-----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, FKdfrEokAltwXG4fs2phRaF2ne5gwItEvAOBc5NmOPr070iryDRtBzQtmGSpxtgQ Xn/EqVlYAi/c/Px3lJCDcQ== 0001058985-99-000050.txt : 19990521 0001058985-99-000050.hdr.sgml : 19990521 ACCESSION NUMBER: 0001058985-99-000050 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19990520 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNET BUSINESS INTERNATIONAL INC CENTRAL INDEX KEY: 0000880584 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FOOD PREPARATIONS & KINDRED PRODUCTS [2090] IRS NUMBER: 330307734 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-43621 FILM NUMBER: 99631203 BUSINESS ADDRESS: STREET 1: 30152 AVENTURA CITY: RANCHO SANTA MARGARI STATE: CA ZIP: 92688 BUSINESS PHONE: 7148588800 MAIL ADDRESS: STREET 1: 30152 AVENTURA CITY: RANCHO SANTA MARGARI STATE: CA ZIP: 92688 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL FOOD & BEVERAGE INC /DE/ DATE OF NAME CHANGE: 19930328 10-Q 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997 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: 33-43621 INTERNATIONAL FOOD & BEVERAGE, INC. (1) (Exact name of registrant as specified in its charter) Delaware 33-0307734 (State or jurisdiction of incorporation I.R.S. Employer or organization) Identification No.) 30152 Aventura, Rancho Santa Margarita, California (2) 92688 (2) (Address of principal executive offices) (Zip Code) Registrant's telephone number: (714) 858-8800 (2) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None 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) been subject to such filing requirements for the past 90 days. Yes X No . Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ]. Not Applicable. The aggregate market value of the voting stock held by non- affiliates of the registrant as of May 10, 1999: Common Stock, par value $0.001 per share -- $27,085,595. As of May 10, 1999, the registrant had 177,302,997 shares of common stock issued and outstanding. (1)As of February 17, 1999, the name was change to: Internet Business's International, Inc. (2) As of March 1, 1999, the address and telephone number was changed to: 3900 Birch Street, Suite 111, Newport Beach, California 92660; (949) 833-0261. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE ITEM 1. FINANCIAL STATEMENTS BALANCE SHEETS AS OF SEPTEMBER 30, 1997 AND JUNE 30, 1997 3 STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996 4 STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996 5 NOTES TO FINANCIAL STATEMENTS 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9 PART II ITEM 1. LEGAL PROCEEDINGS 12 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 12 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12 ITEM 5. OTHER INFORMATION 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12 SIGNATURES 13 PART I. ITEM 1. FINANCAL STATEMENTS. INTERNATIONAL FOOD & BEVERAGE, INC. BALANCE SHEETS (Unaudited) June 30, 1997 September 30, 1997 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 28,000 $ 2,041 Accounts receivable, net of allowance for doubtful accounts of $40,000 at 6-30-97 254,000 318,813 Inventories 254,000 279,839 Prepaid expenses 6,000 8,417 Total current assets 423,000 609,110 FIXED ASSETS: 800,000 725,000 Total Assets $1,511,000 $1,334,110 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Notes payable and current maturities of long term debt $ 408,000 $ 466,398 Accounts payable 918,000 1,211,744 Accrued wages and benefits 207,000 178,727 Accrued commissions and Marketing 261,000 216,208 Other accrued expenses 153,000 115,161 Total current liabilities 1,947,000 2,188,238 LONG TERM DEBT: 677,000 643,802 SHAREHOLDERS' EQUITY (DEFICIT): Preferred Stock 0 0 Common Stock 428,000 428,000 Additional paid-in capial 1,000 1,000 Retained earnings (deficit) (1,542,000) (1,542,000) Currennt earnings (deficit) (384,930) Total Shareholders' Equity (1,113,000) (1,497,930) Total Liabilities & Shareholders' Equity $1,511,000 $1,334,110 See Accccompanying Notes to Financial Statements INTERNATIONAL FOOD & BEVERAGE, INC. STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Three Months Ended September 30, 1996 September 30, 1997 REVENUES $1,993,000 $1,929,434 COST OF SALE 1,603,000 1,693,137 GROSS PROFIT 390,000 236,297 OPERATING EXPENSES: Selling and distribution 334,000 352,617 General and administration 141,000 227,713 Interest expense, net 31,000 40,897 Total Operating Expenses 506,000 621,227 NET INCOME (LOSS) $ (116,000) $ (384,930) NET INCOME (LOSS) PER COMMON SHARE $(nil) $(nil) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 155,666,362 154,763,438 See Accccompanying Notes to Financial Statements INTERNATIONAL FOOD & BEVERAGE, INC. STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended September 30, 1996 September 30, 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $(116,000) $(384,930) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 39,000 75,000 Issuance of Common Stock under distribution agreement 18,000 Changes in assets and liabilities: Accounts receivable 179,000 (64,813) Inventories 39,000 143,161 Prepaid expenses 3,000 (2,417) Accounts payable (2,000) 293,744 Accrued wages and benefits (29,000) (28,273) Accrued commissions and marketing (7,000) (44,792) Other accrued expenses (28,000) (37,839) Net cash provided by (used in) operating activities 96,000 (51,159) CASH FLOWS FROM INVESTING ACTIVITIES: Additions to, and reduction of, fixed assets (5,000) 0 Net cash provided by (used in) investing activities (5,000) 0 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of notes payable 0 0 Principal payments on notes payable (96,000) 25,200 Net cash provided by (used in) financing activities (96,000) 25,200 NET INCREASE (DECREASE) IN CASH (5,000) (25,959) CASH AND CASH EQUIVALENTS, beginning of period 20,000 28,000 CASH AND CASH EQUIVALENTS, end of period $ 15,000 $ 2,041 See Accccompanying Notes to Financial Statements NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 Note 1. Description of the Business International Food & Beverage, Inc. (the "Company"), manufactures and markets fully prepared pizzas, pizza components and specialty baked products to customers within the food service industry including retail supermarket service delicatessens, restaurants, hotels, sports and theme parks, and catering locations. Note 2. Change in Control On December 31, 1994, BT Capital Corporation ("BTCC"), MH Investments, Inc., a California corporation wholly owned by Michael W. Hogarty, the Chief Executive Officer and President of the Company, and Michael W. Hogarty entered into agreements which provided for the sale of 91.8% by BTCC of the outstanding shares of Common Stock of the company to MH Investments, Inc. for $250,000. Concurrent with the foregoing transaction the Company entered into a Tax Allocation Agreement with BTCC. The parties elected under Section 338(h)(10) of the Internal Revenue Code to treat the transaction as an asset acquisition for tax purposes. Under the terms of the tax Allocation Agreement, BTCC agreed to pay to the company $3,475,000 as full consideration for the potential tax benefits which have or may in the future inure to the benefit of BTCC and its affiliates with such amount paid by (i) elimination of $2,675,000 of debt and interest owed to BTCC by the Company, and (ii)payment of $800,000 in cash and short term notes receivable. As a result of the Section 338(h)(10) election, BTCC and its affiliates will be entitled to use, subject to applicable limitations and restrictions, any net operating losses of the company existing as of December 31, 1994. In connection with the foregoing transaction, MH Investments, Inc. has given BTCC a five year option to purchase up to 18,000,000 shares of Common Stock of the Company from MH Investments, Inc. at the same price per share paid by MH Investments, Inc. For financial reporting purposes this transaction was recorded in conformity with Accounting Principles Board Opinion No. 16. Accordingly, the assets and liabilities as of January 1, 1995, and the results of operations for the six months ended June 30, 1995, reflect the "push-down" of the new controlling shareholder's basis, minority interest at its historical basis, and the consideration received from BTCC. Note 3. Summary of Significant Accounting Policies Fiscal Year The Company's fiscal year is the 52-53 week period ending on the Saturday closest to June 30. For clarity of presentation, fiscal year end and period end dates in the accompanying financial statements and notes are referred to as June 30 and September 30 for thc applicable periods presented. Accounts Receivable and Revenues Substantially all of the Company's sales were made to full-line food service distributors, national food service chains major regional supermarket chains or a related party who sells to such organizations. Concentrations of credit risk exist because of the concentration of the Company's customers within these industries and its dependence on a limited number of customers for a large portion of annual revenues. Such risk, however, was mitigated by the longevity of the Company's customer relationships and was considered a normal part of the food service, institutional and retail grocery industries. Inventories Inventories consisted of finished goods and raw materials and were stated at the lower of cost (first-in, first-out method) or market; as of the date of these financials there was no inventory. Fixed Assets Substantially all of the Company's fixed assets were acquired within the past six years. The historical acquisition cost of these assets was approximately $4,000,000, however, as a result of the application of "push-down" accounting in connection with the change of control these assets are reported currently on the Company's financial statements with a cost before accumulated depreciation and amortization of $1,154,000. Asset additions subsequent to December 31, 1994 are stated at cost. Depreciation is provided using the straight-line methods over the shorter of the estimated useful life of an asset or the remaining lease term for leasehold improvements (three to seven years). Significant improvements were capitalized. All maintenance and repair costs had been charged to operations as incurred. When assets are sold or otherwise disposed of, the costs and accumulated depreciation or amortizations are removed from the accounts and any resulting gain or loss is reflected in operations. Other Assets Other assets consisted primarily of cost capitalized in connection with a June 1990 debt restructuring. These costs were being amortized using the interest method over seven years, and were reduced to zero, effective January 1, 1995, in connection with the change in control of the Company. Goodwill The excess of cost over the fair value of net assets acquired by the Predecessor Company was recorded as goodwill and amortized using the straight-line method over twenty-five years. The goodwill was reduced to zero, effective January 1, 1995, in connection with the change on control of the Company. Income Taxes The Company follows Statement of Financial Accounting Standards ("SPAS") No. 109, "Accounting for Income Taxes". Under this method, deferred income taxed was recognized for the tax consequences in future years of difference between the tax bases of assets and liabilities, and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences were expected to affect taxable income. Valuation allowances were established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Under this standard the provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. Net Loss Per Common Share Net loss per common share is based on the reported net loss divided by the weighted average number of common shares outstanding. Shares issuabel under options have been excluded from the calculation in each period presented because of their antidilutive effect. Cash Equivalents The Company considered highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Fair Value of Financial Instruments The carrying value of the Company's cash and cash equivalents, accounts receivable, accounts payable, accrues expenses and notes payable approximates fair value. Management Estimates The preparation of financial statements in conformity with generally accepted accounting principles required management to make estimated and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 4. Commitments Leases The company has an operating lease for its manufacturing and corporate of office facility. The lease, which expires in June 2000, requires monthly payments of approximately $25,000 through October 31, 1996 and thereafter is subject to annual adjustments of at least 4%, but not more than 7% based on the Consumers Price Index. Note 5. Stock Issuance Stock Issuance In February 1996, the Company entered into a "Manufacturing Service and Marketing Agreement" as amended, (the Agreement") with Sunset Specialty foods, Inc. ("Sunset") and James R. Tolliver, the sole owner of Sunset. The Agreement the Company is obligated to issue as a commission to Sunset at the completion of each quarter Common Stock of the Company equal to four shares of Common Stock for each $1.00 of pizza finished product produced and purchased during the period from February 1, 1996 through June 30, 1996, and three shares of Common Stock for each $1.00 of pizza finished product produced and purchased during the two quarters ending December 31,1996. Effective July 1, 1996 the Agreement was amended to exclude the stock commission on purchases by Sunset for export. Through the quarter ended June 30, 1996 the Company has issued 729,869 shares of Common Stock and is accounted for as a noncash transaction on the Statement of Cash Flows. In August 1996 the Company issued an additional 1,825,913 shares of Common Stock in satisfaction of commissions earned as of June 29, 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FIINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the financial statements of the Company and notes thereto contained elsewhere in this report. Results of Operations. Revenues for the three month period ended September 30, 1997 of $1,929,434 decreased approximately 3% when compared with revenues of $1,993,000 in the prior year comparable period. In May 1996, the Company introduced a line of pizzas which are sold under a private label brand in the frozen food section of a major national grocery retailer. The Company recently added a second major grocery retailer private label program with initial sales to this customer made in late February 1997. Revenue increases during the most recent three month period roughly offset the sales decline in contract manufacturing resulting in revenues for the quarter which were nearly flat as compared with the prior year period. The Company continues to market its pizzas and crusts nationally to retail supermarket customers (service delicatessen and frozen food sections) and major foodservice accounts. The gross profit margin for the three months ended September 30, 1997 decreased to approximately 12.2% versus the prior year comparable period gross margin of approximately 19.6%. The current year margin deterioration resulted from an increase is cost of sales. Fixed overhead per unit sold remains high at the Company's low level of production. The Company would realize an increase in its gross profit contribution rate assuming the Company is able to achieve increased production volume and ingredient prices remain stable. Selling, general and administrative expenses for the three months ended September 30, 1997 were approximately 30.1% of sales versus the prior year comparable period at approximately 23.8%. Selling and administrative overhead increased slightly through each of the comparable periods due in part to increases in commissions and marketing as a percent of revenues. These increases in commissions and marketing expenses result from the continuing shift to higher margin programs replacing contract manufacturing revenues that are priced without commission or marketing. The Company does not anticipate having to add substantially to fixed overhead costs to support revenue growth of fifty to one hundred percent of its current revenue level assuming a similar mix of products and customers. As a result of higher borrowings in the current fiscal year, net interest expense for the three months ended September 30, 1997 increased to $40,897 from $31,000 for the comparable prior year period. The resulting loss for the three months ended September 30, 1997 was $384,930 versus reported comparable prior year period loss of $116,000. Inflation. The moderate rate of inflation over the past few years has had an insignificant impact on the Company's sales and results of operations during the period. Liqiudity and Capital Resources. Net cash used in operating activities was $51,159 for the three month period ended September 30, 1997 versus cash provided by operating activities of $96,000 in the comparable prior year period. Management believes that the Company will experience positive cash flow when it achieves a sustained average monthly revenue rate of approximately $750,000 at current sales prices and product mix. In March 1996, the Company entered into a $500,000 revolving line of credit agreement collateralized by eligible accounts receivables and inventories. In April 1997, the Company received from its lender approval for an increase in the line limit to $750,000. At the Company's current level of operations, management believes that this credit facility will be adequate to fund the Company's short term working capital requirements or that there are alternatives for additional debt or equity financing, if required. There is no assurance that the Company would be successful in obtaining the necessary additional financing. The Company's primary emphasis remains revenue generation through increased sales to existing and new customers. It is also aggressively evaluating opportunities ranging from contract manufacturing for others to the acquisition of a synergistic product line or company. Capital Expenditures. The Company is currently operating at approximately 35% of plant capacity. The Company has however committed to a capital improvement which will result in the replacement of its current CO(2) tunnel freezer with a higher capacity CO(2) spiral freezer. This undertaking affords the Company the opportunity to significantly improve (i) line efficiencies with resulting expected lower per unit production costs and (ii) overall product quality. The improvement is being financed by the holder of the note for the equipment being replaced, with the down payment to be satisfied with the underlying equity in the current equipment. The resulting eighty four month equipment contract increases the Company's present monthly payment by approximately $3,500 before giving effect to expected production cost savings. Net Operating Loss Carryforwards. For the quarter ended September 30, 1997, the Company had net operating loss carryforwards for federal and state purposes of approximately $430,634 and $429,373, respectively. These carryforwards begin to expire in 2011 and 2001, respectively. Year 2000 Issue. The Year 2000 issue arises because many computerized systems use two digits rather than four to identify a year. Date sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using the year 2000 date is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 issue may be experienced before, on, or after January 1, 2000, and if not addressed, the impact on operations and financial reporting may range from minor errors to significant system failure which could affect the Company's ability to conduct normal business operations. This creates potential risk for all companies, even if their own computer systems are Year 2000 compliant. It is not possible to be certain that all aspects of the Year 2000 issue affecting the Company, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. The Company is in the process of developing an ongoing program of communication with suppliers and vendors to determine the extent to which those companies are addressing Year 2000 compliance issues. There can be no assurance that the Company will be able to develop a contingency plan that will adequately address issues that may arise in the Year 2000. The Company's Year 2000 plans are based on management's best estimates. Based on currently available information, management does not believe that the Year 2000 issues will have a material adverse impact on the Company's financial condition or results of operations; however, because of the uncertainties in this area, no assurances can be given in this regard. Forward Looking Statements. The foregoing Management's Discussion and Analysis contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, and as comptemplated under the Private Securities Litigation Reform Act of 1995, including statements regarding, among other items, the Company's business strategies, continued growth in the Company's markets, projections, and anticipated trends in the Company's business and the industry in which it operates. The words "believe," "expect," "anticipate," "intends," "forecast," "project," and similar expressions identify forward-looking statements. These forward-looking statements are based largely on the Company's expectations and are subject to a number of risks and uncertainties, certain of which are beyond the Company's control. The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements, including, among others, the following: reduced or lack of increase in demand for the Company's products, competitive pricing pressures, changes in the market price of ingredients used in the Company's products and the level of expenses incurred in the Company's operations. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained herein will in fact transpire or prove to be accurate. The Company disclaims any intent or obligation to update "forward looking statements". PART II. ITEM 1. LEGAL PROCEEDINGS. The Company is not a party to any material pending legal proceedings and, to the best of its knowledge, no such action by or against the company has been threatened. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of the Company's stockholders during the first quarter of the fiscal year covered by this report. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Reports on Form 8-K. There are no reports on Form 8-K filed during the first quarter of the fiscal year covered by this report. (b) Exhibits included or incorporated by reference herein: See Exhibit Index SIGNATURE Pursuant to the requirements of Section 13 or 15(d) 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. INTERNET BUSINESS'S INTERNATIONAL, INC. Dated: May 10, 1999 By: /s/ Albert R. Reda Albert R. Reda Chief Executive Officer EXHIBIT INDEX Exhibit No. Description 3.01 Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.01 of the Registrant's Annual Report on Form 10-K for the fiscal year ended June 26, 1993). 3.02 Bylaws (incorporated by reference to Exhibit 3.02 to the Company's registration statement on Form S-1 filed with the Securities and Exchange Commission on October 29, 1991, the "Registration Statement"). 4.01 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.01 to the Registration Statement). 10.1 Employment Agreement, dated March 15, 1988, as amended January 5, 1989, and November 9, 1990 between Michael W. Hogarty and the Company (incorporated by reference to Exhibit 10.11 to the Registration Statement). 10.2 Standard Form Industrial Lease, dated August 31, 1989, between Tijeras Partnership, as landlord, and the Company (incorporated by reference to Exhibit 10.13 to the Registration Statement). 10.3 1988 Stock Option Plan for Key Employees of International Food & Beverage, Inc. (incorporated by reference to Exhibit 10.19 to the Registration Statement). 10.4 Lease Amendment, dated December 8, 1992 to the Standard Form Industrial Lease, dated August 31, 1989, between Tijeras Partnership, as landlord, and the Company (incorporated by reference to Exhibit 10.8 of the Registrant's Annual Report on Form 10-K for the fiscal year ended June 26, 1993). 10.5 Promissory Note of the Company dated June 29, 1995, in the principal amount of $100,000 in favor of Michael W. Hogarty. Promissory Notes of the Company in substantially the same form as in Exhibit 10.5 herein were issued at various times between October 16, 1995 and January 31, 1996 in the total principal amount of $355,000 in favor of Michael W. Hogarty (incorporated by reference to Exhibit 10.6 of the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1995). 10.6 Loan and Security Agreement, dated June 29, 1995 between the Company and Michael W. Hogarty (incorporated by reference to Exhibit 10.7 of the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1995). 10.7 Loan and Security Agreement, dated March 15, 1996 between Fremont Business Credit and the Company and related documents and agreements executed in connection therewith (incorporated by reference to Exhibit 10.7 of the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1996). 10.8 Building lease Estoppel Certificate dated December 11, 1995 to Ms. Nancee Ehlers Boldman and Ms. Sally Ehlers Stillion as Purchasers of the real property subject to the building lease included in this Exhibit Index as Exhibit 10.2 and Exhibit 10.4 (incorporated by reference to Exhibit 10.8 of the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1996). 22.1 Subsidiaries (incorporated by reference to Exhibit 22.1 to the Registration Statement). 27 Financial Data Schedule. EX-27 2 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1,000 [LEGEND] THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. [/LEGEND] 3-MOS JUN-30-1997 JUL-01-1997 SEP-30-1997 2 0 319 0 280 609 725 0 1,334 2,188 0 0 0 428 (1,498) 1,334 1,929 1,929 1,693 580 0 0 41 (385) 0 (385) 0 0 0 (385) (.00) (.00)
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