Exhibit 99.2

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
OMNILINK SYSTEMS INC. AND SUBSIDIARY

Index to Consolidated Financial Statements

Unaudited Condensed Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013
 1 
Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013
 2 
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013
 3 
Unaudited Notes to the Condensed Consolidated Financial Statements
 4 
 
 
 

 

 
OMNILINK SYSTEMS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
             
   
March 31,
2014
    
December 31, 2013
  
             
ASSETS
            
CURRENT ASSETS
            
Cash and cash equivalents
     166,326       269,548  
Accounts receivable, less allowance for doubtful accounts of
                
$212,760 and $188,069
     2,321,760       3,016,705  
Inventories
     986,288       918,553  
Prepaid expenses and other current assets
     598,117       445,991  
Deferred costs
     210,000       154,693  
TOTAL CURRENT ASSETS
     4,282,491       4,805,490  
                 
Property and equipment, net of accumulated depreciation and
                
amortization of $8,306,728 and $8,174,612
     1,714,783       1,419,031  
Patents, net of acummulated amortization of $16,086 and $13,746
     257,379       253,602  
Other non-current assets
     96,246       90,640  
TOTAL ASSETS
   $ 6,350,899     $ 6,568,763  
                 
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
                
CURRENT LIABILITIES
                
Accounts payable
   $ 1,826,390     $ 1,969,482  
Accrued expenses
     777,420       985,142  
Deferred revenue
     277,384       272,572  
Line of credit
     960,926       1,670,150  
Long-term debt - current portion
     800,000       800,004  
TOTAL CURRENT LIABILITIES
     4,642,119       5,697,350  
                 
Long-term debt, net of current portion
     2,384,819       1,266,656  
Deferred rent
     160,368       169,604  
TOTAL LIABILITIES
     7,187,306       7,133,610  
                 
COMMITMENTS AND CONTINGENCIES
                
                 
REDEEMABLE PREFERRED STOCK
                
Redeemable preferred stock - Series B-2, $0.00002 par value;
                
14,000,000 shares authorized; 13,046,530 shares issed and
                
outstanding at March 31, 2014 and December 31, 2013;
                
liquidation preference of $2,160,000 as of March 31, 2014
                
and December 31, 2013
     2,160,000       2,160,000  
Redeemable preferred stock - Series B-1, $0.00002 par value;
                
35,000,000 shares authorized; 32,864,988 shares issed and
                
outstanding at March 31, 2014 and December 31, 2013;
                
liquidation preference of $5,569,038 as of March 31, 2014
                
and December 31, 2013
     5,569,038       5,569,038  
Redeemable preferred stock - Series B, $0.00002 par value;
                
15,000,000 shares authorized; 14,243,934 shares issed and
                
outstanding at March 31, 2014 and December 31, 2013;
                
liquidation preference of $10,881,545 as of March 31, 2014
                
and December 31, 2013
     10,923,252       10,923,252  
Preferred stock - Series A, $0.00002 par value 3,000,000 shares
                
authorized; 2,903,207 shares issued and outstanding at March
                
31, 2014 and December 31, 2013; liquidation preference of
                
$621,286 as of March 31, 2014 and December 31, 2013
     664,891       664,891  
                 
STOCKHOLDERS’ DEFICIT                
Common stock, $0.00002 par value; 150,000,000 shares
                
authorized; 20,544,090 and 19,872,590 shares issued and
                
outstanding at March 31, 2014 and Decmber 31, 2013
     480       480  
Treasury stock - common, at cost, 671500 shares at March
                
31, 2014 and December 31, 2013
     (66,001 )     (66,001 )
Additional paid-in capital
     4,513,607       4,507,591  
Accumulated deficit
     (24,601,674 )     (24,324,098 )
TOTAL REDEEMABLE PREFERRED STOCK STOCKHOLDERS’ DEFICIT
     (836,407 )     (564,847 )
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
   $ 6,350,899     $ 6,568,763  
                 
 
The accompanying notes are an integral part of these financial statements
 
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OMNILINK SYSTEMS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
 
            
   
Three Months Ended
  
   
March 31,
  
   
2014
    
2013
  
Revenue
   $ 2,844,509     $ 3,374,277  
Cost of revenue
     1,128,858       1,157,939  
Gross profit
     1,715,651       2,216,338  
                 
Operating expenses (income):
                
Sales and marketing
     201,997       239,931  
Research and development
     659,821       831,269  
General and administrative
     1,078,107       1,062,869  
Gain on sale of monitoring equipment
     (37,835 )     (74,564 )
Total operating expenses
     1,902,090       2,059,505  
Operating (loss) income
     (186,439 )     156,833  
Interest expense
     91,135       42,724  
Net (loss) income
   $ (277,574 )   $ 114,109  
 
The accompanying notes are an integral part of these financial statements
 
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OMNILINK SYSTEMS, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
             
   
Three Months Ended
  
   
March 31,
  
   
2014
    
2013
  
Cash flows from operating activities:
            
Net (loss) income
   $ (277,574 )   $ 114,109  
Adjustments to reconcile net income (loss) to net cash
                
used in operating activities:
                
Provision for bad debt
     30,000       30,000  
Depreciation and amortization
     202,954       153,218  
Stock-based compensation
     6,016       14,784  
Gain on sale of asset
     (37,835 )     (74,564 )
Deferred rent adjustment
     (9,236 )     8,705  
                 
Changes in assets and liabilities:
                
Accounts receivable
     664,945       (586,354 )
Inventories
     (67,735 )     (17,085 )
Prepaid expenses and other assets
     (213,040 )     (125,222 )
                 
Accounts payable
     (143,092 )     27,286  
Accrued expenses
     110,443       17,700  
Deferred revenue
     4,812       115,863  
Net cash used in operating activities
     270,658       (321,560 )
                 
Cash flows from investing activities
                
Sale of equipment
     40,103       79,038  
Purchase of property and equipment
     (498,636 )     (134,742 )
Development of patents
     (6,117 )     (13,285 )
Net cash used in investing activities
     (464,650 )     (68,989 )
                 
Cash flows from financing activities
                
Borrowings on long-term debt
     1,000,000       -  
Payments made on long term debt
     (200,001 )     (200,001 )
Net borrowings on line of credit
     (709,229 )     356,833  
Net cash provided by financing activities
     90,770       156,832  
                 
Net decrease in cash and cash equivalents
     (103,222 )     (233,717 )
Cash and cash equivalents, beginning of the year
     269,548       251,087  
Cash and cash equivalents, end of period
   $ 166,326     $ 17,370  
 
The accompanying notes are an integral part of these financial statements.
 
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OMNILINK SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 
NOTE A – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Omnilink Systems, Inc. (the “Company,” “our,” “we”) is a leader in the location based services industry.  The Company’s judicial and commercial solutions provide the real-time location of people and valuable assets through a unique combination of cellular and global positioning satellite (GPS) technology.  Through this technological advance, our solutions can locate people or assets even in situations where GPS alone does not work. Omnilink judicial solutions are used by government agencies and community corrections organizations across the country to monitor the location of offenders in alternative sanctions programs.  With our single-unit monitoring device, officers can even assign “mobile exclusion zones” that send alerts if offenders get too close to victims or criminal cohorts. Our commercial solutions provide the real-time location of people, such as Alzheimer patients or lone workers, and assets, such as vehicles and bank bags, when their safety and security are of paramount importance.  While most of our arrangements are not contractually long-term in nature, low customer turnover and increasing numbers of deployed devices have created a base of recurring revenue.

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the Rules and Regulations issued by the Securities and Exchange Commission, or SEC, as applicable. These financial statements include all of our accounts and those of our wholly-owned subsidiaries. We have eliminated intercompany transactions and balances in consolidation.

Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted, although we believe that the disclosures made are adequate to make the information not misleading. In the opinion of management, the accompanying financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, considered necessary for a fair presentation of our financial position as of March 31, 2014 and our operating results and cash flows for the interim periods presented. The accompanying condensed consolidated balance sheet as of December 31, 2013 was derived from our audited financial statements, but does not include all disclosures required by GAAP. The financial information presented herein should be read in conjunction with our audited financial statements for the year ended December 31, 2013 which includes information and disclosures not included in these condensed consolidated financial statements.

The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual results may differ materially from these estimates. Operating results for the three months ended March 31, 2014 may not be indicative of the results that may be expected for the year ending December 31, 2014 or any future periods. 

NOTE B – INVENTORY

Inventory consisted of the following:
 
   
March 31,
    
December 31,
  
   
2014
    
2013
  
Work-in-progress
   $ 77,811     $ 77,997  
Finished goods
     908,477       840,556  
    $ 986,288     $ 918,553  
 
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OMNILINK SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE C – SUBSEQUENT EVENTS

On May 5, 2014, we closed on a merger with Numerex Corp. (“Numerex”), a leading provider of interactive and on-demand machine-to-machine (referred to as M2M), technology and service, offered on a subscription basis, used in the development and support of M2M solutions for the consumer, enterprise and government markets worldwide and enabling the Internet of Things (IoT). For the year ended December 31, 2013, Numerex generated total sales of $77.8 million, which included subscription based revenues of $51.6 million, and the sale of M2M devices and hardware of $26.2 million. Our technology, product offerings, and strategic alliances in the fast-growing security and safety, tracking and monitoring market segments will improve Numerex’s competitive position. The acquisition will also enable synergistic growth opportunities in the commercial, government and consumer markets. The sale price paid by Numerex was equal to $37.5 million in cash (subject to the adjustments set forth in the merger agreement). The transaction was funded through cash-on-hand and a $25.0 million term loan.
 
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