<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the year ended January 31, 1997
Commission File Number 0-5653
BALA CYNWYD CORPORATION
(Exact name of registrant as specified in its charter)
---------------
New Jersey 22-1436237
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
301 City Avenue, Bala Cynwyd, PA 19004
-------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 667-8225
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
---------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities and 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__ No__ [X]__
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
Revenues for the most recent fiscal year were $108,245.
The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the average bid and asked prices of such stock as of
September 16, 1991 the last date on which price information was available from
the National Quotation Bureau, Inc., was $116,728. Shares of Common Stock held
by each officer and director and by each person who owns 10% or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily
conclusive and does not constitute an admission of affiliate status.
As of January 31, 1997, there were issued and outstanding 1,021,314 shares of
the registrant's Common Stock, par value $.05 per share.
<PAGE>
PART I
ITEM 1- BUSINESS
----------------
Until November 1, 1982, Bala Cynwyd Corporation, under its former name,
ITI Electronics, Inc. (the "Company"), was engaged primarily as a designer and
manufacturer of electrical equipment for the communications industry. On April
7, 1983, the Company sold its business, its name and all of its operating assets
for the aggregate price of $592,600. The entire consideration (subject to
adjustments) was paid in cash at settlement. In accordance with the terms of the
purchase agreement, the buyer assumed all warranties and returns on past sales.
On April 21, 1983, a Certificate of Amendment to the Certificate of
Incorporation was filed with the Secretary of State of New Jersey changing the
corporate name of the Company to Bala Cynwyd Corporation.
The Company currently has no full-time employees. Its Chairman,
President and Chief Executive Officer is Albert M. Zlotnick. Ms. Felice Bravato
serves as the Company's Secretary.
The Company is currently seeking merger or acquisition partners so as
to best utilize the Company's cash and corporate structure.
ITEM 2 - PROPERTY
-----------------
The Company presently maintains its corporate and administrative
offices at 301 City Avenue, Bala Cynwyd, PA. The Company utilizes a portion of
the premises occupied by Davic Associates, an investment firm owned by Albert M.
Zlotnick. Due to the curtailed nature of the Company's operations, Davic
Associates has, until further notice, waived the payment of rent by the Company.
No rent was paid in the fiscal years ended January 31, 1997 and 1996.
ITEM 3 - LEGAL PROCEEDINGS
--------------------------
On September 1, 1992, Antiquities of Nevada, Inc. defaulted on its
obligations to the Company under the loan documents, and on September 14, 1992,
Antiquities filed a Chapter 11 bankruptcy proceeding in the United States
Bankruptcy Court for the District of Nevada. On February 24, 1993, the Court
confirmed the amended Antiquities Plan or Reorganization, which provides, inter
alia, for a monthly repayment schedule of principal and interest owed to the
Company over a period of 22 months through November 30, 1994. Antiquities has
completed its payments to the Company (see Note 2 to financial statements).
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
No matters were submitted to a vote of security holders by the Company
during the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5 - MARKET OF THE REGISTRANT'S COMMON EQUITY
AND RELATED SECURITY HOLDERS MATTERS
--------------------------------------
Due to the infrequent and limited number of shares of common stock
traded, the common stock has been unpriced during the last two fiscal years. The
last available market price data for the common stock was on September 16, 1991
as follows: high bid: 1/4; low bid: 1/4, as reported by the National Quotation
Bureau, Inc. Such quotations represent prices in the over-the-counter market
between dealers in securities, and do not include retail mark-up, mark-down or
commission, and do not necessarily represent actual transactions, and cannot be
considered indicative of any reliable market value for the common stock.
- 2 -
<PAGE>
As of August 25, 2000, the Company's common stock, $.05 par value, was
held of record by approximately 650 record holders.
Holders of the Company's common stock are entitled to receive dividends
as and when they may be declared by the Company's Board of Directors. The
Company did not pay a cash dividend on its common stock during its last two
fiscal years and by reason of its present financial condition and contemplated
financial requirements, the Company does not anticipate paying any cash
dividends upon such stock in the foreseeable future.
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
------------------------------------------------------------------
General
-------
The Company presently conducts no business except for necessary
administrative matters and has ceased to be an operating company. As such, for
the fiscal years ended January 31, 1997 and 1996, the Company had no revenues
from operations. Given the virtual suspension of the Company's operations except
for necessary administrative matters, the Company's officers have waived further
compensation.
Results of Operations
---------------------
During the year ended January 31, 1997, the Company earned interest of
$19,214 as compared to $38,402 in the prior year, a decrease of $19,188. This
was due to the decrease in the interest income earned on the amount due from
shareholder and the resultant lower margins earned on the cash invested. Other
income of $89,031 and $31,900 for the years ended January 31, 1997 and 1996,
respectively, was from the recovery of a loan with Antiquities which was
previously reserved as uncollectible. General and administrative expense for the
year ended January 31, 1997 was $94,441, an increase of $40,363 compared with
the prior year amount of $54,078, which was due to an increase in management
fees.
Liquidity and Capital Resources
-------------------------------
During year ended January 31, 1997, the Company satisfied its working
capital needs from cash generated from interest income and the collection on the
loan to Antiquities that was previously reserved as uncollectible. As of January
31, 1997, the Company had working capital of $443,550. This working capital is
expected to provide the Company with sufficient capital while it seeks a merger,
acquisition or other arrangement by and between the Company and a viable
operating entity, although there is no assurance that this will occur.
Market Risk
-----------
The Company's market risk includes the potential decrease in interest
earned on its cash and cash equivalents arising from a decline in interest
rates.
Forward-Looking Statements
--------------------------
The Company desires to take advantage of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995 and is making this
cautionary statement in connection with such safe harbor legislation. This Form
10-KSB, and the Annual Report to Shareholders, Form 10- QSB or Form 8-K of the
Company or any other written or oral statements made by or on behalf of the
Company may include forward-looking statements which reflect the Company's
current views with respect to future events and financial performance. The words
"believe," "expect," "anticipate," "intends," "estimate," "forecast," "project,"
"should" and similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Report Act
of 1995. All forecasts and projections in this Form 10-KSB are "forward-looking
statements," and are based on management's current expectations of the Company's
near-term results, based on current information available pertaining to the
Company, including the risk factors noted below.
- 3 -
<PAGE>
The Company wishes to caution investors that any forward looking
statements made by or on behalf of the Company are subject to uncertainties and
other factors that could cause actual results to differ materially from such
statements. These uncertainties and other risk factors include, but are not
limited to: changing economic and political conditions in the United States and
in other countries, changes in governmental spending and budgetary policies,
governmental laws and regulations surrounding various matters such as
environmental remediation, contract pricing and international trading
restrictions, customer product acceptance and continued access to capital
markets and foreign currency risks. The Company wishes to caution investors that
other factors may, in the future, prove to be important in affecting the
Company's results of operations. New factors emerge from time to time and it is
not possible for management to predict all such factors, nor can it assess the
impact of each such factor on the business or the extent to which any factor, or
a combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements.
Investors are further cautioned not to place undue reliance on such
forward-looking statements as they speak only to the Company's views as of the
date the statement is made. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
ITEM 7 - FINANCIAL STATEMENTS
------------------------------
The Financial Statements of Bala Cynwyd Corporation for the years ended
January 31, 1997 and 1996 are included as part of this report following the
signature page of this report:
Cover page F-1
Independent Auditor's Report
(Margolis & Company P.C.) F-3
Balance sheet F-4
Statement of operations F-5
Statement of shareholders' equity F-6
Statement of cash flows F-7
Notes to financial statements for the
years ended January 31, 1997 and 1996 F-8 to F-10
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
----------------------------------------
The Company has had no disagreements with its independent accountants
during the Company's most recent fiscal years. The Company changed its
independent accounts during the year ended January 31, 1996 and did not have any
disagreements with the previous independent accountants.
PART III
ITEM 9 - DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
---------------------------------------------------------------
The executive officers and directors of the Company are as follows:
Name Age Position
---- --- --------
Albert M. Zlotnick 75 Chairman, President and Chief Executive Officer
Robert Zlotnick 34 None
Albert M. Zlotnick has served as the Company's Chairman and President
since April, 1979. Due to the curtailed nature of the Company's business
activities, Mr. Zlotnick does not devote full time to the affairs of the
Company. Mr. Zlotnick's primary occupation is as a private investor and
financial consultant. Mr. Zlotnick currently serves as the Chairman of the Board
of Directors of the following companies: P.H.C., Inc., Upward Technology
Corporation, Robin Industries, Inc., Electronic Data Controls Corp. and
Convention Centers, Inc. He also serves as a director of Comprehensive Holding
Corporation, S.A. of Geneva, Switzerland.
- 4 -
<PAGE>
Robert Zlotnick is a psychologist and the son of Albert M. Zlotnick. He
has served as a director since April, 1983.
The Company's By-Laws provide for the election of directors at the
annual meeting of shareholders, such directors to hold office until the next
annual meeting and until their successors are duly elected and qualified. The
By-Laws also provide that the annual meeting of shareholders be held each year
at such time, date and place as the Board of Directors shall determine by
resolution. Directors may be removed at any time for cause by the Board of
Directors and with or without cause by a majority of the votes cast by the
shareholders entitled to vote for the election of directors.
Officers will normally be elected at the annual meeting of the Board of
Directors held immediately following the annual meeting of shareholders, to hold
office for the term for which elected and until their successors are duly
elected and qualified. Officers may be removed by the Board of Directors at any
time with or without cause.
ITEM 10 - EXECUTIVE COMPENSATION
--------------------------------
No Executive Officer received in excess of $100,000 cash compensation
during the year ended January 31, 1997.
The following information is furnished for the Company's Chief
Executive Officer (see Note 5 to financial statements).
Summary Compensation Table
Years ended Total
Name and Principal Position January 31, Compensation
--------------------------- ----------- ------------
Albert M. Zlotnick, 1997 $57,500
Chief Executive Officer 1996 36,000
Chairman and President 1995 36,000
The Company does not provide any non-cash remuneration to its Executive
Officers and Directors. No pension plan or other retirement benefit for the
benefit of Executive Officers or Directors is funded by the Company. The Company
pays no remuneration to Directors for service as such. The Company has no
options, warrants or rights plans.
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
----------------------------------
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of August 18, 2000 by (i) each person or entity
known by the Company to own beneficially 5% or more of its outstanding Common
Stock, (ii) each director, and (iii) each executive officer, and (iv) all
directors and executive officers of the Company as a whole. Except as otherwise
noted below, the listed beneficial owner has sole voting and investment power
with respect to such shares and the address of the listed beneficial owner is
that of the Company.
NAME AND ADDRESS NO. OF SHARES OWNED PERCENT OF CLASS
---------------- ------------------- ----------------
Albert M. Zlotnick 554,404 54%
All directors and executive
officers as a group 554,404 54%
Robert Zlotnick, a Director of the Company by reason of being the son
of Albert M. Zlotnick, could be deemed to be a beneficial owner of these shares
owned by Albert M. Zlotnick, although Robert Zlotnick has no legal or equitable
interest in such shares and disclaims beneficial ownership of such shares.
- 5 -
<PAGE>
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
The Company utilizes a portion of the premises occupied by Davic
Associates, with which Mr. Zlotnick is a principal. Due to the curtailed nature
of the Company's operations Davic Associates has, until further notice, waived
the payment of rent by the Company.
The Company has made advances which bear interest at the prime rate to
Albert M. Zlotnick, president of the Company. The balance of advances, net of
repayments, was $7,588 at January 31, 1997 and was $451,005 at January 31, 1996.
On May 13, 1996, the amount due from shareholder of $451,005 was paid in full.
ITEM 13 - EXHIBITS, REPORTS ON FORM 8-K AND FINANCIAL STATEMENTS
----------------------------------------------------------------
(a) Exhibits:
The following Exhibits are filed as part of this report. Where such
filing is made by incorporation by reference (I/B/R), reference is made to
Commission file number 0-5653 unless another statement or report is identified
in parentheses.
Exhibit No. Description
----------- -----------
3A Articles of Incorporation of Registrant I/B/R
3B By - Laws of Registrant I/B/R
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the fourth
quarter of the year ended January 31, 1997.
(c) Financial Statements
The financial statements and related notes of the Company begin on page
F-1 in the appendix. The report of the independent certified public accountants
on the Company's financial statements is on page F-3 in the appendix.
- 6 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) 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.
BALA CYNWYD CORPORATION
By:/s/Albert M. Zlotnick
-----------------------------------------
ALBERT M. ZLOTNICK, Chairman
and Chief Executive Officer
Dated: August 25, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons in the capacities and
on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ Albert M. Zlotnick Chairman and Chief Executive Officer August 25, 2000
---------------------- (Principal Executive Officer and
ALBERT M. ZLOTNICK Principal Accounting Officer)
- 7 -
<PAGE>
BALA CYNWYD CORPORATION
=======================
FINANCIAL STATEMENTS
====================
FOR THE YEARS ENDED
JANUARY 31, 1997 AND 1996
==========================
F-1
<PAGE>
BALA CYNWYD CORPORATION
=======================
TABLE OF CONTENTS
FOR THE YEARS ENDED JANUARY 31, 1997 AND 1996
--------------------------------------------------------------------------------
PAGE
NUMBER
------
Independent Auditor's Report F-3
Financial Statements:
Balance sheet F-4
Operations F-5
Shareholders' equity F-6
Cash flows F-7
Notes to financial statements F-8 to F-10
F-2
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Board of Directors
Bala Cynwyd Corporation
Bala Cynwyd, Pennsylvania
We have audited the accompanying balance sheet of Bala Cynwyd Corporation as of
January 31, 1997, and the related statements of operations, shareholders' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The financial
statements of Bala Cynwyd Corporation as of January 31, 1996 were audited by
other auditors whose report dated April 22, 1996, expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bala Cynwyd Corporation as of
January 31, 1997, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Certified Public Accountants
Bala Cynwyd, PA
January 10, 2000
F-3
<PAGE>
BALA CYNWYD CORPORATION
=======================
BALANCE SHEET
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JANUARY 31,
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $444,201 $ 1,681
Receivables, litigation 16,129 -
Other receivable - 4,920
Due from shareholder 7,588 451,005
Prepaid and refundable income taxes - 1,182
-------- --------
$467,918 $458,788
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Due to affiliate $ 3,000 $ 3,000
Accrued expenses 16,250 19,742
Income taxes payable 5,118 -
-------- --------
24,368 22,742
-------- --------
Shareholders' equity:
Preferred stock, cumulative convertible,
$.05 par value; 500,000 shares authorized,
2,600 shares issued 130 130
Common stock, $.05 par value, 2,000,000
shares authorized, 1,054,419 shares issued 52,721 52,721
Additional paid-in capital 462,327 462,327
Accumulated deficit (52,062) (59,566)
-------- --------
463,116 455,612
Less treasury stock, at cost:
Preferred stock, 2,600 shares (5,000) (5,000)
Common stock, 33,105 shares (14,566) (14,566)
-------- --------
Net shareholders' equity 443,550 436,046
-------- --------
$467,918 $458,788
======== ========
</TABLE>
The notes to financial statements are an integral part of the above statement.
F-4
<PAGE>
BALA CYNWYD CORPORATION
=======================
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
YEAR ENDED
JANUARY 31,
1997 1996
-------- -------
Revenue:
Interest income $ 19,214 $38,402
Other 89,031 31,990
-------- -------
Total revenue 108,245 70,392
General and administrative expenses 94,441 54,078
-------- -------
Income before provision for income taxes 13,804 16,314
Provision for personal holding company income taxes 6,300 -
-------- -------
Net income $ 7,504 $16,314
======== =======
Net income per share, basic and diluted $ .01 $ .02
======== =======
The notes to financial statements are an integral part of the above statement.
F-5
<PAGE>
BALA CYNWYD CORPORATION
=======================
STATEMENT OF SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY STOCK
ADDITIONAL ---------------------
PREFERRED COMMON PAID-IN ACCUMULATED PREFERRED COMMON
STOCK STOCK CAPITAL DEFICIT STOCK STOCK
------------- --------- ------------- ----------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1995 $130 $52,721 $462,327 ($75,880) ($5,000) ($14,566)
Net income for year ended
January 31, 1996 16,314
----- ----------- ------------ ------ --------- -----------
Balance, January 31, 1996 130 52,721 462,327 (59,566) (5,000) (14,566)
Net income for year ended
January 31, 1997 7,504
----- ----------- ------------- ------- --------- ----------
Balance, January 31, 1997 $130 $52,721 $462,327 ($52,062) ($5,000) ($14,566)
=== ====== ======= ====== ===== ======
</TABLE>
The notes to financial statements are an integral part of the above statement.
F-6
<PAGE>
BALA CYNWYD CORPORATION
=======================
STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 31,
1997 1996
---------- ---------
<S> <C> <C>
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net income $ 7,504 $ 16,314
Adjustments to reconcile net income to net cash
(used in) operating activities:
Interest accrued on due to affiliate - (31,990)
(Increase) decrease in operating assets:
Receivables (11,209) (505)
Prepaid taxes 1,182 -
Increase (decrease) in operating liabilities:
Accrued expenses (3,492) (170)
Income taxes payable 5,118 -
-------- ---------
Net cash (used in) operating activities (897) (16,351)
-------- ---------
Cash flows from investing activities:
Payments on notes receivable - 98,000
Advances to shareholder, net 443,417 (101,476)
-------- ---------
Net cash provided by (used in) investing activities 443,417 (3,476)
-------- ---------
Net increase (decrease) in cash and cash equivalents 442,520 (19,827)
Cash and cash equivalents at beginning of year 1,681 21,508
-------- ---------
Cash and cash equivalents at end of year $444,201 $ 1,681
======== =========
</TABLE>
The notes to financial statements are an integral part of the above statement.
F-7
<PAGE>
BALA CYNWYD CORPORATION
=======================
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1997 AND 1996
--------------------------------------------------------------------------------
1. Nature of Business and Summary of Significant Accounting Policies
-----------------------------------------------------------------
Nature of business - The Company presently conducts no business, but is
searching for appropriate investment and acquisition opportunities. Its
only income consists of interest from investment income.
Earnings per share - The Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share," which establishes
standards for computing basic and diluted earnings per share. Per share
data is computed using the weighted average number of common shares
outstanding. The weighted average number of common shares was 1,021,314
for both years.
Cash equivalents - For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with
maturities of three months or less to be cash equivalents.
Short-term investments potentially subject the Company to
concentrations of credit risk. To limit this risk, the Company places
its short-term cash investments with high credit quality financial
institutions.
The carrying value of the financial instruments, including cash and
cash equivalents, approximates fair value as of January 31, 1997,
because of the short maturity of these financial instruments.
Use of estimates - The presentation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Income taxes - The Company follows the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("SFAS 109"), which requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax
returns. Under this method, deferred tax liabilities and assets are
determined based on the differences between the financial statement and
tax bases of assets and liabilities using tax rates in effect for the
year in which the differences are expected to reverse.
F-8
<PAGE>
BALA CYNWYD CORPORATION
=======================
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEARS ENDED JANUARY 31, 1997 AND 1996
--------------------------------------------------------------------------------
2. Note Receivable
---------------
On October 30, 1991, the Company agreed to extend credit facilities up
to an initial principal amount of $350,000 to Antiquities of Nevada,
Inc. ("Antiquities"), and on January 29, 1992 entered into an amendment
increasing the maximum credit availability by $150,000 through June 15,
1992. On May 15, 1992, the loan agreement was amended, whereby the
principal amount of $431,724 due as of that date was to be repaid in
installments from June to August, 1992, with the balance of principal,
accrued interest and related costs due September 1, 1992. The note
bears interest at 10% per annum and is collateralized by all of the
assets of Antiquities, along with the guarantees of the stockholders.
On September 1, 1992, Antiquities defaulted on its obligations under
the loan agreement, and filed under Chapter 11 of the Federal
Bankruptcy Code on September 14, 1992. Under court order, Antiquities
was required to pay the Company $10,000 per month towards this
obligation plus interest of $3,000 per month, pending the filing and
confirmation of a plan of reorganization. On February 24, 1993, the
plan of reorganization was confirmed by the Court. The plan required
monthly payments of principal of $10,000 to July, 1993, $15,000 to
June, 1994 and $20,000 to November, 1994, plus interest payable monthly
at 10% per annum. Through July, 1993, the principal payments were
received. Subsequent to that point in time, monthly principal payments
in amounts less than the required amounts were received.
Through January 31, 1996, the Company had incurred legal and other
costs in excess of $192,000 in connection with exercising its rights
under the note, which, pursuant to the loan agreement, is reimbursable
to the Company by Antiquities, of which approximately $90,000 was
collected. The Bankruptcy Court had ordered Antiquities to pay during
the 23rd through 26th months of the confirmed plan, $86,500 of the
Company's legal fees and expenses incurred during the Antiquities
bankruptcy proceedings. The Company provided an allowance for any
potentially uncollectible reimbursements. Antiquities has made payments
in accordance with the loan agreement which were $89,031 and $31,990
for the years ended January 31, 1997 and 1996, respectively, in excess
of the Company's allowance.
3. Due from Shareholder
--------------------
The amounts due from shareholder bear interest at the prime rate of
8.5% and 8.25% at January 31, 1997 and 1996, respectively, with no
specific repayment terms. Interest income relating to the advance was
$10,435 and $35,595 for the years ended January 31, 1997 and 1996,
respectively.
4. Due to Affiliate
----------------
The amount due to affiliate bears interest at the prime rate of 8.5%
and 8.25%, respectively, with no specific repayment terms. Interest
expense relating to this advance was $248 and $249 for the years ended
January 31, 1997 and 1996, respectively.
F-9
<PAGE>
BALA CYNWYD CORPORATION
=======================
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEARS ENDED JANUARY 31, 1997 AND 1996
--------------------------------------------------------------------------------
5. Management Fees
---------------
The Company has agreed to compensate its president and principal
shareholder for his services in maintaining the corporate books and
records and in investigating possible merger and acquisition candidates
for the Company, and to reimburse him for expenses incurred. Management
fees of $57,500 and $36,000 are included in general and administrative
expenses for the years ended January 31, 1997 and 1996, respectively.
6. Income Taxes
------------
The Company is classified as a personal holding company for federal
income tax purposes for each of the periods presented. The Company is
subject to a federal tax equal to 39.6% of its undistributed earnings,
in addition to any other income taxes payable.
At January 31, 1997, the Company had net operating loss carryforwards
of approximately $23,700 which will expire in years 2008 through 2010
for federal income tax purposes. For personal holding company tax
purposes, only the preceding year's net operating loss is allowed to
reduce undistributed personal holding company income.
A valuation allowance is provided to reduce deferred tax assets to a
level which, more likely than not, will be realized. The valuation
allowance provided effectively eliminated the deferred tax asset
resulting from net operating loss carryforwards.
F-10
<PAGE>
BALA CYNWYD CORPORATION
=======================
APPENDIX A TO ITEM 601(c) OF REGULATION S-B
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BALA CYNWYD CORPORATION AS OF AND FOR THE YEAR ENDED
JANUARY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
ITEM NUMBER AMOUNT ITEM DESCRIPTION
----------- ------ ----------------
<S> <C> <C>
5-02(1) $444,201 Cash and cash items
5-02(2) 0 Marketable securities
5-02(3)(a)(1) 0 Notes and accounts receivable, trade
5-02(4) 0 Allowances for doubtful accounts
5-02(6) 0 Inventories
5-02(9) 467,918 Total current assets
5-02(13) 0 Property, plant and equipment
5-02(14) 0 Accumulated depreciation
5-02(18) 467,918 Total assets
5-02(21) 24,368 Total current liabilities
5-02(22) 0 Bonds, mortgages and similar debt
5-02(28) 0 Preferred stock, mandatory redemption
5-02(29) 130 Preferred stock, no mandatory redemption
5-02(30) 52,721 Common stock
5-02(31) 390,699 Other stockholders' equity
5-02(32) 467,918 Total liabilities and stockholders' equity
5-03(b)1(a) 0 Net sales of tangible products
5-03(b)1 108,245 Total revenues
5-03(b)2(a) 0 Cost of tangible goods sold
5-03(b)2 0 Total costs and expenses applicable to
sales and revenues
5-03(b)3 94,441 Other costs and expenses
5-03(b)5 0 Provision for doubtful accounts and notes
5-03(b)(8) 0 Interest and amortization of debt discount
5-03(b)(10) 13,804 Loss before taxes and other items
5-03(b)(11) 6,300 Income tax expense
5-03(b)(14) 7,5046 Loss from continuing operations
5-03(b)(15) 0 Discontinued operations
5-03(b)(17) 0 Extraordinary items
5-03(b)(18) 0 Cumulative effect, changes in
accounting principles
5-03(b)(19) 7,504 Net loss
5-03(b)(20) .01 Earnings per share, basic
5-03(b)(20) .01 Earnings per share, diluted
</TABLE>
