UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended
September 30, 1999
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 1-8250
WELLS-GARDNER ELECTRONICS CORPORATION
(Exact name of registrant as specified in its charter)
ILLINOIS 36-1944630
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2701 North Kildare Avenue, Chicago, Illinois 60639
(Address of principal executive offices) (Zip Code)
(773) 252-8220
(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
As of November 4, 1999, 4,532,644 shares of the Common Stock, $1.00
par value of the registrant were outstanding.
<PAGE>
WELLS-GARDNER ELECTRONICS CORPORATION
FORM 10-Q
For Quarter Ended September 30, 1999
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements:
Condensed Statements of Earnings
- Three Months Ended September 30, 1999 & 1998
- Nine Months Ended September 30, 1999 & 1998
Condensed Balance Sheets
- September 30, 1999 & December 31, 1998
Condensed Statements of Cash Flows
- Nine Months Ended September 30, 1999 & 1998
Notes to the Condensed Financial Statements
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
PART II - OTHER INFORMATION
Item 6.
Exhibits and Reports on Form 8-K
SIGNATURE
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<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
WELLS-GARDNER ELECTRONICS CORPORATION
Condensed Statements of Earnings
Three Months Ended September 30,
1999 1998
<S> <C> <C>
Net sales $ 9,086,000 $ 9,965,000
Cost of sales 7,624,000 8,379,000
Engineering, selling & administrative
expenses 1,303,000 1,325,000
Other expense, net 128,000 130,000
Total costs 9,055,000 9,834,000
Earnings before income taxes 31,000 131,000
Income taxes --- ---
Net earnings $ 31,000 $ 131,000
Earnings per share:
Basic net earnings per share $ 0.01 $ 0.03
Diluted net earnings per share $ 0.01 $ 0.03
Basic average common shares outstanding * 4,522,008 4,487,287
Diluted average common shares outstanding * 4,619,715 4,586,297
See accompanying notes to the unaudited condensed financial statements.
* Shares outstanding have been adjusted to reflect the 5% stock dividend paid
to all shareholders of record as of April 13, 1999.
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<TABLE>
WELLS-GARDNER ELECTRONICS CORPORATION
Condensed Statements of Earnings
Nine Months Ended September 30,
1999 1998
<S> <C> <C>
Net sales $ 29,327,000 $ 31,931,000
Cost of sales 24,707,000 26,701,000
Engineering, selling & administrative
expenses 4,093,000 4,032,000
Other expense, net 337,000 366,000
Total costs 29,137,000 31,099,000
Earnings before income taxes 190,000 832,000
Income taxes --- ---
Net earnings $ 190,000 $ 832,000
Earnings per share:
Basic net earnings per share $ 0.04 $ 0.19
Diluted net earnings per share $ 0.04 $ 0.18
Basic average common shares outstanding * 4,512,860 4,460,239
Diluted average common shares outstanding * 4,560,135 4,670,982
See accompanying notes to the unaudited condensed financial statements.
* Shares outstanding have been adjusted to reflect the 5% stock dividend paid
to all shareholders of record as of April 13, 1999.
</TABLE>
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<TABLE>
WELLS-GARDNER ELECTRONICS CORPORATION
Condensed Balance Sheets
September 30 December
1999 1998
<S> <C> <C> <C> <C>
Assets:
Current assets:
Cash & cash equivalents $ 95,000 $ 26,000
Accounts receivable (net) 5,013,000 5,149,000
Note receivable 250,000 232,000
Inventory:
Raw materials 7,861,000 6,226,000
Work in progress 756,000 440,000
Finished goods 2,588,000 1,914,000
11,205,000 8,580,000
Prepaids & other current assets 217,000 428,000
Total current assets 16,780,000 14,415,000
Property, plant & equipment, net 2,567,000 2,649,000
Other assets:
Long-term note receivable 65,000 255,000
Intangible assets (net) 2,229,000 2,352,000
Total other assets 2,294,000 2,607,000
Total assets $ 21,641,000 $ 19,671,000
Liabilities:
Current liabilities:
Accounts payable $ 2,318,000 $ 2,548,000
Accrued expenses 317,000 1,053,000
Note payable 670,000 614,000
Total current liabilities 3,305,000 4,215,000
Long-term liabilities:
Notes payable 5,333,000 2,736,000
Total liabilities 8,638,000 6,951,000
Shareholders' Equity:
Common stock-authorized 25,000,000
shares, $1.00 par value; 4,531,588
shares issued as of September 30, 1999
& 4,285,912 shares issued as of
December 31, 1998 4,532,000 4,286,000
Additional paid in capital 1,843,000 1,527,000
Retained earnings 6,628,000 6,907,000
Total shareholders' equity 13,003,000 12,720,000
Total liabilities & shareholders' equity $ 21,641,000 $ 19,671,000
See accompanying notes to the unaudited condensed financial statements.
</TABLE>
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<TABLE>
WELLS-GARDNER ELECTRONICS CORPORATION
Condensed Statements of Cash Flows
Nine Months Ended September 30,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 190,000 $ 832,000
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 472,000 341,000
Amortization of unearned compensation --- 146,000
Changes in current assets & liabilities
(net of effects of acquistion):
Accounts receivable 135,000 (617,000)
Note receivable (18,000) 150,000
Inventory (2,626,000) 163,000
Prepaid expenses & other current assets 212,000 (37,000)
Accounts payable (230,000) (549,000)
Accrued expenses (736,000) 107,000
Net cash provided by (used in) operating activities (2,601,000) 536,000
Cash provided by (used in) investing activities:
Issuance (repayment) of note receivable 190,000 (317,000)
Payment for acquisition --- (3,350,000)
Additions to property, plant & equipment, net (266,000) (212,000)
Net cash used in investing activities (76,000) (3,879,000)
Cash provided by financing activities:
Borrowings - note payable 2,653,000 3,050,000
Proceeds from stock purchase plan 28,000 ---
Proceeds from stock options exercised 65,000 218,000
Net cash provided by financing activities 2,746,000 3,268,000
Net increase (decrease) in cash & cash equivalents 69,000 (75,000)
Cash & cash equivalents at beginning of period 26,000 150,000
Cash & cash equivalents at end of period $ 95,000 $ 75,000
Supplemental cash flow disclosure:
Interest paid $ 281,000 $ 290,000
Taxes paid $ --- $ 15,000
See accompanying notes to the unaudited condensed financial statements.
</TABLE>
<PAGE>
WELLS-GARDNER ELECTRONICS CORPORATION
Notes to the Condensed Financial Statements
1. In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments, consisting of normal
recurring adjustments, which are necessary for a fair presentation of
the financial position and results of operations for the periods
presented. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. These condensed financial statements should be read in
conjunction with the audited financial statements and notes thereto
included in the Company's 1998 Annual Report to shareholders. The
results of operations for the first nine months ended September 30,
1999 are not necessarily indicative of the operating results for the
full year.
2. On March 16, 1999, the Company declared a five percent (5%) stock
dividend payable to all common stock shareholders of record on April
13, 1999. Shares outstanding for all periods presented have been
adjusted to reflect the five percent (5%) stock dividend.
3. Basic earnings per share is based on the weighted average number of
shares outstanding whereas diluted earnings per share includes the
dilutive effect of unexercised common stock equivalents. Both basic
and diluted earnings per share reflect the declared stock dividend as
referenced in note 2.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Third Quarter Ended September 30, 1999 and 1998
For the third quarter ended September 30, 1999, net sales decreased
8.8 percent to $9,086,000 from $9,965,000 in the prior year's period.
The sales reduction in the third quarter was attributed to lower sales
in the coin operated amusement and leisure markets. Gross operating
margin, as a percentage of sales was 16.1 percent, or $1,462,000,
compared to 15.9 percent, or $1,586,000, for the same period last
year. Engineering, selling, administrative and amortization
expenditures decreased $22,000 to $1,303,000 from $1,325,000 in the
third quarter of 1998. The Company reported net earnings of $31,000,
or 1 cent per basic and diluted share, compared to net earnings of
$131,000, or 3 cents per basic and diluted share, for the comparable
1998 quarter. The Company did not recognize any income tax expense in
the quarterly periods due to the reduction in its income tax valuation
allowance.
Nine Months Ended September 30, 1999 and 1998
For the nine months ended September 30, 1999, net sales decreased 8.2
percent to $29,327,000 from $31,931,000 in the prior year's period.
The Company anticipates its amusement sales slowdown to last through
the balance of 1999. Gross operating margin, as a percentage of sales
was 15.8 percent, or $4,620,000, compared to 16.4 percent, or
$5,230,000, for the same period last year. The decrease in gross
operating margin is attributed to lower sales in the Company's
amusement and leisure markets and lower production which caused lower
overhead absorption. Engineering, selling, administrative and
amortization expenditures increased $61,000 to $4,093,000 from
$4,032,000 in the first nine months of 1998. The increase is
attributed the Company expanding its international sales efforts. The
Company reported net earnings of $190,000, or 4 cents per basic and
diluted share, compared to net earnings of $832,000, or 19 cents per
basic share and 18 cents per diluted share, for the comparable 1998
period. The Company did not recognize any income tax expense in the
nine month periods due to the reduction in its income tax valuation
allowance.
Liquidity and Capital Resources
As of September 30, 1999, cash and cash equivalents increased $69,000
from year end 1998. This increase was due to a timing difference
caused by deposits in transit. On a daily basis, the Company utilizes
a sweep account to minimize its cash on hand which reduces its
outstanding balance on its line of credit and its interest expense.
Accounts receivable decreased $136,000 to $5,013,000 from $5,149,000.
Receivable days were averaging 50, comparable to 44 at the end of
1998. Inventory increased $2,625,000 to $11,205,000 from $8,580,000
at year end 1998. The increase is attributed to higher levels of raw
materials and finished goods on hand at the end of the third quarter.
Current liabilities decreased $910,000 to $3,305,000 from $4,215,000
at year end 1998. The decrease is attributed to lower accounts
payable and accrued expenses attributed to lower sales. Long-term
liabilities increased $2,597,000 to $5,333,000 compared to $2,736,000
at December 31, 1998. This increase was attributed to the Company's
line of credit of $3,100,000 at September 30, 1999 whereas the Company
had an unused line of credit at year-end, 1998. Working capital
increased by $3,275,000 since year-end 1998, to $13,475,000,
shareholders' equity was $2.87 per share and its current ratio was
5.08 to 1.
<PAGE>
Year 2000 Disclosure
The term Y2K is used to refer to a worldwide computer-related problem
where software programs and embedded programs in microprocessors will
not work properly when processing a date greater than December 31,
1999. This problem results from using two digits to denote the third
and fourth digit of a four-digit year whereas a program assumes 19 to
be the first two digits. Many existing programs will continue to
assume the 19 as the first and second digit while a 20 or greater is
required. A method of fixing the problem is for all years to be
denoted in a four-digit field and the programs to recognize all four
digits as the year. This Y2K problem has resulted in significant
worldwide concern about the future operations of businesses and other
institutions.
All critical systems utilized by the Company have already been made Y2K
compliant in an undertaking which began in 1997. Management believes
that there are no Y2K issues with respect to the functionality of any
products sold in the past or expected to be sold in the near future.
The unknown area of Y2K related exposure is with the Company's
suppliers. Although management has an ongoing program of supplier
inquiry and evaluation, management cannot and will not have complete
assurance that all of its critical suppliers are Y2K compliant. There
can be no assurance that the systems of other companies which the
Company deals with will be timely converted or that such failure to
convert by another company could not have an adverse effect on the
Company's financial position, results of operations or cash flows.
Currently, no material compliance costs are expected to be incurred and
management expects to make contingency plans as necessary.
Forward Looking Statements
Because the Company wants to provide shareholders and potential
investors with more meaningful and useful information, this report may
contain certain forward-looking statements (as such term is defined in
the Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended) that reflect the Company's current
expectations regarding the future results of operations, performance
and achievements of the Company. Such forward-looking statements are
subject to the safe harbor created by the Private Securities
Litigation Reform Act of 1995. The Company has tried, wherever
possible, to identify these forward-looking statements by using words
such as "anticipate," "believe," "estimate," "expect" and similar
expressions. These statements reflect the Company's current beliefs
and are based on information currently available to it. Accordingly,
these statements are subject to certain risks, uncertainties and
assumptions which could cause the Company's future results,
performance or achievements to differ materially from those expressed
in, or implied by, any of these statements which are more fully
described in our Securities and Exchange Commission filings. The
Company undertakes no obligation to release publicly the results of
any revisions to any such forward-looking statements that may be made
to reflect events or circumstances after the date of this Report or to
reflect the occurrence of unanticipated events.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Company's market risk
during the nine month period ended September 30, 1999. For additional
information refer to Item 7 in the Company's Annual Report in form
10-K for the year ended December 31, 1998.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits & Reports on Form 8-K
(a)Exhibits:
Exhibit 10.1 Amendment No. 1 to Sales Representative Agreement dated
August 30, 1999.
Exhibit 10.2 Amendment No. 1 to Promissory Note dated August 30,
1999.
Exhibit 10.3 Voting Rights Agreement dated August 30, 1999.
Exhibit 27 Financial Data Schedule
(b)Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended
September 30, 1999.
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.
WELLS-GARDNER ELECTRONICS CORPORATION
Date: November 10, 1999 By: /s/ GEORGE B. TOMA
George B. Toma CPA, CMA
Vice President of Finance,
Chief Financial Officer and Treasurer
Amendment No. 1 to
Sales Representative Agreement
This AMENDMENT NO. 1 TO SALES REPRESENTATIVE AGREEMENT (the
"Amendment") is made and entered into this 30th day of August, 1999, to
be effective as of August 1, 2000 (the "Effective Date"), by and among
WELLS-GARDNER ELECTRONICS CORPORATION, an Illinois corporation (the
"Company"), JAMES INDUSTRIES, INC., an Illinois corporation (the
"Representative"), JAMES J. ROBERTS, JR. ("Roberts") and JOHN R. BLOUIN
("Blouin").
WHEREAS, the Company, the Representative, Roberts and Blouin
entered into that certain Sales Representative Agreement on December 9,
1998 (the "Original Agreement"); and
WHEREAS, the parties desire to enter into this Amendment and modify
certain terms and provisions of the Original Agreement as of the
Effective Date;
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements contained herein and other valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Defined Terms. Capitalized terms used in this Amendment and
not otherwise defined shall have the same meaning set forth in the
Original Agreement.
2. Section 3 of the Original Agreement is hereby deleted in its
entirety and replaced with the following:
3. Exclusivity. The Representative shall be the Company's
exclusive sales representative for the Products for the Markets in the
United States of America, Canada and Mexico (the "Territory") only for
the accounts listed on Exhibit A attached hereto (the "Current Accounts")
and for New Accounts.
4. Section 5(a), (b), (c), (d) and (d)(sic) of the Original
Agreement are hereby deleted in their entirety and replaced with the
following:
5. Commissions:
(a) Monthly Commission. On the 45th day after the end
of each month, the Company shall pay to the
Representative a commission (the "Monthly
Commission") consisting of:
(i) a commission of 2.70% of Net Sales of Products
in the Markets to the Current Accounts for such
month; plus
(ii) a commission of 1.50% of Net Sales of T-models,
excluding consigned panels and controllers for
such month.
<PAGE>
(b) New Customer Commission. In addition to the
commission payable pursuant to Section 5(a), the
Company shall pay to the Representative a commission
of 4.0% of the Net Sales of Products to New Accounts
for the first twenty-four (24) months of Net Sales
to such New Accounts. After the first twenty-four
(24) months, the Company shall pay the
Representative the rate of commission listed in
Section 5(a) for such Net Sales to New Accounts.
(c) Omitted.
(d) Excluded Transactions. Notwithstanding Section 5(a)
above, the Company shall pay no commission on the
following transactions:
(i) Service sales, including parts, labor, finished
goods and refurbished monitors to any operators
and distributors;
(ii) Sales to OEM accounts other than those listed
on Exhibit A attached hereto or are New
Accounts;
(iii) Sales to the Representative and its
affiliates; provided that the Company gives
such companies the best available export
pricing and terms.
(d)-1 All Commissions to be paid to the
Representative hereunder shall be based upon the
Company's invoice price to customers for its
Products, excluding amounts invoiced for taxes,
freight, C.O.D. charges or insurance.
5. After Section 5(h), the following new Section 5(i) shall be
added:
(i) On all orders accepted by the Company, the Company agrees
to not negotiate a commission below 2.0% to the Sales
Representative regardless of the selling price or margin.
Any decrease in commission will be negotiated and agreed
upon in writing by Blouin or Roberts only if the
cumulative gross margin or sales to a Current Account or
New Account is less than 12%. This agreed commission
percentage excludes t-models and dollar bill validation
sales.
6. Exhibit B and C of the Original Agreement are hereby deleted
in their entirety.
<PAGE>
7. Exhibit A of the Original Agreement is hereby deleted in its
entirety and replaced with the following:
EXHIBIT A
Current Accounts
Customer A Customer B Customer C
Customer D Customer E Customer F
Customer G Customer H Customer I
Customer J Customer K Customer L
Customer M Customer N Customer O
Customer P Customer Q Customer R
Customer S Customer T Customer U
Customer V Customer W Customer X
Customer Y Customer Z Customer AA
Customer BB Customer CC
8. All other terms and conditions of the Original Agreement shall
remain in full force and effect.
9. This Amendment may be executed in counterparts and shall
together constitute the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first above written.
WELLS-GARDNER ELECTRONICS CORPORATION JAMES INDUSTRIES, INC.
By: Anthony Spier By: James J. Roberts, Jr.
John R. Blouin
<PAGE>
AMENDMENT NO. 1 TO PROMISSORY NOTE
This AMENDMENT NO. 1 to Promissory Note (the "Amendment") is made
this 30th day of August, 1999, effective as of September 1, 1999 by
James Industries, Inc., an Illinois corporation (the "Industries"),
James J. Roberts, Jr., ("Roberts"), and John R. Blouin ("Blouin")
(Industries, Roberts and Blouin are referred to herein as a "Borrower"
and collectively as the "Borrowers"), to the order of Wells-Gardner
Electronics Corporation, an Illinois corporation (the "Lender"). This
Amendment modifies certain terms and provisions of that certain
Promissory Note made by Borrowers to Lender as of December 9, 1998 (the
"Original Note"). Capitalized terms used herein and not otherwise
defined shall have the meaning set forth in the Original Note.
The undersigned hereby agree to amend the Note as follows:
1. Commencing with the payment of the Monthly Installment for August
2000, the Interest Rate shall be equal to Prime Rate plus 200 basis
points.
2. Section 1.4 shall be deleted in its entirety and replaced with the
following language:
1.4 Principal at Maturity. The entire unpaid principal balance of
the Loan shall be due and payable on the earlier to occur of (i) August
15, 2001 or (ii) the date which is six (6) months after the date notice
of termination of the Sales Representative Agreement is given (the
"Maturity Date").
3. Schedule A shall be deleted in its entirety and replaced with the
attached Schedule A.
4. All other terms and conditions of the Original Note shall remain in
full force and effect.
5. This Amendment may be executed in counterparts and shall together
constitute the same Note.
IN WITNESS WHEREOF, each of the undersigned have caused this
Amendment to be executed as of the date first written above.
JAMES INDUSTRIES, INC.
By: JAMES J. ROBERTS, JR.
JOHN R. BLOUIN
<PAGE>
VOTING RIGHTS AGREEMENT
This AGREEMENT dated as of the 30th day of August, 1999, by and
among John R. Blouin ("Blouin"), Wells-Gardner Electronics Corporation,
an Illinois corporation (the "Company"), James Industries, Inc., an
Illinois corporation ("JI"), and James J. Roberts, Jr. individually and
as trustee of the James J. Roberts, Trust, UTA Dated 01-23-91
(collectively "Roberts") (each of Blouin, JI and Roberts, a
"Shareholder");
WHEREAS, Roberts and Blouin own beneficially all of the outstanding
Capital Stock of JI and Roberts owns beneficially 588,647 of the issued
and outstanding Common Shares of the Company (which Common Shares,
together with any Common Shares of the Company hereafter acquired by
Roberts or JI are hereinafter referred to as "Roberts' Common Shares");
WHEREAS, all of such Roberts' Common Shares are pledged to various
pledgees as collateral for loans; and
WHEREAS, the Shareholders deem it to be in their mutual best
interest and in the best interests of all of the Company's shareholders
that an agreement be entered into concerning the voting of the parties'
Common Shares for directors of the Company; and
WHEREAS, the Company is amending its Sales Representative Agreement
(the "Representative Agreement") with JI, Roberts and Blouin
concurrently with the execution hereof;
NOW, THEREFORE, in consideration of the premises, mutual covenants
and agreements contained herein, it is hereby agreed as follows:
1. Voting For Directors.
(a) Until Termination of the Representative Agreement (as
hereinafter defined) or December 31, 2003, whichever shall first occur,
the Shareholders shall vote (and, if applicable, shall direct all
pledgees to vote) their Common Shares of the Company at every election
of directors of the Company, for the election of such slate of nominees
as the nominating committee of the Board of Directors (or if there is no
nominating committee, then such other committee, or the Board of
Directors, as the case may be, performing such function) shall
designate. Until Termination of the Representative Agreement or
December 31, 2003, whatever shall first occur, neither Roberts nor
Blouin shall be a nominee, stand for election or serve as a member of
the Board of Directors.
(b) The obligations of the parties under this paragraph 1 shall
terminate with respect to any Common Shares of the Company which they
transfer in a bona fide sale or exchange for value.
(c) The obligations of each of the parties under this Agreement
shall also be binding upon any of their transferees, except as otherwise
provided herein.
<PAGE>
2. Death. Within ninety (90) days after the death of each
Shareholder, the executor or administrator of any Shareholder's estate
and the successor trustee of any party shall notify the Company of the
provisions of his will and the provisions of a trust, if any, governing
the distribution of that Shareholder's Common Shares. Such executor or
administrator and successor trustee and all beneficiaries and heirs,
devises and legatees of such party, shall be bound by the provisions of
paragraph 1 hereof.
3. Additional Definition. "Termination of the Representative
Agreement" shall be deemed to occur if such agreement terminates under
paragraph 14 thereof, except that in the event of a termination of the
Representative Agreement by the Company under paragraph 14(c) thereof,
for purposes of this Agreement, Termination shall be deemed to occur on
the later to occur of (a) December 31, 2003, or (b) at the end of any
additional period for which the Representative Agreement had then been
automatically renewed under paragraph 14(a) thereof.
4. Endorsement on Stock Certificates. All certificates
representing Common Shares shall be endorsed as follows:
"The voting of the shares representated hereby are subject to
restrictions and agreements contained in an agreement dated as
of August 30, 1999 by and among Wells-Gardner Electronics
Corporation and certain of its shareholders, a copy of which
is on file with the Secretary of Wells-Gardner Electronics
Corporation."
5. Termination and Amendment. Anything to the contrary
notwithstanding, this Agreement shall terminate and have no further
effect on the earlier of (a) any act or event which provides for
termination elsewhere in this Agreement, or (b) the Termination of the
Representative Agreement, or (c) December 31, 2003. This Agreement may
be altered, amended or terminated (except as otherwise provided herein)
at any time only pursuant to an agreement in writing, executed by or on
behalf of the Company, JI and such of the other parties hereto (or their
successors).
6. Entire Agreement. This Agreement constitutes the entire
agreement and final understanding of the parties with respect to the
subject matter hereof and supersedes and terminates any and all prior
voting agreements, prior and/or contemporaneous communications and/or
agreements between the parties, whether written or verbal, express or
implied, direct or indirect, relating in any way to the subject matter
hereof including, but not limited to the Voting Agreement dated April
26, 1994, the Voting Rights Agreement dated February 29, 1996 and the
Voting Rights Agreement dated December 9, 1998.
7. Notices. All notices, offers and acceptances hereunder shall
be in writing and shall be deemed to be communicated (except as
otherwise provided herein) when delivered in person or deposited in the
U.S. mail, postage prepaid, by registered mail, addressed to the party
concerned at the address appearing on the Company's records or at such
other or additional place as such party may designate by notice given in
accordance with the provisions hereof to the other parties.
<PAGE>
8. Benefit. This Agreement shall be binding as provided herein
upon the parties, their heirs, devisees, legatees, beneficiaries, legal
representatives, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
WELLS-GARDNER
ELECTRONICS CORPORATION JAMES INDUSTRIES, INC.
By: Anthony Spier By: James J. Roberts, Jr.
James J. Roberts, Jr.
Trust UTA Dated 01-23-91
John R. Blouin
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 95
<SECURITIES> 0
<RECEIVABLES> 5,089
<ALLOWANCES> 76
<INVENTORY> 11,205
<CURRENT-ASSETS> 16,780
<PP&E> 10,911
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<SALES> 29,327
<TOTAL-REVENUES> 29,327
<CGS> 24,707
<TOTAL-COSTS> 4,093
<OTHER-EXPENSES> 337
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 281
<INCOME-PRETAX> 190
<INCOME-TAX> 0
<INCOME-CONTINUING> 190
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 190
<EPS-BASIC> .04
<EPS-DILUTED> .04
</TABLE>
