EDGARLINK EXECUTED
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 (Zip Code)
(Address of Principal's Executive Offices)
602-437-5422
(Registrant's 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 registrant's 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
Unaduited 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 Stockholder's Equity
For the Three months ended June 30, 1995 and 1994 ................ 4
Management's Discussion and Analysis of Plan of Operation ........... 5
Unaudited Consolidated Balance Sheets
As of June 30, 1995 and 1994
Garacis, U.S.A., Inc.
(A Development Stage Company)
Balance Sheet
As at June 30, 1995
(Unaudited)
1995
1994
Assets
Current Assets
Accounts Receivable
$ -
$ 25,000
Inventory
86,862
- -
Prepaid expenses (rent)
16,019
- -
Advances
- -
2
- --------------------------------
- ---------------------------------
102,881
25,002
Investment in Shares (note 1)
1
1,200,000
Investment in Trademarks and Rights (note 2)
2,700,000
- -
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
- --------------------------------
- ---------------------------------
Sharesholders' 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
=================
================
Unaudited Consolidated Statements of Loss and Deficit
For the Three Months Ended June 30, 1995 and 1994
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)
1995
1994
Revenue
Sale of Shoes
$ (5,087)
$ -
Cost of Shoes
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
================
================
Unaudited Consolidated Statements of Cash Flow
For the Three Months Ended on June 30, 1995 and 1994
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)
1995
1994
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 issed 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 Peiord
(13,463)
(1,389)
Cash - Beginning of the Period
- -
1,389
- ---------------------------------
- ---------------------------------
Cash - End of the Period
$ (13,463)
$ Nil
===================
===================
Unaudited Statements of Changes in Stockholders' Equity
For the Three Months Ended June 30, 1995 and 1994
Garcis, U. S. A., Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
As at June 30, 1995
(Unaudted)
(Continued)
Garcis, U. S. A., Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
As at June 30, 1995
(Unaudted)
(Continued)
Shares
Amount
capital
Deficit
equity
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
Decembr 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
617,886
- -
- -
- -
- -
for 4 basis
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
Meico for Trademark and rights
5,400,000
54
2,699,946
2,700,000
June 29, 1995
issuance of 1,558,881 common
shares 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
844,3000
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
===========
==========
===========
============
============
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 issed 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, totalling $844,300.
Item 2. Management's 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 asAmended 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.
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 CRG's 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, herinafter referred to as "Agreement," is dated for
reference the 6 th 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, herinafter 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, andDesires 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 Company's current
distributor's 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 Company's 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 Company's
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 Organizations, 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 asDescribed 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 Company's exclusive private label distrbutor 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 Disributorship. 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 Distributor's 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,
Distributor's costs of transportation and handling will be due and payable
at time of delivery.
Distributor Agreement Page 3
F. RESPONSIBILITIES OF DISTRIBUTOR:
1. Mimimum 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
leaset $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 Distributor's 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
COMPANY'S 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 Distributor's 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 Distributor's 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 party's 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 creat 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 b 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 9
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 Page9
GARCIS
EXHIBIT A
Model
Description
Wholesale
Sugg. Retail
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
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.
EXHIBIT B
GARCIS
Suggested
Dealer Cost
Retail
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
$ 2,100.00
Clasico Pants
$ 9.50
$ 18.50
Socks
$ 3.00
$ 6.00
Note: The above prices are F.O.B. Scottsdale, Arizona - all applicable taxes
are extra
EXHIBIT C
Inventory List
TO: Backcourt, Inc Date: 9/7.95
Wagner Ford Road
Dayton, OH 45414
SHIP TO:
ITEM
DESCRIPTION/SIZES
QUANTIT
Y
UNIT PRICE
TOTAL
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 emboroidery)
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
Exhibit D
Items to be delivered at time of signing agreement.
Model
Pairs
Description
Price
Total
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
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 Araizona 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 monthly 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 sixty (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.
