SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 0-15355
J.A.M., INC.
(exact name of registrant as specified in its charter)
NEW YORK 16-1092174
(State of Incorporation) (IRS Employer Identification No.)
530 WILLOWBROOK OFFICE PARK, FAIRPORT, NEW YORK 14450
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code 716-385-6740
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common STOCK, $.01 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X
No______
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
-1-
The aggregate market value of common stock held by non-affiliates of the
Registrant at March 29, 1996 was not verifiable due to delisting.
The number of shares of the Registrant's voting stock outstanding on March 29,
1996 was 15,274,447.
Portions of the 1995 Annual Report to stockholders of Registrant are
incorporated by reference in Parts I and II of this Report.
The Index of Exhibits filed with this Report begins at page 16.
The total number of pages in this Report is 39.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL DEVELOPMENT OF BUSINESS. The information contained in the J.A.M., Inc.
1995 Annual Report to Stockholders for the year ended December 31, 1995 ("1995
Annual Report") on pages 1 through 7 inclusive is incorporated herein by
reference.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. The business operations of
J.A.M., Inc. are primarily development of interactive multimedia products and
services. At the present time, J.A.M. can offer clients "Total Turnkey
Solutions" that encompass both hardware and customized software and
applications. Such solutions might range from stand alone CD-ROM based
multimedia applications to video-on-demand computer-based multimedia
applications such as kiosks or server-based applications utilizing local and
wide area networking. Using our technology and expertise, J.A.M. can offer
immensely effective solutions to our clients in the areas of training,
education, public information, corporate communications, sales, and marketing.
INFORMATION AS TO LINES OF BUSINESS. The Company's multimedia product and
services include:
SALES OF IT2000 PRODUCT AND RELATED HARDWARE AND SOFTWARE -- This includes
IT2000 digital video file servers, kiosks, PCs, and support hardware and
software including DCP (Digital Conversion Process) which consists of the
conversion of existing paper and analog-based materials to digital platforms.
DCP is ideal for the conversion of video and videodisc programs to multimedia
PC platforms.
DEVELOPMENT OF MULTIMEDIA APPLICATIONS AND CONTENT -- Sales of production
services and custom development of projects to meet the various needs to our
customers (training, informational, sales and marketing, database
requirements).
NETWORK CONSULTING AND INTEGRATION SERVICES -- Sales of consulting and
integration services to enable customers to upgrade their computing
environments and implement multimedia networking.
IN-HOUSE SERVICES include:
* Multimedia Design/Production
* Video Production/Post Production/Computer Graphics
* Instructional Design/Writing
* CD-ROM & CD-i Production/Mastering
* Conversion of Existing Material to Digital Platforms
* Network Design/Integration
NARRATIVE DESCRIPTION OF BUSINESS.
The information contained in the J.A.M., Inc. 1995 Annual Report, page 4, is
incorporated herein by reference, to sub-paragraphs (i) and (ii) of this sub
item.
PRINCIPAL PRODUCTS CUSTOM-DESIGNED TRAINING PROGRAMS.
For the years ended December 31, 1995, 1994, and 1993, the Company derived
approximately 95%, 95%, and 75%, respectively, of its revenues from the
production and design of interactive multimedia training and communications
programs.
VIDEO PRODUCTION AND POST- PRODUCTION SERVICES.
Video production and post- production services, which include production
related to training programs, accounted for approximately 5%, 5%, and 10% of
the Company's revenues for the years ended December 31, 1995, 1994, and 1993
respectively.
DEPENDENCE UPON KEY CUSTOMERS. During 1995, the Company had three (3) major
customer which had approximately $721,600 (46%) of total revenues for 1995, as
compared to approximately $200,000 (38%) in 1994, and approximately $388,000
(47%) in 1993.
BACKLOG. In 1995, the Company produced multimedia and communications services
under contracts with its customers. The backlog at the end of 1995 was
approximately $350,000.
COMPETITION. In marketing its services, the Company competes for sales with
many other businesses in training and multimedia communication services.
Several companies also compete directly with the Company in providing video-
based, computer-based, and interactive videodisc training programs. Many of
the Company's competitors have available greater financial, technical, and
marketing resources than the Company.
EMPLOYEES. At December 31, 1995, the Company employed 20 full-time employees.
Such employees included 3 officers, 4 administrative and sales personnel, 2
video production professionals, 7 software
programmers and designers, and 4 instructional designers. The Company also
employs a number of part-time employees and independent contractors depending
on the volume and types of services required for various contracts. None of
the Company's employees currently are represented by a labor union. Management
believes that employee relations are good.
In its production of recorded performances, the Company engages various artists
and other production personnel who may be members of unions. The Company has
not entered into any labor agreement with any such union, but complies with the
terms of union agreements when dealing with union members.
EXECUTIVE OFFICERS OF THE REGISTRANT. John A. Marszalek is the founder of the
Company and has served as its President and as a Director since its
incorporation in 1977. Prior to founding the Company, Mr. Marszalek
served as general manager of two radio broadcast facilities in Rochester.
He holds a Masters Degree from the University of Katowicace, Poland.
ITEM 2. PROPERTIES. During August of 1992, the Company moved its headquarters
to Fairport, which is a suburb of Rochester, New York, to reduce its expenses.
The President of the Company personally guaranteed the five year lease
agreement. The Company leases approximately 5,000 square feet of office space
under a six-year net lease agreement expiring August 31, 1998, at an annual
rental of approximately $70,000. This is a reduction of the Company's former
annual rental by $36,000 per year.
In December, 1995, the Company signed a second lease agreement for an
additional 2,300 square feet on a one-year net lease at an annual rental of
approximately $36,000 per year.
ITEM 3. LEGAL PROCEEDINGS. Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not Applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS. The information concerning the principal market, sales, prices,
number of holders, dividends and dividend policy for the common stock of the
Company, contained in the J.A.M., Inc. 1995 Annual Report, Page 5, is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA. The information contained in the tabulation
"Five Year Summary of Selected Financial Information" in the J.A.M., Inc. 1995
Annual Report, page 8, is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. The information bearing the same title contained in the
J.A.M., Inc. 1995 Annual Report, pages 6 through 7, is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The financial
statements, prepared by the Company and contained in the J.A.M., Inc. 1995
Annual Report, pages 9 through 14 inclusive, are incorporated herein by
reference. Other financial schedules are filed herewith as
part of this Report, see Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES. The information concerning this matter appears at page
7 of the Company's 1995 Annual Report, and is incorporated herein by reference.
PART III
ITEM 10. DIRECTORS OF THE REGISTRANT. The Company was not able to hold an
Annual Meeting in 1995 due to lack of a quorum.
JOHN A. MARSZALEK. Mr. Marszalek, 47 years of age, is the founder of the
Company and has served as its President and as a Director since its
incorporation in 1977. Prior to founding the Company, Mr. Marszalek served as
general manager of two radio broadcast facilities in Rochester, New York.
PETER A. SPINA. Dr. Spina, 57 years of age, has been a Director since June,
1989. He is President of Monroe Community College in Rochester, New York. He
also serves as a director and officer of Blue Cross and Blue Shield of
Rochester, New York, a director of Trinity Liquid Assets Trust, a director of
Home Care Research of Rochester, New York, and is past president of the
Association of Public Community Colleges.
DAVID DELLA PENTA. Mr. DellaPenta, 47 years of age, was elected to the Board
of Directors at the September 22, 1994 meeting. He is the President of Nalge
Corporation, a Rochester, NY-based manufacturer of high-quality plastic
products sold into the scientific research, industrial, and consumer markets
worldwide.
There are no family relationships between any Director, executive officer, or
person nominated or chosen by the Board to become a Director or executive
officer. The Board of Directors held four meetings during 1995, and all of the
incumbent Directors attended more than 75% of the aggregate of the total number
of Board meetings and total number of meetings held by all committees of the
Board on which they serve.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. Section 16(a) of the
Securities Exchange Act of 1934 requires the Company's officers and directors
and persons who own more than ten percent of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc. Officers, directors, and greater than
ten percent shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
As of March 29, 1996, Directors Peter Spina and David Della Penta had not yet
filed Form 3 Reports in connection with their election as Directors, nor
Form 4 Reports to report on the Stock Appreciation Rights ("SARs") they each
were granted on December 14, 1995. Also as of March 29, 1996, John
Marszalek had not filed various Form 4 Reports required to report on private
sales he had made of the Company's Sommon Stock at various times from
April 1993 through March 1995, nor to report on the 3,000,000 shares he
was granted by the Board on December 14, 1995 as partial repayment of a loan
he had previously made to the Company. All of these situations were rectified
by these individuals with Form 3 and 4 filings that were made by each of them
during September and October 1996.
ITEM 11. EXECUTIVE COMPENSATION. Under the SEC's executive compensation
disclosure rules, information is required to be provided with respect to the
compensation and benefits paid by the Company for all services rendered during
1995, 1994 and 1993 to five individuals: the person who was, at December 31,
1995, serving as the Company's Chief Executive Officer, and the four other
individuals who were, as of December 31, 1995, the other four most highly
compensated executive officers of the Company whose 1995 salary and bonus
exceeded $100,000 in amount.
No officers of the Company received compensation exceeding $100,000 in any
of such years. Accordingly, information is presented only for Mr. Marszalek:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
NAME AND
PRINCIPAL ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($)
John A. 1995 $61,836 -0- $11,481 (1)
Marszalek 1994 $47,470 -0- $ 9,710 (2)
1993 $23,576 -0- $11,761 (3)
______________________
(1) Of this total, $9,000 represents the value of Mr. Marszalek's
car allowance and $2,481 represents additional health insurance premiums
paid by the Company on his behalf.
(2) Of this total, $6,264 represents the value of Mr. Marszalek's
car allowance and $3,446 represents additional health insurance premiums
paid by the Company on his behalf.
(3) Of this total, $8,509 represents the value of Mr. Marszalek's
car allowance and $3,252 represents additional health insurance premiums
paid by the Company on his behalf.
MANAGEMENT COMPENSATION. The Company's President, Mr. Marszalek, has an
employment agreement with the Company, effective as of December 3, 1986. The
agreement extends through December 31, 2000, and provides that Mr. Marszalek is
to serve full-time Chief Executive Officer and Chairman of the Board of the
Company. Pursuant to this agreement, Mr. Marszalek is entitled to participate
in any benefit plans or programs for executive officers or employees that may
be in effect from time to time and is entitled to reimbursement for the use of
an automobile. It also provides for the payment of the greater of one year's
salary or his then current salary for the remainder of the contract term in
connection with his termination without cause prior to the expiration of the
agreement.
COMPENSATION OF DIRECTORS. Directors do not receive any compensation for
services as a Director. Directors of the Company are reimbursed for out-of-
pocket expenses incurred on the Company's behalf. However, in December 1995,
the Board approved teh grant of 100,000 SARs to each of Messrs. Spina and
Della Penta for their services rendered to the Company. These SARs entitle
these individuals, upon the exercise of an SAR, to receive the difference
between the then-fair market value of a share of the Company's Common Stock
and $.04 per share, which will be paid in cash by the Company to the SAR
holder within five days following the Company's receipt of the holder's notice
of exercise of an SAR; provided, however, that the Company reserves the
right, at any time and in its sole discretion, to convert these SARs into
non-qualified stock options to purchase the same number of shares of its
Common Stock at an exercise price of $.04 per share and on the same terms and
conditions as are applicable to these SARs. These SARs are for a term of ten
years from their grant date. None of them are exercisable for two years
following their grant date. Thereafter, 25% ofthese SARs become exercisable
on the second anniversary of their grant date and an additional 25% become
exercisable on each of the third, fourth and fifth anniversaries of their
grant date.
COMPENSATION PURSUANT TO PLANS. STOCK OPTION PLAN. In May of 1986, the
shareholders of the Company approved the Incentive Stock Option Plan (the "ISO
Plan") for officers and key employees. The ISO Plan authorizes the issuance of
options to purchase up to 200,000 shares of the Company's common stock.
Options granted under the ISO Plan are intended to qualify as "incentive stock
options" under the Internal Revenue Code of 1986, as amended. Under the ISO
Plan, options may be granted at not less than 100% (110% in the case of 10% or
greater shareholders) of the fair market value of the Company's common stock on
the date of grant. Options granted under the ISO Plan must be exercised, if at
all, within ten years from the date of grant (five years in the case of 10% or
greater shareholders) and no option may be granted more than ten years from the
date of adoption of the Plan. Options granted under the ISO Plan may not be
transferred, except by will or by the laws of descent and distribution.
Options granted under the plan must be exercised, if at all, within three
months after termination of employment for any reason except death or
disability and within 60 days after death or within one year after
termination of employment due to disability. The Board of Directors of the
Company, or the Compensation Committee of the Board, has the power to
impose limitations, conditions, and restrictions in connection with the
grant of any option.
-8-
1987 STOCK OPTION PLAN. In May of 1988, the shareholders of the Company
approved the 1987 Stock Option Plan (the "1987 Plan") under which options to
purchase stock may be granted to officers and other key employees of the
Company. The 1987 Plan authorizes the issuance of options to purchase up to
500,000 shares of the common stock of the Company. The provisions of this plan
are substantially the same as those of the Incentive Stock Option Plan, except
that the 1987 Plan authorizes the issuance of both options intended to qualify
as "incentive stock options" under the Internal Revenue Code of 1986, as
well as options that do not so qualify. As of December 31, 1995, there were
options outstanding to purchase up to 365,000 shares of Common Stock of the
Company. During 1995, no options were exercised under the 1987 Plan.
During 1995, Mr. Marszalek was not granted any options under either of these
Plans, nor did he hold or exercise any options under either of these Plans.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The
following table sets forth as of March 29, 1996, the number and percentage of
outstanding shares of common stock beneficially owned by each Director of the
Company, by all Directors and current officers of the Company as a group, and
by each person known to the Company to be the beneficial owner of more than 5%
of the Company's common stock. The Company believes that each individual in
this group has sole investment and voting power with respect to his shares
unless otherwise noted:
Number of Percentage of Shares
NAME OF NOMINEE SHARES OUTSTANDING
John A. Marszalek 3,587,572 23.5%
211 Inspiration Point
Webster, NY 14580
Peter A. Spina -0- -0-
David DellaPenta -0- -0-
Charles D. Wimmer 896,000 5.9%
3163 Canoga Road
Seneca Falls, NY 13148
Cede & Co.* 6,600,997 43.2%
Box 20, Bowling Gren Stn.
New York, NY 10274
___________________________
* The shares held in this account are held in "street name" for the
beneficial owners of such shares. The Company is unable to determine
whether any of the beneficial owners of these shares owns more than
5% of its outstanding shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Not Applicable
-9-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K. The following documents are filed as part of this Report.
The following financial statements are contained in the J.A.M., Inc. 1995
Annual Report and are incorporated herein by reference in Item 8 of this
Report:
- Balance Sheets, December 31, 1995 and 1994
- Statements of Operations for the years ended December 31, 1995, 1994 and
1993.
- Statements of Stockholders' Equity for the years ended December 31, 1995,
1994 and 1993.
- Statements of Cash Flows for the years ended December 31, 1995, 1994 and
1993.
- Notes to Financial Statements
SCHEDULES - The following schedules are filed as a part of this Report:
- V Property, plant and equipment
- VI Accumulated depreciation, depletion and amortization
- VIII Valuation and qualifying accounts and reserves
- X Supplemental Income Statement Information
Other schedules are omitted because of the absence of conditions under which
they are required or because the required information is given in the financial
statements or the notes thereto.
EXHIBITS - See Exhibit Index attached.
REPORTS ON FORM 8-K. No report on Form 8-K was filed during the fourth
quarter of 1995.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For The Years Ended December 31, 1995, 1994, and 1993
Balance at Balance
beginning at end
CLASSIFICATION OF YEAR ADDITIONS RETIREMENTS OF YEAR
December 31, 1995:
Leasehold improvements $ 13,183 $ 14,766 $ 0 $ 27,949
Production equipment 258,732 242,640 0 501,372
Design and development
equipment 137,416 0 511 136,905
Office furniture and
equipment 151,239 0 88,025 63,214
$ 560,570 $257,406 $88,536 $729,440
December 31, 1994:
Leasehold improvements $ 10,722 $ 17,227 $ 14,766 $ 13,183
Production equipment 327,955 23,277 92,500 258,732
Design and development
equipment 190,268 2,644 55,496 137,416
Office furniture and
equipment 112,514 65,758 27,033 151,239
$ 641,459 $108,906 $189,795 $ 560,570
December 31, 1993:
Leasehold improvements $ 10,722 $ 0 $ 0 $ 10,722
Production equipment 327,955 0 0 327,955
Design and development
equipment 147,943 42,325 0 190,268
Office furniture and
equipment 87,508 25,292 286 112,514
$ 574,128 $ 67,617 $ 286 $641,459
-11-
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
For the Years Ended December 31, 1995, 1994 and 1993
Balance at Balance
beginning at end
CLASSIFICATION OF YEAR ADDITIONS RETIREMENTS OF YEAR
December 31, 1995:
Leasehold improvements $ 969 $ 1,843 $ 0 $ 2,812
Production equipment 243,598 138,772 0 382,370
Design and development
equipment 132,153 11,789 0 143,942
Office furniture and
equipment 65,651 0 34,144 31,507
$ 442,371 $152,404 $ 34,144 $ 560,631
December 31, 1994:
Leasehold improvements 2,820 940 2,791 969
Production equipment 275,822 94,109 126,333 243,598
Design and development
equipment 131,405 63,159 62,411 132,153
Office furniture and
equipment 46,077 32,691 13,117 65,651
$ 456,124 $190,899 $ 204,652 $ 442,371
December 31, 1993:
Leasehold improvements $ 120 $ 2,700 $ 0 $ 2,820
Production equipment 254,222 21,600 0 275,822
Design and development
equipment 120,605 10,800 0 131,405
Office furniture
and equipment 27,177 18,900 0 46,077
$ 402,124 $ 54,000 $ 0 $ 456,124
-12-
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Years Ended December 31, 1995, 1994 and 1993
Additions
Balance at Charged to Balance
beginning Costs and Deduc- at end
DESCRIPTION OF YEAR EXPENSES TIONS (1) OF YEAR
Allowance for doubtful
accounts - deducted from
accounts and notes receivable
in the balance sheet
December 31, 1995 $ 3,600 $ 0 $ 1,803 $1,797
December 31, 1994 $ 3,600 $ 0 $ 0 $3,600
December 31, 1993 $ 3,600 $ 0 $ 0 $3,600
(1) uncollectable accounts written off.
-13-
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
For The Years Ended December 31, 1995, 1994, and 1993
ITEM CHARGED TO COSTS AND EXPENSES
1995 1994 1993
Maintenance and repairs $ * $ 8,609 $ *____
Depreciation and amortization
of intangible assets, pre-
operating costs and similar
deferrals $ 0 $46,082 $55,000
Taxes, other than payroll and
income taxes $ * $ * $ *_____
Royalties $ 0 $ 0 $ *_____
Advertising costs $28,409 $ 8,072 $ *_____
* Less than 1% of total sales.
-14-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Amendment No. 1 to be signed on
its behalf by the undersigned, thereunto duly authorized.
J.A.M., Inc.
Dated: October 31, 1996 By:/s/John A. Marszalek
President and Chief
Executive Officer
EXHIBIT INDEX
Exhibit
NUMBER DESCRIPTION LOCATION
3-1 Restated Certificate of Previously Filed
Incorporation of
J.A.M., Inc., as amended.
3-2 Bylaws of J.A.M., Inc. Previously Filed
4-1 Form of Common Stock Certificate of Incorporated by Reference to
J.A.M., Inc. Exhibit 4 (a) to Registrant's
S-18, registration no.
33-7486-NY, declared effective
November 10, 1986
10-1 Employment Agreement between Registrant Previously Filed
and John A. Marszalek dated July 17, 1986.
10-2 Registrant's Incentive Stock Option Plan Previously Filed
10-3 Registrant's 1987 Stock Option Plan Previously Filed
10-4 Employee Agreement Regarding Previously Filed
Proprietary Information and Inventions
between Registrant and
John A. Marszalek
10-5 Form of Stock Appreciation Rights Filed herewith
Agreement between the Company and
certain Directors and Consultants,
dated December 14, 1995
11 Statement re: Computation of Per Share *
Earnings.
13 J.A.M., Inc. 1995 Annual Report Filed herewith
to Shareholders
27 Financial Data Schedule Previously Filed
*See Note 2 to the Notes to Consolidated Financial Statements incorporated by
reference in Item e of this Report.
STOCK APPRECIATION RIGHTS CONTRACT
This STOCK APPRECIATION RIGHTS CONTRACT (the "Contract") is made
between J.A.M., INC., a New York corporation (the "Company") and
______________________________ (the "Holder").
The parties agree as follows:
1. GRANT OF SARS. The Company hereby grants to the Holder
________________ stock appreciation rights ("SARs") in respect of the
Company's common stock, par value $.01 per share. Each SAR represents the
right, upon the Holder's exercise thereof, to receive the difference
between the then-fair market value of a share of the Company's common stock
and $.04 per share (the "Spread"). The Spread shall be paid in cash by the
Company to the Holder within five days following the Company's receipt of
the Holder's notice of exercise of an SAR. The Company reserves the right,
however, at any time and in its sole discretion, to convert these SARs into
Non-Qualified Stock Options to purchase shares of its common stock at an
exercise price of $.04 per share on the same terms and conditions as are
applicable to these SARs as set forth herein.
For purposes of this Contract, the "fair market value" of a share of
the Company's common stock on any given date means (i) the Closing Price
quoted for the Company's common stock in trading on The Nasdaq Stock Market
on the date the Holder gives notice of an exercise of an SAR; or (ii) if
there are no reported sales on such date, then the mean between the closing
high bid and low asked prices as reported by The Nasdaq Stock Market for
such date (or, if not so reported, then as reported for that date by the
system then regarded as the most reliable source of such quotations); or
(iii) if there are no reported sales or quotations, as the case may be, on
the given date, the value determined pursuant to (i) or (ii) using the
reported sale prices or quotations on the last previous date on which so
reported; or (iv) if none of the foregoing clauses apply, the fair market
value as determined in good faith by the Company's Board of Directors.
2. EXERCISABILITY. These SARs may be exercised at any time and from
time to time, in whole or in part, subject to the following conditions:
No portion of these SARs shall be exercisable for two years following
the grant date hereof. Thereafter, 25% of these SARs shall become
exercisable on the second anniversary date hereof, and an additional 25% of
these SARs shall become exercisable on each of the third, fourth and fifth
anniversaries of the date hereof.
3. TERM. This Contract shall terminate on the expiration of ten
years from the date hereof.
4. NONTRANSFERABILITY.. This Contract is not transferable by the
Holder other than by Will or the laws of descent and distribution and is
exercisable, during his/her lifetime, only by the Holder.
5. BINDING EFFECT. This Contract shall be binding upon and inure to
the benefit of any successor or assignee of the Company and any executor,
administrator, legal representative, legatee or distributee entitled by law
to exercise the Holder's rights hereunder.
6. NOTICES. Notices hereunder shall be in writing and shall be
deemed to have been duly given (i) upon hand delivery, or (ii) on the third
day following delivery to the U.S. Postal Service as certified mail, return
receipt requested and postage prepaid, or (iii) on the first day following
delivery to a nationally recognized U.S. overnight courier service, fee
prepaid and return receipt or other confirmation of delivery requested, or
(iv) when telecopied or sent by facsimile transmission. Any such notice
shall be delivered to a party at its address set forth by its signature
below, or at such other address as may be designated by one party in a
notice given to the other from time to time in accordance with the terms of
this paragraph.
7. GOVERNING LAW. This Contract and the rights of the parties hereto
shall be governed by and construed in accordance with the laws of the State
of New York pertaining to contracts made and to be wholly performed within
such state, without taking into account conflict of laws principles.
IN WITNESS WHEREOF, the Company has caused this Contract to be
executed on its behalf by its duly authorized officer, and the Holder has
hereunto set his/her hand, on the date shown below.
J.A.M., INC.
By:_____________________________
John A. Marszalek, President
Address: 530 Willowbrook Office Park
Fairport, NY 14450
Dated: December 14, 1995 Holder:
________________________________
Address: ____________________________
____________________________
G:\UKIJK\JAM\GENSEC\SARGRANT.CNT
NOTE: DIRECTORS PETER SPINA AND DAVID DELLA PENTA HAVE EACH RECEIVED
SAR GRANTS WITH RESPECT TO 100,000 SARS, AND A TOTAL OF 165,000 SARS
HAVE BEEN GRANTED TO THREE OTHER PERSONS.
Exhibit 13
1995
ANNUAL REPORT
FINANCIAL HIGHLIGHTS
______________________________________________________________________________
For the Year 1995 1994
______________________________________________________________________________
Net sales $1,567,748 $537,696
Earnings (loss) before income taxes
and extraordinary credit 45,532 (185,747)
Net earnings (loss) 45,183
Net earnings (loss) per share $.003 $(0.02)
______________________________________________________________________________
At Year End
Total assets $482,227 $293,749
Total liabilities 663,034 699,189
______________________________________________________________________________
Total stockholders' equity (180,807) (405,440)
_______________________________________________________________________________
Working Capital (360,835) (523,639)
_______________________________________________________________________________
Current ratio 0 0
_______________________________________________________________________________
MARKET FOR THE COMPANY'S COMMON
STOCK AND RELATED MATTERS
______________________________________________________________________________
The number of stockholders of record on January 31, 1996 was
approximately 1,702.
The Company was delisted by NASDAQ in 1992. To the best knowledge of the
Company, management
does not have any market makers. In 1995, it was impossible to establish any
quotes for the JAM Company stock. The Company still believes that its JAMY
common stock is traded in the over-the-counter market. The following table
summarizes by quarter the high and low bid prices for the Company's common
stock during 1995 and 1994.
1995 1994
HIGH LOW HIGH LOW
First Quarter No quotables No quotables
Second Quarter No quotables No quotables
Third Quarter No quotables No quotables
Fourth Quarter No quotables No quotables
-5-
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
______________________________________________________________________________
1995 COMPARED TO 1994
Net sales for 1995 totaled $1,568,748, an increase of $1,031,052, or 150% from
sales of $537,696 in 1994.
This increase was due to receiving several contracts from new and previous
client base.
Cost of sales in 1995 totaled $924,011, an increase of $578,559, or 297% from
1994. This increase was due to payroll and outside vendor activity for multi-
media projects.
Gross profits increased $401,811 in 1995 from $242,926 to $644,737, due to
managing cost controls and project management systems.
1994 COMPARED TO 1993
Net sales for 1994 totaled $537,696, a decrease of $288,641, or 35% from sales
of $826,337 in 1993. This decrease was due to the Company spending much of its
time on research and development.
Cost of sales in 1994 totaled $294,770, a decrease of $124,752, or 30% from
1993. This decrease in cost of sales was due to the decrease in sales and the
need for outside services.
Gross profits decreased $163,889 in 1994 from $406,815 to $242,926, due largely
to the concentration on research and develop which caused the drop in gross
sales.
Liquidity and Capital Resources
At December 31, 1995, the Company had negative working capital of $360,835 and
total stockholders' equity (deficit) of $(180,807). This compares to the
negative working capital of $523,639 and total stockholders' equity (deficit)
of $(405,440) in 1994. Liquidity and capital resources increased in 1995 as a
result of the operating profit.
The Company acknowledges that additional resources may be needed to continue
growth in 1996 as well as additional sources of capital may be necessary.
Inflation
During 1995, 1994 and 1993, inflation had no material effect on the costs
incurred by the Company or the demand for the Company's services.
Status of Certified Public Accountants
In December, 1995, the Company retained the accounting firm of Bonn &
Shortsleeve, CPA's to audit the 1995 and 1994 Financial Statements.
FIVE YEAR SUMMARY OF SELECTED
FINANCIAL INFORMATION
______________________________________________________________________________
The table below represents a summary of selected components of the Company's
balance sheets and
statements of operations of the five years ended December 31, 1995. All
information concerning the
Company should be read in conjunction with the other financial statements and
related notes included elsewhere herein.
AS OF AND FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets $ 302,199 $ 175,550 $ 61,998 $ 60,388 $ 43,939
Current liabilities 663034 699189 414,023 415,984 368,689
Working capital $ (360,835) $ (523,639) $ (352,025) $ (355,596) $ (324,750)
Total assets $ 482,227 $ 293,749 $ 247,333 $ 232,392 $ 821,690
Long-term obligations $ - $ - $ - $ 10,671 $ 269,842
- - -
Stockholders' equity $ (180,807) $ (405,440) $ (166,890) $ (187,212) $ 362,859
OPERATING DATA:
Net sales $ 1,568,748 $ 537,696 $ 826,337 $ 651,876 $ 1,021,451
Cost of sales 924,011 294,770 419,522 415,351 832,379
Gross profit $ 644,737 $ 242,926 $ 406,815 $ 236,525 $ 189,072
Selling, general and
administrative expenses 556,481 394,109 374,593 785,039 781,605
Operating profit (loss) $ 88,256 $ (151,183) $ 32,222 $ (548,514) $ (592,533)
Other income
(deductions), net $ (43,073) $ (34,563) $ (13,101) $ (1,557) $ 7,958
Net earnings (loss) $ 45,183 $ (185,746) $ 19,121 $ (550,071) $ (584,575)
Net earnings (loss) per
share $0.00 ($0.01) $0.00 ($0.04) $0.05
</TABLE>
See accompanying notes to financial statements.
-8-
BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
AUDITED Unaudited
CURRENT ASSETS:
Cash $ 4,705 $ -
Accounts receivable, less allowance for
doubtful accounts of $1,747 in 1995
and $3,600 in 1994 (Note 5) 288,126 200,557
Inventories (Note 2) 2,988 2,814
Prepaid expenses 6,380 6,549
302,199 209,920
PROPERTY AND EQUIPMENT (NOTES 2 AND 3):
Leasehold improvements 27,949 13,183
Production equipment 501,372 258,732
Office furniture and equipment 200,119 288,655
729,440 560,570
Less: Accumulated depreciation 560,631 442,371
168,809 118,199
Other Assets:
Deposits 11,219
-
$ 482,227 $ 328,119
</TABLE>
See accompanying notes to financial statements.
-9-
BALANCE SHEETS (CONT'D)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
AUDITED Unaudited
CURRENT LIABILITIES:
Checks drawn in excess of deposits $ - $ 34,370
Payroll taxes payable - 53,075
Accrued Income Tax 349
-
Accounts payable 87,535 155,564
Accrued expenses 138,975 12,784
Billings in excess of costs and
estimated earnings (Notes 2 and 4) - 19,262
Loan - Officer 146,175 323,504
Loans - Miscellaneous 290,000 135,000
$ 663,034 $ 733,559
STOCKHOLDERS' EQUITY (NOTE 7):
Common stock - $.01 par value, authorized 16,000,000
shares; issued and outstanding 15,274,447 and
12,274,447 at December 31, 1995 and 1994
respectively 152,745 122,744
Additional paid-in capital 3,147,227 3,027,227
Accumulated deficit (3,480,779) (3,555,411)
(180,807) (405,440)
$ 482,227 $ 328,119
</TABLE>
See accompanying notes to financial statements.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
AUDITED Unaudited Unaudited
Net sales (Notes 2 and 5) $ 1,568,748 $ 537,696 $ 826,337
Cost of sales 924,011 294,770 419,522
Gross profit 644,737 242,926 406,815
Selling, general and administrative
expenses 556,481 394,109 374,593
Operating income (loss) 88,256 (151,183) 32,222
Other income (expense):
Interest income
- - 15
Interest expense (47,724) (25,163) (22,216)
Gain on sale of asset 5,000 10,500
(9,400)
(42,724) (34,563) (11,701)
Income (loss) before income taxes and
extraordinary items 45,532 (185,746) 20,521
Provision for income taxes
(Notes 2 and 7) 1,400
349 366
Income (loss) for the year $ 45,183 $ (186,112) $ 19,121
Earnings per share of common stock
(Note 2)
Net income (loss) per share $0.00 ($0.01) $0.00
</TABLE>
See accompanying notes to financial statements.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1995, 1994, and 1993
COMMON STOCK
<TABLE>
<CAPTION>
Paid In
<S> <C> <C> <C> <C> <C>
Number Capital In Total
Of Excess of Stockholder's Accumulated
SHARES Amount Par Value Equity Deficit
Balance December 31, 1992 12,274,447 122,744 3,027,227 $ (187,212) $ (3,337,183)
Net income for the year 19,121 19,121
- - -
Balance December 31, 1993 12,274,447 122,744 3,027,227 $ (168,091) $ (3,318,062)
Net loss for the year
- - - (160,028) (195,513)
Balance December 31, 1994 12,274,447 122,744 3,027,227 $ (328,119) $ (3,513,575)
Net income for the year 3,000,000 30,000 120,000 $ 45,183 $ 195,183
Balance December 31, 1995 15,274,447 152,744 3,147,227 $ (282,936) $ (3,318,392)
</TABLE>
See accompanying notes to financial statements.
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
AUDITED Unaudited Unaudited
Cash flows from operation activities:
Income (loss) before extraordinary
item $ 45,183 $ (154,362) $ 19,121
Adjustments to reconcile net income
(loss) to net cash provided
(used) by operating activities:
Write off of capitalized software - 6,212 -
Depreciation and amortization 42,057 (14,666) 55,000
Provision for doubtful accounts - - -
(Increase) decrease in:
Accounts receivable (103,532) (148,503) (3,393)
Inventories (174) 358 274
Prepaid expenses (6,380) - 1,275
Costs and estimated earning in
excess - - -
Other assets (4,755) - -
Increase (decrease) in:
Checks drawn in excess of deposits 34,148 (18,059)
Accounts payable (69,975) (4,484) (63,561)
Accrued expenses 55,658 33,678 (9,416)
Billings in excess of costs
and estimated earnings - (19,262) (65,861)
(87,101) (112,519) (103,741)
Cash flows from investing activities:
Capital expenditures (65,739) (62,819) (67,291)
(65,739) (62,819) (67,291)
</TABLE>
See accompanying notes to financial statements.
STATEMENTS OF CASH FLOWS, (CONT'D)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
AUDITED Unaudited Unaudited
Cash flows from financing activities:
Loans from shareholders $ (8,268) $ 295,107 $ 163,398
Proceeds from demand loan 55,000 - -
Proceeds from line of credit 100,000 - -
Payments of long-term debt - - (10,671)
Payments of capital lease obligations - - (1,050)
146,732 295,107 151,677
Net increase (decrease) in cash and cash
equivalents $ 39,075 $ (34,593) $ 189
Cash and cash equivalents at beginning of year (34,370) 223 34
Cash and cash equivalents at end of year $ 4,705 $ (34,370) $ 223
Supplemental disclosure of cash flow
information:
Cash paid during the year for $ 34,730 $ 25,163 $ 22,216
interest
Cash paid during the year for income
taxes $ 366 $ 748 $ 1,400
</TABLE>
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
The Company provides training and information communication services, including
instructional design
and training program development; video production and post production;
graphics and animation; and
software design and programming for computer based training and interactive
simulations.
As shown in the financial statements as of December 31, 1995, the Company's
accumulated deficit was
$3,480,779 including total net losses for the three-year period ended December
31, 1995 of $121,818. During 1995, there was an increase in working capital of
$162,804 and as of the date of this financial statement, the Company had
borrowed $146,175 from a shareholder at prime plus 2%.
The financial statements have been prepared in accordance with generally
accepted accounting principles.
Management of the Company has a plan to improve liquidity and attain future
profitable operations. The plan includes aggressive marketing of company
capabilities and services to interactive multi-media markets.
Management believes that the operations of the Company will provide sufficient
cash flow to fund its on-going operations, if the objectives of their plan are
attained. The continued support and forbearance of the Company's creditors
will also be required.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) INVENTORY
Inventories are stated at the lower of cost, using the first-
in, first-out (FIFO) method, or market.
b) PROPERTY, EQUIPMENT AND DEPRECIATION
Property and equipment are stated at cost. Property and
equipment under capital leases are stated at the lower of the present value
of minimum lease payments at the beginning of the lease term or fair market
value at the inception of the lease. Normal repairs and maintenance are
charged to operations as incurred.
Depreciation is calculated using straight-line and declining-
balance methods over the estimated useful lives of the assets. Equipment
held under capital leases is amortized using the straight-line method over
the shorter of the lease term or estimated useful life of the asset.
The estimated useful lives are as follows:
Leasehold improvements 5-10 years
Production equipment 5-7 years
Office furniture and equipment 5-8 years
c) REVENUE RECOGNITION
Revenue is recognized upon the completion and delivery to the
customer of products and services except for long-term contracts (usually
three to sixteen months in duration), for which revenue is recognized on
the percentage-of-completion method as the contracts progress.
d) INCOME TAXES
Certain income and expense items are accounted for in different
periods for financial and tax reporting purposes. These timing differences
consist primarily of different methods of accounting for depreciation and
any unrealized gain or loss on the U.S. Government Mutual Fund.
e) EARNINGS PER COMMON SHARE
Net income per share is based on the weighted average number of
common shares and common share equivalents (stock operation and warrants
with a dilutive effect) outstanding during each period. The weighted average
number of common and common equivalent shares outstanding during 1995 was
15,274,447 and during 1994 and 1993 was 12,274,447 each year.
f) Reclassifications
Certain items in the 1995 and 1994 financial statements were
reclassified for comparative purposes and do not affect the 1995 and 1994
net income (loss) as originally reported.
3. LEASES AND LEASE COMMITMENTS
At December 31, 1995, there was no equipment under capital lease
agreements.
At December 31, 1994, there was no equipment under capital lease
agreements.
At December 31, 1993, there was no equipment under capital lease
agreements
The company leases office space under a non-cancelable lease which
required minimum monthly payments of approximately $6,288 through July, 1997.
In December, 1995, the Company signed for additional office space of
approximately 2300 square feet at $3,000/mo. with a one (1) year commitment
beginning January 1, 1996.
Total rental expense under noncancellable operating leases for
office facilities and equipment amounted to $78,736 in 1995, $74,485 in
1994, and $76,348 in 1993.
4. CONTRACTS IN PROGRESS
As of December 31, 1995, the company had a signed backlog of
$350,000. Accumulated costs and estimated earnings and billings on
contracts in progress at December 31, 1994 and 1993 are as follows:
1995 1994
Accumulated costs and estimated
earnings $N/A $ 0
Less: Billings N/A 19,262
$N/A $19,262
Contracts in progress are included in the accompanying balance
sheets under the following captions:
1995 1994
Costs and estimated earnings in
excess of billings $0 $0
Billings in excess of costs and
estimated earnings 0 19,262
$0 $19,262
5. SIGNIFICANT CUSTOMERS AND ACCOUNTS RECEIVABLE
The Company has received approximately 30% of its revenue from
various divisions of a Fortune 50 company, each of which separately and
independently contracts with the Company for such services. The Company by
the end of 1995 was in the process of negotiating a contract with some of
the same customers for 1996. There were four (4) significant customers in
accounts receivable as of December 31, 1995.
6. STOCK OPTIONS AND WARRANTS
A summary of stock option and warrant transactions during 1995 and
1994 is as follows:
WARRANTS OPTIONS
$.72 $.375 $.25 $.04 $1.00 $.01
Outstanding
December 31, 1994
Outstanding
December 31, 1995 105,000
Options to purchase a total of 105,000 shares were issued under the
Company's 1987 Incentive Stock Option Plan for officers and key employees.
These options are exercisable at $.04 per share. This plan authorized
the issuance of options to purchase up to 500,000 shares of the Company's
common stock.
Options under the 1986 Incentive Stock Option Plan are granted at
the discretion of the Board of Directors. The exercise price of the options
is the fair market value of the Company's common stock at the date of grant,
or 110 percent of fair market value for grants to employees with
stockholdings greater than 10 percent. Options can be exercised in
installments over a three-year period beginning one year from the date of
grant. The options expire 10 years from the date of grant with the exception
of options issued to more than 10 percent stockholders, which expire five
years from the date of grant.
Stock Appreciation Rights (SARs) with respect toa total of 365,000 shares of
the Company's Common Stock were issued as of December 14, 1995 to
the Company's two outside Directors, a consultant to the Company,
a creditor of the Company and one key part-time Company employee.
These SARs entitle these individuals, upon the exercise of an SAR, to
receive the difference between the then-fair market value of a share
of the Company's Common Stock
and $.04 per share, which will be paid in cash by the Company to the SAR
holder within five days following the Company's receipt of the holder's notice
of exercise of an SAR; provided, however, that the Company reserves the
right, at any time and in its sole discretion, to convert these SARs into
non-qualified stock options to purchase the same number of shares of its
Common Stock at an exercise price of $.04 per share and on the same terms and
conditions as are applicable to these SARs. These SARs are for a term of ten
years fromtheir grant date. None of them are exercisable for two years
following their grant date. Thereafter, 25% ofthese SARs become exercisable
on the second anniversary of their grant date and an additional 25% become
exercisable on each of teh third, fourth and fifth anniversaries of their
grant date.
In December, 1995, $150,000 of the Officer Loan was converted to
3,000,000 shares of stock.
Total shares of common stock available for issuance under
option plans at December 31, 1995 amounted to 200,000 shares under the
1986 Plan and 395,000 shares under the 1987 Plan.
7. INCOME TAXES
For the year ended December 31, 1990, the Company recognized a
federal income tax benefit of $4,700, from the
utilization of net operating loss carryforwards. No federal income tax benefit
was derived from the net operating losses in
current in 1991 and 1989 as taxable income within the carryback period had
previously been offset by net operating loss carryforwards. The actual federal
income tax expense (benefit), before consideration of the effect of the loss
carryforwards, differs from the expense (benefit) computed by applying the
federal corporate tax rate of 34 percent to earnings (loss) before
income taxes and extraordinary credit in 1995, 1994 and 1993 as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 1993
Expected federal income tax expense
(benefit) at statutory rate $ 20,321 $ 0 $ 0
Current year operating loss 0 0 0
Effect of graduated tax rates 0 366 1,400
$ 0 $ 366 $ 1,400
0
</TABLE>
The components of current income tax expense are as follows:
1995 1994 1993
Federal $ 0 $ 0 $ 0
State 349 366 1,400
$ 34 $366 $1,400
At December 31, 1995, the Company had net operating loss
carryforwards for tax purposes of $3,436,120, which
expire in 1999 through 2009 and investment credit carryforwards of $46,660
which expire in 1997 through 2009. Net operating loss carryforwards for
financial statement purposes do not differ significantly from those for tax
purposes.
BONN, SHORTSLEEVE & CO.
CERTIFIED PUBLIC ACCOUNTANTS
80 LINDEN OAKS OFFICE PARK
ROCHESTER, NEW YORK 14625
_______________
(716) 381-9660
FAX: (716) 248-0603
To the Board of Directors
J.A.M., Inc.
Fairport, New York
We have audited the accompanying balance sheets of J.A.M., Inc. (a C-
corporation) as of December 31, 1995 and 1994, and the related statements of
income (loss) and deficit and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsbility is to express an opinion on these financial statements based on
our audits.
Except as explained in the following paragraph, we conducted our audits in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
We did not substantiate the December 31, 1993 accounts receivable and accounts
payable balances since that date was prior to our appointment as auditors for
the Company. The accounts receivable and accounts payable balances as of
December 31, 1993, enter into the determination of net income and cash flows
for the year ended December 31, 1994.
Because of the matter discussed in the preceding paragraph, the scope of our
audit was not sufficient to enable us to express, and we do not express, an
opinion on the results of operations and cash flows for the year ended December
31, 1994.
In our opinion, the balance sheets of J.A.M., Inc. as of December 31, 1995 and
1994, and the related statements of income, deficit, and cash flows for the
year ended December 31, 1995, present fairly, in all materials respects, the
financial position of J.A.M., Inc. as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for the year ended December 31,
1995, in conformity with generally accepted accounting principles.
/s/ Bonn, Shortsleeve & Co.
March 5, 1996
-21-
