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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-QSB
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[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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Commission file number 1-8311
SOURCE SCIENTIFIC, INC.
(Exact name of small business issuer as specified in its charter)
California 95-2943936
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7390 Lincoln Way, Garden Grove, California 92641
(Address of principal executive offices) (Zip Code)
(714)898-9001
Issuer's telephone number
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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 __.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No __.
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of May 16, 1997:
34,540,004
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Transitional Small Business Disclosure Format (Check one): Yes __ No X .
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<PAGE>
ITEM 1. Financial Statements:
SOURCE SCIENTIFIC, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 31, 1997 and June 30, 1996
MARCH 31, 1997 JUNE 30, 1996
-------------- -------------
Current Assets:
Cash and cash equivalents $ 73,000 $ 162,000
Accounts receivable, net 367,000 791,000
Inventories 1,140,000 1,263,000
Other current assets 152,000 215,000
---------- -----------
Total current assets 1,732,000 2,431,000
Property and equipment, net 68,000 72,000
Excess of cost over fair value of net
assets acquired, less accumulated
amortization of$33,000 (March, 1997);
$24,000 (June, 1996) 57,000 66,000
Other assets, net 42,000 52,000
----------- -----------
Total assets $1,899,000 $2,621,000
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 373,000 $ 691,000
Accrued expenses 175,000 239,000
Deferred revenue 11,000 0
Customer deposit 63,000 0
Notes payable, current portion 846,000 228,000
Deferred rent, current portion 35,000 36,000
--------- ---------
Total current liabilities 1,503,000 1,194,000
Convertible debentures 0 629,000
Deferred rent 215,000 230,000
--------- ---------
Total liabilities 1,718,000 2,053,000
--------- ---------
Shareholders' equity:
Common stock; no par value,
authorized 75,000,000 shares;
34,540,004 and 20,152,919 shares
issued and outstanding at March
31, 1997 and June 30, 1996,
respectively 21,232,000 20,592,000
Accumulated deficit (21,051,000) (20,024,000)
---------- ----------
Total shareholders' equity 181,000 568,000
---------- ----------
Total liabilities and
shareholders' equity $1,899,000 $2,621,000
========= =========
(See notes to consolidated financial statements.)
<PAGE>
SOURCE SCIENTIFIC, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS For the Three and Nine Months Ended March
31, 1997 and March 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
------------------------ ------------------------
1996 1997 1996 1997
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Product sales $ 438,000 $1,172,000 $1,661,000 $2,505,000
Research contract sales 20,000 28,000 62,000 62,000
Service contract sales 302,000 377,000 917,000 1,234,000
------- ----------- ----------- ---------
Total Net revenues 760,000 1,577,000 2,640,000 3,801,000
------- --------- --------- ---------
Cost of product sales 397,000 706,000 1384,000 1,644,000
Cost of research contract sales 10,000 16,000 34,000 32,000
Cost of service contract sales 227,000 214,000 618,000 648,000
------- ------- -------- ---------
Total cost of revenues 634,000 936,000 2,036,000 2,324,000
------- ------- ---------- ---------
Gross profit 126,000 641,000 604,000 1,477,000
Selling, general and administrative 327,000 333,000 967,000 1,098,000
Research and development 206,000 138,000 581,000 409,000
------- ------- -------- -------
Operating income (loss) (407,000) 170,000 (944,000) (30,000)
------- ------- ------- ------
Interest, net (41,000) (59,000) (83,000) (70,000)
--------- ------ -------- --------
Net income (loss) ($448,000) $111,000 ($1,027,000) ($100,000)
======= ======= ========= =======
Per common share net income (loss) ($0.02) $0.01 ($0.03) ($0.01)
==== ==== ==== ====
Weighted average number of
common shares outstanding 29,519,238 18,096,000 29,519,238 18,096,000
========== ========== ========== ==========
</TABLE>
(See notes to consolidated financial statements.)
<PAGE>
SOURCE SCIENTIFIC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended March 31, 1997 and March 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months Ended
March 31
---------------------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) ($1,027,000) ($100,000)
--------- -------
Adjustments to reconcile income to net cash used
in operating activities
Depreciation and amortization 32,000 97,000
Effect on cash of changes in operating assets and liabilities
Accounts receivable 424,000 (341,000)
Inventories 123,000 (82,000)
Other current assets and other assets 73,000 (62,000)
Accounts payable and accrued expenses (357,000) (14,000)
Other liabilities 49,000 0
Deferred rent (16,000) (10,000)
------ ------
Total adjustments 328,000 (412,000)
------- -------
Net cash used in operating activities (699,000) (512,000)
------- -------
Cash flows from investing activities:
Capital expenditures (19,000) (12,000)
-------- --------
Net cash used in investing activities (19,000) (12,000)
------- -------
Cash flows from financing activities:
Change in Redeemable Series C Preferred Stock 0 0
Issuance of common stock 11,000 0
Proceeds from notes 819,000 373,000
Payments or cancellation of notes (200,000) 132,000
-------- -------
Net cash provided by financing activities 629,000 505,000
------- -------
Net increase (decrease) in cash and cash equivalents (89,000) (19,000)
Cash and cash equivalents at beginning of period 162,000 35,000
------- ---------
Cash and cash equivalents at end of period $73,000 $16,000
====== ======
</TABLE>
Non Cash Transactions
During the nine months ended March 31, 1997, debentures in the aggregate of
$629,000 were converted to common stock.
(See notes to consolidated financial statements.)
<PAGE>
SOURCE SCIENTIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996
NOTE 1 - INTERIM ACCOUNTING POLICY
The accompanying consolidated financial statements are unaudited, but in the
opinion of the Management of Source Scientific, Inc. and its subsidiaries (the
"Company"), such unaudited statements include all adjustments consisting of
normal recurring accruals necessary for a fair presentation of the financial
position of the Company and its consolidated subsidiaries as of March 31, 1997,
and the results of operations and changes in cash flow for the three-month and
nine-month periods ended March 31, 1997, and March 31, 1996. Although the
Company believes that the disclosures in these financial statements are adequate
to make the information presented not misleading, certain information normally
included in financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The results of operations
for the three-month and nine-month periods ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full year.
NOTE 2 - PER COMMON SHARE AMOUNTS
Per common share amounts are determined by dividing the weighted average number
of common shares and common share equivalents outstanding during the period by
the relevant net loss.
NOTE 3 -INVENTORIES:
Inventories are summarized as follows:
March 31, June 30,
1997 1996
Raw materials $ 826,000 $ 860,000
Work in process 126,000 322,000
Finished goods 108,000 71,000
----------- -----------
Net inventories $1,140,000 $1,263,000
========= =========
NOTE 4. NOTES PAYABLE:
Notes Payable consist of the following:
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
-------- --------
<S> <C> <C>
Note payable in the original principal amount of $180,000 dated September, 1995,
to Biopool International ("Biopool"), bearing interest at 7% per annum until
March 1996, at which time the rate increased to 8% per annum, unsecured,
principal payments of $20,000 on each 15th day of the months July through
November 1996; with a final principal payment of $30,000 together with
interest of $6,034, due on December 15, 1996 (the "Biopool Note"). On October
22, 1996, the Company paid the remaining principal balance and accrued
interest in the amount of $75,589. $ 0 $ 130,000
Note payable dated October 10, 1996, secured by accounts receivable, to Concord
Growth Corporation, ("Concord")bearing interest at the initial
rate of 11.0% 169,000 0
Note payable dated February 6, 1997, secured by the Company's inventory and
equipment, to Boston Biomedica, Inc., ("BBI") bearing interest at the
initial rate of 15%. 500,000 0
<PAGE>
Note payable to BBI, under the same terms and conditions as the Note payable
dated February 6, 1997, for additional funds received by
the Company on March 17, 1997. 150,000 0
Notes payable, unsecured, non-interest bearing and interest bearing at rates up
to 10% per annum, with due dates ranging from July 1996 to
April 1997, certain of which are past due and are in technical default. 27,000 98,000
------ -------
$ 846,000 $ 228,000
======= =======
NOTE 5. CONVERTIBLE DEBENTURES:
Convertible Debentures consist of the following:
March 31, June 30,
1996 1996
Convertible debentures, interest at 12% per annum payable annually, principal
due on January 31, 1998, payable to nine individuals unrelated to the Company
and one individual owning more than 10% of the Company's common stock, who is
not an officer or director, converted to equity on February 1, 1997 into
shares of the
Company's common stock at the conversion price of $0.05 per share. $ 0 $ 629,000
===== ========
</TABLE>
ITEM 2. Management's Discussion and Analysis of Operations
and Results of Operations
Results of Operations
Comparison of 1996 to 1995, three-month and nine-month periods ended March 31
The following table shows the changes in operations between the three-month
and nine-month periods ended March 31, 1996 and March 31, 1997. During the third
quarter ended March 31, 1997, sales declined by approximately 51.8% compared to
the third quarter ended March 31, 1996. Sales also declined for the nine-month
period ended March 31, 1997, by approximately 30.5% compared to the nine-month
period ended March 31, 1996. For both the 3-month and 9-month periods, revenues
declined due to delayed renewals of several manufacturing contracts and extended
commencement dates for product service contracts with two major customers. The
total backlog of services and products were $2,597,733 at March 31, 1997,
compared to $2,594,504 at March 31, 1996. The current backlog of $2.5 million
represents purchase orders scheduled to generate revenues during the next 12 to
18 months, although there can be no assurance that filling such purchase orders
will prove profitable to the Company.
<TABLE>
<CAPTION>
3 MONTHS ENDED 3 MONTHS ENDED CHANGE FROM
MARCH 31, 1996 MARCH 31, 1997 MAR. 1996 TO MAR. 1997
-----------------------------------------------------------------------------
(000's) % of (000's) % of (000's)
Amount Revenues Amount Revenues Amount %
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net revenues $1,577 100.0 $ 760 100.0 ($817) -51.8
Cost of revenues 936 59.4 634 83.4 (302) -32.3
--- ---- --- ---- ----- -----
Gross profit 641 40.6 126 16.6 (515) -80.3
--- ---- --- ---- ---- -----
Selling, general and administration 333 21.1 327 43.0 (6) -1.8
Research and development 138 8.8 206 27.1 68 49.3
--- --- --- ---- -- ----
Total operating expenses 471 29.9 533 70.1 62 13.2
--- ---- --- ---- -- ----
Operating income (loss) 170 10.8 (407) -53.6 (577) -339.4
Interest, net 59 3.7 41 5.4 (18) -30.5
----- ---- -- --- ---- -----
Net income (loss) $111 7.0 ($448) -58.9 ($559) -503.6
==== ====== ====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
9 MONTHS ENDED 9 MONTHS ENDED CHANGE FROM
MARCH 31, 1996 MARCH 31, 1997 MAR. 1996 TO MAR. 1997
-----------------------------------------------------------------------------
% of % of
Amount Revenues Amount Revenues Amount % Change
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net revenues $3,801 100.0 $2,640 100.0 $1,161 -30.5
Cost of revenues 2,324 61.1 2,036 77.1 (288) -12.4
----- ---- ----- ---- ---- ----
Gross profit 1,477 38.9 604 22.9 (873) -59.1
----- ---- --- ---- ----- -----
Selling, general and administrative 1,098 28.9 967 36.6 (131) -11.9
Research and development* 409 10.8 581 22.0 172 42.1
------ ---- ----- ---- --- ----
Total operating expenses 1,507 39.6 1,548 58.6 41 2.7
----- ---- ----- ---- -- ---
Operating income (loss) (30) -0.8 (944) -35.8 (914) 3,046.7
Interest, net (70) 1.8 (83) 3.1 13 18.6
--- --- --- --- --- ----
Net (Loss) (100) -2.6 (1,027) -38.9 (927) 927.0
==== ====== ====== =====
</TABLE>
Net Revenues. Net revenues decreased by 51.8% for the quarter ended March 31,
1997 compared to the quarter ended March 31, 1996. Revenues also declined by
30.5% for the nine-month period ended March 31, 1997 compared to the nine-month
period ended March 31, 1996. Revenues declined due to delayed renewal of several
manufacturing contracts and extended commencement dates for product service
contracts with two major customers. On an ongoing basis, the Company has an
average of 20 quotes submitted to potential customers to provide research and
development, manufacturing and product service contracts, although there is no
assurance such contracts will be awarded to the Company, or that in the event
any such contracts are awarded, sufficient economic value will be realized to
make a significant difference in the Company's profitability.
Cost of Revenues. The cost of revenues as a percentage of revenues for the
three-month period ending March 31, 1997, increased to 83.4%, compared to 59.4%
for the three-month period ending March 31, 1996. The increase of cost of
revenues as a percentage of revenues for the nine-month period ending March 31,
1997, to 77.1%, compared to 61.1% for the nine-month period ending March 31,
1996, was due to: (i) delayed commencement dates of new and renewal service and
manufacturing contracts; (ii) a large portion of raw materials and finished
goods of the Alton Subsidiary's Lamda product line sold at standard cost as part
of a settlement agreement with a previous customer; and (iii) the lower sales
volume and a less profitable mix of products shipped and services, resulting in
under-absorption of manufacturing overhead. Because average profit margins are
greater on service contract revenues than on sales of manufactured products, the
overall cost of goods sold for the quarter ended March 31, 1997, reflects an
overall higher cost associated with the types of manufactured products sold
during the period.
Operating Expenses. Total operating expenses increased as a percentage of
revenues from 29.9% for the three- month period ended March 31, 1996, to 70.1%
for the three-month period ended March 31, 1997, and from 39.6% for the
nine-month period ended March 31, 1996, to 58.6% for the nine-month period ended
March 31, 1997. Research and development costs for the nine-month period ended
March 31, 1997, reflect costs to develop the Company's new product,
PlateMate(TM). Of the three major clinical chemistry trade shows and exhibits
attended by the Company in the calendar year 1996, expenses for the two largest
exhibits were incurred early in the nine-month period ended March 31, 1997. In
addition, international travel related to major new business contributed to the
higher costs.
Interest Expense. Interest costs decreased 30.5% in the three-month period ended
March 31, 1997, compared to the same period last year due to a more favorable
interest rate through the utilization of the new credit facility provided by
Concord effective in October 1996. Interest charges increased 18.6% during the
nine-month period ended March 31, 1997, compared to the same period last year
due to a limited use of the Company's credit facility in the nine-month period
ended March 31, 1996.
<PAGE>
Liquidity and Capital Resources and Plan of Operation
The Company's working capital decreased from $1,237,000 at June 30,
1996, to approximately $229,000 at March 31, 1997. To provide liquidity for the
Company's operations during the fiscal year ended June 30, 1996, the Company
issued convertible debentures (the "1996 Debentures") in the aggregate amount of
$629,000; thereafter, on October 10, 1996, the Company secured a line of credit
with Concord at an initial variable interest rate of prime plus 2.75% for
borrowings up to $1,000,000 based on 80% of the eligible accounts receivable.
During December 1996 and January 1997, the Company borrowed an additional
aggregate of $250,000 from Concord on "accommodation notes" (the "Accommodation
Notes"), secured by the Company's inventory, under the terms and conditions of
the Company's October financing agreement with Concord. On February 6, 1997, the
Company borrowed $500,000 from Boston Biomedica, Inc. ("BBI"), as set forth
below.
Effective February 1, 1997, the holders of the 1996 Debentures
exercised their conversion rights at the then-current conversion price of $0.05
per share, plus interest accrued through and including January 31, 1997, and
converted their 1996 Debentures with interest into shares of the Company's
common stock. Pursuant to the terms and conditions of the 1996 Debentures, their
conversion price had been adjusted downward from $0.053, as to the 1996 A
Debentures, and $0.08, as to the 1996 B Debentures, to $0.05 per share of common
stock, due to the Company's inability to sustain profitability for the two
consecutive quarters ended June 30 and September 30, 1996.
On February 6, 1997, the Company and BBI executed a letter of intent
for the acquisition by a newly formed, wholly-owned subsidiary of BBI to acquire
the Company's assets, to assume certain of the Company's liabilities, and to
tender to the Company the sum of $2,144,000. Of such sum $250,000 is to be
placed in a 12-month escrow in support of the Company's representations and
warranties to BBI and its subsidiary and to act as an offset in the event that
the Company's tangible net book value at closing is less than $500,000. The
Company's board currently expects that virtually all of such to-be-escrowed
funds will be returned to BBI's subsidiary because the Company's tangible book
value is currently not expected to be materially in excess of $250,000 on the
closing date.
Concurrently with the execution of the letter of intent, BBI lent the
sum of $500,000 to the Company (the "BBI Demand Note"). The BBI Demand Note,
payable on demand, bears interest at the rate of fifteen percent (15%) per
annum, and is secured by all of the Company's inventory and equipment. Concord,
to facilitate repayment of the Accommodation Notes and the making of the BBI
Demand Note, partially subordinated to BBI Concord's security interest in
certain of the Company's assets that secured the remaining obligations to
Concord. Upon the Company's receipt of the proceeds of the BBI Demand Note, it
repaid the Accommodation Notes and paid delinquent rent due. On March 17, and
April 14, 1997, BBI lent the Company an additional $150,000 and $100,000,
respectively, on the same terms and conditions as the BBI Demand Note.
On March 26, 1997, the Company, BBI, and its wholly-owned subsidiary,
BBI-Source Scientific, Inc., executed the Asset Purchase Agreement. (See Item 5.
Subsequent Events.) The Company's board of directors has determined that the
opportunity provided through such transaction is the only viable alternative for
the Company's shareholders to realize value for their shares. In reaching this
conclusion, the board carefully considered a number of factors, including, among
other things, the financial condition and working capital needs of the Company,
its business and prospects. The board also considered the historical and recent
market prices of the Company's common stock, including the effect of the
delisting by the Boston Stock Exchange ("BSE") of the common stock, effective
February 27, 1997, due to the Company's inability to correct deficiencies
pursuant to the listing requirements. At the date of this Report, the common
stock continues to be quoted on the Electronic Bulletin Board.
In contemplation of the Asset Purchase Agreement, on February 19, 1997,
the Company's loan agreement with Concord was amended to: (i) reduce the ratio
of advances to accounts receivable from 80% to 70%; (ii) increase the interest
rate to prime rate plus 5%; (iii) reduce the monthly minimum interest payment
from $4,000 to $2,500; (iv) waive the early termination fee; and (v) extend the
loan agreement to April 30, 1997. On April 29, 1997, due to the delay in
completing the Asset Purchase Agreement, the loan agreement with Concord was
amended to: (i) extend the loan agreement to July 31, 1997; (ii) reduce the
maximum available credit to $500,000; and (iii) increase the monthly minimum
interest payment of the loan back to $4,000 per month.
<PAGE>
Pursuant to the exercise of stock options in 1994 and acquisition of
shares of common stock in the Company's 1990 reorganization, Mr. John Karsten
(Director and former Chief Financial Officer of the Company) acquired 323,875
shares of common stock. As payment for the shares, Mr. Karsten issued notes to
the Company in the aggregate amount of $161,937.50. The notes were
collateralized under a security agreement between Mr. Karsten and the Company by
the 323,875 shares. The board has determined that collectibility of the notes is
doubtful and that a condition incident to the Asset Purchase Agreement requires
the Company to retain funds incident to the costs of collection. Therefore, the
board approved the cancellation of the notes and the return of 323,875 shares of
common stock to the Company, effective February 20, 1997.
The Company did not have any material commitments for capital
expenditures as of March 31, 1997, or as of the date of this Report. The Company
has no long-term commitments, other than an annual lease obligation of between
$347,778 and $389,520 for its facility through January 31, 2002.
PART II -- OTHER INFORMATION
ITEM 5. Subsequent Events
The Company has filed a preliminary proxy statement with the Securities
and Exchange Commission for a Special Shareholders Meeting, anticipated to be
held on or about June 18, 1997. The shareholders will be asked to consider and
vote upon a proposal to approve the Asset Purchase Agreement, for the
acquisition of substantially all of the assets of the Company by BBI - Source
Scientific, Inc., and the related transactions contemplated thereby, including
the assumption of substantially all of the Company's liabilities and a cash
payment to the Company, and thereafter a dissolution of the Company and
distribution of its net remaining assets in cash to the Company's shareholders
of record on the date of dissolution of the Company. The closing date of such
acquisition and assumption is expected to be no later than June 30, 1997,
although there can be no assurance that the Company's shareholders will approve
such transactions or that the conditions precedent to the closing of such
transactions will be performed or waived by the parties to the Asset Purchase
Agreement.
Because acceptable business combination transaction partners and
alternative financing sources are not readily available to the Company,
management is constrained in developing and implementing alternative proposals
or business plans in the event the proposed Acquisition does not close. In such
event, there can be no assurances that (i) the Company will not fail, (ii) BBI
will not immediately demand repayment of the BBI Demand Note, (iii) the Company
will be able to adhere to the payment terms of its lease and related agreements,
and (iv) the Company will be able to repay its line of credit to Concord.
As of May 12, 1997, the Company had borrowed an aggregate of $750,000
under the BBI Demand Note, and was indebted to Concord in the approximate amount
of $189,000.
ITEM 6. Exhibits and representation on Form 8K
(a) Exhibits:
EX-10.34 Amendment to Loan Agreement, Amendment #2, February 14, 1997
EX-10.35 Amendment to Loan Agreement, Amendment #3, April 30, 1997
EX-27 Financial Data Schedule (included in the transmittal of
EDGAR document to the Securities and Exchange Commission)
(b) Reports:
Preliminary Proxy Statement, filed with the Securities and
Exchange Commission on May 12, 1997, as File Number 1-8311, is incorporated by
reference.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this Report to be signed on its behalf by the undersigned, thereto duly
authorized.
SOURCE SCIENTIFIC, INC.
By: /S/ RICHARD A. SULLIVAN
Date: 05-16-97 Richard A. Sullivan
President and Chief Executive Officer
By: /S/ MOKHTAR A. SHAWKY
Date: 05-16-97 Mokhtar A. Shawky
Chief Financial Officer
Exhibit EX-10.34
10-QSB 03-31-97
Page 1 of 2
AMENDMENT TO
LOAN AGREEMENT
Amendment #2
February 14, 1997
The LOAN AGREEMENT dated October 1, 1996 (the "Agreement"), between Concord
Growth Corporation, a California Corporation, and Source Scientific, Inc.; Alton
Instruments Corporation; and, Source Scientific Systems, Inc., (jointly and
severally as co-borrowers, may hereinafter be referred to individually, or
collectively as, "Borrower"), are hereby amended in the specific section(s) as
follows:
1.1(a) Loans. Notwithstanding the terms and conditions therein,
the Advance Rate shall be seventy percent (70%).
1.3 Accommodations. Borrower confirms that the Accommodation Note
dated October 1, 1996 is hereby terminated and
no further advances shall be made pursuant to
said Note.
2.2 Interest. Notwithstanding the terms and conditions con-
tained therein, the Interest Rate shall be
prime plus five percent (5%).
2.5 Monthly Minimum Fee. Notwithstanding the terms and conditions cont-
ained therein, the Monthly Minimum Fee shall be
two thousand five hundred dollars ($2,500), as of
2/1/97.
2.6. Early Termination Fee. In the event the Obligations are paid in full
prior to April 30, 1997 as agreed below, Len-
der shall waive the Early Termination Fee.
8.2. Effectiveness: Term Notwithstanding the terms and conditions contain-
ed therein, the Obligations shall be due and
payable no later than the end of the business day
on April 30, 1997.
The Amendment affects only the above listed Section(s) of the Agreement and all
other provisions of the Agreement shall remain unchanged and in force as written
or thereafter amended in writing.
(signatures appear on the following page)
<PAGE>
Exhibit EX-10.34
10-QSB 03-31-97
Page 2 of 2
This Amendment shall become effective when it is accepted and executed by an
authorized officer of Lender.
AGREED:
CO-BORROWER:
Source Scientific, Inc.
BY: /S/ RICHARD A. SULLIVAN
Richard A. Sullivan, President and CEO
(PRINT NAME AND TITLE)
DATE: 2/19/97
CO-BORROWER:
Alton Instruments Corporation
BY: /S/ RICHARD A. SULLIVAN
Richard A. Sullivan, President and CEO
(PRINT NAME AND TITLE)
DATE: 2/19/97
CO-BORROWER:
Source Scientific Systems, Inc.
BY: /S/ RICHARD A. SULLIVAN
Richard A. Sullivan, President and CEO
(PRINT NAME AND TITLE)
DATE: 2/19/97
ACCEPTED:
LENDER:
CONCORD GROWTH CORPORATION
BY:________________________________
--------------------------------
(PRINT NAME AND TITLE)
DATE:_____________________________
Exhibit EX-10.35
10-QSB 03-31-97
Page 1 of 2
AMENDMENT TO
LOAN AGREEMENT
Amendment #3
Dated: April 30, 1997
The LOAN AGREEMENT dated October 1, 1996 (the "Agreement"), between Concord
Growth Corporation, a California Corporation, and Source Scientific, Inc.; Alton
Instruments Corporation; and , Source Scientific Systems, Inc., (jointly and
severally as co-borrowers, may hereinafter to referred to individually, or
collectively as, "Borrower"), are hereby amended in the specific section(s) as
follows:
Section 1.1 (b) Loans. Notwithstanding the terms and conditions
contained therein, the Maximum Credit shall be
Five Hundred Thousand Dollars ($500.000).
Section 2.5 Monthly Minimum Fee. Notwithstanding the terms
and conditions contained therein, the Monthly Min-
imum Fee shall be Four Thousand Dollars ($4,000).
Section 8.2. Effectiveness: Term Notwithstanding the terms
and conditions contained therein, this Agree-
ment shall continue in full force and effect for
a term of three (3) months from the date hereof
and all Obligations shall be due and payable
in full at the expiration of said renewal Term.
The Amendment affects only the above listed Section(s) of the Agreement and all
other provisions of the Agreement shall remain unchanged and in force as written
or thereafter amended in writing.
(Signatures appear on the following page)
<PAGE>
Exhibit EX-10.35
10-QSB 03-31-97
Page 2 of 2
This Amendment shall become effective when it is accepted and executed by an
authorized officer of Lender.
AGREED:
CO-BORROWER:
Source Scientific, Inc.
BY: /S/ M.A. SHAWKY
M. A. Shawky, CFO
(PRINT NAME AND TITLE)
DATE: 4-29-97
CO-BORROWER:
Alton Instruments Corporation
Source Scientific, Inc.
BY: /S/ M.A. SHAWKY
M. A. Shawky, CFO
(PRINT NAME AND TITLE)
DATE: 4-29-97
CO-BORROWER:
Source Scientific Systems, Inc.
BY: /S/ M.A. SHAWKY
M. A. Shawky, CFO
(PRINT NAME AND TITLE)
DATE: 4-29-97
ACCEPTED:
LENDER:
CONCORD GROWTH CORPORATION
BY:_________________________________
---------------------------------
(PRINT NAME AND TITLE)
DATE:______________________________
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