U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
F-PACK INTERNATIONAL, INC.
--------------------------
(Name of Small Business Issuer in its charter)
Florida 65-0664954
--------------------------------- ---------------
(State or other jursidiction of (I.R.S. I.D. No.)
incorporation or organization)
515 Madison Avenue, Suite 2100, New York, New York 10022
----------------------------------------------------------------
(Address of principal executive offices) (zip code)
Issuer's telephone number (212) 644-5440
--------------
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
Common
Securities to be registered under Section 12(g) of the Act:
Common Stock $.001 par value
---------------------------------------
(Title of class)
<PAGE>
F-PACK INTERNATIONAL, INC.
Form 10-SB
Table of Contents Page
PART 1
Item 1. Description of Business .......................... 1
Item 2. Management's Discussion and Analysis
of Financial Conditions and Results of Operation.. 2
Item 3. Description of Property........................... 4
Item 4. Security Ownership of Certain Beneficial
Owners and Management............................. 4
Item 5. Directors, Executive Officers, Promoters
and Control Persons............................ 5
Item 6. Executive Compensation............................ 6
Item 7. Certain Relationships and Related Transactions.... 7
Item 8. Description of Securities......................... 7
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and other Stockholder Matters....... 7
Item 2. Legal Proceedings................................. 8
Item 3. Changes in and Disagreements with Accountants..... 8
Item 4. Recent Sales of Unregistered Securities........... 8
Item 5. Indemnification of Directors and Officers......... 9
PART F/S
Financial Statements................................................ F-1
PART III
Item 1. Index to Exhibits................................. 9
Item 2. Description of Exhibits........................... 9
Signature Page...................................................... 10
i
<PAGE>
PART 1
Item 1. Description of Business.
F-Pack, International, Inc. ("F-Pack") was incorporated on May 6, 1996 as
Europa Travel, Inc. On October 24, 1997, we changed our name to F-Pak
International, Inc., and on December 3, 1997 we changed our name to F-Pack
International, Inc. On November 7, 1997, F-Pack acquired F-Pack
Csomagolastechnikai Kft., a Hungarian company ("FPKft."), which designs and
manufactures machines for automatic packaging systems for food and agricultural
products and provides service contracts for 24 hour on-site service to its
customers.
We have no operations and act as a holding company. Operations are conducted
through our subsidiary, FPKft. Unless otherwise indicated, all references
hereinafter to "F-Pack, the Company or we" include both F-Pack, International,
Inc. and FPKft.
Industry
We currently operate in Hungary and elsewhere in Central and Eastern
Europe. Hungary, with a population of ten million and Central and Eastern Europe
with combined populations of more than 300 million are less developed both
technically and economically than the West. This lower base suggests that future
growth in the region will be faster than exists in the more-developed West. That
fact combined with the lower costs of operation in the region suggests that
established, competitive companies in the region should prosper.
Many international food and agricultural companies have recently entered
the Central and Eastern European regions and have gained market share for their
products. F-Pack benefits as these companies expand their production.
The Market
We actively market our products and services in Hungary (currently about
60% of sales), the Ukraine, Russia and Croatia. Key customers include Unilever
(Lever Brothers - Van den Bergh Foods), General Electric, Masterfoods and Kraft
Jacobs Suchard.
Competitors tend to be local, specialized job-shop type companies serving
essentially a regional market. To a lesser extent, we compete with more
established Western companies, that currently have higher costs and prices.
The Product/Service
We design and manufacture machines for automatic packaging systems for food
and agricultural products and provides service contracts for 24 hour on-site
service to its customers. The machines are designed using the Intergraph Solid
1
<PAGE>
Edge design software and undergo continuous development according to the demand
of the market. The manufactured packing machines include: plastic bagging
machines with filling of liquids by volume and weight; shrink-packing machines
with pre-selection; tube filling machines; and individually manufactured
machines.
Governmental Regulations
The Company operates in Central and Eastern Europe with minimal regulations
other than the normal laws and regulations in the region governing all
corporations.
Trademarks and Logo
We use trademarks and logos in our business. Other than in Hungary and the
United States where the corporate names have been reserved, we have no formal
protection of our trademarks and logos other than the protection afforded
generally to companies merely by their use.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion of the results of operations and financial
condition should be read in conjunction with the audited financial statements
and related notes appearing subsequently in Part F/S. This discussion contains
forward-looking statements based upon currently expectations that involve
substantial risks and uncertainties. You can identify these statements by
forward-looking words such as "may," "will," "expect," "anticipate," "believe,"
"estimate," and "continue" or similar words. You should be aware that our actual
results and the timing of certain events could differ materially from those
anticipated in these forward-looking statements and could have an adverse effect
on our business, results of operations and financial conditions.
The Company cautions readers that any such forward-looking statements
made by or on behalf of the Company are based on management's current
expectations and beliefs, but are not guarantees of future performance. Actual
results could differ materially from those expressed or implied in the
forward-looking statements.
Six months ended June 20, 2000 compared to six months ended June 30, 1999.
The Company's revenues for the six months ended June 30, 2000 decreased
to $295,841 from $332.884 in the prior year, a decrease of approximately 11%.
Gross profit for the period increased to $63,295 for June 30, 2000 from $63,235
for the comparable 1999 period. Gross profit as a percentage of revenues for the
six months was 21% as compared to 19% for the prior year.
Operating expenses for the six months ended June 30, 2000 decreased to
$58,144 as compared to $84,220 for the prior year. Miscellaneous income was
$8,544 for the 2000 period as compared to $10,219 for the prior year.
2
<PAGE>
Interest income was $95 for the 2000 period as compared to $179 for the
prior year. There was no interest expense for the 2000 period as compared to
$3,049 for the prior year. The provision for income taxes was $4361 for the 2000
period as compared to $0 for the prior year.
The Company's net income was $9,429 for the six months ended June 30,
2000 as compared to a net loss of $13,636 for the prior year. For the six months
ended June 30, 2000, net income per share was $.01 compared to a net loss per
share of $.02 in the prior year. Average shares outstanding were 921,400 for
2000 and 855,000 for 1999.
Liqidity and Capital Resources
The Company's cash position was $89,024 at June 30, 2000 as compared to
$138,648 at December 31, 1999, a decrease of $49,624. The Company's working
capital at June 30, 2000 was $95,996 as compared to working capital of $32,502
at December 31, 1999. Net cash used by operating activity was $48,405. Cash used
for investing activity totaled $276 for the purchase of property and equipment.
During the period, the Company sold 49,800 common shares for $4,980.
Year ended December 31, 1999 compared to year ended December 31, 1998.
The Company's revenues for the twelve months ended December 31, 1999
decreased to $571,878 from $778,337 in the prior year, a decrease of
approximately 26%. Gross profit for the period decreased to $152,618 in the
twelve months ended December 31, 1999 from $199,141 for the comparable 1998
period. Gross profit as a percentage of revenues for the twelve months ended
December 31, 1999 was approximately 27% as compared to approximately 26% for the
prior year.
Operating expenses for the twelve months ended December 31, 1999
decreased to $107,241 from $192,522 for the prior year. Miscellaneous income was
$5,457 for the twelve month period ended December 31, 1999 as compared to
$10,994 for the prior year.
Interest income was $268 for the twelve months ended December 31, 1999
as compared to $2,238 for the prior year. Interest expense for twelve months
ended December 31, 1999 was $4,077 as compared to $0 for the prior year. The
provision for income taxes was $13,355 for the twelve months ended December 31,
1999 as compared to $3,021 for the prior year.
The Company's net income was $33,670 for the twelve months ended
December 31, 1999 as compared to $16,830 for the prior year. For the twelve
months ended December 31, 1999, net income per share was $.04 compared to net
income per share of $.02 in the prior year. Average shares outstanding were
895,000 for the year ended December 31, 1999 and 855,000 for 1998.
3
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Liquidity and Capital Resources
The Company's cash position was $138,698 at December 31, 1999 as
compared to $117,994 at December 31, 1998, an increase of $20,704. The Company's
working capital at December 31, 1999 was $32,502 as compared to a deficit in
working capital of $7,236 at December 31, 1998. Net cash provided by operating
activity was $24,057 for the year ended December 31, 1999 as compared to $49,145
for the prior year. Cash provided by investing activities totaled $9,346 for the
year ended December 31, 1999 compared to cash used in investing activities for
the prior year in the amount of $15,834.
Item 3. Properties
The Company's office facility and headquarters in the United States is
located in a suite of executive offices at 515 Madison Avenue, Suite 2100, New
York, NY 10022 (telephone 212-644-5440), on a month-to-month rent free basis.
The Company operates through its wholly-owned subsidiary, F-Pack Kft., which in
turn operates out of two leased buildings totaling 8,000 square feet at
Salgotarjani utca 4, 3170 Szecseny, Hungary (telephone +36-3-237-0784)on a month
to month basis at $1,500 per month ($18,000 per annum).
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
As of August 31, 2000, the Company had issued and outstanding 1,444,730
shares of its Common Stock. The following table sets forth as of August 31,
2000, certain information regarding beneficial ownership of the Common Stock by
(i) those persons beneficially holding more than five percent of the Company's
Common Stock, (ii) the Company's directors who beneficially own shares of the
Common Stock, (iii) the officers named in the Summary Compensation table below,
and (iv) all of the Company's directors and officers as a group.
<TABLE>
Name and Address Amount of Shares Percent
of Beneficial Owner(1) of Beneficial Owner of Class
---------------------- -------------------- --------
<S> <C> <C>
Surinder Rametra 210,000 (2) 14.3%
Milton Polland 50,000 (3) 3.4%
Dominick Pope 25,000 1.7%
Southern Group International, Inc. 499,930 34.6%
All officers & directors as a group (3 persons) 285,000 19.4%
</TABLE>
4
<PAGE>
(1) For purposes of the table, a person is considered to "beneficially own"
any shares with respect to which he/she directly or indirectly has or
shares voting or investment power or of which he or she has the right
to acquire the beneficial ownership within 60 days. Unless otherwise
indicated and subject to applicable community property law, voting
power and investment power are exercised solely by the person named
above or shared with members of his or her household.
(2) Includes 62,500 shares held by Nirmala Rametra, Mr. Rametra's wife,
20,000 shares held by Surinder Rametra Irrevocable Trust and 20,000
shares held by Nirmala Rametra Irrevocable Trust.
(3) Includes 25,000 shares held by Central Pacific Assurance Limited of
which Mr. Polland is a control person.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers of the Company and their ages as of
the date of this document are as follows:
Name Age Position
---------------- ---- ---------------------------
Surinder Rametra 60 President & Director
Dominick Pope 68 Secretary & Director
Milton Polland 88 Director
Surinder Rametra has been President and a director of the Company since
October, 1997. Mr Rametra received a Bachelor of Science degree from the Punjab
Engineering College in India in 1965 and an MS Degree in Engineering from the
University of I.I.T, India in 1969. In 1976 Mr. Rametra received an MBA in
Finance from New York University. From 1982 to June 1994 Mr. Rametra was the CEO
of one of the subsidiaries of ATEC Group, Inc., a public company traded on the
American Stock Exchange, which engages in the sale of computer hardware and
software primarily to business users. Mr. Rametra has been President and Chief
Executive Officer and Chairman of the Board of ATEC Group, Inc., since June
1994.
Dominick Pope has been Secretary and a director of the Company since
May, 1997. Mr. Pope attended the Baruch School of Business at the City
University of New York. Mr. Pope was a founder of Intercom Technologies, Inc.
and served as President and Chairman of the Board of Directors of Intercom
Technologies, Inc. since 1977 and as Treasurer from March 1985 until his
resignation in April 1998. Mr. Pope is presently President of L.J. Loeffler In
House Communications, Inc.
5
<PAGE>
Milton R. Polland has been a director of the Company since April, 1997. He
attended Marquette University and received a law degree from the Milwaukee
School of Law. From 1992 to present he has been Ambassador to Mexico from the
Republic of the Marshall Islands; From 1989 to 1996 he was Chairman of the Board
of Pacific Intermediaries, Inc.; From 1988 to 1996 he was a Board Member of
Airline of the Marshall Islands; From 1981 to 1995 he was President and Chairman
of the Board of Pacific Casualty Insurance Co. Ltd.; From 1952 to 1990 he was
President of The Polland Company, Ltd., an actuarial and management consulting
company; From 1988 to 1990 he was a Board Member of The Wilshire Bank, Los
Angeles, CA; From 1957 to 1967 he was President and Chairman of the Board of
Union Trust Life Insurance; From 1965 to 1967 he was President and Chairman of
the Board of Missouri Fidelity and Surety Trust Life Insurance; From 1960 to
1973 he was President and Chairman of the Board of Summit Fidelity and Surety
Company of Ohio and Summit Guarantee Corporation of Delaware.
Item 6. Executive Compensation.
Compensation for the officers of the Company is presented below. There are
no other benefits or compensation provided.
Name Position Year Salary Other
---- -------- ---- ------ -----
None
Aggregated Option Exercises In Last Fiscal Year and Fiscal Year-End Option Value
The Company does not have any officer or director stock option plan. The
Company intends to incorporate one after a public offering. The Company does not
have an employee stock option plan (ESOP). The Company intends to incorporate
one after a public offering.
The following table shows all the cash compensation paid by the Company as
well as certain other compensation paid during the fiscal years indicated, to
the President and others who received total annual salary and bonus in excess of
$100,000 for such period in all capacities in which they served. No other
Executive Officer received total annual salary and bonus in excess of $100,000.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Other
Name and Annual Restricted All Other
Principal Compen Stock Options LTIP Compen
Position Year Salary Bonus sation($) Awards($) SARS Payouts($) sation($)
NONE
</TABLE>
Option/SAR Grants in Last Fiscal Year. There were no option/SAR Grants in
the last fiscal year.
6
<PAGE>
Compensation of Directors
The Company has not compensated its non-employee directors. Directors are
reimbursed for expenses actually incurred in attending meetings of the Board of
Directors and its committees.
Item 7. Certain Relationships and Related Transactions.
The Company has engaged in no "Related Transactions" within the meaning of
Item 404 of Regulation S-B during the last two years.
Item 8. Description of Securities.
Common Stock
The Company has authorized 10,000,000 shares of Common Stock par value
$0.001. Each outstanding Share of Common Stock is entitled to one vote, either
in person or by proxy, on all matters that may be voted upon by the owners
thereof at meetings of the stockholders.
The holders of Common Stock (i) have equal ratable rights to dividends from
funds legally available therefor, when, and if declared by the Board of
Directors of the Company; (ii) are entitled to Share ratably in all of the
assets of the Company available for distribution to holders of Common Stock upon
liquidation, dissolution or winding up of the affairs of the Company; (iii) do
not have preemptive, subscription or conversion rights, or redemption or sinking
fund provisions applicable thereto; and (iv) are entitled to one non-cumulative
vote per Share on all matters on which stockholders may vote at all meetings of
stockholders.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
(a) Market Information
The Company's Common Stock ($0.001 par value, all of which are one class)
is not publicly traded.
(b) Holders
The approximate number of record holders of the Company's Common Stock as
of August 31, 2000 was 72. The aggregate number of shares of Common Stock
outstanding as of August 31, 2000 was 1,444,730 shares.
(c) Dividends
The Company has not paid or declared any dividends upon its Common
Stock since its inception and, by reason of its present financial status and its
contemplated financial requirements, does not contemplate or anticipate paying
any dividends upon its Common Stock in the foreseeable future.
7
<PAGE>
Item 2. Legal Proceedings
The Company is not presently a party to any material litigation not in the
regular course of its business, nor to the Company's knowledge is such
litigation threatened.
Item 3. Changes in and Disagreements with Accountants
The Company has had no changes in or disagreements with accountants on
accounting or financial disclosure.
Item 4. Recent Sales of Unregistered Securities.
The following unregistered securities of the Company have been issued in
the past three years:
(a) In November 1997, the Company issued 51,400 shares of unregistered
securities pursuant to an exemption from registration under Regulation
D, Rule 504 of the Act to 13 non-affiliates for an aggregate
consideration of $5,140.
(b) In November 1997 the Company issued 50,000 shares of restricted
securities to an affiliate, for an aggregate consideration of $25,000,
pursuant to an exemption from registration under Sec. 4(2) of the Act;
(c) In December, 1997, the Company issued 80,000 shares of unregistered
securities pursuant to Regulation D, Rule 504 of the Act.
(d) In January, 1998, the Company issued 272,350 shares of unregistered
securities to 14 non-affiliates, pursuant to an exemption from
registration under Regulation D, Rule 504 of the Act, for an aggregate
consideration of $2,732.50.
(e) In June 1998, the Company issued 30,000 shares of restricted
securities to an affiliate for an aggregate consideration of $3,000
pursuant to an exemption from registration under Sec.4(2) of the Act,
and issued 25,000 shares of unregistered securities to a non-affiliate
for an aggregate consideration of $2,500, pursuant to an exemption from
registration under Regulation D, Rule 504 of the Act.
(f) In December 1998, the Company issued 82,000 shares of unregistered
securities, pursuant to an exemption from registration under SEC
Regulation D, Rule 504 of the Act, to 7 non-affiliates, for an
aggregate consideration of $8,200.
(g) In June 2000, the Company issued 499,930 shares of unregistered
securities to an affiliate in consideration of conversion of a loan in
the amount of $49,993 owed to such affiliate at a conversion rate of
$.10 per share. Said shares were issued pursuant to an exemption from
registration under Section 4(2) of the Act.
8
<PAGE>
Item 5. Indemnification of Directors and Officers
The Certificate of Incorporation and Bylaws of the Company contain
provisions limiting or eliminating the liability of directors of the Company to
the Company or its stockholders to the fullest extent permitted by the General
Corporation law of Florida and indemnifying officers and directors of the
Company to the fullest extent permitted by the General Corporation Law of
Florida. Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act, and will
be governed by the final adjudication of such issue.
PART F/S
The Financial Statements of F-Pack International, Inc., required by
regulation S-B commence on page F-1 hereof and are incorporated herein by
reference.
PART III
Items 1 & 2. Index to Exhibits and Description of Exhibits
2.a Certificate of Incorporation and amendments
2.b By-Laws
Signature page follows
9
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
F-PACK INTERNATIONAL, INC.
Date: October 6, 2000 By: /s/ Surrinder Rametra
-------------------- -------------------------
Surrinder Rametra, President
10
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F-PACK INTERNATIONAL, INC.
CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
<PAGE>
TABLE OF CONTENTS
Page
No.
ACCOUNTANT'S REPORT................................................... 1
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets........................................... 2
Statements of Operations................................. 3
Statements of Changes in Stockholders' Equity............ 4
Statements of Cash Flows................................. 5
Notes to Financial Statements............................ 6
<PAGE>
STEWART H. BENJAMIN
CERTIFIED PUBLIC ACCOUNTANT, P.C.
27 SHELTER HILL ROAD
PLAINVIEW, NY 11803
TELEPHONE: (516) 933-9781
FACSIMILE: (516) 827-1203
To the Board of Directors and Stockholders
F-Pack International, Inc.
Hauppauge, New York
I have reviewed the accompanying balance sheets of F-Pack International, Inc. (a
Florida corporation) and subsidiary as of June 30, 2000 and December 31, 1999,
and the related consolidated statements of operations, stockholders' equity and
cash flows, for the six months ended June 30, 2000 and 1999, in accordance with
Statements on Standards for Accounting and Review Services, issued by the
American Institute of Certified Public Accountants. All information included in
these consolidated financial statements is the representation of the management
of F-Pack International, Inc. I did not review the financial statements of
F-Pack Kft. Hungary, a wholly owned subsidiary, whose statements reflect total
assets of $426,897 and $384,167 as of June 30, 2000 and December 31, 1999,
respectively, and total revenues of $295,841 and $332,884 for the six months
ended June 30, 2000 and 1999, respectively. These statements were reviewed by
other accountants whose report thereon has been furnished to me, and the results
of my review expressed herein, insofar as it relates to the amounts included for
F-Pack Kft. Hungary, is based solely upon the report of the other accountants.
A review consists principally of inquiries of Company personnel analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the consolidated financial
statements taken as a whole. Accordingly, I do not express such an opinion.
Based on my reviews and the report of the other accountants discussed above, I
am not aware of any material modifications that should be made to the
accompanying consolidated financial statements in order for them to be in
conformity with generally accepted accounting principles.
Stewart H. Benjamin
Certified Public Accountant, P.C.
Plainview, New York
July 20, 2000
1
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2000 1999
(Unaudited) (Audited)
------------ -------------
ASSETS
Current assets
Cash $ 89,024 $ 138,648
Accounts receivable 216,863 100,135
Inventory (Notes 1 & 2) 87,329 108,301
------------ ------------
Total current assets 393,216 347,084
------------ ------------
Property, plant and equipment (Notes 1 & 3) 67,726 67,450
Accumulated depreciation (32,526) (27,235)
------------ ------------
Total property, plant and equipment 35,200 40,215
------------ ------------
Total assets $ 428,416 $ 387,299
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses (Note 4) $ 163,259 $ 189,089
Deferred revenue 133,211 74,750
Loans from related parties (Note 5) 750 50,743
Obligation under capital lease -- --
------------ ------------
Total current liabilities 297,220 314,582
------------ ------------
Stockholders' equity
Common stock, $.001 par value, 10,000,000
shares authorized, 1,444,730 and 895,000
shares issued and outstanding at
June 30, 2000 and December 31, 1999,
respectively 1,445 895
Additional paid-in capital 157,934 103,511
Currency translation adjustment (27,383) (21,460)
Accumulated deficit (800) (10,229)
------------ ------------
Total stockholders' equity 131,196 72,717
------------ ------------
Total liabilities and stockholders' equity $ 428,416 $ 387,299
============ ============
See accompanying notes and accountant's review report.
2
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Six Months
Ended Ended
June 30, June 30,
2000 1999
------------ ------------
NET SALES $ 295,841 $ 332,884
COST OF SALES 232,546 269,649
------------ ------------
GROSS PROFIT 63,295 63,235
OPERATING EXPENSES 58,144 84,220
------------ ------------
INCOME (LOSS) FROM OPERATIONS 5,151 (20,985)
------------ ------------
OTHER REVENUES AND EXPENSES
Miscellaneous income 8,544 10,219
Interest income 95 179
Interest expense -- (3,049)
------------ ------------
Total other revenues and expenses 8,639 7,349
------------ ------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 13,790 (13,636)
PROVISION FOR INCOME TAXES 4,361 --
------------ ------------
NET INCOME (LOSS) $ 9,429 $ (13,636)
============ ============
INCOME (LOSS) PER COMMON SHARE $ .01 $ (.02)
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 921,400 855,000
============ ============
See accompanying notes and accountant's review report.
3
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period May 6, 1996 (Inception) to June 30, 2000
<TABLE>
<CAPTION>
Common stock Additional Currency
-------------------- Paid-in Translation Accumulated
Shares Amount Capital Adjustment Deficit Total
------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balances, May 6, 1996
(inception -- $ -- $ -- $ -- $ -- $ --
Common stock issued 896,000 896 -- -- -- 896
Acquisition adjustment -- -- 6,060 6,832 -- 12,892
Accumulated deficit of
subsidiary -- -- -- -- (29,606) (29,606)
Net loss for the period (2,160) (2,160)
------- --------- --------- ---------- --------- ---------
Balances, December 31, 1996 896,000 896 6,060 6,832 (31,766) (17,978)
Common stock repurchased (96,000) (96) 96 -- -- --
Additional capital
contribution -- -- 66,000 -- -- 66,000
Net loss (28,963) (28,963)
------- --------- --------- ---------- --------- ---------
Balances, December 31, 1997 800,000 800 72,156 6,832 (60,729) 19,059
Common stock issued 55,000 55 -- -- -- 55
Additional capital
contribution -- -- 26,245 -- -- 26,245
Foreign currency
adjustment -- -- -- (10,443) -- (10,443)
Net income 16,830 16,830
------- --------- --------- ---------- --------- ---------
Balances, December 31, 1998 855,000 855 98,401 (3,611) (43,899) 51,746
Common stock issued 40,000 40 -- -- -- 40
Additional capital
contribution -- -- 5,110 -- -- 5,110
Foreign currency
adjustment -- -- -- (17,849) -- (17,849)
Net income 33,670 33,670
------- --------- --------- ---------- --------- ---------
Balances, December 31, 1999 895,000 895 103,511 (21,460) (10,229) 72,717
Common stock issued 49,800 50 4,930 -- -- 4,980
Conversion of loan to
equity 499,930 500 49,493 -- -- 49,993
Foreign currency
adjustment -- -- -- (5,923) -- (5,923)
Net income for the
period 9,429 9,429
--------- --------- --------- ---------- --------- ---------
Balances, June 30, 2000 1,444,730 $ 1,445 $ 157,934 $ (27,383) $ (800) $ 131,196
========= ========= ========= ========== ========= =========
</TABLE>
See accompanying notes and accountant's review report.
4
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Six Months
Ended Ended
June 30, June 30,
2000 1999
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 9,429 $ (13,636)
Adjustments to reconcile net income (loss) to net
cash used in operating activities
Depreciation 5,291 6,493
Increase in accounts receivable (116,728) (60,332)
(Increase) decrease in inventory 20,972 (15,271)
Increase (decrease) in accounts payable
and accrued expenses (25,830) 41,736
Decrease in obligation under capital lease -- (1,238)
Increase in short term loans -- 13,137
Increase in deferred revenue 58,461 14,760
--------- --------
NET CASH USED IN OPERATING ACTIVITIES (48,405) (14,351)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Change in property and equipment (276) 5,562
--------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (276) 5,562
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 4,980 700
Effect of foreign currency rate (5,923) (862)
--------- --------
NET CASH USED IN FINANCING ACTIVITIES (943) (162)
--------- --------
NET DECREASE IN CASH (49,624) (8,951)
CASH - BEGINNING OF PERIOD 138,648 117,944
--------- --------
CASH - END OF PERIOD $ 89,024 $108,993
========= ========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the periods for interest $ -- $ 3,049
========= ========
Cash paid during the periods for income taxes $ 755 $ --
========= ========
Conversion of loans payable to common stock $ (49,993) $ --
========= ========
See accompanying notes and accountant's review report.
5
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Principles of Consolidation
F-Pack International, Inc. was incorporated on May 6, 1996 under the laws of the
state of Florida. The Company's principal business activity is the design and
manufacturing of machines for automatic packaging systems for food and
agricultural products.
The consolidated financial statements include the accounts of F-Pack
International, Inc. and its wholly owned subsidiary, F-Pack Csomagolastechnikai
Korlatolt Felelossegu Tarsasag ("F-Pack Kft. Hungary"), which was acquired on
November 7, 1997.
Basis of Presentation
The consolidated financial statements of the Company have been prepared in
conformity with generally accepted accounting principles. With respect to the
foreign subsidiary, the U.S. dollar amounts of balance sheet accounts were based
on an exchange rate of 1 U.S. dollar for 271.33 Hungarian Forints (HUF) at June
30, 2000, and 1 U.S. dollar for 252.52 HUF at December 31, 1999, which
represents the National Bank of Hungary official foreign exchange rates, while
profit and loss statement accounts were translated on the basis of a weighted
average exchange rate of 1 U.S. dollar for 263.36 HUF during the six months
ended June 30, 2000.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Property, Plant, Equipment and Depreciation
Property, plant and equipment are stated at cost. Depreciation is computed using
the straight-line method over 3 to 7 years for machinery and equipment and 3 to
5 years for vans. Maintenance, repairs and "small assets" - under the value of
$111 are charged to operations as incurred.
6
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Inventory
Inventories are carried at the lower of cost or market. Cost elements included
in inventories are raw materials, labor and manufacturing overhead.
Corporate Tax
For the six months ended June 30, 2000, the parent company, F-Pack
International, Inc. sustained a net loss of $10,437. Such loss may be carried
forward to reduce taxable income for a period of up to 20 years. The
subsidiary's pre-tax income for the six months ended June 30, 2000 was $24,227.
The Hungarian tax rate is 18%.
Revenue recognition
Revenues consist of sales from produced packaging machines. Revenues are
recognized when all of the following have occurred: (1) the machines are
completed and operational (2) the machines are delivered to the customer and (3)
the fee has been collected or is collectible. In any other cases, machines are
reported in inventory and received advances are stated as deferred revenue on
the balance sheet.
NOTE 2 - INVENTORY
Inventory at June 30, 2000 and December 31, 1999 consisted of the following:
June 30, December 31,
2000 1999
------------ ------------
Purchased raw materials for production $12,752 $ 11,040
Unfinished and finished machines 74,577 97,261
------ -------
Total $87,329 $108,301
====== =======
7
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at June 30, 2000 and December 31, 1999 consisted
of the following:
June 30, December 31,
2000 1999
----------- -----------
Automobiles $ 9,096 $ 9,096
Production equipment 41,854 41,854
Other equipment 11,395 11,119
Leased van 5,381 5,381
------- -------
67,726 67,450
Accumulated depreciation (32,526) (27,235)
------- -------
Total $ 35,200 $ 40,215
======= =======
NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at June 30, 2000 and December 31, 1999
consisted of the following:
June 30, December 31,
2000 1999
------------- -----------
Domestic creditors (Hungary) $ 90,239 $ 91,462
Foreign creditors (Outside Hungary) -- 34,000
Taxes payable (Hungary) 22,571 16,676
New York State Franchise Tax payable 380 535
New York City Corporation Tax payable -- 600
Social health contribution 24,678 17,493
Wages 2,530 2,518
Guarantee liability 920 1,731
Accrued liabilities 12,432 15,038
Accrued interest 3,440 3,696
Others 6,069 5,340
-------- --------
Total $ 163,259 $ 189,089
======== ========
8
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - LOANS FROM RELATED PARTIES
On October 28, 1998 the Company received a loan of $49,993 from Southern Group
International, Inc., a Florida corporation in which certain stockholders of
F-Pack International, Inc. own an equity interest. Pursuant to a resolution of
the Board of Directors on June 29, 2000, the loan was converted to 499,930
shares of common stock, valued at $.10 per share.
On December 10, 1999 the Company received a loan of $750 from a stockholder. The
loan is non-interest bearing and is expected to be repaid in July 2000.
9
<PAGE>
F-PACK INTERNATIONAL, INC.
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<PAGE>
TABLE OF CONTENTS
Page No.
AUDITOR'S REPORT...................................................... 1
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets........................................... 2
Statements of Operations................................. 3
Statements of Changes in Stockholders' Equity............ 4
Statements of Cash Flows................................. 5
Notes to Financial Statements............................ 6
<PAGE>
STEWART H. BENJAMIN
CERTIFIED PUBLIC ACCOUNTANT, P.C.
27 SHELTER HILL ROAD
PLAINVIEW, NY 11803
TELEPHONE: (516) 933-9781
FACSIMILE: (516) 827-1203
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
F-Pack International, Inc.
New York, New York
I have audited the accompanying consolidated balance sheets of F-Pack
International, Inc. (a Florida corporation) and subsidiary as of December 31,
1999 and 1998, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these consolidated
financial statements based on my audits. I did not audit the financial
statements of F-Pack Kft. Hungary, a wholly owned subsidiary, which statements
reflect total assets of $384,167 and $323,928 as of December 31, 1999 and 1998,
and total revenues of $571,878 and $778,337 for the years then ended. Those
statements were audited by other auditors whose report has been furnished to me,
and my opinion, insofar as it relates to the amounts included for F-Pack Kft.
Hungary, is based solely on the report of the other auditors.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. 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.
I believe that my audits and the report of the other auditors provide a
reasonable basis for my opinion.
In my opinion, based on my audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of F-Pack International, Inc. and
subsidiary as of December 31, 1999 and 1998, and the results of its operations
and cash flows for the years then ended, in conformity with generally accepted
accounting principles.
Stewart H. Benjamin
Certified Public Accountant, P.C.
Plainview, New York
March 15, 2000
1
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
1999 1998
ASSETS ------------ -------------
Current assets
Cash $ 138,648 $ 117,944
Accounts receivable 100,135 84,303
Inventory (Notes 1 & 2) 108,301 64,169
------------ ------------
Total current assets 347,084 266,416
------------ ------------
Property, plant and equipment (Notes 1 & 3) 67,450 76,796
Accumulated depreciation (27,235) (17,814)
------------ ------------
Total property, plant and equipment 40,215 58,982
------------ ------------
Total assets $ 387,299 $ 325,398
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses (Note 4) $ 189,089 $ 175,167
Deferred revenue 74,750 33,898
Loans from related parties (Note 5) 50,743 62,793
Obligation under capital lease -- 1,794
------------ ------------
Total current liabilities 314,582 273,652
------------ ------------
Stockholders' equity
Common stock, $.001 par value, 10,000,000
shares authorized, 895,000 and 855,000
shares issued and outstanding at
December 31, 1999 and 1998, respectively 895 855
Additional paid-in capital 103,511 98,401
Currency translation adjustment (21,460) (3,611)
Accumulated deficit (10,229) (43,899)
Total stockholders' equity 72,717 51,746
------------ ------------
Total liabilities and stockholders' equity $ 387,299 $ 325,398
============ ============
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended Year Ended
December 31, December 31,
1999 1998
------------ -------------
NET SALES $ 571,878 $ 778,337
COST OF SALES 419,260 579,196
------------ ------------
GROSS PROFIT 152,618 199,141
OPERATING EXPENSES 107,241 192,522
------------ ------------
INCOME FROM OPERATIONS 45,377 6,619
------------ ------------
OTHER REVENUES AND EXPENSES
Miscellaneous income 5,457 10,994
Interest income 268 2,238
Interest expense (4,077) --
------------ ------------
Total other revenues and expenses 1,648 13,232
------------ ------------
INCOME BEFORE PROVISION FOR INCOME TAXES 47,025 19,851
PROVISION FOR INCOME TAXES 13,355 3,021
------------ ------------
NET INCOME $ 33,670 $ 16,830
============ ============
INCOME PER COMMON SHARE $ .04 $ .02
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 895,000 829,986
============ ============
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period May 6, 1996 (Inception) to December 31, 1999
<TABLE>
<CAPTION>
Common stock Additional Currency
-------------------- Paid-in Translation Accumulated
Shares Amount Capital Adjustment Deficit Total
------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balances, May 6, 1996
(inception -- $ -- $ -- $ -- $ -- $ --
Common stock issued 896,000 896 -- -- -- 896
Acquisition adjustment -- -- 6,060 6,832 -- 12,892
Accumulated deficit of
subsidiary -- -- -- -- (29,606) (29,606)
Net loss for the period (2,160) (2,160)
------- --------- --------- ---------- --------- ---------
Balances, December 31, 1996 896,000 896 6,060 6,832 (31,766) (17,978)
Common stock repurchased (96,000) (96) 96 -- -- --
Additional capital
contribution -- -- 66,000 -- -- 66,000
Net loss (28,963) (28,963)
------- --------- --------- ---------- --------- ---------
Balances, December 31, 1997 800,000 800 72,156 6,832 (60,729) 19,059
Common stock issued 55,000 55 -- -- -- 55
Additional capital
contribution -- -- 26,245 -- -- 26,245
Foreign currency
adjustment -- -- -- (10,443) -- (10,443)
Net income 16,830 16,830
------- --------- --------- ---------- --------- ---------
Balances, December 31, 1998 855,000 855 98,401 (3,611) (43,899) 51,746
Common stock issued 40,000 40 -- -- -- 40
Additional capital
contribution -- -- 5,110 -- -- 5,110
Foreign currency
adjustment -- -- -- (17,849) -- (17,849)
Net income 33,670 33,670
------- --------- --------- ---------- --------- ---------
Balances, December 31, 1999 895,000 $ 895 $ 103,511 $ (21,460) $ (10,229) $ 72,717
======= ========= ========= ========== ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended Year Ended
December 31, December 31,
1999 1998
----------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 33,670 $ 16,830
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 11,764 13,504
Currency adjustments difference for P/L (2,343) (2,407)
Increase in accounts receivable (15,832) (25,852)
Increase in inventory (44,132) (35,473)
Increase in accounts payable and accrued
expenses 13,922 52,210
Decrease in obligation under capital lease (1,794) (2,147)
Increase (decrease) in short term loans (12,050) 57,229
Increase (decrease) in deferred revenue 40,852 (24,749)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 24,057 49,145
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Change in property and equipment 9,346 (15,834)
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 9,346 (15,834)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 5,150 26,300
Effect of foreign currency rate (17,849) (10,443)
--------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (12,699) 15,857
--------- ---------
NET INCREASE IN CASH 20,704 49,168
CASH - BEGINNING OF YEAR 117,944 68,776
--------- ---------
CASH - END OF YEAR $ 138,648 $ 117,944
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the years for:
Interest $ 230 $ --
========= =========
Income taxes $ 2,041 $ 491
========= =========
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Principles of Consolidation
F-Pack International, Inc. was incorporated on May 6, 1996 under the laws of the
state of Florida. The Company's principal business activity is the design and
manufacturing of machines for automatic packaging systems for food and
agricultural products.
The consolidated financial statements include the accounts of F-Pack
International, Inc. and its wholly owned subsidiary, F-Pack Csomagolastechnikai
Korlatolt Felelossegu Tarsasag ("F-Pack Kft. Hungary"), which was acquired on
November 7, 1997.
Basis of Presentation
The consolidated financial statements of the Company have been prepared in
conformity with generally accepted accounting principles. With respect to the
foreign subsidiary, the U.S. dollar amounts of balance sheet accounts were based
on an exchange rate of 1 U.S. dollar for 252.52 Hungarian Forints (HUF) at
December 31, 1999, and 1 U.S. dollar for 219.03 HUF at December 31, 1998, which
represents the National Bank of Hungary official foreign exchange rates, while
profit and loss statement accounts were translated on the basis of a weighted
average exchange rate of 1 U.S. dollar for 237.76 HUF during 1999.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Property, Plant, Equipment and Depreciation
Property, plant and equipment are stated at cost. Depreciation is computed using
the straight-line method over 3 to 7 years for machinery and equipment and 3 to
5 years for vans. Maintenance, repairs and "small assets" - under the value of
$119 are charged to operations as incurred.
6
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Inventory
Inventories are carried at the lower of cost or market. Cost elements included
in inventories are raw materials, labor and manufacturing overhead.
Corporate Tax
For the year ended December 31, 1999, the parent company, F-Pack International,
Inc. sustained a net loss of $10,843. Such loss may be carried forward to reduce
taxable income for a period of up to 20 years. The subsidiary's pre-tax income
in 1999 was $57,413. The Hungarian tax rate is 18%.
Revenue recognition
Revenues consist of sales from produced packaging machines. Revenues are
recognized when all of the following have occurred: (1) the machines are
completed and operational (2) the machines are delivered to the customer and (3)
the fee has been collected or is collectible. In any other cases, machines are
reported in inventory and received advances are stated as deferred revenue on
the balance sheet.
NOTE 2 - INVENTORY
Inventory at December 31 consisted of the following:
1999 1998
------- --------
Purchased raw materials for production $ 11,040 $ 3,424
Unfinished and finished machines 97,261 60,745
------- -------
Total $108,301 $ 64,169
======= =======
7
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31 consisted of the following:
1999 1998
------- -------
Automobiles $ 9,096 $ 10,487
Production equipment 41,854 48,253
Other equipment 11,119 11,399
Leased van 5,381 6,657
------- -------
67,450 76,796
Accumulated depreciation (27,235) (17,814)
------- -------
Total $ 40,215 $ 58,982
======= =======
NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at December 31 consisted of the following:
1999 1998
----------- ----------
Domestic creditors (Hungary) $ 91,462 $ 92,465
Foreign creditors (Outside Hungary) 34,000 42,105
Taxes payable (Hungary) 16,676 8,260
New York State Franchise Tax payable 535 380
New York City Corporation Tax payable 600 300
Provision for expected losses -- 2,869
Social health contribution 17,493 8,873
Wages 2,518 2,916
Guarantee liability 1,731 2,406
Accrued liabilities 15,038 8,453
Accrued interest 3,696 --
Others 5,340 6,140
-------- --------
Total $ 189,089 $ 175,167
======== ========
8
<PAGE>
F-PACK INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - LOANS FROM RELATED PARTIES
On October 28, 1998 the Company received a loan of $49,993 from Southern Group
International, Inc., a Florida corporation in which certain stockholders of
F-Pack International, Inc. own an equity interest. The loan is uncollateralized,
provides for interest at a rate of 8% per annum and has been extended past its
original due date of December 31, 1999, to June 30, 2000.
On December 10, 1999 the Company received a loan of $750 from a stockholder. The
loan is non-interest bearing and is expected to be repaid within six months.
9
<PAGE>
