As filed with the United States Securities and Exchange
Commission
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (E)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30 1995
Commission File No. 0-18912
Garcis, U.S. A., Inc.
FORMERLY
THE QUESTEX GROUP, LTD.
(Exact name of registrant as specified in charter)
COLORADO 84-1155352
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5002 South 40 th Street, Suite A
Phoenix, AZ 85040
(Address of Principals Executive Offices) (Zip Code)
602-437-5422
(Registrants Telephone No. including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for at least the past 90 days.
Yes NO X
The number of shares outstanding of each of the registrants classes of
common equity, as of June 30, 1995 are as follows:
Class of Securities Shares
Outstanding Common Stock,
par value $.00001 14,079,056
GARCIS, U.S.A., INC.
(A Development Stage Company)
Financial Statements
For the Nine Months Ended June 30, 1995 and 1994
(Unaudited)
INDEX
Page of Report
Financial Statements
Unaudited Consolidated Balance Sheets:
As of June 30, 1995 and 1994 ......................................... 1
Unaudited Consolidated Statements of Loss and Deficit:
For the three months ended June 30, 1995 and 1994 .................... 2
Unaudited Consolidated Statements of Cash Flow:
For the Three months ended June 30, 1995 and 1994 .................... 3
Unaudited Statement of Changes in Stockholders Equity
For the Three months ended June 30, 1995 and 1994 .................... 4
Managements Discussion and Analysis
of Plan of Operation ................................................. 5
OTHER INFORMATION
Exhibits and Reports on Form 8-K
Unaudited Consolidated Balance Sheets
As of June 30, 1995 and 1994
<TABLE>
Garacis, U.S.A., Inc.
(A Development Stage Company)
Balance Sheet
As at June 30, 1995
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
ASSETS
Current Assets
Accounts Receivable $ - $ 25,000
Inventory 86,862 -
Prepaid expenses (rent) 16,019 -
Advances - 2
-------------- --------------
102,881 25,002
Investment in Shares 1 1,200,000
(note 1)
Investment in Trademarks 2,700,000 -
and Rights (note 2)
Organization Costs 384 284
-------------- --------------
$ 2,803,266 $ 1,225,386
============= ==============
LIABILITIES
Current Liabilities
Due to banks $ 13,463 $ -
Accounts Payables 69,587 12,786
-------------- --------------
83,049 12,786
-------------- --------------
SHAREHOLDERS EQUITY
Common Stock
1000,000,000 Class A
common share $0.00001
par value authorized
Issued and outstanding -
14,079,056 (1994 -7,563,344) 294 213
Paid in Capital in Excess
Of Par Value 5,438,109 3,225,721
-------------- --------------
5,438,403 3,225,934
Deficit Accumulated During
The Development Stage (2,718,186) (2,013,334)
-------------- --------------
Shareholders' Equity 2,720,217 1,212,600
-------------- --------------
$ 2,803,266 $ 1,225,383
</TABLE>
Unaudited Consolidated Statements of Loss and Deficit
For the Three Months Ended June 30, 1995 and 1994
<TABLE>
Garcis, U.S.A., Inc.
(A Development Stage Company)
Statement of Loss and Deficit
For the Nine Months Ended June 30, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Revenue
Sale of Shoes $ (5,087) $ -
Cost of Goods Sold 1,940 -
-------------- ---------
Gross Profit (3,147) Nil
General and Administrative Expenses
Legal and audit fees 61,281 6,460
Consulting Fees - 68,600
Office Facilities and rent 3,682 5,946
Travel and Promotions 21,894 1,622
Promotional Advertising 102,700 -
Bad Debts Expense - 19,000
-------------- ----------
189,557 101,628
-------------- ----------
Operating Loss 186,410 101,628
-------------- ----------
Other (Income) Expense
Common stock previously issued to
settle debt of Tactile Signage, Inc.
returned to Treasury (231,394) -
Loss on disposal of Tactile
Signage, Inc. - 1,040,441
Loss on disposal of Garcis,
U.S.A., Inc. (Wyoming) 601,438 -
Adjustment to purchase of Tactile
Signage, Inc. - 453,461
----------- ------------
370,044 1,493,902
----------- ------------
Loss for the Period 556,454 1,595,530
Deficit - Beginning of the
Period 2,161,732 417,804
----------- ------------
Deficit - End of Period $ 2,718,186 $ 2,013,334
============== ==============
</TABLE>
Unaudited Consolidated Statements of Cash Flow
For the Three Months Ended on June 30, 1995 and 1994
<TABLE>
Garcis, U.S.A.,Inc.
(A Development Stage Company)
Statement of Changes in Financial Position
For the Nine Months Ended June 30,
1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Cash Provided by (Used for)
Operating Activities
Loss for the Period $ (186,410) $ (101,628)
Net Changes in non-cash working
capital items -
Accounts Receivable - 23,214
Inventories (86,862) 126,874
Prepaid expenses (rent) (16,019) -
Accounts Payable (12,034) (195,601)
Unearned Revenue - (376,471)
Notes Payable - (539,454)
Loan Payable - (8,000)
-------------- ------------
(301,325) (1,071,066)
-------------- ------------
Investing Activities
Property, plant and equipment - 326,724
Product development costs - 418,597
Cancellation of Green River Coal Purchase - 11,400,000
Deposits - 6,850
Investment in shares (1) (1,200,000)
Adjustment to purchase of Tactile Signage, Inc. - 736,911
Loss on disposal of Tactile Signage, Inc. - (1,040,441)
Recovery of loss on disposal of Tactile
Signage, Inc. 231,394 -
Loss on disposal of Garcis,
U.S.A.,Inc. (Wyoming) (601,438) -
Purchase of trademarks and rights (2,700,000) -
-------------- --------------
(3,070,045) 10,648,641
-------------- --------------
Financing Activities
Cancellation of common stock issued
For Green River Coal - (11,400,000)
Cancellation of common stock issued
For Shear, Inc. - (418,597)
Cancellation of common stock issued
For Garcis, U.S.A., Inc. (Wyoming) (560,000) -
Issuance of common stock 4,149,301 2,239,633
Net return of common stock to
Treasury re: Tactile Signage, Inc.debt (231,394) -
-------------- -------------
3,357,907 (9,578,964)
-------------- -------------
Decrease in Cash for the Period (13,463) (1,389)
Cash - Beginning of the Period - 1,389
-------------- -------------
Cash - End of the Period $ (13,463) $ Nil
============== =============
</TABLE>
Unaudited Statements of Changes in Stockholders Equity
For the Three Months Ended June 30, 1995 and 1994
<TABLE>
Garcis, U. S. A., Inc.
(A Development Stage Company)
Statement of Stockholders Equity
As at June 30, 1995
(Unaudited)
(Continued)
<CAPTION>
Class A
Common Stock Additional Total
$0.00001 per share Paid in Stockholders
Shares Amount Capital Deficit Equity
<S> <C> <C> <C> <C> <C>
June 30, 1994
Balances brought
forward 7,563,344 $ 213 $3,225,721 $ 2,013,334 $ 1,212,600
July 5, 1994
Shares consolidated
on a one new for
4 old basis 1,890,836 213 3,225,721 (2,013,334) 1,212,600
September 16, 1994
151,500 pre roll back
shares returned to
reverse Safco
purchase (37,900) (2) - - (2)
September 25, 1994
212,857 common Shares
issued to settle debt
of $53,563 212,857 2 54,561 - 54,563
September 28, 1994
400,000 pre roll
back common shares
returned to reverse
Pam American Energy
share purchase (100,000) (4) 1,199,996 -(1,200,000)
Loss for the three
months ended
September 31, 1994 - - - (148,398) (149,398)
------------------------------------------------------------------------
Total -
September 30, 1994 1,965,793 209 2,080,286 (2,161,732) (81,237)
</TABLE>
<TABLE>
Garcis, U. S. A., Inc.
(A Development Stage Company)
Statement of Stockholders Equity
As at June 30, 1995
(Unaudted)
(Continued)
<CAPTION>
Class A
Common Stock Additional Total
$0.00001 per share Paid in Stockholders'
Shares Amount Capital Deficit Equity
<S> <C> <C> <C> <C> <C>
Balance brought
forward 1,965,793 $ 209 $ 2,080,286 $(2,161,732) $ (81,237)
October 7, 1994
300,000 common
shares issued for
legal service of
$45,000 300,000 3 44,997 - 45,000
October 7, 1994
324,368 common
shares issued
to settle debt
of $38,431 324,368 3 38,478 - 38,481
December 10, 1964
474,464 pre roll back
common shares issued
for debt returned
to treasury (118,616) (1) (269,874) - (269,875)
------------------------------------------------------------
2,471,545 214 1,893,887 (2,161,732) (267,631)
-------------------------------------------------------------
December 28, 1994
shares
consolidated
on one for 4
basis 617,886 - - - -
January 2, 1995
issuance of
11,290,003 common
shares to
purchase Carcis
U.S.A., Inc. 11,290,003 110 559,890 - 560,000
April 24, 1995
cancellation of
7,200,000 common
shares issued
for Garcis
U.S.A., Inc. (7,200,000) (109) 559,890 - (559,999)
May 1, 1995
issuance of 5,400,000
common shares at $.50
to Garcis Mexico
for Trademark
and rights 5,400,000 54 2,699,946 - 2,700,000
June 29, 1995
issuance of 1,558,881
commonshares to settle
debt of Garcis U.S.A.
Inc.(Wyoming) 1,558,881 1 - - 1
June 29, 1995
issuance of 2,412,286
common shares to
settle debt of
$844,300 2,412,286 24 844,276 - 844,300
June 30, 1995
operating loss for
the 9 months
ended June 30, 1995 - - - (556,454) (556,454)
--------------------------------------------------------------
Balance -
June 30,1995 14,079,056 $ 254 $5,438,109 $(2,718,186) $2,720,217
================================================================
</TABLE>
Garcis, U.S.A., Inc.
(A Development Stage Company)
Notes to Financial Statements
As at June 30, 1995
1. On April 24, 1995 the Company cancelled 7,200,000
common Class A shares of the 11,290,003 of same issued to
purchase Garcis, U.S.A., Inc. (Wyoming). The Remainder of
the shares so issued were written down to a nominal value of
$1. The Company will deal directly with Garcis Mexico for
the trademark and marketing rights to the Garcis Line of
sports and athletic shoes for North America.
2. On May 1, 1995, the Company issued 5,400,000 common
Class A shares to Garcis Mexico to secure the rights as in
(1) above.
3. On June 29, 1995, the Company issued a total of
3,971,167 common Class A shares to settle certain debts of
Garcis, U.S.A., Inc. (Wyoming) (which it had guaranteed) and
debts of its own, totaling $844,300.
Item 2. Managements Discussion and Analysis or Plan of
Operation.
a. The company and Corporate Relations Group (CRG)
mutually agreed to terminate their agreement dated
July 20, 1995. CGR has agreed to return all of the shares
delivered to them and in the meantime, the company will continue to
look for their replacement. (Termination Letter attached
as Exhibit A)
b. The company has concluded an agreement with Backcourt, Inc.
who, effective September 1995, will replace Select
Financial Corp. as the exclusive distributor for the private
label products. (Agreement attached as Exhibit B)
c. The company has now relocated to a new warehouse and
office located at 5002 South 40th Street, Suite A, Phoenix, Arizona.
Phone number (602) 437-5422.
In addition, the company was able to negotiate out of its
office and warehouse lease located at the Scottsdale
Industrial Park with no future liabilities to the
company. (Attached is a copy of the lease identified as
Exhibit C)
d. The Continental Indoor Soccer League (CISL) has served
the company and other defendants on September, 1995 with a
law suit. The company has now hired legal council to defend
this action.
e. The company, on August 29, 1995, signed a Letter of
Intent with Ibarrey, S.A. of Mexico to purchase their
apparel manufacturing company. (Attached is a copy of the
letter of Intent identified as Exhibit D)
f. Outside corporate counsel, Sergei Klimow, agreed to act
as administrative officer for the company during the
transition period occasioned by the above discussed changes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
A, B, C, and D
(b) Reports on Form 8-K
As filed by the company on October 1, 1993; November
9, 1993 and December 20, 1994, July 5, and as
Amended September 25, 1995 (Attached): and
incorporated by reference hereto.
Signatures
In accordance with the requirements of the Exchange Act, the
Registrant caused this Report on Form 10-QSB to be signed on its behalf by
the undersigned, thereunto duly authorized.
Garacis, U.S.A., Inc.
/s/ Sergei Klimow
By: Sergei Klimow,
V.P. and Corporate Counsel
EXHITBIT A
CRG
Corporate
Relations
Group, Inc.
September 20, 1995
Richard E. Wensel
Garcis U.S.A. Inc
9700 N. 91s t St., Suite B-111
Scottsdale, AX 85258
Re: Lead Generation/Corporate Relations Agreement
Dated July 20, 1995 (Corporate Relations Group, Inc.)
Dear Mr. Wensel:
Please be advised that I am corporate counsel for Corporate
Relations Group, Inc., of
Winter Park` Florida, with who Garcis U.S.A. Inc. entered
into a Lead Generation/Corporate Relations Agreement on July
20, 1995.
Unfortunately, within one month of that date, CRG was
contacted by an SEC attorney, Kevin Edmondson, who demanded
production of all material sent to us by Garcis, as well as
copies of a news release and a MoneyWorld article which we
had printed, previously approved by Garcis U.S.A. Inc.
While Mr. Edmondson would not give us the specifics of the
SEC investigation, he did imply that the materials released
by Corporate Relations Group, Inc. contained inaccuracies
unacceptable to the SEC. I am certain that you can
understand that these allegations were equally disturbing to
CRG since its continued viability as a financial public
relations concern depends on its reputation for conducting
accurate and ethical public relations campaigns.
Please note that paragraphs 1, 2 and 3 of the Lead
Generation/Corporate Relations agreement state that CRG must
rely on and assume the accuracy of the information (provided
by the client). It is further stated that the Client will
agree not to omit any facts necessary, so that statements
made on behalf of the Client are not inaccurate or
misleading, and state that the client covenants and warrants
that any information submitted for dissemination would be
truthful and in compliance with all copyright laws as well
as other applicable laws and regulations.
1802 Lee Road, Suite 301
Winter Park, Florida 32789
(407) 628-5700
(800) 444-4980
Fax: (407) 628-0807
Richard E. Wensel
September 20, 1995
Page two
As the current SEC investigation of Garcis U.S.A. Inc.
raises the appearance of impropriety, please accept this
letter as notice that CRG considers Garcis to be in material
breach of the agreement of July 20, 1995, and that CRG will
no longer honor its commitment to Garcis under said
agreement.
Also, please be advised that CRG will timely return all
shares of stock and/or moneys provided to it by Garcis,
with the exception of those moneys earned by the efforts of
CRGs creative personnel, as well as the cost of publication
and mailing of the Garcis message in the news release and
the October, 1995 issue of MoneyWorld. A detailed statement
will be provided to Garcis for all moneys retained by CRG.
Again, we are sorry that such an unfortunate incident
mandates that the above stated action be taken by CRG.
Should you have any questions or comments concerning this
matter, please do not hesitate to contact me.
Sincerely,
(Signature)
Len Aronoff, Esq.
LA:mbs
EHIBIT B
DISTRIBUTOR AGREEMENT
A. THIS AGREEMENT, hereinafter referred to as "Agreement,"
is dated for reference the 6th day of September, 1995, and
is between:
1. GARCIS U.S.A., INC., a Colorado corporation with an
address at 8340 East Raintree Drive, Suite B-6, Scottsdale,
AZ 85260, hereinafter referred to as "Company."
AND:
2. BACKCOURT INC., an Ohio corporation with an address of
4970 Wagner Ford Road, Dayton, OH 45414, hereinafter
referred to as Distributor.
B. RECITALS:
1. Company is in the business of producing, manufacturing
and marketing private label athletic footwear and apparel.
2. Company in engaged in the manufacture and distribution
of Products," hereafter defined, and Desires to develop the
market for these Products in the 'Territory,' hereafter defined.
Distributor has expertise in the Territory and marketing techniques
therein, and agrees to develop the market for these
Products throughout the Territory subject to the
terms and conditions hereof.
3. Company desires to establish Distributor as the sole
and exclusive distributor for the private label Products in
the Territory upon the terms hereinafter set forth, and
Distributor desires to distribute Products for Company.
NOW, THEREFORE, IN CONSIDERATION OF THE TERMS, CONVENATES,
CONDITIONS,AND MUTUAL PREMISES AND PROMISES
CONTAINED HEREIN, THE PARTIES HERETO AGREE AS
FOLLOWS:
C. INCORPORATION OF RECITALS AND DEFINITIONS:
1. Incorporation of Recitals. The parties hereto
acknowledge the accuracy and correctness of the
recitals set forth above, which are incorporated in this
Agreement.
Company represents and warrants that the statements in
Recital B are true and accurate.
2. Definitions. As used in this Agreement, the following
terms and phrases have the following meanings:
Distributor Agreement
Page 1
2.1 'Contract Year': Any twelve-month period beginning
with the date of this Agreement or any anniversary
of that date which is within the term of this Agreement.
2.2 'Territory': The territory consists of all the
geographic areas in the USA.
2.3 'Products': The products Company will will supply
to Distributor pursuant to this Agreement as specifically
described in the Companys current distributors price list,
attached hereto as Exhibits A and B.
2.4 'Licensed Indicia': Means the names, symbols, designs,
and colors of the Colleges, Universities, publis and/or
private schools, hereinafter all such aforementioned
entities referred to collectively as 'Organizations,'
including without limitation, the trademarks, service marks,
designs, team names, nicknames, abbreviations, city and/or
state names in the appropriate context, slogans,
logographics, mascots, seals and other symbols which have
come to be associated with or refer to the respective
Organizations. Licensed Indicia includes those currently
used and/or displayed on Companys Products and any Licensed
Indicia adopted hereafter and approved for use and/or
display on Company Products by the respective Organizations.
Any such newly adopted Organizations Licensed Indicia shall
be deemed to be additions to Companys Licensed Indicia and
shall be subject to the terms and conditions of this
Agreement and the licensed indicia agreements Company has
entered into with the respective Organization, such
licensed indicia agreements hereinafter referred to as
'Licensed Indicia Agreements.'
D. APPOINTMENT OF DISTRIBUTOR
1. Appointment of Distributor. Subject to Distributor placing an
initial order as Described in Section D, 2.3, Company hereby
appoints Distributor, and Distributor hereby accepts
its appointment by Company as an exclusive (within
the Territory) distributor for the Territory during
the to: (I) serve as Companys exclusive private
label distributor to solicit orders for the
Products; and (ii) develop additional sales and
marketing arrangements with respect to the sales and
distribution of the Products in the Territory (subject
to Company's approval in writing).
2. General Terms of Distributorship. The terms of this
distributorship are set forth in this Agreement . As
a general matter, Distributor shall purchase its requirements
for the Products and Company shall supply to distributor its
requirements for Products at the prices set forth herein.
Distributor Agreement - Page 2
2.1 Distributor shall have the right to place orders with
Company for such quantities as in its discretion it may
require from time to time. Distributor shall maintain
adequate sales, service,inventory and sales representatives
to service the Territory. The Company in consultation with
the Distributor shall determine what constitutes adequate.
2.2 Company will give careful consideration to Distributors
Orders for the purchase of the Products, but all such orders
shall be subject to Company's written acceptance at it
address in its sole and absolute discretion. All accepted
orders, whether or not delivery dates are specified therein,
shall be subject to delays or failures in manufacture or in
delivery due to any cause beyond the reasonable control of
the Company.
2.3 Distributor's appointment is conditioned upon Distributor
placing an initial order as described on Exhibit D and
immediately taking delivery and paying up front $30,003.76 for
1130 pairs of shoes. The Distributor agrees to put forth its
best efforts in order to sell the balance of the Private Label
Athletic Shoes described in Exhibit C.
E. PRICES FOR PRODUCTS:
1. Prices. Until changed, Company shall apply Products to Distributor
at the prices set forth in the Company published price list for
distributors. The prices charged by Company to Distributor shall
not exceed the most favorable price charged by Company to any of
its customers, if on the same terms and conditions.
2. Modification of Prices. The price for the products and each of them
shall be initially set forth in the Company's published price list
for distributors and shall be increased or decreased as Company sees
fit. Any such increase and/or decrease shall become effective for
future orders submitted on or after the thirtieth (30 th) day after
notice of such price change. In the event of a material price
increase by Company, Distributor may upon ten (10) days written
notice to Company terminate this Agreement without liability.
3. Shipping and Handling. Company assumed the risk of
loss until the shipment is delivered to the Distributor or
delivery point designated by the Distributor. Title shall
pass upon delivery. All costs of transportation from
Company to distributor shall be borne by the Distributor.
Therefore, Company will bill distributor for cost of
transportation and handling, Distributors costs of
transportation and handling will be due and payable at time
of delivery.
Distributor Agreement-Page 3
F. RESPONSIBILITIES OF DISTRIBUTOR:
1. Minimum Annual Purchases. Distributor agrees to
purchase from Company Certain minimum dollar quantities of
Products at wholesale in the aggregate during each Contract
Year. If Distributor fails to purchase from Company at
least $250,000 worth of Products at wholesale in the
aggregate during each Contract Year, Company may terminate
this Agreement by giving sixty (60) calendar days advance
written notice.
2. Licensed Indicia Ownership and Compliance. Distributor
acknowledges and agrees herein Licensed Indicia of the
respective Organizations are of great value of the good will
of the respective Organizations, and that such Licensed
Indicia have secondary meaning associated with each.
Further, Distributor agrees it is the responsibility of
Distributor to comply fully with all terms and conditions of
solicitation, marketing, display, advertising, distribution
and/or any other conditions and/or limitations as set forth
by each of the respective Organizations in Licensed Indicia
Agreements with Company.
3. Sales Effort and Representatives. Distributor shall
use its reasonable efforts to solicit and procure orders for
Products within the Territory during the term of this Agreement,
Distributor will use its best efforts to maintain sufficient sales
representation to properly service its Territory.
4. Pay Costs. Distributor will pay the entirety of its
own costs, expenses, and taxes in effectuating Distributor's
obligations under this Agreement.
5. Marketing Information. Distributor will provide to
Company at least quarterly, and at other times as may be
reasonably requested by Company, information concerning the
sale by Distributor of the Products and such information as
Distributor may obtain in the ordinary course of its
business regarding the sales of products that compete with
the Company Products.
6. Copyrights. Company licenses Distributor to use its
copyrights during the term. Distributor agrees to use the
copy rights correctly and to include in all packaging and
advertising copy the proper notification of the copyrights
of Company.
7. Distributor Advertising. Distributor agrees to devote
a sufficient amount of its advertising resources to the
promotion of Products to create a market demand sufficient
to enable Distributor to purchase amounts of Products in
excess of the minimum purchase requirements set forth in
Section F, 1. Distributor is responsible for the content of
all such advertising and agrees to indemnify Company and
hold it harmless of and from any and all liability, claims,
or damages arising form the content of that advertising,
unless based upon a claim or warranty made by company to
Distributor or a third party regarding the Products, or
based on advertising provided by Company.
Distributor Agreement - Page 4
8. Placing of Orders. Orders by Distributor for Products
shall be placed on a Company order form or other form
approved by Company. A request for quotation by
Distributor or a written quotation from the Company is not
an order, Company will inform Distributor of the estimated
date of shipment for each order.
9. Product Improvements. Distributor shall advise Company
of any improvement on Products of the Company that are made
by Distributor or its employees to the Products and all such
improvements shall belong to and be the property of Company.
10. Marketing Cooperation. Distributor shall cooperate
with Company in fulfilling any requirements of law regarding
the marketing of Products.
G. RESPONSIBILITIES OF COMPANY:
1. Shipment Responsibilities. Company shall ship, or
case to be shipped, orders placed by Distributor
in a timely manner and in accordance with
reasonable instructions provided by Distributor.
2. Product Warranty. Company warrants that the
quality of the Products supplied to Distributor
will be comparable to the samples previously
furnished and sold to the Distributor and that the
Products sold pursuant to this Agreement will be
free from defects in material and workmanship for
thirty (30) days from date of sale by Distributor
to Distributors customer. All claims that
Product(s) delivered to Distributor or its
customers under this Agreement do not comply with
the warranties set forth in this paragraph must be
made in writing within a reasonable time after
receipt of the Product(s), and specify the amount
and type of Product(s) affected. Company shall
replace the defective Product(s) as Company shall
choose, within a reasonable time after receipt of
the defective Product(s) by the Company.
2.1 DISCLAIMER: THE WARRANTIED SET FORTH HEREIN ARE IN LIEU
OF ANY AND ALL OTHER WARRANTIES EXPRESSED OR IMPLIED,
INCLUDING THE WARRANTY OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. DISTRIBUTOR ACKNOWLEDGES THAT NO OTHER
REPRESENTATIONS WERE MADE OR RELIED UPON BY IT WITH RESPECT
TO THE QUALITY AND FUNCTION OF THE FOODS SOLD PURSUANT TO
THIS AGREEMENT,COMPANY SHALL NOT BE LIABLE FOR NORMAL
MANUFACTURING VARIATIONS FROM SPECIFICATIONS. THIS WARRANTY
SHALL NOT APPLY TO ANY PRODUCT WHICH
Distributor Agreement - Page 5
SHALL HAVE BEEN REPAIRED, OR ALTERED OUTSIDE OF
COMPANYS FACTORY IN ANY WAY SO AS, IN PERFORMANCE
NO WHICH HAS BEEN SUBJECTED TO MISUSE, NEGLIGENCE,
OR ACCIDENT.
3. Cooperation Between Parties or Marketing
Information: Each party agrees to cooperate with
each other by supplying the other with information
regarding customers, marketing representative, and
marketing techniques.
4. Product Improvements: Company shall advise
Distributor of any improvements on Products of the
Company that are made by Company to the Products
and all such improvements shall belong to and be
the property of Company
5. Marketing Cooperation: Company shall cooperate
with Distributor in fulfilling any requirements of
law regarding the marketing of Products.
H. DURATION OF AGREEMENT AND TERMINATION:
1 Term and Renewal: The term of the Agreement shall
be two (2) years from the date as of which it is
made, unless it is sooner terminated pursuant to
the provisions of Section E2, or extended (which
extension will be part of the term). This
Agreement shall automatically renew annually,
after expiration of the initial two-year term, for
additional one-year periods, unless terminated for
cause as provided in Section H, 2, and Company or
Distributor shall give written notice of
nonrenewal for cause at least sixty (60) days in
advance of the expiration of the term hereof.
2. Termination for Cause: This Agreement shall
terminate during any term or period hereof with or
without any notice upon the happening of any of
the following events:
2.1 Distributors orders being less in any
contract year than the minimum amount set
forth in Section F,1, and upon sixty (60) day
written notice by Company Distributor fails
to purchase additional Products sufficient in
quantity to meet the minimum amount in
aggregate as set forth in Section F,1.
2.2 Either party going into bankruptcy, making an
assignment for the benefit of creditors, or
being adjudicated insolvent.
2.3 An attempted assignment by Distributor or its
rights under this Agreement without the
express and precious written consent of
Company.
Distributor Agreement - Page 6
2.4 Distributors manufacturing for itself any of
the Products that it is to purchase from
Company pursuant to this Agreement, except if
expressly permitted herein or in writing.
2.5 Either partys defaulting in any other of
its obligations pursuant to this Agreement
and not curing the default within thirty (30)
calendar days after being advised in writing
of the nature of the default
3. Obligations on Termination: All indebtedness of
Distributor to Company for Products sent or in transit to
Distributor or its customers. Company shall have the
obligation to repurchase all Products or any portion of the
Products sold to Distributor and not resold by Distributor
as of the termination of this Agreement.
I. RELATIONSHIP BETWEEN PARTIES:
IT IS AGREED BY BOTH PARTIES OF THIS AGREEMENT THAT THE
FOLLOWING SHALL CHARACTERIZE THEIR RELATIONSHIP UNDER
THIS AGREEMENT:
1. Legal Relationship. Nothing contained in this
Agreement shall in any manner whatsoever constitute either
party to be the partner, agent or legal representative of
the other party, nor create any fiduciary relationship
between them for any purpose whatsoever.
2. Authority To Act. Neither party shall have any
authority to act for or to assume or incur any obligations
or responsibilities on behalf of the other party except as
may be, from time to time, agreed upon in writing between
the parties or as otherwise expressly provided.
3. Assignability. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective assigns, legal representatives, executors, heirs
and successors, provided, however, that no party hereto
shall have the right to assign any right hereunder or to
delegate any obligation hereunder, in whole or in part,
without the prior written consent of the other parties
hereto, and any attempt to do so shall be voided, provided,
however, that if a party has complied fully with terms and
conditions of this Agreements, that party may assign or
transfer its rights hereunder, however, such assignee or
transferees shall be subject to the terms and conditions
hereof.
4. Terminology. All captions, heading, or titles in the
paragraphs or sections of this Agreement are inserted for
convenience of reference only and shall not constitute a
part of this Agreement or a limitation of the scope of the
particular paragraph or section to which they apply. All
personal pronouns used in this Agreement,
Distributor Agreement - Page 7
whether used in the masculine, feminine, or neuter gender,
shall, where appropriate, include all other genders and
the singular shall include the plural and vice versa.
5. Counterparts. This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed to
be an original as against any party whose signature appears
thereon, and all of which together shall constitute one and
the same agreement. This Agreement shall become binding
when one or more counterparts have been signed by each of
the parties hereto and delivered to the other parties
hereto.
6. Construction. The parties acknowledge that each party
was represented by legal counsel, or had the opportunity to
be represented by legal counsel, in connection with this
Agreement and that each of them and their counsel have
reviewed and revised this Agreement, or have had an
opportunity to do so, and that any rule of construction to
the effect that ambiguities are to be resolved against the
drafting party shall not be employed in the interpretations
of this Agreement or any amendments.
7. Amendment, Modification, or Waiver. No amendment, modification,
or waiver of any condition, provision, or term of this Agreement
shall be valid or of any effect unless made in writing, signed by
the party or parties to be bound, and specifying with particularity
the nature and extent of such amendment, modification, or waiver.
Failure on the part of any party in default, irrespective of how
long such failure continues, shall not constitute a waiver by such
party of its rights hereunder. Any waiver by any party of
any default of another party shall not affect or impair any
right arising from any other or subsequent default.
Nothing herein shall limit the remedies and rights of the
parties hereto under and pursuant to this Agreement.
8. Notices. All communications or notices required or
permitted to be given or served under this Agreement shall
be in writing and shall be deemed to have been duly given or
made if: (I) delivered in person or by courier (e.g. Federal
Express), (ii)deposited in the United States mail, postage
prepaid, for mailing by certified or registered mail, return
receipt requested; or (iii) telecopied and addressed to the
intended recipient at the address and/or the telecopy number
set forth below such parties signature at the end of this
Agreement. All communications and notices shall be effective
upon delivery in person or by courier, three (3)days after
being deposited in the United States mail or two (2) hours after
being telecopied, if telecopied during regular business
hours, as the case may be. Any party may change his or her address
and/or telecopy number by giving notice in writing, stating his or
her new address and/or telecopy number, to all the other parties in
the foregoing manner.
9. Severability Provisions; Enforceability. Each provision of
this Agreement is intended to be serverable. If any provision
hereof shall be declared by a court of competent jurisdiction to be
illegal, unenforceable, or invalid for any reason whatsoever, such
illegality, unenforceability or invalidity shall not affect the
validity of the remainder of this Agreement.
Distributor Agreement - Page 8
10. Governing Law. This Agreement shall be deemed to be
made under and for all purposed, to be governed by and
construed in accordance with the laws of the State of
Arizona. Further, it is agreed that if any legal action or
other proceeding is brought for the enforcement of this
Agreement, or other proceeding is brought for the
information of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection
with any of the provisions of this Agreement, the prevailing
party or parties shall be entitled to recover, from the
party or parties involved in such dispute, breach, default
or misrepresentation and not prevailing, reasonable
attorney's fees and other costs incurred in that actions or
proceeding, in addition to any other relief to which they be
entitled.
11. Authority to Sign. Any individual signing below on
behalf of a corporation, partnership, or other entity hereby
personally represents that he or she has full authority to
bind the party or parties on whose behalf he or she is signing.
J. IN WITNESS WHEREOF the parties of this Agreement have set their hand
and executed this document the (7 th) day of (September), 199 (5)
GARCIS U.S.A. INC BACKCOURT. INC.
BY (SIGNATURE FOR GARCIS) BY: (SIGNATURE FOR BACKCOURT)
Distributor Agreement - Page 9
GARCIS
<TABLE>
EXHIBIT A
<CAPTION>
Model Description Wholesale Sugg.
Retail
<S> <C> <C> <C>
2065 High Tech Cross Trainer $ 28.80 $ 79.95
2001-S Safety Shoe Steel Toe $ 26.40 64.95
2001 Safety Shoe $ 25.40 59.95
4042 Women's Kiss Sole $ 24.88 69.95
4040 Women's Tennis $ 21.80 64.95
4501 Women's High Top $ 23.76 69.95
6018 Children's Shoe $ 19.56 59.95
</TABLE>
NOTE: 1. Allow 6-8 weeks for delivery upon receipt of
approved artwork.
2. The above prices are F.O.B. Scottsdale, Arizona
all applicable taxes are extra.
<TABLE>
EXHIBIT B
GARCIS
<CAPTION>
Suggested
Dealer Cost Retail
<S> <C> <C>
Jersey
La Piedad $ 12.95 $ 25.95
Neon $ 12.95 $ 25.95
Prime $ 12.95 $ 25.95
Dixon $ 11.59 $ 22.50
Inter Tijuana $ 11.50 $ 22.50
Europa $ 9.95 $ 19.95
Monaco $ 9.95 $ 19.95
Shorts
Loose $ 9.95 $ 19.95
Pressit $ 9.95 $ 19.95
Astroc $ 9.95 $ 19.95
Cup 94 $ 8.50 $ 16.50
Olympique $ 8.50 $ 16.50
Plain $ 6.95 $ 13.95
Sweats
Moon Jacket $ 18.50 $ 36.50
Access Jacket $ 18.50 $ 36.50
Realistic Jacket $ 18.50 $ 36.50
Pants $ 11.50 $ 22.50
Clasico Jersey $ 10.50 $ 21.00
Clasico Pants $ 9.50 $ 18.50
Socks $ 3.00 $ 6.00
</TABLE>
Note: The above prices are F.O.B. Scottsdale, Arizona all
applicable taxes are extra
<TABLE>
EXHIBIT C
Inventory List
TO: Backcourt, Inc Date: 9/7/95
Wagner Ford Road
Dayton, OH 45414
SHIP TO:
<CAPTION>
ITEM DESCRIPTION/SIZES QUANTITY UNIT TOTAL
PRICE
<S> <C> <C> <C> <C>
4042 Texas 61 24.88 $ 1,517.68
4503 Mercedes Benz 70 24.88 $ 1,741.60
4505 Bowie 96 24.88 $ 2,388.48
4504 Mirage 408 24.88 $10,151.04
4507 Team USA 240 24.88 $ 5,971.20
4508 Westlake 96 24.88 $ 2,388.48
4510 Texas A & M 30 24.88 $ 746.40
4511 Baylor 60 24.88 $ 1,492.80
4514 Mercedes Benz(no embroidery) 69 24.88 $ 1,716.72
4513 Hooter 240 24.88 $ 5,971.20
4517 Southwest 2236 24.88 $55,631.68
Women's Total 3,606 $89,717.28
2551 Mercedes Benz Work 250 25.40 $ 6,350.00
2550 Southwest Work 231 25.40 5,867.40
2517 Southwest Mens 114 28.80 3,283.20
2502 Texas Longhorn 253 28.80 7,286.40
2503 Mercedes Benz Men 32 28.80 921.60
2504 Mirage Men 203 28.80 5,846.40
2505 Bowie 23 28.80 662.40
2507 Team USA 80 28.80 2,304.00
2508 West Lake 18 28.80 518.40
2510 Texas A & M 239 28.80 6,883.20
2511 Baylor 125 28.80 3,600.00
2513 Hooters 69 28.80 1,987.20
2514 Mercedes Benz(w/o embroidery) 100 28.80 2,880.00
Men's Total 1737 $48,390.20
GRAND TOTAL 5343
$138,107.48
</TABLE>
<TABLE>
Exhibit D
Items to be delivered at time of signing agreement.
<CAPTION>
Model Pairs Description Price Total
<S> <C> <C> <C> <C>
20065 452 High Tech Cross Trainer 28.80 $13,017.60
2001 226 Safety Shoe 25.50 $ 5,740.40
4042 452 Women's Kiss Sole 24.88 $11,245.75
TOTAL 1130 $30,003.76
</TABLE>
ADDENDUM TO LEASE
ADDENDUM A TO LEASE
This shall be ADDENDUM "A" TO THAT CERTAIN Lease Agreement
dated the 12 t h day of May, 1995, by and between Northeast
8, L.L.C. an Arizona Limited Liability Company, herein after
referred to as Lessor, and Garcis USA Inc. hereinafter
referred to as Lessee. In the event of any conflict between
the terms and conditions of the Lease and this Addendum, the
provisions of this Addendum shall control.
49. Term: This Lease shall be for three (3) years
commencing November 1, 1995 or issuance of a certificate of
occupancy by the City of Scottsdale. The rental rate for
the term of the Lease shall be as follows:
Months 1-12 $0.68 per square foot per month plus
common area maintenance charges and
applicable sales taxes.
Months 13-24 $0.70 per square foot per Month plus
common area maintenance Charges and
applicable sales taxes.
Months 25-36 $0.72 per square foot per month
Plus common area maintenance charges
And applicable sales taxes.
50. This lease shall be voidable by Lessee if the
Landlord cannot deliver the property for occupancy as
evidenced by a certificate of occupancy issued by the
City of Scottsdale within two hundred and ten (210)
days from the Issuance of a building permit by the
City of Scottsdale.
51. In no event shall tenant improvement costs exceed
fifty thousand ($50,000.00) dollars. Tenant improvements
costs shall generally be defined as carpet, base, partition
walls, window coverings, restrooms, paint, electrical
outlets, lighting and air conditions or evaporative cooling.
See Exhibit 'A' attached.
52. This lease is conditioned upon close of escrow by the
Lessor of Lot 9 Scottsdale Industrial Park.
53. Lessor to provide Lessee option to purchase completed
industrial building described herein for twelve (12) months
from issuance of the City of Scottsdale building permit.
Should Lessee exercise this option, the buyer will take
title in the name of Chase Investment Inc. Purchase price
would be seven hundred thousand dollars ($700,000.00) on a
full cash sale or upon other terms and conditions acceptable
to Seller.
54. Lease commission for the full cash value of the three
year lease at 6 percent (6%) commission is fifteen thousand,
two hundred and ninety-nine dollars ($15,299.00) to be
shared equally by Omni Management Group, Inc., who
represents Lessor and Cuellar Realty Services, Inc., who
represents Lessee. Should Lessee elect to purchase subject
property described as Lot 9, Scottsdale Industrial Park,
then Lessor agrees to pay six percent (6%) commission based
on the total sales price in case at close of escrow and
shared equally, less any unmentioned portion of lease
commission already paid to Omni Management Group, Inc. and
Cuellar Realty Services, Inc. The sales commission referred
to herein shall apply through the 'Option to Purchase
Period' only.
EXECUTED as of the date first above written:
LESSOR: LESSEE:
Northeast 8, LLC Garcis USA, Inc.,
An Arizona Limited Liability Company A Colorado
Corporation
(Signatures) (Signatures)
Dated: 5-24-95
EXHIBIT D
LETTER OF INTENT
It is the desire and mutual interest of the
parties herein, Garcis U.S.A., Inc., (Garcis) and Ibarrey,
S.A., (Ibarrey) to enter into an agreement (the Agreement)
according to the terms and conditions contained herein.
Garcis desires to purchase one hundred per cent (100%) of
the outstanding shares in Ibarrey and Ibarrey desires to be
a fifty percent (50%) shareholder in Garcis. To accomplish
the mutual goals of this agreement Garcis shall:
Pay the sum of $4,500,000 to Ibarrey for one hundred percent
(100%) of the outstanding stock. The purchase price and
allocation of the purchase price shall be as follows:
$2,000,000, without interest, to be allocated for real
estate, equipment, fixtures, inventory, and accounts
receivable. Said sum to be paid in monthly installments.
The amount of the monthl installment shall be fifty percent
(50%) of the gross profit of uniform sales in the United
States and Canada (minus freight and duty), with the unpaid
balance due and payable sity (60) months from execution of
the final Agreement;
$2,500,000, approximately, to be allocated for trademarks
and goodwill, and paid by transferring approximately
13,000,000 shares of Garcis or fifty percent (50%) of the
outstanding stock to Ibarrey.
Ibarrey shall provide to Garcis its latest financial
statements and appraisal of assets. If such appraisal is
less than $2,000,000, then the cash payment due Ibarrey
shall be reduced by the amount of shortfall reflected in the
appraisal.
Garcis shall execute an order for $90,000 of merchandise
from Ibarrey upon execution of the final Agreement.
This Agreement is subject to the approval of the Board of
Directors of Garcis.
Dated August 29, 1995
GARCIS
(signature)
by Maxe Zendejas, President
IBARREY
(signature)
by Jose Ibarrea De La Paz, President
EXHIBIT - 8K SUPPLEMENT
KLIMOW 8711 E Pinnacle Peak Road
No.171
And Scottsdale, Arizona USA 85255
Associates, P.A.
Tel. (602) 585-1773 FAX (602)
585-4707
September 25, 1995
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Filing Des, Stop 1-4
Re: Garcis U.S.A., Inc.
Commission File No. 0-18912
Gentlemen:
The form 8-K filed July 5, 1995 is supplemented by the
following information offered as:
(1) Richard Wessel, CEO and Chairman of the Board should be
referred to as having attended Arizona State Collage (now
Arizona State University), Tempe, Arizona.
(2) Max Zendejas, President, should be referred to as
having attended the University of Arizona, Tucson, Arizona.
(3) Robert Palm, should have been included as a person
known by the company who owns or beneficially controls other
entities with more than five percent of the total issued and
outstanding stock having at the time of filing 6.7% of said
stock.
Sincerely,
(signature)
Sergei N. Klimow
Attorney for Garcis U.S.A., Inc.
