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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-KSB
ANNUAL REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the fiscal year ended May 31, 2000
Commission file No. 0-5141
PRINCETON AMERICAN CORPORATION
(Name of small business issuer in its charter)
Nevada 22-1848644
(state or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2222 East Camelback Road, Suite 200
Phoenix, AZ 85016
(Address of principal office) (Zip code)
Issuer's telephone number, including area code: (602) 522-2444
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
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 periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B 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-KSB or any
amendment to this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year were $849,275.
The aggregate market value of voting stock held by non-affiliates of the
registrant was approximately $339,553 as of August 25, 2000.
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date of August 28, 2000 was 14,148,047.
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Princeton American Corporation
FORM 10-KSB
FOR THE FISCAL YEAR ENDED MAY 31, 2000
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
PART I ....................................................................... 1
Item 1 - Description of Business ....................................... 1
Item 2 - Description of Property ....................................... 4
Item 3 - Legal Proceedings ............................................. 9
Item 4 - Submission of Matters to a Vote of Security Holders ........... 10
PART II ...................................................................... 11
Item 5 - Market for Common Equity and Related Shareholder Matters ...... 11
Item 6 - Management's Discussion and Analysis or Plan of Operation ..... 13
Item 7 - Financial Statements and Supplementary Data ................... 14
Item 8 - Changes in and Disagreements with Accountants on Accounting
Financial Disclosure ....................................... 15
PART III ..................................................................... 16
Item 9 - Directors and Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a)
of the Exchange Act ........................................ 16
Item 10 - Executive Compensation ....................................... 16
Item 11 - Security Ownership of Certain Beneficial Owners and Management 19
Item 12 - Certain Relationships and Related Transactions ............... 20
Item 13 - Exhibits and Reports on Form 8-K ............................. 20
SIGNATURES ................................................................... 22
FINANCIAL STATEMENTS ......................................................... F-1
</TABLE>
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this report discuss future
expectations, contain projections of results of operations or financial
condition or state other "forward-looking" information. Those statements are
subject to known and unknown risks, uncertainties and other factors that could
cause the actual results to differ materially from those contemplated by the
statements. The forward-looking information is based on various factors and was
derived using numerous assumptions. Important factors that may cause actual
results to differ from forward-looking statements and projections include, for
example:
- a downturn in the Phoenix, Arizona real estate market, particularly one
which would adversely affect commercial lease rates;
- an adverse result in the Weiss or other litigation referred to in this
report;
- any change in tax laws which would change the Company's ability to utilize
its tax loss carryforward or the inability under existing tax laws for the
full utilization of such tax loss carryforward;
- an inability of the Company to regain a listed or trading status on the
Over-the-Counter Bulletin Board, NASDAQ, the American Stock Exchange, or
some other recognized market or exchange;
- certain operations of the Company, including the formation of alliances
with other entities, will remain under the jurisdiction of and be subject
to the confirmation and approval of the U.S. Bankruptcy Court. The
decisions of the Bankruptcy Court, with respect to Company operations
retained under its jurisdiction, could affect the business of the Company.
- the inability of the Company to secure renewals of existing leases at
commercially reasonable rates or to promptly replace tenants following the
expiration of existing leases;
- the effect of changing economic conditions; and
- other risks which may be described in our future filings with the
Securities and Exchange Commission. We do not promise to update
forward-looking information to reflect actual results or changes in
assumptions or other factors that could affect those statements.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
INTRODUCTION. On October 4, 1996, Princeton American Corporation
("Princeton" or the "Company") filed its Annual Report on Form 10-KSB for the
fiscal year ended May 31, 1996. Since that time, because of the events described
below, the Company has been unable to file periodic annual or quarterly reports.
Subsequent to the filing of the last Annual Report on Form 10-KSB for the fiscal
year ended May 31, 1996, the following events took place:
ARREST, PROSECUTION AND CONVICTION OF THE COMPANY'S CEO. On October 10, 1996,
Dale E. Eyman, Chairman and CEO of Princeton was arrested by the F.B.I. and
charged with securities fraud involving a scheme to bribe stockbrokers to
promote Company shares in the open market. The allegations charged that
illegal transactions were conducted by him in his capacity as CEO of the
Company. Mr. Eyman was later tried and convicted in the Federal District
Court, Southern District of New York, on four counts of violating federal
securities laws. He is currently serving a 70 month sentence in federal
prison.
NASDAQ DELISTING. On November 18, 1996, Princeton's securities were delisted
from the NASDAQ Stock Exchange. Princeton was one of three companies delisted
because of its identification with the securities fraud case described above.
The NASDAQ Board of Directors stated that "the type of activity demonstrated
by this Company has no place on the Nasdaq Stock Market."
BANKRUPTCY FILING; APPOINTMENT OF A TRUSTEE. On December 11, 1996 the Company
filed for protection under Chapter 11 of the US Bankruptcy Code. (Case no.
96-13675 PHX JMM). On January 21, 1997, the then existing management of
Princeton submitted a Plan of Reorganization. The Plan was challenged by
William C. Taylor, a former principal and creditor of the Company, who
petitioned the court for the appointment of a trustee.
The case was tried and, on February 6, 1997, the court issued its order
appointing Roger W. Brown as Trustee. Shortly thereafter, the Trustee
terminated the then existing management of Princeton and assumed day to day
management of the Company.
BUSINESS PRIOR TO REORGANIZATION. At the time the bankruptcy proceedings
began, Princeton's business included:
PERSONAL CARE DIVISION, comprised of three subsidiaries:
- GSK Products, Inc. (50% interest)
- Biosome Products, Inc. (80% interest)
- Organifyl Labs, Inc. (100% interest)
These companies manufactured and distributed personal care products to the
professional beauty and barber industry.
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REAL ESTATE DIVISION, which acquired and managed office buildings and
undeveloped land through four subsidiaries:
- 88 Redevelopment Co.
- 4808 Corporation
- Prinwest Corporation
- Saturn Resources Incorporated
The Real Estate Division owned:
- Two office buildings in Phoenix, Arizona:
- 2222 East Camelback Road
- 4808 North 22nd Street
- An industrial building in Phoenix, Arizona.
- A five-acre parcel of undeveloped property on Scottsdale Road
approximately three miles south of Carefree, Arizona (the
"Lone Mountain Property").
- Five acres of undeveloped property in Chino Valley, Yavapai
County, Arizona.
- A long-term brokerage commission on a ground lease of a mobile
home park in Mesa, Arizona.
- A 74 acre parcel in Peoria, Arizona zoned for manufactured
housing.
SALES AND TRANSFERS PRIOR TO BANKRUPTCY. Prior to (or simultaneously with)
the filing with the Bankruptcy Court, the following transactions occurred:
(1) Prinwest Corporation sold the 10,000 square foot warehouse in Phoenix
on December 13, 1966 for $305,000.
(2) David S. Smith received a severance package when he resigned as a
Director, Treasurer and Secretary of the Company in November, 1996. He
received compensation which included Saturn Resources, Inc. and the 74
residential lots owned by it in Peoria, Arizona.
SALES AND TRANSFERS OF ASSETS. Princeton's holdings (as reported in the
1996 Form 10-KSB) were reduced significantly from November, 1996 to December,
1997 during Trustee Brown's management of the Company. The following four
transactions were confirmed by the Court during the Trustee's administration of
the bankrupt debtor.
(1) Princeton sold its 80% interest in Biosome Products, Inc. to Gregory
Eastman (the former President of that subsidiary) for $5000 cash.
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(2) Princeton's 50% interest in GSK Products was purchased by the two
Doctors who had originally sold it to the company for $1000 cash and the
return of the Princeton shares issued to them as part of the consideration
for acquiring GSK Products.
(3) Ownership of Organifyl reverted to the sellers because Princeton had
defaulted on the purchase contract (after approximately $80,000 of the
$375,000 purchase price had been paid to them).
(4) The Lone Mountain Property was sold on June 20, 1997 for $270,000.
In addition, the severance package with David Smith described above was
the subject of litigation. The dispute was settled with Mr. Smith retaining the
assets transferred to him in exchange for the payment to Princeton of $125,000
cash.
CONFIRMATION OF JOINT PLAN OF REORGANIZATION. After Roger W. Brown was
appointed Trustee in February, 1997, William C. Taylor submitted his proposed
Plan of Reorganization of Princeton on May 30, 1997. During the course of
extensive litigation among competing plan proponents, other concerned parties
and creditors, on August 28, 1997, Trustee Brown and Mr. Taylor filed a Joint
Plan of Reorganization. The Joint Plan was confirmed by the Court on November
19, 1997 and was published in its entirety in a Current Report on Form 8K which
was filed with the Securities and Exchange Commission (the "Commission") on
December 20, 1997, the Effective Date of the Plan.
By its order confirming the Plan, the Bankruptcy Court:
1. Converted all Princeton preferred stock into common stock.
2. Merged wholly owned subsidiaries (4808 Corporation and 88
Redevelopment Corporation) into Princeton.
3. Confirmed the prepetition sale by Prinwest Corporation of its 10,000
square foot warehouse in Phoenix.
OPERATIONS AFTER PLAN CONFIRMATION. On January 2, 1998, the directors
designated in the Plan held their first formal meeting, elected officers and
commenced the task of reorganizing the Company. As confirmed, the Plan called
for the reorganized Princeton to make distributions to unsecured creditors
within one year of the Plan's effective date. Once distributions were made to
unsecured creditors, the Plan would be "substantially consummated" within the
meaning of the Bankruptcy Code. The Plan was subsequently modified in January
1999 to extend certain deadlines in the Plan, including the deadline for
distributions to unsecured creditors. These deadlines were extended to 180 days
following the entry of a final, non-appealable order resolving the claim of
Harry and Irene Weiss (see "Bankruptcy Litigation - Harry and Irene Weiss"
below).
PRINCETON'S REMAINING BUSINESS. After all of these transactions occurred,
Princeton's remaining assets consisted of the two Phoenix office buildings,
the Mesa real estate
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commission, two residential lots in Chino Valley, Arizona (which were sold
before May 31, 2000) and stock in Exten Industries, Inc. and Stratford
American Corporation.
CURRENT COMPANY BUSINESS As of May 31, 2000, Princeton's primary business
activity is the management of its two office buildings totaling 50,000 square
feet in Phoenix, Arizona. Currently we have 2 employees. None of the Company's
employees are represented by a labor union and we believe that employee
relations are good.
ITEM 2. DESCRIPTION OF PROPERTY
2222 EAST CAMELBACK ROAD, PHOENIX, ARIZONA. On March 12, 1992 Princeton
acquired this two story building which contains approximately 30,953 square foot
of office space. The property includes a banking facility with a drive-in window
and a bank vault on the ground floor. The Company paid approximately $296,000
cash for the building including closing costs and commissions.
Princeton occupies 1822 square feet (6%) of the total leasable space in
this building. As of May 30, 2000, 100% of the remaining leasable space was
occupied by unaffiliated tenants, producing $580,000 of income annually.
Additional information about this property is included in the Property
Information and Operating Data Table at the end of this Item 2.
4808 NORTH 22ND STREET, PHOENIX, ARIZONA. On December 1, 1994, Princeton
acquired this two story building which contains approximately 19,295 square feet
of office space. Princeton paid $1,000,000 for the building, of which $900,000
was borrowed from the seller at 8% annual interest. As of May 31, 2000 this
building is 49% leased. It is projected to produce gross revenues of $380,000
annually when fully occupied. Additional information about this property is
included in the Property Information and Operating Data Table at the end of this
Item 2.
CHINO VALLEY, ARIZONA. In February, 1994 Princeton acquired approximately
20 acres of undeveloped land in Chino Valley, Arizona in exchange for 50,000
shares of restricted common stock valued at $50,000 by the Company. On March
19,1996, Princeton sold 15 of the 20 acres for $63,000, represented by $15,000
cash down payment and promissory notes totaling $48,000 secured by deeds of
trust. The notes bear interest at 9.5% per annum with interest and principal
payments of $500 per month, with final payments due and payable on August 16,
2001. One of the notes in the amount of $24,108 was paid off during 2000. On
October 18, 1999, the Company sold the balance of the property for $23,700 cash.
MESA TRAILER PARK COMMISSION RECEIVABLE. In March, 1994 Princeton acquired
a long term real estate brokerage commission of 5% of the total lease payments
generated from a 55 year ground lease of a 55-acre mobile home park in Mesa,
Arizona. The Company purchased the commission for $60,000 cash and 174,400
shares of restricted Princeton common stock. The lease was executed in 1980 and
runs through 2031, and provides revenue equal to 5% of each lease payment. The
commission agreement presently provides quarterly payments of $3,687.50 which
are made through an escrow at Security Title Company. The quarterly payments
escalate annually to $7,437 per quarter at year 2030. Through May 31, 2000
approximately $81,687 had
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been paid and approximately $ 713,000 of additional commission will be paid to
Princeton through year 2031 pursuant to the agreement. While there can be no
assurance that Princeton will receive any or all of these assigned brokerage
fees in the future, as of the date of this report all payments have been
received on time.
PROPERTY INFORMATION AND OPERATING DATA
2222 East Camelback Road
Phoenix, Arizona
1. Character and Location. Two story office building; 30,952 square feet;
includes banking facility with a drive-in window and a bank vault.
2. Title to Property. Building is subject to a First Deed of Trust:
Principal: $976,979
Interest rate: 8%
Payment: $7,338
Maturity: December 2004
The original terms of this loan (interest rate of 15% and maturity in
1999) were adjusted by the Bankruptcy Court, and the revised terms are currently
being contested by the lender.
3. Lease Terms. Subject to two net ground leases with terms of 99 years,
expiring in 2073 and 2076. Rent adjusts each 10 years based upon 8% of the fair
market value of the ground, excluding improvements. The first lease has a
monthly base payment of $4,933, and will next adjust in 2009. The second lease
has a monthly payment of $3,100 and will next adjust in 2002.
4. Renovation or Improvement Plans. None, other than normal maintenance.
5. Competitive Conditions. This property is located in an area known as the
"Camelback Corridor" which is comprised predominately of office buildings. This
building competes with both higher and lower priced office space in the
immediate vicinity. The current market is strong, with high renewals.
6. Insurance. Management believes that the property is adequately covered by
insurance.
7. General Information.
(i) Occupancy Rate - 100% - effective as of May 31, 2000
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(ii) Tenants - Current Rent Roll As of May 31, 2000
<TABLE>
<CAPTION>
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Months to Annual Current
Tenant Rentable Square Feet Tenant Share Expiration Rate/ Base
------ -------------------- ------------ ---------- ----- ----
Square Feet
-----------
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Princeton American 1,822 6.07% N/A N/A N/A
Corporation
-------------------------------------------------------------------------------------------------------------------------------
Southwest Commercial 1,840 6.1% 4 $23.48 $ 3,600
Bank
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Southwest Commercial 2,972 (1) 9.8% 60 (2) $28.00 $ 6,935
Bank
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Evercare 5,085 (3) 16.8% 3 $19.00 $ 8,027
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Phoenix Commercial 3,348 11.0% 17 $23.50 $ 6,464
Real Estate
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BRE 12,193 40.2% 3 $36.55 $37,137
-------------------------------------------------------------------------------------------------------------------------------
International Circuit 3,085 10.2% 14 $21.00 $ 5,203
Sales
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</TABLE>
(1) Lease commenced June 1, 2000
(2) Lessee has two (2) five-year options to renew.
(3) This space has been leased to Southwest Commercial Bank at an effective
average annual rate of $23.00 per square foot, commencing October 1, 2000
(iii) Principal business, occupations and professions -
Princeton American Corporation - owner and manager of building
Southwest Commercial Bank - banking
Phoenix Commercial Real Estate - rental and sales of commercial
property
BRE - real estate development and management
International Circuit Sales - computer component sales
Evercare - health maintenance (administrative division)
(iv) Average effective rental per leased square foot - $28.53
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(v) Lease Expirations: All leases will expire no later than five years
from the date of this filing unless renewed or extended by the
lessee.
(vi) Depreciation Components: The Company depreciates the buildings
primarily over lives of 39 years, using the Modified Accelerated
Cost Recovery Method for federal income tax purposes. The tax basis
in the property is approximately $500,000 at May 31, 2000.
PROPERTY INFORMATION AND OPERATING DATA
4808 North 22nd Street
Phoenix, Arizona
1. Character and Location. Two story office building; 19,295 square feet;
located at 4808 North 22nd Street, Phoenix, Arizona.
2. Title to Property. Building is subject to
(a) First Deed of Trust:
Principal: $824,846
Interest rate: 8%
Payment: $6,946
Maturity: January 2020
(b) Second Deed of Trust:
Principal: $976,979
Interest rate: 8%
Payment: $7,338
Maturity: December 2004
3. Lease Terms. Subject to a ground lease which expires July 31, 2031. The
current rent rate is $2,311, subject to annual adjustment based on the Consumer
Price Index.
4. Renovation or Improvement Plans. None, other than normal maintenance.
5. Competitive Conditions. This property is located in an area known as the
"Camelback Corridor," which is comprised predominantly of office buildings. This
building competes with both higher and lower priced office space in the
immediate vicinity. Current market conditions are strong, with high renewals.
6. Insurance. Management believes that the property is adequately covered by
insurance.
7. General Information.
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(i) Occupancy Rate - 49% - effective as of May 31, 2000.
(ii) Tenants - Current Rent Dollars as of May 31, 2000.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Months to Annual Current
Tenant Rentable Tenant Share Expiration Rate/ Base
Square Feet Square
Feet
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Schafer-Smith Ankeny 5,820 17.77% 16 $19.62 $9,516
-----------------------------------------------------------------------------------------
WRG Design 3,331 30.9% 36 $20.75 $5,621
-----------------------------------------------------------------------------------------
</TABLE>
(iii) Principal business, occupations and professions -
Schafer-Smith-Ankeny - insurance company
WRG Design - architect
(iv) Average effective rental per leased square foot - $19.85
(v) Lease Expirations: All leases will expire no later than three years
from the date of this filing unless renewed or extended by lessee.
(vi) Depreciation Components: The Company depreciates the buildings
primarily over lives of 39 years, using the Modified Accelerated
Cost Recovery Method for federal income tax purposes. The tax basis
in the property is approximately $1,200,000 at May 31, 2000.
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ITEM 3. LEGAL PROCEEDINGS
SETTLEMENT OF CENTER AND TAYLOR LAWSUITS. The 1996 10-KSB discloses
lawsuits brought by Hyman R. Center and William C. Taylor as plaintiffs who sued
Princeton for money damages based on consulting contracts which had allegedly
been breached by the Company. Taylor's claim was settled by the Trustee and
incorporated into the Plan of Reorganization. Center's claim was litigated and
compromised by a court approved reduction of his creditor's claim from $355,000
to $104,300 and 22,000 shares of the common stock of the Company.
CHAPTER 11 BANKRUPTCY LITIGATION.
ADMINISTRATIVE CLAIMS. Administrative claims for professional and other
fees have been and will be paid by the Company.
UNSECURED CREDITOR CLAIMS. During the initial stage of the bankruptcy
proceedings, creditors filed 65 proofs of claim aggregating $5,001,503. These
proofs of claim have been litigated or settled, reducing the number of claims to
20. The total amount of administrative and unsecured claims was $679,289 at
May 31, 2000.
SHAREHOLDER CLAIMS. Equity shareholders filed approximately 900 proof of
interest claims, allegedly representing 14,840,000 shares. These claims were
reviewed by management and litigated or settled by agreement which were
confirmed by Court orders reducing all outstanding shares to approximately
8,488,828 shares.
UNRESOLVED CLAIMS. All proof of interest claims have been resolved the
Court with the exception of the following two matters:
Onset Investment Limited. Onset filed a claim for damages in the
amount of $200,713 based on an alleged breach of a stock purchase
agreement by Princeton. The Company has objected to this claim and the
matter is awaiting determination by the Court. Settlement negotiations are
pending, and Princeton anticipates its maximum exposure to be
approximately $25,000 cash and 70,000 shares of common stock. If the Onset
claim is allowed in whole or in part, the Company intends to seek a ruling
by the Bankruptcy Court subordinating the Onset claim from that of a
creditor to that of an equity holder.
Harry and Irene Weiss. This claim is based on an agreement by which
the Weiss' sold Princeton a residence in Phoenix, Arizona for 600,000
shares of restricted common stock. Under the terms of the agreement, the
Company was committed not to sell any shares to third parties for less
than $1.00 a share until expiration of the two year restriction against
any sale by the Weiss' of their shares. Princeton, through Mr. Eyman, sold
shares for less than $1.00 shortly after executing the agreement.
Princeton objected to the Weiss' claim for $812,708 plus interest because:
(1) they failed to mitigate their damages by selling their shares; (2)
their claim was for stock, not cash; and (3) any recovery by the Weisses
should be subordinated to those of other creditors pursuant to Section
510(b) of the Bankruptcy Code.
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These issues were heard by the Bankruptcy Court which ruled, in separate
proceedings, that the value of the Weiss claim was $619,602.73 and that
the claim would be allowed only as an equity claim. Princeton filed an
appeal with the U.S. District Court in Phoenix as to the valuation amount,
and the Weisses appealed the ruling that their claim was that of a
stockholder. Federal District Court Judge J. Russell Holland reversed the
ruling of the Bankruptcy Court that the Weiss' claim was that of an equity
holder. The Company has appealed that ruling to the United States Ninth
Circuit Court of Appeals. No date has been set for hearing either of these
appeals, and Bankruptcy counsel for the Company has indicated that pursuit
of the appeals could extend the Company's operations under Bankruptcy
Court protection for up to an additional 18 to 24 months.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters have been submitted to a vote of security holders since the
annual meeting on September 14, 1995, when shareholders voted to (i) change the
name of the Company from Princeton Electronic Products, Inc. to Princeton
American Corporation, (ii) to change the domicile of the Company from New Jersey
to the State of Nevada and (iii) to increase the authorized common stock of the
Company from 15,000,000 to 100,000,000.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Princeton's Common Stock has traded on the over-the-counter market "pink
sheets" since the Company was delisted from the NASDAQ (Small Capital) Market in
November 1996. Its symbol is "PELT."
The table below gives the range of high and low bid prices for each
quarterly period for the fiscal year's ended May 31, 2000 and May 31, 1999.
<TABLE>
<CAPTION>
2000 - 1999 High bid Low bid
<S> <C> <C>
Quarter ending May 31, 2000 $0.07 $0.07
Quarter ending February 28, 2000 $0.01 $0.01
Quarter ending November 30, 1999 $0.001 $0.001
Quarter ending August 31, 1999 $0.031 $0.031
<CAPTION>
1998 - 1999
<S> <C> <C>
Quarter ending May 31, 1999 $0.01 $0.01
Quarter ending February 28, 1999 $0.01 $0.01
Quarter ending November 30, 1998 $0.02 $0.02
Quarter ending August 31, 1998 $0.0625 $0.0625
</TABLE>
The quotations reflect inter-dealer prices, without retail mark-up, mark down,
or commission and may not reflect actual transactions or a liquid trading
market.
Princeton has never paid any cash dividends on any equity securities, and
no change of this policy is under consideration by the Board of Directors.
Recent Sales of Unregistered Securities. None.
ADJUSTMENTS OF OUTSTANDING SHARES AND SHAREHOLDERS
PROBLEMS WITH SECURITIES RECORDS. Princeton has not been able to provide
audited financial statements since those prepared by its former auditors, Semple
& Cooper, PLC. for the fiscal year ended May 31, 1996. Audited financial
statements could not be prepared until the entry of final orders by the
Bankruptcy Court establishing the validly issued and outstanding securities of
the Company and the legitimate holders of Princeton securities. During his
tenure as CEO, Mr. Eyman engaged in numerous transactions involving Princeton
securities which involved fraud, the issuance of securities without adequate
consideration, and other defects which resulted in questions as to the validity
of issued and outstanding securities issued.
In its Order dated July 29, 1997, the Court set a deadline of September
17, 1997 for filing of Proofs of Interest. Pursuant to that order, Princeton
mailed notices to all shareholders who had
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filed Proofs of Interest and to all shareholders according to the records of
Princeton's transfer agent, American Stock Transfer & Trust Company ("AST").
More than 91% of those appearing on the records of AST (representing in excess
of 21,000,000 shares) failed to file Proofs of Claim by September 17, 1997.
When present Management assumed control of Princeton in January, 1998, it
was clear that the Company's records, as maintained by AST, did not accurately
reflect the number of shares or shareholders.
The records of AST contained five separate accounts for three different
entities reflecting the Company's evolution from Minco American Corporation's
merger with Princeton Electronic Products to what is now Princeton American
Corporation, as well as three reverse stock splits; one for Minco and two for
Princeton. From July, 1991 (Minco-Princeton merger) to the December 1996
bankruptcy filing, AST's records show that Princeton's shareholder base
increased from less than 1000 shareholders with approximately 3,000,000 shares,
to over 2,000 shareholders of record holding a purported 24,000,000 shares. Most
of this increase occurred in the months immediately preceding the bankruptcy
filing.
Consequently, Management raised many questions with respect to the
authenticity of issued shares and shareholders of record as of December 20,
1997, the date of confirmation of the Plan of Reorganization. Because of these
apparent inaccuracies, Management elected to undertake a complete overhaul of
the shareholder records.
EXAMINATION AND CONFIRMATION OF SECURITIES HOLDINGS. After extensive
research over a period of two years, including an intensive review of AST's
records and verification of Proofs of Interest, the Company was able, on
December 30, 1999, to file a Motion for an Omnibus Order (which also provided
for the second mailing of Notice of Hearing to all persons and entities
purporting to have equity claims in the Company). The Bankruptcy Court on
February 3, and May 10, 2000 entered a total of six order(s) establishing
shareholder base.
The final shareholder equity base established by Order of the Bankruptcy
Court is set forth below:
<TABLE>
<S> <C>
Shares validly issued and outstanding as of May 31, 2000. 8,488,828
Shares recognized for issuance to William C. Taylor.(1) 5,659,219
TOTAL SHARES 14,148,047
</TABLE>
(1) Issuance of Shares to William Taylor. Taylor's claim was allowed by Trustee
Roger Brown as set forth in their Joint Plan of Reorganization which was
confirmed by the Court on November 19, 1997. Taylor and the Trustee agreed that
Taylor would convert his allowed $990,140 cash claim into shares of common stock
of the Company, (excerpted from the Plan) as follows:
"The Joint Plan of Reorganization, which was confirmed by the Court on November
19, 1997, allowed William Taylor's creditor's claim for $990,140. Taylor and the
Trustee agreed that Taylor would convert his cash claim into shares of common
stock of the Company by issuing to Taylor that number of shares of common stock
that represents forty percent (40%) of the total of all of Princeton's common
stock that was outstanding after the Effective Date of December 20,
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<PAGE> 16
1997. Taylor's stock is to be held in escrow by the Trustee until all Class 8
(Administrative) and Class 9 (General Unsecured Creditors) allowed claims have
been paid in full. In the event of a material default in the Plan relative to
the Class 8 and Class 9 claims, Taylor's stock will be distributed to the
holders of these unsatisfied claims.
In the event that the Weiss and Onset claims are subordinated to Class 12
Claims pursuant to Section 510(b) of the Bankruptcy Code, Taylor's shares will
be increased in order to maintain his 40% ownership of the stock of Princeton
American Corp."
This could result in a significant dilution in the value of shares held by
other shareholders.
ITEM 6 MANAGEMENT DISCUSSION AND ANALYSIS
BACKGROUND: The past several years have been difficult for Princeton. The
Company suffered greatly because many ill-conceived programs had been undertaken
without benefit of sufficient capital. A number of questionable promotional
schemes were created, and it appears to current management that certain
acquisitions were made for the primary purpose of making press releases while
ignoring sound business fundamentals.
Since the last time former management formally reported to you in its 1996
10-KSB, the Company has gone through a major metamorphosis. Former management
filed a Chapter 11 Bankruptcy in December, 1996. A Plan of Reorganization was
approved by the Court on November 19, 1997 and the new Board of Directors took
control of Princeton on December 20, 1997. With the exception of the two office
buildings owned by the Company, every business acquired by the Company prior to
Princeton's bankruptcy filing failed for lack of capital and insufficient
management attention. Many commitments made to entities and persons by the prior
management were, at best, ill conceived. Huge expenditures for stock promotions
were reported in the Company's 1996 10-KSB in which management acknowledged
that, instead of supporting GSK, Biosome Products and Organifyl Laboratories,
Princeton invested its operating capital in "advertising, promotion and public
relations which increased by $2,455,506" over the previous fiscal year. These
funds were in fact spent on "a massive promotional effort in order to improve
the price of the shares of the company."
As a result of the fiscal chaos which resulted, the Personal Care Division
languished and Princeton's shares plummeted to a point where they were nearly
valueless when current management took over in December 1997.
OPERATIONS:
The primary mission has been to return Princeton to financial stability.
In order to do so it was necessary for management to concentrate on resolving
the major issues, which were resolving creditor claims and establishing a valid
shareholder base. In the two and a half years since current management took over
the operations of the Company, considerable time and monies were expended in
handling claims litigation (in particular the Weiss claim discussed in Item 3),
bringing the books and records to auditable standards, and restoring a credible
shareholder base.
13
<PAGE> 17
All but two of 65 Unsecured Creditor's Claims against the Company have
been authenticated or litigated and resolved. The shareholder base has been
carefully analyzed and significantly modified by Court Orders. We anticipate
that all existing share certificates will be cancelled, and new share
certificates issued representing the proper holdings of each shareholder. This
procedure will have the effect of validating all the shares that were
legitimately acquired. These housekeeping measures have been laborious and time
consuming. The legal, accounting and consulting expenses incurred to achieve
these results are in excess of $480,000.
The Company also focused its attention on the rehabilitation and marketing
of its two office buildings, which have benefited from the increase in demand
for office space in the Phoenix market over the past two years. Several tenant
leases have matured and have either been rolled over at higher prices, or the
tenants have moved elsewhere allowing the Company to replace them with higher
rent paying tenants. The office building at 2222 East Camelback Road is fully
occupied with annual gross revenues exceeding $580,000. It will be known as the
"Southwest Bank Building" in acknowledgement of that financial institution's
lease of the west half of the ground floor including the banking facilities
formerly occupied by Wells Fargo Bank. The lease runs for five years with two
five year renewal options. Southwest Bank is completely refurbishing this 8,057
square foot space.
The second floor of the office building at 4808 North 22nd Street has been
vacant since September 1999. Formerly occupied by Capital Title Company, this
space is currently configured for use by a title or mortgage company or similar
use. A number of potential lessees have made offers at rates too far below
market to be accepted by the Company without negatively impacting on the value
of the building. In the last few months, activity has increased and negotiations
are currently underway with prospective lessees. If and when fully occupied,
this office building is projected to produce gross revenues of $380,000. With
most of the high cost of legal and accounting fees behind it, the Company looks
forward to gradually increasing revenues and profits as rents increase and costs
go down.
Once the new share certificates have been issued, the exact number of
shares outstanding will be known and will permit better evaluation of the
Company's stock. Management believes that the completion of these "clean up"
activities will make Princeton far more attractive to potential investors and
merger prospects (in particular those that can take advantage of the Company's
$14,000,000 tax loss carry forward) or to other entities which might choose to
be acquired by Princeton. Armed with a fundamentally sound financial statement,
management intends to pursue all available opportunities for strategic
alliances, with a view toward enhancing shareholder value. While there can be no
assurance that the Company will be successful in doing so, at the appropriate
time, Princeton will seek to have its securities qualify for trading on the OTC
Bulletin Board, AMEX, NASDAQ or another well-recognized exchange or market.
ITEM 7. FINANCIAL STATEMENTS
The full text of the Company's audited, consolidated financial statements
for the fiscal years ended May 31, 2000 and 1999 begins on page F-1 of this
Report and is incorporated herein by reference.
14
<PAGE> 18
ITEM 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
15
<PAGE> 19
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
The Directors and Executive Officers of the Company as of May 31, 2000
were:
<TABLE>
<CAPTION>
Name Age Position Date Elected (*)
---- --- -------- ----------------
<S> <C> <C> <C>
William C. Taylor 68 Chairman, CEO & December 20, 1997
Director
Roderick W. McKinnon III 54 Secretary & Director December 20, 1997
Scott E. Bird 76 Treasurer, CFO & December 20, 1997
Director
</TABLE>
(*) Pursuant to Article III Section 3.9 of the Plan of Reorganization, the
Directors took office on the "Effective Date" of the Plan.
Scott E. Bird is the Managing Consultant of SASolutions, LLC, an integrated
business and information technology consulting group. He is the Vice President
and General Manager of Uservco, Inc., a national receivables recovery company
and Pacific Aviation Services, an international aviation procurement and support
company. Mr. Bird has served as Director and Chief Financial Officer of the
Company since its reorganization. His term of office will expire on the date of
the next Annual Shareholder's Meeting, the date of which has not been set.
William C. Taylor served the Company as Executive Vice-President from July 1991
to April 1995 and as a Director from August 1994 to April 1995. Mr. Taylor is a
member (inactive) of the State Bar of Arizona and is a licensed realtor. He is a
managing partner in several real estate development companies. Mr. Taylor has
served as Chairman and Chief Executive Officer of the Company since its
reorganization. His term of office will expire on the date of the next Annual
Shareholders Meeting, the date of which has not been set.
Roderick W. McKinnon III has been a Director and Secretary of the Company since
1998. Since 1974 Mr. McKinnon has been the President of R.W. McKinnon & Co.,
Inc. which is an investment banking and development service company. He holds
Bachelor of Science from Northern Arizona University and serves on several
boards of directors. His term of office will expire on the date of the next
Annual Shareholders Meeting, the date of which has not been set.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
received for the fiscal years ended May 31, 1998, 1999 and 2000 for services
rendered to the Company in all
16
<PAGE> 20
capacities by the Company's Chief Executive Officer and other highly compensated
executive officers.
17
<PAGE> 21
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Cash Compensation Long Term Compensation
----------------------------------- --------------------------------------
Awards Payouts
------------------------ ---------- All other
Name and Principal Other annual (1) Restricted Securities compensation
Position Year Salary Bonus compensation stock Underlying LTIP
($) ($) ($) award(s) Options/ payouts
($) SAR(#) ($)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William C. Taylor 2000 96,000 -0- 1,200 -0- -0- -0- -0-
Chairman, CEO 1999 96,000 -0- 1,200 -0- -0- -0- -0-
and Director 1998 32,000 -0- 600 -0- -0- -0- -0-
------------------------------------------------------------------------------------------------------------------------------
Roderick W McKinnon 2000 -0- -0- 1,200 -0- -0- -0- -0-
Secretary & Director 1999 -0- -0- 1,200 -0- -0- -0- -0-
1998 -0- -0- 600 -0- -0- -0- -0-
------------------------------------------------------------------------------------------------------------------------------
Scott E Bird (2) 2000 -0- -0- 1,200 -0- -0- -0- -0-
CFO, Treasurer and 1999 -0- -0- 1,200 -0- -0- -0- -0-
Director 1998 -0- -0- 600 -0- -0- -0- -0-
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Directors are compensated at the rate of $200 for each formal meeting of
the Board of Directors. There were three such meetings in fiscal 1998, six
meetings in 1999 and six scheduled for 2000. These fees are unpaid as of
May 31, 2000
(2) Mr. Bird is a shareholder of SASolutions, LLC, a financial consulting firm
which received $62,000 in calendar 1998, $82,000 in 1999 and $27,800
through May 31, 2000 for consulting services to the company.
18
<PAGE> 22
2. Other Non-Cash Compensation
None
3. Stock Option Grants
No stock options have been granted since December 20, 1997 when Current
Management assumed control of the Company. There are no stock options
currently outstanding.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as to shares of common
stock owned by (i) each person known to beneficially own more than 5% of the
outstanding common stock , (ii) each director and named executive officer of the
Company, and (iii) all executive officers and directors of the Company as a
group.
<TABLE>
<CAPTION>
Name Title Common Shares % of Class
---- ----- ------------- ----------
<S> <C> <C> <C>
William C. Taylor Chairman & CEO 5,792,181 40.9% (1)
2222 East Camelback Road
Suite 105
Phoenix, Arizona 85016
Laurence J. and Diane K.
Testasecca Shareholder 800,000 5.7% (2)
5669 Walnut Ridge Circle
West Bloomfield, MI 48322.
</TABLE>
(1) Includes 132,962 shares which Mr. Taylor owned prior to the Effective Date
of the Plan of Reorganization.
(2) Based solely upon information contained in a Form 13G filed with the
Commission on October 18, 1999.
The above percentages of ownership are based on 14,148,047 shares of the
Company's Common Stock outstanding based upon the Bankruptcy Court Order dated
February 3, 2000. Beneficial ownership has been determined in accordance with
Rule 13d-3 of the Securities and Exchange Act of 1934. Pursuant to the rules of
the Securities and Exchange Commission, shares of Common Stock that each named
person and group has the right to acquire within 60 days pursuant to options,
warrants, conversion privileges or other rights are deemed outstanding for
purposes of computing shares beneficially owned by and the percentage of
ownership of each such person and group. However, such shares are not deemed
outstanding for purposes of computing the shares beneficially owned by, or
percentage of ownership of, any other person or group.
19
<PAGE> 23
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding Princeton's transactions with related parties since
November 1996 is included above in: Item 1 "Description of Business - Sales and
Transfers Prior to Bankruptcy, and Sales and Transfers of Assets"; Item 3 -
"Legal Proceedings"; and Item 5 - "Market for the Registrant's Common Stock and
Related Shareholders Matters - Adjustments of Outstanding Shares and
Shareholders."
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Name Method of Filing
------ ------------ ----------------
<S> <C> <C>
2.1 Plan of Reorganization (i)
3.1 Articles of Incorporation, as amended filed with this Report
3.2 By-Laws, as amended filed with this Report
27.1 Financial Data Schedule filed with this Report
</TABLE>
(i) Incorporated by reference to Exhibit 1 of Current Report on Form 8-K (file
no.000-05141) filed on January 5, 1998.
20
<PAGE> 24
(b) Reports on Form 8-K
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
DATE OF REPORT DATE FILED DESCRIPTION
---------------------------------------------------------------------------------
<S> <C> <C>
12-17-96 12-17-96 Filing of Bankruptcy Proceedings.
---------------------------------------------------------------------------------
12-24-96 12-24-96 Resignation of Accountant.
---------------------------------------------------------------------------------
1-09-97 1-09-97 Change in Control of Princeton.
---------------------------------------------------------------------------------
1-09-97 1-31-97 Resignation of Accountant.
---------------------------------------------------------------------------------
12-23-97 1-05-98 Effectiveness of Joint Plan of
Reorganization; Change of Accountant;
Change of Management.
---------------------------------------------------------------------------------
12-16-98 12-17-98 Bankruptcy Hearings re extending deadlines
established by Joint Plan of Reorganization.
---------------------------------------------------------------------------------
8-25-99 8-25-99 Material Developments in Bankruptcy
Proceedings.
---------------------------------------------------------------------------------
2-8-00 2-10-00 Bankruptcy Court Orders re Stock and
Stockholders.
---------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 25
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
PRINCETON AMERICAN CORPORATION
By: /s/ William C. Taylor
---------------------------
William C. Taylor
Chairman, CEO and Director
Date: 8/28/00
-------------------------
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
By: /s/ William C. Taylor Chairman, CEO and 8/28/00
----------------------------- Director -------
William C. Taylor
By: /s/ Scott E. Bird Treasurer, CFO and 8/28/00
----------------------------- Director -------
Scott E. Bird
By: /s/ Roderick W. McKinnon III Secretary and Director 8/28/00
----------------------------- -------
Roderick W. McKinnon III
</TABLE>
22
<PAGE> 26
PRINCETON AMERICAN CORPORATION
FINANCIAL STATEMENTS
For the Years Ended
May 31, 2000 and 1999
F-1
<PAGE> 27
Independent Auditors' Report
The Board of Directors
Princeton American Corporation
We have audited the accompanying balance sheets of Princeton American
Corporation as of May 31, 2000 and 1999, and the related statements of
operations and comprehensive loss, changes in stockholders' deficit, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Princeton American Corporation
as of May 31, 2000 and 1999, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes 9 and 10 to the
financial statements, the Company is involved in litigation and is also
operating under a Joint Plan of Reorganization following a bankruptcy filing in
December 1996, which raise substantial doubt about its ability to continue as a
going concern. Management's plans with regard to these matters are also
discussed in Note 9. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
The Plan of Reorganization will not be substantially consummated until payment
of unsecured creditors. Prior to that time, the Company is under the supervision
of the Bankruptcy Court. The Company is involved in litigation, which is being
overseen by the Bankruptcy Court and the Company is also seeking Court approval
to cancel existing shares and reissue new stock. Until final resolution by the
Bankruptcy Court, there is uncertainty as to the number of shares and the
procedure for issuing them to approved shareholders. The Bankruptcy Court may
also exert significant influence over the operations of the Company, which may
result in changes to the estimates described in the accompanying financial
statements. Please read note 9; it describes certain aspects and uncertainties
of the bankruptcy filing.
EVERS & COMPANY LTD.
June 30, 2000
Phoenix, Arizona
F-2
<PAGE> 28
PRINCETON AMERICAN CORPORATION
Balance Sheets
May 31, 2000 and 1999
ASSETS
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,650 5,820
Notes receivable, current portion 947 1,970
Accounts receivable - trade -- 448
Investments in marketable securities 107,265 27,298
Prepaid expenses 20,167 41,240
---------- ----------
Total current assets 130,029 76,776
---------- ----------
Notes receivable, net of current portion 17,202 41,483
Investment in commission contract 202,756 199,162
Property and equipment, net 1,283,735 1,344,408
Investment in real estate -- 12,500
Deposits -- 9,930
---------- ----------
$1,633,722 1,684,259
========== ==========
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE> 29
PRINCETON AMERICAN CORPORATION
Balance Sheets
May 31, 2000 and 1999
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Current liabilities:
Notes payable - current portion $ 28,284 26,117
Notes payable, officers 100,000 70,000
Accounts payable 161,152 39,286
Bankruptcy claims 679,289 741,813
Liabilities in dispute 619,603 619,603
Accrued interest 122,163 71,251
Accrued real estate taxes 222,690 157,956
Payroll and sales taxes payable 13,172 14,330
Advance rental income and tenant security deposits 30,773 88,933
----------- -----------
Total current liabilities 1,977,126 1,829,289
Tenant security deposits - long term 26,616 26,908
Mortgage notes payable 1,773,541 1,801,825
----------- -----------
3,777,283 3,658,022
----------- -----------
Commitments, contingencies and subsequent events (see notes)
Stockholders' deficit:
Common stock, par value $.001, 100,000,000 shares authorized
approximately 15,000,000 shares issued and outstanding 15,000 15,000
Additional paid-in-capital 2,460,350 2,460,350
Accumulated deficit (4,243,720) (3,996,395)
----------- -----------
(1,768,370) (1,521,045)
Net unrealized loss on marketable securities (375,191) (452,718)
----------- -----------
Total stockholders' deficit (2,143,561) (1,973,763)
----------- -----------
Total liabilities and stockholders' deficit $ 1,633,722 1,684,259
=========== ===========
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE> 30
PRINCETON AMERICAN CORPORATION
Statements of Cash Flows
For the Years Ended May 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(247,325) (307,399)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 107,046 140,184
Interest income on investment contract (17,844) (17,517)
Loss (gain) on investment (2,440) 9,098
Gain on sale of real estate (8,481) --
Non-cash gain on settlement of claim (62,524) --
Decrease in receivables 448 1,660
Decrease in prepaid expenses 21,073 28,816
Increase in accounts payable and accrued expenses 185,442 17,796
Increase in accrued interest 50,912 51,316
Increase (decrease) in rent deposits (58,452) 5,193
--------- ---------
Net cash used in operating activities (32,145) (70,853)
--------- ---------
Cash flows from investing activities:
Payments on notes receivable 25,304 1,792
Purchase of property and equipment (46,373) (1,625)
Payments on investment contract 14,250 13,750
--------- ---------
Net cash provided by (used in) investing activities (6,819) 13,917
--------- ---------
Cash flows from financing activities:
Refund of deposit 9,930 --
Proceeds from sale of real estate 20,981 --
Repayment of notes payable to officers (20,000) (20,000)
Proceeds from loan from officers 50,000 90,000
Payments on mortgage notes payable (26,117) (24,114)
--------- ---------
Net cash provided by (used in) financing activities 34,794 45,886
--------- ---------
Net decrease in cash and cash equivalents (4,170) (11,050)
Cash and cash equivalents, beginning of year 5,820 16,870
--------- ---------
Cash and cash equivalents, end of year $ 1,650 5,820
========= =========
Supplementary Disclosure of Cash Flow Information
Cash paid during the year for interest $ 176,884 158,922
========= =========
Cash paid during the year for income taxes $ 100 217
========= =========
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE> 31
PRINCETON AMERICAN CORPORATION
Statements of Operations and Comprehensive Loss
For the Years Ended May 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenues
Rental income $ 842,565 913,083
Parking and other 6,710 9,622
----------- -----------
849,275 922,705
----------- -----------
Costs and expenses
Building operating costs 354,723 375,122
Professional fees 176,794 147,843
Payroll and payroll taxes 135,425 134,006
Ground lease 123,088 117,838
Depreciation 107,046 140,184
Consulting 83,115 72,750
Other 99,108 51,180
----------- -----------
Total costs and expenses 1,079,299 1,038,923
----------- -----------
Loss from operations (230,024) (116,218)
----------- -----------
Other income (expense)
Interest and dividend income 21,836 23,336
Interest expense (227,796) (208,542)
Gain on settlement of lawsuits 183,225 --
Other 5,534 (5,758)
----------- -----------
(17,201) (190,964)
----------- -----------
Net loss before income tax (247,225) (307,182)
Income taxes 100 217
----------- -----------
Net loss $ (247,325) (307,399)
=========== ===========
Net loss per common share, basic and diluted $ (0.02) (0.02)
=========== ===========
Net loss $ (247,325) (307,399)
Net unrealized gain (loss) on marketable securities 77,527 (8,619)
----------- -----------
Comprehensive loss $ (169,798) (316,018)
=========== ===========
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE> 32
PRINCETON AMERICAN CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Years Ended May 31, 2000 and 1999
<TABLE>
<CAPTION>
Unrealized
Additional Gain (Loss)
Common Paid-in Accumulated on
Stock Capital Deficit Securities
----- ------- ------- ----------
<S> <C> <C> <C> <C>
Balance at May 31, 1998 $ 15,000 $ 2,460,350 $(3,688,996) $ (444,099)
Net loss for the year
ended May 31, 1999 -- -- (307,399) --
Unrealized loss on
marketable securities -- -- -- (8,619)
----------- ----------- ----------- -----------
Balance at May 31, 1999 15,000 2,460,350 (3,996,395) (452,718)
Net loss for the year
ended May 31, 2000 -- -- (247,325) --
Unrealized gain on
marketable securities -- -- -- 77,527
----------- ----------- ----------- -----------
Balance at May 31, 2000 15,000 2,460,350 (4,243,720) (375,191)
=========== =========== =========== ===========
</TABLE>
F-7
<PAGE> 33
PRINCETON AMERICAN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF PRESENTATION
The following is a summary of the significant accounting policies
followed by Princeton American Corporation (the Company). The
policies conform with generally accepted accounting principles and
require management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses
as well as disclosures of contingent assets and liabilities in the
financial statements. Actual results could differ from those
estimates.
During the years ended May 31, 1998 and 1997, the Company did not have
access to adequate records to file audited financial statements,
as required by the Securities and Exchange Commission. The Company
has requested a waiver of its filing requirements for the years
ended May 31, 1997 and 1998 and its quarterly filings through
February 28, 2000. The Company's request has not yet been
approved.
b. ORGANIZATION AND OPERATIONS
Princeton American Corporation is organized under the laws of the State
of Nevada and currently owns two office buildings in Phoenix,
Arizona.
At the date of its last filing with the Securities and Exchange
Commission for the year ended May 31, 1996, the Company was
engaged in both the real estate and hair care products industries.
The Company filed for bankruptcy in December 1996 and subsequently
disposed of substantially all its assets during the years ended
May 31, 1997 and 1998, except for the two commercial buildings and
certain investments. The trustee combined substantially all the
Company's operating subsidiaries into Princeton American
Corporation. The Court approved the Plan of Reorganization for the
Company in November 1997.
c. CASH EQUIVALENTS
Cash equivalents include highly liquid debt instruments and other
short-term investments with an original maturity of three months
or less.
d. MARKETABLE SECURITIES, AVAILABLE FOR SALE
Marketable securities available for sale are recorded at their quoted
market prices. Unrealized gains and losses on these securities are
included as a separate component of comprehensive income and
shareholders' equity until realized. Realized gains and losses on
securities available for sale are computed based upon the average
cost of the investment.
F-8
<PAGE> 34
PRINCETON AMERICAN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
e. INVESTMENTS IN REAL ESTATE
Investments in real estate were valued at the lower of cost or market.
f. PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and are being depreciated
principally on the straight-line method over the estimated useful
lives of the assets, which range from three to forty years.
g. INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future
tax consequence attributable to differences between the financial
statement carrying amount of existing assets and liabilities; and
their respective tax bases, including operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect in deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Valuation
allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.
h. STOCK OPTIONS
The Company has elected to follow Accounting Principles Board Opinion
No. 25 "Accounting for Stock Issued to Employees" (APB25) and
related interpretations in accounting for its employee stock
options and awards. Under APB 25, no compensation expense is
recognized when the exercise price of the options equals the fair
value (market price) of the underlying stock on the date of grant.
The Company has adopted the disclosure provisions of Statement of
Financial Accounting Standards No. 123 Accounting for Stock-Based
Compensation.
i. EARNINGS PER SHARE
The Company has adopted Statement of Financial Accounting Standards
No. 128 "Earnings Per Share". The new standard simplifies the
standards of computing earnings per share and requires
presentation of two new amounts, basic and diluted earnings per
share. Net loss per share is computed by dividing the loss
attributable to common shareholders by the weighted average number
of shares outstanding during the period, which was assumed to be
approximately 15,000,000 for the years ended May 31, 2000 and
1999.
F-9
<PAGE> 35
PRINCETON AMERICAN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
2. NOTES RECEIVABLE
Notes receivable consist of the following at May 31, 2000 and 1999. No
allowance for doubtful accounts is considered necessary.
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Note receivable, secured by a first
deed of trust on real property,
payable in monthly installments of
$282 including interest at 9.5%,
paid during the year ended May
31, 2000 $ - 24,442
Note receivable, secured by a first
deed of trust on real property,
payable in monthly installments of
$219 including interest at 9.5%,
remaining principal and interest
due August 2001 18,149 19,011
-------- ------
$ 18,149 43,453
Less current portion (947) (1,970)
-------- ------
Notes receivable, net of current portion $ 17,202 41,483
======== ======
</TABLE>
3. INVESTMENTS IN MARKETABLE SECURITIES AVAILABLE FOR SALE
Marketable securities consist of the following investments in common stock
at May 31, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Exten Industries $ 90,241 13,756
Stratford American 14,584 13,542
Other securities 2,440 -
-------- ------
$107,265 27,298
======== ======
</TABLE>
Total net unrealized losses at May 31, 2000 and 1999 were $375,191 and
$452,718 respectively. The net unrealized loss decreased by $77,527
during the year ended May 31, 2000 and increased by $8,619 during the
year ended May 31, 1999.
The Company also has an investment in Sgarlato Laboratories, a
privately-held company, which management estimates has minimal value at
year-end. As such, the investment has been written down to zero at May
31, 2000 and 1999.
F-10
<PAGE> 36
PRINCETON AMERICAN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
4. INVESTMENT IN COMMISSION CONTRACT
In March 1994, the Company acquired the rights to the commission on a
ground lease for a mobile home park in Mesa, Arizona. The commission is
based upon a fifty-five (55) year ground lease. Annual payments range
from $11,750 in 1994 to $27,000 in 2031. For the years ended May 31,
2000 and 1999, the commission contract was valued at $202,756 and
$199,162, respectively. The valuation is determined by calculating the
net present value of the quarterly payments at an imputed interest rate
of twelve percent (12%). The Company recognizes any fluctuation in the
market value as interest income or expense in the year of fluctuation.
5. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at May 31, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Office buildings $1,296,786 1,296,786
Leasehold improvements 515,686 615,132
Office furniture and equipment 4,139 4,139
---------- ---------
1,816,611 1,916,057
Less: Accumulated depreciation (532,876) (571,649)
---------- ---------
$1,283,735 1,344,408
========== =========
</TABLE>
6. INVESTMENT IN REAL ESTATE
At May 31, 1999 the Company owned a parcel of undeveloped land with a cost
of $12,500. The property was sold during the year ended May 31, 2000
for $20,981 resulting in a gain of $8,481 after selling expenses.
7. MORTGAGE NOTES PAYABLE
Mortgage notes payable consist of the following at December 31, 2000 and
1999:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Mortgage note payable, secured by a
first deed of trust on the building at
4808 N. 22nd St., payable in monthly
installments of $6,946 including
interest at 8% through January 2020 $824,846 841,485
</TABLE>
F-11
<PAGE> 37
PRINCETON AMERICAN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
7. MORTGAGE NOTES PAYABLE, CONTINUED
<TABLE>
<S> <C> <C>
Mortgage note payable, Vanderford,
secured by a first deed of trust on the
building at 2222 E. Camelback and a
second deed of trust on the building at
4808 N. 22nd St., payable in monthly
installments of $7,338 including
interest at 8%, remaining principal
and interest due December 2004 976,979 986,457
---------- ---------
1,801,825 1,827,942
Less current portion (28,284) (26,117)
---------- ---------
Long-term debt, net of current portion $1,773,541 1,801,825
========== =========
</TABLE>
The terms of the Vanderford mortgage note payable are being disputed. The
original loan, which was made shortly before the bankruptcy filing,
called for an interest rate of 15%, with a maturity date of December
1999. The terms of the note were revised by the court to the current
terms. The Company and the lender have reached a verbal agreement to
modify the terms. The agreement is subject to the approval of the
Bankruptcy Court.
Maturities of long-term debt at May 31, 2000 are as follows:
<TABLE>
<CAPTION>
Year ended May 31, Amount
------------------ ------
<S> <C>
2001 $ 28,284
2002 30,632
2003 33,174
2004 35,928
2005 955,310
Thereafter 718,497
----------
$1,801,825
==========
</TABLE>
8. NOTES PAYABLE, OFFICERS AND RELATED PARTY TRANSACTIONS
On May 31, 2000, notes payable, officers included two $25,000 notes, with
an interest rate of 12% that are due and payable on or before May 1,
2001. One of the Company's officers also paid a $50,000 administrative
claim directly for the Company. The Company is obligated to repay the
officer under the terms of a 12% promissory note that required payments
of $5,000 per month beginning January 2000. The Company has not
complied with the repayment terms of this agreement. At May 31, 1999,
the outstanding balance was $70,000, plus accrued interest of $1,696 at
a rate of 18%. Advances totaled $50,000 and $90,000 during the years
ended May 31, 2000 and 1999, respectively. Repayments were $20,000 in
both years. Interest on the notes totaled $9,876 in 2000 and $1,253 in
1999.
F-12
<PAGE> 38
PRINCETON AMERICAN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
8. NOTES PAYABLE, OFFICERS AND RELATED PARTY TRANSACTIONS, CONTINUED
During the years ended May 31, 2000 and 1999, the Company paid a director
consulting fees of $82,115 and $72,750.
9. BANKRUPTCY CLAIMS
The Company filed for bankruptcy on December 11, 1996 and is currently
operating as a reorganized debtor under a Joint Plan of Reorganization
confirmed by the United States Bankruptcy Court for the District of
Arizona on November 19, 1997.
Subsequent to the Company's filing in December 1996 and prior to the
reorganization in December 1997, the Company was operated by a
court-appointed trustee. During that time, the trustee liquidated
various assets of the Company other than certain real estate holdings
in Phoenix, Arizona and certain investments in marketable securities.
William Taylor and the Trustee filed a Joint Plan of Reorganization in
November 1997, which was approved in December 1997. Some of the key
provisions of the Plan are:
- The Plan classifies various secured, unsecured and non-priority
unsecured claims. The Plan also classifies post petition administrative
claims. As confirmed, the Plan called for the reorganized debtor to
make distributions to unsecured creditors within one year of the Plan's
effective date, December 20, 1998. Once distributions were made to
unsecured creditors, the Plan would be substantially consummated within
the meaning of the Bankruptcy Code.
- Preferred shareholders received common stock of the Company.
- Approved common shareholders will retain their interest in the Company.
The interest of shareholders with 10,000 shares or less (as listed on
the records of American Stock Transfer only) shall be allowed, unless
an objection was filed and upheld. Claims for greater than 10,000
shares required the shareholder to file a proof of interest or their
interest would be reduced to 10,000 shares.
- William Taylor is to receive 40% of the Company's outstanding stock,
upon payment of all unsecured claims. Prior to payment, Taylor's stock
is to be held in escrow. Taylor's interest is based upon his claim of
$990,134 for consulting fees and other costs.
- The Company's wholly-owned subsidiaries, 88 Redevelopment and 4808
Corporation, were merged into Princeton American Corporation.
The Plan was subsequently modified in January 1999 to extend certain
deadlines of the Plan, including the deadline for making distributions
to unsecured creditors. These deadlines were extended to 180 days
following the entry of a final, non-appealable order resolving the
claim of Harry and Irene Weiss (Note 10).
F-13
<PAGE> 39
PRINCETON AMERICAN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
9. BANKRUPTCY CLAIMS, CONTINUED
The deadline for filing proof of ownership interest was also extended
several times in an effort to give stockholders ample opportunity to
file their proofs of interest. The Company and the Court have compiled
a final listing of valid proofs of interest and the Company is
currently seeking approval to cancel all existing outstanding shares
and to reissue new certificates to stockholders, whose interests were
verified in this process. Currently there are approximately 15,000,000
shares of common stock (including Taylor's 40% interest), which were
established by this process. The Court disallowed approximately
12,000,000 shares in this process primarily because the stockholders,
including many of those held by brokers, failed to file proofs of
interest. Upon completion of this process, stockholders' equity was
restated effective to the year ended May 31, 1997 to reflect total
capitalization of $2,475,350. Capitalization was computed based upon
Taylor's ownership interest of 40% of all common stock in settlement of
his claim for $990,134.
During the year ended May 31, 2000 a settlement was reached with Hyman
Center, the Company's former president, for a claim related to
compensation due for services rendered prior to the bankruptcy. The
settlement called for a cash payment of $4,300 and an unsecured claim
of $100,000. The claim is to bear interest from January 1, 2000 until
paid in full. A gain of $58,225 has been recorded from this settlement.
The Company has accrued interest at 8% on all unpaid bankruptcy claims
since December 1997, with the exception of the Center claim.
Upon resolution of the Weiss claim, management intends to explore the
possibility of refinancing the buildings or the viability of merger
candidates.
10. LITIGATION AND LIABILITIES IN DISPUTE
The Company is involved in litigation, arising from actions of the Company
prior to the bankruptcy filing.
In September 1993, the Company acquired residential real estate from Harry
& Irene Weiss in exchange for 600,000 shares of the Company's
restricted common stock, with an agreed upon value of $1.00 per share.
As part of the agreement, the Company agreed that it would not sell or
offer its stock for two years at a price less than $1.00 per share.
However, the Company subsequently violated that agreement.
F-14
<PAGE> 40
PRINCETON AMERICAN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
10. LITIGATION AND LIABILITIES IN DISPUTE, CONTINUED
Weiss filed a proof of claim with the Bankruptcy Court for an unsecured,
pre-petition claim of $812,707. The Company objected to both the
priority and amount of the claim. The Bankruptcy Court initially upheld
the Company's objection and found that the Weiss claim was subordinated
to the level of a shareholder claim, rather than an unsecured claim.
The Court determined the amount of the claim to be $619,603. The
District Court subsequently reversed the Bankruptcy Court and found
that the Weiss's were entitled to assert an unsecured non-priority
claim in the same amount. The Company has appealed this decision.
The Weiss's also applied for an award of attorney's fees, which was denied.
They also have sought to convert the bankruptcy proceedings to Chapter
7, which would require liquidation of the Company's assets. The
Bankruptcy Court denied their motion. The Weiss's have appealed both
decisions.
Onset Investments has filed two proofs of claim, totaling $200,713 for
damages resulting from securities transactions prior to the bankruptcy
filing. The Company has objected to the validity, priority and amount
of these claims and intends to defend these claims vigorously. To date,
the Company and Onset have been unable to settle the dispute and
therefore the claim is currently unresolved and scheduled for a
hearing.
Legal counsel is unable to determine the outcome and amount of potential
loss from these claims. However, the Company has recorded a liability
for the amount of the Weiss claim currently approved by the Court.
During the year ended May 31, 2000, the Company reached a settlement with a
former officer and director, which required him to pay the Company
$125,000 in exchange for certain promissory notes, assets received upon
his termination from the Company and other claims filed by the Company.
The terms of the mortgage note described in Note 7 are also being
contested.
11. ACCRUED REAL ESTATE TAXES
The Company was delinquent on its real estate tax obligations during the
years ended May 31, 2000 and 1999, which resulted in tax liens being
placed on both its commercial properties. The 4808 building was brought
current by May 31, 2000. Interest incurred on real estate tax
obligations was approximately $30,000 in 2000 and $7,000 in 1999.
12. LEASE COMMITMENTS
The Company leases office space in its commercial buildings located at 2222
E Camelback and 4808 North 22nd Street in Phoenix, Arizona. Future
minimum lease payments required under these leases are as follows:
F-15
<PAGE> 41
PRINCETON AMERICAN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
12. LEASE COMMITMENTS, CONTINUED
<TABLE>
<CAPTION>
Year ended May 31, Amount
----------------- ------
<S> <C>
2001 $ 476,617
2002 219,680
2003 78,315
2004 11,798
-----------
$ 786,410
===========
</TABLE>
Effective April 30, 2000, the Company and a former tenant entered into a
Lease Termination and Release Agreement, whereby the Company is
required to pay the tenant $50,000 in five equal monthly payments
beginning July 1, 2000. The Company signed a five-year lease agreement
for the space in June 2000, which requires annual payments that range
from approximately $184,000 to $210,000 over the term of the lease.
This lease is not included in the above schedule.
The office building located at 2222 E. Camelback Road is subject to two
ground leases. The first lease was entered into on November 1, 1974.
The second lease was entered into on August 1, 1977. Both leases are
net leases, with terms of 99 years. On the 15th anniversary and for
each succeeding ten-year term, the rent is to be adjusted to an annual
rate equal to 8% of the fair market value of the leased premises,
excluding improvements. The rate on the first lease was adjusted on
November 1, 1999 to a monthly rate of $4,933. The second lease was
adjusted to a monthly rate of $3,100 on the 15th anniversary of the
lease and will be adjusted in 2002. Rent expense on these two leases
for the years ended May 31, 2000 and 1999 was $95,444 and $90,744,
respectively.
The office building located at 4808 N. 22nd Street is subject to a ground
lease, the term of which extends through July 31, 2031. The lease is a
net lease. The rental rate as of May 31, 2000 was $2,311 and is subject
to an annual adjustment based on the Consumer Price Index. Rent expense
on this lease for the years ended May 31, 2000 and 1999 was $27,644 and
$27,094, respectively.
The Company has a limited number of tenants in both buildings. As such, the
loss of certain tenants could adversely impact the Company.
The Company's future minimum lease obligations on the ground leases for the
next five years are approximately $124,000 per year, based upon the
current valuation.
13. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments", requires that the Company
disclose estimated fair values for its financial instruments. The
following summary presents a description of the methodologies and
assumptions used to determine such amounts.
F-16
<PAGE> 42
PRINCETON AMERICAN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
13. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED
Fair value estimates are made at a specific point in time and are based on
relevant market information and information about the financial
instrument; they are subjective in nature and involve uncertainties,
matters of judgment and, therefore, cannot be determined with
precision. These estimates do not reflect any premium or discount that
could result from offering for sale at one time the Company's entire
holdings of a particular instrument. Changes in assumptions could
significantly affect the estimates.
Since the fair value is estimated as of May 31, 2000, the amounts that will
actually be realized or paid at settlement of the instruments could be
significantly different.
The carrying amount of cash and cash equivalents is assumed to be the fair
value because of the liquidity of these instruments. The recorded
amount of the investment in marketable securities approximates market
based upon quoted market values. The rate specified in the mortgage
note receivable approximates current market rates. The investment in
the commission contract has been discounted to its estimated present
value using market rates of interest. Accounts payable and accrued
expenses approximate fair value because of the short maturity of these
instruments. The recorded balance of notes payable and bankruptcy
claims are assumed to be the fair value, since the rates specified
approximate current market rates.
14. INCOME TAXES
The components of net deferred tax assets at May 31, 2000 and 1999,
assuming an effective tax rate of 40%, are as follows:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Net operating loss carryforward $ 5,730,000 5,780,000
Appreciation of marketable securities 150,000 180,000
Difference in basis of property & equipment (170,000) (160,000)
Accrued real estate taxes 90,000 60,000
Less valuation allowance (5,800,000) (5,860,000)
---------- ---------
Net deferred tax assets $ - -
=========== =========
</TABLE>
The expected tax benefit from the net loss before income taxes was offset
by a valuation allowance, since the Company has not yet developed a
history of profitable operations. During the periods ended May 31,
2000, the valuation allowance decreased by approximately $60,000. For
1999, it increased by approximately $60,000.
At May 31, 2000, the Company has approximately $14,000,000 in unused
federal net operating loss carryforwards, which expire from 2001
through 2020. The state net operating loss carryforwards, which
approximate $8,000,000 expire from 2001 through 2005
F-17
<PAGE> 43
PRINCETON AMERICAN CORPORATION
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
14. INCOME TAXES, CONTINUED
Due to significant changes in ownership in prior years and changes in the
Company's operations, the amount of operating losses available to
offset future income taxes may be significantly limited. The Company
has not yet completed an evaluation of the amount of losses that are
available for utilization by the Company or a prospective merger
candidate.
F-18
<PAGE> 44
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Name Method of Filing
<S> <C> <C>
2.1 Plan of Reorganization (i)
3.1 Articles of Incorporation, as amended filed with this Report
3.2 By-Laws, as amended filed with this Report
27.1 Financial Data Schedule filed with this Report
</TABLE>
(i) Incorporated by reference to Exhibit 1 of Current Report on Form 8-K (file
no.00005141) filed on January 5, 1998.
