-----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, U692M/9dsnxgGn+X8e6O9/xWE6mhHIoutpx7cb2Ayu5oW80UuUUIaXoBr0RY0mxE 0rcuklDjyJE3GseUm2MZuw== /in/edgar/work/0000801529-00-000036/0000801529-00-000036.txt : 20001115 0000801529-00-000036.hdr.sgml : 20001115 ACCESSION NUMBER: 0000801529-00-000036 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRINTWARE INC CENTRAL INDEX KEY: 0000801529 STANDARD INDUSTRIAL CLASSIFICATION: [3577 ] IRS NUMBER: 411522267 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-20729 FILM NUMBER: 768128 BUSINESS ADDRESS: STREET 1: 1270 STREET 2: 1270 EAGAN INDUSTRIAL ROAD CITY: ST PAUL STATE: MN ZIP: 55121 BUSINESS PHONE: 6124561400 10QSB 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10QSB [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2000 [ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act. Commission file Number 000-20729 PRINTWARE, INC. (Exact name of small business issuer as specified in its charter.) Minnesota 41-1522267 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1270 Eagan Industrial Road, St. Paul, MN 55121 (Address of principal executive offices) (Zip Code) (651) 456-1400 (Registrant's telephone number, including area code) 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 [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: Common Stock, no Par Value - 3,293,178 shares outstanding as of November 8, 2000. PART I - FINANCIAL INFORMATION ITEM 1. - FINANCIAL STATEMENTS PRINTWARE, INC. CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME 3 AND 9 MONTHS ENDED SEPTEMBER 30, 2000 AND OCTOBER 2, 1999 DOLLARS IN THOUSANDS EXCEPT PER SHARE (UNAUDITED)
Three months ended Nine months ended Sep 30 Oct 2 Sep 30 Oct 2 ______ ______ ______ ______ 2000 1999 2000 1999 ______ ______ ______ ______ TOTAL REVENUES $1,095 $1,355 $3,964 $3,541 COST OF REVENUES 674 981 2,308 2,306 ______ ______ ______ ______ GROSS MARGIN 421 374 1,656 1,235 PERIOD COSTS: Research and development 147 177 446 547 Selling, general and administrative 510 327 1,231 1,193 Proxy contest costs 2 - 360 - ______ ______ ______ ______ Total 659 504 2,037 1,740 ______ ______ ______ ______ LOSS FROM OPERATIONS (238) (130) (381) (505) OTHER INCOME (EXPENSE): Interest expense - - - - Interest and other income 110 151 346 530 _____ ______ ______ _____ (LOSS) INCOME BEFORE INCOME TAXES (128) 21 (35) 25 INCOME TAX BENEFIT 49 - 14 - ______ ______ ______ ______ NET (LOSS) INCOME $ (79) $ 21 $ (21) $ 25 ====== ====== ====== ====== NET (LOSS) INCOME PER COMMON SHARE: BASIC AND DILUTED $ (.02) $ .01 $ (.01) $ .01 ====== ====== ====== ====== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING--BASIC AND DILUTED 3,288,134 3,681,397 3,279,266 4,455,639 ========= ========= ========= ========= OTHER COMPREHENSIVE (LOSS) INCOME BEFORE TAX: Unrealized gains on securities: Unrealized holding losses arising during period $ 59 $ (25) $ 36 $ (275) Add reclassification adjustment for (loss) included in net income - - (1) - ______ ______ ______ ______ OTHER COMPREHENSIVE (LOSS) INCOME, BEFORE TAX 59 (25) 35 (275) INCOME TAX BENEFIT (EXPENSE) RELATED TO ITEMS OF OTHER COMPREHENSIVE INCOME (24) (25) (11) 96 ______ ______ ______ ______ OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX $ 35 $ (50) $ 24 $ (179) ====== ====== ====== ====== COMPREHENSIVE (LOSS) INCOME $ (44) $ (29) $ 3 $ (154) ====== ====== ====== ====== See notes to condensed financial statements.
PRINTWARE, INC. CONDENSED BALANCE SHEETS DOLLARS IN THOUSANDS EXCEPT PER SHARE INFORMATION (UNAUDITED) ASSETS September 30, December 31, 2000 1999 ____________ ____________ CURRENT ASSETS: Cash and cash equivalents $ 648 $ 56 Marketable securities available-for-sale 5,733 7,492 Receivables 440 445 Lease receivables--current 968 757 Inventories 2,472 2,142 Deferred income taxes--current 415 426 Prepaid expenses 109 56 _______ _______ Total Current Assets 10,785 11,374 PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization 149 186 INTANGIBLE ASSETS, net of accumulated amortization 20 22 LEASE RECEIVABLES--long-term 2,169 1,717 DEFERRED INCOME TAXES--long-term 2,066 2,057 RESTRICTED ASSETS HELD IN TRUST 607 - _______ _______ $15,796 $15,356 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 724 $ 392 Accrued expenses 447 407 Deferred revenues 25 35 _______ _______ Total Current Liabilities 1,196 834 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred Stock, no specified par value; 1,000,000 shares authorized; none issued and outstanding - - Common Stock, no par value, authorized 15,000,000 shares; issued and outstanding 3,293,178 shares at September 30, 2000; 3,269,494 shares at December 31, 1999, respectively 19,105 19,031 Accumulated deficit (4,467) (4,446) Accumulated other comprehensive loss (38) (63) _______ _______ Total shareholders' equity 14,600 14,522 _______ _______ $15,796 $15,356 ======= ======= See notes to condensed financial statements.
PRINTWARE, INC. CONDENSED STATEMENTS OF CASH FLOWS 9 MONTHS ENDED SEPTEMBER 30, 2000 AND OCTOBER 2, 1999 DOLLARS IN THOUSANDS (UNAUDITED) September 30, October 2, 2000 1999 _______ ______ OPERATING ACTIVITIES: Net (loss) income $ (21) $ 25 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 48 52 Warrants issued for services 26 - Provision for bad debts - 9 Provision for inventory write-downs 81 45 Deferred income taxes 2 (86) Changes in operating assets and liabilities: Receivables 5 204 Inventories (411) (407) Prepaid expenses (53) (23) Accounts payable 332 (16) Accrued expenses 40 (32) Deferred revenues (10) (1) ______ ______ Net cash used in operating activities 39 (230) INVESTING ACTIVITIES: Purchases of available-for-sale securities - (1,275) Maturities and sales of available-for-sale securities 1,784 4,834 Increase in lease receivables (663) (833) Purchases of property and equipment (11) (30) Proceeds from sale of property and equipment 2 - Increase in other assets (607) - ______ ______ Net cash provided by investing activities 505 2696 FINANCING ACTIVITIES: Proceeds from issuance of Common Stock 48 46 Common Stock redeemed and retired - (3,016) ______ ______ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 592 (504) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 56 654 ______ ______ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 648 $ 150 ====== ====== SUPPLEMENTAL CASH FLOW DISCLOSURE: Cash paid during the period for: Income taxes $ - $ - ====== ====== Interest $ - $ - ====== ====== See notes to condensed financial statements.
PRINTWARE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS 3 AND 9 MONTHS ENDED SEPTEMBER 30, 2000 AND OCTOBER 2, 1999 1. INTERIM FINANCIAL INFORMATION The accompanying condensed balance sheet as of September 30, 2000 and the condensed statements of operations and comprehensive income for the three and nine months ended September 30, 2000 and October 2, 1999, and the condensed statements of cash flows for the nine months ended September 30, 2000 and October 2, 1999 are unaudited. In the opinion of management, such unaudited financial statements include all adjustments, consisting of only normal, recurring accruals necessary for a fair presentation thereof. The results of operations for any interim period are not necessarily indicative of the results for the year.
September 30, December 31, 2000 1999 _____________ ____________ 2. INVENTORIES: Raw materials $1,002 $1,353 Work-in-process 262 236 Finished goods 1,208 553 ______ ______ Total inventories $2,472 $2,142 ====== ======
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2000 AND OCTOBER 2, 1999 Total revenues for the third quarter of 2000 were $1.10 million, a decrease of 19% from third quarter 1999 revenues of $1.36 million. The decrease was due primarily to a decrease in equipment sales in the third quarter of 2000 compared to the same quarter in 1999 due to a depleted backlog at the beginning of the quarter. Sales of supplies products in the third quarter of 2000 increased 42% compared to the same period in 1999, all from supplies for the Company's current generation of platesetters that were not yet available in the 1999 quarter. The Company's gross margin was $421,000 in the third quarter of 2000 versus $374,000 in the comparable quarter in 1999. Gross margin as a percentage of revenue increased to 38% in the third quarter 2000 from 28% in third quarter 1999. The increased margin in 2000 was due primarily to reduced manufacturing costs and to higher expenses in the 1999 quarter for service costs and write-offs of certain obsolete inventory. Research and development expenses decreased to $147,000 in the third quarter 2000 from $177,000 in the third quarter in 1999. The decrease was largely due to lower headcount and related costs caused by the completion of the PlateStream development, and despite increased expenses for development of the new low-priced PlateStream-SC platesetter model and Internet-related Web-to-Plate development activities. Selling, general and administrative expenses increased to $512,000 in the third quarter of 2000 from $327,000 in the third quarter of 1999. Selling expenses increased by approximately $16,000 in the third quarter 2000 primarily due to recruiting of four field sales people in the current period. General and administrative expenses were up by approximately $143,000 in the third quarter of 2000 due primarily to expenses from retaining consultants in strategic planning and market research, combined with additional expenses for corporate development, directors and officers insurance, and legal fees. In addition, general and administrative expenses in the 1999 quarter were reduced due a reduction of $61,000 of accruals of executive incentive compensation. The proxy contest costs in the second quarter of 2000 were the result of a contested election of the Board of Directors. The Company incurred expenses for legal, proxy solicitation, and printing of $153,000 in support of the incumbent Board, with the expenses of the Committee to Improve Printware Shareholder Value ("the Committee") for similar activities totaling $205,000. The proxy contest ended with the election of the Committee's slate as the new Board of Directors on June 16, 2000. The Company accrued for the reimbursement of the Committee's expenses in the second quarter of 2000. Interest and other income were $110,000 in the third quarter of 2000 compared to $151,000 in the same quarter in 1999. The decrease in interest income in 2000 was due to lower interest rates and a decrease in cash and investments of $1.6 million from the third quarter in 1999 compared to the same quarter in 2000. The decrease in cash and investments was primarily due to increased financing of leases and the establishing of a Rabbi trust, restricted assets held in trust, related to the change in control severance agreements with the Company's officers. The Company's income tax (benefit) expense primarily consists of federal and state taxes due or receivable in the current year and is based on the estimated annualized effective rate of 38%. In 1999, the Company did not record income taxes because income tax expense was offset by a reduction in the valuation allowance on the deferred tax assets. RESULTS OF OPERATIONS FOR THE 9 MONTHS ENDED SEPTEMBER 30, 2000 and OCTOBER 2, 1999 Total revenues for the first nine months of 2000 were $3.96 million, an increase of 12% from the same period in 1999. The increase in 2000 revenues versus the year-ago period was primarily due to sales of new supplies products for the current generation of platesetters that were not yet available for sale in the 1999 period. The Company's gross margin as a percentage of revenue in the first nine months of 2000 was 42%, up from 35% in the same period in 1999. This was due largely to higher-margin equipment sales in the first nine months of 2000, combined with lower manufacturing costs. Research and development expenses for the first nine months of 2000 decreased 23% over the same period in 1999. The decrease was largely due to lower headcount and related costs caused by the completion of the PlateStream development, and despite increased expenses for development of the new low- priced PlateStream-SC, platesetter model, and Internet-related Web-to-Plate development activities. Selling, general and administrative expenses increased $398,000 in the first nine months of 2000 compared to the same period in 1999. This included a 7% decrease in marketing and sales costs due largely to the attrition of personnel that were replaced by the end of the third quarter. General and administrative expenses increased 95% over the first nine months of 1999 primarily due to $456,000 of proxy contest related costs. Interest and other income totaled $346,000 in the first nine months of 2000 compared to $530,000 in the same period in 1999. The decrease in 2000 was due to lower interest rates and a decrease in cash and investments. The decrease in cash and investments was primarily due to increased financing of leases and the establishment of a Rabbi trust, restricted assets held in trust, related to the change in control severance agreements with the Company's officers. The Company's income tax (benefit) expense primarily consists of federal and state taxes due or receivable in the current year, and is based on the estimated annualized effective rates of 38%. In 1999, the Company did not record income taxes because income tax expense was offset by a reduction in the valuation allowance on the deferred tax assets. LIQUIDITY AND CAPITAL RESOURCES Working capital was $9.6 million at September 30, 2000 compared to $10.5 at December 31, 1999. Cash, cash equivalents and investments decreased by approximately $1.2 million at September 30, 2000 compared to December 31, 1999. The decrease was primarily due an increase in lease receivables of $663,000 and to the establishment and funding of $607,000 (including interest) for a Rabbi trust to cover potential payments to the Company's officers who are parties to change-in-control severance agreements with the Company. The Company is exploring the transfer of its lease portfolio to a third party leasing company. While no final decisions have been made by the Company regarding such a transfer, if a transfer occurred it would be expected to result in a loss between $100,000 and $300,000 and, depending upon the transaction structure, would be accounted for either as a sale or financing. The transfer would add between $2.6 million and $2.8 million to cash and cash equivalents. Management believes working capital is adequate for its current needs. As of September 30, 2000 the Company has no material commitments which would result in a significant cash outflow other than purchases of inventory. PART II--OTHER INFORMATION Item #2 Changes in Securities and Use of Proceeds Pursuant to a consulting contract (see Exhibit 10 filed herewith) between the Company and Stanley Goldberg, a director of the Company, and his business development firm Goldmark Advisors, warrants were granted to purchase 25,000 shares of the Company's common stock. The warrants are exercisable at $2.375, the market value of such common stock on the warrant issuance date July 27, 2000. The value of the warrants was calculated at approximately $26,000 using the Black-Scholes pricing model and was included in expenses for the third quarter 2000. The warrants are immediately 100% vested. The warrants' term is five years and their provisions contain rights and privileges relating to dilution. Item #5 Other Information 1. The Board of Directors amended the Company's Bylaws effective as of July 27, 2000. The full text of the Bylaw amendment is attached as an exhibit hereto. The Bylaw amendment establishes an advance notice provision for shareholders who wish to bring business before a shareholders' meeting and also establishes a procedure that shareholders must follow if they wish to nominate directors for election. The proxy rules of the Securities and Exchange Commission permit shareholders of a company, after timely notice to the company, to present proposals for shareholder action in the Company's Proxy Statement where such proposals are consistent with applicable law, pertain to matters appropriate for shareholder action and are not properly omitted by action of the Company in accordance with the proxy rules. In order for a shareholder proposal to be considered for inclusion in the Proxy Statement for the 2001 Annual Meeting of Shareholders, the proposal prepared in accordance with the proxy rules must be received by the Secretary of the Company in writing no later than January 10, 2001. In addition, if the Company receives notice of a shareholder proposal before March 18, 2001 or after April 17, 2001, such proposal will be considered untimely pursuant to Rules 14a-4 and 14a-5(e) and the persons named in proxies solicited by the Board of Directors for its fiscal 2001 Annual Meeting of Shareholders may exercise discretionary voting power with respect to such proposal. The Company's Bylaws provide that certain additional requirements be met in order that business may properly come before the shareholders at the Annual Meeting. Among other things, shareholders intending to bring business before the Annual Meeting or intending to nominate directors for election must provide written notice of such intent to the Secretary of the Company. Such notice must be given not less than 60 days nor more than 90 days prior to a meeting date corresponding with the previous year's Annual Meeting date, and must contain certain required information. Shareholders desiring to bring matters for action at an Annual Meeting or to nominate directors should review the Bylaw amendment attached as an exhibit to this Form 10-QSB. 2. The Company entered into a consulting contract with Stanley Goldberg, a current director of the Company, and his business development firm Goldmark Advisors. This contract is filed herewith as Exhibit 10. The contract has subsequently been extended for an additional 30-day period. 3. The Company is negotiating an agreement with Thomas W. Petschauer, the Company's Executive Vice President and Chief Financial Officer, on terms of the termination of Mr. Petschauer's employment. Mr. Petschauer's employment is expected to end in early 2001. The Company plans to accrue and charge to operations an amount approximately equal to the payment which would have been due Mr. Petschauer under his change in control severance agreement to cover anticipated severance payments to Mr. Petschauer. Item #6 Exhibits and Reports of Form 8-K a. Exhibits Exhibit 3. Amendment to the Bylaws Exhibit 10. Consulting contract with a director Exhibit 11. Statement re computation of per share earnings Exhibit 27. Financial Data Schedule b. Reports on Form 8-K No reports have been filed on Form 8-K during this quarter. PRINTWARE, INC. SIGNATURES In accordance with the requirement of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PRINTWARE, INC. Registrant Date: November 14, 2000 /s/ THOMAS W. PETSCHAUER ________________________ Thomas W. Petschauer EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER (Principal Financial Officer) Date: November 14, 2000 /s/ DANIEL A. BAKER ________________________ Daniel A. Baker, Ph.D., PRESIDENT AND CHIEF EXECUTIVE OFFICER (Principal Executive Officer) EX-3 2 0002.txt EXHIBIT 3 AMENDMENT TO THE BYLAWS PRINTWARE, INC. EXHIBIT 3 AMENDMENT TO THE BYLAWS WRITTEN ACTION IN LIEU OF A MEETING OF THE BOARD OF DIRECTORS OF PRINTWARE, INC. Effective as of July 27, 2000 The undersigned, being all of the directors of Printware, Inc., a Minnesota corporation (the "Corporation"), acting pursuant to the Minnesota Business Corporation Act and the Corporation's Bylaws, do hereby adopt the following resolutions in writing in lieu of a meeting of the Board of Directors, effective as of the date first above written: WHEREAS, the Board of Directors desires to amend the Corporation's Bylaws to provide for procedures for the submission of shareholder proposals and director nominees. NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Bylaws be, and they hereby are, amended to add a new Section 2.11 to read in its entirety as follows: 2.11 Properly Brought Business. At the regular meeting, the shareholders shall elect directors of the corporation and shall transact such other business as may properly come before them. To be properly brought before the meeting, business must be of a nature that is appropriate for consideration at a regular meeting and must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a shareholder. In addition to any other applicable requirements, for business to be properly brought before the regular meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, each such notice must be given, either by personal delivery or by United States mail, postage prepaid, to the secretary of the corporation, not less than sixty (60) days nor more than ninety (90) days prior to a meeting date corresponding to the previous year's regular meeting. Each such notice to the secretary shall set forth as to each matter the shareholder proposes to bring before the regular meeting (a) a brief description of the business desired to be brought before the regular meeting and the reasons for conducting such business at the regular meeting, (b) the name and address of record of the shareholders proposing such business, (c) the class or series (if any) and number of shares of the corporation which are owned by the shareholder, and (d) any material interest of the shareholder in such business. Notwithstanding anything in these Bylaws to the contrary, no business shall be transacted at the regular meeting except in accordance with the procedures set forth in this Article; provided, however, that nothing in this Article shall be deemed to preclude discussion by any shareholder of any business properly brought before the regular meeting, in accordance with these Bylaws. The amendment or repeal of this section or the adoption of any provision inconsistent therewith shall require the approval of the holders of shares representing at least 70% of the outstanding shares of the common stock. FURTHER RESOLVED, that the Corporation's Bylaws be, and they hereby are, amended to add a new Section 3.13 to read in its entirety as follows: 3.13 Nomination for Election. Subject to the rights of holders of any class or series of stock having a preference over the common shares as to dividends or upon liquidation, nominations for the election of directors may be made by the Board of Directors or a committee appointed by the Board of Directors or by any shareholder entitled to vote generally in the election of directors. However, any shareholder entitled to vote generally in the election of directors may nominate one or more persons for election as directors at a meeting only if written notice of such shareholder's intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the secretary of the corporation not less than sixty (60) days nor more than ninety (90) days prior to a meeting date corresponding to the previous year's regular meeting. Each such notice to the Secretary shall set forth: (i) the name and address of record of the shareholder who intends to make the nomination; (ii) a representation that the shareholder is a holder of record of shares of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iii) the name, age, business and residence addresses, and principal occupation or employment of each nominee; (iv) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (v) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission; and (vi) the consent of each nominee to serve as a director of the corporation if so elected. The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as a director of the corporation. The presiding officer of the meeting may, if the facts warrant, determine that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. The amendment or repeal of this section or the adoption of any provision inconsistent therewith shall require the approval of the holders of shares representing at least seventy percent (70%) of the outstanding shares of the common stock. FURTHER RESOLVED, that the Corporation's officers be, and they hereby are, directed to include appropriate disclosure of the above referenced deadlines in the Corporation's next Quarterly Report on Form 10-QSB. IN WITNESS WHEREOF, the undersigned have hereunto set their hands effective as of the date first above written. /s/Gary S. Kohler /s/Andrew J. Redleaf _________________________________ _____________________________ Gary S. Kohler Andrew J. Redleaf /s/Stanley Goldberg /s/Roger C. Lucas _________________________________ _____________________________ Stanley Goldberg Roger C. Lucas /s/Charles Bolger /s/Douglas M. Pihl _________________________________ _____________________________ Charles Bolger Douglas M. Pihl EX-10 3 0003.txt EXHIBIT 10 CONSULTING CONTRACT WITH A DIRECTOR PRINTWARE, INC. EXHIBIT 10 CONSULTING CONTRACT WITH A DIRECTOR July 27, 2000 Board of Directors Printware, Inc. 1270 Eagan Industrial Road Eagan, MN 55121 Dear Directors of Printware, Inc: This letter outlines the scope of the engagement between the Board of Directors of Printware, Inc. ("Printware" or the "Company") and Stanley Goldberg (Goldberg) a current director of the company and his business development firm Goldmark Advisors (Goldmark). Background Based upon its initial review of the business, the Board of Directors of Printware would like to obtain an independent assessment of the Company's business, provide greater board oversight, assist management in the execution of the initiatives the Board has suggested and establish a better communications link between management and the Board. Services In addition to providing a liaison service and oversight responsibility Goldberg/Goldmark will complete an investigation and evaluation of the business, organization, products and markets of Printware. After meeting with employees, customers, vendors, competitors and other industry participants, as appropriate, Goldberg/Goldmark will, in conjunction with senior management and selected members or committees of the Board, continue and /or complete the following: Strategic Involvement * In conjunction with management, assist in the preparation of a three- year business plan, which would include identifying strategic options and/or alternatives available to the Company. * Oversee the marketing study commissioned by the Board and currently being conducted by Terry Nagi. * Summarize and present the findings to the Board of Directors. Operational Involvement * Work with management to implement the cost accounting and management information systems initiatives recommended by the Board. Begin a process to identify and implement product and manufacturing cost improvements which would allow for greater margins or the ability to obtain lower product pricing without sacrificing margin. * Facilitate the Board's current business and operational review. All Goldberg/Goldmark activities will be subject to the approval and control of the Board of Directors of the Company. Goldberg/Goldmark will act as a consultant only, not as an agent or employee, and will have no authority to bind the Company in any manner. Fees (Assumes Status Quo at the Company) For the services outlined above, Goldberg would charge the following fees for his or his Company's services: From July 28, 2000 to October 31, 2000 1. A retainer fee of $50,000 payable as follows - $20,000 commencing on the acceptance of the engagement - $15,000 on September 1, 2000 - $15,000 on October 1, 2000 2. Warrants to purchase 25,000 shares of the Company's common stock exercisable at the market value of such common stock on the warrant issuance dates (July 28, 2000 or upon acceptance of the engagement).The warrants shall be immediately 100% vested. The warrant agreement terms would be five years in duration and their provisions would contain all applicable rights and privileges relating to dilution. 3. All reasonable out of pocket expenses reimbursed semi-monthly. After October 31, 2000 1. The engagement may continue after its termination date on a month- to-month basis by mutual agreement. 2. The general terms would be approximately $20,000 per month plus the right to additional 10,000 warrants per month exercisable at the price in effect at the time the warrants are issued. Termination 1. Either party with sixty (60) days notification can terminate this agreement. Confidentiality Goldmark agrees to maintain all information obtained about and from the Company in the strictest of confidence. Goldmark will disseminate no information obtained by Goldmark to any other party without prior permission of the Board of Directors or officers of the Company. If the Company directors are in agreement with the foregoing, a representative of the Company should execute this letter by signing where indicated below. Sincerely, Agreed and accepted: Goldmark Advisors, LLC Printware Inc. By: /s/Stanley Goldberg By: /s/Gary Kohler ________________________ ________________________ Stanley Goldberg Gary Kohler Its: Managing Partner Its: Chairman Date: 7/27/00 EX-11 4 0004.txt EXHIBIT 11 STATEMENT RE COMPUTATION PER SHARE EARNINGS (LOSS) PRINTWARE, INC. EXHIBIT 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (LOSS)
Three months ended Nine months ended Sep 30, Oct 2, Sep 30, Oct 2, 2000 1999 2000 1999 _________ _________ _________ _________ BASIC EPS: Weighted average number of common shares outstanding 3,288,134 3,681,397 3,279,266 4,455,639 _________ _________ _________ _________ Total shares 3,288,134 3,681,397 3,279,266 4,455,639 ========= ========= ========= ========= Net (loss) income (000's) $ (79) $ 21 $ (21) $ 25 ========= ========= ========= ========= (Loss) earnings per share $ (.02) $ .01 $ (.01) $ .01 ========= ========= ========= ========= DILUTED: Weighted average number of common shares outstanding 3,288,134 3,681,397 3,279,266 4,455,639 Common share equivalents from assumed exercise of options and warrants 0 0 0 0 _________ _________ _________ _________ Total shares 3,288,134 3,681,397 3,279,266 4,455,639 ========= ========= ========= ========= Net (loss) income (000's) $ (79) $ 21 $ (21) $ 25 ========= ========= ========= ========= (Loss) earnings per share $ (.02) $ .01 $ (.01) $ .01 ========= ========= ========= =========
EX-27 5 0005.txt ARTICLE 5 FIN. DATA SCHEDULE FOR 3RD QTR 10QSB
5 1,000 9-MOS Dec-31-1999 Jul-02-2000 Sep-30-2000 648 5733 1408 (51) 2472 10785 1428 1279 15796 1196 0 19105 0 0 (4467) 15796 1095 1095 674 674 659 0 (110) (128) 49 (79) 0 0 0 (79) (.02) (.02)
-----END PRIVACY-ENHANCED MESSAGE-----