-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V6JcWhe3z/jVil4BdZCKwk+9EZFgqa8Agc1kk4hSlvNYU80R9CyYCh7ShaYr+cXR kVPT9pkCKow7/hE8rSUeTg== 0000800458-98-000015.txt : 19981111 0000800458-98-000015.hdr.sgml : 19981111 ACCESSION NUMBER: 0000800458-98-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RENTRAK CORP CENTRAL INDEX KEY: 0000800458 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE DISTRIBUTION [7822] IRS NUMBER: 930780536 STATE OF INCORPORATION: OR FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15159 FILM NUMBER: 98741195 BUSINESS ADDRESS: STREET 1: ONE AIRPORT CTR STREET 2: 7700 N E AMBASSADOR PL CITY: PORTLAND STATE: OR ZIP: 97220 BUSINESS PHONE: 5032847581 MAIL ADDRESS: STREET 1: 7227 NE 55TH AVENUE CITY: PORTLAND STATE: OR ZIP: 97218 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL VIDEO INC DATE OF NAME CHANGE: 19881004 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: September 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission file number: 0-15159 RENTRAK CORPORATION (Exact name of registrant as specified in its charter) OREGON 93-0780536 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification no.) 7700 NE Ambassador Place, Portland, Oregon 97220 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (503) 284- 7581 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (x) No ( ) As of October 31, 1998, the Registrant had 10,674,868 shares of Common Stock outstanding. PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of September 30, 1998 and March 31, 1998 Consolidated Statements of Income for the three month periods ended September 30, 1998 and September 30, 1997 Consolidated Statements of Income for the six month periods ended September 30, 1998 and September 30, 1997 Consolidated Statements of Cash Flows for the six month periods ended September 30, 1998 and September 30, 1997 Notes to Consolidated Financial Statements RENTRAK CORPORATION CONSOLIDATED BALANCE SHEETS ASSETS
UNAUDITED September 30, March 31, 1998 1998 CURRENT ASSETS: Cash and cash equivalents $2,533,774 $6,361,680 Accounts receivable, net of allowance for doubtful accounts of $206,505 and $586,641 22,954,602 24,395,143 Advances to program suppliers 3,705,707 431,975 Inventory 2,458,227 2,427,176 Deferred tax asset 999,880 1,217,950 Other current assets 6,511,539 4,582,337 Total current assets 39,163,729 39,416,261 PROPERTY AND EQUIPMENT, net 1,850,294 1,910,317 OTHER INVESTMENTS, net 574,592 887,884 DEFERRED TAX ASSET 4,087,812 4,087,292 OTHER ASSETS 7,181,808 5,306,943 TOTAL ASSETS $52,858,235 $51,608,697 The accompanying notes are an integral part of these consolidated balance sheets.
RENTRAK CORPORATION CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY
UNAUDITED September 30, March 31, 1998 1998 CURRENT LIABILITIES: Line of credit $5,115,000 $6,000,000 Accounts payable 25,090,955 23,333,656 Accrued liabilities 2,717,050 2,532,832 Accrued compensation 659,025 1,072,848 Deferred revenue 119,035 829,863 Net current liabilities of discontinued operations 4,585,373 4,585,373 Total current liabilities 38,286,438 38,354,572 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock $.001 par value; Authorized: 10,000,000 shares 0 0 Common stock, $.001 par value; Authorized: 30,000,000 shares Issued and outstanding: 10,916,824 shares at September 30, 1998 and 10,986,455 at March 31, 1998 10,917 10,987 Capital in excess of par value 45,059,401 45,365,298 Net unrealized gain (loss) on investment securities (38,080) 54,645 Accumulated deficit (29,437,460) (30,794,263) Less - Deferred charge - warrants (1,022,981) (1,382,542) 14,571,797 13,254,125 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $52,858,235 $51,608,697 The accompanying notes are an integral part of these consolidated balance sheets.
RENTRAK CORPORATION CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED) Three Months Ended September 30, 1998 1997 REVENUES: PPT $27,907,650 $26,721,000 Other 4,421,367 2,127,511 32,329,017 28,848,511 OPERATING COSTS AND EXPENSES: Cost of sales 27,054,981 23,802,293 Selling, general, and administrative 5,200,923 3,156,183 32,255,904 26,958,476 INCOME FROM OPERATIONS 73,113 1,890,035 OTHER INCOME (EXPENSE): Interest income 109,803 128,325 Interest expense (75,767) 0 34,036 128,325 INCOME BEFORE INCOME TAX PROVISION 107,149 2,018,360 INCOME TAX PROVISION 40,190 814,472 NET INCOME $66,959 $1,203,888 EARNINGS PER SHARE: Basic $0.01 $0.11 Diluted $0.01 $0.10 The accompanying notes are an integral part of these consolidated statements.
RENTRAK CORPORATION CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED) Six Months Ended September 30, 1998 1997 REVENUES: PPT $58,349,008 $55,492,168 Other 7,439,451 3,970,894 65,788,459 59,463,062 OPERATING COSTS AND EXPENSES: Cost of sales 54,602,849 48,840,933 Selling, general, and administrative 8,962,865 6,575,920 63,565,714 55,416,853 INCOME FROM OPERATIONS 2,222,745 4,046,209 OTHER INCOME (EXPENSE): Interest income 231,665 251,176 Interest expense (93,992) (5,000) Other (117,768) 0 19,905 246,176 INCOME BEFORE INCOME TAX PROVISION 2,242,650 4,292,385 INCOME TAX PROVISION 885,847 1,777,363 NET INCOME $1,356,803 $2,515,022 EARNINGS PER SHARE: Basic $0.12 $0.22 Diluted $0.12 $0.22 The accompanying notes are an integral part of these consolidated statements.
RENTRAK CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Six Months Ended September 30, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $1,356,803 $2,515,022 Adjustments to reconcile income to net cash provided (used) in operations Loss on investment / asset sales 220,607 0 Depreciation and Amortization 501,449 419,231 Amortization of warrants 359,561 303,396 Provision for doubtful accounts (5,840) (309,733) Retailer financing reserves 0 (300,000) Studio advance reserves 9,121 (17,852) Deferred income taxes 274,382 534,768 Change in specific accounts: Accounts receivable 1,489,050 (389,780) Advances to program suppliers (3,282,853) (2,153,991) Inventory (31,051) (328,946) Other current assets (1,929,202) (589,460) Accounts payable 1,757,299 4,223,011 Accrued liabilities & compensation (229,605) (421,064) Deferred revenue (710,828) (1,195,376) Net current liabilities of discontinued operations 0 (47,741) Net cash provided (used) by operations (221,107) 2,241,485 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (285,475) (256,749) Investments in retailer financing program (929,320) (750,000) Proceeds from sale of investments 234,368 0 Purchase of other assets & intangibles (1,435,405) (581,332) Net cash used by investing activities (2,415,832) (1,588,081) CASH FLOWS FROM FINANCING ACTIVITIES: Payments under line of credit, net (885,000) 0 Repurchase of common stock (388,547) (2,998,877) Repurchase of Warrants 0 (250,000) Issuance of common stock 82,580 28,219 Net cash used by financing activities (1,190,967) (3,220,658) NET DECREASE IN CASH AND CASH EQUIVALENTS (3,827,906) (2,567,254) CASH AND CASH EQUIVALENTS AT BEGINNING OF THIS PERIOD 6,361,680 10,167,169 CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,533,774 $7,599,915 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for - Interest $93,992 $5,000 Income taxes, net of refunds 427,155 1,337,366 NON-CASH TRANSACTIONS Decrease in net unrealized gain on investment securities (92,725) (190,086) Retailer Loan Program Investment through conversion of accounts receivable 42,669 1,196,856 The accompanying notes are an integral part of these consolidated statements.
RENTRAK CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE A: Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of RENTRAK CORPORATION (the "Company"), have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The results of operations for the three month and six month periods ended September 30, 1998 are not necessarily indicative of the results to be expected for the entire fiscal year ending March 31, 1999. The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and footnotes thereto included in the Company's 1998 Annual Report to Shareholders. The Condensed Consolidated Financial Statements reflect, in the opinion of management, all material adjustments (which include only normal and recurring adjustments) necessary to present fairly the Company's financial position and results of operations. The Condensed Consolidated Financial Statements include the accounts of the Company, its majority owned subsidiaries, and those subsidiaries in which the Company has a controlling interest after elimination of all inter-company accounts and transactions. Investments in affiliated companies owned 20 to 50 percent are accounted for by the equity method. Certain amounts in the prior period's Condensed Consolidated Financial Statements have been reclassified to conform to the current period's presentation. NOTE B: Net Income Per Share Basic earnings per common shares is computed by dividing net income by the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per common share is computed on the basis of the weighted average shares of common stock outstanding plus common equivalent shares arising from dilutive stock options and warrants. In the quarter ended December 31, 1997, the Company adopted SFAS No. 128, "Earnings per Share". As a result, the Company's reported earnings per share for the three month and six month periods ended September 30, 1998 were restated. Three Months Ended Six Months Ended Per Share Amounts September 30, 1997 September 30, 1997 Primary EPS as reported $0.10 $0.20 Effect of SFAS No. 128 0.01 0.02 Basic EPS as Restated $0.11 $0.22 Fully Diluted EPS as reported $0.10 $0.19 Effect of SFAS No. 128 - 0.03 Diluted EPS as Restated $0.10 $0.22 Note B: Net Income Per Share
3-Months Ended 6-Months Ended 3-Months Ended 6-Months Ended September 30, 1998 September 30, 1998 September 30, 1997 September 30, 1997 Basic Diluted Basic Diluted Basic Diluted Basic Diluted Weighted average number of shares of common stock outstanding 10,988,466 10,988,466 10,996,400 10,996,400 11,369,295 11,369,295 11,533,504 11,533,504 Dilutive effect of exercise of stock options - 158,436 - 544,870 - 98,882 - 84,617 Weighted average number of shares of common stock and common stock equivalents 10,988,466 11,146,902 10,996,400 11,541,270 11,369,295 11,468,177 11,533,504 11,618,121 Net Income $66,959 $66,959 $1,356,803 $1,356,803 $1,203,888 $1,203,888 $2,515,022 $2,515,022 Net Income per Share $0.01 $0.01 $0.12 $0.12 $0.11 $0.10 $0.22 $0.22 Warrants to purchase approximately 6.5 million shares of common stock at prices ranging from $4.77-$9.78 per share were outstanding during the year but were not included in the computation of diluted EPS because the warrants' and options' exercise prices were greater than the average market price of the common shares. The warrants and options, which expire during fiscal years 2000 through 2008 remain outstanding at September 30,1998.
NOTE C: Major Suppliers For the quarter ended September 30, 1998, the Company had one program supplier whose product generated 34 percent, a second that generated 23 percent, and a third that generated an additional 17 percent of Rentrak revenues. For the six month period ended September 30, 1998, the Company had one program supplier whose product generated 32 percent, a second that generated 28 percent, and a third that generated an additional 17 percent of Rentrak revenues. No other program supplier provided product which generated more than 10 percent of revenue for the three or six month periods ended September 30, 1998. For the quarter ended September 30, 1997, the Company had one program supplier whose product generated 50 percent, a second that generated 21 percent, and a third that generated an additional 11 percent of Rentrak revenues. For the six month period ended September 30, 1997, the Company had one program supplier whose product generated 52 percent, a second that generated 19 percent, and a third that generated an additional 13 percent of Rentrak revenue. No other program supplier provided product which generated more than 10 percent of revenue for the three or six month periods ended September 30, 1997. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Forward Looking Statements Information included in Management's Discussion and Analysis of Financial Conditions and Results of Operations regarding liquidity and capital resources constitute forward-looking statements that involve a number of risks and uncertainties. Forward looking statements can be identified by the uses of forward-looking words such as "may", "will", "expects", "intends", "anticipates", "estimates", or "continues" or the negative thereof or variations thereon or comparable terminology. The following factors are among the factors that could cause actual results to differ materially from the forward-looking statements: the Company's ability to continue to market the Pay Per Transaction ("PPT") System successfully, the financial stability of participating retailers and their performance of their obligations under the PPT System, non-renewal of the Company's line of credit, business conditions and growth in the video industry and general economics, both domestic and international; competitive factors, including increased competition, expansion of revenue sharing programs other than the PPT System by Program Suppliers, new technology, the ability of the Company and its suppliers and customers to address potential Year 2000 problems, and the continued availability of prerecorded videocassettes ("Cassettes") from Program Suppliers. Such factors are discussed in more detail in the Company's 1998 Annual Report to Shareholders. Results of Operations For the quarter ended September 30, 1998, total revenue increased $3.5 million, or 12 percent, rising to $32.3 million from $28.8 million in the quarter ended September 30, 1997. For the six month period ended September 30, 1998, total revenue increased $6.3 million, or 10.6 percent, to $65.8 million from $59.5 million in the six month period ended September 30, 1997. Total revenue includes the following fees: application fees generated when retailers are approved for participation in the PPT System; order processing fees generated when Cassettes are ordered by and distributed to retailers; transaction fees generated when retailers rent Cassettes to consumers; sell-through fees generated when retailers sell Cassettes to consumers; buy out fees when retailers purchase Cassettes at the end of the lease term; royalty payments from Rentrak Japan; and sale of Cassettes. The increase in total revenue and the increases described in the following paragraph were primarily due to the growth in (i) the total number of Cassettes leased under the PPT System; (ii) the number of retailers approved to lease Cassettes under the PPT System from the Company (the "Participating Retailers"); (iii) the number of titles released to the PPT System; and (iv) a one-time royalty of $1 million from Rentrak Japan which was recorded in September, 1998. These increases in total revenue were offset in part by weaker than expected rental turns on certain popular titles, which in turn led to the Company recording additional costs related to guarantee minimum payments to program suppliers. For the quarter ending December 31, 1998, program suppliers are offering more titles on a sell-through basis than historical levels. The Company cannot predict the effect of this added number of sell-through titles but they could have an adverse impact on the results of operations for the quarter ending December 31, 1998. Cost of sales for the quarter ended September 30, 1998 rose to $27.1 million from $23.8 million in the quarter ended September 30, 1997, an increase of $3.3 million, or 13.7 percent. Cost of sales for the six month period ended September 30, 1998 rose to $54.6 million from $48.8 million the prior year, an increase of $5.8 million or 11.9 percent. These increases are due to the increases in revenue noted above and additional costs which were recorded in the quarter ended September 30, 1998 related to the guarantee minimum payments due to program suppliers on certain movie titles . The gross profit margin decreased to 16.3 percent in the quarter ended September 30, 1998 from 17.5 percent the previous year. The gross profit margin decreased to 17.0 percent in the six month period ended September 30, 1998 from 17.9 percent in the six month period ended September 30, 1997. These decreases are primarily due to the increase in cost of sales as noted above partially offset by the increase in royalty revenue. Selling, general and administrative expenses were $5.2 million for the quarter ended September 30, 1998 compared to $3.2 million in the quarter ended September 30, 1997, an increase of $2.0 million, or 64.8 percent. Selling general and administrative expenses were $9.0 million in the six month period ended September 30, 1998 compared to $6.6 million in the six month period ended September 30, 1997, an increase of $2.4 million or 36.4 percent. The increase in selling, general and administrative expenses is primarily due to increased legal fees and marketing expenses. Also, in the quarter ended September 30, 1997 the Company recognized a reduction in selling, general and administrative expenses due to the recovery of amounts which were loaned under the retailer loan program and which had been previously reserved. For the quarter ended September 30, 1998, the Company recorded net income of $.1 million , compared to net income of $1.2 million in the quarter ended September 30, 1997. For the six month period ended September 30, 1998, the Company recorded net income of $1.4 million , compared to net income of $2.5 million, in the six month period ended September 30, 1997. These decreases in pre-tax profits are primarily due to the increases in selling, general and administrative expenses as noted above. LIQUIDITY AND CAPITAL RESOURCES At September 30, 1998, total assets were $52.9 million, an increase of $1.3 million from the $51.6 million at March 31, 1998. As of September 30, 1998, cash decreased $3.9 million to $2.5 million from $6.4 million at March 31, 1998. The decrease is primarily due to the increase in other assets such as advances to program suppliers and advances to retailers under the retailer loan program. At September 30, 1998, the Company's current ratio (current assets/current liabilities) remained unchanged from March 31, 1998 at 1.03. The Company has an agreement for a line of credit with a financial institution in an amount not to exceed the lesser of (a) $12.5 million or (b) the sum of 80 percent of the net amount of eligible accounts receivable as defined in the agreement. The line of credit expires on December 18, 1999. Interest is payable monthly at the bank's prime rate (8.5 percent at September 30, 1998). The line is secured by substantially all of the Company's assets. The terms of the agreement require, among other things, a minimum amount of tangible net worth, minimum current ratio and minimum total liabilities to tangible net worth. The agreement also restricts the amount of net losses, loans and indebtedness and limits the payment of dividends on the Company's stock. As of September 30, 1998, the Company is in compliance with these covenants. The Company had $5.1 million outstanding under this line at September 30, 1998. The Company has established a retailer financing program whereby the Company will provide, on a selective basis, financing to video retailers which the Company believes have the potential for substantial growth in the industry. In connection with these financings, the Company typically makes a loan to and/or an equity investment in the retailer. In some cases, a warrant to purchase stock may be obtained. As part of such financing, the retailer typically agrees to cause all of its current and future retail locations to participate in the PPT System for a designated period of time. Under these agreements, retailers are typically required to obtain some or all of their requirements of Cassettes from those offered under the PPT System or obtain a minimum amount of Cassettes based on a percentage of the retailer's revenues. Notwithstanding the long term nature of such agreements, both the Company and the retailer may, in some cases, retain the right to terminate such agreement upon 30-90 days prior written notice. These financings are highly speculative in nature and involve a high degree of risk, and no assurance of a satisfactory return on investment can be given. The amounts the Company could ultimately receive could differ materially in the near term from the amounts assumed in establishing reserves. The Board of Directors has authorized up to $18 million to be used in connection with the Company's retailer financing program. As of September 30, 1998, the Company had invested or loaned approximately $15 million in various retailers. The investments individually range from $0.1 million to $4.7 million. Interest rates per annum on the various loans range from nine percent to the prime rate plus 2 percent. As each financing is made, and periodically throughout the term of the agreement, the Company assesses the likelihood of recoverability of the amount invested or loaned based on the financial position of each retailer. This assessment includes reviewing available financial statements and cash flow projections of the retailer and discussions with retailers' management. As of September 30, 1998, the Company reserved approximately $9.2 million. As noted in the Company's 1998 Annual Report to Shareholders, the Company distributed to its Shareholders shares of common stock of BlowOut Entertainment, Inc. (BlowOut). The operations of BlowOut were reflected as discontinued operations in the March 31, 1996 consolidated financial statements. Net current liabilities of discontinued operations include management's best estimates of the anticipated losses from discontinued operations through the final resolution of all contingencies related to the disposition of BlowOut. The estimates are based on an analysis of the costs which may be incurred to dispose of the entity. The amounts the Company will ultimately incur could differ materially in the near term from the amounts assumed in arriving at the loss on disposal of the discontinued operations. BlowOut is an early stage company requiring additional financing if it is to continue its expansion and support its operations. The Company is the principal creditor to BlowOut. Pursuant to a Financing Agreement, the Company agreed to provide guarantees for up to $7 million of indebtedness of BlowOut (the "Guarantee"). The obligations under the Guarantee are comprised of the following: (a) BlowOut has a credit facility (the Credit Facility) in an aggregate principal amount of $2 million for a five-year term. Amounts outstanding under the Credit Facility bear interest at a fixed rate per annum equal to 14.525 percent. Pursuant to the terms of the Guarantee, the Company agreed to guarantee any amounts outstanding under the Credit Facility until the lender is satisfied, in its sole discretion, that BlowOut's financial condition is sufficient to justify the release of the Company's guarantee. As of September 30, 1998, BlowOut had borrowed approximately $1.5 million under the Credit Facility. BlowOut has stated that at October 28, 1998, it was delinquent with respect to the principal and interest payment due on October 1, 1998, under the Credit Facility in the amount of $46,379. (b) BlowOut also has a revolving line of credit (Line of Credit) in a maximum principal amount at one time outstanding of $5 million. Under the Line of Credit, BlowOut may only draw up to 80 percent of the Orderly Liquidation Value (as defined in the Line of Credit) of eligible new and used Cassette inventory. Advances under the Line of Credit bear interest at a floating rate per annum equal to the Bank of America Reference Rate plus 2.75 percent (11.25 percent as of September 30, 1998). The term of the Line of Credit is three years. The Company has agreed, pursuant to an Unconditional Repurchase Agreement, to purchase under certain circumstances in the event of default under the Line of Credit, BlowOut's Cassette inventory at specified amounts up to a principal amount of $5 million. In February 1998, the Company entered into an agreement with BlowOut and Culture Convenience Club ("CCC") (the "Tri-Party Agreement") under which BlowOut has agreed not to draw down in excess of $4.0 million under the Line of Credit. As of September 30, 1998, BlowOut had borrowed approximately $3.6 million under the Line of Credit. There can be no assurance that the Company will not have to pay out under these guarantees or provide other accommodations. During the term of the Guarantee, BlowOut has agreed to pay the Company a weekly fee at a rate equal to .02 percent per week of then-currently outstanding indebtedness subject to the Guarantee. In fiscal year 1997, BlowOut executed a $3.0 million note in favor of the Company which accrues interest at 9 percent per annum. As part of the Tri-Party Agreement, the Company agreed to defer principal and interest payments on this note by BlowOut until December 31, 2004 during which deferment period no interest accrues. The Company also agreed to the forgiveness of all or a portion of the $3.0 million note as BlowOut is able to lower the Company's contingent obligations under its guarantees. At September 30, 1998, the total outstanding balance of the debt under such note, including accrued interest, was $2.8 million. BlowOut has stated that it is encountering severe financial difficulties because of a decline in revenue, limited cash resources, recent inability to obtain videocassettes for rental on terms favorable to BlowOut and high fixed costs in relation to its revenue, all of which may affect BlowOut's continuing financial viability. BlowOut also stated that unless it is able to obtain new equity and/or debt capital or is able to refinance its existing debt (including trade payables) to generate additional cash flows, BlowOut management believes that BlowOut's existing sources of cash will not be sufficient to meet BlowOut's operating needs through calendar 1998. If BlowOut's financial condition deteriorates further and/or if BlowOut seeks bankruptcy protection, the Company may be obligated to make payments under the Guarantee (including pursuant to the Repurchase Agreement), the Company may not be able to collect its outstanding receivables owed by BlowOut, the Company could be subject to other claims and the Company's claims could be subject to defenses arising under applicable bankruptcy law. On November 26, 1996, the Board authorized the re-purchase of up to two million shares of Common Stock in open market and negotiated purchases. During the quarter ended September 30, 1998, the Company acquired 91,800 shares for an aggregate amount of approximately $369,000. As of September 30, 1998, the Company acquired 1,528,100 shares for an aggregate amount of approximately $5,818,000. These purchases were funded through cash flows from operations. The Company's sources of liquidity include its cash balance, cash generated from operations and its available credit facility. These sources are expected to be sufficient to fund the Company's operations for the year ending March 31, 1999. Year 2000 Many computer software programs, as well as hardware with embedded software, use a two-digit date field to track and refer to any given year. After, and in some cases prior to, January 1, 2000, these software and hardware systems may interpret the year "00" as "1900," which will cause them to perform faulty calculations or shut down altogether. To the extent that this "Year 2000" problem is present in the Company's internal software and hardware systems, or those of its suppliers or customers, there could be material disruptions in such important functions as the ordering and delivery of Cassettes, the reporting and tracking of Cassette rental and sale transactions, and billing and payment systems. Such difficulties could result in a number of adverse consequences, including but not limited to delayed or lost revenue, diversion of resources, damages to the Company's reputation, increased administrative and processing costs, and liability to suppliers or customers. Any one or a combination of such consequences could have a material adverse effect on the Company's business, operating results, and financial condition. Accordingly, the Company began assessing the scope of the Year 2000 problem both internally and among its suppliers and customers as far back as March 1997, and began implementing remedial measures soon thereafter. The Company is conducting extensive tests of all software and hardware systems used internally in the Company's business to determine whether they are Year 2000 compliant. The Company's internal assessment, testing, and remediation program is expected to be completed by March 31, 1999. Although the Company believes that these corrective measures will adequately address the Year 2000 problem, there can be no assurance that every Year 2000 problem will be discovered and addressed, or that every remedial measure will be effective. To the extent that Year 2000 problems persist, the Company could experience the adverse consequences described above, some or all of which could be material. The Company has initiated formal communications with its POS system software vendors, and certain of the Company's larger individual customers that have developed their own POS system software, to determine the extent to which their software and hardware systems are Year 2000 compliant. In addition, the Company has completed the required programming of the Company's proprietary Rentrak Profit Maker ("RPM") software and is taking steps to have this upgrade installed on its customers' computer systems. The Company has also initiated formal contact with the vendors involved in the Cassette distribution process to determine whether the Year 2000 problem may adversely affect the Company's ability to timely deliver Cassettes to its customers. The Company has and will continue to work with all of its vendors, suppliers, and customers to resolve any potential Year 2000 problems. As a follow-up measure, the Company plans to evaluate and test the software of its POS vendors and test communications with its customers by March 31, 1999, to determine which are in fact Year 2000 compliant. However, the Company has no direct control over these third parties and cannot provide any assurance that such third party software and hardware systems will be timely converted. The failure of certain individual vendors, suppliers, and customers, or a combination of vendors, suppliers, and customers, to make their systems Year 2000 compliant could have a material adverse effect on the Company's performance. The Company expects the total cost of its assessments, corrective measures, and testing to be less than $250,000 of which approximately $150,000 has already been incurred. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCOLUSRES ABOUT MARKET RISK None. PART II - OTHER INFORMATION Item 1. Legal Proceedings. In April 1998, the Company filed a complaint (the "Hollywood Complaint") against Hollywood Entertainment, Inc. ("Hollywood"), entitled Rentrak Corporation v. Hollywood Entertainment et al., case no. 98-04-02811, in the Circuit Court of the State of Oregon for the County of Multnomah, Portland, Oregon. There have been no material changes in this litigation since it was reported in the Company's 10-Q for quarter ended June 30, 1998. On November 21, 1997, Merle Harmon, individually and as assignee for Merle Harmon Enterprises and Fan Fair Corporation, sued the Company and two of its officers in relation to the Company's attempt to negotiate the purchase of Merle Harmon Enterprises and Fan Fair Corporation. The case is pending in the U.S. District Court for the Eastern District of Wisconsin. There have been no material changes in this litigation since it was reported in the Company's 10- Q for quarter ended June 30, 1998. As previously reported in the Company's 1998 Annual Report and in its Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, in June 1998, Video Update, Inc. ("Video Update") filed a complaint (the "Video Update Complaint") against the Company entitled Video Update, Inc. v. Rentrak Corp., Civil Action No. 98-286, in the United States District Court for the District of Delaware. The Video Update Complaint alleges various violations of the antitrust laws, including that the Company has attempted to monopolize the market for videocassettes leased to retail video stores in violations of Section 2 of the Sherman Act. Video Update further alleges that the Company's negotiation and execution of an exclusive, long-term revenue sharing agreement with Video Update violates Section 1 of the Sherman Act and Section 3 of the Clayton Act. Video Update is seeking unspecified monetary relief, including treble damages and attorney's fees, and equitable relief, including an injunction prohibiting the Company from enforcing its agreement with Video Update or any exclusivity provision against videocassette suppliers and video retailers. In August 1998, the Court granted the Company's motion to dismiss the Video Update Complaint pursuant to Federal Rules of Civil Procedure Rule 12(b)(3) on the basis of improper venue. In August 1998, Video Update filed a new complaint against the Company in the United States District Court for the District of Oregon (the "Re-Filed Complaint"), Case No. 98- 1013 HA. The Re-Filed Complaint is substantially the same as the previous complaint. The Company believes the Re- Filed Complaint lacks merit and intends to vigorously defend against the allegations in the Complaint. The Company has answered the Re-Filed Complaint denying its material allegations and asserting several affirmative defenses. The Company also has counterclaimed against Video Update alleging, among other things, breach of contract, breach of the covenant of good faith and fair dealing, promissory fraud, breach of fiduciary duty, breach of trust, constructive fraud, negligent misrepresentation and intentional interference with business advantage, and seeks damages and equitable relief. In August 1998, the Company filed a complaint (the "Movie Buffs Complaint") against Susan Janae Kingston d/b/a Movie Buffs ("Movie Buffs"), entitled Rentrak Corporation v. Susan Janae Kingston, an individual, d/b/a Movie Buffs, Case No. CV 98-1004 HA, in the United States District Court for the District of Oregon. The Movie Buffs Complaint alleges breach of contract and conversion claims and seeks damages in the amount of at least $3.3 million and punitive damages of $500,000. In September 1998, Movie Buffs filed counterclaims against the Company and Third Party Claims against Hollywood Entertainment Corp. (the "Movie Buffs Counterclaims"). The Movie Buffs Counterclaims allege that the Company violated the antitrust laws, including the Sherman, Clayton and Robinson-Patman Acts. The Counterclaim also seeks declaratory relief, an accounting and alleges fraud and conspiracy to defraud, breach of contract, breach of the implied covenant of good faith, and unfair trade practices. Movie Buffs seeks an unspecified amount of damages (at least $10 million), treble damages, general and consequential damages, punitive damages, attorneys' fees and court costs. In September 1998, Roadrunner Video ("Roadrunner Video") filed a third party complaint in intervention against the Company and Hollywood Entertainment Corp. ("the "Roadrunner Complaint"). The Roadrunner Complaint alleges the same claims as the Movie Buffs Counterclaims. The Company believes the Movie Buffs Counterclaims and the Roadrunner Complaint lack merit and the Company intends to vigorously defend against all of the allegations therein. The Company has filed a motion to dismiss the Robinson-Patman Act claims pursuant to Federal Rule of Civil Procedure 12(b)(6). The following are registered trademarks of Rentrak Corporation: Rentrak, Pay Per Transaction, PPT, Rentrak Profit Maker and RPM Item 2. Changes in Securities and Use of Proceeds - None Item 3. Defaults upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders On August 24, 1998, the Company conducted its Annual Meeting of Shareholders. The matters voted on were as follows: 1. Voting for Directors was as follows: Nominees For: Percentage:* Withheld: Percentage: Pradeep Batra 8,364,524 88.23% 1,115,569 11.77% Ron Berger 8,398,234 88.59% 1,081,859 11.41% Skipper Baumgarten 8,488,476 89.54% 991,617 10.46% * Percentage of votes cast at the meeting by Proxy 2. Proposal to Approve an Amendment to the 1997 Equity Participation Plan of Rentrak Corporation to increase the aggregate number of common shares that may be issued thereunder: For: Against: Abstain: Broker Non-Votes: 7,051,629 2,383,364 45,100 0 Item 5. Other Information - None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 10.1 - The Amendment to the 1997 Equity Participation Plan of Rentrak Corporation. (1) Exhibit 10.2- Employment Agreement with F. Kim Cox dated April 1, 1998. Exhibit 27 - Financial Data Schedule (1) Incorporated by reference to the Company's Proxy Statement dated July 1, 1998 for the Company's 1998 Annual Meeting of Shareholders. (b) Reports on Form 8-K - None SIGNATURE 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 thereunto duly authorized. Dated this 9th day of November, 1998 RENTRAK CORPORATION: /s/ Carolyn A. Pihl Carolyn A. Pihl Chief Accounting Officer Signing on behalf of the registrant EX-10.2 2 EXHIBIT 10.2 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (hereinafter referred to as the "Agreement") is made and entered into effective this 1st day of April, 1998, by and between RENTRAK CORPORATION, an Oregon corporation (hereinafter referred to as "Employer"), and F. KIM COX (hereinafter referred to as "Employee"). W I T N E S S E T H: WHEREAS, Employer currently employs Employee in the capacity of Executive Vice President and Employee is one of the key executives of the Employer; WHEREAS, Employer and Employee have entered into an Employment Agreement dated as of April 20, 1995 (the "Employment Agreement"), and Employer and Employee desire to modify the terms of the Employment Agreement upon the terms and subject to the conditions of this Agreement; WHEREAS, the terms of this Agreement shall supersede in its entirety the terms of the Employment Agreement; WHEREAS, Employer considers it essential to the best interests of its shareholders to foster the continuous employment of Employee; NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements herein contained, the recitals set forth hereinabove which by this reference are incorporated herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows: SECTION 1. EMPLOYMENT 1.01. Position and Title. Employer shall employ and engage the services of Employee, in the position of Executive Vice President for the term of this Agreement as defined in Section 2, infra, pursuant to the terms and conditions set forth in this Agreement. 1.02. Duties and Place of Employment. Employee shall be responsible for, and perform duties associated with his position as Executive Vice President and other duties as may be directed by the Employer, from time to time. Employee shall: (i) devote his full business time during normal business hours to the business and affairs of Employer; (ii) use his best efforts to promote the interests of Employer; and (iii) perform faithfully and efficiently his responsibilities. Employee shall perform his duties at the Employer's principal executive offices which are currently located at One Airport Center, 7700 N.E. Ambassador Place, Portland, Oregon 97220, or such other locations as may be reasonably directed by Employer from time to time. Subject to the terms of this Agreement, Employee shall comply promptly and faithfully with all of Employer's policies, instructions, directions, requests, rules and regulations. SECTION 2. TERM AND TERMINATION 2.01. Stated Term. Employment shall commence on the effective date of this Agreement and shall continue for a period of four (4) years ending on March 31, 2002 or until Employee's employment under this Agreement is terminated pursuant to Section 2.02, Section 2.03, or Section 2.04, infra ("Term"). 2.02. At Will Termination. Notwithstanding anything herein to the contrary, Employee's employment may be terminated at any time with our without reason, by Employer upon thirty (30) days written notice to Employee, or by Employee upon thirty (30) days written notice to Employer. 2.03. For Cause Termination. Employee's employment may be terminated by Employer without notice for "cause." Termination for "cause" is defined for purposes of this subsection as termination upon: (i) the final conviction of Employee for a felony involving willful conduct materially injurious, harmful or detrimental to Employer; or (ii) the final adjudication of Employee in a civil proceeding for acts or omissions to act involving willful conduct materially injurious, harmful or detrimental to Employer. For the purposes of this subsection, "final conviction" and "final adjudication" shall be and mean a conviction or and adjudication, as the case may be, that is no longer appealable due to the passage of time or otherwise, and with respect to which a final judgment has been entered on the judgment roles of the court in which the action was commenced. Further, for the purposes of this subsection, no act or omission to act on Employee's part shall be considered "willful" unless done, or omitted to be dome, by Employee in bad faith and without reasonable belief that Employee's act of omission was in the best interest of Employer. 2.04. Disability or Death. Employee's employment shall be terminable immediately upon Employee's death or disability. "Disability" is defined for purposes of this subsection as absence from Employee's full time duties with Employer as a result of Employee's incapacity due to physical or mental illness for ninety (90) days calculated on a cumulative basis during any two (2) year period during the term of this Agreement. Nothing in this Section 2.04 is intended to violate any Oregon State law regarding parental or family leave policies or any other applicable law. SECTION 3. COMPENSATION 3.01. Base Salary. Commencing April 1, 1998 through March 31, 1999, Employee shall be paid an annual base salary in the amount of one hundred seventy-eight thousand five hundred dollars ($178,500); commencing April 1, 1999 through March 31, 2000, Employee shall be paid an annual base salary in the amount of one hundred eighty-seven thousand four hundred twenty-five dollars ($187,425); commencing April 1, 2000 through March 31, 2001, Employee shall be paid an annual base salary in the amount of one hundred ninety-six thousand seven hundred ninety-six dollars ($196,796); and commencing April 1, 2002 through March 31, 2002, Employee shall be paid an annual base salary in the amount of two hundred six thousand six hundred thirty-six dollars ($206,636) ("Base Salary"). The Base Salary shall be paid to Employee in equal semi-monthly installments in arrears on the seventh (7th) and twenty-second (n) day of each month, commencing as of the first semi-monthly pay period following the effective date of this Agreement. Should the seventh (7th) or the twenty- second (n) day of any month not be a business day, Employee's semi-monthly installment of the Base Salary otherwise due on such date shall be paid to Employee on the business day closest to the date such semi-monthly installment is due (i.e., if the seventh (7th) day of the month falls on a Saturday, the semi-monthly installment shall be paid on the preceding business day or if the seventh (7th) day of the month falls on a Sunday, the semi- monthly installment shall be paid on the next following business day). Employee's Base Salary may be increased in the discretion of Employer during the Term of this Agreement. 3.02. Bonus Compensation. Nothing herein shall preclude the Employer from authorizing the payment of additional compensation to Employee over and above the Base Salary at any time payable to him under his Agreement, whether as a bonus or otherwise. The payment of such additional compensation shall not operate as an amendment obligating Employer to make any similar payment or to pay additional compensation at any future time or for any future period, or be deemed to affect Employee's Base Salary in any manner. Employee will participate in whatever bonus plan is adopted by Employer including any cash bonus pools established from time to time by Employer for Corporate Executives. 3.03. Stock Options. Upon execution of this Agreement, Employer shall grant Employee one hundred thousand (100,000) options for Employer's stock. To the extent allowed under the Internal Revenue Code of 1986 ("Code"), the stock options will be granted pursuant to that certain Incentive Stock Option Agreement, a copy of which is attached to this Agreement as Exhibit A. The remaining options, if any, not allowed as incentive stock options under the Code will be granted as nonqualified options, copies of which are attached hereto as Exhibit B. Said options shall be priced on the date of execution of this Agreement and shall vest according to the following schedule: Date Number of Options Vested March 31, 2000 33,333 March 31, 2001 33,333 March 31, 2002 33,334 3.04. Benefits. 3.04A Vacation and Holiday Pay. As of the effective date of this Agreement, Employee will be entitled to: (i) accrue vacation time at the rate of four (4) weeks of paid vacation during each year of employment; and (ii) will be eligible to receive pay for Employer-paid holidays. 3.04B Insurance. Employee shall be entitled to medical, life, worker's compensation, social security and state unemployment insurance benefits as provided under Employer's then current terms, policies and procedures, except that the ninety day waiting period for such insurance benefits shall be waived. 3.04C Tuition Reimbursement. Employee shall be entitled to reimbursement for all tuition, enrollment fees, and books pursuant to Employers education assistance program. Employee shall comply with all Employer's terms, policies and procedures regarding its education assistance program. 3.04D Miscellaneous Benefits. In addition to any other compensation or benefits to be received by Employee pursuant to the terms of this Agreement, Employee shall be entitled to participate in any employee benefits which Employer may from time to time provide its employees or its corporate officers generally. SECTION 4. PAYMENTS UPON TERMINATION OF EMPLOYMENT 4.01. Termination for Cause. In the event of the termination of Employee's employment by Employer for cause as defined in Section 2.03, supra, or in the event of termination of Employee's employment by Employee, Employer shall pay to Employee only the amount of compensation accrued pursuant to Section 3.01, supra, through and including the date of termination. 4.02. Termination for Death or Disability. In the event of the termination of Employee's employment due to his death or disability, Employer shall pay to Employee or Employee's estate or legal representative, as the case may be, the amount of compensation accrued pursuant to Section 3.01, supra, as of the date of termination plus a lump sum severance payment equal to one hundred eighty (180) days Base Salary in effect as of the date of termination. 4.03. Other Termination. In the event of termination of Employee's employment by Employer other than as provided in Section 4.01 or 4.02, supra, Employer shall pay Employee the amount of compensation accrued pursuant to Section 3.01, supra, as of the date of termination plus severance payments in an amount equal to one year's Base Salary in effect as of the date of termination, payable in installments as if still employed; subject however, to Employee demonstrating that he is using his best efforts to find employment of comparable status within one hundred (100) miles of wherever last located. For purposes of this Agreement, "employment" shall be defined to include self- employment and the offering of consulting services. In the event Employee does not use, or cannot demonstrate that he is using his best efforts to obtain other employment severance payments shall cease. If Employee does use his best efforts to obtain other employment and is successful in obtaining such employment, severance payments shall be reduced by the amount of any remuneration received from such employment. For the purposes of this Agreement, "remuneration" shall be defined to include cash payments, the face value of any promissory notes issued to Employee regardless of the terms of payment or whether payments are ever received, stock or stock options valued as of the day granted, or any other compensation given in any form whatsoever. 4.04. Other Compensation. In the event of a termination of Employee's employment, all stock options held by Employee as described in Section 3.03 of this Agreement shall vest immediately. Except as set forth in this Section 4, no other compensation shall be due or payable to Employee upon termination of his employment. SECTION 5. PERSONAL NATURE This Agreement is personal, and is being entered into based upon the singular skill, qualifications and experience of Employee. Employee shall not assign this Agreement or any rights hereunder without the express written consent of Employer which may be withheld with or without reason. Employee hereby grants to Employer the right to use Employee's name, likeness and/or biography in connection with the services performed by Employee hereunder and in connection with the advertising or exploitation of any project with respect to which Employee performs services hereunder. SECTION 6. NOTICES Any and all notices or other or other communications required or permitted by this Agreement or by law shall be deemed duly served and given when personally delivered to the party to whom such notice or communication is directed or, in lieu of such personal service, when deposited in the United States mail, certified, return receipt requested, first class postage prepaid, addressed as follows: EMPLOYER: Rentrak Corporation One Airport Center 7700 N.E. Ambassador Place Portland, Oregon 97220 Attn: Ron Berger COPY TO: Dana Campbell Corporate Director of Legal and Business Affairs 7227 N.E. 55th Avenue P.O. Box 18888 Portland, Oregon 97218 EMPLOYEE: F. Kim Cox 8036 S.E. 141st Court Portland, Oregon 97236 Each party may change its address for purposes of this Section by giving written notice of such change in the manner provided for in this Section. SECTION 7. MISCELLANEOUS PROVISIONS 7.01. Attorneys' Fees. In the event that it should be become necessary for any party to bring an action, including arbitration, either at law or in equity, to enforce or interpret the terms of this Agreement, each party shall pay its own attorneys' fees including those incurred in resolving the dispute prior to initiation of any litigation and at trial and on any appeal. 7.02. Applicable Law and Venue. This Agreement is executed and intended to be performed in the State of Oregon and the laws of such State shall govern its interpretation and effect. If suit is instituted by any party hereto or by any other party for any cause or matter arising from or in connection with the respective rights or obligations of the parties hereunder, the sole jurisdiction and venue for such action shall be the Circuit Court of the State of Oregon in and for the County of Multnomah. 7.03. Integration. Employee has simultaneously executed an Incentive Stock Option Agreement (a copy of which is attached hereto as Exhibit A), a Nonqualified Stock Option Agreement (a copy of which is attached hereto as Exhibit B) and has previously executed an Employee Confidentiality and Noncompetition Agreement ( a copy of which is attached hereto as Exhibit C) which remain in effect and are incorporated into the terms and conditions of employment under this Agreement. Except as set forth in the preceding sentence, this Agreement constitutes the entire agreement of the parties with respect to the subject matter of this Agreement and supersedes all prior agreements, negotiations, or understandings, whether oral or written, between the parties with respect thereto. 7.04. Heirs and Assigns. Subject to any restriction on assignment contained herein, this Agreement shall be binding upon and shall inure to the benefit of the respective party's heirs, successors and assigns. 7.05. Severability. Any provision in this Agreement which is, by competent judicial authority, declared illegal, invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such illegality, invalidity or unenforceability without invalidating the remaining provisions hereof or affecting the legality, validity or enforceability of such provision in any other jurisdiction. The parties hereto agree to negotiate in good faith to replace any illegal, invalid or unenforceable provision that, to the extent possible, will preserve the economic bargain of this Agreement, or otherwise to amend this Agreement. 7.06. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and the counterparts shall together constitute one and the same agreement, notwithstanding that all of the parties are not signatory to the original or the same counterpart. 7.07. Captions. The headings and captions herein are inserted solely for the purpose of convenience of reference and are not intended to govern, any term or provision hereof. 7.08. Execution. Each of the parties hereto shall execute, acknowledge and deliver any instrument necessary to carry out the provisions of this Agreement. 7.09. Construction. This Agreement has been prepared by legal counsel for Employer. Employee has been advised and by his execution hereof acknowledges, that he has the right to and should have this Agreement reviewed by his own separate legal counsel. This Agreement has been negotiated at arms' length with the benefit of or opportunity to seek legal counsel and, accordingly, shall not be construed against any of the parties. 7.10 Indemnification. Employer shall indemnify Employee to the fullest extent permitted by law for and against any and all cost, loss, expense and liability including, without limitation, attorneys' fees, incurred by Employee as a result of the performance of his duties for Employer. Such obligation to indemnify shall include, without limitation, indemnification against any and all claims arising out of the Non-Disparagement Agreement entered into on July 10, 1997 between Employer, Employee, Kim Cox and Michael R. Lightbourne. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. EMPLOYER: RENTRAK CORPORATION, an Oregon Corporation _____________________________________ By: Ron Berger, President EMPLOYEE: I acknowledge that I have read and agree to the foregoing Agreement including, without limitation, the provision allowing termination of my employment "at will" by Employer in Section 2.01, supra. _________________________________ F. Kim Cox EX-27 3
5 6-MOS MAR-31-1999 SEP-30-1999 2,533,774 0 23,161,107 206,505 2,458,227 39,163,729 7,525,617 5,675,323 52,858,235 38,286,438 0 0 0 10,917 14,560,880 52,858,235 65,788,459 65,788,459 54,602,849 63,565,714 19,905 0 231,665 2,242,650 885,847 1,356,803 0 0 0 1,356,803 0.12 0.12
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