .09
THE COMPANY EQUIVALENT PRO FORMA COMBINED
For the year ended December 31, 1997..................................... .01
As of June 30, 1998 and for the six months then ended.................... .59 .05
- --------------------
(1) For comparability purposes, book value and income (loss) per share date
for Steiner is based upon 4,720,954 weighted average common shares
outstanding for the dates and periods indicated.
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