UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number 0-20770
RESPONSE USA, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware #22-3088639
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
11-H Princess Road, Lawrenceville, New Jersey 08648
(Address of principal executive offices) (Zip code)
(609)896-4500
(Registrant's telephone number, 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 for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No__
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date: 4,141,625 shares of
$.008 par value common stock as of October 31, 1996.
Response USA, Inc. and Subsidiaries
Index
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets for September 30, 1996
and June 30, 1996 1-2
Consolidated Statements of Operations for the Three
Months ended September 30, 1996 and 1995 3
Consolidated Statement of Stockholders' Equity for
September 30, 1996 4
Consolidated Statement of Cash Flows for the Three
Months Ended September 30, 1996 and 1995 5-6
Notes to Consolidated Financial Statements 7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-14
PART II. OTHER INFORMATION 15-16
<TABLE>
Response USA, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
ASSETS
<CAPTION>
September 30, June 30,
------------- -------------
1996 1996
------------- -------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $394,830 $1,926,766
Marketable securities 68,750 100,000
Accounts receivable - Current portion
Trade - Net of allowance for doubtful accounts
of $355,508 and $327,072 respectively 1,825,407 1,360,321
Net investment in sales-type leases 134,748 125,385
Preferred stock subscription receivable 6,525,000
Current portion of note receivable 94,169 101,590
Inventory 808,263 652,551
Prepaid expenses and other current assets 207,159 118,689
------------- -------------
Total current assets 3,533,326 10,910,302
------------- -------------
MONITORING CONTRACT COSTS - Net of accumulated
amortization of $3,384,398 and $2,838,374 respectively 16,675,237 16,950,387
------------- -------------
PROPERTY AND EQUIPMENT - Net of accumulated
depreciation and amortization of $1,955,594 and
$1,862,915 respectively 1,395,869 1,261,007
------------- -------------
OTHER ASSETS
Accounts receivable - Noncurrent portion
Trade 21,348 20,537
Net investment in sales-type leases 317,460 323,817
Notes receivable - Net of current portion 8,884
Deposits 51,710 48,008
Deferred financing costs - Net of accumulated amortization
of $252,929 and $111,945 respectively 1,937,410 3,411,803
------------- -------------
2,327,928 3,813,049
------------- -------------
$23,932,360 $32,934,745
============= =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
1
<TABLE>
Response USA, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
September 30, June 30,
------------- -------------
1996 1996
------------- -------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt
Notes payable $194,803 $194,914
Capitalized lease obligations 78,238 51,064
Accounts payable - Trade 563,740 424,921
Purchase holdbacks - Current portion 464,667 636,493
Accrued expenses and other current liabilities 1,414,419 2,033,701
Deferred revenue - Current portion 1,491,171 1,568,059
------------- -------------
Total current liabilities 4,207,038 4,909,152
------------- -------------
LONG-TERM LIABILITIES - Net of current portion
Long-term debt
Notes payable 8,006,945 12,374,607
Capitalized lease obligations 125,888 31,189
Purchase holdbacks 10,483
Deferred revenue 27,657 23,044
Dividends payable 182,719
Put obligation payable 1,490,403 2,580,338
------------- -------------
9,833,612 15,019,661
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - Par value $1,000
Authorized 250,000 shares
Issued and outstanding 7,500 - June 30, 1996
and 6,990 shares - September 30, 1996 9,366,600 7,500,000
Common stock - Par value $.008
Authorized 12,500,000 shares
Issued and outstanding 3,854,944 shares - June 30, 1996
and 4,063,625 shares - September 30, 1996 32,509 30,840
Additional paid-in capital 19,827,345 19,056,240
Unrealized holding losses on available-for-sale securities (224,593) (193,343)
Accumulated deficit (19,110,151) (13,387,805)
------------- -------------
9,891,710 13,005,932
------------- -------------
$23,932,360 $32,934,745
============= =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
2
<TABLE>
Response USA, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended
September 30,
------------------------------
1996 1995
------------- -------------
<S> <C> <C>
OPERATING REVENUES
Product sales $656,128 $909,054
Services 1,937,828 1,622,528
Finance and rentals 448,411 469,632
------------- -------------
3,042,367 3,001,214
------------- -------------
COST OF REVENUES
Product sales 451,535 533,625
Services and rentals 510,042 273,714
------------- -------------
961,577 807,339
------------- -------------
GROSS PROFIT 2,080,790 2,193,875
------------- -------------
OPERATING EXPENSES
Selling,general and administrative 1,552,967 1,431,463
Depreciation and amortization 662,719 541,631
Interest 481,595 700,375
------------- -------------
2,697,281 2,673,469
------------- -------------
LOSS FROM OPERATIONS (616,491) (479,594)
INTEREST INCOME 7,939 6,795
------------- -------------
LOSS BEFORE EXTRAORDINARY ITEM ($608,552) ($472,799)
EXTRAORDINARY ITEM
Loss on debt extinguishment 2,549,708
------------- -------------
NET LOSS (3,158,260) (472,799)
============= =============
Loss per common share
Loss before extraordinary item ($0.81) ($0.58)
Extraordinary item ($0.65) -
------------- -------------
Net loss ($1.46) ($0.58)
============= =============
Weighted average number of shares outstanding 3,906,851 819,709
============= =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<TABLE>
RESPONSE USA, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
(Unaudited)
<CAPTION>
Preferred Stock Common Stock Unrealized
------------------- -------------------- Additional Holding Loss on
Number of Number of Paid-in Avaliable-For- Accumulated
Shares Amount Shares Amount Capital Sale Securities Deficit Total
------- ----------- ---------- -------- ------------ --------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance - July 1, 1996 7,500 $7,500,000 3,854,944 $30,840 $19,056,240 ($193,343) ($13,387,805) $13,005,932
Net loss for the three months
ended September 30, 1996 (3,158,260) (3,158,260)
Unrealized holding loss on
available-for-sale securities (31,250) (31,250)
Conversion of convertible
subordinated promissory notes 11,110 89 44,843 44,932
Exercise of stock options
and warrants 46,500 372 221,503 221,875
Conversion of preferred stock (510) (683,400) 151,071 1,208 504,759 173,400 (4,033)
Preferred stock deemed dividends (187,486) (187,486)
Discount on convertible
preferred stock 2,550,000 (2,550,000) 0
------- ----------- ---------- -------- ------------ --------------- ------------- ------------
Balance - September 30, 1996 6,990 $9,366,600 4,063,625 $32,509 $19,827,345 ($224,593) ($19,110,151) $9,891,710
======= =========== ========== ======== ============ =============== ============= ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<TABLE>
RESPONSE USA, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
Three Months Ended
September 30,
------------------------------
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net loss ($3,158,259) ($472,799)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization of monitoring contract costs 546,024 388,307
Depreciation and amortization of property and equipment 116,695 99,834
Amortization of deferred financing costs and debt discount 379,389 67,747
Loss on sale of property and equipment 11,319
Issuance of common stock for consulting fees 8,125
(Increase) decrease in accounts receivable
Trade (461,484) (634,397)
Net investment in sales-type leases (3,006) 5,825
Decrease in notes receivable 16,305 22,445
(Increase) decrease in inventory (155,712) 40,248
(Increase) decrease in prepaid expenses and other
current assets 3,868 (43,112)
(Increase) decrease in deposits (3,702) 20,933
Increase in accounts payable - Trade 101,575 223,712
Increase (decrease) in purchase holdbacks (211,309) 334,815
Increase (decrease) in accrued expenses and other
current liabilities 200,477 (134,806)
Increase (decrease) in deferred revenue (46,005) 15,445
------------- -------------
Net cash used in operating activities (2,663,825) (57,678)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment 20,000
Purchase of property and equipment (120,730) (80,523)
Purchase of monitoring contracts (270,874) (2,475,524)
------------- -------------
Net cash used in investing activities (371,604) (2,556,047)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of preferred stock 7,500,000
Costs incurred in connection with the issuance of
preferred stock (1,146,924)
Proceeds from the exercise of stock options and warrants 190,000
Proceeds from private placement 145,000
Proceeds from long-term notes payable 10,750,000 2,792,500
Debt issue costs incurred (691,377) (27,441)
Principal payments on long-term debt
Notes payable (15,076,982) (326,541)
Capitalized lease obligations (21,224) (6,999)
------------- -------------
Net cash provided by financing activities 1,503,493 2,576,519
------------- -------------
NET DECREASE IN CASH ($1,531,936) ($37,206)
CASH - BEGINNING 1,926,766 159,445
------------- -------------
CASH - ENDING $394,830 $122,239
============= =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<TABLE>
Response USA, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
<CAPTION>
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for
Interest $199,857 $637,031
Income taxes $ 0 $ 0
</TABLE>
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
During the three months ended September 30, 1996, convertible subordinated
promissory notes of $50,000 were converted to common stock. The Company
reduced deferred financing costs and additional paid-in capital in the
amount of $5,068 in connection with the conversion of the subordinated
promissory notes.
During the three months ended September 30, 1996, the Company reduced
accrued expenses by $31,875 in connection with the exercise of warrants.
During the three months ended September 30, 1996, the Company reduced the
put obligation payable and the corresponding charge to deferred financing
costs by $1,089,935 (see Note 6).
During the three months ended September 30, 1996, the Company recorded
accretion to the preferred stock account of $2,550,000, with a correspond-
ing charge to accumulated deficit (see Note 7).
During the three months ended September 30, 1996, the Company recorded
a deemed dividend payable of $187,486 in connection with the preferred
stock agreement (see Note 7).
During the three months ended September 30, 1996, $510,000 of preferred
stock and $4,767 in deemed dividends payable were converted to 151,071
shares of common stock. As a result, the Company reduced the accretion
to the preferred stock and reduced accumulated deficit in the amount
of $173,400.
During the three months ended September 30, 1996, capitalized lease
obligations of $143,100 were incurred for the acquisition of property
and equipment.
During the three months ended September 30, 1996, long-term notes payable
of $19,049 were incurred for the purchase of property and equipment.
During the three months ended September 30, 1995, the Company issued
25,000 shares of its common stock, valued at $110,937, in connection with
the purchase of monitoring contracts.
During the three months ended September 30, 1995, the Company issued
2,000 shares of its common stock, valued at $8,125 as payment for con-
sulting services.
During the three months ended September 30, 1995, the Company reduced
monitoring contract costs and the corresponding purchase holdback
liability in the amount of $306,977.
See accompanying Notes to Consolidated Financial Statements.
6
Response USA, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
1. Basis of Presentation
The accompanying interim balance sheet as of September 30, 1996, and the
related statements of operations, stockholders' equity and cash flows have
been prepared by management of the Company and are in conformity with
generally accepted accounting principles.In the opinion of management, all
adjustments, comprising normal recurring accruals necessary for a fair
presentation of the results of the Company's operations, are included.
These financial statements should be read in conjunction with the Company's
annual financial statements.
2. Marketable Securities
The Company's investments in marketable securities have been categorized
as available-for-sale and are stated at fair value. Realized gains and losses,
determined using the specific identification method, are included in opera-
tions; unrealized holding gains and losses are reported as a separate com-
ponent of stockholders' equity.
Marketable securities consist of common stock. At September 30, 1996, the
cost of these securities was $293,343, and gross unrealized losses were
$224,593.
3. Inventory
September 30, June 30,
1996 1996
------------- ----------
(Unaudited)
Raw Materials $ 181,747 $ 145,098
Finished Goods 626,516 507,453
------------- ----------
$ 808,263 $ 652,551
============= ==========
4. Loss Per Common Share
For the three month periods ended September 30, 1996 and 1995, loss per
common share is based solely on the weighted average number of common shares
outstanding, because the effect of common stock equivalents and other
securities is antidilutive. The net loss, for 1996, was adjusted for accretion
and deemed dividends on the preferred stock (see Note 7) in the computation
of the loss per common share.
5. Purchase Holdbacks
The Company records purchase holdbacks, in connection with its acquisitions
of monitoring contracts, as a liability for delinquent accounts and for
future cancellations within an agreed upon time period. Monitoring contract
costs and the corresponding purchase holdback liabilities are reduced for
delinquent accounts and future cancellations as specified in each agreement.
6. Long-Term Notes Payable
Equipment Financing
Payable in monthly installments aggregating $5,986
including interest at rates ranging from 6.95% to
11.83%; final payments due January, 1997 through
December, 1999; collateralized by related equipment $ 97,685
7
Response USA, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
6. Long-Term Notes Payable (continued)
Reorganization Debt
As part of the 1990 plan of reorganization of a 1987
bankruptcy, the U.S. Bankruptcy Court approved a 30.5%
settlement on the total unsecured claims submitted;
payments are due March 1 of every year, as follows:
3.5% ($101,286)-1997, and 3% ($86,817) each year-1998
through 2000; interest imputed at 14%; net of imputed
interest of $94,995 266,742
Federal priority tax claims payable in annual
installments of $2,211 through March, 1999, and
$1,896 thereafter 12,321
Convertible Subordinated Promissory Notes
5% convertible subordinated promissory notes due
November 30, 1996 75,000
Line of Credit Agreement
Note payable with interest only due through June 30,
2000 at prime plus 1-3/4% on the outstanding loan
balance; a commitment fee of .5% is payable on the
average daily unused credit; collateralized by all
assets of the Company 7,750,000
__________
8,201,748
Less Current Portion 194,803
----------
$ 8,006,945
==========
On June 30, 1996, the Company entered into a four-year $15,000,000 revolving
bank line of credit agreement. Loans outstanding bear interest at prime plus
1-3/4%, are collateralized by all assets of the Company, and are subject to
certain restrictive covenants. The agreement also provides for a commitment
fee, payable monthly in arrears, of .5% based on the average daily unused
credit.
In connection with the line of credit agreement, the Company issued warrants
to an affiliate of the bank to purchase 1,032,135 shares of the Company's
common stock at an exercise price of $3.25. The warrants expire June 30, 2006.
Under the terms of the agreement, the Company may be required to purchase the
warrants (put obligation) upon 10 days' notice, at a price equal to the excess
of the market price on the delivery date over the exercise price ($3.25). At
June 30, 1996, the value of the warrants were estimated at $5.75 per share of
common stock based upon a discounted market value of the average price of the
Company's common stock, resulting in a put obligation payable of $2,580,338,
with a corresponding charge to deferred financing costs. At september 30, 1996,
the value of the warrants were estimated at $4.694 per share of common stock.
As a result, the Company reduced the put obligation payable and the correspond-
ing deferred financing costs by $1,089,935.
Deferred financing costs associated with this agreement are being amortized
using the effective interest method over the four-year term of the agreement.
With the proceeds received from the issuance of preferred stock (see Note 7)
and a $10,500,000 advance on July 1, 1996, from the line of credit, the Company
paid off notes payable with balances aggregating $12,072,668 at June 30, 1996
plus a prepayment penalty. The prepayment penalty of $2,415,877 and unamortized
deferred financing costs of $133,831 associated with the notes paid have been
recorded as an extraordinary item during the quarter ended September 30, 1996.
8
Response USA, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
7. Preferred Stock
On July 2, 1996 the Company issued 7,500 shares of 1996 Series-A Convertible
Preferred Stock with a par value of $1,000 per share.(The Company recorded a
preferred stock subscription receivable of $6,525,000 at June 30, 1996; which
was received on July 2, 1996). The holders of the preferred stock are not
entitled to receive dividends and have no voting rights. The preferred shares
are convertible into a number of common shares determined by using a formula
of "the premium plus $1,000, divided by the conversion price." The premium as
defined equates to an annual 10% deemed dividend and the conversion price is
equal to the lesser of $5.00 or 80% of the average closing bid price of the
Company's common stock for the five days immediately preceding the date of
conversion. Up to 50% of the preferred stock may be converted beginning 45 days
after closing and the balance may be converted beginning 70 days after closing.
After June 1, 1999, the Company may require conversion.
The Company, during the quarter ending September 30, 1996, recorded accretion
to the preferredstock account of $2,550,000, representing the difference be-
tween the value of common stock into which the preferred stock is convertible
and the issue price of the preferred stock on June30, 1996, up to eligibility
for conversion of the preferred stock, as described above, with a corresponding
increase in accumulated deficit.
The Company, for the three months ended September 30, 1996, recorded a deemed
dividend of $187,486.
During the months August 1996 and September 1996, 510 shares of Series-A
Convertible Preferred Stock, with a value of $510,000, and $4,767 in deemed
dividends payable were converted to 151,071 shares of common stock. As a
result, the Company reduced the accretion to the preferred stock and reduced
accumulated deficit in the amount of $173,400.
On September 30,1996, the Company suspended conversion of its 1996 Series-A
Convertible Preferred Stock. The Company intends to renegotiate the terms and
conditions of the preferred stock.
8. Common Stock and Additional Paid-in Capital
During the quarter ended September 30, 1996, 11,110 shares of common stock,
with a value of $50,000, were issued in connection with the conversion of 10%
convertible subordinated promissory notes.
During the three months ended September 30, 1996, 46,500 shares of common
stock were issued as aresult of the exercise of warrants and stock options.
The Company recorded common stock of $372 and additional paid-in capital of
$221,503.
9
Response USA, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
8. Common Stock and Additional Paid-in Capital (continued)
The following is a summary of warrant activity:
Number of Exercise Price
Shares Per Share
----------- ----------------
Warrants outstanding at June 30, 1996 3,114,430 $2.50 - $8.00
Warrants exercised in connection with
10% notes - Class C (30,000) $3.875 - $6.00
Warrants exercised in connection with
12% notes - Class A (14,000) $3.25
------------ ---------------
Warrants outstanding at September 30, 1996 3,070,430 $2.50 - $8.00
============ ===============
9. Commitments and Contingencies
Consulting Agreement
In April, 1996, the Company entered into a two-year consulting agreement
commencing October, 1996, which provides for a minimal annual fee of $42,000.
Contingencies
In the normal course of business, the Company is subject to litigation, none
of which is expected to have a material effect on the consolidated financial
position, results of operations or cash flows of the Company.
As part of certain acquisitions, the Company has guaranteed the value of its
common stock at various prices ranging from $3.75 to $17.34 for two-year periods
expiring at various dates through February, 1997. As of September 30, 1996,
the Company's contingent liabilities under these agreements aggregated aprox-
imately $104,100, which may be settled in cash or by the issuance of common
stock; to the extent that settlement is in common stock, the holders are
entitled to piggy-back registration rights and the Company has filed a
registration statement for 94,402 shares of common stock which are expected
to be sufficient to satisfy the Company's obligation.
10
Response USA, Inc. and Subsidiaries
ITEM 2. MANAGEMENT'S DISCUSSION ON AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward looking Information
The Private Securities Litigation Reform Act of 1995 (the "Reform Act")
provides a "safe harbor" for forward-looking statements to encourage companies
to provide prospective information about their companies, so long as those
statements are identified as forward-looking and are accompanied by meaningful
cautionary statements identifying important factors that would cause actual
results to differ materially from those discussed in the statement. The Company
desires to take advantage of the "safe harbor" provisions of the Reform Act.
Except for the historical information contained herein, the matters discussed
in this Form 10QSB quarterly report are forward-looking statements which
involve risks and uncertainties. Although the Company believes that the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will be
achieved. Important factors that could cause actual results to differ materially
from the Company's expectations are disclosed in conjunction with the forward-
looking statements or elsewhere herein.
Liquidity and Capital Resources
On June 30, 1996 through July 3, 1996, the Company completed a complete
restructuring of its long-term debt. The Company obtained a $15.0 million
dollar revolving credit facility from Mellon Bank, N.A. and issued $7.5 million
dollars of its 1996 Series-A Convertible Preferred Stock to institutional and
individual domestic and foreign investors. The proceeds of the financing were
utilized to repay the Company's existing long-term indebtedness and will result
in a substantial decrease of the Company's borrowing costs. as of September 30,
1996, the Company has available on its revolving credit facility the amount of
$7.25 million dollars. The credit facility bears interest at the Prime Rate,
plus 1-3/4 %. The restructuring resulted in an extraordinary charge of
$2,549,708 for the first quarter ended September 30, 1996 for early extinguish-
ment of debt.
The Company's working capital decreased by $6.7 million from $6.0 million to
a working capital deficiency of $.7 million at September 30, 1996. On June 30,
1996, the Company recorded a preferred stock subscription receivable for
$6,525,000, from a Series-A Convertible Preferred Stock subscribed with a par
value of $7,500,000, net of related placement fees of $975,000 paid from the
proceeds at the closing. On July 1, 1996, the Company entered into a four-year
$15 million revolving bank line of credit agreement (see Note 6 of Notes to
the Consolidated Financial Statements). With the proceeds received from the
issuance of preferred stock on July 2, 1996 and $10,500,000 from the revolving
line of credit, the Company paid off notes payable used to finance its growth
through acquisitions, with balances aggregating $12.1 million. The Company
believes its cash flows from operations will be sufficient to fund the Company's
interest payments on its debt and capital expenditures, which are the Company's
principal uses of cash other than the acquisitions of portfolios of subscriber
accounts.
Net cash used in operating activities was $2,663,825. A net loss of
$3,158,259, which included depreciationand amortization of $1,042,108 and
prepayment fees on early extinguishment of debt of $2,549,708, were the primary
reasons for cash used in operating activities. Other significant changes
included changes in accounts receivable, inventory, purchase holdbacks, accounts
payable trade and accrued expenses. At September 30, 1996, accounts receivable
increased by $464,490 from fiscal June 30, 1996. The acquisition of approx-
imately 8,000 subscriber accounts, during the past year, has caused an increase
in monitoring and service revenues billed, and an increase in the sale of
11
Response USA, Inc. and Subsidiaries
Liquidity and Capital Resources (continued)
personal emergency response systems (PERS) to both private label resellers
and home healthcare agencies have resulted in higher accounts receivable. The
provision for doubtful accounts increased to $355,000 at September 30, 1996
from $327,000 for fiscal 1996, reflecting an increase in the Company's average
subscriber base and the Company's willingness to work with subscribers
experiencing credit difficulties in order to maintain long-term subscriber
relationships. The Company believes it has recorded adequate reserves for
allowance for doubtful accounts against all accounts receivable trade. The
increase in inventory of $155,000 is attributable to an increase in future
orders for PERS by both private label resellers and home healthcare agencies.
The increase in accounts payable and accrued expenses totalling $302,000 was
due to both the additional finished goods inventory required to meet future
orders and other operating expenses related to the acquisitions of approxi-
mately 8,000 monitoring contracts. Payments of purchase holdbacks totalled
$211,000 during the quarter ended September 30, 1996.
Net cash used in investing activities for the three months ended
September 30, 1996 was $371,604. The purchase of monitoring contracts during
the three months ended September 30, 1996 accounted for $270,974 of the cash
used in investing activities. Other investing activity included the purchase
of property and equipment of $120,730, which was offset by the proceeds from
the sale of equipment of $20,000.
Net cash provided by financing activities was $1,503,493 for the three month
period ended September 30, 1996. Net proceeds of $6,353,076 were received from
the issuance of Preferred Stock in July 1996. Proceeds from the exercise of
stock options and warrants totalled $190,000. Proceeds received from a $10.75
million advance from the line of credit (see Note 6) less debt issue costs of
$691,377 were used, along with the proceeds from the preferred stock issuance,
to pay off notes payable totalling $12,072,668 and the purchase of monitoring
contracts. Principal payments on long-term debt, excluding notes payable paid
off with the line of credit and preferred stock proceeds, totalled $3,025,538,
were made during the three months ended September 30, 1996.
The Company's wholly-owned subsidiary Systems, filed a petition for reorgani-
zation under Chapter 11 of the Federal Bankruptcy Act in October 1987. Systems'
Plan of Reorganization became effective in February 1990. As of September 30,
1996, deferred payment obligations to such pre-reorganization creditors
totalled $374,058, which is payable in varying installments through the year
2000.
The Company has no material commitments for capital expenditures during the
next twelve months and believes that its current cash and working capital
position and future income from operations will be sufficient to meet its cash
and working capital needs for twelve months.
The Company intends to use borrowings under the revolving bank line of credit
(see Note 6) together with the remaining cash flow from operations to continue
to acquire monitoring contracts. Additional funds beyond those currently
available may be required to continue the acquisition program, and there can
be no assurance that the Company will be able to obtain such financing.
12
Response USA, Inc. and Subsidiaries
Results of Operations
A majority of the Company's revenues are derived from recurring payments for
the monitoring, rental and servicing of both electronic security systems and
PERS, pursuant to contracts with initial terms up to five years. Service
revenues are derived from payments under extended warranty contracts and for
service calls performed on a time and material basis. The remainder of the
Company's revenues are generated from the sale and installation of security
systems and PERS. Monitoring and service revenues are recognized as the service
is provided. Sale and installation revenues are recognized when the required
work is completed. all direct installation costs, which include materials,
labor and installation overhead, and selling and marketing costs are expensed
in the period incurred. Alarm monitoring and rental services generate
significantly higher gross margins than do the other services provided by the
Company.
Operating revenues increased by $41,000 or 1% for the quarter ended Septem-
ber 30, 1996 as compared to the quarter ended September 30, 1995. Product sales
decreased by $253,000 or 28% for the period ended September 30, 1996, as com-
pared to the prior period ended September 30, 1995. The decrease in product
sales was due to the Company's primary strategy to expand through acquisition
of monitoring contracts, as opposed to direct sales of security systems. Sales
of electronic security systems decreased by $295,000 for the three months ended
September 30, 1996 as compared to the same period in the prior year. Revenues
from the sale of personal emergency response systems (PERS) increased by
$42,000 for the quarter ended September 30, 1996, as compared to the same
period ended September 30, 1995. The significant growth in monitoring and
service revenues of $315,000 or 19% for the period ended September 30, 1996,
as compared to the same period ended September 30, 1995, was due to the
acquisition of monitoring contracts and the success of the Company's extended
warranty program. Finance and rental income declined by $22,000 or 5%.
The Company is in the process of developing additional cooperative marketing
programs in which the Company's PERS products are distributed in conjunction
with another vendor's products or utilizing other marketing methods developed
by a co-participant specializing in direct sales to the consumer or home
healthcare agency. The Company currently distributes its PERS through approxi-
mately 3,000 pharmacy departments of national retail chains. The Company will
continue to acquire monitoring customers from other security system companies.
The Company believes the foregoing will result in a substantial increase in
monitoring and service revenues.
The Gross Profit Margin, as a percentage of sales, was 73% and 68% for the
quarter ended September 30, 1995 and 1996, respectively. The decline is pri-
marily attributable to lower gross profit margins recognized on the sale of
personal emergency response systems for the three month period ended Septem-
ber 30, 1996 as compared to the three month period ended September 30, 1995.
Private label sales accounted for 47% and 13% and home healthcare agency sales
accounted for 51% and 81% of PERS sales for the quarter ended September 30, 1996
and 1995, respectively. Therefore, profit margins on sales of PERS decreased
from 41% for the quarter ended September 30, 1995 to 31% for the quarter ended
September 30, 1996, due to significantly lower margins realized on private
label sales as opposed to PERS sales to home healthcare agencies. Gross profit
margins significantly decreased from 32% to 7% on sales of electronic security
systems for the quarter ended September 30, 1995 and 1996, respectively. An
increase in competition, including the advertisement of free security systems,
has resulted in a lower average selling price for the Company's security
systems; therefore increasing the costs of electronic security systems sold.
13
Response USA, Inc. and Subsidiaries
Results of Operations (continued)
Selling, general, and administrative expenses rose to $1.55 million for the
quarter ended September 30, 1996, which represents an increase of $120,000 or
8.4%, over selling, general and administrative expenses, for the quarter ended
September 30, 1995. Selling, general and administrative expenses, as a per-
centage of total operating revenues, increased from 48% to 51% for the period
ended September 30, 1995 and 1996, respectively. Sales and marketing expenses
declined due to the Company's strategy to grow through acquisitions as opposed
to new system installations. An increase in general and administrative expenses
was caused by increases in corporate overhead expenses incurred to support a
larger subscriber base. The percentage increase in selling, general and
administrative expenses of 8.4% was lower than the 14% increase in monitoring,
service, and rental revenues between comparable periods, reflecting efficiencies
realized in the Company's corporate offices. The Company anticipates that its
current level of selling, general and administrative expenses, as a percentage
of sales, will continue to decrease as a result of the Company's operating
revenues increasing substantially due to increases in monitoring and service
revenues.
Amortization and depreciation expenses increased by $121,000 from $542,000
to $663,000 for the three months ended September 30, 1995 and 1996, respec-
tively. This increase in amortization expense is the result of the Company's
purchases of monitoring contracts totalling approximately $8 million during
the fiscal year ended June 30, 1996.
Interest expense decreased by $218,000 or 31% from $700,000 for the quarter
ended September 30, 1995 to $482,000 for the same period ended September 30,
1996. In July 1996, the Company paid off notes payable with balances aggregat-
ing $12,072,688 with proceeds received from the issuance of preferred stock
(see Note 7) and an advance from the line of credit (see Note 5), which
resulted in a substantial decrease of the Company's borrowing costs.
The net loss for the quarter ended September 30, 1996 was $608,552 (excluding
an extraordinary item for early extinguishment of debt of $2,549,708,and
accretion and deemed dividends on the Preferred Stock totalling $2,564,086), or
($.16) per share based on 3,906,851 shares outstanding, as compared to a net
loss of $472,799 or ($.58) per share based on 819,709 shares outstanding. The
loss before extraordinary item of $608,552 includes depreciation and amorti-
zation and interest expense totalling approximately $1.1 million. Earnings
before interest, taxes, depreciation, and amortization (EBITDA), excluding
loss on debt extinguishment, improved by approximately $175,000 to $527,823
for the three months ended September 30, 1996, as compared to the average
quarterly EBITDA for the prior fiscal year ended June 30, 1996.
14
Response USA, Inc. and Subsidiaries
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Computation of loss per common share
(b) Report on Form 8-K - None
15
Response USA, Inc. and Subsidiaries
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Response USA, Inc. February 25, 1997
------------------ -----------------
Registrant
By:/s/Richard M. Brooks
--------------------
Richard M. Brooks
President and Chief Executive and
Financial Officer
Principal Financial Officer
Principal Accounting Officer
By:/s/Ronald A. Feldman
--------------------
Ronald A. Feldman
Chief Operating Officer
Vice President, Secretary
Treasurer
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 395
<SECURITIES> 69
<RECEIVABLES> 2654
<ALLOWANCES> 356
<INVENTORY> 808
<CURRENT-ASSETS> 3533
<PP&E> 3352
<DEPRECIATION> 1956
<TOTAL-ASSETS> 23932
<CURRENT-LIABILITIES> 4207
<BONDS> 0
0
9367
<COMMON> 33
<OTHER-SE> 492
<TOTAL-LIABILITY-AND-EQUITY> 23932
<SALES> 656
<TOTAL-REVENUES> 3042
<CGS> 451
<TOTAL-COSTS> 962
<OTHER-EXPENSES> 2216
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 482
<INCOME-PRETAX> (609)
<INCOME-TAX> 0
<INCOME-CONTINUING> (609)
<DISCONTINUED> 0
<EXTRAORDINARY> (2550)
<CHANGES> 0
<NET-INCOME> (3158)
<EPS-PRIMARY> (1.46)
<EPS-DILUTED> (1.46)
</TABLE>
<TABLE>
RESPONSE USA, INC.
EARNINGS PER SHARE
SEPTEMBER 30, 1996
<CAPTION>
WEIGHTED
TOTAL WEIGHTED TOTAL AVERAGE
DATE DATE EXERCISE DAYS SHARES AVERAGE PROCEEDS PROCEEDS
ISSUED EXPIRE TRANSACTION PRICE O/S ISSUED # SHARES OBTAINABLE OBTAINABLE
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C><C> <C> <C> <C>
OUTSTANDING SHARES:
01-Jul-90 ORIGINAL ISSUANCE 92 37,922 37,922
17-Aug-90 PURCHASE OF SYSTEMS 92 6,656 6,656
13-May-91 ISSUED FOR ASSETS 92 358 358
30-Oct-92 PUBLIC OFFERING 92 80,000 80,000
30-Oct-92 BRIDGE LOAN SHARES ISSUED 92 3,450 3,450
25-Nov-92 OVER-ALLOTMENT ISSUANCE 92 12,000 12,000
30-Jun-93 WARRANTS EXERCISED - GRANTED 2-16-93 0.008 92 5,000 5,000
30-Jun-93 RESTRICTED OPTIONS EXERCISED 0.008 92 1,429 1,429
30-Jun-93 RESTRICTED OPTIONS EXERCISED 0.008 92 136 136
30-Jun-93 RESTRICTED OPTIONS EXERCISED 0.008 92 704 704
30-Jun-93 RESTRICTED OPTIONS EXERCISED 0.008 92 1,250 1,250
30-Jun-93 ADDITIONAL OPTIONS 0.008 92 5,893 5,893
12-May-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 3,572 3,572
17-May-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 6,786 6,786
21-May-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 715 715
25-May-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 1,429 1,429
01-Jun-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 1,072 1,072
02-Jun-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 6,072 6,072
18-Jun-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 5,714 5,714
21-Jun-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 2,143 2,143
23-Jun-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 2,858 2,858
25-Jun-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 1,072 1,072
30-Jun-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 2,143 2,143
06-Jul-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 358 358
09-Jul-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 7,858 7,858
20-Jul-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 1,429 1,429
29-Jul-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 2,858 2,858
04-Aug-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 1,072 1,072
05-Aug-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 358 358
13-Aug-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 1,072 1,072
20-Aug-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 2,143 2,143
25-Aug-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 715 715
07-Sep-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 1,072 1,072
18-Oct-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 2,143 2,143
19-Oct-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 1,429 1,429
28-Oct-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 2,143 2,143
03-Nov-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 2,500 2,500
24-Nov-93 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 1,429 1,429
31-Jan-94 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 715 715
21-Mar-94 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 715 715
29-Mar-94 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 358 358
11-Mar-96 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 14,286 14,286
22-Mar-96 CONVERSION OF CONVERTIBLE NOTES #1/#2 3.50 92 35,715 35,715
27-Mar-96 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 7,143 7,143
09-Apr-96 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 3,572 3,572
09-Apr-96 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 3,572 3,572
26-Apr-96 CONVERSION OF CONVERTIBLE NOTES #1 4.50 92 2,778 2,778
10-Jun-96 CONVERSION OF CONVERTIBLE NOTES #1/#2 1.50 92 67,553 67,553
12-Jun-96 CONVERSION OF CONVERTIBLE NOTES #1 3.50 92 3,571 3,571
14-Jun-96 CONVERSION OF CONVERTIBLE NOTES #1 5.75 92 4,348 4,348
07-Jul-93 PRIVATE PLACEMENT 2.50 92 60,000 60,000
09-Jul-93 PRIVATE PLACEMENT 0.008 92 15,000 15,000
04-Mar-94 PURCHASE UVA/NSF (ORIG) 1.73 92 31,893 31,893
04-Mar-94 PURCHASE UVA/NSF (ORIG) 1.73 92 11,676 11,676
24-Feb-95 PURCHASE UVA/NSF - GUARANTEE 0.375 92 3,126 3,126
24-Feb-95 PURCHASE UVA/NSF - GUARANTEE 0.375 92 7,838 7,838
24-Feb-95 PURCHASE UVA/NSF - GUARANTEE 0.375 92 22,199 22,199
30-Jun-95 PURCHASE UVA/NSF - GUARANTEE 0.40625 92 29,940 29,940
30-Jun-95 PURCHASE UVA/NSF - GUARANTEE 0.40625 92 27,823 27,823
30-Jun-95 PURCHASE UVA/NSF - GUARANTEE 0.40625 92 3,650 3,650
30-Jun-95 PURCHASE UVA/NSF - GUARANTEE 0.40625 92 4,717 4,717
30-Jun-95 PURCHASE UVA/NSF - GUARANTEE 0.40625 92 7,599 7,599
30-Jun-95 PURCHASE UVA/NSF - GUARANTEE 0.40625 92 11,735 11,735
30-Jun-95 PURCHASE UVA/NSF - GUARANTEE 0.40625 92 1,378 1,378
29-Dec-95 PURCHASE UVA/NSF - GUARANTEE (BB) 3.75 92 4,000 4,000
02-Feb-96 PURCHASE UVA/NSF - GUARANTEE 5.00 92 9,177 9,177
02-Feb-96 PURCHASE UVA/NSF - GUARANTEE 5.00 92 9,177 9,177
12-Mar-96 PURCHASE UVA/NSF - GUARANTEE 4.39 92 6,200 6,200
12-Mar-96 PURCHASE UVA/NSF - GUARANTEE 4.39 92 6,100 6,100
12-Mar-96 PURCHASE UVA/NSF - GUARANTEE 4.42 92 4,200 4,200
12-Mar-96 PURCHASE UVA/NSF - GUARANTEE 4.32 92 3,225 3,225
31-May-96 PURCHASE UVA/NSF - GUARANTEE 7.00 92 1,400 1,400
30-Jun-96 PURCHASE UVA/NSF - GUARANTEE 0.008 92 11,500 11,500
30-Nov-95 PURCHASE USS - GUARANTEE (SL) 3.75 92 18,354 18,354
18-Jan-96 PURCHASE USS - GUARANTEE (SL) 4.125 92 23,862 23,862
14-Jul-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 11,000 11,000
21-Jul-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 46,000 46,000
22-Jul-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 16,000 16,000
26-Jul-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 26,000 26,000
02-Aug-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 13,000 13,000
11-Aug-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 10,000 10,000
16-Aug-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 2,000 2,000
18-Aug-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 8,000 8,000
24-Aug-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 16,000 16,000
26-Aug-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 18,000 18,000
06-Sep-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 13,000 13,000
09-Sep-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 2,000 2,000
23-Sep-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 8,000 8,000
04-Oct-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 2,000 2,000
07-Oct-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 2,000 2,000
14-Oct-94 CONVERSION OF CONVERTIBLE NOTES #2 1.25 92 4,000 4,000
09-Apr-96 CONVERSION OF CONVERTIBLE NOTES #2 3.50 92 7,143 7,143
01-May-96 CONVERSION OF CONVERTIBLE NOTES #2 5.00 92 2,500 2,500
02-Aug-94 PURCHASE TOTAL SECURITY ACCOUNTS 1.00 92 7,500 7,500
02-Aug-94 PURCHASE VAULT ACCOUNTS 1.00 92 1,640 1,640
24-Feb-95 PURCHASE VAULT ACCOUNTS 1.00 92 1,860 1,860
01-Nov-94 PURCHASE UNIVERSAL 0.75 92 75,689 75,689
22-Nov-94 PURCHASE ERS 1.00 92 10,000 10,000
22-Nov-94 PURCHASE ERS - McGinn 0.008 92 10,000 10,000
31-May-96 PURCHASE ERS - GUARANTEE (SPIEGELMANS) 7.00 92 6,000 6,000
24-Feb-95 MONITOR ACQUISITION CORP. 0.34375 92 15,000 15,000
12-May-95 PURCHASE ALERT CENTRE - McGinn 0.40625 92 22,500 22,500
12-Jul-95 DELAWARE ACQUISITION - KEYSER 0.40625 92 10,000 10,000
15-Jul-95 WESTERGARD (CONSULTING) 0.40625 92 2,000 2,000
25-Jul-95 DELAWARE ACQUISITION - MCGINN 0.46875 92 15,000 15,000
04-Dec-95 ERS - N/P Pay-off 4.60 92 32,000 32,000
06-Dec-95 EXERCISE CLASS C WARRANTS 3.75 92 10,800 10,800
08-Dec-95 EXERCISE CLASS C WARRANTS 3.75 92 3,000 3,000
14-Dec-95 EXERCISE CLASS C WARRANTS 3.75 92 4,000 4,000
19-Dec-95 EXERCISE CLASS C WARRANTS 3.75 92 2,000 2,000
31-Dec-95 EXERCISE CLASS C WARRANTS 3.75 92 500 500
30-Mar-96 EXERCISE CLASS C WARRANTS (HI-TEL) 3.50 92 17,500 17,500
04-Jun-96 EXERCISE CLASS C WARRANTS 5.625 92 4,000 4,000
10-Jun-96 EXERCISE CLASS C WARRANTS 3.75 92 3,500 3,500
12-Jun-96 EXERCISE CLASS C WARRANTS 5.625 92 5,000 5,000
18-Jun-96 EXERCISE CLASS C WARRANTS 3.75 92 1,000 1,000
20-Jun-96 EXERCISE CLASS C WARRANTS 5.625 92 7,000 7,000
20-Jun-96 EXERCISE CLASS C WARRANTS 5.625 92 10,000 10,000
20-Jun-96 EXERCISE CLASS C WARRANTS 5.825 92 2,000 2,000
20-Jun-96 EXERCISE CLASS C WARRANTS 5.631 92 500 500
25-Jun-96 EXERCISE CLASS C WARRANTS 3.75 92 2,000 2,000
03-Jul-96 EXERCISE CLASS C WARRANTS 5.625 89 5,000 4,837
17-Jul-96 EXERCISE CLASS C WARRANTS 6.00 76 20,000 16,304
17-Jul-96 EXERCISE CLASS C WARRANTS 5.625 76 2,000 1,630
25-Jul-96 EXERCISE CLASS C WARRANTS 5.625 68 1,000 728
25-Jul-96 EXERCISE CLASS C WARRANTS 3.875 68 1,000 728
03-Sep-96 EXERCISE CLASS C WARRANTS 5.625 28 1,000 293
09-Nov-95 CONVERSION OF CONVERTIBLE NOTES #3 0.30 92 75,000 75,000
13-Nov-95 CONVERSION OF CONVERTIBLE NOTES #3 0.275 92 9,091 9,091
16-Nov-95 CONVERSION OF CONVERTIBLE NOTES #3 2.00 92 74,306 74,306
17-Nov-95 CONVERSION OF CONVERTIBLE NOTES #3 2.00 92 75,000 75,000
21-Nov-95 CONVERSION OF CONVERTIBLE NOTES #3 2.25 92 83,339 83,339
21-Nov-95 CONVERSION OF CONVERTIBLE NOTES #3 2.25 92 11,112 11,112
21-Nov-95 CONVERSION OF CONVERTIBLE NOTES #3 2.00 92 12,500 12,500
21-Nov-95 CONVERSION OF CONVERTIBLE NOTES #3 2.25 92 38,891 38,891
30-Apr-96 CONVERSION OF CONVERTIBLE NOTES #3 3.75 92 6,667 6,667
01-May-96 CONVERSION OF CONVERTIBLE NOTES #3 3.75 92 3,334 3,334
18-Jan-96 EXERCISE WARRANT (BOULDER) 3.50 92 25,000 25,000
31-Jan-96 EXERCISE WARRANT (BOULDER) 3.50 92 12,500 12,500
20-Feb-96 EXERCISE WARRANT (BOULDER) 3.50 92 12,500 12,500
23-Feb-96 EXERCISE WARRANT (BOULDER) 3.50 92 62,500 62,500
01-Mar-96 EXERCISE WARRANT (BOULDER) 3.50 92 60,000 60,000
06-Mar-96 EXERCISE WARRANT (BOULDER) 3.50 92 70,000 70,000
21-Mar-96 EXERCISE WARRANT (BOULDER) 3.50 92 25,000 25,000
01-Apr-96 EXERCISE WARRANT (BOULDER) 3.50 92 35,000 35,000
04-Apr-96 EXERCISE WARRANT (BOULDER) 3.50 92 25,000 25,000
11-Apr-96 EXERCISE WARRANT (BOULDER) 3.50 92 75,000 75,000
17-Apr-96 EXERCISE WARRANT (BOULDER) 3.50 92 100,000 100,000
18-Apr-96 EXERCISE WARRANT (BOULDER) 3.50 92 50,000 50,000
26-Apr-96 EXERCISE WARRANT (BOULDER) 3.50 92 75,000 75,000
01-May-96 EXERCISE WARRANT (BOULDER) 3.50 92 100,000 100,000
02-May-96 EXERCISE WARRANT (BOULDER) 3.50 92 100,000 100,000
14-May-96 EXERCISE WARRANT (BOULDER) 2.50 92 100,000 100,000
14-May-96 EXERCISE WARRANT (BOULDER) 3.50 92 2,500 2,500
21-May-96 EXERCISE WARRANT (BOULDER) 2.50 92 125,000 125,000
23-May-96 EXERCISE WARRANT (BOULDER) 2.50 92 70,000 70,000
14-Jun-96 EXERCISE WARRANT (BOULDER) 2.50 92 125,000 125,000
10-Jun-96 R. RUBIN (BOULDER-COMMISSION) 2.50 92 60,000 60,000
02-Feb-96 EXERCISE OPTIONS (J.B.) 3.75 92 2,500 2,500
15-Feb-96 EXERCISE OPTIONS (R.B.) 2.50 92 25,000 25,000
15-Feb-96 EXERCISE OPTIONS (R.F.) 2.50 92 25,000 25,000
17-Jul-96 EXERCISE OPTIONS (S.L.) 3.75 76 2,500 2,038
07-Feb-96 UNIVERSAL BURG & FIRE - HOLDBACK 4.99 92 7,500 7,500
12-Mar-96 ACCURATE - HOLDBACK 4.68 92 7,000 7,000
12-Mar-96 SHELTON - HOLDBACK (IN ESCROW) 0.008 92 50,000 50,000
28-Feb-96 PURCHASE MAC 4.99 92 127,868 127,868
15-May-96 CONVERSION OF CONVERTIBLE NOTES #4 4.50 92 149,998 149,998
16-May-96 CONVERSION OF CONVERTIBLE NOTES #4 4.50 92 52,774 52,774
17-May-96 CONVERSION OF CONVERTIBLE NOTES #4 4.50 92 11,111 11,111
22-May-96 CONVERSION OF CONVERTIBLE NOTES #4 4.50 92 41,663 41,663
31-May-96 CONVERSION OF CONVERTIBLE NOTES #4 4.50 92 5,555 5,555
04-Jun-96 CONVERSION OF CONVERTIBLE NOTES #4 4.50 92 13,887 13,887
10-Jun-96 CONVERSION OF CONVERTIBLE NOTES #4 4.50 92 5,555 5,555
12-Jun-96 CONVERSION OF CONVERTIBLE NOTES #4 4.50 92 30,552 30,552
13-Jun-96 CONVERSION OF CONVERTIBLE NOTES #4 4.50 92 11,111 11,111
20-Jun-96 CONVERSION OF CONVERTIBLE NOTES #4 4.50 92 5,555 5,555
03-Jul-96 CONVERSION OF CONVERTIBLE NOTES #4 4.50 89 11,110 10,748
08-May-96 EXERCISE WARRANTS (Kuzon) 3.50 92 17,500 17,500
17-May-96 EXERCISE WARRANTS 3.75 92 2,000 2,000
22-May-96 EXERCISE WARRANTS 3.75 92 500 500
27-Aug-96 EXERCISE WARRANTS (ECC) - Class A 3.25 35 14,000 5,174 originally belonged to L
04-Jun-96 N/P STOCKHOLDERS (TH/JC) 6.92 92 44,500 44,500
10-Jun-96 N/P STOCKHOLDERS (RR) 2.50 92 84,208 84,208
03-Jun-96 CONVERSION OF CONVERTIBLE NOTES - MCGI 3.26 92 133,436 133,436
30-Jun-96 MCGINN ANTIDILUTIVE SHARES 0.008 92 115,251 115,251
27-Aug-96 Preferred Stock Conversion 4.33 35 4,682 1,730
19-Sep-96 Preferred Stock Conversion 3.739 12 11,768 1,407
19-Sep-96 Preferred Stock Conversion 3.55 12 3,944 472
20-Sep-96 Preferred Stock Conversion 3.37 11 2,077 226
26-Sep-96 Preferred Stock Conversion 3.37 5 106,657 4,637
26-Sep-96 Preferred Stock Conversion 3.19 5 21,943 954
-----------------------
TOTAL OUTSTANDING SHARES 4,063,625 3,906,851
=======================
COMMON STOCK EQUIVALENTS:
30-Aug-90 31-Jan-96 RESTRICTED OPTIONS $2.80 92 7,142 7,142 $19,998 $19,998
30-Aug-90 31-Jan-97 RESTRICTED OPTIONS 2.80 92 7,142 7,142 19,998 $19,998
30-Jun-93 31-Jan-97 RESTRICTED OPTIONS EXERCISED 2.80 92 (14,284) (14,284) (39,995) ($39,995)
31-Jan-91 31-Jan-96 RESTRICTED OPTIONS 7.00 92 21,428 21,428 149,996 $149,996
31-Jan-91 31-Jan-96 RESTRICTED OPTIONS CANCELLED 7.00 92 (20,070) (20,070) (140,490) ($140,490)
30-Jun-93 31-Jan-96 RESTRICTED OPTIONS EXERCISED 7.00 92 (1,358) (1,358) (9,506) ($9,506)
31-Jan-91 31-Jan-96 RESTRICTED OPTIONS (E.E.) 70.00 92 7,142 7,142 499,940 $499,940
31-Jan-91 31-Jan-96 RESTRICTED OPTIONS (E.E.) Reverse 70.00 92 (6,427) (6,427) (449,890) ($449,890)
31-Jan-91 31-Jan-96 RESTRICTED OPTIONS (E.E.) EXPIRED 70.00 92 (715) (715) (50,050) ($50,050)
15-Nov-91 15-Nov-96 RESTRICTED OPTIONS 4.20 92 10,714 10,714 44,999 $44,999
15-Nov-91 15-Nov-96 RESTRICTED OPTIONS CANCELLED 4.20 92 (3,680) (3,680) (15,456) ($15,456)
30-Jun-93 15-Nov-96 RESTRICTED OPTIONS EXERCISED 4.20 92 (7,034) (7,034) (29,543) ($29,543)
02-Jan-92 02-Jan-97 RESTRICTED OPTIONS 3.50 92 12,500 12,500 43,750 $43,750
30-Jun-93 02-Jan-97 RESTRICTED OPTIONS EXERCISED 3.50 92 (12,500) (12,500) (43,750) ($43,750)
02-Jan-92 02-Jan-97 RESTRICTED OPTIONS (S.A.) 3.75 92 3,571 3,571 13,391 $13,391
02-Jan-92 02-Jan-97 RESTRICTED OPTIONS - REVRSE STCK SPLIT 3.75 92 (3,213) (3,213) (12,049) ($12,049)
02-Jan-92 02-Jan-97 RESTRICTED OPTIONS CANCELLED 3.75 92 (358) (358) (1,343) ($1,343)
30-Oct-92 30-Oct-95 RESTRICTED OPTIONS 3.75 92 15,000 15,000 56,250 $56,250
30-Oct-92 30-Oct-95 RESTRICTED OPTIONS - REVERSE 3.75 92 (13,500) (13,500) (50,625) ($50,625)
30-Oct-92 30-Oct-95 RESTRICTED OPTIONS EXPIRED 3.75 92 (1,500) (1,500) (5,625) ($5,625)
30-Oct-92 30-Oct-95 RESTRICTED OPTIONS 52.50 92 5,000 5,000 262,500 $262,500
30-Oct-92 30-Oct-95 RESTRICTED OPTIONS EXPIRED 52.50 92 (5,000) (5,000) (262,500) ($262,500)
16-Feb-94 28-Feb-99 RESTRICTED OPTIONS 3.75 92 15,000 15,000 56,250 $56,250
16-Feb-94 28-Feb-99 RESTRICTED OPTIONS - REVRSE STCK SPLIT 3.75 92 (13,500) (13,500) (50,625) ($50,625)
16-Feb-94 28-Feb-99 RESTRICTED OPTIONS CANCELLED 3.75 92 (1,500) (1,500) (5,624) ($5,625)
15-Nov-95 14-Nov-04 RESTRICTED OPTIONS (SA) 3.875 92 13,358 13,358 51,763 $51,762
15-Nov-95 14-Nov-04 RESTRICTED OPTIONS (MG) 3.875 92 15,000 15,000 58,126 $58,125
02-Jan-92 02-Jan-97 RESTRICTED OPTIONS (Consultants) 35.00 92 83,929 83,929 2,937,515 $2,937,515
02-Jan-92 02-Jan-97 RESTRICTED OPTIONS CANCELLED 35.00 92 (6,250) (6,250) (218,750) ($218,750)
30-Jun-93 02-Jan-97 RESTRICTED OPTIONS EXERCISED 35.00 92 (58,929) (58,929) (2,062,515)($2,062,515)
30-Jun-93 02-Jan-97 RESTRICTED OPTIONS (Consult) Reverse 35.00 92 (16,875) (16,875) (590,625) ($590,625)
30-Jun-93 02-Jan-97 RESTRICTED OPTIONS CANCELLED 35.00 92 (1,250) (1,250) (43,750) ($43,750)
07-Sep-94 07-Sep-04 RESTRICTED OPTIONS (Consultants R.R.) 3.75 92 150,000 150,000 562,500 $562,500
01-Feb-95 01-Feb-05 RESTRICTED OPTIONS (Consultants R.R.) 3.75 92 150,000 150,000 562,500 $562,500
07-Sep-94 07-Sep-04 RESTRICTED OPTIONS CANCELLED 3.75 92 (150,000) (150,000) (562,500) ($562,500)
01-Feb-95 01-Feb-05 RESTRICTED OPTIONS CANCELLED 3.75 92 (150,000) (150,000) (562,500) ($562,500)
15-Nov-95 14-Nov-04 RESTRICTED OPTIONS (Consultants R.R.) 2.50 92 300,000 300,000 750,000 $750,000
01-Aug-95 31-Jul-05 RESTRICTED OPTIONS (Consultants LPI) 4.45 92 41,250 41,250 183,563 $183,563
01-Feb-95 01-Feb-05 RESTRICTED OPTIONS (Director - SL) 3.75 92 25,000 25,000 93,750 $93,750
01-Feb-95 01-Feb-05 RESTRICTED OPTIONS (SL) Reverse Split 3.75 92 (22,500) (22,500) (84,375) ($84,375)
01-Feb-95 01-Feb-05 RESTRICTED OPTIONS (SL) CANCELLED 3.75 92 (2,500) (2,500) (9,375) ($9,375)
01-Feb-95 01-Feb-05 RESTRICTED OPTIONS (Director - JB) 3.75 92 25,000 25,000 93,750 $93,750
01-Feb-95 01-Feb-05 RESTRICTED OPTIONS (JB) Reverse Split 3.75 92 (22,500) (22,500) (84,375) ($84,375)
01-Feb-95 01-Feb-05 RESTRICTED OPTIONS (JB) EXERCISED 3.75 92 (2,500) (2,500) (9,375) ($9,375)
15-Nov-95 14-Nov-04 RESTRICTED OPTIONS (Director - SL) 3.75 92 2,500 2,500 9,375 $9,375
17-Jul-96 14-Nov-04 RESTRICTED OPTIONS (SL) EXERCISED 3.75 17 (2,500) (2,038) (9,375) ($1,732)
28-Aug-92 28-Aug-97 EMPLOYMENT AGREEMENT OPTIONS (R.B.) 3.75 92 133,333 133,333 499,999 $499,999
31-Aug-94 31-Aug-04 EMPLOYMENT AGREEMENT OPTIONS (R.B.) 3.75 92 300,000 300,000 1,125,000 $1,125,000
01-Feb-95 01-Feb-05 EMPLOYMENT AGREEMENT OPTIONS (R.B.) 3.75 92 300,000 300,000 1,125,000 $1,125,000
28-Aug-92 28-Aug-97 EMPLOYMENT OPTIONS (R.B.) CANCELLED 3.75 92 (733,333) (733,333) (2,749,999)($2,749,999)
28-Aug-92 28-Aug-97 EMPLOYMENT AGREEMENT OPTIONS (R.F.) 3.75 92 85,067 85,067 319,001 $319,001
31-Aug-94 31-Aug-04 EMPLOYMENT AGREEMENT OPTIONS (R.F.) 3.75 92 100,000 100,000 375,000 $375,000
01-Feb-95 01-Feb-05 EMPLOYMENT AGREEMENT OPTIONS (R.F.) 3.75 92 100,000 100,000 375,000 $375,000
28-Aug-92 28-Aug-97 EMPLOYMENT OPTIONS (R.F.) CANCELLED 3.75 92 (285,067) (285,067) (1,069,001)($1,069,001)
28-Aug-92 28-Aug-97 EMPLOYMENT AGREEMENT OPTIONS (H.L.) 5.00 92 181,600 181,600 908,000 $908,000
28-Aug-92 28-Aug-97 EMPLOYMENT OPTIONS (H.L.) CANCELLED 5.00 92 (181,600) (181,600) (908,000) ($908,000)
04-Mar-94 31-Mar-99 EMPLOYMENT AGREEMENT OPTIONS (T.H.) 3.75 92 300,000 300,000 1,125,000 $1,125,000
04-Mar-94 31-Mar-99 EMPLOYMENT OPTIONS (T.H.) CANCELLED 3.75 92 (300,000) (300,000) (1,125,000)($1,125,000)
04-Mar-94 31-Mar-99 EMPLOYMENT AGREEMENT OPTIONS (J.C.) 3.75 92 300,000 300,000 1,125,000 $1,125,000
04-Mar-94 31-Mar-99 EMPLOYMENT OPTIONS (J.C.) CANCELLED 3.75 92 (300,000) (300,000) (1,125,000)($1,125,000)
15-Nov-95 14-Nov-04 EMPLOYMENT AGREEMENT OPTIONS (R.B.) 2.50 92 733,333 733,333 1,833,333 $1,833,333
15-Nov-95 14-Nov-04 EMPLOYMENT OPTIONS (R.B.) EXERCISED 2.50 92 (25,000) (25,000) (62,500) ($62,500)
15-Nov-95 14-Nov-04 EMPLOYMENT AGREEMENT OPTIONS (R.F.) 2.50 92 285,067 285,067 712,668 $712,668
15-Nov-95 14-Nov-04 EMPLOYMENT OPTIONS (R.F.) EXERCISED 2.50 92 (25,000) (25,000) (62,500) ($62,500)
15-Nov-95 14-Nov-04 EMPLOYMENT AGREEMENT OPTIONS (T.H.) 2.50 92 300,000 300,000 750,000 $750,000
15-Nov-95 14-Nov-04 EMPLOYMENT AGREEMENT OPTIONS (J.C.) 2.50 92 300,000 300,000 750,000 $750,000
30-Mar-92 NONE BRIDGE LOAN SHARES ISSUABLE 0.008 92 30,000 30,000 240 $240
23-Jun-92 NONE BRIDGE LOAN SHARES ISSUABLE 0.008 92 4,500 4,500 36 $36
30-Oct-92 NONE BRIDGE LOAN SHARES ISSUED 0.008 92 (34,500) (34,500) (276) ($276)
30-Oct-92 30-Oct-95 INCENTIVE OPTIONS (RAS) 5.25 92 30,500 30,500 160,125 $160,125
30-Oct-92 30-Oct-95 INCENTIVE OPTIONS (RAS) EXPIRED 5.25 92 (30,500) (30,500) (160,125) ($160,125)
16-Feb-94 28-Feb-99 INCENTIVE OPTIONS (RAS) 16.25 92 37,000 37,000 601,250 $601,250
16-Feb-94 28-Feb-99 INCENTIVE OPTIONS (RAS) CANCELLED 16.25 92 (18,500) (18,500) (300,625) ($300,625)
16-Feb-94 28-Feb-99 INCENTIVE OPTIONS (RAS) REVERSE SPLIT 16.25 92 (16,650) (16,650) (270,563) ($270,563)
20-Apr-94 30-Apr-99 INCENTIVE OPTIONS (UVS) 12.50 92 35,000 35,000 437,500 $437,500
20-Apr-94 30-Apr-99 INCENTIVE OPTIONS (UVS) CANCELLED 12.50 92 (15,500) (15,500) (193,750) ($193,750)
20-Apr-94 30-Apr-99 INCENTIVE OPTIONS (USS) REVERSE SPLIT 12.50 92 (17,550) (17,550) (219,375) ($219,375)
22-Dec-94 22-Dec-99 INCENTIVE OPTIONS (UVS) 5.00 92 13,000 13,000 65,000 $65,000
22-Dec-94 22-Dec-99 INCENTIVE OPTIONS (UVS) CANCELLED 5.00 92 (8,000) (8,000) (40,000) ($40,000)
22-Dec-94 22-Dec-99 INCENTIVE OPTIONS (USS) REVERSE SPLIT 5.00 92 (4,500) (4,500) (22,500) ($22,500)
27-Nov-95 27-Nov-01 INCENTIVE OPTIONS (USA) 3.875 92 62,750 63,250 63,250 $243,156
30-Oct-92 22-Oct-97 CLASS A WARRANTS - IPO 4.50 92 80,000 80,000 360,000 $360,000
30-Oct-92 22-Oct-97 CLASS B WARRANTS - IPO 5.50 92 80,000 80,000 440,000 $440,000
25-Nov-92 22-Oct-97 CLASS A WARRANTS - OVER ALLOTMENT 4.50 92 12,000 12,000 54,000 $54,000
25-Nov-92 22-Oct-97 CLASS B WARRANTS - OVER ALLOTMENT 5.50 92 12,000 12,000 66,000 $66,000
30-Oct-92 30-Oct-96 CLASS A UNDERWRITER WARRANTS 4.50 92 8,000 8,000 36,000 $36,000
30-Oct-92 22-Oct-97 CLASS A WTS UNDERLYING U/W WTS 4.50 92 8,000 8,000 36,000 $36,000
30-Oct-92 22-Oct-97 CLASS B WTS UNDERLYING U/W WTS 5.50 92 8,000 8,000 44,000 $44,000
25-Nov-92 25-Nov-96 CLASS A UNDERWRITER WARRANTS 4.50 92 1,200 1,200 5,400 $5,400
25-Nov-92 22-Oct-97 CLASS A WTS UNDERLYING U/W WTS 4.50 92 1,200 1,200 5,400 $5,400
25-Nov-92 22-Oct-97 CLASS B WTS UNDERLYING U/W WTS 5.50 92 1,200 1,200 6,600 $6,600
16-Feb-93 NONE WARRANTS 0.008 92 50,000 50,000 400 $400
30-Jun-93 NONE WARRANTS EXERCISED 0.008 92 (50,000) (50,000) (400) ($400)
24-Mar-93 31-Mar-96 CLASS B WARRANTS 5.50 92 17,858 17,858 98,219 $98,219
31-Mar-93 31-Mar-96 CLASS B WARRANTS 5.50 92 19,286 19,286 106,073 $106,073
07-Apr-93 31-Mar-96 CLASS B WARRANTS 5.50 92 14,643 14,643 80,537 $80,537
22-Apr-93 31-Mar-96 CLASS B WARRANTS 5.50 92 17,143 17,143 94,287 $94,287
26-Apr-93 31-Mar-96 CLASS B WARRANTS 5.50 92 2,142 2,142 11,781 $11,781
22-Nov-93 31-Mar-96 CLASS B WARRANTS-PLACEMENT AGENT 5.50 92 7,108 7,108 39,094 $39,094
22-Nov-93 31-Mar-96 CLASS A WARRANTS (ORIG HOLDERS) 4.50 92 14,215 14,215 63,968 $63,968
15-Dec-93 30-Nov-96 CLASS A WARRANTS 4.50 92 133,000 133,000 598,500 $598,500
15-Dec-93 30-Nov-96 CLASS B WARRANTS 5.50 92 133,000 133,000 731,500 $731,500
15-Dec-93 30-Nov-96 CLASS A WARRANTS-PLACEMENT AGENT 4.50 92 13,300 13,300 59,850 $59,850
15-Dec-93 30-Nov-96 CLASS B WARRANTS-PLACEMENT AGENT 5.50 92 13,300 13,300 73,150 $73,150
15-Dec-93 30-Nov-96 CLASS B WARRANTS-PLACEMENT AGENT 5.50 92 2,000 2,000 11,000 $11,000
30-Dec-93 30-Nov-96 CLASS A WARRANTS 4.50 92 71,000 71,000 319,500 $319,500
30-Dec-93 30-Nov-96 CLASS B WARRANTS 5.50 92 71,000 71,000 390,500 $390,500
30-Dec-93 30-Nov-96 CLASS A WARRANTS-PLACEMENT AGENT 4.50 92 7,100 7,100 31,950 $31,950
30-Dec-93 30-Nov-96 CLASS B WARRANTS-PLACEMENT AGENT 5.50 92 7,100 7,100 39,050 $39,050
18-Jan-94 30-Nov-96 CLASS A WARRANTS 4.50 92 11,000 11,000 49,500 $49,500
18-Jan-94 30-Nov-96 CLASS B WARRANTS 5.50 92 11,000 11,000 60,500 $60,500
18-Jan-94 30-Nov-96 CLASS A WARRANTS-PLACEMENT AGENT 4.50 92 1,100 1,100 4,950 $4,950
18-Jan-94 30-Nov-96 CLASS B WARRANTS-PLACEMENT AGENT 5.50 92 1,100 1,100 6,050 $6,050
08-Feb-94 30-Nov-96 CLASS A WARRANTS 4.50 92 3,000 3,000 13,500 $13,500
08-Feb-94 30-Nov-96 CLASS B WARRANTS 5.50 92 3,000 3,000 16,500 $16,500
08-Feb-94 30-Nov-96 CLASS A WARRANTS-PLACEMENT AGENT 4.50 92 300 300 1,350 $1,350
08-Feb-94 30-Nov-96 CLASS B WARRANTS-PLACEMENT AGENT 5.50 92 300 300 1,650 $1,650
10-Mar-95 15-Jan-00 CLASS C WARRANTS - 12% 3.75 92 20,000 20,000 75,000 $75,000
17-Mar-95 15-Jan-00 CLASS C WARRANTS - 12% 3.75 92 10,000 10,000 37,500 $37,500
07-Apr-95 15-Jan-00 CLASS C WARRANTS - 12% 3.75 92 4,500 4,500 16,875 $16,875
21-Apr-95 15-Jan-00 CLASS C WARRANTS - 12% 3.75 92 2,000 2,000 7,500 $7,500
10-Mar-96 15-Jan-00 CLASS C WARRANTS - EXERCISED 12% 3.75 92 (20,000) (20,000) (75,000) ($75,000)
17-Mar-96 15-Jan-00 CLASS C WARRANTS - EXERCISED 12% 3.75 92 (9,300) (9,300) (34,875) ($34,875)
31-Mar-95 15-Jan-00 CLASS C WARRANTS-PLACEMENT AGENTS 3.75 92 20,000 20,000 75,000 $75,000
31-Mar-96 15-Jan-00 CLASS A WARRANTS-PLACEMENT AGENTS 3.25 92 92,000 92,000 299,000 $299,000
27-Aug-96 CLASS A WARRANTS-EXERCISED 3.25 58 (14,000) (5,174) (45,500) ($28,685)
28-Jul-95 30-Jun-97 CLASS C WARRANTS - McGinn 13.8% 3.26 92 6,667 6,667 21,734 $21,734
04-Oct-95 30-Jun-97 CLASS C WARRANTS - McGinn 13.8% 3.26 92 6,667 6,667 21,734 $21,734
01-Dec-95 30-Jun-97 CLASS C WARRANTS - McGinn 13.8% 3.26 92 6,666 6,666 21,731 $21,731
10-Jan-96 31-Dec-97 CLASS C WARRANTS - 10% 5.625 92 27,000 27,000 151,875 $151,875
22-Jan-96 31-Dec-97 CLASS C WARRANTS - 10% 5.625 92 17,000 17,000 95,625 $95,625
31-Jan-96 31-Dec-97 CLASS C WARRANTS - 10% 5.625 92 12,000 12,000 67,500 $67,500
28-Feb-96 31-Dec-97 CLASS C WARRANTS - 10% 5.625 92 5,000 5,000 28,125 $28,125
10-Jan-96 31-Dec-97 CLASS C WARRANTS - EXERCISED 10% 5.625 92 (27,000) (27,000) (151,875) ($151,875)
22-Jan-96 31-Dec-97 CLASS C WARRANTS - EXERCISED 10% 5.625 92 (1,500) (1,500) (8,438) ($8,438)
03-Jul-96 CLASS C WARRANTS - EXERCISED 5.625 3 (5,000) (4,837) (28,125) ($917)
17-Jul-96 CLASS C WARRANTS - EXERCISED 6.00 17 (20,000) (16,304) (120,000) ($22,174)
17-Jul-96 CLASS C WARRANTS - EXERCISED 5.625 17 (2,000) (1,630) (11,250) ($2,079)
25-Jul-96 CLASS C WARRANTS - EXERCISED 5.625 25 (1,000) (728) (5,625) ($1,529)
25-Jul-96 CLASS C WARRANTS - EXERCISED 3.875 25 (1,000) (728) (3,875) ($1,053)
03-Sep-96 CLASS C WARRANTS - EXERCISED 5.625 65 (1,000) (293) (5,625) ($3,974)
30-Jun-96 30-Jun-01 WARRANTS - ECC CONSULTING 5.125 92 200,000 200,000 1,025,000 $1,025,000
30-Jun-96 01-Jul-00 WARRANTS - BWF CONSULTING - MELLON 4.50 92 100,000 100,000 450,000 $450,000
30-Jun-96 30-Jun-01 WARRANTS - ZANNETT CAPITAL - PREFERRED 6.13 92 500,000 500,000 3,065,000 $3,065,000
30-Jun-96 30-Jun-01 WARRANTS - ZANNETT CAPITAL - PREFERRED 8.00 92 250,000 250,000 2,000,000 $2,000,000
30-Jun-96 30-Jun-00 WARRANTS - BWF CONSULTING - PREFERRED 4.50 92 75,000 75,000 337,500 $337,500
30-Jun-96 30-Jun-06 WARRANTS - PUT OPTIONS - MELLON 3.25 92 1,032,135 1,032,135 3,354,439 $3,354,439
--------- --------- --------- ---------
TOTAL COMMON STOCK EQUIVALENTS 5,076,113 5,091,379 $19,723,824 $20,070,960
========= ========= ========= =========
OTHER POTENTIALLY DILUTIVE SECURITIES:
24-Mar-93 31-Mar-96 $625,000 CONVERTIBLE NOTES 7% 3.50 92 178,571 178,571 $624,999 $624,999
31-Mar-93 31-Mar-96 $675,000 CONVERTIBLE NOTES 7% 3.50 92 192,857 192,857 $675,000 $675,000
07-Apr-93 31-Mar-96 $512,500 CONVERTIBLE NOTES 7% 3.50 92 146,429 146,429 $512,502 $512,502
22-Apr-93 31-Mar-96 $600,000 CONVERTIBLE NOTES 7% 3.50 92 171,429 171,429 $600,002 $600,002
26-Apr-93 31-Mar-96 $75,000 CONVERTIBLE NOTES 7% 3.50 92 21,428 21,428 $74,998 $74,998
15-Dec-93 30-Nov-96 $1,662,500 CONVERTIBLE NOTES 5% 1.25 92 1,330,000 1,330,000 $1,662,500 $1,662,500
30-Dec-93 30-Nov-96 $887,500 CONVERTIBLE NOTES 5% 1.25 92 710,000 710,000 $887,500 $887,500
18-Jan-94 30-Nov-96 $137,500 CONVERTIBLE NOTES 5% 1.25 92 110,000 110,000 $137,500 $137,500
08-Feb-94 30-Nov-96 $37,500 CONVERTIBLE NOTES 5% 1.25 92 30,000 30,000 $37,500 $37,500
10-Mar-95 31-Dec-96 $500,000 CONVERTIBLE NOTES 12% 2.50 92 200,000 200,000 $500,000 $500,000
17-Mar-95 31-Dec-96 $250,000 CONVERTIBLE NOTES 12% 2.50 92 100,000 100,000 $250,000 $250,000
07-Apr-95 31-Dec-96 $112,500 CONVERTIBLE NOTES 12% 2.50 92 45,000 45,000 $112,500 $112,500
21-Apr-95 31-Dec-96 $50,000 CONVERTIBLE NOTES 12% 2.50 92 20,000 20,000 $50,000 $50,000
Adjust for Reverse Stock Split/Price 92 (2,394,238)(2,394,238)($4,256,309)($4,256,309)
10-Jan-96 31-Dec-97 $675,000 CONVERTIBLE NOTES 10% 4.50 92 150,000 150,000 $675,000 $675,000
22-Jan-96 31-Dec-97 $425,000 CONVERTIBLE NOTES 10% 4.50 92 94,444 94,444 $425,000 $425,000
31-Jan-96 31-Dec-97 $300,000 CONVERTIBLE NOTES 10% 4.50 92 66,667 66,667 $300,000 $300,000
28-Feb-96 31-Dec-97 $125,000 CONVERTIBLE NOTES 10% 4.50 92 27,778 27,778 $125,000 $125,000
28-Jul-95 30-Jun-97 $145,000 CONVERTIBLE NOTES 13.8% 3.26 92 44,479 44,479 $145,002 $145,002
04-Oct-95 30-Jun-97 $145,000 CONVERTIBLE NOTES 13.8% 3.26 92 44,479 44,479 $145,002 $145,002
01-Dec-95 30-Jun-97 $145,000 CONVERTIBLE NOTES 13.8% 3.26 92 44,478 44,478 $144,998 $144,998
12-May-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (3,572) (3,572) ($12,502) ($12,502)
17-May-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (6,786) (6,786) ($23,751) ($23,751)
21-May-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (715) (715) ($2,503) ($2,503)
25-May-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (1,429) (1,429) ($5,002) ($5,002)
01-Jun-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (1,072) (1,072) ($3,752) ($3,752)
02-Jun-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (6,072) (6,072) ($21,252) ($21,252)
18-Jun-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (5,714) (5,714) ($19,999) ($19,999)
21-Jun-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (2,143) (2,143) ($7,501) ($7,501)
23-Jun-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (2,858) (2,858) ($10,003) ($10,003)
25-Jun-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (1,072) (1,072) ($3,752) ($3,752)
30-Jun-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (2,143) (2,143) ($7,501) ($7,501)
06-Jul-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (358) (358) ($1,253) ($1,253)
09-Jul-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (7,858) (7,858) ($27,503) ($27,503)
20-Jul-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (1,429) (1,429) ($5,002) ($5,002)
29-Jul-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (2,858) (2,858) ($10,003) ($10,003)
04-Aug-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (1,072) (1,072) ($3,752) ($3,752)
05-Aug-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (358) (358) ($1,253) ($1,253)
13-Aug-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (1,072) (1,072) ($3,752) ($3,752)
20-Aug-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (2,143) (2,143) ($7,501) ($7,501)
25-Aug-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (715) (715) ($2,503) ($2,503)
07-Sep-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (1,072) (1,072) ($3,752) ($3,752)
18-Oct-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (2,143) (2,143) ($7,501) ($7,501)
19-Oct-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (1,429) (1,429) ($5,002) ($5,002)
28-Oct-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (2,143) (2,143) ($7,501) ($7,501)
03-Nov-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (2,500) (2,500) ($8,750) ($8,750)
24-Nov-93 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (1,429) (1,429) ($5,002) ($5,002)
31-Jan-94 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (715) (715) ($2,503) ($2,503)
21-Mar-94 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (715) (715) ($2,503) ($2,503)
29-Mar-94 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (357) (357) ($1,250) ($1,250)
11-Mar-96 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (14,286) (14,286) ($50,001) ($50,001)
22-Mar-96 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (7,143) (7,143) ($25,001) ($25,001)
27-Mar-96 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (7,143) (7,143) ($25,001) ($25,001)
09-Apr-96 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (7,144) (7,144) ($25,004) ($25,004)
26-Apr-96 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 4.50 92 (2,778) (2,778) ($12,501) ($12,501)
10-Jun-96 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 1.50 92 (33,333) (33,333) ($50,000) ($50,000)
12-Jun-96 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 3.50 92 (3,571) (3,571) ($12,499) ($12,499)
14-Jun-96 31-Mar-96 CONVERSION OF CONVERTIBLE NOTES 7% 5.75 92 (4,348) (4,348) ($25,001) ($25,001)
14-Jul-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (11,000) (11,000) ($13,750) ($13,750)
21-Jul-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (46,000) (46,000) ($57,500) ($57,500)
22-Jul-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (16,000) (16,000) ($20,000) ($20,000)
26-Jul-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (26,000) (26,000) ($32,500) ($32,500)
02-Aug-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (13,000) (13,000) ($16,250) ($16,250)
11-Aug-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (10,000) (10,000) ($12,500) ($12,500)
16-Aug-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (2,000) (2,000) ($2,500) ($2,500)
18-Aug-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (8,000) (8,000) ($10,000) ($10,000)
24-Aug-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (16,000) (16,000) ($20,000) ($20,000)
26-Aug-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (18,000) (18,000) ($22,500) ($22,500)
06-Sep-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (13,000) (13,000) ($16,250) ($16,250)
09-Sep-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (2,000) (2,000) ($2,500) ($2,500)
23-Sep-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (8,000) (8,000) ($10,000) ($10,000)
04-Oct-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (2,000) (2,000) ($2,500) ($2,500)
07-Oct-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (2,000) (2,000) ($2,500) ($2,500)
14-Oct-94 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.25 92 (4,000) (4,000) ($5,000) ($5,000)
22-Mar-96 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 3.50 92 (28,572) (28,572) ($100,002) ($100,002)
09-Apr-96 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 3.50 92 (7,143) (7,143) ($25,001) ($25,001)
01-May-96 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 5.00 92 (2,500) (2,500) ($12,500) ($12,500)
10-Jun-96 30-Nov-96 CONVERSION OF CONVERTIBLE NOTES 5% 1.50 92 (33,333) (33,333) ($50,000) ($50,000)
09-Nov-95 31-Dec-96 CONVERSION OF CONVERTIBLE NOTES 12% 3.00 92 (75,000) (75,000) ($225,000) ($225,000)
13-Nov-95 31-Dec-96 CONVERSION OF CONVERTIBLE NOTES 12% 2.750 92 (9,091) (9,091) ($25,000) ($25,000)
16-Nov-95 31-Dec-96 CONVERSION OF CONVERTIBLE NOTES 12% 2.00 92 (74,306) (74,306) ($148,612) ($148,612)
17-Nov-95 31-Dec-96 CONVERSION OF CONVERTIBLE NOTES 12% 2.00 92 (75,000) (75,000) ($150,000) ($150,000)
21-Nov-95 31-Dec-96 CONVERSION OF CONVERTIBLE NOTES 12% 2.25 92 (83,339) (83,339) ($187,513) ($187,513)
21-Nov-95 31-Dec-96 CONVERSION OF CONVERTIBLE NOTES 12% 2.25 92 (11,112) (11,112) ($25,002) ($25,002)
21-Nov-95 31-Dec-96 CONVERSION OF CONVERTIBLE NOTES 12% 2.00 92 (12,500) (12,500) ($25,000) ($25,000)
21-Nov-95 31-Dec-96 CONVERSION OF CONVERTIBLE NOTES 12% 2.25 92 (38,891) (38,891) ($87,505) ($87,505)
30-Apr-96 31-Dec-96 CONVERSION OF CONVERTIBLE NOTES 12% 3.75 92 (6,667) (6,667) ($25,001) ($25,001)
01-May-96 31-Dec-96 CONVERSION OF CONVERTIBLE NOTES 12% 3.75 92 (3,334) (3,334) ($12,503) ($12,503)
15-May-96 31-Dec-97 CONVERSION OF CONVERTIBLE NOTES 10% 4.50 92 (149,998) (149,998) ($674,991) ($674,991)
16-May-96 31-Dec-97 CONVERSION OF CONVERTIBLE NOTES 10% 4.50 92 (52,774) (52,774) ($237,483) ($237,483)
17-May-96 31-Dec-97 CONVERSION OF CONVERTIBLE NOTES 10% 4.50 92 (11,111) (11,111) ($50,000) ($50,000)
22-May-96 31-Dec-97 CONVERSION OF CONVERTIBLE NOTES 10% 4.50 92 (41,663) (41,663) ($187,484) ($187,484)
31-May-96 31-Dec-97 CONVERSION OF CONVERTIBLE NOTES 10% 4.50 92 (5,555) (5,555) ($24,998) ($24,998)
04-Jun-96 31-Dec-97 CONVERSION OF CONVERTIBLE NOTES 10% 4.50 92 (13,887) (13,887) ($62,492) ($62,492)
10-Jun-96 31-Dec-97 CONVERSION OF CONVERTIBLE NOTES 10% 4.50 92 (5,555) (5,555) ($24,998) ($24,998)
12-Jun-96 31-Dec-97 CONVERSION OF CONVERTIBLE NOTES 10% 4.50 92 (30,569) (30,569) ($137,561) ($137,561)
13-Jun-96 31-Dec-97 CONVERSION OF CONVERTIBLE NOTES 10% 4.50 92 (11,111) (11,111) ($50,000) ($50,000)
20-Jun-96 31-Dec-97 CONVERSION OF CONVERTIBLE NOTES 10% 4.50 92 (5,555) (5,555) ($24,997) ($24,998)
03-Jul-96 31-Dec-97 CONVERSION OF CONVERTIBLE NOTES 10% 4.50 3 (11,110) (10,748) ($49,994) ($1,630)
03-Jun-96 30-Jun-97 CONVERSION OF CONVERTIBLE NOTES 13.8% 3.26 92 (133,436) (133,436) ($435,000) ($435,001)
30-Jun-96 01-Jun-99 Preferred Stock 5.00 92 2,010,000 2,010,000 $10,050,000 $10,050,000
19-Aug-96 01-Jun-99 CONVERSION OF PREFERRED STOCK 5.00 50 (5,360) (2,447) ($26,800) ($14,565)
17-Sep-96 01-Jun-99 CONVERSION OF PREFERRED STOCK 5.00 79 (11,792) (1,666) ($58,960) ($50,629)
19-Sep-96 01-Jun-99 CONVERSION OF PREFERRED STOCK 5.00 81 (3,752) (449) ($18,760) ($16,517)
20-Sep-96 01-Jun-99 CONVERSION OF PREFERRED STOCK 5.00 82 (97,016) (10,545) ($485,080) ($432,354)
23-Sep-96 01-Jun-99 CONVERSION OF PREFERRED STOCK 5.00 85 (18,760) (1,427) ($93,800) ($86,663)
--------- --------- --------- ---------
TOTAL OTHER POTENTIALLY DILUTIVE SECURITIES 1,386,601 1,987,691 $6,708,007 $7,169,729
========= ========= ========= =========
EARNINGS PER SHARE COMPUTATIONS:
MODIFIED TREASURY STOCK METHOD:
TOTAL EXERCISE PROCEEDS $20,070,960
---------
PERIOD-END OUTSTANDING SHARES 4,063,625
---------
20% OF PERIOD-END OUTSTANDING SHARES 812,725
---------
AVERAGE SHARE PRICE DURING PERIOD $6.13 ***
---------
PROCEEDS USED TO PURCHASE SHARES 4,982,004
---------
REMAINING PROCEEDS 15,088,955
---------
PROCEEDS USED TO RETIRE AVERAGE DEBT 9,340,967
---------
REMAINING PROCEEDS INVESTED $5,747,988
=========
ADJUSTED INCOME (LOSS):
NET INCOME (LOSS) ($3,158,260)
ACCRETION TO PREFERRED STOCK (2,376,600)
DEEMED DIVIDENDS (187,486)
------------
ADJUSTED INCOME (LOSS) (5,722,346)
INTEREST (EXPENSE) ON RETIRED DEBT (10.25%) 239,362
INTEREST INCOME ON PROCEEDS INVESTED (2.5%) 35,925
TAX EFFECT OF INTEREST ADJUSTMENTS (40%) (110,115)
---------
NET INCOME (LOSS) FOR EARNINGS PER SHARE PURPOSES (5,557,174)
---------
SHARES:
WEIGHTED AVERAGE SHARES OUTSTANDING 3,906,851
WEIGHTED AVERAGE EQUIVALENT SHARES OUTSTANDING 5,091,379
20% OF PERIOD-END OUTSTANDING SHARES (812,725)
---------
TOTAL SHARES FOR EARNINGS PER SHARE PURPOSES 8,185,506
---------
NET INCOME (LOSS) PER SHARE ($0.68)
=========
MAXIMUM INCOME (MINIMUM LOSS) PER SHARE:
ADJUSTED INCOME (LOSS) ($5,722,346)
---------
WEIGHTED AVERAGE SHARES OUTSTANDING 3,906,851
---------
NET INCOME (LOSS) PER SHARE ($1.46)
=========
</TABLE>
