SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to _______________
Commission File No. 1-5926
MILLER INDUSTRIES, INC.
(Name of Small Business Issuer in its Charter)
FLORIDA 59-0996356
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
16295 N.W. 13TH AVE., MIAMI, FLORIDA 33169
(Address of Principal Executive Offices)
(305) 621-0501
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b)
of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $.05 PAR VALUE
(Title of Class)
Check whether the issuer: (1) has 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 past 90 days.
Yes [X] No [ ]
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 the definitive proxy or
information statement incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $252,000.
As of August 1, 1996, the registrant had 2,982,662 outstanding shares of common
stock $.05 par value. The aggregate market value of the common stock of the
registrant held by non-affiliates (based on the average of the closing bid and
asked prices of the common stock in the over-the-counter market as of August 1,
1996) was approximately $73,256.
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PART I
ITEM 1. BUSINESS
GENERAL
MILLER INDUSTRIES, INC. (the "Company") was incorporated under the laws
of the State of Florida on January 21, 1963. The administrative offices of the
Company are located at 16295 N.W. 13th Avenue, Miami, Florida 33169, and its
telephone number is (305) 621-0501.
Prior to August 1991, the Company was primarily engaged in the
manufacture, sale, and installation of aluminum doors and windows. As a result
of continuing losses, depressed sales levels, and the poor prospects for a
recovery in the housing industry, the Company's Board of Directors decided to
discontinue the Company's manufacturing and sales activities in August 1991.
During the remainder of the fiscal year ended April 30, 1992, the
Company terminated its door and window sales activity, completed final
production, and laid off all of its employees.
During fiscal years 1993 and 1994, the focus of the Company's efforts
was to liquidate the Company's assets (other than its warehouse), and to pay or
otherwise resolve the Company's outstanding liabilities and obligations. During
this period, the Company faced three major problems. The first was the Company's
mortgage loan of $2,000,000 on the Company's warehouse facility. The Company
discontinued payments on this loan in 1991 due to the Company's poor financial
condition. As a result, the lender commenced foreclosure proceedings in 1993.
The Company successfully resolved this problem in September 1994 by refinancing
this loan with another lending institution. See Item 2 Properties.
The Company's second major problem was the presence of soil and ground
water contamination at the Company's warehouse. This contamination was
discovered in 1990. During 1993 and 1994, the Company worked to resolve this
problem through a combination of assessment and remediation efforts. In this
connection, the Company entered into a consent order with the Florida Department
of Environmental Regulation ("FDER") regarding the clean-up of the property. The
Company is continuing to work with FDER to complete the clean-up process. See
Item 3 - Legal Proceedings.
The Company's third major problem was the lack of cash flow from
operations. To address this problem, the Company has sought tenants for the
Company's warehouse.
The Company believes that it has made substantial progress in
addressing the Company's major problems. Based on this progress,
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the Company has modified its business plan. The Company now intends to retain
ownership of its warehouse and to seek long-term tenants for this facility. If
successful, the Company believes it can generate positive cash flow from
operations. As of the date of this report, the Company had not yet leased enough
of its warehouse to generate positive cash flow from operations. The Company
also intends to acquire other income-generating properties to add to the
Company's portfolio. The Company's current President, Angelo Napolitano, has
extensive experience in the real estate industry, and believes that he can
provide the Company with the expertise to locate, acquire and manage attractive
properties. The Company hopes to finance the acquisition of properties through a
combination of cash, debt from third parties (including outside lenders and
seller financing) and issuance of equity securities. As discussed in the
remainder of this Form 10-KSB, the Company continues to have certain contingent
liabilities which may adversely affect the Company's financial prospects.
EMPLOYEES
As of April 30, 1996 and April 30, 1995, the Company had no employees.
The Company's President provides services to the Company as an
independent contractor. The Company also utilizes a third party to perform
administrative and bookkeeping services.
ITEM 2. PROPERTIES
DESCRIPTION OF WAREHOUSE
The Company owns a one-story concrete block building located at 16295
N.W. 13th Avenue, Miami, Florida. This facility consists of 97,813 square feet,
7,000 of which is air-conditioned. The building is zoned for use as a warehouse
or light manufacturing facility. The building has a relatively low ceiling,
which has adversely affected leasing efforts.
FINANCING
Until September 1994, the building was subject to a mortgage loan in
favor of First Nationwide Bank ("FNB") and its assignee, Granite Management &
Disposition, Inc. ("Granite"). This loan had an original principal amount of
$2,000,000. In April 1991, the Company stopped making payments on this loan due
to the Company's poor financial condition.
In April 1993, FNB declared the entire balance of the loan to be due
and in August 1993 initiated foreclosure proceedings against the Company. As of
April 30, 1994, the balance due under the loan, including principal and accrued
interest, was approximately
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$2,507,000, plus two years of unpaid property taxes in the amount of
approximately $85,000.
On June 10, 1994, the Company entered into a letter agreement with
Granite, pursuantT to which the Company agreed to settle with FNB and Granite.
Granite agreed to accept a payment of $1,400,000 from the Company as payment in
full of the all sums owing under the loan documents (the "Redemption Price"). In
consideration of Granite's agreement to accept the Redemption Price, the Company
agreed to waive and withdraw all affirmative defenses and counterclaims in the
litigation with FNB. The settlement also provided that if the Company sold or
refinanced the building within eighteen months after the settlement, it would be
required to pay Granite 60% of the amount by which the consideration it receives
(less closing and capital improvement costs) exceeds the Redemption Price. The
Company's obligation to pay this amount is secured by a second mortgage on the
building.
The Company consummated its settlement with Granite on September 15,
1994. To finance the settlement, the Company obtained a $1,400,000 loan from
InterContinental Bank ("InterContinental"). The new loan bears interest at the
prime rate of Citibank plus 1% and may be adjusted annually. Principal and
interest are payable monthly over a five year period based on a twenty-three
year amortization schedule. A balloon payment of approximately $1,275,000 is due
at the end of the five year period. The loan is secured by a first lien on the
Company's building.
Angelo Napolitano, the Company's Chairman of the Board, has guaranteed
$700,000 of the loan. The Company compensated Mr. Napolitano for his personal
guaranty of this loan. See Item 10 - Executive Compensation - Stock Options.
Pursuant to the terms of the loan agreement with InterContinental, the
Company had agreed to escrow $60,000 with InterContinental to complete the
environmental clean-up of soil and groundwater contamination found on its
property. InterContinental released this amount during the 1996 fiscal year. See
Item 3 Legal Proceedings. Based on a report from Akdoruk Shather and Associates,
Inc. dated July 18, 1994, the Company believes that it will be able to complete
the remediation of the property for the original estimate of $60,000. To date,
the Company has expended approximately $22,000 of this amount.
LEASING ACTIVITIES
The Company continues to seek long term commercial tenants for its
building. The building is located in an industrial park which contains many
similar facilities. Current rents for such facilities range from approximately
$3.75 per square foot to approximately $5.00 per square foot and the occupancy
rate in the area is approximately 90%. During fiscal year 1996, the Company
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leased portions of its warehouse space pursuant to both long and short term
leases. Total rental income under these leases for fiscal 1996 was approximately
$174,000.
The Company has entered into a five-year lease for 24,000 square feet
of its property for $120,000 per year, plus an annual cost of living increase.
The lease requires the Company to make approximately $100,000 in improvements to
the leased premises. The tenant has agreed to pay $36,000 of this amount. The
lease commenced in January 1995. The Company also has an existing short-term
lease for approximately 10,800 square feet which provides for rental of $4,565
per month. This lease is currently scheduled for expiration in December 1996,
although it may be further extended based on negotiations between the parties.
INSURANCE AND TAXES
The Company believes that the building is adequately insured.
Depreciation is determined using the straight-line method over five to 31.5
years for tax purposes and 10 to 30 years for accounting purposes. Real estate
taxes paid for calendar year 1995 were approximately $34,800.
BUSINESS PLAN
As discussed in Item 1 - Business, the Company intends to develop a new
business plan involving investments in commercial real estate. At the present
time, the Company has not developed any specific investment policy with regard
to its proposed real estate activities. Accordingly, the Company has not
established any limitations in the percentage of assets which may be invested in
any one investment or type of investments. The Company generally intends to seek
real estate assets for income-generation purposes rather than capital gains. The
Company has not developed any particular criteria for the types of real estate
in which it may invest. Accordingly, the Company may invest in office and
apartment buildings, shopping centers, industrial and commercial properties,
special purpose buildings and undeveloped acreage. The Company believes that any
such acquisitions will occur in South Florida. The Company hopes to finance the
acquisition of properties through a combination of cash, financing from third
parties, financing from the seller and issuance of equity securities of the
Company. The Company may also invest in real estate through partnerships or
other similar vehicles.
ITEM 3. LEGAL PROCEEDINGS
DISPUTE WITH TENANT
In June 1996, the principal tenant for the building indicated that it
would seek to recover damages to its inventory and other
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property caused by roof leaks and certain related repair efforts. The tenant did
not quantify the amount of damages it had incurred. The Company hopes to resolve
this dispute in an amicable manner. The Company intends to seek indemnification
from the roofing contractor who performed the repairs and the Company's property
insurance carrier.
CONTAMINATION AT COMPANY WAREHOUSE
In March 1990, the Company received an environmental report on the
Company's building prepared by an outside consulting firm. The report indicated
the presence of soil and groundwater contamination in a limited area behind and
to one side of the building.
Prior to 1988, the Company utilized this area to store paints and other
chemicals used in the Company's paint line. The Company terminated its painting
operations in April 1987, and dismantled and sold the paint line in the fall of
1987. Therefore, it appears that the contamination is of a residual nature.
In November 1990, the Company submitted the report to the Dade County
Department of Environmental Resources Management ("DERM"). In March 1991, DERM
responded to the report. DERM requested that the Company provide an expanded
groundwater assessment plan, an expanded soil assessment and a soil remediation
plan.
In April 1991, the Company engaged the services of another outside
consultant to assist the Company in responding to DERM's request. Meetings were
held with DERM personnel to clarify the nature of its request. In May 1991, the
Company submitted a response to DERM. The Company's response suggested that the
Company's limited funds should be used for soil remediation rather than for
additional testing.
In June 1991, DERM requested that the Company submit, within 30 days, a
formal Initial Remedial Action Plan ("IRAP"). The Company submitted an IRAP to
DERM in July 1991. DERM approved the Company's IRAP with certain modifications
in September 1991.
During October 1991, the Company excavated a 30 foot by 13 foot by 3
foot area on the south side of its building and a 50 foot by 50 foot by 5 foot
area on the east side of the building. After a short period of aeration, various
soil samples were taken and analyzed. The laboratory results were submitted to
DERM in December 1991.
In February 1992, DERM authorized the Company to transport
approximately 300 tons of excavated soil to an approved facility for
incineration. DERM also advised the Company that the Florida Department of
Environmental Regulation ("FDER") would oversee the remainder of the cleanup.
The excavated soil was incinerated in March 1992. Clean soil was purchased to
fill in the holes.
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In May 1992, FDER drafted and sent to the Company a proposed Consent
Order outlining the steps deemed necessary by FDER for an acceptable resolution
of the contamination problem. After several months of negotiation, the Consent
Order was signed by the Company in February 1993.
Under the terms of the Consent Order, a Contamination Assessment Plan
("CAP") was prepared and submitted to the FDER in April 1993. The CAP proposed
specific steps to be taken to identify and quantify the nature and extent of
pollution. The Company's CAP was approved with certain minor modifications and
new testing wells were installed. The laboratory analysis of the samples taken
from these wells revealed the presence of one contaminate. The Company is
awaiting notification from FDER as to which course of action should be taken to
address this finding.
In July 1994, the Company obtained another environmental report from an
independent consultant which estimated that all remaining remedial work could be
completed for $60,000. This report has been submitted to FDER for its
consideration. The Company has expended approximately $22,000 of the $60,000
estimated for clean-up activities.
SEABOARD CHEMICAL CORPORATION
In September 1991, the Company was identified by the North Carolina
Department of Environment, Health, and Natural Resources ("DEHNR") as a
generator of hazardous substances which had been shipped to Seaboard Chemical
Corporation ("Seaboard"). Accordingly, DEHNR issued a Notice of Responsibility
to advise the Company of its liability as a potentially responsible party
("PRP") with respect to the site.
Seaboard had operated a facility in Jamestown, North Carolina for the
treatment, storage, and disposal of hazardous substances from approximately 1976
until 1989, when Seaboard ceased its operations and declared bankruptcy. The
bankruptcy trustee started to close the facility in 1990 in accordance with the
terms of the Resource Conservation and Recovery Act ("RCRA"), but had
insufficient funds to complete the closure. Work remaining to be done included
decontamination of tanks and equipment, removal of bulk hazardous substances,
and, perhaps, cleanup of contaminated soil and groundwater. The EPA and DEHNR
indicated that if the PRP's did not take response action at the site, DEHNR
would issue a unilateral order under North Carolina law, and /or EPA would
complete the cleanup under authority of the Comprehensive Environmental Response
Compensation and Liability Act ("CERCLA") and sue responsible parties to recover
its costs.
In October 1991, the Company entered into a Participation Agreement
with many other PRP's in order to work together as the "Seaboard Group." As of
June 8, 1992, the Seaboard Group consisted
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of 1,025 PRP's. According to the records of Seaboard, the Seaboard Group was
responsible for 10,078,000 gallons of hazardous materials at the Seaboard site,
which represented approximately 75% of the total. The Seaboard Group has created
a subgroup known as the "De Minimis PRP's" consisting of all entities which are
responsible for less than 85,000 gallons of hazardous materials. The Company is
a member of the De Minimis PRP's because its documented volume was 7,265
gallons. The initial cost to join the Seaboard Group was $100.
In May 1992, the DEHNR issued an Imminent Hazard Order ("IHO")
directing all generators, transporters and owner/operators to initiate action at
the site. In response, the Seaboard Group and DEHNR entered into an
Administrative Order of Consent ("AOC") under which the Seaboard Group agreed to
undertake Phase I response action at the site in accordance with the Seaboard
Group's work plan. The Company executed the AOC in June 1992. The estimated cost
of Phase I Work was expected to be $2,600,000.
In connection with the AOC, the Seaboard Group entered into a Phase I
Buyout Agreement with the De Minimis PRP's, including the Company. Under the
agreement, the remaining members of the Seaboard Group agreed to pay for actual
Phase I clean-up costs and certain other expenses, up to the first $5,200,000 of
expense. This amount is double the estimated cost of $2,600,000. The buy out
agreement required the payment of $.40 per gallon from each De Minimis PRP. The
Company's payment was $2,906. Phase I clean-up was completed as of May 1, 1994.
The Phase I Work Plan only included a Work Plan for Surface removal
action and a work plan for remedial site investigation. Accordingly, the buy out
agreement did not include a remedial investigation or feasibility study beyond
the scope of the plans and any remedial design or remedial action with respect
to soil, surface water and groundwater contamination in the vicinity of the
site, or any matters arising out of or relating to the City of High Point
Landfill.
In 1994, the Company joined a group to complete Phase II of the
clean-up plan. The cost of completing Phase II has not yet been established. The
Company was required to pay $200 at the time of joining and may be required to
pay additional amounts in the future. The Company is unable to determine the
amount of any further clean-up costs, and thus has not accrued any amounts with
respect to this matter.
GOLD COAST OIL
In 1981, the Company was named by the U.S. Environmental Protection
Agency ("EPA") as one of many PRPs with respect to chemical pollution discovered
at a site known as "Gold Coast Oil."
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In 1988, a settlement was negotiated between the EPA and certain PRP's
including the Company which resulted in a settlement of the EPA claim. The PRPs
subsequently negotiated a settlement among themselves in which the Company
agreed to pay $50,000 of the anticipated clean up costs. The Company's insurance
carrier at the time of the alleged violations agreed to pay $45,000 of this
amount in return for a release from any future additional claims.
In January 1993, it was determined that additional funds would be
required to complete the clean up of the Gold Coast Oil site. The Company
received an assessment of $10,000 for this obligation. As of April 30, 1995, the
Company had accrued, but not paid this amount.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is currently traded on the over-the-counter
market.
The range of the high and low bid quotations for each quarter of the
past two (2) fiscal years is as follows:
MAY 1995 - APRIL 1996(1) HIGH LOW
- --------------------- ---- ---
First Quarter $ .100 $ .020
Second Quarter .080 .020
Third Quarter .080 .020
Fourth Quarter .060 .020
MAY 1994 - APRIL 1995(1) HIGH LOW
- --------------------- ---- ---
First Quarter $ .1875 $ .015
Second Quarter .150 .010
Third Quarter .100 .010
Fourth Quarter .100 .020
- ---------------------
(1) Over-the-counter prices do not reflect retail mark-ups, mark-downs,
or commissions and may not necessarily represent actual transactions.
Prices for fiscal years 1995 and 1996 were provided by National
Quotation Bureau, Inc.
As of August 1, 1996, there were 486 holders of record of the Company's
common stock.
The Company has not paid any cash dividends during the last two fiscal
years.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATION
In 1996, the Company had rental income of $174,000, compared with
rental income of $87,000 in 1995. During 1996, less than half of the Company's
warehouse was leased. The Company needs to lease
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the balance of the space in order to achieve positive cash flow from operations.
Rental income was offset by rental expense of $144,000 in 1996 compared to
$158,000 in 1995. The decrease in rental expense was due to a reduction in
repairs and improvements over the previous year.
During 1996, the Company continued to operate a hardware sales
business, in which it sells replacement parts for the sliding glass door and
window products formerly sold by the Company. Sales in 1996 were $69,000 (with
cost of goods sold of $17,000), compared to sales of $59,000 in 1995 (and cost
of goods sold of $12,000).
During 1996, the Company also continued to liquidate the equipment and
product lines for the Company's former business. The Company recognized a gain
of $8,000 from these sales in 1996, compared with a gain of $25,000 in 1995.
The Company's administration expenses were $76,000 in 1996, compared
with $108,000 in 1995. The decrease was due to further reductions in operating
expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash decreased by $38,000 during fiscal year 1996
compared with a decrease of $311,000 during fiscal year 1995. The decrease in
cash was primarily due to the loss from operations and the cost of building
repairs. As of April 30, 1996, the Company's cash position was approximately
$130,000.
On September 15, 1994, the Company entered into a settlement agreement
with its principal mortgage lender. See Item 3 Properties. As a result of this
settlement, the Company's prior lender agreed to accept a payment of $1,400,000
in full and complete satisfaction of all the Company's obligations under its
mortgage loan. As of the date of the settlement, the Company owed the mortgage
lender approximately $2,600,000 for principal, interest and other expenses. The
Company financed the settlement through a new loan of $1,400,000.
As indicated in Item 3, the Company has accrued approximately $60,000
to complete the cleanup of the environmental problem at its building. However,
there is no assurance that this will be sufficient to cover this cost.
The Company's working capital remains extremely limited. The Company
intends to generate cash flow by leasing its building and continuing hardware
sales. The Company believes that its working capital needs over the next twelve
months will include repairing the roof of its building, routine maintenance of
its building, and alterations to the interior of the building to accommodate new
tenants. The Company believes that it has enough cash to continue
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operations at their current level for at least 12 more months. However, the
Company's long term prospects ultimately depend on the Company's ability to
lease the remainder of its building at attractive rates.
CURRENT OPERATIONS
As discussed in "Item 1 - Business," the Company has modified its
business plan. Under the new plan, the Company now operates as a real estate
investment and management company. The Company is currently seeking to obtain
additional commercial tenants for its existing building. The Company has entered
into a five-year lease, which commenced in January 1995, which provides for rent
of approximately $120,000 per year. The Company also has an existing short-term
lease for approximately 10,800 square feet which provides for rental of $4,565
per month. This lease is currently scheduled for expiration in December 1996,
although it may be further extended based on negotiations between the parties.
The Company's principal operating expenses consist of management and
professional fees associated with the administration of the Company, interest
expense on the Company's new mortgage loan, real estate taxes and insurance. The
Company believes that it can generate positive cash flow from operations if it
is able to find additional tenants for the building. However, at the present
time, the Company does not receive enough in lease payments to cover its
expenses.
The Company's business plan also contemplates the acquisition of
additional income-producing properties. The Company hopes to acquire such
properties through a combination of cash, financing from third parties, seller
financing and issuance of the Company's equity securities.
The Company's business plan is subject to substantial uncertainty.
There can be no assurance that the Company will be able to obtain a sufficient
number of additional tenants in order to fully lease its existing building and
to meet its debt service requirements and operating expenses. Furthermore, there
can be no assurance that the Company will be able to locate or acquire suitable
properties in order to expand its holdings of real property. Finally, the
Company continues to be subject to several potentially significant contingent
liabilities. These include the environmental problem at the Company's existing
building as well as certain potential litigation. See Item 3 - Legal
Proceedings. If any of these items should result in significant additional
liabilities, the Company's financial condition could be adversely affected.
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ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's financial statements and supplementary financial
schedules are attached as an exhibit to this report. See Items
14(a) and 14(b).
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The directors and executive officers of the Company are as follows:
OFFICER DIRECTOR
NAME POSITION SINCE SINCE
------ ---------- --------- ----------
Angelo Napolitano President, Chief 1992 1988
Executive Officer,
and Chairman of the
Board of Directors
Martin Engelmann Director -- 1988
Each director is elected for a period of one (1) year, or until his
successor is duly elected by the shareholders. Officers serve at the will of the
Board of Directors.
Angelo Napolitano, age 60, has been President and Chief Executive
Officer of the Company since 1992. He has been a Director of the Company since
1988 and Chairman since July 1989. Mr. Napolitano is the Chairman and Chief
Executive Officer of Harnap Corp., a commercial real estate management company
which he founded in 1971. Since 1975, Mr. Napolitano has served as a director of
Sunshine State Industrial Park Authority, the property owners' association for
the industrial park in which the Company's building is located.
Martin Engelmann, age 55, has been a director of the Company since
1988. Mr. Engelmann is the President of DiaMed Caribbean, Inc., a health care
consulting and exporting company which he founded in 1984. Mr. Engelmann also
serves as a director of America's Growth Fund, an investment company which
provides short-term capital to companies doing business in Latin America.
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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon a review of Forms 3, 4 and 5 furnished to the
Company, all of the Company's directors have filed reports on a timely basis.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation
paid by the Company to the Company's chief executive officer. None of the
Company's officers in 1996 received compensation in excess of $100,000.
SUMMARY COMPENSATION TABLE
FISCAL STOCK
NAME AND POSITION YEAR SALARY (1) OPTIONS
- ----------------- ------ ---------- -------
Angelo Napolitano, 1996 $ 36,250 -
Chief Executive
Officer 1995 $ 36,500 -
1994 $ 37,000 -
- ------------------------
(1) Includes management fees paid to Harnap Corp., a company controlled
by Mr. Napolitano, and director fees paid to Mr. Napolitano.
MANAGEMENT AGREEMENT
In October 1992, the Company agreed to pay Harnap Corp. a monthly
management fee of $3,000. Harnap Corp. is owned and controlled by Angelo
Napolitano, the Company's Chief Executive Officer and Chairman of the Board.
STOCK OPTIONS
On December 11, 1992, The Company's Board of Directors granted the
Company's President a three year non-qualified option to purchase 842,256 shares
of the Company's common stock at a price of $0.14 per share. The price was
established by the Company's independent directors on the basis of the average
bid and asked price of the Company's common stock on the date of the grant.
In September 1994, the Company's Board of Directors agreed to amend the
terms of the Company's option agreement with Mr. Napolitano in consideration of
his agreement to guarantee a portion of the Company's new mortgage loan. Under
the terms of the amendment, the exercise price of the options was reduced from
$.14
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per share to $.025 per share, and the expiration date was extended from December
1995 to September 1997. The exercise price of $.025 per share exceeded the
average of the bid and asked price for the Company's common stock as of the date
of the amendment. Mr. Napolitano exercised all of these options in fiscal year
1995. The Company did not grant any stock options to Mr. Napolitano during the
1995 fiscal year.
COMPENSATION OF DIRECTORS
Each director receives a fee of $250 for attendance at each meeting of
the Board of Directors. Directors also receive $450 per day for any special
assignments which they undertake at the Board's request. Directors are also
reimbursed for out-of-pocket expenses which they incur while performing
activities on behalf of the Company.
The total amount paid to directors during the 1996 fiscal year was
$750.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
To the knowledge of management, as of August 1, 1996, the only person
who beneficially owned 5% or more of the common stock of the Company was as
follows:
AMOUNT
NAME AND ADDRESS OF BENEFICIALLY OWNED PERCENT OF
BENEFICIAL OWNER AS OF AUGUST 1, 1996 CLASS
- ------------------- ------------------------------
Angelo Napolitano 1,131,256(1) 37.9%
1460 N.W. 159th Street
Miami, FL 33169
- --------------------------
(1) Mr. Napolitano has sole voting and investment power with
respect to 1,121,256 shares which he holds of record. Mr.
Napolitano has shared voting and investment power with respect
to 10,000 shares which he owns jointly with his wife, Mrs.
Helen Napolitano.
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The shares of common stock beneficially owned by each director and by
all the executive officers and directors of the Company as a group as of August
1, 1996, were as follows:
Name of Amount Beneficially Percent of
BENEFICIAL OWNER OWNED (1) CLASS
- ------------------ ------------------------------
Directors and Officers 1,151,256 38.8%
as a Group (consisting
of two persons)
Martin Engelmann 20,000 0.9%
Angelo Napolitano 1,131,256(3) 37.9%(3)
- -----------------------------
(1) Except as otherwise indicated, each person has sole voting and
investment power as to the listed shares.
(2) With respect to Mr. Napolitano's shares, see Note (1) to the
preceding table.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into a brokerage agreement with Napolitano
Realty Corporation ("NRC") with respect to the lease of the Company's building.
The President of NRC is the son of Mr. Angelo Napolitano, the Company's
President and Chairman of the Board. The agreement provides for a 6% commission
to be paid to NRC on sales or lease proceeds received by the Company. During
fiscal 1995, a $1,570 commission was paid for rental income generated by the
short term leases of portions of the building. In addition, Napolitano Realty is
owed a commission of $18,000, payable at the rate of $3,600.00 annually for the
long term lease agreement which was commenced in January 1995. Payment of the
first two installments of this is being accrued by mutual agreement until such
time as the Company's cash position improves.
-17-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 10-KSB
PAGE NO.
(a) Financial Statements
Report of Independent Certified Public
Accountants.......................................... 20
Balance Sheets As of April 30, 1996
and 1995............................................. 21
Statements of Operations and (Deficit) for
Years ended April 30, 1996 and 1995.................. 22
Statements of Changes in Shareholders (Deficiency)
for Years ended April 30, 1996 and 1995.............. 23
Statements of Cash Flows for Years ended
April 30, 1996 and 1995.............................. 24
Notes to Financial Statements........................ 26
(c) Exhibits Sequential
PAGE NUMBER
3. (A) Articles of Incorporation (Note 1)
(B) Articles of Amendment (Note 2)
(C) By-laws (Note 1)
(D) Amendment to By-laws --
Indemnification (Note 1)
(E) Amendment to By-laws --
Control Share Acquisitions (Note 5)
-18-
<PAGE>
10. Material Contracts
(A) Profit Sharing Plan (Note 3)
(B) Stock Option Plan (Note 3)
(C) Incentive Bonus Plan (Note 3)
(D) Indemnification Agreement
with Directors (Note 4)
(E) Option Agreement with
Angelo Napolitano (Note 5)
(F) Settlement Agreement with
Granite (Note 6)
(G) Promissory Note to
InterContinental Bank (Note 6)
27. Financial Data Schedule
Note 1. Incorporated by reference from the Form 10-K filed with the
Commission for the year ended April 30, 1981.
Note 2. Incorporated by reference from Form 10-K filed with the
Commission for the year ended April 30, 1985.
Note 3. Incorporated by reference from Form 10-K filed with the
Commission for the year ended April 30, 1988.
Note 4. Incorporated by reference from the Form 10-K filed with the
Commission for the year ended April 30, 1990.
Note 5. Incorporated by reference from the Form 10-K filed with the
Commission for the year ended April 30, 1993.
Note 6. Incorporated by reference from the Form 10-K filed with the
Commission for the fiscal year ended April 30, 1994.
(d) Reports on Form 8-K
There were no reports on Form 8-K for the three months
ended April 30, 1996.
-19-
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Miller Industries, Inc.
Miami, Florida
We have audited the accompanying balance sheets of Miller Industries, Inc. as of
April 30, 1996 and 1995, and the related statements of operations, shareholders'
(deficiency), and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted audit standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Miller Industries, Inc. as of
April 30, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
Spear, Safer, Harmon & Co., P.A.
Miami, Florida
July 11, 1996
-20-
<PAGE>
MILLER INDUSTRIES, INC.
BALANCE SHEETS
APRIL 30, 1996 AND 1995
ASSETS
1996 1995
----------- ------------
INVESTMENT PROPERTY:
Land $ 161,443 $ 161,443
Buildings and Improvements 708,487 698,487
Machinery and Equipment 22,211 22,211
Furniture and Fixtures 10,451 9,865
------------- -------------
902,592 892,006
Less: Accumulated Depreciation (696,359) (682,247)
------------- --------------
206,233 209,759
------------- --------------
OTHER ASSETS:
Cash 129,548 167,306
Inventories 38,224 29,717
Prepaid Expenses 9,286 60,196
Deferred Lease Incentive 54,095 68,715
Loan costs, less accumulated
amortization of $6,067 and
$4,044 in 1996 and 1995,
respectively 20,222 26,289
------------- ---------------
251,375 352,223
------------- --------------
$ 457,608 $ 561,982
============== ==============
LIABILITIES AND SHAREHOLDERS'(DEFICIENCY)
LIABILITIES:
Mortgage Note Payable $ 1,366,087 $ 1,384,003
Accounts Payable and
Accrued Expenses 167,497 138,943
Tenant Security Deposits 33,092 31,510
-------------- --------------
TOTAL LIABILITIES 1,566,676 1,554,456
-------------- --------------
SHAREHOLDERS' (DEFICIENCY):
Common stock - $.05 par,
5,000,000 shares authorized;
2,982,662 shares issued and
outstanding 149,133 149,133
Paid-in capital 1,126,507 1,126,507
(Deficit) (2,384,708) (2,268,114)
-------------- -------------
TOTAL SHAREHOLDERS' (DEFICIENCY) (1,109,068) (992,474)
-------------- --------------
$ 457,608 $ 561,982
============== ==============
The accompanying notes are an integral part of these financial statements.
-21-
<PAGE>
MILLER INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED APRIL 30, 1996 AND 1995
1996 1995
----------- ----------
REVENUES:
Rental $ 174,323 $ 87,572
Net hardware sales 69,399 59,070
Gain on sale of equipment and
product lines and other income 8,301 24,916
-------------- -------------
TOTAL REVENUES 252,023 171,558
-------------- -------------
EXPENSES:
Rental 144,178 158,259
Cost of hardware sales 16,736 11,737
Administrative 76,250 108,310
Interest 131,453 129,567
-------------- -------------
TOTAL EXPENSES 368,617 407,873
-------------- -------------
LOSS BEFORE EXTRAORDINARY ITEM (116,594) (236,315)
EXTRAORDINARY ITEM - Gain on
extinguishment of debt (less
applicable income taxes of
$3,200) - 211,722
-------------- -------------
NET LOSS $ (116,594) $ (24,593)
============== ============
NET LOSS PER COMMON SHARE:
Loss before extraordinary item $ (.03) $ (.10)
Extraordinary item - .09
-------------- -------------
NET LOSS PER COMMON SHARE $ (.03) $ (.01)
============== =============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING USED IN COMPUTING
NET LOSS PER COMMON SHARE 2,982,662 2,470,386
============== =============
The accompanying notes are an integral part of these financial statements.
-22-
<PAGE>
<TABLE>
<CAPTION>
MILLER INDUSTRIES, INC.
STATEMENTS OF SHAREHOLDERS' (DEFICIENCY)
YEARS ENDED APRIL 30, 1996 AND 1995
COMMON STOCK TREASURY STOCK
---------------------- --------------------
ADDITIONAL
SHARES PAID-IN
ISSUED AMOUNT CAPITAL (DEFICIT) SHARES AMOUNT
-------- -------- ------------ ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT APRIL 30, 1994 2,982,662 $ 149,133 $ 1,442,344 $(2,243,521) 842,256 $ 336,902
NET (LOSS) - 1995 -- -- -- (24,593) -- --
SALE OF TREASURY SHARES -- -- (315,837) -- (842,256) (336,902)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE AT APRIL 30, 1995 2,982,662 149,133 1,126,507 (2,268,114) -- --
NET (LOSS) - 1996 -- -- -- (116,594) -- --
----------- ----------- ----------- ----------- ----------- -----------
BALANCE AT APRIL 30, 1996 2,982,662 $ 149,133 $ 1,126,507 $(2,384,708) -- $ --
=========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
-23-
<PAGE>
MILLER INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED APRIL 30, 1996 AND 1995
1996 1995
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(116,594) $ (24,593)
Adjustments to reconcile net
loss to net cash used by
operating activities
Depreciation 14,112 18,548
Amortization 20,687 8,430
Extraordinary gain on
extinguishment of debt -- (214,922)
Capitalized deferred liquidation
costs of discontinued operation
subsequently retained -- 708,835
(Gain) on the sale of assets -- (7,982)
Changes in operating assets and
liabilities
Decrease (increase) in:
Inventories (8,507) (9,557)
Prepaid Expenses 50,909 (51,212)
Loan Costs -- (30,333)
Increase (decrease) in:
Accounts payable and accrued
expenses 28,554 (669,861)
Tenant security deposits 1,582 21,751
--------- ---------
NET CASH USED BY OPERATING ACTIVITIES (9,257) (250,896)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and
equipment (10,585) --
Proceeds from sale of equipment -- 7,982
Expenditures for improvements used
as lease incentive -- (73,101)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (10,585) (65,119)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage note payable (17,916) (15,997)
Proceeds from sale of treasury
shares -- 21,065
--------- ---------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES (17,916) 5,068
--------- ---------
DECREASE IN CASH (37,758) (310,947)
CASH AT BEGINNING OF YEAR 167,306 478,253
--------- ---------
CASH AT END OF YEAR $ 129,548 $ 167,306
========= =========
The accompanying notes are an integral part of these financial statements.
-24-
<PAGE>
MILLER INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED APRIL 30, 1996 AND 1995
1996 1995
--------- --------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest $ 131,453 $ 66,158
Income taxes -- 7,500
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING ACTIVITIES:
Refinancing of mortgage note -- 1,400,000
payable
The accompanying notes are an integral part of these financial statements.
-25-
<PAGE>
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1996 AND 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - In August of 1991, Miller Industries, Inc. (the
"Company") discontinued its primary operations, manufacturing
of aluminum windows and doors. Pursuant to a plan of
reorganization, the Company currently operates as a rental
real estate company.
(See Note 2)
CREDIT RISK - Financial instruments, which potentially subject
the Company to concentrations of credit risk, consist
principally of cash. The Company places its cash with high
credit quality financial institutions. At certain times during
the year the Company had amounts on deposit with financial
institutions in excess of the F.D.I.C. insured limits.
INVESTMENT PROPERTY - Investment property is recorded at cost.
Depreciation is computed using the straight-line method over
the estimated useful lives of the assets ranging from 5 to 30
years.
INVENTORIES - Inventories consist primarily of miscellaneous
hardware items and are stated at the lower of cost (first-in,
first-out method) or market.
DEFERRED LEASE INCENTIVE - The deferred lease incentive is
amortized on a straight-line basis over the term of the lease
which is five years.
LOAN COSTS - Loan costs are amortized on a straight-line basis
over the term of the loan which is five years.
INCOME TAXES - The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109
"ACCOUNTING FOR INCOME TAXES" (SFAS 109), which requires a
change from the deferred method to the asset and liability
method of accounting for income taxes. Under this method,
deferred tax liabilities and assets are determined based on
the difference between the financial statement carrying
amounts and tax bases of assets and liabilities, principally
depreciation, using enacted tax rates in effect in the years
in which the differences are expected to reverse.
ESTIMATES - The preparation 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.
NET LOSS PER SHARE - The net loss per share is computed by
dividing net loss by the weighted average number of common
shares outstanding. Common share equivalents are not included
for fiscal years 1996 and 1995 as their effect would be
antidulutive.
-26-
<PAGE>
NOTE 2 - OPERATIONS
The Company's principal asset is a building and the related
real property. The Company's current business plan is to lease
its building to one or more parties and use the cash flows
generated to purchase additional investment real estate as
selected by the Company's Board of Directors.
NOTE 3 - INCOME TAXES
The Company determines deferred tax assets and liabilities
based on the difference between the financial statement and
tax bases of assets and liabilities as measured by the enacted
tax rates which will be in effect when these differences
reverse. Deferred tax assets are reduced by a valuation
allowance if, based on the weight of available evidence, it is
more likely than not that some portion or all of the deferred
tax assets will not be realized.
The deferred tax asset at April 30, 1996, consists of the
following:
Net operating loss carryforwards $811,000
Valuation allowance 811,000
--------
$ -
========
Since any tax benefit is dependent on future taxable earnings,
the Company has not recognized such benefits for financial
reporting purposes.
A reconciliation of income tax at the statutory rate to the
Company's effective rate for the year ended April 30, 1996, is
as follows:
Federal income tax at statutory rate 34.0%
State income tax, net of Federal tax benefit 3.6
Benefit of net operating loss carryforward (37.6)
-----
Income tax expense - %
======
NOTE 4 - MORTGAGE NOTE PAYABLE
During 1993, the Company defaulted on a mortgage held by First
Nationwide Bank. On June 10, 1994, the Company executed an
agreement with Granite Management and Disposition, Inc.
("Granite") whereby Granite agreed to an assignment as primary
obligor under the terms of the Company's mortgage note.
Additionally, pursuant to the agreement, Granite accepted
$1,400,000 as payment in full of all sums owing on the
original mortgage note.
On September 15, 1994, the Company obtained a $1,400,000 loan
from InterContinental Bank ("InterContinental") to close its
settlement with Granite. The loan bears interest at the
Citibank prime rate plus 1% (9.75% at April 30, 1996) and may
be adjusted annually. Principal and interest are payable
monthly over a five year period based on a twenty-three year
amortization schedule. The remaining outstanding balance is
payable in full in September 1999. The loan is secured by a
first lien on the Company's building. At April 30, 1996,
$1,366,087 was outstanding under this loan agreement.
The Company's Chairman of the Board, Angelo Napolitano,
guaranteed $700,000 of the loan. The guaranty will be reduced
to $350,000 once
-27-
<PAGE>
the Company stabilizes its tenant occupancy for ninety
consecutive days which has not yet been achieved. In
consideration of his agreement to guarantee a portion of the
Company's new mortgage loan, the Company's Board of Directors
amended the terms of the Company's option agreement with Mr.
Napolitano. (See Note 6).
Pursuant to the terms of the new loan agreement, the Company
agreed to escrow $60,000 with InterContinental to complete
environmental cleanup of soil and groundwater contamination
found on its property. The balance of this escrow account at
April 30, 1995 is $45,932 (none in 1996). The agreement also
requires the Company to maintain substantial compensating
balances with InterContinental. (See Note 7).
The mortgage note payable as of April 30, 1996 is scheduled to
mature as follows:
Year Ending
APRIL 30,
1997 $ 19,238
1998 21,200
1999 23,362
2000 1,302,287
---------
$1,366,087
==========
NOTE 5 - RENTAL INCOME
The Company leases portions of its warehouse space to
unrelated third parties for various short-term lease periods.
Total rental income under these leases for fiscal 1996 and
1995 was approximately $174,000 and $87,000, respectively.
Future minimum rental income under these non-cancelable
leases, excluding cost of living adjustments, is summarized as
follows:
Year Ending
APRIL 30,
1997 $128,274
1998 120,000
1999 120,000
2000 120,000
2001 80,000
--------
$568,274
========
NOTE 6 - RELATED PARTY TRANSACTIONS
(a) MANAGEMENT FEES - The Company pays a monthly
management fee of $3,000 to Harnap, a corporation
related to the Company's CEO and President. Total
management fees under this agreement were $36,000 for
both fiscal 1996 and 1995.
(b) TREASURY STOCK OPTION - In December 1992, the
Company's Board of Directors granted a three year
option to the Company's President and CEO to purchase
842,256 shares of the Company's common stock at the
average of the high bid and low ask price as of the
date of the grant ($0.14 per share). The agreement
was amended in September 1994. Under the terms of the
amendment, the exercise price of the option was
reduced from
-28-
<PAGE>
$.14 per share to $.025 per share, and the expiration
date was extended from December 1995 to September
1997. The exercise price of $.025 per share exceeded
the average of the bid and asked price for the
Company's common stock as of the date of the
amendment.
The option was exercised in December 1994. The
842,256 shares were exercised at the price of $.025
per share, aggregating approximately $21,000, in
exchange for the outstanding treasury stock.
(c) COMMISSION CONTRACT - On November 1, 1990, the
Company entered into a real estate listing agreement
with Napolitano Realty Corporation ("NRC") for the
purpose of marketing the Company's former
manufacturing facility for lease or sale. The
President of NRC is the son of the Company's CEO and
President. The agreement provides for the payment of
a commission to NRC in the event that the building is
leased or sold as the result of services rendered by
NRC. During fiscal years 1996 and 1995, $5,780 and
$5,170, respectively, of fees were incurred under
this contract. NRC is to receive $3,600 per year for
five years beginning in fiscal 1995 for obtaining a
five-year lease in January 1995. The initial $3,600
payment has not been paid as of April 30, 1996.
Consequently, the amount is included in accrued
expenses on the 1996 balance sheet. The contract is
ongoing on a month-to-month basis.
NOTE 7 - CONTINGENCIES AND COMMITMENTS
ENVIRONMENTAL MATTERS - Since fiscal 1990, the Company has
conducted various environmental evaluations of its land and
building. The consultant's reports indicated the presence of
soil and groundwater contamination in a limited area behind
the Company building. In February 1993, the Company entered
into a consent order with the State of Florida Department of
Environmental Regulation agreeing to perform various tests to
determine the extent, if any, of its environmental problem.
Based on the results of these tests, the Company has accrued
$48,620 for the estimated additional costs to complete the
cleanup which is included in accrued expenses in the
accompanying balance sheets.
During 1991, the Company was named by the North Carolina
Department of Environmental, Health and Natural Resources as
one of many PRP's for the closure and cleanup of a bankrupt
EPA approved hazardous waste processing facility in Jamestown,
North Carolina. Over 1,000 of the PRP's, including the
Company, have formed the Seaboard Group II for the purpose of
limiting their exposure with respect to the site. To date, the
Company has incurred approximately $200 in costs with respect
to this site. However, the Company is unable to determine what
its total costs might be, and no accruals have been made for
future cleanup liability at this site.
In 1981, the Company was named by the Environmental Protection
Agency (EPA) as one of many PRPs with respect to chemical
pollution discovered at a site known as "Gold Coast Oil." In
1988, a settlement was negotiated between the EPA and certain
PRPs including the Company which resulted in a consent order
in settlement of the EPA claim. The PRPs subsequently
negotiated a settlement among themselves to raise the funds
necessary to perform specified cleanup activities. To date,
all but $15,000 of the Company's commitment has been covered
by its insurance carrier, and cleanup operations are
progressing at the site. The Company has accrued $10,000 for
-29-
<PAGE>
the estimated additional costs to complete the cleanup which
is included in accrued expenses in the accompanying balance
sheets.
TENANT MATTER - In June 1996, the principal tenant of the
Company's building indicated that it would seek to recover an
unspecified amount of damages to its inventory and other
property caused by roof leaks and work performed by a
contractor to repair those leaks. The ultimate results of the
aforementioned matter cannot be determined and management does
not expect that it will have a material adverse effect on
the Company's future results of operations or financial
position. Additionally, the Company intends to seek
indemnification from its roofing contractor and the Company's
property insurance carrier.
-30-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereto duly authorized on the 21st day of August, 1996.
MILLER INDUSTRIES, INC.
/s/ ANGELO NAPOLITANO
-------------------------------
By: Angelo Napolitano, President
and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities
indicated on the 21st day of August, 1996.
SIGNATURE TITLE
/s/ ANGELO NAPOLITANO President, Chief Executive
- ---------------------
Angelo Napolitano Officer, and Director
(Principal Executive Officer)
(Principal Financial Officer)
(Principal Accounting Officer)
/s/ MARTIN ENGELMANN Director
- ----------------------
Martin Engelmann
-31-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S
APRIL 30, 1996 FORM 10-KSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> APR-30-1995
<PERIOD-END> APR-30-1996
<CASH> 130,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 38,000
<CURRENT-ASSETS> 251,000
<PP&E> 903,000
<DEPRECIATION> 696,000
<TOTAL-ASSETS> 458,000
<CURRENT-LIABILITIES> 1,567,000
<BONDS> 0
0
0
<COMMON> 149,000
<OTHER-SE> (1,259,000)
<TOTAL-LIABILITY-AND-EQUITY> 458,000
<SALES> 0
<TOTAL-REVENUES> 252,000
<CGS> 17,000
<TOTAL-COSTS> 17,000
<OTHER-EXPENSES> 220,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 131,000
<INCOME-PRETAX> (117,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (117,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (117,000)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
