UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB / A-1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_______________ to ______________
Commission file number: 333-15127
---------
AZUREL LTD.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 13-3842844
- ------------------------------- ------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
509 MADISON AVENUE, NEW YORK, NY 10022
--------------------------------------------------
(Address of principal executive office) (Zip Code)
(212) 317- 0712
--------------------------------------------------
(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
--- ---
The number of shares of registrant's Common Stock, $.001 par value, outstanding
as of July 31, 1998 was 5,318,745 shares.
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-----------------
Azurel, Ltd. (the "Company") filed with its Form 10-QSB for the quarter ended
June 30, 1998, in lieu of a Form 8-K, information on the acquisition of the
assets of Ben Rickert, Inc. The Company amends such Form 10-QSB solely to add
the financial statements required to be filed pursuant to Item 7 of Form 8-K not
previously included on Form 10-QSB in connection with the acquisition and to
correct the number of shares of the Company's common stock outstanding as of
July 31, 1998. No other changes to the Form 10-QSB are being made by this
amendment. The following financial statements and pro forma financial
information accompany this amendment:
Audited Balance Sheet of Ben Rickert, Inc. at April 30, 1998 and 1997
and related Statements of Operations and Retained Earnings and
Statements of Cash Flows, Notes to Financial Statements and Independent
Auditor's Report.
Unaudited Balance Sheet of Ben Rickert, Inc. at July 31, 1998 and
related Statement of Operations and Retained Earnings and Statement of
Cash Flows.
Unaudited Pro-Forma Condensed Consolidated Financial Statements.
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.
AZUREL LTD. AND SUBSIDIARIES
Dated : September 28, 1998 /S/ GERARD SEMHON
------------------
Gerard Semhon
Chief Executive Officer
/S/ FRANK DESIMONE
-------------------
Frank DeSimone
Chief Financial Officer
-2-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
BEN RICKERT, INC.: PAGE
- ------------------ ----
Independent Auditor's Report F-2
Balance Sheet at April 30, 1998 and 1997 F-3
Statement of Operations and Retained Earnings (Deficit) for
the years ended April 30, 1998 and 1997 F-4
Statement of Cash Flows for the years ended April 30, 1998
and 1997 F-5
Notes to Financial Statements F-6
Unaudited Financial Statements:
Balance Sheet at July 31, 1998 F-10
Statement of Operations and Retained Earnings (Deficit) for
the three months ended July 31, 1998 F-11
Statement of Cash Flows for the three months ended July 31,
1998 F-12
UNAUDITED PRO-FORMA FINANCIAL STATEMENTS:
- -----------------------------------------
Report on Pro-forma Financial Statements F-13
Pro-forma Condensed Balance Sheet F-14
Pro-forma Condensed Interim Statement of Operations F-15
Pro-forma Condensed Annual Statement of
Operations F-16
Notes to Pro-forma Financial Statements F-17
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
Ben Rickert, Inc.
Wayne, New Jersey
We have audited the accompanying balance sheets of Ben Rickert, Inc. as
of April 30, 1998 and 1997, and the related statements of operations and
retained earnings and of cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Ben Rickert, Inc. at
April 30, 1998 and 1997, and the results of its operations and retained earnings
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 9, the
Company is in technical default of its existing loan agreement and is
experiencing difficulty in generating cash flow to meet its obligations and
sustain its operation, which raises substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
/s/ Feldman Sherb Ehrlich & Co., P.C.
-------------------------------------
Feldman Sherb Ehrlich & Co., P.C.
Certified Public Accountants
New York, New York
September 16, 1998
F-2
<PAGE>
BEN RICKERT, INC.
-----------------
BALANCE SHEET
-------------
<TABLE>
<CAPTION>
April 30,
-----------------------------
1998 1997
------------- -------------
ASSETS
------
CURRENT ASSETS:
<S> <C> <C>
Cash $ 44,629 $ 42,409
Accounts receivable net of allowance for doubtful
accounts of $10,000 in 1998 and $15,000 in 1997 633,672 852601
Inventory 3,910,590 3,349,031
Prepaid expenses and other current assets 386,974 368,991
------------- -------------
Total current assets 4,975,865 4,613,032
PLANT AND EQUIPMENT- NET: 572,190 622,105
------------- -------------
$ 5,548,055 $ 5,235,137
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES:
Note payable - bank $ 3,920,763 $ 2,114,580
Accounts payable 1,360,864 944,589
Payroll taxes payable 43,683 54,862
Accrued liabilities 65,006 57,122
------------- -------------
Total current liabilities 5,390,316 3,171,153
------------- -------------
SHAREHOLDER'S LOAN 1,021,292 1,017,292
COMMITMENTS AND CONTINGENT LIABILITIES 0 0
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, no par value
150 shares issued and outstanding 5,000 5,000
Additional paid in capital 825,000 0
Retained earnings (deficit) (1,693,553) 1,041,692
------------- -------------
Total stockholders' equity (deficit) (863,553) 1,046,692
------------- -------------
$ 5,548,055 $ 5,235,137
</TABLE>
See notes to financial statements
F-3
<PAGE>
BEN RICKERT, INC.
-----------------
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
---------------------------------------------
<TABLE>
<CAPTION>
Year ended April 30,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
NET SALES $ 10,856,515 $ 13,235,034
Cost of Goods sold 8,686,742 9,085,489
------------ ------------
GROSS PROFIT 2,169,773 4,149,545
------------ ------------
OPERATING EXPENSES:
Selling 2,609,468 2,665,932
Shipping 646,069 821,056
General and administrative 1,246,709 1,036,763
------------ ------------
Total operating expenses 4,502,246 4,523,751
------------ ------------
OPERATING INCOME (LOSS) (2,332,473) (374,206)
OTHER INCOME (EXPENSE):
Interest (402,772) (322,326)
Miscellaneous 0 (19,020)
------------ ------------
NET LOSS (2,735,245) (715,552)
Corporate Sub-Chapter S Distribution 0 (50,239)
Retained earnings, beginning of year 1,041,692 1,807,483
------------ ------------
RETAINED EARNINGS (DEFICIT), END OF YEAR $ (1,693,553) $1,041,692
============ ============
</TABLE>
See notes to financial statements
F-4
<PAGE>
BEN RICKERT, INC.
-----------------
STATEMENT OF CASH FLOWS
-----------------------
<TABLE>
<CAPTION>
Year ended April 30,
-----------------------------
1998 1997
------------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (2,735,245) $ (715,552)
Adjustments to reconcile net loss to net
cash provided (used) by operating
activities:
Depreciation and amortization 92,431 146,599
Loss on sale of fixed assets 19,322
Change in assets and liabilities
(Increase) decrease in accounts receivable 218,929 (395,576)
(Increase) in inventory (561,559) (185,717)
(Increase) in prepaid expenses and
other current assets (17,983) (211,877)
Increase in accounts payable 416,275 13,988
(Decrease) in wages payable 0 (237,915)
Increase (decrease) in payroll taxes payable (11,179) 8,466
Increase (decrease) in accrued liabilities 7,884 (64,036)
------------ ----------
NET CASH USED IN OPERATING ACTIVITIES (2,590,447) (1,622,298)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed asset (42,516) (126,851)
Sale of fixed asset 0 2,306
Corporate Sub-Chapter S distribution 0 (50,239)
------------ ----------
NET CASH USED IN INVESTING ACTIVITIES (42,516) (174,784)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in notes payable 1,806,183 1,581,566
Increase in paid in capital 825,000 0
Increase (Decrease) in shareholder loan 4,000 221,000
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,635,183 1,802,566
----------- -----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 2,220 5,484
CASH AND CASH EQUIVALENTS, beginning of year 42,409 36,925
----------- -----------
CASH AND CASH EQUIVALENTS, end of year $ 44,629 $ 42,409
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the year for interest $ 386,533 $ 322,326
=========== ===========
Cash paid during the year for income taxes $ 0 $ 0
=========== ===========
</TABLE>
See notes to financial statements
F-5
<PAGE>
BEN RICKERT, INC.
------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
1. BUSINESS
--------
Ben Ricket, Inc. (the Company), is engaged in the sale and manufacture
of soap and other toileteries.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-------------------------------------------
A. INVENTORY - Merchandise inventories, consisting of finished goods and
---------
raw materials, are stated at the lower of cost (determined on a
first-in, first-out basis) or market.
B. PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
----------------------
Depreciation and amortization are computed by either the accelerated or
straight line methods over the estimated useful lives of the assets.
Leasehold improvements are amortized over the lesser of the term of the
lease or the estimated useful life. Expenditures incurred for
maintenance and repairs are charged to expense whereas expenditures for
improvements are generally capitalized.
C. INCOME TAXES - The Company, with the consent of its stockholders,
------------
elected to be taxed as an S Corporation under the provisions of the
Internal Revenue Code and New Jersey State Tax Law which provides that,
in lieu of corporation income taxes, the stockholders are required to
report their proportionate share of the Company's taxable income
or loss on their personal tax returns. Other state and local taxes are
included in operating, general and administrative expenses.
The Company accounts for income taxes pursuant to Statement of
Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes".
D. FAIR VALUE OF FINANCIAL INSTRUMENTS - SFAS No. 107, "Disclosures About
-----------------------------------
Fair Value of Financial Instruments" requires disclosure about the fair
value of financial instruments. The carrying amounts reported in the
balance sheet for cash and cash equivalents, accounts receivable, notes
payable, and accounts payable approximate fair value because of the
short-term maturity of these financial statements.
E. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - The
-----------------------------------------------------------
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported
F-6
<PAGE>
amounts of asserts and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
F. RECENT ACCOUNTING PRONOUNCEMENT - In March 1995, the Financial
-------------------------------
Accounting Standards Board issued SFAS No. 121, "Accounting for the
Impairment of Long- Lived Assets and for Long-Lived Assets to be
disposed of". SFAS No. 121 requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable, and is
effective for financial statements for fiscal years beginning after
December 15, 1995. The Company has determined that the impact of
adopting this new standard would be immaterial..
3. PROPERTY AND EQUIPMENT
----------------------
Major classes of property and equipment are as follows: 1998 1997
Machinery and equipment $ 1,601,147 $ 1,601,147
Automobiles 54,478 181,735
Furniture, fixture and equipment 1,269,397 1,284,008
Leasehold improvements 591,294 499,112
------------ -----------
3,516,316 3,566,002
Accumulated depreciation (2,944,126) (2,943,897)
------------ -----------
$ 572,190 $ 622,105
============ ============
4. LINES OF CREDIT
---------------
The Company has a line of credit with a bank under a revolving loan
agreement which is secured by the Company's accounts receivable and
inventory. The maximum amount available under this loan agreement was
$8,000,000. The note bears interest at the bank's base rate. This line of
credit expires on May 31, 1998.
The agreement further states the declaration of dividends or
distribution of equity to the shareholders is limited to the earnings taxable
to the shareholders under the Sub-Chapter S election. Borrowings outstanding
under the Credit Agreement were $3,920,763 at April 30, 1998.
Outstanding letters of credit established to facilitate international
F-7
<PAGE>
merchandise purchases amounted to $34,000 and $105,000 at April 30, 1998 and
1997, respectively.
5. COMMITMENTS
-----------
The Company leases its operating and administrative facility from its
major stockholder at an annual rental of approximately $853,000 plus real
estate taxes. In addition, the Company leases operating equipment from its
stockholder at an annual rental of approximately $61,000.
Total rent expense charged to operations in 1998 and 1997 were $914,400
and $1,000,000, respectively
6. RELATED PARTY TRANSACTIONS
--------------------------
As discussed in Note 5, the Company leases its operating and
administrative facility and certain operating equipment, from its majority
shareholder.
Under the provision of the revolving loan agreement, the majority
shareholder, as guarantor, has agreed to subordinate its loan in the amount
of $1,425,000. This shareholder loan bears no defined repayment terms. The
subordinated debt is offset by prepaid rent and security deposits in the
amount of $403,708.
7. EMPLOYEE PROFIT-SHARING PLAN
----------------------------
The Company has a voluntary noncontributory profit-sharing plan which
complies with the Employee Retirement Income Security Act of 1974. There were
no contributions for the years ended April 30, 1998 and 1997.
8. MAJOR CUSTOMERS
---------------
The Company had sales to two major customers which amounted to
approximately 81% of the gross sales for the fiscal year ended April 30, 1998
and 58% of the gross sales for fiscal year ended April 30, 1997.
9. GOING CONCERN
-------------
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As indicated in
the financial statements, the Company experienced significant losses for the
years ended April 30, 1998 and 1997. Additionally, the Company
F-8
<PAGE>
has had significant cash shortfalls from operations.
Furthermore, the Company was in violation of covenants continued in its
loan agreement. In this regard, the Company had entered into a Forbearance
Amendment Agreement in February 1998 due to its inability to satisfy the
conditions of its loan agreement under which the bank agreed to forbear
action to May 31, 1998, without waiving any of its rights. The Company is
also experiencing cash flow problems as a result of the more stringent
borrowing requirements under the Forbearance and Amendment Agreement.
10 SUBSEQUENT EVENT
----------------
On July 31, 1998, Ben Rickert, Corp., a wholly-owned subsidiary of
Azurel, Ltd., a publicly traded company, acquired substantially all of the
assets of the Company from Summit Bank, the Company's secured lender, for a
purchase price of $1,500,000. Under the agreement, the $1,500,000, in cash
and a note, was paid directly to the bank. Immediately prior to the asset
sale, the Company surrendered its assets to the bank as a result of various
defaults existing under the Company's loan agreement with the bank. The
balance of approximately $2,100,000 owed under the loan agreement was assumed
by the stockholders.
F-9
<PAGE>
BEN RICKERT, INC.
-----------------
BALANCE SHEET
-------------
JULY 31, 1998
-------------
(Unaudited)
ASSETS
------
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash $ 15,056
Accounts receivable- net 384,143
Inventory 3,103,930
Prepaid expenses and other current assets 54,919
-----------
Total current assets 3,558,048
PLANT AND EQUIPMENT- NET: 550,249
-----------
$ 4,108,297
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES:
Note payable - bank $ 3,642,364
Accounts payable 1,361,301
Payroll taxes payable 88,467
Accrued liabilities 45,000
-----------
Total current liabilities 5,137,132
-----------
SHAREHOLDER'S LOAN 1,062,534
COMMITMENTS AND CONTINGENT LIABILITIES 0
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, no par value
150 shares issued and outstanding 5,000
Additional paid in capital 825,000
Retained earnings (deficit) (2,921,369)
-----------
Total stockholders' equity (deficit) (2,091,369)
-----------
$ 4,108,297
===========
</TABLE>
F-10
<PAGE>
BEN RICKERT, INC.
-----------------
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
---------------------------------------------
THREE MONTHS ENDED JULY 31, 1998
--------------------------------
(Unaudited)
<TABLE>
<S> <C>
NET SALES $ 1,023,236
COST OF GOODS SOLD 1,447,831
-----------
GROSS PROFIT (424,595)
-----------
OPERATING EXPENSES:
Selling 425,879
Shipping 46,310
General and administrative 246,957
-----------
Total operating expenses 719,146
-----------
OPERATING INCOME (1,143,741)
OTHER INCOME (EXPENSE):
Interest (89,701)
Miscellaneous 5,626
-----------
NET LOSS (1,227,816)
Retained earnings (deficit), May 1, 1998 (1,693,553)
===========
Retained earnings (deficit), July 31, 1998 $(2,921,369)
===========
</TABLE>
F-11
<PAGE>
BEN RICKERT, INC.
-----------------
STATEMENT OF CASH FLOWS
-----------------------
THREE MONTHS ENDED JULY 31, 1998
--------------------------------
(Unaudited)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,227,816)
Adjustments to reconcile net loss to net
cash provided (used) by operating
activities:
Depreciation and amortization 21,941
Change in assets and liabilities
Decrease in accounts receivable 249,529
Decrease in inventory 806,660
Decrease in prepaid expenses and
other current assets 332,055
Increase in accounts payable 437
Increase in payroll taxes payable 44,784
(Decrease) in accrued liabilities (20,006)
-----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 207,584
-----------
CASH FLOWS FROM INVESTING ACTIVITIES: 0
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 0
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) in note payable (278,399)
Increase in shareholder loan 41,242
-----------
NET CASH USED IN FINANCING ACTIVITIES (237,157)
-----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS (29,573)
CASH AND CASH EQUIVALENTS, beginning of year 44,629
-----------
CASH AND CASH EQUIVALENTS, end of year $ 15,056
===========
</TABLE>
F-12
<PAGE>
AZUREL, LTD. AND SUBSIDIARIES/ BEN RICKERT, INC.
UNAUDITED PRO-FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro-forma condensed consolidated balance sheet
presents the pro-forma financial position of Azurel, Ltd. and Subsidiaries
(Azurel) at June 30, 1998, as if the acquisition of Ben Rickert, Inc. had been
made as of June 30, 1998.
The unaudited pro-forma condensed consolidated statements of operations
for the six months ended June 30, 1998 and the year ended December 31, 1997
reflect the combined results of Azurel and Ben Rickert, Inc. as if the
acquisition had occurred on January 1, 1997.
The unaudited pro-forma condensed consolidated statements of operations
do not necessarily represent actual results that would have been achieved had
the companies been together from January 1, 1997, nor may they be indicative of
future operations. These unaudited pro-forma condensed consolidated financial
statements should be read in conjunction with the historical financial
statements and notes thereto of the respective companies.
F-13
<PAGE>
AZUREL, LTD. AND SUBSIDIARIES/ BEN RICKERT, INC.
UNAUDITED PRO-FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
Azurel, Ltd.
and Ben Rickert, Pro-Forma Adjustments
Subsidiaries Inc. --------------------------
06/30/98 07/31/98 Dr. Cr. Total
--------------- ------------ --------- ------- ---------------
ASSETS
------
CURRENT ASSETS:
<S> <C> <C> <C> <C> <C>
Cash $ 39,656 $ 15,056 $ 0 $ 165,056 $ (110,344)
Accounts receivable- net 1,901,287 384,143 0 0 2,285,430
Inventories 2,255,919 3,103,930 0 0 5,359,849
Prepaid expenses and other current assets 206,856 54,919 0 54,919 206,856
Due from stockholders and related parties 155,167 0 0 0 155,167
------------ ------------ ------------
TOTAL CURRENT ASSETS 4,558,885 3,558,048 0 0 7,896,958
PROPERTY AND EQUIPMENT 1,657,842 550,249 0 550,249 1,657,842
INTANGIBLES 3,029,890 0 0 0 3,029,890
OTHER ASSETS 170,700 0 0 0 170,700
------------ ------------ ------------
$ 9,417,317 $ 4,108,297 0 0 $ 12,755,390
============ ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Revolving line of credit $ 1,303,130 $ 0 $ 0 $ 0 $ 1,303,130
Notes payable 349,457 3,642,364 3,642,364 1,350,000 1,699,457
Accounts payable 1,186,287 1,361,301 1,361,301 0 1,186,287
Accrued expenses and other liabilities 258,571 129,709 129,709 800,000 1,058,571
Current portion of long-term debt 703,203 0 0 0 703,203
Due to related parties 119,933 45,000 0 0 164,933
------------ ------------ ------------
TOTAL CURRENT LIABILITIES 3,920,581 5,178,374 0 0 6,115,581
------------ ------------ ------------
LONG-TERM DEBT 1,351,091 1,021,292 1,021,292 0 1,351,091
------------ ------------ ------------
EXCESS OF FAIR VALUE OF ACQUIRED ASSETS
OVER PRICE PAID 0 0 0 1,143,073 1,143,073
------------ ------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock 5,294 5,000 5,000 0 5,294
Additional paid-in-capital 7,438,001 825,000 825,000 0 7,438,001
Accumulated earnings (deficit) (3,281,893) (2,921,369) 0 2,921,369 (3,281,893)
Cumulative translation adjustment (13,582) 0 0 0 (13,582)
Stock subscription receivable (2,175) 0 0 0 (2,175)
------------ ------------ ------------
TOTAL STOCKHOLDERS' DEFICIT 4,145,645 (2,091,369) 0 0 4,145,645
------------ ------------ ------------
$ 9,417,317 $ 4,108,297 $ 12,755,390
============ ============ ============
</TABLE>
See notes to pro-forma financial statements.
F-14
<PAGE>
AZUREL, LTD. AND SUBSIDIARIES/ BEN RICKERT, INC.
UNAUDITED PRO-FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Azurel, Ltd.
and Subsidiaries Ben Rickert, Inc.
Six months ended Six months Pro-Forma Adjustments
ended --------------------------
06/30/98 07/31/98 Dr. Cr. Total
--------------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET SALES $ 6,291,351 $ 2,120,509 $ 0 $ 0 $ 8,411,860
COST OF GOODS SOLD 4,323,899 2,864,435 0 0 7,188,334
----------- ----------- -----------
GROSS PROFIT 1,967,452 (743,926) 0 0 1,223,526
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,462,605 1,321,887 0 0 3,784,492
AMORTIZATION OF DEFERRED CREDIT (INCOME) 0 0 0 120,000 (120,000)
----------- ----------- -----------
OPERATING INCOME (LOSS) (495,153) (2,065,813) 0 0 (2,440,966)
OTHER EXPENSES 176,910 182,853 0 91,695 268,068
----------- ----------- -----------
NET LOSS $ (672,063) $(2,248,666) $ 0 $ 211,695 $(2,709,034)
=========== =========== =========== =========== ===========
LOSS PER COMMON SHARE $ (0.13) $ (0.51)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,293,745 5,293,745
=========== ===========
</TABLE>
See notes to pro-forma financial statements.
F-15
<PAGE>
AZUREL, LTD. AND SUBSIDIARIES/ BEN RICKERT, INC.
UNAUDITED PRO-FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Azurel, Ltd. Pro-Forma Adjustments
------------------------
and Subsidiaries Ben Rickert, Inc. Dr. Cr. Total
--------------- ---------------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
NET SALES $12,481,556 $11,348,766 $ 0 $ 0 $23,830,322
COST OF GOODS SOLD 8,607,759 9,295,559 0 0 17,903,318
----------- ----------- -----------
GROSS PROFIT 3,873,797 2,053,207 0 0 5,927,004
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 3,896,990 4,470,895 0 0 8,367,885
AMORTIZATION OF DEFERRED CREDIT (INCOME) 0 0 0 240,000 (240,000)
----------- ----------- -----------
OPERATING INCOME (LOSS) (23,193) (2,417,688) 0 0 (2,200,881)
OTHER EXPENSES 475,310 389,533 0 183,389 681,454
----------- ----------- -----------
NET LOSS $ (498,503) $(2,807,221) $ 0 $ 423,389 $(2,882,335)
=========== =========== =========== =========== ===========
LOSS PER COMMON SHARE $ (0.11) $ (0.62)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,468,325 4,648,325
=========== ===========
</TABLE>
See notes to pro-forma financial statements.
F-16
<PAGE>
AZUREL, LTD. AND SUBSIDIARIES/ BEN RICKERT, INC.
NOTES TO UNAUDITED PRO-FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
A. The following unaudited pro-forma acquisition adjustment is included in the
accompanying unaudited pro-forma condensed consolidated balance sheet at June
30, 1998:
(1) To record the acquisition of certain assets of Ben Rickert, Inc. from
its lending bank (which foreclosed on the assets) by Azurel for
$150,000 in cash and a $1,350,000 note due on October 30, 1998.
Acquisition costs are estimated at $800,000. The excess of fair value
of assets acquired over price paid of approximately $1.7 million is
allocated first to reduce any long-term assets to zero, with the
remaining excess of approximately $1.1 million recorded as a deferred
credit, which is amortized into income over its estimated applicable
period of five years.
B. The following pro-forma adjustments is included in the accompanying unaudited
pro-forma condensed consolidated statements of operations for the year ended
December 31, 1997 and the six months ended June 30, 1998:
(1) To record a reduction of interest expense due to the reduced debt
level.
(2) To record amortization of the deferred credit resulting from the
acquisition over its estimated applicable period of five years.
F-17
