<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ____________________ to ________________________.
Commission file number 0-19908
---------------------------------------------------------
ODD'S-N-END'S, INC.
--------------------------------------------------------------------------
DELAWARE 16-1205515
-------------------------------------- ------------------------------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
5000 WINNETKA AVENUE NORTH, NEW HOPE, MINNESOTA 55428
--------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 533-1169
-----------------------------
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. ( X ) Yes ( ) No
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court ( X ) Yes ( ) No
As of August 1, 1997, 4,724,048 shares of the registrant's Common Stock (par
value $.07) were outstanding.
<PAGE>
ODD'S-N-END'S, INC.
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1997
and December 31, 1996 3
Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion & Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Authorized Signature 11
2
<PAGE>
ODD'S-N-END'S, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 222 $ 144
Inventories 3,929 4,096
Other current assets 227 206
------ ------
Total current assets 4,378 4,446
Property and equipment, net 1,858 1,979
Other assets 11 11
------ ------
Total assets $6,247 $6,436
------ ------
------ ------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Demand note payable - shareholder $6,372 $3,602
Current maturities of long-term debt - 387
Accounts payable 574 688
Accrued expenses 1,229 1,399
------ ------
Total current liabilities 8,175 6,076
Long-term debt, net - 1,276
------ ------
Total liabilities 8,175 7,352
------ ------
Shareholders' equity (deficiency):
Common stock, $.07 par value, 20,000 shares
authorized, 4,724 issued and outstanding 331 331
Additional paid-in capital 1,607 1,607
Accumulated deficit (3,866) (2,854)
------ ------
Total shareholders' equity (deficiency) (1,928) (916)
------ ------
Total liabilities and shareholders'
equity (deficiency) $6,247 $6,436
------ ------
------ ------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
ODD'S-N-END'S, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- ---------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $4,753 $4,857 $ 9,357 $ 9,526
Cost of goods sold 2,987 3,185 5,891 6,351
------ ------ ------- -------
Gross margin 1,766 1,672 3,466 3,175
Operating expenses 2,099 2,212 4,119 4,315
------ ------ ------- -------
Loss from operations (333) (540) (653) (1,140)
Interest expense 193 138 359 264
------ ------ ------- -------
Net loss $ (526) $ (678) $(1,012) $(1,404)
------ ------ ------- -------
------ ------ ------- -------
Net loss per share $ (.11) $ (.14) $ (.21) $ (.30)
------ ------ ------- -------
------ ------ ------- -------
Weighted average common
shares outstanding 4,724 4,724 4,724 4,724
------ ------ ------- -------
------ ------ ------- -------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
ODD'S-N-END'S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------
June 30, June 30,
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,012) $(1,404)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 133 106
Provision for inventory shrink 162 209
Changes in operating assets and liabilities:
Inventories 5 (221)
Other assets (21) 115
Accounts payable (114) (513)
Accrued expenses (170) 194
-------- --------
Net cash used for operating activities (1,017) (1,514)
-------- --------
Cash flows from investing activities:
Acquisition of property and equipment, net (12) (117)
-------- --------
Net cash used for investing activities (12) (117)
-------- --------
Cash flows from financing activities:
Proceeds from demand note payable, net 2,770 1,617
Repayment of long-term debt (1,663) (367)
-------- --------
Net cash provided by financing activities 1,107 1,250
-------- --------
Increase (decrease) in cash 78 (381)
Cash - beginning of period 144 760
-------- --------
Cash - end of period $ 222 $ 379
-------- --------
-------- --------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
ODD'S-N-END'S, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
NOTE 1. - BASIS OF PRESENTATION
The financial statements included in this Form 10-Q have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed, or omitted,
pursuant to such rules and regulations. These financial statements should be
read in conjunction with the financial statements and related notes included
in the Company's 1996 Form 10-K.
The financial statements presented herein as of June 30, 1997 and for the
six months then ended, reflect, in the opinion of management, all adjustments
necessary, consisting of normal recurring items, for a fair presentation of
financial position and the results of operations for the periods presented.
The results of operations for any interim period are not necessarily
indicative of results for the full year.
NOTE 2. - RELATED PARTY TRANSACTIONS
During the six months ended June 30, 1997 and 1996, the Company purchased
merchandise of $5,365 and $6,236, respectively, from Universal International,
Inc. ("Universal") pursuant to a supply agreement between the parties.
Universal owns 40.5% of the outstanding common stock of the Company. The
supply agreement allows for, among other things, Universal to achieve a gross
profit margin of approximately 15.25% on the merchandise sold to the Company.
The Company entered into a discretionary revolving note agreement with
Universal in February 1995. The agreement, as amended, allows for borrowings
up to $10 million with interest payable at prime plus 2.5%. In June 1997,
Universal repaid the Company's $1.3 million bank notes payable. Outstanding
borrowings under the agreement were $6,372 at June 30, 1997 and $3,602 at
December 31, 1996. Borrowings are collateralized by a security interest in
substantially all assets of the Company. Total interest charged by Universal
pursuant to the note agreement was $286 and $165 during the six months ended
June 30, 1997 and 1996, respectively.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Universal provides funding for the Company under a demand discretionary
revolving note agreement. On March 3, 1997, Universal's lender under its
revolving credit agreement declared Universal in default of several provisions
of its loan agreement. In June 1997, Universal obtained new financing to
replace its revolving credit agreement, and Universal has continued to provide
funding to the Company for its operating cash flow needs (see "Liquidity and
Capital Resources").
FORWARD LOOKING INFORMATION
Information contained in this Form 10-Q contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology
such as "may", "will", "expect", "plan", "anticipate", "estimate", or
"continue" or the negative thereof or other variations thereon or comparable
terminology. There are certain important factors that could cause results to
differ materially from those anticipated by some of these forward-looking
statements. Investors are cautioned that all forward-looking statements
involve risks and uncertainty. The factors, among others, that could cause
actual results to differ materially include: the Company's ability to execute
its business plan, the Company's ability to continue to receive financing and
merchandise from Universal, competitive pressures on sales and pricing,
increases in other costs which cannot be recovered through improved pricing of
merchandise, and the adverse effect of weather conditions on retail sales.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items
from the Company's operating statement data expressed as a percentage of sales.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sales................................. 100.0% 100.0% 100.0% 100.0%
Cost of goods sold.................... 62.8 65.6 63.0 66.7
------ ------ ------ -----
Gross margin................... 37.2 34.4 37.0 33.3
Operating expenses.................... 44.2 45.5 44.0 45.3
------ ------ ------ -----
Loss from operations.................. (7.0) (11.1) (7.0) (12.0)
Interest expense...................... 4.1 2.9 3.8 2.7
------ ------ ------ -----
Net loss.............................. (11.1%) (14.0%) (10.8%) (14.7%)
------ ------ ------ -----
------ ------ ------ -----
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Sales for the three months and six months ended June 30, 1997 were
$4,753,000 and $9,357,000, respectively, a 2.1% decrease and a 1.8% decrease
from sales for the same periods in the prior year. The decrease in sales was
primarily due to supply disruptions that occurred prior to Universal closing
on its new credit facility, since Universal supplies substantially all of the
Company's merchandise.
Gross margin for the three months and six months ended June 30, 1997 were
$1,766,000 and $3,466,000, respectively, a 5.6% increase and a 9.2% increase
from the same periods in the prior year. Gross margin, as a percent of sales,
increased to 37.2% and 37.0% for the three months and six months ended June
30, 1997, compared to 34.4% and 33.3% for the same periods of the prior year.
The increase in gross margins is primarily due to less markdowns of seasonal
merchandise in the first quarter of 1997 compared to the first quarter of
1996. In addition, the Company's change in merchandise mix has resulted in
lower product costs and improved margins. Management expects that retail
gross margins for the remainder of 1997 will continue to exceed 1996 gross
margins.
Operating expenses for the three months and six months ended June 30, 1997
decreased $113,000 or 5.1% and $196,000 or 4.5%, respectively, from the
corresponding periods last year. Operating expenses decreased primarily due
to the elimination of certain corporate overhead costs associated with the
Buffalo, New York corporate office and warehouse, which was sold during the
third quarter of 1996.
Interest expense for the three months and six months ended June 30, 1997
increased $55,000 or 39.9% and $95,000 or 36.0%, respectively, from the
corresponding periods last year. This increase reflects the significant
increase in borrowings from Universal to fund the Company's continuing
operating losses.
LIQUIDITY AND CAPITAL RESOURCES
In February 1995, the Company entered into a demand discretionary credit
facility with Universal which as amended, allows for borrowings up to $10
million with interest payable at prime plus 2.5% (11.0% at June 30, 1997).
Borrowings are collateralized by substantially all assets of the Company. In
June 1997, Universal repaid the Company's bank notes payable totaling $1.3
million, which increased the amount due Universal. Outstanding borrowings
under the agreement were $6,372,000 at June 30, 1997 and $3,602,000 at
December 31, 1996. The Company believes that this agreement will fund its
cash flow needs for merchandise purchases and operating expenses for the
foreseeable future.
The Company used $1.0 million for operating activities during the six
months ended June 30, 1997, primarily as a result of a $1.0 million net loss.
The use of cash for operating activities and the repayment of $1.7 million of
long-term debt were funded principally by a $2.8 million increase in the
demand note payable to Universal.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Since the filing of its bankruptcy petition in May 1994, the Company has
closed 31 of its retail outlets, including one in January 1996, and is
presently operating a total of 22 retail outlets. At the present time,
management has not initiated any plan to close specific locations but will
continue to evaluate the performance of each of the remaining stores. The
Company does not plan to open any additional stores in the foreseeable future.
The Company expects 1997 property and equipment additions to be insignificant.
On March 3, 1997, Universal's lender under its revolving credit agreement
declared Universal in default of several provisions of its loan agreement. In
June 1997, Universal obtained new financing to replace this revolving credit
agreement. Universal's new credit agreement, which expires in June 1999,
permits Universal to borrow up to $14 million.
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 10.14.3 Amended and Restated Loan and Security Agreement
with Universal International, Inc., dated
June 6, 1997.
No Form 8-K's were filed during the quarter ended June 30, 1997.
10
<PAGE>
AUTHORIZED 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.
Dated: August 13, 1997
ODD'S-N-END'S, INC.
By:
------------------------------------
James A. Patineau
Secretary and Chief Financial Officer
(principal financial officer)
11
<PAGE>
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Agreement"),
dated as of June 7, 1997, is entered into between UNIVERSAL INTERNATIONAL, INC.
(the "Lender") and ODDS-N-ENDS, INC. (the "Borrower").
WITNESSETH:
WHEREAS, Lender and Borrower entered into that certain Loan and
Security Agreement dated as of February 28, 1995, as amended (the "Existing
Loan Agreements") to provide credit to Borrower for the purchase of inventory;
WHEREAS, as evidence of its obligations to Lender, Borrower executed
and delivered to Lender that certain Revolving Note dated February 28, 1995 in
the original principal amount of $2,000,000 (the "Existing Note"), which was
amended to $5,000,000 by an Allonge dated July 30, 1996;
WHEREAS, the Borrower and the Lender desire to enter into this
Agreement to amend and restate the terms of the Existing Loan Agreements and
the Existing Note.
NOW, THEREFORE, for and in consideration of loans, advances or other
extensions of credit made or to be made to the Borrower by the Lender, and for
other good and valuable consideration, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the meanings indicated for purposes
of this Agreement (such means being applicable to both the singular and plural
forms):
"Agreement" shall mean this Amended and Restated Loan and Security
Agreement, as it may be amended, modified, supplemented, assigned, restated or
replaced from time to time.
"Collateral" shall mean all property or rights in which security
interest is granted hereunder.
"Default" shall mean: (1) the occurrence of any "Event of Default"
or similar occurrence under the Revolving Note; or (2) nonpayment, when due
or demanded (if under a demand instrument) of any amount of the Liabilities,
or any amount payable to the Lender by Borrower.
<PAGE>
"Liabilities" shall mean all obligations of the Borrower under the
Revolving Note, under this agreement, or for indemnity as the result of
Lender's guaranty of Borrower's obligations, and all other obligations of the
Borrower to the Lender, its successors and assigns, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, or
now or hereafter existing, or due or to become due.
1.2 TERMS DEFINED IN UNIFORM COMMERCIAL CODE. "Account," "Account
Debtor," Chattel paper," "Document" "Equipment," "Fixtures," "General
Intangibles," "Instrument," "Investment Property", "Inventory," and "Proceeds"
shall have the meaning set forth in the Minnesota Uniform Commercial Code,
PROVIDED, that if any additional goods, property or rights shall be included in
such terms under Section 2 hereof, such terms shall be construed to include such
additional goods, property or rights.
SECTION 2
AMENDMENT AND RESTATEMENT OF EXISTING LOAN AGREEMENTS
Section 2.1. AMOUNT OF EXISTING INDEBTEDNESS; AGREEMENT TO AMEND AND
RESTATE.
(a) The Borrower hereby acknowledges and agrees that, as of the date
hereof, the outstanding principal balance of, and accrued interest on, the
Existing Note is approximately $6 million.
(b) The Lender and the Borrower agree to amend and restate the terms
and conditions of the revolving credit facility existing under, and the
obligations owing to the Lender under, the Existing Loan Agreements,
including without limitation, the obligations owing under the Existing
Note, on the terms and conditions set forth herein.
Section 2.2 EXISTING AGREEMENTS. The Lender and the Borrower agree
that this Agreement shall exclusively control and govern the mutual rights and
obligations of the parties hereto with respect to the Existing Loan Agreements
and the Existing Note.
Section 2.3. NO NOVATION. THE PARTIES HERETO HAVE EXECUTED THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SOLELY TO AMEND AND RESTATE THE TERMS OF,
AND THE OBLIGATIONS OWING UNDER AND IN CONNECTION WITH, THE EXISTING DOCUMENTS.
THE PARTIES DO NOT INTEND THIS AGREEMENT, NOR THE TRANSACTIONS CONTEMPLATED
HEREBY TO BE AND THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL
NOT BE CONSTRUED TO BE, A NOVATION OR WAIVE OF ANY OF THE OBLIGATIONS OWING BY
THE BORROWER UNDER OR IN CONNECTION WITH ANY OF THE EXISTING DOCUMENTS.
FURTHER, THE PARTIES DO NOT INTEND THIS AGREEMENT, NOR THE TRANSACTIONS
2
<PAGE>
CONTEMPLATED HEREBY, TO AFFECT OR IMPAIR THE PRIORITY OF THE SECURITY INTEREST
IN ANY OF THE COLLATERAL IN ANY WAY.
SECTION 3
TERMS OF LENDING
3.1 THE REVOLVING NOTE. Borrower shall execute a revolving note
(the "Revolving Note") in the form attached hereto as EXHIBIT A in the
principal sum of Ten Million Dollars ($10,000,000) representing the
outstanding balance of the current obligation of Borrower to Lender and
further advances of credit for the purpose of inventory, fixtures, tenant
improvements and operating expenses to be made by Lender in the future.
3.2 ADVANCES DISCRETIONARY. All further advances of credit from
Lender to Borrower under the Existing Note shall be at the discretion of the
Lender. Lender shall have no obligation to advance further credit at any
time, whether or not Borrower is in Default under this Agreement.
3.3 PAYMENTS TO LENDER. Upon written notice to Borrower whether
or not a Default exists or on demand, Lender shall have the option to require
that all cash received by Borrower be turned over to Lender for application
on the Existing Note.
SECTION 4
GRANT OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. As security for the payment of
all Liabilities, the Borrower hereby assigns to the Lender, and grant to the
Lender, a continuing first priority security interest in, the following
whether now owned or hereafter arising or acquired:
4.1.1 Accounts, including all other rights and interests
(including all liens and security interests) that the Borrower may at time
have by law or agreement against any Account Debtor or other obligor
obligated to make any such payment or against any of the property of such
Account Debtor or other obligor;
4.1.2 Equipment and fixtures, including all accessories, parts and
other property at any time affixed thereto or used in connection therewith
and all substitutions and replacements thereof;
4.1.3 Inventory, including goods that are returned, repossessed,
stopped in transit or which otherwise come into the possession of the
Borrower;
3
<PAGE>
4.1.4 General Intangibles, including real estate leases,
inventions, designs, patents, patent applications, design patents, design
patent applications, trademarks, trademark applications, trade names, trade
secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refund claims, rights to indemnification and rights
under warranties;
4.1.5 Chattel Paper, Instrument and Documents;
4.1.6 Goods, instruments, documents of chattel paper that are in
the possession or control of, or in transit to, the Lender or any agent or
bailee for the Lender for any reason and all interest on, dividends and
distributions and other rights in connection with such property, and any
and all balances, credits, deposits (general or special, time or demand,
provisional or final), accounts or monies of or in the name of the Borrower
now or hereafter with the Lender;
4.1.7 Books, correspondence, credit files, records, invoices,
manuals, service records and programs, other papers and documents, computer
records, runs, software, systems, procedures, disks, tapes and other
storage media relating to any of the Collateral, including any of the
foregoing in the possession or control of any service, consultant, or
outside vendor;
4.1.8 Proceeds, including all policies, claims to payment under,
and proceeds of any and all insurance policies and letters of credit
payable to the Borrower, or on behalf of the Borrower's property whether or
not such policies are issued to or owned by the Borrower and whether or not
the Lender is named as loss payee or additional insured, including any
credit insurance.
SECTION 5
DEFAULT AND REMEDIES
Whenever a Default shall be existing:
5.1 LIABILITIES DUE AND PAYABLE. All of the Liabilities may at the
option of the Lender without any showing of cause, and without demand or notice
of any kind, be declared, and thereupon immediately shall become, due and
payable.
5.2 USE AND SALE OF COLLATERAL. The Lender may, to the fullest
extent permitted by applicable law, without notice, hearing or process of law
of any kind, (a) enter upon any premises where any of the Collateral may be
located and take possession of and sell or remove such Collateral; (b) use or
license, on an exclusive or non-exclusive basis, any General Intangibles
throughout the world for such term or terms, on such conditions, and in such
manner, as the Lender shall in its sole discretion determine, without
compensation to the Borrower; (c) sell any or all of the
4
<PAGE>
Collateral, free of all rights and claims of the Borrower therein and
thereto; and (d) bid for and purchase any or all of such Collateral at any
such sale.
5.3 USE OF PREMISES. Borrower grants to Lender a license to take
temporary possession of any premises upon which the Collateral is located for
the purpose of conducting a sale of Collateral. Such sale may be identified as
a "Going Out of Business Sale." This license shall not impair or affect
Lender's security interest in Borrower's leases or Lender's right to foreclose
on such leases. By exercising rights under this license, Lender assumes no
liability for Borrower's obligations under any lease of the premises.
5.4 OTHER RIGHTS. The Lender may exercise from time to time any
other rights and remedies available to it under any agreement and under all
applicable laws.
5.5 NOTICE TO COAST. Lender shall provide to Coast Business Credit
written notice of the default and Lender's intention regarding exercise of its
remedies.
SECTION 6
GENERAL PROVISIONS
6.1 REIMBURSEMENT OF EXPENSES. The Borrower shall reimburse the
Lender upon demand for all costs and expenses, including reasonable fees of
attorneys for the Lender and legal expenses, incurred by the Lender in
seeking to collect or enforce any rights under the Collateral and its rights
hereunder and, in case of Default, in seeking to collect the Liabilities,
including expenses of any repairs to any realty or other property to which
any of the Equipment may be affixed or be a part.
6.2 REMEDIES CUMULATIVE. The remedies provided for herein are
cumulative and not exclusive of any remedies which may be available to the
lender at law or in equity.
6.3 TERMINATION OF AGREEMENT. Unless sooner terminated by the
Lender, this Agreement shall terminate when all Liabilities shall have been
paid in full and Lender has given notice of termination to Borrower. This
Agreement shall continue notwithstanding that there may be, from time to
time, no outstanding loans or extensions of credit from the Lender to the
Borrower.
6.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Borrower, its successors and assigns and shall inure to the benefit of,
and be enforceable by, the Lender and its successors, transferees and assigns.
6.5 CHOICE OF LAW. This Agreement has been delivered at
Minneapolis, Minnesota, and shall be construed in accordance with any
governed by the laws of the State of Minnesota.
5
<PAGE>
6.6 SEVERANCE. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
6.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
UNIVERSAL INTERNATIONAL, INC.
By: /s/ Mark Ravich
-------------------------------------
Its: CEO
--------------------------------
ODDS-N-ENDS, INC.
By: /s/ Mark Ravich
-------------------------------------
Its: Chairman
--------------------------------
6
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 222
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 3,929
<CURRENT-ASSETS> 4,378
<PP&E> 1,858
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,247
<CURRENT-LIABILITIES> 8,175
<BONDS> 0
0
0
<COMMON> 331
<OTHER-SE> (2,259)
<TOTAL-LIABILITY-AND-EQUITY> 6,247
<SALES> 9,357
<TOTAL-REVENUES> 9,357
<CGS> 5,891
<TOTAL-COSTS> 5,891
<OTHER-EXPENSES> 4,119
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 359
<INCOME-PRETAX> (1,012)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,012)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,012)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
