UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-QSB
(Mark one)
|X| QUARTERLY Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended October 31, 1998
|_| Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____________ to ______________
Commission file number 1-8460
UNIVERSAL MONEY CENTERS, INC.
(Exact name of small business issuer as specified in its charter)
Missouri 43-1242819
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6800 Squibb Road, Shawnee Mission, Kansas 66202
(Address of principal executive offices)
(913) 831-2055
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities and 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 __ No X
Number of shares outstanding of each of the issuer's classes of common
equity as of April 14, 1999: 39,293,069 shares of Common Stock, $.01 par value
per share
Transitional Small Business Disclosure Format: Yes __ No X
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NOTE CONCERNING THIS FILING
The Company intends to file with the SEC its Annual Report on Form 10-KSB
for the fiscal year ended January 31, 1999 on or before its due date, May 3,
1999, which is approximately one week after the date of the filing of this Form
10-QSB. Unless otherwise indicated herein, this Form 10-QSB provides information
concerning the Company as of October 31, 1998 and for the period ended October
31, 1998. The discussion in this Form 10-QSB should be read in conjunction with
the discussions of subsequent periods contained in the Annual Report on Form
10-KSB for the fiscal year ended January 31, 1999.
NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-QSB that
are not statements of historical fact constitute forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These statements involve risks and uncertainties
that may cause actual results to differ materially from those in such
statements. See Part I, Item 2 "Management's Discussion and Analysis or Plan of
Operation - Cautionary Statement Concerning Forward-Looking Statements" for
additional information and factors to be considered with respect to
forward-looking statements.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
UNIVERSAL MONEY CENTERS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
October January
31, 1998 31, 1998
(unaudited)
------------ -----------
CURRENT ASSETS
Cash $ 268,721 $ 374,675
Notes receivable - affiliate 415,000 --
Accounts receivable - trade, less
allowance for doubtful accounts:
October 31, 1998 - $21,380; January
31, 1998 - $21,380 55,158 87,256
Accounts receivable - affiliate 0 2,340
Inventories 300 300
Prepaid expenses and other 13,170 9,176
Interest receivable - affiliate 3,999 2,059
---------- -----------
Total Current Assets 756,348 475,806
---------- -----------
PROPERTY AND EQUIPMENT, At cost
Equipment 3,006,205 2,578,635
Leasehold improvements 117,803 117,803
Vehicles 9,722 9,722
---------- ------------
3,133,730 2,706,160
Less accumulated depreciation 1,769,300 1,475,325
---------- ------------
Total Property and Equipment 1,364,430 1,230,835
------------ -----------
OTHER ASSETS
Deferred income taxes 315,000 315,000
Other 32,155 12,383
------------ -----------
Total Other Assets 347,155 327,383
------------ -----------
Total Assets $ 2,467,933 $2,034,024
============ ===========
See Notes to Consolidated Financial Statements (Unaudited)
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UNIVERSAL MONEY CENTERS, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
October January
31, 1998 31, 1998
(unaudited)
------------- --------------
CURRENT LIABILITIES
Current maturities of long-term debt $ 60,674 $ 206,040
and capital lease obligations
Accounts payable 366,623 296,455
Accounts payable - affiliate 17,877 35,551
Accrued expenses 265,274 223,496
------------- --------------
Total Current Liabilities 710,448 761,542
------------- --------------
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS 644,234 392,945
------------- -------------
STOCKHOLDERS' EQUITY
Common stock; no par value; $.01 stated
value;
40,000,000 shares authorized;
39,851,380 issued
as of 10/31/98 and 1/31/98 398,514 398,514
Additional paid-in capital 18,593,430 18,593,430
Retained earnings (deficit) (16,216,385) 16,450,099)
------------- --------------
2,775,559 2,541,845
Less treasury stock, at cost; common
stock
558,311 shares as of 10/31/98 and (1,662,308) (1,662,308)
1/31/98
------------- --------------
Total Stockholders' Equity 1,113,251 879,537
------------- --------------
Total Liabilities and $2,467,933 $2,034,024
Stockholders' Equity ============= ==============
See Notes to Consolidated Financial Statements (Unaudited)
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UNIVERSAL MONEY CENTERS, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Nine Months Ended
October 31, October 31,
1998 1997 1998 1997
---- ---- ---- ----
NET REVENUES $ 1,335,228 $ 1,002,293 $ 3,731,184 $ 2,889,518
COSTS OF REVENUES 878,972 614,355 2,501,151 1,742,993
--------- ---------- --------- ---------
GROSS PROFIT 456,256 387,938 1,230,033 1,146,525
OPERATING EXPENSES 293,557 297,869 890,669 764,845
--------- ---------- --------- ---------
INCOME FROM OPERATIONS 162,699 90,069 339,364 381,680
--------- ---------- --------- ---------
OTHER INCOME (EXPENSE)
Interest income 9,908 6,185 22,268 15,906
Interest expense (48,055) (17,935) (127,918) (54,616)
Other 0 0 0 0
--------- ---------- --------- ---------
(38,147) (11,750) (105,650) (38,710)
--------- ---------- --------- ---------
INCOME BEFORE INCOME TAXES 124,552 78,319 233,714 342,970
INCOME TAX PROVISION (CREDIT) -- -- -- --
NET INCOME $ 124,552 $ 78,319 $ 233,714 $ 342,970
======== ========= ========= =========
BASIC & DILUTED EARNINGS PER $ 0.0032 $ 0.0020 $ 0.0060 $ 0.0087
SHARE ======== ========= ========= =========
See Notes to Consolidated Financial Statements (Unaudited)
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UNIVERSAL MONEY CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Nine Months
Ended Ended
October 31, 1998 October 31, 1997
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 233,714 $ 342,970
Items not requiring (providing) cash:
Depreciation 304,095 217,066
Loss on disposal of property and
equipment -- 125
Deferred income taxes -- --
Changes in:
Accounts receivable 32,498 (87,251)
Inventories -- 7,873
Prepaid expenses and other (23,766) (473)
Accounts payable and accrued
expenses 94,272 59,214
------------ -----------
Net cash provided by (used in)
operating activities 640,813 539,524
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (296,468) (343,176)
Increase from notes receivable -
affiliate (415,000) (202,000)
Proceeds from sale of property and
equipment -- 150
------------ -----------
Net cash provided by (used in) (711,468) (545,026)
investing activities ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under long-term debt
and capital lease obligations (184,779) (173,203)
Proceeds from issuance of long-term
debt 149,480 51,000
Proceeds from issuance of common stock -- (2,747)
Purchase of treasury stock -- --
------------ -----------
Net cash provided by (used in) (35,299) (124,950)
financing activities ------------ -----------
INCREASE (DECREASE) IN CASH (105,954) (130,452)
CASH, BEGINNING OF PERIOD 374,675 325,646
------------ -----------
CASH, END OF PERIOD $ 268,721 $ 195,194
============ ===========
See Notes to Consolidated Financial Statements (Unaudited)
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UNIVERSAL MONEY CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. General
The consolidated financial statements include the accounts of Universal
Money Centers, Inc. (the "Company"), and its wholly-owned subsidiaries,
Electronic Funds Transfer, Inc., Corporate Payments Systems, Inc. (inactive)
and A.M. Corporation (inactive). All significant intercompany accounts and
transactions have been eliminated in consolidation.
The unaudited consolidated financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Accordingly, they reflect all adjustments that are, in
the opinion of management, necessary for a fair presentation of the financial
results for the interim periods. Certain information and notes normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. The Company believes, however, that the disclosures are adequate to
make the information presented not misleading. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's Annual Report on Form
10-KSB for the fiscal year ended January 31, 1998.
2. Future Changes in Accounting Principles
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This Statement establishes standards for
reporting information about operating segments in annual financial statements of
public business enterprises and requires disclosure of selected information
about operating segments in interim financial reports. The Statement is
effective for financial statements for periods beginning after December 15,
1997. Management has elected to first apply this standard in the Company's 1999
fiscal year-end reporting and believes that the adoption of this Statement will
not have a material effect on the Company's financial reporting.
3. Earnings Per Share
The computation of earnings per share is based upon the weighted average
number of common shares outstanding during the respective period. For all
periods reflected in the Consolidated Financial Statements, the weighted average
number of common shares outstanding was 39,293,069 shares.
4. Supplemental Cash Flow Information
Non-cash items for the nine months ended October 31, 1998 include
purchases of ATMs acquired under capital leases of approximately $141,224
during the nine-month period ended October 31, 1998.
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Item 2. Management's Discussion and Analysis or Plan of Operation
Overview
Universal Money Centers, Inc. (the "Company") operates a regional network
of automated teller machines ("ATMs"). The ATMs provide holders of debit and
credit cards access to cash, account information and other services at
convenient locations and times. At October 31, 1998, the network consisted of
approximately 271 ATMs owned by the Company and its affiliate, Universal Funding
Corporation ("Funding"), 69 ATMs owned by banks and 10 ATMs owned by third party
merchants. ATMs in the Company's network are principally installed in
convenience stores and banks with locations concentrated in the Kansas City and
St. Louis, Missouri and El Paso, Texas metropolitan areas, and the state of
Kansas. The Company also provides ATM network management services to banks and
third parties owning ATMs in the Company's ATM network.
The Company's revenues are principally derived from two types of fees,
which the Company charges for processing transactions on its ATM network. The
Company receives an interchange fee from the issuer of the credit or debit card
for processing a transaction when a cardholder uses an ATM in the Company's
network. In addition, in most cases the Company receives a surcharge fee from
the cardholder when the cardholder makes a cash withdrawal from an ATM in the
Company's network.
Interchange fees are processing fees that are paid by the issuer of the
credit or debit card used in a transaction. Interchange fees vary for cash
withdrawals, balance inquiries, account transfers or uncompleted transactions,
the primary types of transactions that are currently processed on ATMs in the
Company's network. The maximum amount of the interchange fees is established by
the national and regional card organizations and credit card issuers with which
the Company has a relationship. The Company (or its affiliate, Funding) receives
the full interchange fee for transactions on Company owned ATMs, but sometimes
rebates a portion of the fee to the owner of the ATM location under the
applicable lease for the ATM site. The Company also receives the full
interchange fee for transactions on ATMs owned by banks or third party vendors
included within the Company's network, but rebates a portion of each fee to the
bank or third party vendor based upon negotiations between the parties. The
interchange fees received by the Company vary from network to network and to
some extent from issuer to issuer, but generally range from $0.35 to $0.75 per
cash withdrawal. Interchange fees for balance inquiries, account transfers and
denied transactions are generally substantially less than fees for cash
withdrawals. The interchange fees received by the Company from the card issuer
are independent of the service fees charged by the card issuer to the cardholder
in connection with ATM transactions. Service fees charged by card issuers to
cardholders in connection with transactions through the Company's network range
from zero to as much as $2.50 per transaction. The Company does not receive any
portion of the service fees charged by the card issuer to the cardholder.
In most markets the Company imposes a surcharge fee for cash withdrawals.
The Company expanded its practice of imposing surcharge fees in April 1996 when
national debt and credit card organizations changed rules applicable to their
members to permit these fees. Subsequently, surcharge fees have been a
substantial additional source of revenue for the Company and other ATM network
operators. The surcharge fee for ATMs in the Company's network owned by or
located in banks ranges between $0.50 and $1.50 per withdrawal. The surcharge
fee for other ATMs in the Company's network ranges between $0.50 and $2.50 per
withdrawal. The Company receives the full surcharge fee for transactions on
Company owned ATMs, but sometimes rebates a portion of the fees to the owner of
the ATM location under the applicable
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lease for the ATM site. The Company also receives the full surcharge fee for
transactions on ATMs owned by banks and third party vendors included within the
Company's network, but rebates a portion of each fee to the bank or third party
vendor based upon a variety of factors, including transaction volume and the
party responsible for supplying vault cash to the ATM.
The Company's profitability is substantially dependent upon the imposition
of surcharge fees. Any changes in laws or card association rules materially
limiting the Company's ability to impose surcharge fees would have a material
adverse effect on the Company.
In addition to revenues derived from interchange and surcharge fees, the
Company also derives revenues from providing network management services to
banks and third parties owning ATMs included in the Company's ATM network. These
services include 24 hour transaction processing, monitoring and notification of
ATM status and cash condition, notification of ATM service interruptions, in
some cases, dispatch of field service personnel for necessary service calls and
cash settlement and reporting services. The fees for these services are paid by
the owners of the ATMs.
Interchange fees are credited to the Company by networks and credit card
issuers on a periodic basis which is generally either daily or monthly depending
upon the party. Surcharge fees are charged to the cardholder and credited to the
Company by networks and credit card issuers on a daily basis. The Company
periodically rebates the portion of these fees owed to ATM owners and owners of
ATM locations. Fees for network management services are generally paid to the
Company on a monthly basis.
Comparison of Results of Operations for the Three Months and Nine Months Ended
October 31, 1998 and October 31, 1997.
Revenues. The Company's total revenues increased to $1,335,228 for the
three months ended October 31, 1998 from $1,002,293 for the three months ended
October 31, 1997 and increased to $3,731,184 for the nine months ended October
31, 1998 from $2,889,518 for the nine months ended October 31, 1997. This
increase is primarily attributable to an increase in the number of ATMs in the
Company's network on which the Company imposed surcharge fees for cash
withdrawals. The number of such ATMs increased to 327 at October 31, 1998 from
270 at October 31, 1997. Surcharge fees increased to $806,374 or 60.4% of total
revenues for the three months ended October 31, 1998 from $525,753 or 52.5% of
total revenues for the three months ended October 31, 1997. Surcharge fees also
increased to $2,204,350 or 59.1% of total revenues for the nine months ended
October 31, 1998, from $1,471,913 or 50.9% of total revenues for the nine months
ended October 31, 1997. The increase in total revenues is also partially due to
an increase in the number of ATMs in the Company's network, from 300 at October
31, 1997 to 350 at October 31, 1998. The increase in the number of ATMs resulted
in an increase in the number of transactions processed on ATMs in the Company's
network. Revenues derived from interchange fees increased to $260,329 for the
three months ended October 31, 1998 from $190,411 for the three months ended
October 31, 1997, and increased to $726,537 for the nine months ended October
31, 1998 from $582,794 for the nine months ended October 31, 1997. Revenues
received from Funding under a Management Agreement between the Company and
Funding decreased to $132,228 and $445,253 the three months and nine months
ended October 31, 1998, respectively, from $188,737 and $569,884 for the three
months and nine months ended October 31, 1997, respectively. See "-Revenues from
Funding" below. The Company's revenues from providing network management
services to banks and third parties increased to $136,297 and $355,044 for the
three months and nine months ended October 31, 1998,
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respectively, from $97,392 and $264,927 for the three months and nine months
ended October 31, 1997, respectively.
Revenues from Funding. The Company has maintained a business relationship
with Funding since August 1989. The relationship began in 1989 as a result of
the Company's severe financial problems. The operation of the Company's ATM
network generally requires that the Company supply vault cash to ATMs owned by
the Company to fund cash withdrawals. As a result of the Company's financial
problems, lenders were generally unwilling to extend loans partly because of the
concern that the Company's creditors would assert claims against cash physically
located in ATMs owned by the Company. The Company has not had sufficient cash to
supply the vault cash for these ATMs. In order to resolve this problem and to
permit the Company to continue to operate certain ATMs, Funding was formed in
1989 by David S. Bonsal, the Chairman of the Company's Board of Directors, John
L. Settles, the President of the Company from April 1989 through late 1990, and
William Smithson, a shareholder of the Company. Each of these individuals has a
one-third ownership interest in Funding.
Under a Management Agreement between the Company and Funding, Funding
provides vault cash for certain ATMs in the Company's network that are owned by
the Company or Funding, and receives all interchange fees for transactions
processed on these ATMs. At October 31, 1998 and 1997, Funding had vault cash
located in approximately 208 and 209 ATMs, respectively, owned by Funding or the
Company. The Company receives a management fee from Funding under the Management
Agreement for providing services to Funding. The management fee paid to the
Company under the Management Agreement equals Funding's "net income." Funding's
"net income" is defined in the Management Agreement as revenues from interchange
fees, less armored security charges, interest expense on funds borrowed to
provide vault cash, ATM location expenses, debt service related to the purchase
of the ATMs, taxes or insurance on ATMs, and a monthly payment to each of
Funding's shareholders representing a return on their equity investment in
Funding. For additional information, see the Company's 1998 Annual Report on
Form 10-KSB, Item 12, "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -
Universal Funding Corporation."
Cost of Revenues. The Company's cost of revenues increased to $878,972 and
$2,501,151 for the three months and nine months ended October 31, 1998,
respectively, from $614,355 and $1,742,993 for the three months and nine months
ended October 31, 1997, respectively. The principal components of cost of
revenues are salaries, telecommunication services and transaction processing
charges, interchange and surcharge rebates, ATM site rentals, maintenance and
repairs, and depreciation and amortization. This increase is principally due to
an increase in interchange and surcharge rebates paid to third party owners of
ATMs included in the Company's ATM network and to ATM site owners. Rebates
generally increase approximately in proportion to increases in total revenues
from interchange and surcharge fees. The increase is also attributable to
increased depreciation associated with the larger number of ATMs owned by the
Company, and increased telecommunications expenses associated with the larger
number of ATMs in the Company's network.
Gross Margin. Gross profit as a percentage of revenues for the three
months and nine months ended October 31, 1998 was 34.2% and 33.0%, respectively,
and for the three months and nine months ended October 31, 1997 was 38.7% and
39.7%, respectively. The decrease for the three months and nine months ended
October 31, 1998 was caused by a number of factors, including increased
interchange and surcharge rebates, increased depreciation expense resulting
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from the purchase of new ATMs and increased personnel expense and
telecommunications charges resulting from growth in the ATM network.
Operating Expenses. The Company's total operating expenses were $293,557
and $890,669 for the three months and nine months ended October 31, 1998,
respectively, compared to $297,869 and $764,845 for the three months and nine
months ended October 31, 1997, respectively. The principal components of
operating expenses are administrative salaries and benefits, occupancy costs,
sales and marketing expenses and administrative expenses. The increase for the
nine months ended October 31, 1998 is principally attributable to salary
increases and other personnel expenses.
Other Income (Expense). The Company extends short-term loans to Funding,
which uses the proceeds as vault cash in the ATMs owned by Funding. These loans
generally have a term of one month and bear interest at 12% per annum. Interest
income primarily represents the interest paid by Funding to the Company on the
outstanding balance of these loans. Interest income increased to $9,908 and
$22,268 for the three months and nine months ended October 31, 1998,
respectively, from $6,185 and $15,906 for the three months and nine months ended
October 31, 1997, respectively, as a result of higher average outstanding
balances.
Interest Expense. Interest expense increased to $48,055 and $127,918 for
the three months and nine months ended October 31, 1998, respectively, from
$17,935 and $54,616 for the three months and nine months ended October 31, 1997,
respectively. This increase was attributable to increased capital lease
obligations and notes payable related to the acquisition of additional ATMs.
Income Taxes. The Company paid no income taxes for the three months or
nine months ended October 31, 1998 and October 31, 1997, utilizing operating
loss carryforwards to reduce taxable income to zero. In addition, the Company
has recorded a deferred tax credit of $315,000 at January 31, 1998, which is
primarily a result of operating loss carryforwards which management believes are
more likely than not to be realized prior to their expiration between 2005 and
2012. Realization is dependent on generating sufficient future taxable income to
absorb the carryforwards. The amount of the deferred tax credit considered
realizable could be increased or reduced in the near term if estimates of future
taxable income during the carryforward period change. As of October 31, 1998,
the Company had approximately $195,000 of tax credits available to offset future
federal income taxes. These credits expire between 1999 and 2002. The Company
also has unused operating loss carryforwards of approximately $1,600,000, which
expire between 2005 and 2012.
Net Income. The Company had net income of $124,552, or $0.0032 per share,
for the three months ended October 31, 1998, compared to net income of $78,319,
or $0.0020 per share, for the three months ended October 31, 1997. The Company
had net income of $233,714, or $0.0060 per share, for the nine months ended
October 31, 1998, compared to net income of $342,970, or $0.0087 per share, for
the nine months ended October 31, 1997. Net income for the three months ended
October 31, 1998 was higher principally as a result of substantially higher
revenues and reduced operating expenses, as described above. Net income for the
nine months ended October 31, 1998 was lower principally as a result of higher
costs of revenues and operating expenses, as described above.
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Liquidity and Capital Resources
At October 31, 1998, the Company had working capital of $45,900, compared
to a working capital deficit of $285,736 at January 31, 1998. The ratio of
current assets to current liabilities improved to 1.06 at October 31, 1998 from
.62 at January 31, 1998.
The Company has funded its operations and capital expenditures from cash
flow generated by operations, capital leases and borrowings from lenders. Net
cash provided by operating activities was $640,813 for the nine months ended
October 31, 1998 and $539,524 for the nine months ended October 31, 1997. Net
cash provided in the nine months ended October 31, 1998 consisted primarily of
net income of $233,714, depreciation of $304,095, a decrease in accounts
receivable of $32,498 and an increase in accounts payable of $94,272, partially
offset by an increase in prepaid expenses of $23,766. Net cash used in investing
activities was $711,468 for the nine months ended October 31, 1998 and $545,026
in the nine months ended October 31, 1997. The increase in net cash used in
investing activities resulted primarily from increased loans to Funding for
vault cash and increased purchases of plant and equipment (principally ATMs) for
the nine months ended October 31, 1998. Net cash used in financing activities
was $35,299 for the nine months ended October 31, 1998, compared to net cash
used in financing activities of $124,950 for the nine months ended October 31,
1997. The Company had cash and cash equivalents of $268,721 at October 31, 1998,
compared to cash and cash equivalents of $374,675 at January 31, 1998.
During the nine months ended October 31, 1998, the Company borrowed
approximately $290,704 under loan agreements and capital leases for the purchase
of approximately 39 additional ATMs. These obligations are in addition to
existing capital leases for 42 ATMs under capital lease agreements that expire
between 2000 and 2001.
Management believes that the anticipated cash flow from operations will
provide the capital resources necessary to meet the Company's current working
capital needs and existing capital expenditure obligations. The Company expects
that its capital expenditures will increase in the future to the extent that the
Company is able to pursue its strategy of expanding its network and increasing
the number of installed ATMs. These increased expenditures are expected to be
funded from cash flow from operations, capital leases and additional borrowings,
to the extent financing is available. There can be no assurance that the Company
will be able to obtain financing under a credit facility on terms that are
acceptable to the Company or at all. The Company's expansion plans will be
limited if the Company is unsuccessful in obtaining a credit facility or other
financing.
Impact of Inflation and Changing Prices
While subject to inflation, the Company was not impacted by inflation
during the past two fiscal years in any material respect.
Year 2000 Compliance
General Discussion. The Year 2000 issue is the result of computer code
being written using two digits to represent years rather than four digits, which
include the century designation. Without corrective action, it is possible that
computer programs could recognize a date using "00" as the year 1900 rather than
the year 2000. Additionally, certain equipment may contain
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embedded chips that include date functions that may be affected by the
transition to the Year 2000. In some systems, Year 2000 problems could result in
a system failure or miscalculations causing disruptions of operations and an
inability to process transactions.
As the operator of an ATM network, the Company relies upon computers and
related telecommunications equipment for the operation of its business. The
Company acts as an intermediary for the transfer of data between its clients and
third parties, and in doing so supplies the operating and technical resources
necessary to cause electronic data to be transmitted. The Company also owns and
operates ATMs, which utilize computer hardware and software to operate.
The Company has initiated a Year 2000 Project ("Project2000") to locate
and address possible Year 2000 problems. The Company has assigned a project
coordinator for Project2000 who generally manages Project2000, ensures that
Project2000 meets or exceeds requirements set forth by banking regulatory
agencies including the Federal Deposit Insurance Corporation, the Federal
Reserve Bank, and the Office of the Comptroller of the Currency, and assists in
identifying points of concern and providing solutions.
Status of Year 2000 Readiness. The Company's Project2000 consists of
the following five phases: awareness, assessment, corrective action,
validation and implementation.
The awareness phase consists of defining the scope of the Year 2000
problem and establishing a corporate infrastructure and overall strategy to
perform compliance work. In the assessment phase, the Company attempts to
identify all hardware, software, networks, ATMs, other various processing
platforms and customer and vendor interdependencies affected by the Year 2000
problem. This assessment goes beyond information systems and includes equipment
and support systems that may be dependent on embedded microchips. The corrective
action phase involves code enhancements, hardware and software upgrades, system
replacements, vendor certification and other associated changes. The validation
phase involves the testing of incremental changes to hardware and software
components. In the implementation phase, systems are to be certified as Year
2000 compliant. For any systems that are not determined to be compliant, the
consequences must be assessed, and corrective actions or contingency plans put
into effect.
Awareness Phase. The Company's Project2000 encompasses an overall
strategy to address Year 2000 problems. The Company's Project2000 focuses
chiefly upon the in-house, real-time, on-line systems, but also includes
assessing and assuring year 2000 compliance from third parties. Because of the
seriousness of the year 2000 issues, the Company appointed a Project2000
Coordinator and established a Project2000 team consisting of the Coordinator,
all officers of the Company and the Accounting Manager.
To determine the size of the compliance project relating to internal
systems, the Company searched all of its production computer programs for
references to, and actions taken by reference to, the date (year in particular),
and compiled a list of those programs for evaluation for Project2000 issues. The
Company searched for date references that related to performing calculations or
that provided application program logic affecting the decision path of the
application, and date-driven calculations using "00" as an operand.
Page - 13
<PAGE>
The Company also identified all third parties whose ability to comply
with Year 2000 problems might affect the Company's operations, which include
product and service vendors and suppliers, including card issuers and other
real-time connections, and clients.
The Company has completed the awareness phase.
Assessment Phase. The assessment phase involves three components: (1)
determining Year 2000 compliance of the Company's internal systems used to
process data and to transfer data between its clients and third parties,
including the Company's computer switch, (2) determining Year 2000 compliance of
its individual ATMs and (3) determining Year 2000 compliance of third party
vendors and clients.
Internal Systems. With respect to the Company's internal data
processing and transfer systems, in January 1985, as a result of incorrect
year-end date processing, the Company implemented a policy requiring all
production programs making date-related processing decisions to do so using
Julian dates. This form of date processing should not be sensitive to the
century rollover. Consequently, the Company's computer switch was developed
using a year 2000 compliant philosophy. The principal piece of equipment
comprising the computer switch is a Tandem computer. In 1997, the Company
entered into a lease for a new Tandem computer that the Company believes is Year
2000 compliant. The Company also believes that the operating software for the
new system is Year 2000 compliant. To assess its internal systems, the Company
evaluated all references to, and actions taken by reference to, the date (year
in particular), in its internal systems. The Company also examined systems and
equipment that may be dependent upon embedded microprocessors. The Company
concluded from the evaluation that its internal systems were Year 2000
compliant. In order to verify this conclusion, a comprehensive test was
completed on September 30, 1997 of all of the Company's critical applications.
Prior to cutting over from its old production system to its new production
system on that date, the Company had the opportunity to set the clock forward in
a controlled environment to test all internal systems and program functionality
with regard to the year 2000 rollover. The test revealed no Year 2000 problems.
The Company believes its conclusion is supported by the fact
that the Company's system is not highly date-dependent. The Company processes
transactions in segments from 2:00 p.m. one day through 2:00 p.m. the next day.
Consequently, the Company believes that the window of risk for the Company's
internal systems from the year 2000 rollover should be limited to a maximum of
24 hours. Furthermore, the Company processes dates and makes all programmatic
date decisions based on a Julian representation of the date which should not be
vulnerable to the year 2000 rollover. The Company believes that its conclusion
is further supported by the fact that all of the application code was developed
in-house, all source code is intact and available, and the Company has the
in-house expertise to revise and maintain the software as needed for the year
2000 rollover.
Individual ATMs. The Company has assessed whether its individual
ATMs are Year 2000 compliant and determined that as of February 28, 1999
approximately 70% of the Company's individual ATMs are Year 2000 compliant or
can be made Year 2000 compliant with the purchase of software upgrades from the
manufacturer.
Third Party Compliance. The Company has attempted to obtain
initial certification from its "higher risk" vendors as to Year 2000
Compliance. The Company has mailed questionnaires to these vendors to
identify and, to the extent possible, to resolve issues
Page - 14
<PAGE>
involving Year 2000 issues. Responses to these questionnaires have been verified
against information included with current releases of vendors' products and
services and on vendor web sites and are shared with the Company's clients upon
request. In addition, the Company has engaged in joint testing with most of
these vendors and service providers, testing each party's system and the
interface between the systems. The Company believes that all mission critical
vendors and service providers have completed their internal Year 2000 corrective
actions. Service providers, vendors and suppliers whom the Company deems "no
risk" will not be contacted. The Company is also coordinating with its clients
regarding their activities related to the Year 2000 problem. Most of the
Company's clients maintain their own application programs, although they utilize
the Company's computer and network resources. The Company conducted its own
testing on the systems of its largest clients, and did not discover any Year
2000 problems.
The assessment phase is complete.
Corrective Action Phase. The corrective action phase involves
addressing compliance problems identified during the assessment phase.
Internal Systems. Because the assessment phase revealed no
material Year 2000 problems, the Company does not plan any system replacements,
code enhancements or hardware or software upgrades. However, the Company does
plan to implement "mature" releases of the Tandem operating system and to
monitor Tandem Year 2000 Compliance statements regarding such releases.
Individual ATMs. With respect to those ATMs that can be made
Year 2000 compliant with the purchase of software upgrades from the
manufacturer, the Company expects to obtain software upgrades at no charge
because of the recent date of purchase of these ATMs. However, in the event the
Company must purchase ATM software upgrades, management estimates that the cost
should not exceed $50,000. With respect to the 30% of its ATMs that are not Year
2000 compliant and cannot be upgraded, the Company expects to replace
approximately half of these ATMs prior to the Year 2000 as part of an ongoing
program of replacing ATMs and other equipment for technology and maintenance
reasons. Some of these ATMs may be replaced with used Year 2000 compliant ATMs
to minimize cost. The balance of the ATMs that are not Year 2000 compliant are
located in marginally profitable locations, will not be replaced and will be
phased out.
Third Party Compliance. Because no material Year 2000 problems
have been discovered to date, the Company does not currently plan any corrective
action with respect to service providers, vendors, suppliers and clients.
The corrective action phase has been completed as to the Company's
internal systems and third party vendors, although as described below, the
Company intends to continue testing in these areas. The corrective action phase
with respect to individual ATMs will be completed prior to the Year 2000 when
all replacement or upgraded ATMs are expected to be in operation.
Validation Phase. During the validation phase, the Company will
continue to test its internal systems, test its new and upgraded ATMs for Year
2000 compliance and engage in further testing with certain third parties.
Page - 15
<PAGE>
Internal Systems. The Company will test and validate all
incremental changes to hardware, software, and connections with other systems as
those changes (or additions) occur in the ordinary course of business prior to
Year 2000. All users of the Company's products and services have been asked to
validate the Company's Year 2000 compliance. All such testing should be complete
by August 31, 1999.
Individual ATMs. Year 2000 compliance of all replacement and
upgraded ATMs will be tested prior to or at the time such ATMs are brought on
line.
Third Party Compliance. During the first half of 1999, the
Company intends to review and possibly "re-validate" certifications from outside
service providers, vendors, and suppliers for compliance and will request each
to provide quarterly statements of compliance through the end of 1999.
The validation phase will be completed at the times described above.
Implementation Phase. The Company plans a final full internal system
test on or about September 1, 1999. Any resulting component failure (internal
and external) will be resolved to the Company's satisfaction prior to December
30, 1999, or the component will be (1) eliminated or replaced or (2) suspended
from production on December 30, 1999 and implemented after January 1, 2000 and
after re-certification.
Regulatory and Independent Assessment. In addition to developing an
internal risk assessment methodology with respect to Year 2000 issues, the
Company is subject to external examinations and project reviews by regulatory
agencies and governmental bodies of the federal government. To date, these
examinations have not identified any material issues regarding the Company's
Year 2000 compliance efforts.
At this time, the Company does not anticipate obtaining verification or
validation by independent third parties to assess Year 2000 risk. The Company's
Project2000 team continues to review the Company's readiness for the Year 2000.
Year 2000 Compliance of Support Systems. In addition to computers and
related systems, the operation of office and facilities equipment, such as fax
machines, photocopiers, security systems, air conditioning, fire systems and
other common devices may be affected by Year 2000 problems. The Company does not
expect to devote substantial resources or time to evaluating potential Year 2000
problems with respect to these systems, other than contacting the manufacturer
or provider of these systems to determine Year 2000 compliance and taking or
arranging for appropriate corrective action.
Costs of Year 2000 Compliance. The principal cost incurred by the Company
in connection with Project2000 will be the cost of replacing obsolete ATM
equipment as part of the Company's ongoing process of upgrading and modernizing
its ATMs. As of April, 1999, approximately 70 NCR model 1773 ATMs currently in
operation are not and will not be made Year 2000 compliant. These ATMs are
predominately in low volume sites, many of which do not support the expense of
replacement with new equipment. The Company expects to simply pull out of the
lowest tier of these sites, replace the medium volume sites with low cost
pre-owned equipment, and replace the highest volume sites with new and higher
end pre-owned equipment. The expected total cost of this project is
approximately $400,000 and the expected cost in fiscal year 2000 (prior to
December 31, 1999) is approximately $225,000.
Page - 16
<PAGE>
The Company has not identified any other significant costs directly
relating to the Year 2000 problem. The cost of compliance testing of external
client systems is billed to the Company clients. Testing and repair, and the
day-to-day burden of Project2000 has consumed incremental overhead of managers
and executive officers of the Company. Such overhead has been effectively
absorbed with no material effect on budgets and operations.
Possible Consequences of Year 2000 Problems. It is not possible to predict
with any certainty the extent and nature of Year 2000 problems that the Company
may encounter. Management believes that the following are possible consequences
of Year 2000 problems that could arise:
o operational inconveniences and inefficiencies for the Company and its
clients which will divert management's time and attention and financial
and human resources from ordinary business activities;
o serious system failures that will cause material business disruptions or
require significant efforts by the Company or its clients to prevent or
alleviate material business disruptions;
o routine business disputes and claims for pricing adjustments or
penalties due to Year 2000 Problems incurred by clients, which would be
resolved in the ordinary course of business; and
o serious business disputes alleging that the Company failed to comply
with the terms of contracts or industry standards of performance, some
of which could result in litigation or contract termination.
Contingency Plans. The Company has developed department-by-department
contingency plans to be implemented if its efforts to identify and correct Year
2000 Problems affecting its internal systems are not effective. Depending upon
the systems affected, these plans include accelerated replacement of affected
equipment or software; short- to medium-term use of backup sites, equipment, and
software, increased work hours for Company personnel; and similar approaches.
Disclaimer. Management of the Company believes that it is not possible to
determine with complete certainty that all Year 2000 problems affecting the
Company or its clients have been or will be identified or corrected. The number
of devices that could be affected and the interactions among these devices are
simply too numerous. In addition, no one can accurately predict how many Year
2000-related failures will occur or the severity, duration, or financial
consequences of any such failure.
The Company's policy is not to acquire hardware, software or other
technology that is not contractually represented by the vendor as Year 2000
compliant. However, the Company cannot be sure that all of these products are in
fact Year 2000 compliant. In addition, although the Company does not have any
contractual responsibility to ensure that its clients' application programs are
compliant, if its clients experience Year 2000 problems with such applications,
such clients may reduce or cease use of the Company's products and computing
resources. The successful operation of the Company's data processing and
transfer systems is dependent upon the proper functioning of the systems of
third parties that utilize the Company's services. Any
Page - 17
<PAGE>
failure of third parties to resolve Year 2000 problems in a timely manner could
materially adversely affect the Company's operations.
There can be no assurance that the Company will identify and resolve all
Year 2000 issues in a timely manner. Any failure by the Company to adequately
resolve all Year 2000 issues could have a material adverse effect on the
Company's business, financial condition, and results of operation.
Forward-Looking Statements. Many of the statements contained in this
discussion of Year 2000 issues are "forward-looking statements." These
statements are not guarantees of future performance or results. They involve
risks, uncertainties and assumptions. Consequently, actual results may differ
materially from those discussed in these forward-looking statements. See Item 6
"Management's Discussion and Analysis OR PLAN OF OPERATION Cautionary Statement
Concerning Forward-Looking Statements" for additional information and factors to
be considered with respect to forward-looking statements.
Future Changes in Accounting Principles
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information." This Statement establishes standards for
reporting information about operating segments in annual financial statements of
public business enterprises and requires disclosure of selected information
about operating segments in interim financial reports. The Statement is
effective for financial statements for periods beginning after December 15,
1997. Management has elected to first apply this standard in the Company's 1999
fiscal year-end reporting and believes that the adoption of this Statement will
not have a material effect on the Company's financial reporting.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-QSB that
are not statements of historical fact constitute "forward-looking statements"
within the meaning of Section 21E of the Exchange Act. These statements are
subject to risks and uncertainties, as described below.
Examples of forward-looking statements include, but are not limited to:
(i) projections of revenues, income or loss, earnings or loss per share, capital
expenditures, the payment or non-payment of dividends, capital structure and
other financial items, (ii) statements of plans and objectives of the Company or
its management or Board of Directors, including plans or objectives relating to
the products or services of the Company, (iii) statements of future economic
performance, and (iv) statements of assumptions underlying the statements
described in (i), (ii) and (iii). Forward-looking statements can often be
identified by the use of forward-looking terminology, such as "believes,"
"expects," "may," "will," "should," "could," "intends," "plans," "estimates" or
"anticipates," variations thereof or similar expressions.
Forward-looking statements are not guarantees of future performance or
results. They involve risks, uncertainties and assumptions. The Company's future
results of operations, financial condition and business operations may differ
materially from those expressed in these forward-looking statements. Investors
are cautioned not to put undue reliance on any forward-looking statement.
Page - 18
<PAGE>
There are a number of factors that could cause actual results to differ
materially from those discussed in the forward-looking statements, including
those factors described below. Other factors not identified herein could also
have such an effect. Among the factors that could cause actual results to differ
materially from those discussed in the forward-looking statements are the
following:
o Changes in laws or card association rules affecting the Company's
ability to impose surcharge fees, and continued customer willingness
to pay surcharge fees;
o The ability of the Company to form new strategic relationships and
maintain existing relationships with issuers of credit cards and
national and regional card organizations;
o The ability of the Company to expand its ATM base and transaction
processing business;
o The availability of financing at reasonable rates for vault cash and
for other corporate purposes, including funding the Company's
expansion plans;
o The ability of the Company to maintain its existing relationships with
two operators of combination convenience stores and gas stations at
which the Company maintains 44 and 34 ATMs, respectively, as of
January 31, 1998;
o The ability of the Company to keep its ATMs at other existing
locations at reasonable rental rates and to place additional ATMs in
preferred locations at reasonable rental rates;
o The extent and nature of competition from financial institutions,
credit card processors and third party operators, many of whom have
substantially greater resources than the Company;
o The ability of the Company to maintain its ATMs and information
systems technology without significant system failures or breakdowns;
o The ability of the Company to cause its ATMs and information systems
to be Year 2000 compliant and the extent to which the systems of card
issuers, card organizations, banks and other companies on which the
Company's systems rely are Year 2000 compliant;
o The extent of losses from errors and omissions, employee dishonesty
and vault cash losses, for which the Company does not maintain
insurance;
o The ability of the Company to develop new products and enhance
existing products to be offered through ATMs, and the ability of the
Company to successfully market these products;
o The ability of the Company to identify suitable acquisition
candidates, to finance and complete acquisitions and to successfully
integrate acquired assets and businesses into existing operations;
o The ability of the Company to retain senior management and other key
personnel;
Page - 19
<PAGE>
o Changes in general economic conditions.
Any forward-looking statement contained herein is made as of the date of this
document. The Company does not undertake to publicly update or correct any of
these forward-looking statements in the future.
PART II - OTHER INFORMATION
Item - 6 Exhibits and Reports on Form 8-K.
(a) Exhibits
The exhibits required by this item are listed in the Index to
Exhibits set forth at the end of this Form 10-QSB.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended October 31, 1998.
Page - 20
<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, thereunto duly
authorized.
UNIVERSAL MONEY CENTERS, INC.
(Registrant)
Date: April 28, 1999 By: /s/ David S. Bonsal
--------------------------------
David S. Bonsal
Chairman of the Board
and Chief Executive Officer
Date: April 28, 1999 By: /s/ Dave A. Windhorst
--------------------------------
Dave A. Windhorst
President
(Principal Financial and Accounting Officer)
Page - 21
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
3.1* Articles of Incorporation of the Company, as amended
3.2* Amended and Restated Bylaws of the Company
4.1* Promissory Note dated June 3, 1996 issued by the Company to Bank
21 (formerly The Farmers Bank)
4.2* Business Loan Agreement dated June 3, 1996 between the
Company and Bank 21 (formerly The Farmers State Bank)
4.3* Promissory Note dated August 26, 1996 issued by the Company to
Bank 21 (formerly The Farmers State Bank)
4.4* Business Loan Agreement dated August 26, 1996 between
the Company and Bank 21 (formerly The Farmers State
Bank)
4.5* Commercial Security Agreement dated August 26, 1996
between the Company and Bank 21 (formerly The Farmers
State Bank)
4.6** Promissory Note dated April 9, 1998 issued by the Company to
Bank 21 (formerly The Farmers Bank)
4.7** Negative Pledge Agreement dated April 9, 1998 between
the Company and Bank 21 (formerly The Farmers State
Bank)
4.8** Commercial Security Agreement dated April 9, 1998
between the Company and Bank 21 (formerly The Farmers
State Bank)
10.1* Agreement dated August 15, 1989 among the Company, Funding,
David S. Bonsal, John L. Settles and William Smithson
10.2* Addendum dated August 29, 1989 among the Company, Funding,
David S. Bonsal, John L. Settles and William Smithson
10.3* Letter Agreement dated June 12, 1997 between the Company and
Funding
10.4* Master Equipment Lease Agreement dated October 18, 1996
between the Company and Newcourt Communications Finance
Corporation (formerly AT&T Credit Corporation)
Page - 22
<PAGE>
10.5* Master Equipment Lease Agreement Schedule dated December 30,
1996, between the Company and Newcourt Communications Finance
Corporation (formerly AT&T Credit Corporation), as amended
10.6* Master Equipment Lease Agreement Schedule dated October 30,
1996, between the Company and Newcourt Communications Finance
Corporation (formerly AT&T Credit Corporation)
10.7* Master Equipment Lease Agreement Schedule dated February 28,
1997, between the Company and Newcourt Communications Finance
Corporation (formerly AT&T Credit Corporation)
10.8** Master Lease Agreement dated February 28, 1998 between the
Company and Diebold Credit Corporation.
10.9** Lease Schedule dated April 20, 1998 between the Company and
Diebold Credit Corporation.
10.10 Assignment and Delegation dated September 25, 1998 among the
Company, as assignor, Diebold Incorporated, as seller, and
Diebold Credit Corporation, as assignee.
27 Financial Data Schedule
* Incorporated by reference from the exhibit to the registrant's Annual Report
on Form 10-KSB for the fiscal year ended January 31, 1998 which bears the same
exhibit number.
**Incorporated by reference from the exhibit to the registrant's Quarterly
Report on Form 10-QSB for the quarter ended April 30, 1998 which bears the same
exhibit number.
Page - 23
ASSIGNMENT AND DELEGATION
Lessee: UNIVERSAL MONEY CENTERS, INC. Master Lease 10319
THIS ASSIGNMENT AND DELEGATION MADE AS OF, by and between UNIVERSAL MONEY
CENTERS, INC. ("Assignor"), Diebold, Incorporated ("Seller") and, Diebold Credit
Corporation ("Assignee").
WHEREAS, Assignor and Seller are parties to a Memorandum of Agreement dated,
September 2nd 1998, ("Agreement"), which provides, in part, for the installation
and/or sale of certain equipment ("Equipment") to Assignor; and
WHEREAS, Assignor and Assignee intends to enter into a Master Equipment Lease of
even date with respect to the Equipment ("Lease"); and
WHEREAS, Assignor intends to assign certain of its rights, and to delegate
certain of its obligations, under the Agreement, as set forth below, to
Assignee; and
WHEREAS, Seller intends to consent to such assignment and delegation.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties agree as follows:
(d) ASSIGNMENT
Assignor hereby assigns to Assignee, Assignor's right to purchase and receive
title to the Equipment pursuant to the Agreement. All other rights of Assignor,
under the Agreement, are not assigned to Assignee and shall continue to run
directly to Assignor, provided, that, upon termination of the Lease, for any
reason, Assignor shall assign to Assignee all of Assignor's then remaining
rights (if any) under the Agreement.
(d) WARRANTIES
Nothing contained herein shall be deemed to assign, modify, limit or expand the
rights, warranties, remedies, liabilities and/or any limitations of such rights,
warranties, remedies and liabilities contained in the Agreement, and Assignor
shall have no greater rights, warranties, or remedies than those provided
pursuant to the Agreement. Assignor acknowledges that Assignee is a wholly owned
subsidiary of Seller, and agrees that Assignee shall have no liability to
Assignor as a result of any act or omission by Seller.
(d) DELEGATION
Assignor hereby delegates to Assignee, and Assignee hereby agrees to perform,
Assignor's obligation under the Agreement to pay the purchase price for the
Equipment as set forth in the Agreement, and any applicable taxes as described
in Section 5 of the Agreement (the "Purchase Price"), provided, that, Assignee
receives a properly executed and delivered Certificate of Acceptance with
respect to the Equipment from Assignor in accordance with the Lease. Assignor
shall, at all times, be obligated to Seller to perform all of the obligations of
Assignor pursuant to the Agreement, other than the obligation to pay the
Purchase Price. Assignee shall have no duty to perform any of the Assignor's
obligations under the Agreement, other than the obligation to pay the Purchase
Price.
(d) CONDITION SUBSEQUENT
If Assignor fails to deliver a Certificate of Acceptance to Assignee pursuant to
Section 2 of the Lease, this Assignment and Delegation shall become null and
void, and of no force or effect. In such event:
(d) Assignor shall promptly pay to Assignee the aggregate amount of all
portions of the Purchase Price previously paid to Seller by Assignee,
plus interest at the rate of one and one-half percent (1-1/2%) per
month, (18% per annum) or such lesser rate as may be the maximum rate
permitted under applicable law, calculated daily on the aggregate amount
of such previously paid portions of the Purchase Price from the date of
payment by Assignee to Seller, to the date of repayment by Assignor to
Assignee hereunder; and
(b) the delegation set forth at Section 3 shall be of no further effect,
and Assignee shall have no further obligations as a result of that
delegation.
Page 1 of 6
<PAGE>
(d) CONSENT
Seller hereby consents to the terms and conditions of this Assignment and
Delegation, provided, that:
(d) This Assignment and Delegation shall not release Assignor of any of
its duties or liabilities to Seller pursuant to the Agreement, except
that if Assignor executes and delivers a Certificate of Acceptance to
Assignee pursuant to Section 2 of the Lease, Assignor shall be relieved
of its obligations to pay the Purchase Price; and
(b) Seller shall have no liability to Assignee except to transfer title to
Assignee upon payment of the Purchase Price.
(d) GENEREAL
(d) This Assignment and Delegation constitutes the final agreement of the
parties hereto with respect to the subject matter hereof, and supersedes
all previous negotiations, proposals, commitments, writings,
advertisements, publications and understandings of any nature
whatsoever.
(b) Except as specifically provides herein, any changes to the Assignment
and Delegation shall become effective only if mutually agreed upon in
writing by the duly authorized representatives of all the parties
hereto. This Assignment and delegation shall not be modified or amended
or any rights of a party to it waived except by such a writing.
(c) Section headings are inserted for convenience only and shall not be
used in any way to construe the terms of this Assignment and Delegation.
(d) This agreement shall be of no effect until accepted by Assignee at its
Corporate Offices in Canton, Ohio, and shall be governed and construed
in accordance with the laws of the State of Ohio. Assignor consents, in
all actions and proceedings arising from this agreement, to the
exclusive jurisdiction of the Federal District Court of the Northern
District of Ohio, Eastern Division, or any State Court located within
Stark County, Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Delegation to be duly executed as of the date first set forth above.
DIEBOLD, INCORPORATED (Seller) DIEBOLD CREDIT CORPORATION (Assignee)
By: /s/ P.K. Gwich By: /s/ Robert J. Warren
------------------------------ -------------------------------
Title: Contract Administration Title: Vice President & Treasurer
------------------------------ ------------------------------
UNIVERSAL MONEY CENTERS, INC. (Assignor)
By: /s/ Pamela A. Glenn
------------------------------ -------------------------------
Title: Vice President
------------------------------ -------------------------------
Page 2 of 6
<PAGE>
DIEBOLD CREDIT CORPORATION
LEASE SCHEDULE
This Lease Schedule is executed pursuant to the subject Master Lease
Agreement (Master Lease), the terms and conditions of which are incorporated
herein by reference.
The equipment described in the Schedule "A" hereto ("the Equipment") is leased
pursuant to the terms and conditions of this Lease Schedule and the Master
Lease.
Lessor: Lessee:
DIEBOLD CREDIT CORPORATION UNIVERSAL MONEY CENTERS, INC.
5995 Mayfair Rd 6800 SQUIBB RD
North Canton, Oh. 44720 OVERLAND PARK, KS 66202
<TABLE>
<CAPTION>
Lease Schedule, Page 2 of 2
Master Lease No. 10319________Dated: 2/28/98
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Sales Order 2. Term 3. Description 4. Domicile Location 5. Cost 6. Basic
No. Rent
- ------------------------------------------------------------------------------------------------
0499-01265-11 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-12 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-13 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-14 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-15 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-16 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-17 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-18 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-19 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-20 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-21 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-22 60 CSP-200 ATM WITH TWO * $8,005.00 $$163.30
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
* To be provided by $
Lessee at
installation.
- ------------------------------------------------------------------------------------------------
Side One
DIEBOLD CREDIT CORPORATION, 5995 Mayfair Road, North Canton, Ohio
44720; PHONE (330) 490-6900
Page 3 of 6
</TABLE>
<PAGE>
DIEBOLD CREDIT CORPORATION
LEASE SCHEDULE
1. Sales Order No.: This number will correspond to the Sales Agreement signed
by Customer and Diebold Inc. and assigned to Diebold Credit Corporation for
payment.
2. Term: Will begin on the 1st day of the month following the acceptance date
listed on the Schedule "A" and will continue for the number of months
listed under that section.
3. Description: Briefly describes the equipment that is itemized on the
Schedule "A"
4. Domicile Location: The equipment will be housed at this location unless
approved by lessor.
5. Cost: This is the investment that is used to determine Basic Rent and is
taken from the Sales Agreement, any changes negotiated between Lessee and
Manufacturer must be approved by lessor.
6. Basic Rent: Will be the monthly rental payments in the amount set forth in
the Lease Schedule or if different, the rent payment in the Schedule "A"
and Acceptance Certificate will become the rental payment.
Additional Terms:
Theparties agree that this lease is a "finance lease" as defined by Article
2A-103(g) of the Uniform Commercial Code.
Lessee acknowledges that it has either a) received, reviewed and approved any
written supply contract from the manufacturer or supplier ("Supplier") covering
the Equipment purchased from Supplier by Lessor for lease to Lessee, or b) has
been informed of the identity of the Supplier, that it may have rights under the
supply contract, and that Lessee may contact Supplier for a description of any
such rights.
This Lease Schedule will apply only to the Schedule "A" document signed and
approved by Lessee.
By execution hereof, the signer certifies
that he/she has read, accepted and duly
executed this Lease Schedule to the Master
Lease Agreement on behalf of Lessee.
Lessor: DIEBOLD CREDIT CORPORATION Lessee: UNIVERSAL MONEY CENTERS, INC.
By: /S/ Robert J. Warren By: /s/ Pamela A. Glenn
------------------------------ -------------------------------
Title: Vice President & Treasurer Title: Vice President
------------------------------ ------------------------------
Date: 10/05/98 Date: 9-25-98
------------------------------ ------------------------------
Side Two
DIEBOLD CREDIT CORPORATION, 5995 Mayfair Road, North Canton, Ohio 44720;
PHONE (330) 490-6900
Page 4 of 6
<PAGE>
DIEBOLD CREDIT CORPORATION
LEASE SCHEDULE
This Lease Schedule is executed pursuant to the subject Master Lease
Agreement (Master Lease), the terms and conditions of which are incorporated
herein by reference. The equipment described in the Schedule "A" hereto ("the
Equipment") is leased pursuant to the terms and conditions of this Lease
Schedule and the Master Lease.
Lessor: Lessee:
DIEBOLD CREDIT CORPORATION UNIVERSAL MONEY CENTERS, INC.
5995 Mayfair Rd 6800 SQUIBB RD
North Canton, Oh. 44720 OVERLAND PARK, KS 66202
<TABLE>
<CAPTION>
Lease Schedule, Page 1 of 2
Master Lease No. 10319________Dated: 2/28/98
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Sales Order 2. Term 3. Description 4. Domicile Location 5. Cost 6. Basic
No. Rent
- ------------------------------------------------------------------------------------------------
0499-01265-00 60 CSP-100 ATM WITH TWO * $6,505.00 $$132.70
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-01 60 CSP-100 ATM WITH TWO * $6,505.00 $$132.70
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-02 60 CSP-100 ATM WITH TWO * $6,505.00 $$132.70
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-03 60 CSP-100 ATM WITH TWO * $6,505.00 $$132.70
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-04 60 CSP-100 ATM WITH TWO * $6,505.00 $$132.70
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-05 60 CSP-100 ATM WITH TWO * $6,505.00 $$132.70
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-06 60 CSP-100 ATM WITH TWO * $6,505.00 $$132.70
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-07 60 CSP-100 ATM WITH TWO * $6,505.00 $$132.70
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-08 60 CSP-100 ATM WITH TWO * $6,505.00 $$132.70
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-09 60 CSP-100 ATM WITH TWO * $6,505.00 $$132.70
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
0499-01265-10 60 CSP-100 ATM WITH TWO * $6,505.00 $$132.70
SIDEDILLUMINATED
TOPPERS
- ------------------------------------------------------------------------------------------------
* To be provided by $
Lessee at
installation.
- ------------------------------------------------------------------------------------------------
Side One
DIEBOLD CREDIT CORPORATION, 5995 Mayfair Road, North Canton, Ohio
44720; PHONE (330) 490-6900
Page 5 of 6
</TABLE>
<PAGE>
DIEBOLD CREDIT CORPORATION
LEASE SCHEDULE
1. Sales Order No.: This number will correspond to the Sales Agreement signed
by Customer and Diebold Inc. and assigned to Diebold Credit Corporation for
payment.
2. Term: Will begin on the 1st day of the month following the acceptance date
listed on the Schedule "A" and will continue for the number of months
listed under that section.
3. Description: Briefly describes the equipment that is itemized on the
Schedule "A"
4. Domicile Location: The equipment will be housed at this location unless
approved by lessor.
5. Cost: This is the investment that is used to determine Basic Rent and is
taken from the Sales Agreement, any changes negotiated between Lessee and
Manufacturer must be approved by lessor.
6. Basic Rent: Will be the monthly rental payments in the amount set forth in
the Lease Schedule or if different, the rent payment in the Schedule "A"
and Acceptance Certificate will become the rental payment.
Additional Terms:
The parties agree that this lease is a "finance lease" as defined by Article
2A-103(g) of the Uniform Commercial Code.
Lessee acknowledges that it has either a) received, reviewed and approved any
written supply contract from the manufacturer or supplier ("Supplier") covering
the Equipment purchased from Supplier by Lessor for lease to Lessee, or b) has
been informed of the identity of the Supplier, that it may have rights under the
supply contract, and that Lessee may contact Supplier for a description of any
such rights.
This Lease Schedule will apply only to the Schedule "A" document signed and
approved by Lessee.
By execution hereof, the signer certifies
that he/she has read, accepted and duly
executed this Lease Schedule to the Master
Lease Agreement on behalf of Lessee.
Lessor: DIEBOLD CREDIT CORPORATION Lessee: UNIVERSAL MONEY CENTERS, INC.
By: /S/ Robert J. Warren By: /s/ Pamela A. Glenn
------------------------------ -------------------------------
Title: Vice President & Treasurer Title: Vice President
------------------------------ ------------------------------
Date: 10/05/98 Date: 9-25-98
------------------------------ ------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial
Information Extracted From the Unaudited
Consolidated Balance Sheets as of October 31,
1998 and Unaudited Consolidated Statements
Of Income For The Nine Months Ended October 31,
1998 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> United States
<CIK> 0000702167
<NAME> Universal Money Centers, Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-1-1998
<PERIOD-END> OCT-30-1998
<EXCHANGE-RATE> 1
<CASH> 268,721
<SECURITIES> 0
<RECEIVABLES> 495,537
<ALLOWANCES> 21,380
<INVENTORY> 300
<CURRENT-ASSETS> 756,348
<PP&E> 3,133,730
<DEPRECIATION> 1,769,300
<TOTAL-ASSETS> 2,467,933
<CURRENT-LIABILITIES> 710,448
<BONDS> 644,234
0
0
<COMMON> 398,514
<OTHER-SE> 2,377,045
<TOTAL-LIABILITY-AND-EQUITY> 2,467,933
<SALES> 0
<TOTAL-REVENUES> 3,753,452
<CGS> 0
<TOTAL-COSTS> 890,669
<OTHER-EXPENSES> 127,918
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127,918
<INCOME-PRETAX> 233,714
<INCOME-TAX> 0
<INCOME-CONTINUING> 339,364
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 233,714
<EPS-PRIMARY> .006
<EPS-DILUTED> .006
</TABLE>
