<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996 Commission File No. 0-15148
------------------
SCIENTIFIC NRG, INCORPORATED
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1457271
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2651 DOW AVENUE
TUSTIN, CALIFORNIA 92680
(Address of principal executive offices)
Registrant's telephone number, including area code:
(714) 730-3555
------------------
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding as of
Class May 7, 1996
----- -----------
<S> <C>
Common Stock, no par value 10,820,249
</TABLE>
<PAGE> 2
SCIENTIFIC NRG, INCORPORATED
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
- ------------------------------ --------
<S> <C>
Item 1. Condensed Financial Statements (Unaudited):
Condensed Balance Sheets
March 31, 1996 and June 30, 1995 3
Condensed Statements of Operations
Three Months Ended March 31, 1996 and 1995
Nine Months Ended March 31, 1996 and 1995 4
Condensed Statements of Stockholders' Deficit
Nine Months Ended December 31, 1996 5
Condensed Statements of Cash Flow
Nine Months Ended March 31, 1996 and 1995 6-7
Notes to Unaudited Condensed Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-10
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11-15
SIGNATURES 16
- ----------
EXHIBITS 17-18
- --------
</TABLE>
2
<PAGE> 3
SCIENTIFIC NRG, INCORPORATED
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (Unaudited)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
ASSETS (Unaudited) (Audited)
----------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash $ (9,850) $ 19,599
Trade receivables, less allowance for
doubtful accounts of 3/31/96 $13,127;
6/30/95 $14,932 76,035 128,495
Inventories 197,878 165,548
Prepaid expenses 2,224 5,164
----------- -----------
Total current assets $ 266,287 $ 318,806
----------- -----------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS,
at depreciated cost $ 33,232 $ 38,697
----------- -----------
OTHER ASSETS, deposits $ 4,809 $ 4,809
----------- -----------
$ 304,328 $ 362,312
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable $ 36,203 $ 81,932
Notes payable to related parties 305,759 135,759
Current obligations under capital leases 3,716 5,902
Accounts payable 231,579 224,521
Accrued compensation 53,568 69,349
Accrued interest to related parties 83,225 41,131
Other accrued expenses 41,507 22,812
----------- -----------
Total current liabilities $ 755,557 $ 581,406
----------- -----------
OBLIGATIONS UNDER CAPITAL LEASE $ 10,666 $ 15,148
----------- -----------
ACCRUED SERVICE CONTRACT PAYABLE TO
RELATED PARTY $ 159,875 $ 159,875
----------- -----------
STOCKHOLDERS' DEFICIT
Common stock, no par value;
authorized 15,000,000 shares;
issued and outstanding:
March 31, 1996 10,520,249 shares;
June 30, 1995 10,520,249 shares $ 2,858,620 $ 2,858,620
Accumulated deficit (3,480,390) (3,252,737)
----------- -----------
$ (621,770) $ (394,117)
----------- -----------
$ 304,328 $ 362,312
=========== ===========
</TABLE>
3
<PAGE> 4
SCIENTIFIC NRG, INCORPORATED
d/b/a SCIENTIFIC COMPONENT SYSTEMS
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 80,792 $ 297,546 $ 443,207 $ 897,493
Cost of sales 54,734 186,735 270,062 497,046
----------- ----------- ----------- -----------
Gross profit $ 26,058 $ 110,811 $ 173,145 $ 400,447
Operating expenses:
General, administrative,
and selling costs
(including $6,250 monthly
for service contract
with related party) 101,290 151,721 332,595 480,368
Research and development 379 2,074 4,101 8,097
----------- ----------- ----------- -----------
Operating (loss) $ (75,611) $ (42,984) $ (163,551) $ (88,018)
Interest expense (21,217) (23,328) (63,502) (53,923)
----------- ----------- ----------- -----------
(Loss) before income taxes $ (96,828) $ (66,312) $ (227,053) $ (141,941)
Income tax provision (200) (200) (600) (600)
----------- ----------- ----------- -----------
Net (loss) $ (97,028) $ (66,512) $ (227,653) $ (142,541)
=========== =========== =========== ===========
Weighted average number
of shares outstanding 10,520,249 10,520,249 10,520,249 10,520,249
=========== =========== =========== ===========
Net (loss) per common share $ (0.01) $ (0.01) $ (0.02) $ (0.01)
=========== =========== =========== ===========
</TABLE>
4
<PAGE> 5
SCIENTIFIC NRG, INCORPORATED
CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT
Nine Months Ended March 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock
------------ Accumulated Stockholders'
Shares Amount Deficit Deficit
------ ------ ------- -------
<S> <C> <C> <C> <C>
Balance, June 30, 1995 10,520,249 $2,858,620 $(3,252,737) $(394,117)
Net income loss (227,653) (227,653)
---------- ---------- ----------- ---------
Balance, March 31, 1996 10,520,249 $2,858,620 $(3,480,390) $(621,770)
========== ========== =========== =========
</TABLE>
5
<PAGE> 6
SCIENTIFIC NRG, INCORPORATED
CONDENSED STATEMENTS OF CASH FLOW
Nine Months Ended March 31, 1996 and 1995
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, March 31,
1996 1995
---- ----
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Cash received from customers $ 497,472 $ 897,832
Cash paid to suppliers and employees (620,594) (959,912)
Interest paid (23,930) (43,691)
Income taxes paid -- --
--------- ---------
Net cash provided by (used in)
operating activities $(147,052) $(105,771)
--------- ---------
CASH FLOW (USED IN) INVESTING ACTIVITIES
Purchase of equipment and
leasehold improvements $ -- $ --
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Net increase (decrease) in notes payable (45,729) 124,503
Proceeds from advances and notes from
Company's officer and/or director 170,000 20,000
Principal payments under
capital lease obligations (6,668) (10,109)
Proceeds from issuance of common stock -- --
--------- ---------
Net cash provided by (used in)
financing activities $ 117,603 $ 134,394
--------- ---------
Net increase in cash $ (29,449) $ 28,623
CASH
Beginning 19,599 20,338
--------- ---------
Ending $ (9,850) $ 48,961
========= =========
</TABLE>
6
<PAGE> 7
SCIENTIFIC NRG, INCORPORATED
CONDENSED STATEMENTS OF CASH FLOW (Continued)
Nine Months Ended March 31, 1996 and 1995
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, March 31,
1995 1995
---- ----
<S> <C> <C>
RECONCILIATION OF NET (LOSS) TO
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net income (loss) $(227,653) $(142,541)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 5,465 9,288
Provision for doubtful accounts 9,000 9,000
Compensation expense arising from
stock warrants and service contract -- --
Change in assets and liabilities:
(Increase) decrease in:
Trade receivables 43,460 4,146
Inventories (32,330) 2,302
Prepaid expenses and deposits 2,940 (2,276)
Increase (decrease) in:
Accounts payable and accrued expenses 9,372 11,237
Accrued interest payable 42,094 2,473
Accrued income taxes 600 600
Accrued service contract -- --
--------- ---------
Net cash provided by (used in)
operating activities $(147,052) $(105,771)
========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING ACTIVITIES
Capital lease obligations incurred
for use of equipment $ -- $ --
========= =========
</TABLE>
7
<PAGE> 8
SCIENTIFIC NRG, INCORPORATED
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
In the opinion of the Company's management, the accompanying unaudited
condensed financial statements include all adjustments (which consist only of
normal recurring adjustments) necessary for a fair presentation of its financial
position at March 31, 1996 and results of operations and cash flows for the
periods presented. Although the Company believes that the disclosures in these
financial statements are adequate to make the information presented not
misleading, certain information and disclosures normally included in the
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted and should be read in conjunction with
the Company's audited financial statements included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission on
September 26, 1995. Operating results for the nine month period ended March 31,
1996 are not necessarily indicative of the results that may be expected for the
Company's fiscal year ending June 30, 1996.
Note 2. Inventories
<TABLE>
<CAPTION>
March 31, 1996 June 30, 1995
-------------- -------------
<S> <C> <C>
Raw Materials $148,375 $124,922
Finished Goods 49,503 40,626
-------- --------
$197,878 $165,548
======== ========
</TABLE>
8
<PAGE> 9
SCIENTIFIC NRG, INCORPORATED
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis should be read in conjunction with
the Company's audited financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on September 26, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations for the nine-month period ended March 31, 1996
resulted in a net loss of $227,653 compared to a net loss of $142,541 for the
nine-month period ended March 31, 1995, an increase in loss of $85,112. The
Company had a negative cash flow from operating activities for the nine-month
period ended March 31, 1996 of $147,052 compared to a negative cash flow of
$105,771 for the nine-month period ended March 31, 1995. The 1996 negative cash
flow was primarily due to a decrease in sales and gross profit margins.
The Company's inventory increased from $165,548 at June 30, 1995 to
$197,878 at March 31, 1996, an increase of $32,330. Accounts receivable
decreased from $128,495 at June 30, 1995 to $76,035 at March 31, 1996, a
decrease of $52,460.
The Company's accounts payable and other accrued expenses increased from
$357,813 at June 30, 1995 to $409,879 at March 31, 1996, an increase of $52,066.
At March 31, 1996, the Company had a net working capital deficit of
$489,270, compared to a net working capital deficit of $262,600 at June 30,
1995, an increase of $226,670, which is primarily the result of additional
borrowings by the Company. Management is continuing its efforts to increase
sales and profit margins and control costs and expenses.
No assurance can be given that there will not be losses from operations or
that management will be able to obtain sufficient financing when required, or
that such financing, if obtained, will be on favorable terms and conditions.
Management is also continuing the process of identifying potential merger
candidates, and is pursuing the sale of its product line in order to generate
cash to meet its obligations.
9
<PAGE> 10
SCIENTIFIC NRG, INCORPORATED
PART I. FINANCIAL INFORMATION (Continued)
RESULTS OF OPERATIONS
Three-month and Nine-Month Periods Ended March 31, 1996 Compared to Three-month
and Nine-Month Periods Ended March 31, 1995
Total sales of the Company during the three months ended March 31, 1996
decreased from $297,546 to $80,792, a decrease of $216,754 or 72.8% from the
corresponding period of the prior fiscal year. Total sales of the Company during
the nine months ended March 31, 1996 decreased from $897,493 to $443,207, a
decrease of $454,286 or 50.6% from the corresponding period of the prior fiscal
year.
Gross profit from operations during the the three months ended March 31,
1996 decreased from $110,811 to $26,058, a decrease of $84,753 or 76.5% from the
gross profit during the prior fiscal year. The gross profit margin for the three
months ended March 31, 1996 was 32.3%, compared to 37.2% for the three months
ended March 31, 1995. Gross profit from operations during the the nine months
ended March 31, 1996 decreased from $400,447 to $173,145, a decrease of $227,302
or 56.8% from the gross profit during the prior fiscal year. The gross profit
margin for the nine months ended March 31, 1996 was 39.1%, compared to 44.6% for
the nine months ended March 31, 1995.
General, administrative and selling expenses for the three months ended
March 31, 1996 decreased by $50,431, from $151,721 to $101,290, and increased as
a percentage of sales from 51% of sales to 125.4% of sales. General,
administrative and selling expenses for the nine months ended March 31, 1995
decreased by $147,773, from $480,368 to $332,595, and increased as a percentage
of sales from 53.5% of sales to 75% of sales.
The Company realized a net loss of $97,028, or $.01 per share for the
three-month period ended March 31, 1996, compared to a net loss of $66,512, or
$.01 per share for the corresponding period of the prior fiscal year. The
Company realized a net loss of $227,653, or $.02 per share for the nine-month
period ended March 31, 1996, compared to a net loss of $142,541, or $.01 per
share for the corresponding period of the prior fiscal year.
10
<PAGE> 11
SCIENTIFIC NRG, INCORPORATED
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
The Company does not anticipate that it will schedule an annual
meeting during the current fiscal year.
Item 6. Exhibits and Reports on Form 8-K
(a) Documents filed as part of this Form 10-Q
(1) Exhibits
Exhibits filed concurrently with this report (and referenced in the
Exhibit Index) have ten asterisks in the left margin, and are hereby
incorporated herein by this reference.
Exhibits previously filed with the Company's quarterly report on Form
10-Q for the quarterly period ended September 30, 1995 have nine
asterisks in the left margin, and are hereby incorporated herein by
this reference.
Exhibits previously filed with the Company's annual report on Form
10-K for the fiscal year ended June 30, 1995 have eight asterisks in
the left margin, and are hereby incorporated herein by this
reference.
Exhibits previously filed with the Company's quarterly report on Form
10-Q for the quarterly period ended December 31, 1994 have seven
asterisks in the left margin, and are hereby incorporated herein by
this reference.
Exhibits previously filed with the Company's annual report on Form
10-K for the fiscal year ended June 30, 1994 have six asterisks in
the left margin, and are hereby incorporated herein by this
reference.
Exhibits previously filed with the Company's annual report on Form
10-K for the fiscal year ended June 30, 1993 have five asterisks in
the left margin, and are hereby incorporated herein by this
reference.
11
<PAGE> 12
SCIENTIFIC NRG, INCORPORATED
PART II. OTHER INFORMATION (Continued)
Exhibits previously filed with the Company's quarterly report on Form 10-Q for
the quarterly period ended March 31, 1993 have four asterisks in the left
margin, and are hereby incorporated herein by this reference.
Exhibits previously filed with the Company's annual report on Form 10-K for the
fiscal year ended June 30, 1992 have three asterisks in the left margin, and are
hereby incorporated herein by this reference.
Exhibits previously filed with the Company's annual report on Form 10-K for the
fiscal year ended June 30, 1991 have two asterisks in the left margin, and are
hereby incorporated herein by this reference.
Exhibits previously filed with the Company's annual report on Form 10-K for the
fiscal year ended June 30, 1989 have one asterisk in the left margin, and are
hereby incorporated herein by this reference.
Finally, all Exhibits previously filed with the Securities and Exchange
Commission as part of the Company's initial Form 10 filing on or about November
12, 1986 or in other reports filed pursuant to the Securities Exchange Act of
1934 have no asterisk in the left margin, and are hereby incorporated herein by
this reference.
** 3.1 Articles of Incorporation as in effect on the date hereof
(including Amendment thereto effective December 28, 1988)
** 3.3 Bylaws
4.1 Specimen of Issued and Outstanding Restricted Share
Certificate and reverse side thereof (see also Exhibits 3.1
and 3.3)
4.6 Incentive Stock Option Plan
10.7 Agreement (assigning patent rights)
10.8 Agreement Between Scientific Component Systems, Inc. and NRG,
Inc., June 29, 1983
10.9 Agreement, July, 1983 (assigning patent rights, with Exhibit
10.7 as exhibit)
10.10 Assignment of Patent Rights from Scientific Component
Systems, Inc. to NRG, Inc., April 20, 1984
10.11 Assignment of Patent Rights from Rhett McNair and James
Helling to NRG, Inc., April 20, 1984
12
<PAGE> 13
SCIENTIFIC NRG, INCORPORATED
PART II. OTHER INFORMATION (Continued)
10.12 Assignment of Patent Rights from Rhett McNair, James
Helling, William R. Ingles and Gerald L. Fullerton to NRG,
Inc., April 20, 1984
10.13 Agreement Assigning Patent Rights from Scientific
Component Systems, Inc., to NRG, Inc., April 20, 1984
** 10.14 Assignment with Possibility of Reverter of Patent Rights
from Rhett McNair to NRG, Inc., January 21, 1986
10.20 Form of Warrant Certificate
*** 10.27 New Lease for Company Headquarters in Tustin, California
* 10.28 Royalty Agreement with Rhett McNair
* 10.29 Consulting Agreement with MLF & Associates, Inc., April 1,
1990
*** 10.30 Promissory Note Payable to Oliver Washburn and Extension
Thereto
*** 10.31 Promissory Note Payable to Malcolm Fickel and Extension
Thereto
*** 10.32 Promissory Note Payable to Malcolm Fickel and Extension
Thereto
*** 10.33 Promissory Note Payable to Malcolm Fickel and Extension
Thereto
*** 10.34 Promissory Note Payable to Malcolm Fickel and Extension
Thereto
*** 10.35 Deferred Compensation Agreement Between the Company and
Malcolm Fickel
*** 10.36 Line of Credit Agreement with Bank
*** 10.37 Promissory Note Payable to Peter C. Kreft
**** 10.38 Stock Purchase Agreement Between the Company and MLF &
Associates, Inc. Retirement Trust, April 30, 1993
**** 10.39 Stock Purchase Agreement Between the Company and Malcolm
L. Fickel, April 30, 1993
**** 10.40 Stock Purchase Agreement Between the Company and Oliver K.
Washburn, April 30, 1993
**** 10.41 Stock Purchase Agreement Between the Company and Peter C.
Kreft, April 30, 1993
13
<PAGE> 14
SCIENTIFIC NRG, INCORPORATED
PART II. OTHER INFORMATION (Continued)
**** 10.42 Stock Purchase Agreement Between the Company and Thomas
C. Moceri, April 30, 1993
***** 10.43 Financing Agreement Between the Company and Pre-Banc
Business Credit, Inc., May 21, 1993
***** 10.44 Addendum to Consulting Agreement between the Company and
Malcolm L. Fickel, June 30, 1993
***** 10.45 Leasing Agreement Between the Company and Autocar Leasing
Company, September 9, 1993
***** 10.46 Stock Warrant Agreement Between the Company and Eddie R.
Fischer, September 9, 1993
******* 10.47 Note and Revolving Loan Agreement Between the Company and
William T. Moceri, IRA, November 15, 1994
******** 10.48 Promissory Note Payable to Thomas C. Moceri, Trustee,
Thomas C. Moceri Profit Sharing Plan, September 28, 1994
******** 10.49 Promissory Note Payable to Oliver Washburn, March 7, 1995
******** 10.50 Promissory Note Payable to Oliver Washburn, March 7, 1995
******** 10.51 General Release Agreement Between the Company and Peter
Kreft, June 9, 1995
********* 10.52 Promissory Note Payable to Oliver Washburn, September 14,
1995
********** 10.53 Promissory Note Payable to Oliver Washburn, November 13,
1995
********** 10.54 Promissory Note Payable to Oliver Washburn, April 26,
1996
********** 27 Financial Data Schedule
28.2 Patent No. 4,520,436 (X-18 Series Downlight)
** 28.4 Patent No. 4,595,969 (Lamp Mounting Apparatus and Method)
** 28.5 Patent No. 4,641,228 (Lamp Mounting Apparatus and Method)
** 28.6 Patent No. 4,700,110 (Lamp Switching)
** 28.7 Patent No. 4,704,664 (Lamp Apparatus)
** 28.8 Trademarks Registered (Lightning Bolt Logo, Scientific
NRG Component Systems, SCS, X-18) and Notice of
Publication of Trademark, "Switchit"
****** 28.9 Patent No. 4,922,393 (Lamp Apparatus)
14
<PAGE> 15
SCIENTIFIC NRG, INCORPORATED
PART II. OTHER INFORMATION (Continued)
(b) Reports on Form 8-K
During the quarter ended March 31, 1996, the Company did not
file any reports Form 8-K
15
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 7, 1996
SCIENTIFIC NRG, INCORPORATED
by: /s/ Malcolm L. Fickel
-------------------------------------
Malcolm L. Fickel,
President and Chief Executive Officer
by: /s/ Thomas C. Moceri
-------------------------------------
Thomas C. Moceri,
Principal Financial Officer
16
<PAGE> 1
$150,000.00 November 13, 1995
On demand, for value received, Scientific NRG, Incorporated promises to pay to
the order of Oliver K. Washburn, one hundred fifty thousand dollars
($150,000.00), in lawful money of the United States of America, at 171 Wildwood
Ave, White Bear Lake, MN 55110, with interest at the rate of 12% per year.
Interest payments are due by the last day of each month during the term of the
loan, beginning on December 31, 1995.
A principal payment of $80,000 is due February 28, 1996, and additional
principal payments of $5,000 are due at the end of each month beginning March
31, 1996, with any remaining principal balance due in full on December 31,
1996. Additional principal payments may be made at any time without penalty.
This note is secured by all assets of the Corporation as more fully described in
the accompanying Form UCC-1, subject to prior filings.
Until principal and interest on this loan have been paid in full, Mr. Fickel's
salary shall be limited to that amount specified in the Consulting Agreement of
April 1, 1990. Additionally, no principal or interest payments shall be made on
the accrued service contract ($159,875), nor the note payable to Thomas C.
Moceri ($8,000), nor the prior notes payable to Oliver K. Washburn ($47,759)
Should suit be commenced to enforce payment of this note, the Corporation
promises to pay such additional sum as the court may adjudge reasonable as
attorney's fees in said suit.
Dated at Tustin, CA this 13th day of November, 1995
/s/ Malcolm L. Fickel
- -------------------------------------
Malcolm L. Fickel
President and Chief Executive Officer
Scientific NRG, Incorporated
2651 Dow Avenue
Tustin, CA 92680
17 EXHIBIT 10.53
<PAGE> 1
$30,000.00 April 26, 1996
On demand, for value received, Scientific NRG, Incorporated promises to pay to
the order of Oliver K. Washburn, thirty thousand dollars ($30,000.00), in lawful
money of the United States of America, at 171 Wildwood Ave, White Bear Lake, MN
55110, with interest at the rate of 12% per year.
This note is secured by all assets of the Corporation as more fully described in
the Form UCC-1 previously filed on behalf of Mr. Washburn, subject to prior
filings by other secured parties.
Until principal and interest on this loan have been paid in full, Mr. Fickel
agrees not to cash any salary checks presently being held or issued in the
future.
Further, until the full principal and accrued interest on the first Washburn
bridge loan for $150,000 (dated November 13, 1995) has been repaid, there will
be no interest or principal payments on the Sterling $100,000 variable rate note
agreement.
As a final inducement to Washburn for making this additional bridge loan, he is
to be issued 300,000 shares of the Company's common stock.
Should suit be commenced to enforce payment of this note, the Corporation
promises to pay such additional sum as the court may adjudge reasonable as
attorney's fees in said suit.
Dated at Tustin, CA this 26th day of April, 1996
/s/ Malcolm L. Fickel
- -------------------------------------
Malcolm L. Fickel
President and Chief Executive Officer
Scientific NRG, Incorporated
2651 Dow Avenue
Tustin, CA 92680
18 EXHIBIT 10.54
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
FINANCIAL STATEMENTS FOR QUARTER ENDED 3-31-96 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<CIK> 0000794929
<NAME> SCIENTIFIC NRG INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> (9,850)
<SECURITIES> 0
<RECEIVABLES> 76,035
<ALLOWANCES> 13,127
<INVENTORY> 197,878
<CURRENT-ASSETS> 266,287
<PP&E> 33,232
<DEPRECIATION> 5,465
<TOTAL-ASSETS> 304,328
<CURRENT-LIABILITIES> 755,557
<BONDS> 0
0
0
<COMMON> 10,520,249
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 304,328
<SALES> 80,792
<TOTAL-REVENUES> 80,792
<CGS> 54,734
<TOTAL-COSTS> 101,669
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,217
<INCOME-PRETAX> (96,828)
<INCOME-TAX> (200)
<INCOME-CONTINUING> (97,028)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (97,028)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
