<PAGE>
FORM 10-QSB/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
----------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File Number
June 30, 1996 33-25701
- ----------------- ----------------------
ADVANTAGE MARKETING SYSTEMS, INC.
---------------------------------
(Exact Name of Registrant as Specified in its Charter)
Oklahoma 33-0296193
- --------------------------------- ------------------------------
(State or Other Jurisdiction (IRS Employer Identification
of Incorporation or Organization) Number)
2601 N.W. Expressway, Suite 1210W, Oklahoma City, Oklahoma 73112
- -------------------------------------------------------------------------
(Address of Principal Offices) (Zip Code)
(405) 842-0131
- -------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (i) 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 (ii) has been subject to such filing
requirements for the past 90 days.
Yes X No
--------- ---------
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Common Stock, $.0001 par value 17,145,524
- ------------------------------ --------------------------------
Title of Class Number of Shares outstanding
at June 30, 1996
Exhibit Index appears on page 13 .
----
Page 1 of 14
<PAGE>
ADVANTAGE MARKETING SYSTEMS, INC.
- -------------------------------------------------------------------------------
QUARTERLY REPORT ON FORM 10-QSB/A
FOR THE QUARTER ENDED JUNE 30, 1996
-----------------------------------
Table of Contents
-----------------
Part I - Financial Information
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II - Other Information 13
Page 2
<PAGE>
ADVANTAGE MARKETING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS, JUNE 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS JUNE 30, DEC. 31,
- ------ 1996 1995
<S> <C> <C>
CURRENT ASSETS:
Cash $ 181,799 $ 112,087
Receivables - net of allowance
of $25,804 and $27,434 12,921 18,299
Receivable from affiliate 73,963 51,963
Inventory 289,561 98,621
Prepaid expenses 16,145 2,371
---------- ----------
Total current assets 574,389 283,341
COMMISSION ADVANCES TO RELATED PARTIES - NONCURRENT 14,332 65
RECEIVABLES - NONCURRENT 19,731 22,620
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $311,174 and $280,606 186,864 159,797
GOODWILL 117,743 -
COVENANT NOT TO COMPETE 58,889 -
OTHER ASSETS 131,862 67,173
---------- ----------
TOTAL ASSETS $1,103,810 $ 532,996
========== ==========
LIABILITIES & STOCKHOLDERS' DEFICIENCY
- --------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 256,952 $ 91,949
Accrued expenses 328,179 151,654
Accrued promotion expense 74,625 99,424
Notes payable:
Stockholder 40,700 81,929
Other 8,685 8,440
Current obligations under capital lease 23,839 20,679
---------- ----------
Total current liabilities 732,980 454,075
LONG-TERM LIABILITIES:
Notes payable - other 24,151 28,500
Capital lease 68,768 75,649
---------- ----------
Total long-term liabilities 92,919 104,149
---------- ----------
TOTAL LIABILITIES 825,899 558,224
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred stock - $.0001 par value;
authorized 5,000,000 shares; none issued - -
Common stock - $.0001 par value; authorized
495,000,000 shares; 17,145,524 shares
issued and outstanding 1,714 1,698
Paid-in capital 1,979,880 1,858,396
Accumulated deficit (1,703,683) (1,885,322)
----------
Total stockholders' equity (deficiency) 277,911 (25,228)
---------- ----------
TOTAL $ 1,103,810 $ 532,996
=========== ==========
</TABLE>
See notes to financial statements.
Page 3
<PAGE>
ADVANTAGE MARKETING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUE:
Sale of programs $1,411,069 $1,042,301 $2,671,250 $1,848,600
Sale of promotional material 63,350 30,395 126,034 50,545
Other 6,660 4,871 16,244 9,194
---------- ---------- ---------- ----------
Total 1,481,079 1,077,567 2,813,528 1,908,339
---------- ---------- ---------- ----------
EXPENSES:
Cost of programs 331,480 308,653 634,446 501,089
Cost of promotional material 42,407 25,117 78,152 41,891
Selling 733,444 481,632 1,416,606 897,642
Interest expense 6,489 8,066 13,848 12,211
General and administrative 267,324 186,035 488,837 351,821
---------- ---------- ---------- ----------
Total 1,381,144 1,009,503 2,631,889 1,804,654
---------- ---------- ---------- ----------
NET PROFIT $ 99,935 $ 68,064 $ 181,639 $ 103,685
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES (thousands) 26,900 16,845 26,900 16,845
NET PROFIT PER COMMON SHARE NIL NIL NIL NIL
------ ------ ------ ------
</TABLE>
Page 4
<PAGE>
ADVANTAGE MARKETING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1996 1995
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net profit $ 181,639 $103,685
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 30,965 18,102
Changes in assets and liabilities
which provided (used) cash:
Inventory (190,940) (11,000)
Receivables, advances and prepaids (19,774) 13,892
Checks outstanding - (46,663)
Accounts payable and accrued
expenses 317,303 41,174
--------- --------
Net cash provided by operating activities 319,193 119,190
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (57,635) (2,697)
Advances to affiliate (22,000) (73,850)
Repayment of advances to affiliate - 37,110
Purchase of Miracle Mountain International, Inc. (56,103) -
Purchase of other assets (64,689) -
--------- --------
Net cash used by investing activities (200,427) (39,437)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans from stockholders - 43,372
Payment on capital leases (3,721) (4,237)
Payment on notes payable (4,104) (2,088)
Payment on notes payable - stockholders (41,229) (90,985)
--------- --------
Net cash provided (used) by financing activities (49,054) (53,938)
--------- --------
NET INCREASE IN CASH 69,712 25,815
BEGINNING CASH BALANCE 112,087 -
--------- --------
ENDING CASH BALANCE $ 181,799 $ 25,815
========= ========
SUPPLEMENTAL DISCLOSURE OF NON-CASH OPERATING,
INVESTING AND FINANCING ACTIVITIES:
Reclassify interest payable to notes payable -
stockholders $ - $ 51,806
========= ========
Property and equipment acquired by capital lease $ - $ 91,263
========= ========
Fair value of capital stock issued to purchase
Miracle Mountain International, Inc. $ 120,000 $ -
========= ========
</TABLE>
See notes to financial statements.
Page 5
<PAGE>
ADVANTAGE MARKETING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- -------------------------------------------------------------------------------
1. UNAUDITED INTERIM FINANCIAL STATEMENTS
The unaudited financial statements and related notes have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations. The
accompanying financial statements and related notes should be read in
conjunction with the audited financial statements of the Company, and notes
thereto, for the fiscal year ended December 31, 1995.
The information furnished reflects, in the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the results of the interim periods presented. Operating results
of the interim period are not necessarily indicative of the amounts that will be
reported for the fiscal year ending December 31, 1996.
2. MIRACLE MOUNTAIN INTERNATIONAL, INC.
Pursuant to a stock purchase agreement having an effective date of May 31, 1996
(the "Purchase Agreement"), the Company acquired all of the issued and
outstanding capital stock of Miracle Mountain International, Inc., a Colorado
corporation ("MMI"), and MMI became a wholly-owned subsidiary of the Company
(the "MMI Acquisition"). MMI is a multi-level marketer of various third-party
manufactured nutritional supplement products. Pursuant to the Purchase
Agreement and in connection with the MMI Acquisition, the Company issued and
delivered to the shareholders of MMI 160,000 shares of common stock. In
addition, the Company agreed to issue and deliver an additional 40,000 shares of
common stock to the shareholders of MMI on or before December 17, 1996, pending
determination of certain liabilities.
In connection with the MMI Acquisition, the excess of the purchase price of
$176,103, which includes $56,103 of transaction costs, over the negative $3,059
fair market value of assets of MMI, net of liabilities, has been allocated
$119,162 to Goodwill and $60,000 to the covenant not to compete. Goodwill and
the covenant not to compete will be amortized over a 7 and 4.5 year period,
respectively. The fair market value of the assets of MMI, net of liabilities,
declined from $16,690 to negative $3,059 between March 31, 1996 and May 31,
1996.
Page 6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- -------------------------------------------------------------------------------
Liquidity and Capital Resources
- -------------------------------
The Company had a deficit working capital of approximately $158,591 at June 30,
1996, as compared to a deficit of approximately $170,700 at December 31, 1995.
Of this $158,591 deficit, approximately $40,700 represents amounts owed to the
Company's chief executive officer and major stockholder which is classified as a
current liability, however, the Company makes payments on this loan only when
there is sufficient working capital. Management believes that cash flows from
operations will be sufficient to fund its working capital needs over the next
twelve months. During the six months ended June 30, 1996, net cash provided by
operating activities was $319,193 of which $200,427 was used in investing
activities, and $49,054 was used in financing activities (consisting primarily
of repayments to the Company's Chief Executive Officer and major stockholder).
The Company had a net increase in cash during this period of $69,712. The
Company's working capital needs over the next twelve months consist primarily of
administrative and operating overhead. For the three months ended June 30,
1996, the Company's administrative and operating overhead averaged approximately
$89,000 per month. The Company anticipates that this level of administrative
and operating overhead will continue over the next twelve months.
At June 30, 1996, and December 31, 1995, the balance due on a short-term loan
from the Company's Chief Executive Officer and major shareholder was $40,700 and
$81,929, respectively. During 1995, the Company combined interest payable of
approximately $52,000 with the principal due under the loan and began making
weekly interest and principal payments of $1,500. During the six months ended
June 30, 1996, the Company did not receive any advances under the loan, while
during 1995, the Company received aggregate advances of $31,963 under the loan.
During the six months ended June 30, 1996 and the year ended December 31, 1995,
the Company made principal payments of $41,229 and $127,615, respectively,
thereon to the Company's Chief Executive Officer and major shareholder. The
outstanding balance of the loan bears interest at 12 percent per annum, is
unsecured and is due on demand.
The Company made advances to the John Hail Agency, Inc. ("JHA"), a company of
which the Company's Chief Executive Officer and major shareholder is the sole
director and shareholder, of $22,000, and $87,684 during the six months ended
June 30, 1996, and the year ended December 31, 1995, respectively. During the
six months ended June 30, 1996, JHA has not made any repayments. JHA has made
repayments of these advances of $67,401 during the year ended December 31, 1995.
The Company's primary source of liquidity is net cash provided by operating
activities. Other than loans made available to the Company by its Chief
Executive Officer and major shareholder, the Company does not have any outside
liquidity sources. As of June 30, 1996,
Page 7
<PAGE>
the Company did not have any material commitments for capital expenditures.
The Company is attempting to raise funds through the simultaneous sale of Units
pursuant to the exercise of Public Warrants and Rights. The Company has filed a
registration statement with the Securities and Exchange Commission to redeem the
outstanding Class A and Class B Warrants at $.0001 per warrant. In connection
with the redemption, the Company will offer to temporarily reduce the exercise
price of Class B Warrants to $.75 and will offer upon exercise of each Class A
and Class B Warrant one share of common stock plus one new 1996-A Warrant. Each
1996-A Warrant will be exercisable at $1.50 per share at any time 90 days after
the date of the associated prospectus and on or before November 30, 1998 to
purchase one share of common stock. The proposed redemption will be limited to a
specific time period after the declaration of effectiveness of the related
registration statement filed by the Company with the Securities and Exchange
Commission.
In addition, the registration statement includes the Company's intention to
distribute nontransferable rights to purchase a unit consisting of one share of
common stock and one new 1996-A Warrant to existing shareholders of record. The
rights will be offered at no cost and will allow shareholders of record to
purchase one unit for every previous common share held. The rights exercise
period will be limited to a specific time period after the declaration of
effectiveness of the related registration statement filed by the Company with
the Securities and Exchange Commission.
The net proceeds to be received by the Company from these offerings will be
dependent upon the number of Units purchased by the holders of the Public
Warrants and the recipients of the Rights. Therefore, the net proceeds of these
offerings are not determinable at this time. There is no assurance that all or
any portion of the Units will be purchased pursuant to these offerings.
The net proceeds from these offerings will be used for general corporate
purposes, including working capital and to fund the Company's efforts to expand
sales and marketing activities. The Company estimates that it will use
approximately $1.5 million for expansion of its U.S. distributor network and
enhancement of its marketing materials. The Company intends to use
approximately $.5 million to develop new products and enhance the packaging of
its existing products. The Company will devote approximately $1.0 million for
the expansion into and development of international markets. In the event the
Company raises less than $3.0 million the funds will be devoted to each of these
areas in the order in which they have been presented. The Company does not
intend to use any of the proceeds to discharge existing debt. Pending use of
the net proceeds, they will be invested by the Company in investment grade,
short-term, interest-bearing securities.
In connection with these offerings the Company has incurred certain direct costs
consisting primarily of legal, accounting and filing
Page 8
<PAGE>
fees. These costs totalled approximately $129,000 and $53,000 at June 30, 1996,
and December 31, 1995, respectively, and are reflected in the Company's
financial statements under the caption "Other Assets".
Furthermore, the Company signed a letter of intent on May 24, 1996, with an
underwriter which sets forth in principle the terms and conditions pursuant to
which investment banking services are to be provided and, subject to a number of
conditions, Common Stock is to be purchased from the Company and sold to the
public by the underwriter during 1996. Until a definitive underwriting
agreement is executed with the underwriter, which generally will be following
the declaration of effectiveness of the registration statement filed by the
Company with the Securities and Exchange Commission covering the Common Stock,
the underwriter will have no obligation to purchase the Common Stock.
Therefore, there is no assurance that this offering will be completed.
In the event that the Company does not obtain any net proceeds from these
offerings it anticipates that it will be able to continue to operate on
internally generated cash. During the six months ended June 30, 1996, the
Company had an average monthly positive cash flow from operating activities of
approximately $53,200, and an average monthly net positive cash flow of
approximately $11,600, after investing and financing activities.
Pursuant to a stock purchase agreement having an effective date of May 31, 1996
(the "Purchase Agreement"), the Company acquired all of the issued and
outstanding capital stock of Miracle Mountain International, Inc., a Colorado
corporation ("MMI"), and MMI became a wholly-owned subsidiary of the Company
(the "MMI Acquisition"). MMI is a multi-level marketer of various third-party
manufactured nutritional supplement products. Pursuant to the Purchase
Agreement and in connection with the MMI Acquisition, the Company issued and
delivered to the shareholders of MMI 160,000 shares of common stock. In
addition, the Company agreed to issue and deliver an additional 40,000 shares of
common stock to the shareholders of MMI on or before December 17, 1996, pending
determination of certain liabilities.
In connection with the MMI Acquisition, the excess of the purchase price of
$176,103, which includes $56,103 of transaction costs, over the negative $3,059
fair market value of assets of MMI, net of liabilities, has been allocated
$119,162 to Goodwill and $60,000 to the covenant not to compete. Goodwill and
the covenant not to compete will be amortized over a 7 and 4.5 year period,
respectively. The fair market value of the assets of MMI, net of liabilities,
declined from $16,690 to negative $3,059 between March 31, 1996 and May 31,
1996.
RESULTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
- -----------------------------------------------
During 1996, total revenues increased $905,189 (a 47.4 percent
Page 9
<PAGE>
increase) as compared to 1995. The increase was primarily attributable to the
increased sales volume of the Company's NewTrition Plan, which was introduced in
October 1993, and expansion of the Company's network of its independent
distributors. At June 30, 1996, the Company had 7,852 "active" independent
distributors compared to 5,234 at June 30, 1995. A distributor is considered
to be "active" if he or she has made a product purchase from the Company within
the previous 12 months. During 1996, the Company made aggregate sales under
its NewTrition Plan of $2,587,410 to 4,859 distributors, compared to aggregate
sales in 1995 of $1,617,117 to 3,102 distributors. Promotional material revenue
increased $75,489 (a 149.4 percent increase) to $126,034 in 1996 from $50,545 in
1995. In addition, other revenue increased by $7,050 (a 76.7 percent increase)
from $9,194 in 1995 to $16,244 in 1996, as a result of increased interest income
during 1996.
Total costs and expenses of programs, promotional material and selling during
1996 increased by $688,582 (a 47.8 percent increase) to $2,129,204 from
$1,440,622 during 1995. This increase was attributable to an increase of (i)
$133,357 (a 26.6 percent increase) in costs of programs and (ii) $518,964 (a
57.8 percent increase) in selling expenses, while promotional material expenses
increased $36,261 (a 86.6 percent increase). The costs and expenses of
programs, promotional materials and selling, as a percentage of program sales
revenue, increased from 77.9 percent during 1995 to 79.7 percent during 1996 due
to an increase in selling costs as a percentage of program sale revenue from
48.6 percent to 53.0 percent, offset by a decrease in the costs of programs as a
percentage of program sale revenue from 27.1 percent to 23.7 percent as a result
of price reductions obtained from vendors on the program costs associated with
the Company's NewTrition Plan. The Company achieved a net profit on sales of
promotional materials of $47,882 during 1996 compared to a net profit of $8,654
during 1995 as a result of the Company's curtailed practice of providing
promotional materials at reduced cost during special promotions.
The Company's gross profit on program and promotional material revenues (program
and promotional material revenue less program costs, promotional material costs
and selling expenses) increased $209,557 (a 45.7 percent increase) to $668,080
in 1996 from $458,523 in 1995. The gross profit on program and promotional
material revenues decreased as a percentage of total revenue from 24.0 percent
in 1995 to 23.7 percent in 1996. The decrease in the Company's gross profit
margin on program and promotional material revenues resulted from the
combination of a decrease in program and promotional materials costs as a
percentage of programs and promotional material revenues, offset by an increase
in selling costs and expenses as a percentage of programs and promotional
material revenues.
General and administrative expenses increased $137,016 (a 38.9 percent increase)
to $488,837 during 1996 from $351,821 during 1995. This increase was
attributable to the Company's administrative infra-structure necessary to
support increased levels of sales. The Company expanded its administrative
infra-structure by hiring six
Page 10
<PAGE>
additional employees. Consequently, payroll and employee costs increased by
$131,976 during 1996 as the Company increased its number of employees from ten
to 16. Interest expense during 1996 increased $1,637 (a 13.4 percent increase)
to $13,848 from $12,211 during 1995.
Net income increased $77,954 (a 75.2 percent increase) to $181,639 during 1996
from $103,685 during 1995. Net income as a percentage of total revenue
increased from 5.4 percent during 1995 to 6.5 percent during 1996.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
- -------------------------------------------------
During 1996, total revenues increased $403,512 (a 37.4 percent increase) as
compared to 1995. The increase was primarily attributable to the increased
sales volume of the Company's NewTrition Plan, which was introduced in October
1993, and expansion of the Company's network of its independent distributors.
At June 30, 1996, the Company had 7,852 "active" independent distributors
compared to 5,234 at June 30, 1995. A distributor is considered to be "active"
if he or she has made a product purchase from the Company within the previous 12
months. During 1996, the Company made aggregate sales under its NewTrition Plan
of $1,308,959 to 3,362 distributors, compared to aggregate sales in 1995 of
$719,058 to 1,901 distributors. Promotional material revenue increased $32,955
(a 108.4 percent increase) to $63,350 in 1996 from $30,395 in 1995. In
addition, other revenue increased by $1,789 (a 36.7 percent increase) from
$4,871 in 1995 to $6,660 in 1996, as a result of increased interest income
during 1996.
Total costs and expenses of programs, promotional material and selling during
1996 increased by $291,929 (a 35.8 percent increase) to $1,107,331 from $815,402
during 1995. This increase was attributable to an increase of (i) $22,827 (a
7.4 percent increase) in costs of programs and (ii) $251,812 (a 52.3 percent
increase) in selling expenses, while promotional material expenses increased
$17,290 (a 68.8 percent increase). The costs and expenses of programs,
promotional materials and selling, as a percentage of program sales revenue,
increased from 78.2 percent during 1995 to 78.5 percent during 1996 due to an
increase in selling costs as a percentage of program sale revenue from 46.2
percent to 52.0 percent, offset by a decrease in the costs of programs as a
percentage of program sale revenue from 29.6 percent to 23.5 percent as a result
of price reductions obtained from vendors on the program costs associated with
the Company's NewTrition Plan. The Company achieved a net profit on sales of
promotional materials of $20,943 during 1996 compared to a net profit of $5,278
during 1995 as a result of the Company's curtailed practice of providing
promotional materials at reduced cost during special promotions.
The Company's gross profit on program and promotional material revenues (program
and promotional material revenue less program costs, promotional material costs
and selling expenses) increased
Page 11
<PAGE>
$109,794 (a 42.6 percent increase) to $367,088 in 1996 from $257,294 in 1995.
The gross profit on program and promotional material revenues increased as a
percentage of total revenue from 23.9 percent in 1995 to 24.8 percent in 1996.
The increase in the Company's gross profit margin on program and promotional
material revenues resulted from the combination of a decrease in program and
promotional materials costs as a percentage of programs and promotional material
revenues, offset by an increase in selling costs and expenses as a percentage of
programs and promotional material revenues.
General and administrative expenses increased $81,289 (a 43.7 percent increase)
to $267,324 during 1996 from $186,035 during 1995. This increase was
attributable to the Company's administrative infra-structure necessary to
support increased levels of sales. The Company expanded its administrative
infra-structure by hiring six additional employees. Consequently, payroll and
employee costs increased by $79,238 during 1996 as the Company increased its
number of employees from ten to 16. Interest expense during 1996 decreased
$1,577 (a 19.6 percent decrease) to $6,489 from $8,066 during 1995.
Net income increased $31,871 (a 46.8 percent increase) to $99,935 during 1996
from $68,064 during 1995. Net income as a percentage of total revenue increased
from 6.3 percent during 1995 to 6.7 percent during 1996.
Page 12
<PAGE>
PART II. OTHER INFORMATION
- -------------------------------------------------------------------------------
Item 1. LEGAL PROCEEDINGS
-----------------
None
Item 2. CHANGES IN SECURITIES
---------------------
None
Item 3. DEFAULTS IN SECURITIES
----------------------
None
Item 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------
None
Item 5. OTHER INFORMATION
-----------------
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
EXHIBITS: None.
REPORTS ON FORM 8-K: Yes.
Included in the report was "Item 2. Acquisition or Disposition of
Assets". The Company acquired all of the issued and outstanding
capital stock of Miracle Mountain International, Inc., a Colorado
corporation ("MMI"). Also included was "Item 7. Financial
Statements and Exhibits". The report included the audited financial
statements of MMI for the Year ended December 31, 1995, and the
unaudited financial statements of MMI for the three months ended
March 31, 1996. The report also included pro forma financial
information relating to the acquisition of MMI. The date of the
report was June 20, 1996. A revised Form 8-K/A was filed on
November 12, 1996, containing additional information on the MMI
acquisition.
Page 13
<PAGE>
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.
Date: November 8, 1996 By: /s/ John W. Hail
---------------- ---------------------------------
John Hail
Chief Executive Officer
Date: November 8, 1996 By: /s/ Roger P. Baresel
---------------- ---------------------------------
Roger P. Baresel
Chief Financial Officer
Page 14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 181,799
<SECURITIES> 0
<RECEIVABLES> 38,725
<ALLOWANCES> 25,804
<INVENTORY> 289,561
<CURRENT-ASSETS> 574,389
<PP&E> 498,038
<DEPRECIATION> 311,174
<TOTAL-ASSETS> 1,103,810
<CURRENT-LIABILITIES> 732,980
<BONDS> 92,919
0
0
<COMMON> 1,714
<OTHER-SE> 276,197
<TOTAL-LIABILITY-AND-EQUITY> 1,103,810
<SALES> 2,671,250
<TOTAL-REVENUES> 2,813,528
<CGS> 2,129,204
<TOTAL-COSTS> 2,618,041
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,848
<INCOME-PRETAX> 181,639
<INCOME-TAX> 0
<INCOME-CONTINUING> 181,639
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 181,639
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
