-----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, VnxV/g+Cg/dnG1kE08kwLm4X8xsh5doFTz6OE5Mxzl3pApxZGxLYQP4n+COQvfQX BuW8T4af0scdcXLPOcYqKQ== 0000950005-99-000764.txt : 19990817 0000950005-99-000764.hdr.sgml : 19990817 ACCESSION NUMBER: 0000950005-99-000764 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIBERSTARS INC /CA/ CENTRAL INDEX KEY: 0000924168 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 943021850 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-24230 FILM NUMBER: 99690088 BUSINESS ADDRESS: STREET 1: 2883 BAYVIEW DR CITY: FREMONT STATE: CA ZIP: 94538 BUSINESS PHONE: 5104900719 MAIL ADDRESS: STREET 1: 2883 BAYVIEW DR CITY: FREMONT STATE: CA ZIP: 94538 10QSB 1 FORM 10QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-QSB (Mark one) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 For the quarterly period ended June 30, 1999 [ ] 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 0-24564 ------- ----------------- FIBERSTARS, INC. (Exact name of registrant as specified in its charter) ----------------- California 94-3021850 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 2883 Bayview Drive, Fremont, CA 94538 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code): (510) 490-0719 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 ____ Number of shares of Common Stock outstanding as of June 30, 1999: 3,987,236 ---------- Index to Exhibits is at page 15 Page 1 FIBERSTARS, INC. TABLE OF CONTENTS
Page ---- Part I - FINANCIAL INFORMATION Item 1 Financial Statements: a. Consolidated Balance Sheets June 30, 1999 and December 31, 1998.........................................3 b. Consolidated Statements of Operations Three and six months ended June 30, 1999 and 1998...........................4 c. Consolidated Statements of Comprehensive Operation Three and six months ended June 30, 1999 and 1998...........................5 d. Consolidated Statements of Cash Flows Six months ended June 30, 1999 and 1998.....................................6 e. Notes to Financial Statements.............................................7-8 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations...........................................9-13 Part II - OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K................................................14 Signatures......................................................................14 EXHIBITS Index to Exhibits...............................................................15
Page 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements FIBERSTARS, INC. CONSOLIDATED BALANCE SHEETS (amounts in thousands) June 30, December 31, 1999 1998 -------- -------- (unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,757 $ 1,290 Accounts receivable trade, net 5,738 5,210 Notes and other accounts receivables 414 771 Inventories 4,160 4,179 Prepaids and other current assets 506 369 Deferred income taxes 254 507 -------- -------- Total current assets 12,829 12,326 Fixed assets, net 1,575 1,522 Goodwill, net 4,060 4,403 Investment in joint venture 2 18 Other assets 169 566 Deferred income taxes 89 89 -------- -------- Total assets $ 18,724 $ 18,924 ======== ======== LIABILITIES Current Liabilities: Accounts payable $ 2,046 $ 2,598 Accrued expenses 2,034 2,198 Current portion of long-term debt 114 107 -------- -------- Total current liabilities 4,194 4,903 Long-term debt, less current portion 610 667 -------- -------- Total liabilities 4,804 5,570 -------- -------- SHAREHOLDERS' EQUITY Common stock 0 0 Additional paid-in capital 13,946 13,930 Note receivable from shareholder (75) (86) Cumulative translation adjustments (58) 0 Retained earnings (accumulated deficit) 107 (490) -------- -------- Total shareholders' equity 13,920 13,354 -------- -------- Total liabilities and shareholders' equity $ 18,724 $ 18,924 ======== ======== The accompanying notes are an integral part of these financial statements Page 3 FIBERSTARS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except per share amounts) (Unaudited)
Three Months Ended June 30, Six Months Ended June 30, 1999 1998 1999 1998 -------- -------- -------- -------- Net sales $ 8,845 $ 6,162 $ 16,027 $ 10,821 Cost of sales 5,106 3,657 9,312 6,801 -------- -------- -------- -------- Gross profit 3,739 2,505 6,715 4,020 -------- -------- -------- -------- Operating expenses: Research and development 324 344 653 651 Sales and marketing 2,101 1,343 3,959 2,620 General and administrative 609 378 1,152 779 -------- -------- -------- -------- Total operating expenses 3,034 2,065 5,764 4,050 -------- -------- -------- -------- Income from operations 705 440 951 (30) Other income: Equity in joint venture's loss (15) (20) (15) (20) Interest income, net 1 45 5 108 -------- -------- -------- -------- Income before income taxes 691 465 941 58 Provision for income taxes (254) (174) (344) (28) -------- -------- -------- -------- Net income $ 437 $ 291 $ 597 $ 30 ======== ======== ======== ======== Net income per share - basic $ 0.11 $ 0.08 $ 0.15 $ 0.01 ======== ======== ======== ======== Shares used in per share calculation - basic 3,983 3,554 3,983 3,534 ======== ======== ======== ======== Net income per share - diluted $ 0.11 $ 0.08 $ 0.15 $ 0.01 ======== ======== ======== ======== Shares used in per share calculation - diluted 4,053 3,639 4,041 3,637 ======== ======== ======== ======== The accompanying notes are an integral part of these financial statements Page 4
FIBERSTARS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATION (amounts in thousands except per share amounts) (unaudited)
Three Months Ended June 30, Six Months Ended June 30, 1999 1998 1999 1998 ----- ----- ----- ----- Net income $ 437 $ 291 $ 597 $ 30 Other comprehensive loss, net of tax: Foreign currency translation adjustments (30) 0 (58) 0 ----- ----- ----- ----- Comprehensive income $ 407 $ 291 $ 539 $ 30 ===== ===== ===== ===== The accompanying notes are an integral part of these financial statements Page 5
FIBERSTARS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) (unaudited)
Six months ended June 30, 1999 1998 ------- ------- Cash flows from operating activities: Net income $ 597 $ 30 ------- ------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 428 235 Provision for doubtful accounts receivable 47 57 Deferred income taxes 254 28 Equity in joint ventures' loss 15 20 Changes in assets & liabilities: Accounts receivable (574) (1,542) Notes and other receivable (56) 0 Inventories 18 (159) Prepaid expenses and other current assets (137) 6 Other assets 397 (90) Accounts payable (552) 193 Accrued liabilities (163) 673 ------- ------- Total adjustments (323) (579) ------- ------- Net cash provided by (used in) operating activities 274 (549) ------- ------- Cash flows from investing activities: Sale of short-term investments 0 1,527 Repayment of loans made to officers 0 30 Loans made to officers 0 (30) Repayment of loans made under notes receivable 413 0 Acquisition of fixed assets (278) (249) ------- ------- Net cash provided by investing activities 135 1,278 ------- ------- Cash flows from financing activities: Cash proceeds from sale of common stock 27 182 Repayment of long term debt (49) (10) ------- ------- Net cash provided by (used in) financing activities (22) 172 ------- ------- Effect of exchange rate changes on cash 80 0 ------- ------- Net increase in cash and cash equivalents 467 901 Cash and cash equivalents, beginning of period 1,290 523 ------- ------- Cash and cash equivalents, end of period $ 1,757 $ 1,424 ======= ======= The accompanying notes are an integral part of these financial statements Page 6
1. Summary of Significant Accounting Policies Interim Financial Statements (unaudited) Although unaudited, the interim financial statements in this report reflect all adjustments, consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair statement of financial position, results of operations and cash flows for the interim periods covered and of the financial condition of the Company at the interim balance sheet dates. The results of operations for the interim periods presented are not necessarily indicative of the results expected for the entire year. The year-end balance sheet information was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. These financial statements should be read in conjunction with the Company's audited financial statements and notes thereto for the year ended December 31, 1998, contained in the Company's 1998 Annual Report to Shareholders. Earnings Per Share The Company presents its earnings per share (EPS) in accordance with SFAS 128 which requires the presentation of basic and diluted EPS. Basic EPS is computed by dividing income available to shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental shares upon exercise of stock options and warrants. In accordance with the disclosure requirements of SFAS 128, a reconciliation of the numerator and denominator of basic and diluted EPS is provided as follows (in thousands, except per share amounts): Three months Six months ended June 30, ended June 30, -------------- -------------- 1999 1998 1999 1998 ------ ------ ------ ------ Numerator - Basic and diluted EPS Net income $ 437 $ 291 $ 597 $ 30 Denominator - Basic EPS Weighted average shares outstanding 3,983 3,554 3,983 3,534 ------ ------ ------ ------ Basic earnings per share $ 0.11 $ 0.08 $ 0.15 $ 0.01 ====== ====== ====== ====== Denominator - Diluted EPS Denominator - Basic EPS 3,983 3,554 3,983 3,534 Effect of dilutive securities: Stock options 70 85 58 103 ------ ------ ------ ------ 4,053 3,639 4,041 3,637 ------ ------ ------ ------ Diluted earnings per share $ 0.11 $ 0.08 $ 0.15 $ 0.01 ====== ====== ====== ====== Options and warrants to purchase 1,194,848 shares of common stock were outstanding at June 30, 1999, but were not included in the calculation of diluted EPS because their inclusion would have been antidilutive. At June 30, 1998, options and warrants to purchase 569,466 were outstanding, but were not included in the calculation of diluted EPS because their inclusion would have been antidilutive. Page 7 2. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following (in thousands): June 30, December 31, 1999 1998 ------ ------ (unaudited) Raw materials $2,864 $2,780 Finished Goods 1,296 1,399 ------ ------ $4,160 $4,179 ====== ====== 3. Comprehensive Income The Company has adopted the provisions of Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," effective January 1, 1998. This statement requires the disclosure of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income is defined as net income plus net sales, expenses, gains and losses that, under generally accepted accounting principles, are excluded from net income. A separate statement of comprehensive income has been presented with this report. 4. Significant Equity Transactions There were no significant equity transactions during the quarter. 5. Segments and Geographic Sales The Company operates in a single industry segment that manufactures, markets and sells fiber optic lighting products. The Company markets its products for worldwide distribution primarily through independent sales representatives, distributors and swimming pool builders in North America, Europe and the Far East. A summary of geographic sales is as follows (in thousands): Six months ended June 30, --------------------------- 1999 1998 ------- ------- (unaudited) (unaudited) U.S. Domestic $10,895 $ 9,298 Foreign 5,132 1,523 ------- ------- $16,027 $10,821 ======= ======= Page 8 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition The following discussion should be read in conjunction with the attached financial statements and notes thereto. RESULTS OF OPERATIONS Net sales increased 44% to $8,845,000 for the quarter ending June 30, 1999. The increase was a result of growth in the commercial lighting and pools product sales. Net sales from companies acquired in 1998 also contributed to net sales growth in the 2nd quarter. For the half-year ending June 30, 1999 net sales were $16,027,000, a 48% increase over the prior year. Net sales year-to-date grew in both pools and commercial lighting and was augmented by contributions from companies acquired in 1998. Gross profit increased to $3,739,000 in the 2nd quarter of 1999, a 49% increase over the same period in the prior year. The gross profit margin was 42.3% for the quarter, an increase from the 40.7% gross margin achieved in the 2nd quarter of 1998. The increase in gross margin was primarily a result of lower warranty and freight costs in 1999 versus 1998. Gross profit year-to-date was $6,715,000, 67% above the gross profit for the same period in the prior year. The gross profit margin year-to-date was 41.9% compared to 37.2% in the prior year. The improvement was a result of lower costs for components along with lower warranty expenses. Research and development expenses were $324,000 in the 2nd quarter of 1999, a 6% decrease over the 2nd quarter of 1998 due to lower travel and project costs. Research and development expenses were 4% of sales in the 2nd quarter 1999 versus 6% in 1998. Year-to-date, research and development expenses were $653,000 compared to $651,000 in the prior year. As a percentage of net sales, research and development were 4% year-to-date versus 6% in the prior year largely as a result of expenses remaining constant while net sales increased. Sales and marketing expenses were $2,101,000 in the 2nd quarter of 1999 as compared to $1,343,000 in 1998, an increase of 56%. The increase was primarily due to $643,000 in additional expenses for the 2nd quarter of 1999 from the companies acquired in 1998 for which there were no expenses in the 2nd quarter of 1998. Sales and marketing expenses were 24% of sales in the 2nd quarter of 1999 compared to 22% in 1998. Year-to-date, sales and marketing expenses were $3,959,000 compared to $2,620,000, a 51% increase. The increase was largely a result of $1,223,000 in additional expenses from companies acquired in 1998 for which there were no expenses in the 1st half of 1998. Sales and marketing expenses were 25% of net sales year-to-date in 1999 versus 24% for the same period in the prior year. General and administrative costs were $609,000 in the 2nd quarter 1999, an increase of 61% over 1998 costs. This increase was largely a result of additional general and administrative costs in the second quarter of 1999 from companies acquired in 1998 for which there were no expenses in the 2nd quarter of 1998. General and administrative costs were 7% of net sales in the quarter ending June 30, 1999 versus 6% for the same quarter in 1998. Year-to-date, general and administrative expenses were $1,152,000 in 1999 compared to $779,000 for the same period in the prior year. Increases were largely due to additional costs from companies acquired at the end of 1998. General and administrative costs were 7% of net sales year-to-date in 1999 versus 7% for the same period in the prior year. Page 9 Total operating expenses were 34% of net sales in the 2nd quarter of 1999, the same percentage as that achieved in 1998. Year-to-date, total operating expenses were 36% of net sales in 1999 compared to 37% for the same period in the prior year. Other income and expense includes income from joint ventures and interest income and expense. The Company incurred losses from its joint venture with its Australian distributor of $15,000 in the 2nd quarter of 1999 compared to a loss of $20,000 for the same period in 1998. The Company is working with its Australian distributor to decrease these losses. Net interest income was $1,000 in the 2nd quarter of 1999 compared to $45,000 in 1998. The decrease was due primarily to a use of cash in 1998 to acquire three companies, along with a general decrease in interest rates since the 2nd quarter of 1998. Similarly, year-to-date, the losses from the Company's joint venture were $15,000 compared to $20,000 in the prior year. Net interest income year-to-date was $5,000 in 1999 versus $108,000 for the same period in 1998, largely as a result of a decrease in the cash position from 1998 to 1999 due to the usage of cash for acquisitions. The income tax rate in the 2nd quarter 1999 was 37%, the same rate recorded in 1998. The tax rate is lower than historical rates due to the recognition of certain tax benefits accumulated over prior years. Year-to-date, the income tax rate was 37%. As a result of the increase in sales in the 2nd quarter of 1999 over the same quarter in 1998 and the improvement in gross margin, the Company's net income increased to $437,000 in the 2nd quarter of 1999 as compared to net income of $291,000 for the same period in 1998. Year-to-date, net income was $597,000 compared to $30,000 in for the same period in the prior year. LIQUIDITY AND CAPITAL RESOURCES For the period ended June 30, 1999, cash and cash equivalents when combined with short-term investments were $1,757,000 as compared to $1,290,000 for the year ended December 31, 1998. During the 1st half of 1999, net income contributed $597,000 to cash, some of which was utilized to increase working capital, primarily for increases in accounts receivable. Cash utilized to acquire fixed assets was partially offset by cash received against loans outstanding for a divestiture made in fiscal 1998, resulting in a net cash provided of $135,000 from investing activities. There was a net use of $22,000 in cash for financing activities, primarily for paying down long term debt of subsidiaries. As a result of the cash provided from operating activities and investing activities combined with exchange rate effects, there was a net provision of cash in the 1st half of $467,000 which resulted in an ending cash balance of $1,757,000. The Company has a $2.5 million unsecured line of credit for working capital purposes and a term loan commitment of $500,000 for equipment purchases. There are renewed on an annual basis, with the most recent renewal in August 1999, subsequent renewals will also be in August. As of June 30, 1999 the Company had no borrowings outstanding against either of these lines of credit. The Company also had a total borrowing of $724,000 against a credit facility held by its German subsidiary. This borrowing is largely held in order to finance the building of new offices owned by the Company in Berching, Germany. The Company believes that existing cash balances, together with the Company's bank lines of credit and funds that may be generated from operations, will be sufficient to finance the Company's currently anticipated working capital requirements and capital expenditure requirements for at least the next twelve months. Page 10 OTHER FACTORS This Report on Form 10QSB contains forward-looking statements. Such statements generally concern future operating results, capital expenditures, product development and enhancements, liquidity and strategy. Specific forward-looking statements in this report include, without limitation, statements regarding improvements in the Company's cash position. We may not update these forward looking statements, and the occurrence of the events predicted in these statements is subject to a number of risks and uncertainties, including those discussed in this report. These risks and uncertainties could cause our actual results to differ materially from the results predicted in our forward looking statements. You are encouraged to consider all the information in this report along with our other periodic reports on file with the SEC, prior to investing in our stock. BUSINESS RISKS AND UNCERTAINTIES Our quarterly operating results can vary significantly depending upon a number of factors. It is difficult to predict the lighting market's acceptance of our products on a quarterly basis, and the level and timing of orders received can fluctuate substantially. Our sales volumes also fluctuate. Historically we have shipped a substantial portion of our quarterly sales in the last month of each of the second and fourth quarters of the year. Significant portions of our expenses are relatively fixed in advance based upon our forecasts of future sales. If sales fall below our expectations in any given quarter, we will not be able to make any significant adjustment in our operating expenses and our operating results will be adversely affected. In addition, our product development and marketing expenditures may vary significantly from quarter to quarter and are made well in advance of potential resulting net sales. Sales of our pool and spa lighting products, which currently are available only with newly constructed pools and spas, depend substantially upon the level of new construction. Sales of commercial lighting products also depend significantly upon the level of new building construction and the renovation of existing buildings. Construction levels are affected by housing market trends, interest rates, and the weather. Because of the seasonality of construction, our sales of swimming pool and commercial lighting products, and thus our overall net sales and income, have tended to be significantly lower in the first quarter of each year. Various economic and other trends may alter these seasonal trends from year to year, and we cannot predict the extent to which these seasonal trends will continue. We believe our business has been favorably impacted by recent strength in the overall U.S. economy. If the U.S. economy softens, our operating results will probably suffer. Competition is increasing in a number of our markets. A number of companies offer directly competitive products, including fiber optic lighting products for downlighting, display case and water lighting, and neon and other lighted signs. Our competitors include some very large and well established companies such as Philips, Schott, 3M, Bridgestone, Mitsubishi, Osram/Siemens and Rohm & Haas/Advanced Lighting Technologies. All of these companies have substantially greater financial, technical and marketing resources than we do. We anticipate that any future growth in fiber optic lighting will be accompanied by continuing increases in competition, which could accelerate growth in the market for fiber optic lighting, but which could also adversely affect our operating results to the extent we do not compete effectively. We believe the success of our business depends primarily on our continued technical innovation, marketing abilities and responsiveness to customer requirements, rather than on patents, trade Page 11 secrets, trademarks, copyrights and other intellectual property rights. Nevertheless, we have a policy of seeking to protect our intellectual property through, among other things, the prosecution of patents with respect to certain of our technologies. There are many issued patents and pending patent applications in the field of fiber optic technology, and certain of our competitors hold and have applied for patents related to fiber optic lighting. Although to date we have not been involved in litigation challenging our intellectual property rights or asserting intellectual property rights of others, we have in the past received communications from third parties asserting rights in our patents or that our technology infringes intellectual property rights held by such third parties. Based on information currently available to us we do not believe that any such claims involving our technology or patents are meritorious. However, we may be required to engage in litigation to protect our patent rights or to defend against the claims of others. In the event of litigation to determine the validity of any third party claims or claims by us against such third party, such litigation, whether or not determined in our favor, could result in significant expense. Our business is subject to additional risks that could materially and adversely affect our future business, including: o manufacturing risks, including the risks of shortages in materials or components necessary to our manufacturing and assembly operations, and the risks of increases in the prices of raw materials and components; o sales and distribution risks, such as risks of changes in product mix or distribution channels that result in lower margins; o risks of the loss of a significant distributor or sales representative; o risks of the loss of a significant customer or swimming pool builder; o risks of the effects of volume discounts that we grant from time to time to our larger customers, including reduced profit margins; o risks of product returns and exchanges; in this regard, as noted above, we have increased our warranty reserve in the fourth quarter of 1998 in response to evidence of defective lamps in certain of our products. We cannot assure you we will not experience similar component problems in the future that could also require increased warranty reserves and manufacturing costs; o risks associated with product development and introduction problems, such as increased research, development and marketing expenses associated with new product introductions; and o risks associated with delays in the introduction of new products and technologies, including lost sales and loss of market share. YEAR 2000 COMPLIANCE Many currently installed computer systems and software products are not capable of distinguishing 20th century dates from 21st century dates. As a result, within the next year, computers systems and/or software used by many companies in a very wide variety of applications will experience operating difficulties unless they are modified or upgraded to adequately process information involving, related to or dependent upon the century change. Significant uncertainty exists in the software and information services industries concerning the scope and magnitude of problems associated with the century change. In light of the potentially broad effects of the year 2000 on a wide range of business systems, the Company's products and services may be affected. Page 12 The Company utilizes and is dependent upon data processing computer hardware and software to conduct its business, and in 1998 completed an upgrade of hardware and software at an approximate cost of $30,000. The Company has completed its assessment of its own computer systems and based upon this assessment, the Company believes its computer systems are "Year 2000 compliant;" that is, capable of adequately distinguishing 21st century dates from 20th century dates. However, there can be no assurance that the Company has timely identified or will timely identify and remediate all significant Year 2000 problems in its own computer systems, that remedial efforts subsequently made will not involve significant time and expense, or that such problems will not have a material adverse effect on the Company's business, operating results and financial condition. If unforeseen internal disruptions occur, the Company believes that its existing disaster recovery program, which includes the manual processing of certain key transactions, would significantly mitigate the impact. The Company has made efforts to determine the extent of and minimize the risk that the computer systems of the Company's suppliers or customers are not Year 2000 compliant, or will not become compliant on a timely basis. The Company expects that the process of making inquiries with these customers and suppliers will be ongoing through the end of 1999. As of this report, the Company has had responses from a portion of these customers and suppliers. Of those responding, the majority are compliant, with the rest indicating they will be compliant by year end 1999. If Year 2000 problems prevent any of the Company's suppliers from timely delivery of products or services required by the Company, the Company's operating results could be materially adversely affected. However, the Company currently estimates that its costs to address Year 2000 issues relating to its suppliers will not be material, and that these costs will be funded from its operating cash flows. The Company has identified and will continue to identify alternative suppliers in the event its preferred suppliers become incapable of timely delivering products or services required by the Company. The Company's suppliers are generally locally or regionally based, which tends to lessen the Company's exposure from the lack of readiness of any single supplier. The Company may also face delays in receipt of payments from customers with unresolved Year 2000 problems, and such delays could materially adversely affect the Company's operating results. To the extent any such delays are significant or protracted, the Company's quarterly results would be adversely affected. The Company intends to continually reassess this risk as it receives communications about the status of its customers with regard to Year 2000 issues, and if necessary, adjust its account sales and policies accordingly. Year 2000 costs relating to the Company's own computer systems including consulting fees and costs to remediate or replace hardware and software as well as non-incremental costs resulting from redeployment of internal resources are estimated to be immaterial . The Company is not able to accurately estimate potential costs associated with the Year 2000 issues of its customers and suppliers, and is in the process of verifying that these companies will be year 2000 compliant by the end of 1999. There can be no assurance that the estimated costs for remediating the Company's own systems as well as estimated costs associated with the potential non-compliance of its customers and suppliers are correct, and actual results could differ materially from these estimates. Specific factors that might cause such material differences include, but are not limited to, the availability and cost of personnel trained in this area, the ability to locate and correct all relevant computer costs, and similar uncertainties. Page 13 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits have been filed with this Report: Exhibit 10.30 - Extension - Term Commitment Note of the Registrant dated as of June 28, 1999, to Wells Fargo Bank. Exhibit 10.31 - Extension - Revolving Line of Credit Note of the Registrant dated as of June 28, 1999, to Wells Fargo Bank. Exhibit 27 - Financial Data Schedule (b) No reports on Form 8-K were filed by the Company during the period covered by this report. Items 1, 2, 3, 4 and 5 are not applicable and have been omitted. SIGNATURES 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. FIBERSTARS, INC. Date: August 13, 1999 By: /s/ Robert A.Connors ------------------------------- Robert A.Connors Chief Financial Officer (Principal Financial and Accounting Officer) Page 14 INDEX TO EXHIBITS
Exhibit Page Number Number ------ ------ 10.30 Extension - Term Commitment Note of the Registrant dated as of June 28, 1999, to Wells Fargo Bank. 16 10.31 Extension - Revolving Line of Credit Note of the Registrant dated as of June 28, 1999, to Wells Fargo Bank. 21 27 Financial Data Schedule
Page 15 EX-10.30 2 EXHIBIT 10.30 Exhibit 10.30 Commercial Banking Group Santa Clara Valley Region 121 Park Center Plaza, 3rd Floor P.O. Box 720010 San Jose, CA 95172 WELLS FARGO June 28, 1999 Fiberstars, Inc. 2883 Bayview Drive Fremont, CA 94538 Gentlemen: This letter is to confirm that Wells Fargo Bank, National Association ("Bank") has agreed to extend the maturity date of that certain credit accommodation granted by Bank to Fiberstars, Inc. ("Borrower") in the maximum principal amount of Five Hundred Thousand Dollars ($500,000.00), as evidenced by that certain promissory note dated as of June 28, 1998, executed by Borrower and payable to the order of Bank (the "Note"), a copy of which is attached hereto as Exhibit A. The maturity date of said credit accommodation is hereby extended until August 12, 1999. The Note shall be deemed modified as of the date this letter is acknowledged by Borrower to reflect said new maturity date. All other terms and conditions of the Note remain in full force and effect, without waiver or modification. Borrower acknowledges that Bank has not committed to make any renewal or further extension of the maturity date of the above-described credit accommodation beyond the new maturity date specified herein, and that any such renewal or further extension remains in the sole discretion of Bank. This letter constitutes the entire agreement between Bank and Borrower with respect to the maturity date extension for the above-described credit accommodation, and supercedes all prior negotiations, discussions and correspondence concerning said extension. Page 16 Fiberstars, Inc. June 28, 1999 Page 2 WELLS FARGO Please acknowledge your acceptance of the terms and conditions contained herein by dating and signing one copy below and returning it to my attention at the above address on or before July 6, 1999. Very truly yours, WELLS FARGO BANK, NATIONAL ASSOCIATION By: /S/ LAURA ZARAGOZA ------------------------------ Laura Zaragoza Assistant Vice President Acknowledged and accepted as of June 29, 1999: FIBERSTARS, INC. By: /S/ ROBERT A. CONNORS --------------------------------------- Title: Chief Financial Officer --------------------------------------- Page 17 WELLS FARGO BANK TERM COMMITMENT NOTE - -------------------------------------------------------------------------------- $500,000.00 San Jose, California June 28, 1998 FOR VALUE RECEIVED, the undersigned FIBERSTARS, INC. ("Borrower") promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at Santa Clara Valley RCBO, 121 Park Center Plaza 3rd Flr, San Jose, CA 95115, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of $500,000.00, or so much thereof as may be advanced and be outstanding, with interest thereon, to be computed on each advance from the date of its disbursement as set forth herein. INTEREST/FEES: (a) Interest. The outstanding principal balance of this Note shall bear interest at a rate per annum (computed on the basis of a 360-day year, actual days elapsed) .50000% above the Prime Rate in effect from time to time. The "Prime Rate" is a base rate that Bank from time to time establishes and which serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto. Each change in the rate of interest hereunder shall become effective on the date each Prime Rate change is announced within Bank. (b) Payment of Interest. Interest accrued on this Note shall be payable on the 28th day of each month, commencing July 28,1998. (c) Default Interest. From and after the maturity date of this Note, or such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise, the outstanding principal balance of this Note shall bear interest until paid in full at an increased rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to 4% above the rate of interest from time to time applicable to this Note. (d) Commitment Fee. Prior to the initial extension of credit under this Note, Borrower shall pay to Bank a non-refundable commitment fee of $500.00. (e) Collection of Payments. Borrower authorizes Bank to collect all interest and fees due hereunder by charging Borrower's demand deposit account number 4124-053885 with Bank, or any other demand deposit account maintained by any Borrower with Bank, for the full amount thereof. Should there be insufficient funds in any such demand deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower. BORROWING AND REPAYMENT: (a) Use of Proceeds; Limitation on Borrowings. Each advance under this Note shall be available solely to finance Borrower's purchase of new and/or used equipment to be used in Borrower's business. Each advance shall be available to a maximum of 80.0% of the cost or appraised value (as required by Bank) of the new equipment purchased with the proceeds thereof, and 75.0% of the cost or appraised value (as required by Bank) of the used equipment purchased with the proceeds thereof, as evidenced by copies of invoices and/or appraisals acceptable to Bank. Page 18 (b) Borrowing and Repayment. Borrower may from time to time during the term of this Note borrow and partially or wholly repay its outstanding borrowings, subject to all of the limitations, terms and conditions of this Note and of any document executed in connection with, or at any time as a supplement to, this Note; provided however, that amounts repaid may not be reborrowed; and provided further, that the total borrowings under this Note shall not exceed the principal amount stated above. The unpaid principal balance of this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less the amount of any principal payments made hereon by or for any Borrower, which balance may be endorsed hereon from time to time by the holder. The outstanding principal balance of this Note shall be due and payable in full on June 28, 1999, unless said balance is refinanced by Bank pursuant to the provisions of (d) below. (c) Advances. Advances hereunder, to the total amount of the principal sum available hereunder, may be made by the holder at the oral or written request of (i) DAVID N. RUCKERT or ROLAND DENNIS, any one acting alone, who are authorized to request advances and direct the disposition of any advances until written notice of the revocation of such authority is received by the holder at the office designated above, or (ii) any person, with respect to advances deposited to the credit of any account of any Borrower with the holder, which advances, when so deposited, shall be conclusively presumed to have been made to or for the benefit of each Borrower regardless of the fact that persons other than those authorized to request advances may have authority to draw against such account. The holder shall have no obligation to determine whether any person requesting an advance is or has been authorized by any Borrower. (d) Refinancing. So long as Borrower is in compliance with all terms and conditions contained herein and in any loan agreement or other loan documents in effect between Borrower and Bank on the maturity date set forth above (or on such earlier date as may be requested by Borrower), and Borrower executes a new promissory note and such other documents as Bank shall require, all in form and substance satisfactory to Bank, Bank agrees to refinance the then outstanding principal balance of this Note on the following terms and conditions: (i) The outstanding principal balance of this Note shall be amortized over 3 years and shall be repaid in 36 monthly installments over said term, as set forth in the promissory note executed by Borrower to evidence such refinancing. (ii) The outstanding principal balance so refinanced shall bear interest at a rate per annum (computed on the basis of a 360-day year, actual days elapsed) 0.500% above Bank's Prime Rate in effect from time to time. COLLATERAL: As security for the payment and performance of all obligations of Borrower under this Note, Borrower grants to Bank security interests of first priority (except as agreed otherwise by Bank in writing) in the following property of Borrower, now owned or at any time hereafter acquired: all equipment financed with the proceeds of this note, together with security interests in all other personal property of Borrower now or at any time hereafter pledged to Bank as collateral for any other commercial credit accommodation granted by Bank to Borrower. All of the foregoing shall be evidenced by and subject to the terms of such security agreements, financing statements and other documents as Bank shall reasonably require, all in form and substance satisfactory to Bank. Borrower shall reimburse Bank immediately upon demand for all costs and expenses incurred by Page 19 Bank in connection with any of the foregoing security, including without limitation, filing fees and allocated costs of collateral audits. EVENTS OF DEFAULT: Any default in the payment or performance of any obligation under this Note, or any defined event of default under any loan agreement now or at any time hereafter in effect between Borrower and Bank (whether executed prior to, concurrently with or at any time after this Note), shall constitute an "Event of Default" under this Note. MISCELLANEOUS: (a) Remedies. Upon the occurrence of any Event of Default, the holder of this Note, at the holder's option, may declare all sums of principal, interest, fees and charges outstanding hereunder to be immediately due and payable without presentment, demand, protest or notice of dishonor, all of which are expressly waived by each Borrower, and the obligation, if any, of the holder to extend any further credit hereunder shall immediately cease and terminate. Each Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of the holder's in-house counsel), incurred by the holder in connection with the enforcement of the holder's rights and/or the collection of any amounts which become due to the holder under this Note, and the prosecution or defense of any action in any way related to this Note, including without limitation, any action for declaratory relief, and including any of the foregoing incurred in connection with any bankruptcy proceeding relating to any Borrower. (b) Obligations Joint and Several. Should more than one person or entity sign this Note as a Borrower, the obligations of each such Borrower shall be joint and several. (c) Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above. FIBERSTARS, INC. By: /s/ David N. Ruckert -------------------------- Title: President, CEO -------------------------- Page 20 EX-10.31 3 EXHIBIT 10.31 Exhibit 10.31 Commercial Banking Group Santa Clara Valley Region 121 Park Center Plaza, 3rd Floor P.O. Box 720010 San Jose, CA 95172 WELLS FARGO June 28, 1999 Fiberstars, Inc. 2883 Bayview Drive Fremont, CA 94538 Gentlemen: This letter is to confirm that Wells Fargo Bank, National Association ("Bank") has agreed to extend the maturity date of that certain credit accommodation granted by Bank to Fiberstars, Inc. ("Borrower") in the maximum principal amount of Two Million Dollars ($2,000,000.00), as evidenced by that certain promissory note dated as of February 2, 1999, executed by Borrower and payable to the order of Bank (the "Note"), a copy of which is attached hereto as Exhibit A. The maturity date of said credit accommodation, and the last day of which Bank will issue letters of credit under the subfeature relating thereto, as described in the Noted, is hereby extended until August 12, 1999. The Note shall be deemed modified as of the date this letter is acknowledged by Borrower to reflect said new maturity date. All other terms and conditions of the Note remain in full force and effect, without waiver or modification. Borrower acknowledges that Bank has not committed to make any renewal or further extension of the maturity date of the above-described credit accommodation beyond the new maturity date specified herein, and that any such renewal or further extension remains in the sole discretion of Bank. This letter constitutes the entire agreement between Bank and Borrower with respect to the maturity date extension for the above-described credit accommodation, and supercedes all prior negotiations, discussions and correspondence concerning said extension. Page 21 Fiberstars, Inc. June 28, 1999 Page 2 WELLS FARGO Please acknowledge your acceptance of the terms and conditions contained herein by dating and signing one copy below and returning it to my attention at the above address on or before July 6, 1999. Very truly yours, WELLS FARGO BANK, NATIONAL ASSOCIATION By: /S/ LAURA ZARAGOZA -------------------------------- Laura Zaragoza Assistant Vice President Acknowledged and accepted as of June 29, 1999: FIBERSTARS, INC. By: /S/ ROBERT A . CONNORS ----------------------------------------- Title: Chief Financial Officer ----------------------------------------- Page 22 EXHIBIT A WELLS FARGO BANK REVOLVING LINE OF CREDIT NOTE - -------------------------------------------------------------------------------- $2,000,000.00 San Jose, California February 2, 1999 FOR VALUE RECEIVED, the undersigned FIBERSTARS, INC. ("Borrower") promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at Santa Clara Valley RCBO, 121 Park Center Plaza, 3rd Floor, San Jose, CA 95115, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of $2,000,000.00, or so much thereof as may be advanced and be outstanding, with interest thereon, to be computed on each advance from the date of its disbursement as set forth herein. INTEREST/FEES: (a) Interest. The outstanding principal balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed) at a rate per annum .12500% above the Price Rate in effect from time to time. The "Prime Rate" is a base rate that Bank from time to time establishes and which serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto. Each change in the rate of interest hereunder shall become effective on the date each Prime Rate change is announced within Bank. (b) Payment of Interest. Interest accrued on this Note shall be payable on the 28th day of each month, commencing March 28, 1999. (c) Default Interest. From and after the maturity date of this Note, or such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise, the outstanding principal balance of this Note shall bear interest until paid in full at an increased rate per annum (computed on the basis of a 360-day year, actual day elapsed) equal to 4% above the rate of interest form time to time applicable to this Note. (d) Commitment Fee. Prior to the initial extension of credit under this Note, Borrower shall pay to Bank a non-refundable commitment fee of $833.33. (e) Collection of Payments. Borrower authorizes Bank to collect all interest and fees due hereunder by charging Borrower's demand deposit account number 4124-053885 with Bank, or any other demand deposit account maintained by any Borrower with Bank, for the full amount thereof. Should there be insufficient funds in any such demand deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower. Page 23 SIGHT AND USANCE COMMERCIAL AND STANDBY LETTER OF CREDIT SUBFEATURE: (a) Letter of Credit Subfeature. As a substitute under this Note, Bank agrees from time to time during the term hereof to issue standby letters of credit for the account of Borrower to finance to guarantee renal payments and/or sight commercial and usance commercial letters of credit for the account of Borrower to finance Borrower's inventory purchases (each, a "Letter of Credit" and collectively, "Letters of Credit"); provided however, that the form and substance of each Letter of Credit shall be subject to approval by Bank, in its sole discretion; and provided further, that the aggregate undrawn amount of all outstanding Letters of Credit shall not at any time exceed $400,000.00. Each standby Letter of Credit shall be issued for a term not to exceed 365 days, and each commercial Letter of Credit shall be issued for a term not to exceed 180 days, as designated by Borrower; provided however, that no standby Letter of Credit shall have an expiration date subsequent to the maturity date of this Note, and no commercial Letter of Credit shall have an expiration date of more than 90 days beyond the maturity date of this Note. The undrawn amount of all Letters of Credit shall be reserved under this Note and shall not be available for borrowings hereunder. Each Letter of Credit shall be subject to the additional terms and conditions of the Letter of Credit Agreement and related documents, if any, required by Bank in connection with the issuance thereof. Each draft paid by Bank under a Letter of Credit shall be deemed an advance under this Note and shall be repaid by Borrower in accordance with the terms and conditions of this Note; provided however, that if advances hereunder are not available, for any reason, at the time any draft is paid by Bank, then Borrower shall immediately pay to Bank the full amount of such draft, together with interest thereon form the date such amount is paid by Bank to the date such amount is fully repaid by Borrower, at the rate of interest applicable to advances hereunder. In such event Borrower agrees that Bank, in its sole discretion, may debit any demand deposit account maintained by Borrower with Bank for the amount of any such draft. Notwithstanding the foregoing, usance commercial Letters of Credit shall be issued only to finance Borrower's importation of goods into the United States, and shall contain such provisions and be issued in such manner as to satisfy Bank that any bankers' acceptance created by Bank's acceptance of a draft thereunder shall be eligible for discount by a Federal Reserve Bank, will not result in a liability of Bank subject to reserve requirements under any law, regulation or administrative order, and will not cause Bank to violate any lending limit imposed upon Bank by any law, regulation or administrative order. Usance commercial Letters of Credit shall provide for drafts thereunder with terms which do not exceed the lesser of 180 days or such other period of time as may be necessary for the acceptance created thereunder to be eligible for discount and otherwise comply with the terms and conditions of this Note; provided however, that no usance commercial Letter of Credit shall provide for drafts with terms that extend more than 90 days beyond the maturity date of this Note. The amount of each draft accepted by Bank under a usance commercial Letter of Credit shall be paid by Borrower in accordance with the terms and conditions of this Note applicable to Acceptance. (b) Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the issuance of each standby Letter of Credit equal to 1.000% per annum (computed on the basis Page 24 of a 360-day year, actual days elapsed) of the face amount thereof, and (ii) fees upon the issuance of each commercial Letter of Credit, upon the payment or negotiation by Bank of each draft under any Letter of Credit and upon the occurrence of any other activity with respect to any Letter of Credit (including without limitation, the transfer, amendment or cancellation of any Letter of Credit) determined in accordance with Bank's standard fees and charges then in effect for such activity. CLEAN AND DOCUMENTARY ACCEPTANCE SUBFEATURE: (a) Acceptance Subfeature. As a subfeature under this Note, Bank agrees from time to time during the term hereof to create bankers' acceptance (each, an "Acceptance" and collectively, "Acceptances") for the account of Borrower (i) by accepting drafts drawn on Bank by Borrower for the purpose of financing Borrower's importation of goods in the United States and (ii) by accepting time drafts presented under usance commercial Letters of Credit issued by Bank for the account of Borrower under this Note; provided however, that the form and substance of each Acceptance shall be subject to approval by Bank, in its sole discretion; and provided further, that the aggregate amount of all outstanding Acceptances shall not at any time exceed $400,000.00. Each Acceptance created by Bank's acceptance of a draft drawn on Bank by Borrower shall be in the minimum amount of $5,000.00. Each Acceptance shall be subject to the additional terms and conditions of an Acceptance Agreement in form and substance satisfactory to Bank. Each Acceptance shall be created for a term not to exceed the lesser of 365 days, as designated by Borrower, or such period of time as may be necessary to comply with the terms of the Acceptance Agreement; provided however, that no Acceptance shall mature more than 90 days beyond the maturity date of this Note. The outstanding amount of all Acceptances shall be reserved under this Note and shall not be available for borrowings hereunder. The amount of each Acceptance which matures shall be deemed an advance under this Note and shall be repaid by Borrower in accordance with the terms and conditions of this Note; provided however, that if advances hereunder are not available, for any reason, at the time any Acceptance matures, then Borrower shall immediately pay to Bank the full amount of such matured Acceptance, together with interest thereon form the date such Acceptance matures to the date such amount if fully repaid by Borrower, at the rate of interest applicable to advances hereunder. In such event Borrower agrees that Bank, in its sole discretion, may debit any demand deposit account maintained by Borrower with Bank for the amount of any such Acceptance. All Acceptances created by Bank's acceptance of drafts drawn on Bank by Borrower shall be discounted with Bank. Bank shall not be obligated to discount Acceptances created by Bank's acceptance of time drafts presented under usance commercial Letters of Credit. (b) Acceptance Fees. For each Acceptance created hereunder, Borrower shall pay to Bank on the date such Acceptance is created an acceptance fee determined in accordance with Bank's standard fees and charges then in effect for the creation of Acceptances. Page 25 BORROWING AND REPAYMENT: (a) Use of Proceeds. Advances under this Note shall be available solely to finance working capital requirements. (b) Borrowing and Repayment. Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions of this Note and of any document executed in connection with, or at any time as a supplement to, this Note; provided however, that the total outstanding borrowings under this Note shall not at any time exceed the principal amount stated above; and provided further, that Borrower shall maintain a zero balance on advances under this Note for a period of at least 30 consecutive days during each fiscal year. The unpaid principal balance of this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less the amount of any principal payments made hereon by or for any Borrower, which balance may be endorsed hereon from time to time by the holder. The outstanding principal balance of this Note shall be due and payable in full on June 28, 1999; except with respect to any draft paid by Bank under a commercial Letter of Credit and any Acceptance which matures subsequent to said date, the full amount of which shall be due and payable by Borrower immediately upon payment by Bank or at such maturity as applicable. (c) Advances. Advances hereunder, to the total amount of the principal sum available hereunder, may be made by the holder at the oral or written request of (i) David N. Ruckert or Roland Dennis or Bob Connors, any one acting alone, who are authorized to request advances and direct the disposition of any advances until written notice of the revocation of such authority is received by the holder at the office designated above, or (ii) any person, with respect to advances deposited to the credit of any account of any Borrower with the holder, which advances, when so deposited, shall be conclusively presumed to have been made to or for the benefit of each Borrower regardless of the fact that persons other than those authorized to request advances may have authority to draw against such account. The holder shall have no obligation to determine whether any person requesting an advance is or has been authorized by any Borrower. EVENTS OF DEFAULT: Any default in the payment or performance of any obligation under this Note, or any defined event of default under any loan agreement now or at an time hereafter in effect between Borrower and Bank (whether executed prior to, concurrently with or at any time after this Note), shall constitute an "Event of Default" under this Note. MISCELLANEOUS: a) Remedies. Upon the occurrence of any Event of Default, the holder of this Note, at the holder's option, may declare all sums of principal, interest, fees and charges outstanding hereunder to be immediately due and payable without presentment, demand, notice of nonperformance, notice of protest, protest or notice of dishonor, all of which are expressly waived be each Borrower, and the obligation, if any, of the holder to extend any further credit hereunder shall Page 26 immediately cease and terminate. Each Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of the holder's in-house counsel), expanded or incurred by the holder in connection with the enforcement of the holder's rights and/or the collection of any amounts which become due to the holder under this Note, and the prosecution or defense of any action in any way related to this Note, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to any Borrower or any other person or entity. b) Obligations Joint and Several. Should more than one person or entity sign this Note as a Borrower, the obligations of each such Borrower shall be joint and several. c) Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above. FIBERSTARS, INC. By: /s/ David N. Ruckert --------------------------------------- David N. Ruckert, President/Chief Executive Officer Page 27 EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 1,757 0 5,785 47 4,160 12,829 4,339 2,764 18,724 4,194 0 13,946 0 0 0 18,724 16,027 16,017 9,312 9,312 5,764 0 0 941 344 0 0 0 0 597 0.15 0.15
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