Subject: Annual Report
Date: Fri, Jan 9, 1998 23:19 EST
From: TokyoMexx
Message-id: <19980110041900.XAA02413@ladder02.news.aol.com>
Revenue
1996 20,633,000
1997 36,843,000 increase of 79%
Gross Profit
1996 5,956,000
1997 12,521,000 increase of 110%
Earnings before taxes app and amortisation
1996 (1.029)
1997 (.71) 93%
Shareholders equity
1996 3,002,000
1997 8,476,000 192 %
LETTER TO SHAREHOLDERS
It has been over three years since the conipany's last shareholder meeting. Clearly, the fundamental character and quality of the company and its future prospects have all changed dramatically since that last meeting.
LOOKING BACK
In November 1994, the company was operating solely in Deriver and was engaged in three businesses: electrical contracting through Sharp Electric Construction; control system component distribution via 'I'ech Sales, and control system integration through Topro Systems Integration. Consolidated revenues were $12,865,000 for fiscal 1994, and control systems integration services accounted for approximately $10,600,000 of that total.
From that base, in the spring of 1995, shortly after I joined 'I'opro as Chief Executive Officer, the company launched a new strategy to concentrate all its resources on growing the control system integration business and establishing a true national operating presence.
The execution of that strategy was a major under-
John Jenkins taking; in less than twenty-four months, we:
Chief Executive Officer
+ Discontinued the operations of Sharp Electric Construction (lo.
*Discontinued the operations of 1ech Sales, Inc.
*Acquired MDCS Inc., an Atlatita-based control system integrator
+ Acquired Advanced Control Technology Inc., a control system integrator with operations in Albany, Oregon and Seattle, Washington
+ Acquired Vision Engineering Inc., a control system integrator with operations in Cypress, California; Sacramento, California; Phoenix, Arizona; Atlanta, Georgia; Chicago, Illinois and San Juan, Puerto Rico.
*Merged the Vision Atlanta operations with MDCS
+Closed the Vision San Juan operations
* Acquired All Control Systems Inc., in West Chester, Pennsylvania
This was a rugged journey, but well worth the price.
2T 0 S H A R E H 0 L D E R S
WHERE WE ARE NOW
Three years later tire company is engaged only in its core business of Industrial Information technology Services which includes not only control system integration, but also includes more expanded offerings such as providing sophisticated manufacturing execution systems.
'The revenue run rate in the core business now stands at $45,000,000, is growing and operating results are moving sharply forward. The balance sheet and cash position are much improved.
'The company is now the largest independent control system integrator in the LJ.S., employing 300+ personnel and operating from ten offices: Denver, CO; Ilhoenix, AZ; Cypress, CA; Sacramento, CA; Albany, OR; Seattle, WA; Chicago, IL; Atlanta, (iA; Greenville, SC; West Chester, f'A.
This geographical positioning allows us to better service our vertical markets
and national accounts, such as Coca-(@ola, Hershey Foods, Nestle, Merck and Coastal. More importantly, we are now positioned to accelerate growth by taking existing products to new geographical markets.
rfie company has developed a series of application solution products that includes, among others, BevOtieTM, BakeOneTM, l,ineonerm, FabOneTM. This element of our strategy further distinguishes us from the competition and provides opportunity for improved execution margins. We will continue to expand the "product" component of the business.
The company is investing in an Intranct structure that will allow our branch operations to easily distribute workload across offices, allowing engineers in several locations to work "side-by-side" electronically. 'This is of great value ill maintaining high resource utilization during the typical peak and valley demand cycles faced by each branch.
fit the process of this transformation, the company has made major changes to its organization and management structure. At the executive level this includes the recent naming of Kevin Fallon as Chief Operating Officer, Douglas Kelsalt as Chief Financial Officer and Larry Hagewood as Executive Vice President of Sales and Marketing. These gentlemen all bring demonstrated skill and industry specific experience to their assignments.
Of greater importance is the continued professional growth and constant dedication of our employees. This market places very rigorous demands on our staff; deadlines are always tight, technology is stretched, project start-ups require continuous 24-hour, on-site presence away from home, in venues from Alaska to India. Our staff continues to not only respond to these demands, but constantly develop fresh ideas by which we upgrade our own
effectiveness and create even greater Value for our client.
TO @ H A R F H 0D E R S
T HE F UT UR E
In July, 1997, the company launched a major business initiative to address Year 2(X)O (Y2K) compliance in factory automation and process control, offering a suite of services and products called Plant Y2kOnelm.
Plant Y2kOne includes: a CD-ROM based methodology, including Internetenabled access to our vendor compliance database that supports client self-execution of their Year 2000 program; training services and help desk support; and project services ranging from complete execution to program management of client staff .
Our technical staff worked at a breakneck pace to ensure on-time shipment of the initial release of the CD-ROM.
The market response to this offering has been very strong. As of this date, the company has closed a number of contracts with Fortune SOO clients for multi-site engagements and expects to finalize several more by the end of December, 1997. The company is actively recruiting additional staff with current plans to hire as many as ISO in the next nine months to meet demand. We expect our core business to grow to support this additional staff beyond
the Year 2000 demand.
At this time, the company finds itself in a clear leadership position as the only organization providing a comprehensive offering of product and services for Year 2000 process control compliance.
Of critical importance is that the Plant Y2kOne initiative directly supports the objectives of our base business. In only 30 days since the release of the CD-ROM, we find ourselves positioned to do business with more than 30 new Fortune 500 clients. We expect that number to grow dramatically and that, as a result of this Y2K-driven introduction, we will continue to practice our core business in these new accounts after the Year 2000 event is behind
us.
In addition, the Y2K activity will force many of our clients to understand the value to be gained from vertical integration of their business and process control information technology systems. This will further significantly expand the growth opportunity for our company as we are particularly well positioned to provide the product and services required to effect that integration.
The future holds dramatic opportunity for our organization to broaden its industry leadership position. Our challenge is to meet that opportunity in an aggressive and timely fashion. We relish that challenge and took forward to your continued support and shared success.
Sincerely,
John Jenkins, Chief Executive Officer, Topro, Inc.
Subject: TPRO y2k service definition
Date: Fri, Jan 9, 1998 23:27 EST
From: TokyoMexx
Message-id: <19980110042700.XAA04768@ladder01.news.aol.com>
PLANT Y2K ONE PRODUCTS & SERVICES
DESIGNED BY TAVA TECHNOLOGIES TO ADDRESS YEAR 2000 COMPLIANCE IN FACTORY AUTOMATION AND
PROCESS CONTROL SYSTEMS
For manufacturers, resolving Year 2000 date problems on the plant floor computers can be air opportunity if they use it as such.
Although most companies have begun work on their corporate and financial business systems, many manufacturers have yet to deal with the risk to the hundreds of control systems and embedded devices which operate their plant floors and which generate their revenues.
'I'he problem exists because many computer systems are [lot capable of handling dates that end in '00," and could crash when clocks tick over to January 1, 2000. 'the results are production problems for management and safety hazards for employees.
'['fie only reliable solution for the 600,000 plant floors in the U.S. is a methodical application of skill and experience to every system and device that controls their production operations. 'I his is exactly tire kind of superior project expertise and experience 'RAVA brings to the Year 2000 issue.
Executed properly, manufacturers can use this occasion to improve their plant floor perfortliatice so that today's expenditure becomes an investment for tomorrow.
TAVA offers manufacturers two choices to solve their Year 2000 date problems. TAVA has developed Plant Y2kOne, a full service suite of resources on a CD-ROM that covers the entire project from impact assessment to implementation and testing. The suite includes the following tools:
PLANT Y2K ONE PRODUCTS AND SERVICES
Method V2kOne v
A step by step methodology for identifying, prioritizing and fixing Year 2000 compliance problems on the plant floor.
Inventory V2kOneTM
A computer program designed to collect and organize data from the inveiltory of software and hardware components on the plant floor.
P L A N T Y 2 K 0 N E
(Compliance V2kOne'm
TAVA's database of potential Year 2000 problems with thousands of over-the-counter plant floor devices and systems.
Manage Y2kOne TM
A highly developed project management program that provides for specific and comprehensive tracking, control and status reporting of the remediation process.
(:all (Center Y2kOne'm
Provides access to a "help desk" which furnishes information on research, testing and general technical information.
Search V2kOnelm
A set of search engines that quickly scan and accurately identify date fields in custonier software,
Train V2kOne'm
A structured multi-day training program designed to accelerate plant ability to launch compliance initiatives. A multi-day, graduated training program is offered to clients proficient in plant floor technologies that desire to apply Plant Y2kOne tools independent of, or with'IAVA.
However, most manufacturers don't have qualified systems engineers that they can take away from current assignments to work on Year 2000 date problems. So TAVA'rechnologies offers one more feature of Plant Y2kOne:
MILLENNIUM SERVICES
TAVA engineers either team with plant staff or conduct the projects for the plant. The service scope can range from managing and staffing the entire remediation Prograni to supplying any combination of experienced technical staff augmentation, program or project management leadership to support client core staff.
P L A N T Y 2 K0 N E
Subject: Financials
Date: Fri, Jan 9, 1998 23:50 EST
From: TokyoMexx
Message-id: <19980110045000.XAA08185@ladder01.news.aol.com>
CONSOLIDATED BALANCE SHEET
Topro Inc. and Subsidiaries, June 30, 199 7
Pro forma
Assets (Note 8) (Note 16)
Current assets:
Cash (Note 13) $907,000 $ 3,215,000
Receivables:
Trade, net of allowance for dotibtftil accounts
of $2,075,000 (Note 6) 6,097,000 6,097,000
Other receivables 20,000 20,000
Costs and estimated earnings in excess of billings
on uncompleted contracts (Note 7) 5,712,000 $,712,000
Inventories 174,000 174,000
Prepaid expenses and other 222,000 222,000
Total current assets 13,132,000 15,440,000
Property and equipment, at cost:
Building and land 850,000 850,000
Furniture and equipment 2,820,000 2,820,000
Leasehold improvements 786,000 786,000
4,456,000 4,456,000
Accumulated depreciation and amortization (1,823,000) (1,823,000)
Net property and equipment 2,633,000 2,633,000
Capitalized software costs,
net of accumulated amortization of $401,000 2,025,0(X) 2,025,000
Other assets:
Excess of cost over fair value of assets acquired,
net of accumulated amortization
of $634,000 (Note 4) 8,5.18,000 8,538,000
Debt issuance costs, net of accumulated
amortization of $64,000 274,000 274,000
Other assets 254,000 284,000
Total assets $26,886,000 $29,194,000
The accompanying notes are an integral part of the consolidated financial statements.
29 T E M 7 C 0 N @ 0 L D A T E 1) B A L A N C F @ H E E T
Cotisoli@lated Balance Slieet continued.
Pro forma
Liabilities and Stockholders' Equity (Note 16)
Current liabilities:
l,ine-of-credit (Note 9) $75,000 75,000
Current portion of long-term debt (Note 8):
Related parties 142,000 142,000
Financial institutions and other 1,823,000 1,823,000
Capital lease obligations 111,000 111,000
Accounts payable 7,247,000 4,9.39,000
Billings in excess of costs and estimated earnings
on uncompleted contracts (Note 7) 1,478,000 1,478,000
Accrued expenses 1,718,000 1,718,000
Reserve for contract losses (Note 13) 370,000 370,000
Total current liabilities 12,964,000 10,656,000
Long-term debt, net of current portion (Note 8);
Financial institutions and other 5,332,000
Capital lease obligations 90,000
'total long-term debt 5,422,000
Deferred gain (Note 13) 24,000
Total liabilities 18,410,000 13,417,
Commitments and contingencies (Notes 3, 7 and 13)
Stockholders' equity (Notes IO, I I and 12):
Preferred stock, par value $.OOOI per share;
authorized 10,000,000 shares,
133,334 shares issued and outstanding
Common stock, par value $.OOOI per share;
authorized 200,000,000 shares,
11,709,605 shares issued and outstanding,
16,500,738 shares issued and outstanding
pro forma 1,000 2,000
Additional paid-in capital 15,998,000 23,298,000
Accumulated deficit (7,523,000) (7,523,000)
'total stockholders' equity 8,476,000 15,777,000
Total liabilities and stockholders' equity $26,886,000 $29,194,000
'I'he accompanying notes are an integral part of the consolidated financial statements.
30 T E M 7 C 0 N S 0 1 1) A T E 0 B A L A N C F S H E E T
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended June 30,
1997 1996
]Revenues $ 36,843,( 00 20,633,000
Cost of sales 24,322,000 14,677,000
Gross profit 12,521,000 5,956,000
Expenses:
Sales expenses 2,297,000 1,744,000
General and administrative expenses 9,871,000 4,129,000
Bad debt expense 944,000 51,000
Amortization of capitalized software costs and goodwill 815,000 150,000
Subsidiary acquisition purchase adjustment (Note 4) 250,000 -
14,177,000 6,074,000
Other income (expense):
Gain on sale of assets 8,000 435,000
Interest expense (,987,000) 380,000)
Other 116,000 79,000
(863,000) 134,000
Income (loss) from continuing operations
before income tax expense (2,519,000) 16,000
Income tax expense (Note 9) (110,000) -
Income (loss) from continuing operations (2,629,000) 16,000
Discontinued operations (Note 5):
Loss on disposal (,106,000) (1,871,000)
Net loss $(2,735,000) $(1,855,000)
Net loss applicable to common shareholders $(2,750,000) $(1,855,000)
Net loss per share:
Continuing operations $ (0.30) $
Discontinued operations (0.01) (0.40)
Net loss per share $ (0.31) $(0.40)
Weighted average shares outstanding 8,882,000 4,655,000
The accompanying notes are an integral part of the consolidated financial statements'
31 T E M 7 CON @ 0 L DA T ED S T A F E M F N T S0 F 0 P F R A T 0 N S
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended June 30, 1996 and 1997
Additional
Preferred stock Common stock paid-in Accumulated
Shares Amount Shares / Amount capital deficit
Balance, July 1, 1995 3,375,628 $ 4,17H,000 $(2,918,000)
Shares issued for cash in
private placements, net 84S,Ml 7S7,OW -
Shares issued for conversion of 12@Yf)
1 80 day debentures and accrued interest 390,000 498,000 -
Shares issued to employees as compensation 2,000 1,000 -
Shares issued for acquisition
of Advanced Control 1,657,M) 1,657, -
Shares issued for conversion of
senior notes and accrued interest 94,775 63,000
Shares issued in payment of
Advanced Control debt 65,000 105,000
Warrants issued with convertible debentures - 38,000
Shares issued for acquisition of Vision 200,000 300,000
Options Issued for acquisition of Vision - 90,000
Shares issued for payment of
accounts payable 10,000 10,000
Warrants issued for services - 87,000
Net loss - - (1,855,000)
Balance, June 30, 1996 6,639,403 7,774,000 (4,773,000)
Shares issued for cash in private
placements, net 880,(m 2,984,(M -
Shares issued for conversion of 8'Yo notes 214,285 37S,000 -
Shares issued for conversion of
12(Y(i notes and accrued interest 35,000 53,000 -
Shares issued for conversion of IOIN)
senior notes and accrued interest 548,436 367,000 -
Shares issued for financing fees
and extensions 40,000 99,000 -
Shares issued for acquisition of All (.ontrol 1,883,333 2,825,000 -
Shares issued for acquisition of Vision 201,130 289,000 -
Shares issued upon exercise of warrants 1,178,018 1,167,000 -
Shares issued upon exercise of stock options - - 90,000 -66,000 -
Options and warrants issued
for outside services - - - -52,000 -
Deferred debt costs upon conversion of debt - - - -(53,000) -
Ilrefefred stock dividends - - - - 15,000)
Net loss - - - - (2,73S,000)
Balance, June 30, 1997 133,334 $ 11,709,605 $1,000 $15,998,000 $(7,523,000)
The accompanying notes are an integral part of the consolidated financial statements.
32 1 T E M 7 S T E 0 U T Y
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30,
1997 1996
Cash flows from operating activities:
Income (loss) from continuing operations $(2,629,000) $16,000
Adjustments to reconcile income (loss) to cash
used fit continuing operating activities:
Depreciation 767,000 296,000
Amortization 815,000 150,000
Provision for doubtful accounts 813,000 61,000
(;am on sale of fixed assets 8,000) 435,000)
Issuance of compensatory options and warrants 52,000 18,000
(',oninioii stock issued for interest and other fees 99,000 37,000
Changes in operating assets and liabilities:
(Increase) decrease in:
Receivables 3,740,000 (1,942,000)
Costs and estimated earnings in excess of billings
(1,886,000) (,378,000)
Inventories (26,000) 73,000
Prepaid expenses and other 9,000 43,000)
Increase (decrease) in:
Accounts payable 32,000) 104,000
Billings in excess of costs and estimated earnings (1,528,000) 82,(X)O
Accrued expenses and other (1,054,000) 357,000)
Net cash used in continuing operating activities ( 868,000) (2,318,000)
Discontinued operations:
Loss from discontinued operations ( 106,000) (1,871,000)
Change in assets 526,000 1,294,000
Decrease in accounts payable
( 974,000) (,621,000)
Net cash used in discontinued operations ( 554,000) (1,198,000)
Net cash used in operating activities (1,422,000) (3,516,000)
Cash flows from investing activities:
Cash acquired in acquisitions of subsidiaries 3,000 202,000
Purchase of investment - ( 229,000)
Sale of investments - 350,000
Proceeds from sale of property and equipment 13,000 -
Purchase of property and equipment (,217,000) ( gs,ooo)
Acquisition costs of subsidiaries (,522,000) -
Capitalized software development costs (1,174,000) ( 572,000)
Proceeds from notes receivable 40,000
Net cash used in investing activities (1,897,000) ( 304,000)
']'lie accompanying notes are an integral part of the consolidated financial statements.
33 T E M 7 C A S H
(,'ooisolidated stateptictits of cash flow cotititiued.
For the years ended June 30,
1997 1996
Cash flow from financing activities:
Proceeds from issuance of notes and other borrowings 1,411,000 12,396,000
Principal payments on notes and other borrowings (1,503,000) (9,556,000)
Deferred note arid other financing costs (,120,000) 284,000)
Proceeds from the sale of stock arid exercise of warrants
and options, net of offering costs of $336,000 4,217,000 1,267,000
Preferred stock dividends (15,000)
Net cash provided by financing activities 3,990,000
Increase in cash 671,000
Cash, beginning of year 236,000
Cash, end of year $907,000 $236,00
Supplemental disclosure of cash flow information:
(lasti paid for interest $1,049,000 $ 294,000
Supplemental disclosure of non-cash investing and financing activities:
Common stock issued in the acquisition of All Control $2,825,000 $ -
Conversion of notes, accrued interest and debt issue
costs to common stock 742,000 588,000
Common stock issued in the acquisition of Vision 289,000 390,000
Purchase of equipment under long-term lease 32,000 -
Notes payable cancelled in exchange for equity investment - 760,000
Common stock issued in the acquisition of Advanced Control - 1,657,000
Common stock issued as payment of accounts payable - 10,000
Warrants issued in connection with convertible debentures - 38,000
The accompanying notes are an integral part of the consolidated financial statements.
34 1 T F M7 A S H
Subject: Jan 29 Agenda
Date: Sat, Jan 10, 1998 00:07 EST
From: TokyoMexx
Message-id: <19980110050700.AAA10543@ladder01.news.aol.com>
TOPRO, INC. ANNUAL MEETING TO BE HELD ON 01/29/96 AT lOtOO A.M. KST
FOR HOLDERS AS OF 12/IS/97
70117 11-0577 AS AN ALTERNATIVE TO COMPLETING THIS FORM, YOU KAY ENTER YOUR
VOTE INSTRUCTION BY TELEPHONE. CALL TOLL FREE 1-600-4S4-8663
890780104 AND FOLLOW THE SIMPLE INSTRLXTIONS.
0391 853S 9711
DIRECTORS RECOMWND: A VOTE FOR ELECTION OF THE FOLLOWING DIRECTORS
I- 01-POSERT L. COSTELLO,02-J" JENKINS,OS-ROBERT C. PEAMN,04-RICK SCHLEUFER. 05-JUDITH A. DRAPER
ú - AMENDMENT OF ARTICLES OF INCORPORATION ------------------------- FOR
3 - APPROVAL OF AMEM)NENT TO THE 1992 EMPLOYEE STOCK PURCHASE PLAN ---- >>> FOR
4 - APPROVAL OF 1"7 STOCK OPTION AND STOCK BONUS PLAN ---------------- >>> FOR
ú - RATIFICATION OF APPOINTMENT OF IDO SEIDMAN, LLP AS ------------- FOR INDEPENDENT ALMITORS
-NOTE* SUCH OTHER BUSINESS AS MAY PROPERLY COW BEFORE THE
MEETING OR ANV ADJOURNMENT THEREOF
VIFIL |
