<PAGE> 1
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarter ended March 31, 1997 Commission File Number 33-8333-D
AMERISHOP CORP.
(Exact Name of registrant as specified in its charter)
DELAWARE 38-2684858
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Centennial Office Park
Suite 308
3033 Orchard Vista Drive SE
Grand Rapids, MI 49546-7080
(Address of principal executive offices) (Zip Code)
(616) 949-0775
(Registrant's telephone number including area code)
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
--- ---
As of May 15, 1997, 2,894,765 shares of common stock were outstanding.
<PAGE> 2
AMERISHOP CORP.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Descriptions Page Number
- ------------ -----------
<S> <C>
Cover Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Part I. Financial Information
1. Financial Statements (Unaudited)
Balance Sheets
March 31, 1997 and June 30, 1996 . . . . . . . . . . . . . . . . . . 3
Statements of Operations
Three Months Ended March 31, 1997 and 1996 . . . . . . . . . . . . . 4
Statements of Operations
Nine Months Ended March 31, 1997 and 1996 . . . . . . . . . . . . . . 5
Statement of Cash Flows
Nine Months Ended March 31, 1997 and 1996 . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . 7-8
2. Management's Discussion and Analysis of Results
of Operations and Financial Conditions . . . . . . . . . . . . . . . 9-11
Part II.
1. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 12
2. Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
2
<PAGE> 3
1. FINANCIAL INFORMATION
AMERISHOP CORP.
BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash $ 72,599 $ 72,429
Prepaid expenses 71,650 65,246
Accounts receivable 567,430 461,603
Prepayments to vendors 227,604 127,191
Inventory 179,095 80,109
----------- -----------
Total current assets 1,118,378 806,578
EQUIPMENT, net 22,770 29,520
----------- -----------
Total assets $ 1,141,148 $ 836,098
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 728,063 $ 516,512
Customer deposits 775,989 500,811
Deferred membership revenue 416,936 461,364
Notes payable (Note 3) 2,017,844 1,628,445
Accrued interest 1,127,539 847,714
Current maturities of long-term debt (Note 3) 2,000,000 2,000,000
Other current liabilities 95,613 114,146
----------- -----------
Total current liabilities 7,161,984 6,068,992
DEFERRED MEMBERSHIP REVENUE 14,583 58,333
LONG-TERM DEBT, less current maturities (Note 3) 23,285 11,573
SHAREHOLDERS' EQUITY: (Deficit)
Preferred stock, $.001 par value per share,
1,000,000 shares authorized and no shares issued.
Common stock, $.00001 par value per share, 20,000,000
shares authorized, 2,894,765 shares
outstanding at March 31, 1997 and June 30, 1996 30 30
Additional paid-in capital 697,820 697,820
Accumulated deficit (6,756,554) (6,000,650)
----------- -----------
Total shareholders' equity/(deficit) (6,058,704) (5,302,800)
----------- -----------
Total liabilities and shareholders' equity (deficit) $ 1,141,148 $ 836,098
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
AMERISHOP CORP.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
---------- ----------
<S> <C> <C>
REVENUES:
Membership fees $ 167,640 $ 289,703
Merchandise sales 719,587 1,156,276
Travel revenue 322,593 194,801
Promotional revenue 104,562 87,870
---------- ----------
Total revenues 1,314,382 1,728,650
---------- ----------
EXPENSES:
Sales commissions 172,373 116,368
Cost of merchandise sales 505,148 862,717
Cost of travel revenue 266,974 176,279
Selling, general and administrative 449,440 463,791
Promotional expenses 96,838 97,830
---------- ----------
Total expenses 1,490,773 1,716,985
---------- ----------
Income/(Loss) from operations (176,391) 11,665
OTHER INCOME (EXPENSE):
Interest income 518 993
Other income 3,261 1,686
Interest expense (Note 3) (101,619) (133,077)
---------- ----------
Total other income (expense) (97,840) (130,398)
---------- ----------
Net loss $ (274,231) $ (118,733)
========== ==========
Net Loss Per Share (Note 4) $ (.09) $ (.04)
========== ==========
Weighted Average Shares Outstanding 2,894,765 2,894,765
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
AMERISHOP CORP.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1997 1996
---- ----
<S> <C> <C>
REVENUES:
Membership fees $ 551,770 $ 867,025
Merchandise sales 2,308,255 3,030,777
Travel revenue 322,593 194,801
Promotional revenue 168,029 167,457
---------- ----------
Total revenues 3,350,647 4,260,060
---------- ----------
EXPENSES:
Sales commissions 417,325 323,149
Cost of merchandise sales 1,648,332 2,284,717
Cost of travel revenue 266,974 176,279
Selling, general and administrative 1,345,545 1,287,310
Promotional expenses 132,703 145,096
---------- ----------
Total expenses 3,810,879 4,216,551
---------- ----------
Income/(Loss) from operations (460,232) 43,509
OTHER INCOME (EXPENSE):
Interest income 1,704 2,824
Other income 4,092 2,932
Loss on lease renegotiation 0 (17,624)
Interest expense (Note 3) (301,468) (384,106)
---------- ----------
Total other income (expense) (295,672) (395,974)
---------- ----------
Net loss $ (755,904) $(352,465)
========== ==========
Net Loss Per Share (Note 4) $ (.26) $ (.13)
========== ==========
Weighted Average Shares Outstanding 2,894,765 2,894,765
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
AMERISHOP CORP.
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the nine months ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(755,904) $(352,465)
Adjustments to reconcile net loss
to net cash from operating activities:
Loss on lease renegotiation 0 17,624
Depreciation and amortization 9,784 13,315
Changes in assets and liabilities:
Prepaid expenses (6,404) (38,940)
Accounts receivable (105,827) (193,589)
Prepayments to vendors (100,413) (95,119)
Inventory (98,986) (10,557)
Accounts payable 211,551 (43,360)
Customer deposits 275,178 292,212
Deferred membership revenue (88,178) (74,370)
Deferred non-compete revenue 0 (37,483)
Accrued interest 279,828 381,965
Other current liabilities (18,532) (47,685)
--------- ---------
Net cash used in operating activities (397,903) (188,452)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,035) (10,547)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under long-term
debt and capital lease obligations 0 (4,625)
Principal payments under short-term debt obligations (63,290) 0
Net Proceeds from revolving line of credit 252,686 0
Proceeds from the issuance of notes payable 200,000 200,000
Increase in deferred rent 11,712 0
--------- ---------
401,108 195,375
NET CHANGE IN CASH 170 (3,624)
CASH AT BEGINNING OF PERIOD 72,429 47,210
--------- ---------
CASH AT END OF PERIOD $ 72,599 $ 43,586
========= =========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON CASH
INVESTING AND FINANCING ACTIVITIES
For the nine months ended March 31, 1996 the Company was released of $195,471
in accrued rent obligations when it entered into a new lease, for which it
issued $213,095 in stock.
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
AMERISHOP CORP.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1997
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
normally included in the annual financial statements prepared in accordance
with generally accepted accounting principles. In the opinion of management,
all material adjustments (of a normal recurring nature) considered necessary
for a fair presentation have been included. Operating results for the nine
months ended March 31, 1997 are not necessarily indicative of the results that
may be expected for the year ended June 30, 1997. For further information,
refer to the financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended June 30, 1996.
The balance sheet at June 30, 1996 has been derived from the audited financial
statements at that date.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - AmeriShop Corp., formerly AmeriMark Corporation, was
incorporated under the laws of the State of Delaware on August 1, 1986.
Revenue Recognition: Membership fees and annual renewal fees allow members to
use services provided by the Company. Annual renewal fees are recorded as
deferred revenue when received and recognized as income on the straight-line
basis over the renewal period.
Merchandise sales are recorded when the customer is shipped the merchandise.
Travel revenue is recognized when the client has completed its trip.
Equipment and Depreciation - Equipment is stated at cost less accumulated
depreciation. Improvements and betterment's are capitalized; maintenance and
repairs are charged to expense as incurred. Depreciation is provided by the
use of straight-line and accelerated methods for both financial reporting and
income tax purposes over the estimated useful lives of 3 to 7 years.
Industry Segment - The Company operates as a provider of consumer merchandise
and other services. It services customers through consumer benefit programs as
well as premium incentive programs.
NOTE 3 - NOTES PAYABLE AND LONG-TERM DEBT
The Company has $2,000,000 of convertible debentures payable to an investment
fund partnership payable in quarterly installments of interest only at 12.5%
per annum. Commencing on August 1, 1995, monthly principal installments of $10
per $1,000 borrowed were required. As of March 31, 1997, the $2,000,000
debenture is classified as a current liability due to violations of debt
covenants as described below.
In addition, the Company has demand notes payable to the same investment fund
partnership totaling $1,428,445 that were due no later than July 1, 1995,
demand notes payable totaling $200,000 that were due March 31, 1996 and demand
notes payable totaling $100,000 that is due October 5, 1997. Interest is
payable at 12.5% per annum on the demand notes due July 1, 1995 and March 31,
1997 and 10% per annum on the demand note due October 5, 1997. These notes are
collateralized by the Company's accounts receivable.
7
<PAGE> 8
The Company is in default of its financial loan covenants on the debentures.
It is also in default of its interest installments since May 1, 1994 and
principal installments since August 1, 1995 on the debentures and the notes
payable. These covenants and default from nonpayment of interest have been
waived through May 20, 1997. Also effective July 1, 1996 the investment fund
partnership has waived for one year future interest to be paid or accrued on
the convertible debenture, short-term note payable and related accrued interest
totaling $4,476,162. Under FASB 15 a new effective interest rate of 8.17% was
determined for the remaining term of the note and an amount of $274,277 for the
nine months ending March 31, 1997 was accrued for interest expense related to
this note.
The investment fund partnership has the right at any time to convert any issued
debenture into the common stock of the Company at $0.56309 per share. The
debenture can be redeemed by the Company at any time after July 1995, at
varying premium rates above par.
There are no quoted market prices for this convertible debenture. Because the
Company is unable to estimate the timing and ultimate settlement of this
convertible debenture and related accrued interest, it is unable to estimate
the fair value at March 31, 1997.
As of March 31, 1997, the Company has a demand note payable to Network Direct,
Inc. totaling $36,709 which was due December 1, 1996. Network Direct, Inc. has
extended this note payable and will retain renewal membership fees until the
note payable is repaid. Interest is accrued at 12% and has a balance of
$628.46. Also the Company has a revolving line of credit secured by accounts
receivable with Publishers Credit Service, Inc. totaling $252,686. Interest is
payable at prime plus 3.75%. The maximum amount of the credit line is
$250,000. The overage is due to the Company being at maximum borrowing
capacity and the addition of March interest, which was subsequently paid.
NOTE 4 - LOSS PER SHARE
Loss per share is based on the weighted average number of common shares
outstanding during the periods presented. Common stock equivalents in the form
of convertible debentures were not included in the calculation of weighted
average shares outstanding since inclusion would be anti-dilutive.
8
<PAGE> 9
AMERISHOP CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company has a working capital deficit of $6,043,606 at March 31, 1997. A
major portion of this deficit relates to the convertible debentures, short term
notes payable and accrued interest totaling $4,581,082 due to an investment
fund partnership. Management is currently working with the investment group to
extend this debt and/or convert it into equity. Effective July 1, 1996 the
investment group has waived for one year any additional future interest to be
paid or accrued on the convertible debentures, short term notes payable and
accrued interest. Under FASB 15, an interest amount of $274,276 for the nine
months ending March 31, 1997 was accrued yielding an effective rate of 8.17%
for the remaining term of the note.
If the debt can be deferred beyond one year or converted, the Company is left
with a $1,188,248 deficit of which $416,936 represents deferred membership
revenue. The deferred revenue will be liquidated through amortization into
income over the next twelve months and therefore will not require the use of
cash resources. Management is seeking additional equity financing to offset
the remaining working capital deficit of $771,312. On July 12, 1996, the
Company received a short term loan from Network Direct, Inc. (NDI) for $100,000
at 12% interest. The note and accrued interest was due December 1, 1996, at
which time, NDI agreed to extend the note payable while retaining any renewal
membership fees due to AmeriShop. As of March 31, 1997 the balance of the note
payable and accrued interest was $37,337. The Company has utilized its
accounts receivable financing by borrowing $1,691,370 over the last nine
months. As of March 31, 1997 the outstanding loan balance was $252,686.
The Company had a deficiency in shareholders' equity of $6,756,554 as of March
31, 1997 and its continuation is dependent upon meeting its liabilities as they
become due and attaining profitable operations. Management believes that it
can attain profitable operations in the future through its merchandise premium
incentive programs which it continues to actively market.
In order to generate substantial growth and become profitable, the Company must
have additional marketing capital or a strategic acquisition. In this regard,
Management is actively pursuing a private placement. With an investment in the
$1-$2 million range, Management believes that the Company would be properly
positioned to overcome any operations shortfalls and provide a substantial
investment into the marketing of its programs. The private placement would
also position the Company for an offering of its shares, which would provide
additional marketing capital and allow it to follow its acquisition strategy.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1997 VS. 1996
The Company experienced a loss of $274,231 during the quarter ended March 31,
1997 compared to a loss of $118,733 for the same period of the prior year. In
the prior year, interest expense on convertible debentures, short-term notes
and accrued interest to an investment fund partnership was $132,691. Effective
July 1, 1996 the investment fund partnership has waived for one year any future
interest to be paid or accrued. Under FASB 15, an interest amount of $91,372
was accrued, constituting an decrease of $41,319. Also in the prior period an
amount of $58,333 pertaining to the renegotiating of the Network Direct, Inc.
membership contract was amortized into revenue. This amount was subsequently
adjusted at June 30, 1996 of which the net effect was to reduce revenue by
$43,750. Adjusting for these two amounts, the comparable net loss for
March 31, 1997 and 1996 would of been ($182,859) and ($29,792) respectively
constituting an increased loss of $153,067.
Membership fees decreased $122,063 (42%) from $289,703 of the prior year to
$167,640. Adjusting for the above mentioned difference in amortization of
revenue, the actual decrease was $78,313 (31%). Since revenue is recorded on
an amortized basis the difference would have to be analyzed over the length of
the membership periods which can vary from one to three years. On a cash
basis, membership fees decreased by $35,464 (18%) from $200,189 of the prior
year to $164,725 the current year. The Company's significant membership
program, Network Direct, Inc., recorded a decrease of $27,698 from the prior
9
<PAGE> 10
period, $49,510 in new memberships and $21,812 increase in renewal memberships.
The remaining portion of the decrease is attributed to a mixture of other
smaller membership enhancement programs of which vary month to month.
Merchandise sales decreased by $436,689 (38%) from $1,156,276 the prior year to
$719,587 the current year. Merchandise sales are a combination of membership
merchandise sales and premium incentive merchandise sales. Membership
merchandise sales decreased by $125,757 (35%) from the prior period. Net loss
on these sales is approximately 6%. The merchandise is sold at break-even
because of the membership fee, but the Company covers the guarantee of savings
which amounts to 6% of sales. Premium incentive merchandise sales decreased
$279,650 (37%) from the prior period. Gross profit (excluding sales
commissions) on these sales is approximately 42%, increasing approximately 3%
over the prior period. A direct mail catalog that generated $31,282 in
merchandise sales in the prior period did not occur this year. Gross profit on
this program was approximately 16% during the period.
Sales commissions increased by $56,005 (48%) from $116,368 the prior year to
$172,373 the current year. The increase resulted from greater sales derived
from independent sales agents. Commission rates to independent agents range
from 1% to 25% of sales. When sales commissions are added to the calculation
then gross profit on premium incentive merchandise sales is approximately 17%
for the current period versus 21% for the prior period. Overall, gross profit
from merchandise sales decreased $135,125 (76%) from the prior period.
Travel revenue increased by $127,792 (65%) over the prior period. The increase
resulted from a new incentive client at a higher volume than the previous year.
Gross profit also increased from 9.5% the previous period to 17.24% the
current period.
Promotional revenue increased by $16,692 (19%) over the prior period.
Promotional revenue is a combination of materials and administration fees for
premium incentive programs. The variance in revenue is due to the timing of
program start dates. In the prior period approximately $20,000 was written off
for obsolete incentive catalogs. Adjusting for this amount the comparable
gross profits for the quarter ending March 31, 1997 and 1996 were $7,724 and
$10,040 respectively, a decrease of $2,316 (22%).
Selling, general and administrative expenses decreased by $14,351 (3%) from
$463,791 the prior period to $449,440 the current period. The major
fluctuation pertained to employee health insurance which decreased by $14,676
(46%) over the prior period. The Company was on a partial self-funding plan,
but effective August 1, 1996 the Company changed to a fixed fee plan. The
decrease reflects the savings of the new plan. The remaining fluctuations
pertain to various other expenses of which are not material.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1997 VS. 1996
The Company experienced a loss of $755,904 during the nine months ended March
31, 1997 compared to a loss of $352,465 for the same period of the prior year.
In the prior year, interest expense on convertible debentures, short-term notes
and accrued interest to an investment fund partnership was $382,564. Effective
July 1, 1996 the investment fund partnership has waived for one year any future
interest to be paid or accrued. Under FASB 15, an interest amount of $274,277
was accrued, constituting a decrease of $108,337. Also, in the prior period an
amount of $175,000 pertaining to the renegotiating of the Network Direct, Inc.
membership contract was amortized into revenue. This amount was subsequently
adjusted at June 30, 1996 of which the net effect was to reduce revenue by
$131,250. Adjusting for these two amounts the comparable net losses for March
31, 1997 and 1996 would of been $481,627 and $101,151 constituting an increased
loss of $380,476.
Membership fees decreased $315,255 (36%) from $867,025 of the prior year to
$551,770. Adjusting for the above mentioned difference in amortization of
revenue, the actual decrease was $184,005. Since revenue is recorded on an
amortized basis the difference would have to be analyzed over the length of the
membership periods which can vary from one to three years. On a cash basis,
membership fees decreased by $113,164 (20%) from $571,025 of the prior year to
$457,861 the current year. The Company's significant membership program,
Network Direct, Inc., recorded a decrease of $81,215 from the prior
10
<PAGE> 11
period, $104,155 in new memberships and an increase of $22,940 in renewal
memberships. The remaining portion of the decrease is attributed to a mixture
of other smaller membership enhancement programs of which vary month to month.
Merchandise sales decreased by $722,522 (24%) from $3,030,777 the prior year to
$2,308,255 the current year. Merchandise sales are a combination of membership
merchandise sales and premium incentive merchandise sales. Membership
merchandise sales decreased by $210,092 (21%) from the prior period. Net loss
on these sales is approximately 6%. The merchandise is sold at break-even
because of the membership fee, but the Company covers the guarantee of savings,
which amounts to 6% of sales. Premium incentive merchandise sales decreased
$431,185 (22%) from the prior period. Gross profit (excluding sales
commissions) on these sales is approximately 42%. A direct mail catalog that
generated $81,245 in merchandise sales in the prior period did not occur this
year. Gross profit on this program was approximately 20%.
Sales commissions increased by $94,176 (29%) from $323,149 the prior year to
$417,325 the current year. The increase resulted from greater sales derived
from independent sales agents. Commission rates to independent agents range
from 1% to 25% of sales. When sales commissions are added to the calculation
then gross profit on premium incentive merchandise sales is approximately 17%
for the current period versus 18.6% for the prior period. Overall, gross
profit from merchandise sales decreased by $180,313 (43%) over the prior
period.
Travel revenue increased by $127,792 (65%) over the prior period. The increase
resulted from a new incentive client at a higher volume than the previous year.
Gross profit also increased from 9.5% the previous period to 17.24% the
current period.
Gross profit on promotional revenue increased $12,965 (8%) over the prior
period. Promotional revenue is a combination of materials and administration
fees for premium incentive programs. In the prior period the Company had to
write off approximately $20,000 of obsolete incentive catalogs. Currently in
inventory the Company has 25,000 new catalogs at a cost of approximately
$120,000. The lifetime of a catalog is approximately 18 months.
Selling, general and administrative expenses increased by $58,235 (5%) from
$1,287,310 the prior period to $1,345,545 the current period. The major
fluctuations included the following: Wages increased by $45,603 (7%) over the
prior period. In the current period a new premium incentive representative and
an internet web designer were added. Employee health insurance increased by
$5,346 (8%) over the prior period. The Company was on a partial self-funding
plan, but effective August 1, 1996 the Company changed to a fixed fee plan.
The Company is finally seeing the benefits of the policy change and anticipates
more reductions. Professional Services increased by $19,292 (39%) over the
prior period of which $16,000 pertains to fees paid to a consultant retained to
search for acquisition candidates. Rent expense decreased by $22,128 (20%)
over the prior period which reflects the lease re-negotiation of October 1995.
Also, in the current period the Company exhibited at the National Premium
Incentive Show in Chicago, which increased advertising expenses by
approximately $15,000 and initiated an internet project which the initial
start-up cost was approximately $12,000. The remaining fluctuations pertain
to various other expenses of which are not material.
11
<PAGE> 12
PART II.
AMERISHOP CORP.
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None.
ITEM 2 CHANGES IN SECURITIES
None.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
The Company is in default of certain covenants and interest payments on its $2
million of convertible debentures. The covenants dictate that the Company
maintain a current ratio of 1 to 1 and maintain positive cash flow from
operations over a three month moving average. The Company has not met these
requirements.
Since May 1, 1994, the Company is also in default regarding the payment of
interest and fees relating to the debentures and to the $1,428,445 of
short-term demand notes due to the same debenture holder.
The covenants and rights to remedies for non-payment of interest and fees have
been waived through May 20, 1997.
Effective July 1, 1996, the investment fund partnership has waived for one year
future interest to be paid or accrued on the convertible debentures, short-term
note payable and related accrued interest. Under FASB 15 an interest amount of
$274,277 for the nine months ended March 31, 1997 has been accrued.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 OTHER INFORMATION
None.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None.
SIGNATURES
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.
AMERISHOP CORP.
/s/ Joseph B. Preston
--------------------------------
Joseph B. Preston, Chairman/CEO
/s/ Steven R. Salasky
--------------------------------
Steven R. Salasky, Controller
12
<PAGE> 13
Exhibit Index
Exhibit
No. Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 72,599
<SECURITIES> 0
<RECEIVABLES> 567,430
<ALLOWANCES> 0
<INVENTORY> 179,095
<CURRENT-ASSETS> 1,118,378
<PP&E> 489,699
<DEPRECIATION> 466,929
<TOTAL-ASSETS> 1,141,148
<CURRENT-LIABILITIES> 7,161,984
<BONDS> 0
0
0
<COMMON> 30
<OTHER-SE> (6,756,554)
<TOTAL-LIABILITY-AND-EQUITY> 1,141,148
<SALES> 2,308,255
<TOTAL-REVENUES> 3,350,647
<CGS> 2,065,657
<TOTAL-COSTS> 3,810,879
<OTHER-EXPENSES> (295,672)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
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