<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 18, 1999
(Date of Earliest Event Reported)
MACE SECURITY INTERNATIONAL, INC.
(Exact name of Registrant as Specified in its Charter)
Delaware
(State of Incorporation)
0-22810
(Commission File Number)
03-0311630
(IRS Employer Identification No.)
160 Benmont Avenue, Bennington, Vermont 05201
(Address of Principal Executive Offices)
(802) 447-1503
(Registrant's Telephone Number)
<PAGE>
ITEM 2. ACQUISITION OF THE ASSETS OF GENIE CAR WASHES
On May 18, 1999, Mace Security International, Inc., a Delaware corporation (the
"Company" or "Registrant"), through its wholly owned subsidiary Mace Car Wash -
Arizona, Inc., acquired substantially all of the assets (the "Genie Purchased
Assets") of Genie Car Wash Inc. of Austin; Genie Car Care Center, Inc.; and
Genie Car Service Center, Inc. (collectively, "Genie") from Genie and Cornett
Limited Partnership (collectively with Genie, the "Sellers"). Pursuant to the
terms and conditions of the Car Wash Asset Purchase/Sale Agreement executed by
Millennia Car Wash, LLC with the Sellers (the "Genie Purchase Agreement"), as
assigned to the Company, the Company purchased the real estate, inventory, fixed
assets, trade names and trademarks, and intangibles of the car wash operations
of Sellers. The Company intends to continue such use of the Genie Purchased
Assets. Seller is not affiliated with the Registrant nor with any of the
Registrant's subsidiaries. The description of the acquisition transaction set
forth herein is qualified in its entirety by reference to the Genie Purchase
Agreement and subsequent amendments, which are incorporated as Exhibits 2.1,
2.2, 2.3, 2.4 and 2.5 respectively.
At Closing under the Genie Purchase Agreement, the Company paid to Sellers an
aggregate purchase price, subject to adjustments, of $11,750,000 (the "Genie
Purchase Price"), $1,000,000 of which was paid in cash at the closing of the
transaction from working capital, $4,750,000 of which was evidenced by the
delivery of a promissory note bearing interest at 8% per annum, payable in 90
days of the Closing, and $5,550,000 of which was paid by the delivery of 493,333
unregistered shares of the Registrant's Common Stock, par value $.01, valued in
accordance with and subject to restrictions set forth in the terms of the Genie
Purchase Agreement. Upon the expiration of a "hold-back" period, assuming that
the Company has no claims against the Sellers for breaches of representations
and other indemnified claims, the remaining $450,000 will be paid by the
issuance to the Sellers of 40,000 additional unregistered shares of the
Registrant's Common Stock. The acquisition is accounted for using the "purchase"
method of accounting.
In addition, the Sellers and certain principals designated by the Company
executed non-competition agreements preventing each from competing, directly or
indirectly, with the Company or carrying on the operations of a car wash within
certain geographic areas and for certain predetermined periods.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of business acquired.
Independent Auditor's Report
Combined Balance Sheets as of December 31, 1998 and 1997
Combined Statements of Income for the Two Years Ended December 31, 1998 and
1997
Combined Statements of Common Stock and Equity for the Two Years Ended
December 31, 1998 and 1997
Combined Statements of Cash Flows for the Two Years Ended December 31, 1998
and 1997.
Notes to Combined Financial Statements
Combined Balance Sheet as of March 31, 1999 and March 31, 1998 (Unaudited)
Combined Statement of Income for the Three Months
Ended March 31, 1999 and 1998 (Unaudited)
Combined Statements of Changes in Stockholders' Equity for the Three Months
Ended March 31, 1999 and 1998 (Unaudited)
Combined Statement of Cash Flows for the Three Months
Ended March 31, 1999 and 1998 (Unaudited)
Selected Notes to Combined Financial Statements (Unaudited)
(b) Pro Forma Financial Information
Pro forma Consolidated Statement of Operations for the Year Ended December
31,1998 (Unaudited)
Pro forma Consolidated Statement of Operations for the Three Months Ended
March 31, 1999 (Unaudited)
Pro forma Consolidated Balance Sheet as of March 31, 1999 (Unaudited)
(c) Exhibits
*2.1 Car Wash Asset Purchase/Sale Agreement dated July 8, 1998 between Genie Car
Wash Inc. of Austin; Genie Car Care Center, Inc.; Genie Car Service Center,
Inc.; and Cornett Limited Partnership and Millennia Car Wash LLC.
*2.2 First Amendment to Car Wash Asset Purchase/Sale Agreement effective July 8,
1998 between Genie Car Wash Inc. of Austin; Genie Car Care Center, Inc.;
Genie Car Service Center, Inc.; and Cornett Limited Partnership and
Millennia Car Wash Group LLC.
*2.3 Second Amendment to Car Wash Asset Purchase/Sale Agreement effective April
29, 1999 between Genie Car Wash Inc. of Austin; Genie Car Care Center,
Inc.; Genie Car Service Center, Inc.; and Cornett Limited Partnership and
Millennia Car Wash Group LLC.
*2.4 Third Amendment to Car Wash Asset Purchase/Sale Agreement effective May 17,
1999 between Genie Car Wash Inc. of Austin; Genie Car Care Center, Inc.;
Genie Car Service Center, Inc.; and Cornett Limited Partnership and
Millennia Car Wash Group LLC.
<PAGE>
*2.5 Fourth Amendment to Car Wash Asset Purchase/Sale Agreement effective May
18, 1999 between Genie Car Wash Inc. of Austin; Genie Car Care Center,
Inc.; Genie Car Service Center, Inc.; and Cornett Limited Partnership and
Millennia Car Wash Group LLC.
*2.6 Promissory Note in the amount of $4,750,000 by Mace Car Wash-Arizona, Inc.,
dated May 18, 1999, payable to Mike W. Cornett as collecting agent for
Genie Car Wash Inc. of Austin; Genie Car Care Center, Inc.; Genie Car
Service Center, Inc.; and Cornett Limited Partnership.
*2.7 Security Agreement dated May 18, 1999 between Mace Car Wash-Arizona, Inc.
and Genie Car Wash Inc. of Austin; Genie Car Care Center, Inc.; Genie Car
Service Center, Inc.; and Cornett Limited Partnership.
*99 Press Release dated May 25, 1999.
23.1 Consent of D. Williams & Co., P.C.
- --------------------------------------------------------------------------------
* Incorporated by reference
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 2, 1999 MACE SECURITY INTERNATIONAL, INC.
By:/s/ Gregory M. Krzemien
-----------------------
Gregory M. Krzemien
Chief Financial Officer and Treasurer
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
AND THE THREE MONTHS ENDED MARCH 31, 1999
The following unaudited pro forma consolidated statements of operations for the
year ended December 31, 1998 and the three months ended March 31, 1999 give
effect to (i) the acquisition on May 17, 1999 of all the outstanding stock of
Colonial Full Service Car Wash, Inc. ("Colonial") by Mace Security
International, Inc. (the "Registrant" or "Mace") for total consideration paid by
Mace of approximately $15.1 million, and (ii) the acquisition of substantially
all of the assets of Genie Car Wash, Inc. of Austin, Genie Car Care Center,
Inc., and Genie Car Service Center, Inc. (collectively, "Genie") from Genie and
Cornett Limited Partnership (collectively with Genie, the "Sellers") for total
consideration of approximately $11,750,000.
The following unaudited pro forma consolidated statement of operations for the
year ended December 31, 1998 and the three months ended March 31, 1999 gives
effect to the aforementioned transactions as if the transactions had occurred on
January 1, 1998. The following unaudited pro forma financial data may not be
indicative of what the results of operations or financial position of Mace
Security International, Inc. would have been, had the transactions to which such
data gives effect had been completed on the date assumed, nor are such data
necessarily indicative of the results of operations or financial position of
Mace Security International, Inc. that may exist in the future. The following
unaudited pro forma information should be read in conjunction with the notes
thereto, the other pro forma financial statements and notes thereto, and the
consolidated financial statements and notes of Mace Security International, Inc.
as of December 31, 1998 and for each of the three years in the period then ended
and the historical financial statements of Genie appearing elsewhere in this
filing.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
(Dollars in thousands, except shares and per share data)
<TABLE>
<CAPTION>
Colonial Full
Mace Security Service Car Genie
International, Inc. Wash, Inc. Car Wash
----------------------- -------------------- -----------------
<S> <C> <C> <C>
Net sales $ 2,404 $ 10,697 $ 6,553
Cost of sales 1,230 9,248 4,708
Selling, general and administrative 1,719 955 1,914
----------------------- -------------------- -----------------
Operating (loss) income (545) 494 (69)
Other income (expense):
Interest income 137 - 5
Interest expense (95) (528) -
Other income 221 53 6
----------------------- -------------------- -----------------
(Loss) income from operations before
income tax expense (282) 19 (58)
Income tax expense (4) (19) -
----------------------- -------------------- -----------------
Net (loss) income $ (286) $ - $ (58)
======================= ==================== =================
Net loss per common share: ($0.04)
=======================
Weighted average number of
common shares outstanding 6,987,127
=======================
Pro Forma Pro Forma
Adjustments Consolidated
------------------ -----------------------
<C> <C>
Net sales $ - $ 19,654
Cost of sales (297)(1) 14,968
79 (2)
Selling, general and administrative (569)(4) 3,659
(360)(5)
------------------ -----------------------
Operating (loss) income 1,147 1,027
Other income (expense):
Interest income - 142
Interest expense (380)(6) (1,003)
Other income - 280
------------------ -----------------------
(Loss) income from operations before
income tax expense 767 446
Income tax expense - (23)
------------------ -----------------------
Net (loss) income $ 767 $ 423
================== =======================
Net loss per common share: $ 0.05
=======================
Weighted average number of
common shares outstanding 8,771,460 (3)
=======================
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1999
(Dollars in thousands, except shares and per share data)
<TABLE>
<CAPTION>
Colonial Full
Mace Security Service Car Genie
International, Inc. Wash, Inc. Car Wash
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Net sales $ 704 $ 2,642 $ 1,755
Cost of sales 364 2,243 1,298
Selling, general and administrative 802 423 483
----------------------- ----------------------- -----------------------
Operating (loss) income (462) (24) (26)
Other income (expense):
Interest income 47 - 5
Interest expense - (129) -
Other income (expense) (53) 13 -
----------------------- ----------------------- -----------------------
(Loss) income
before income tax expense (468) (140) (21)
Income tax expense (benefit) - (37) -
----------------------- ----------------------- -----------------------
Net (loss) income $ (468) $ (103) $ (21)
======================= ======================= =======================
Net loss income per common share $ (0.07)
=======================
Weighted average number of
common shares outstanding 6,387,200
=======================
Pro Forma Pro Forma
Adjustments Consolidated
----------------------- ---------------------
<S> <C> <C>
Net sales $ - $ 5,101
Cost of sales (78)(1) 3,862
35 (2)
Selling, general and administrative (139)(4) 1,452
(117)(5)
----------------------- ---------------------
Operating (loss) income 299 (213)
Other income (expense):
Interest income - 52
Interest expense (117)(8) (246)
Other income (expense) - (40)
----------------------- ---------------------
(Loss) income
before income tax expense 182 (447)
Income tax expense (benefit) - (37)
----------------------- ---------------------
Net (loss) income $ 182 $ (410)
======================= =====================
Net loss income per common share $ (0.05)
=====================
Weighted average number of
common shares outstanding $ 8,171,533 (3)
=====================
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of March 31, 1999
(Dollars in thousands)
<TABLE>
<CAPTION>
Colonial Full
Mace Security Service Car Genie
International, Inc. Wash, Inc. Car Wash
-------------------- -------------------- --------------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,572 $ 52 $ 212
Cash escrow 611 - -
Accounts receivable, net 1,271 32 541
Inventories 1,502 231 74
Prepaid expenses and other 285 138 19
-------------------- -------------------- --------------------
Total current assets 7,241 453 846
Net assets of discontinued operations 327 - -
Property and equipment, net 1,079 9,325 347
Intangibles, net 912 - -
Other assets 217 390 227
-------------------- -------------------- --------------------
Total Assets $ 9,776 $ 10,168 $ 1,420
==================== ==================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 298 $ 1,041 $ 265
Accrued expenses 232 316 74
Current portion of long term debt - 5,199 -
-------------------- -------------------- --------------------
Total current liabilities 530 6,556 339
Deferred income taxes - 21 -
Long term debt, less current portion - 514 -
Other Liabilities - 39 -
-------------------- -------------------- --------------------
Total liabilities 530 7,130 339
Commitments and contingencies
Stockholders' equity:
Common stock 68 118 1
Additional paid-in capital 13,333 3,486 1,798
Treasury stock (52) (50) -
(Accumulated deficit) retained earnings (4,103) (516) (718)
-------------------- -------------------- --------------------
Total stockholders' equity 9,246 3,038 1,081
-------------------- -------------------- --------------------
Total liabilities and
stockholders' equity $ 9,776 $ 10,168 $ 1,420
=================== =================== ===================
Pro Forma Pro Forma
Adjustments Consolidated
------------------ ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ (212)(2) $ 2,624
(1,000)(2)
Cash escrow - 611
Accounts receivable, net (541)(2) 1,303
Inventories - 1,807
Prepaid expenses and other (19)(2) 423
------------------ ---------------
Total current assets (1,772) 6,768
Net assets of discontinued operations - 327
Property and equipment, net 2,175(1) 20,769
7,843(2)
Intangibles, net 3,153(1) 7,551
3,486(2)
Other assets (227) 607
------------------ ---------------
Total Assets $ 14,658 $ 36,022
================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ (265) $ 1,338
Accrued expenses (74) 548
Current portion of long term debt 4,750 9,948
------------------ ---------------
Total current liabilities 4,411 11,836
Deferred income taxes - 21
Long term debt, less current portion - 514
Other Liabilities - 39
------------------ ---------------
Total liabilities 4,411 12,410
Commitments and contingencies
Stockholders' equity:
Common stock (106)(1) 85
4 (2)
Additional paid-in capital 4,868 (1) 27,682
Treasury stock 50 (52)
(Accumulated deficit) retained earnings 516 (1)
718 (2) (4,103)
------------------ ---------------
Total stockholders' equity 10,247 23,612
------------------ ---------------
Total liabilities and
stockholders' equity $ 14,658 $ 36,022
================== ===============
</TABLE>
<PAGE>
Notes to Unaudited Pro Forma Consolidated Statement of Operations Adjustments
The Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended
December 31, 1998 has been adjusted to reflect the following:
(1) To adjust depreciation and amortization expense for the change in the basis
of property and equipment and intangible assets as if the purchase of
Colonial had been completed on January 1, 1998, net of historical
depreciation and amortization expense of Colonial.
(2) To adjust depreciation and amortization expense for the change in the basis
of property and equipment and intangible assets as if the purchase of Genie
had been completed on January 1, 1998, net of historical depreciation and
amortization expense of Genie.
(3) For purpose of determining pro forma earnings per share, the issuance of
1,251,000 and 533,333 shares, respectively, of unregistered shares of
common stock to effect the acquisition of Colonial and Genie were issued to
be outstanding from January 1, 1998 by Mace.
(4) To eliminate intercompany administrative charges of $569,000 related
directly to cost sharing arrangements provided by Genie's prior parent,
which were terminated as a result of the purchase transaction. Such
administrative services were absorbed by excess capacity of the Company and
the Company has not hired additional employees to perform these
administrative services.
(5) To reflect the elimination of intercompany rental expense of $360,000 from
Genie's prior parent terminated as a result of the purchase transaction.
(6) To record additional interest expense of $380,000 resulting from a $4.75
million promissory note issued to Genie's prior parent to consummate the
acquisition of Genie.
The Unaudited Pro Forma Consolidated Statement of Operations for the Three
Months Ended March 31, 1999 has been adjusted to reflect the following:
(1) To adjust depreciation and amortization expense for the change in the basis
of property and equipment and intangible assets as if the purchase of
Colonial had been completed on January 1, 1999, net of historical
depreciation and amortization expense of Colonial.
(2) To adjust depreciation and amortization expense for the change in the basis
of property and equipment and intangible assets as if the purchase of Genie
had been completed on January 1, 1999, net of historical depreciation and
amortization expense of Colonial..
(3) For purpose of determining pro forma earnings per share, the issuance of
1,251,000 and 533,333 shares, respectively, of unregistered shares of
common stock to effect the acquisition of Colonial and Genie were issued to
be outstanding from January 1, 1999 by Mace.
(4) To eliminate intercompany administrative charges of $139,000 related
directly to cost
<PAGE>
sharing arrangements provided by Genie's prior parent, which were
terminated as a result of the purchase transaction. Such administrative
services were absorbed by excess capacity of the Company and the Company
has not hired additional employees to perform these administrative
services.
(5) To reflect the elimination of intercompany rental expense of $117,000 from
Genie's prior parent terminated as a result of the purchase transaction.
(6) To record additional interest expense of $95,000 resulting from a $4.75
million promissory note issued to Genie's prior parent to consummate the
acquisition of Genie.
<PAGE>
Notes to Unaudited Pro Forma Consolidated Balance Sheet Adjustments
The unaudited Pro Forma Consolidated Balance Sheet as of December 31, 1998 has
been adjusted to reflect the following:
(1) On February 4, 1999, the Company entered into a Stock Purchase Agreement
for the acquisitions of all the outstanding stock of Colonial Full Service
Car Wash, Inc. ("Colonial") for total consideration to be paid by Mace
Security International, Inc. of approximately $15,100,000 including
1,251,000 shares of the Registrant's Common Stock valued at $6.6875 per
share and the assumption of debt and negative working capital of
approximately $6,734,000. Approximately 245,000 shares of the Registrant's
Common Stock was "held back" in accordance with the provisions of the Stock
Purchase Agreement. Upon the expiration of the "hold-back" period,
assuming that the Company has no claims against the Shareholders for
breaches of representations and other indemnified claims, the remaining
shares will be issued. The acquisition is anticipated to be accounted for
under the purchase method. Pursuant to the terms of the stock purchase
agreement, all property, equipment, other assets and working capital will
be acquired and all liabilities will be assumed. The allocation of the
purchase price is preliminary. The actual allocation will be based on
management's final evaluation of such assets and liabilities. The excess
of the purchase price over the estimated fair value of net assets was
allocated to goodwill; however, this excess may ultimately be allocated to
other specific tangible and intangible assets. The final allocation of the
purchase price and the resulting effect on operations may differ from the
pro forma amounts included herein. The preliminary allocation of the
purchase price is as follows:
<TABLE>
<S> <C>
Property and equipment........................ $11,500,000
Cost over fair value of net assets acquired... 3,153,000
Current assets acquired....................... 453,000
Other assets acquired......................... 390,000
Current liabilities assumed................... (6,556,000)
Other liabilities assumed..................... (574,000)
-------------
$ 8,366,000
=============
</TABLE>
(2) On May 18, 1999, the Company entered into an Asset Purchase/Sale Agreement
for the acquisition of all the assets (the "Genie Purchased Assets") of
Genie Car Wash Inc. of Austin; Genie Car Care Center, Inc.; and Genie Car
Service Center, Inc. (collectively, "Genie") from Genie and Cornett Limited
Partnership (collectively with Genie, the "Sellers") for an aggregate
purchase price, subject to adjustments, of $11,750,000 (the "Genie Purchase
Price"), including $1,000,000 of which was paid in cash at the closing of
the transaction from working capital, $4,750,000 of which was evidenced by
the delivery of a promissory note bearing interest at 8% per annum, payable
in 90 days of the Closing, and $5,550,000 of which was paid by the delivery
of 493,333 unregistered shares of the Registrant's Common Stock, par value
$.01. Upon the expiration of a "hold-back" period, assuming that the
Company has no claims against the Sellers for breaches of representations
and other indemnified claims, the remaining $450,000 will be paid by the
issuance to the Sellers of 40,000 additional unregistered shares of the
Registrant's Common Stock. The acquisition is anticipated to be accounted
for under the purchase method. Pursuant to the terms of the
<PAGE>
stock purchase agreement, all property, equipment, other assets and working
capital will be acquired and all liabilities will be assumed. The
allocation of the purchase price is preliminary. The actual allocation will
be based on management's final evaluation of such assets and liabilities.
The excess of the purchase price over the estimated fair value of net
assets was allocated to goodwill; however, this excess may ultimately be
allocated to other specific tangible and intangible assets. The final
allocation of the purchase price and the resulting effect on operations may
differ significantly from the pro forma amounts included herein. The
preliminary allocation of the purchase price is as follows:
<TABLE>
<S> <C>
Property and equipment....................... $ 8,190,000
Cost over fair value of net assets acquired.. 3,486,000
Current assets acquired...................... 74,000
-------------
$11,750,000
=============
</TABLE>
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Combined Financial Statements
December 31, 1998 and 1997
(With Auditors' Report Thereon)
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Table of Contents
<TABLE>
<CAPTION>
Page
number
------
<S> <C>
Independent Auditors' Report 1
Combined Balance Sheets 2
Combined Statements of Income 4
Combined Statements of Common Stock and Equity 5
Combined Statements of Cash Flows 6
Notes to Combined Financial Statements 8
</TABLE>
<PAGE>
The Board of Directors
Genie Car Wash Inc. of Austin,
Genie Car Care Center, Inc. and
Genie Car Service Center, Inc.
Independent Auditors' Report
We have audited the accompanying combined balance sheets of Genie Car Wash Inc,
of Austin, Genie Car Care Center, Inc. and Genie Car Service Center, Inc.,
(Companies) as of December 31, 1998 and 1997 and the related combined statements
of income, common stock and equity, and cash flows for the years then ended.
The combined financial statements include the financial statements of Genie Car
Wash Inc, of Austin, Genie Car Care Center, Inc. and Genie Car Service Center,
Inc., which are related through common ownership and management. These combined
financial statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of the Companies as of
December 31, 1998 and 1997, and the results of their operations and their cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ D. Williams & Co., P.C.
June 18, 1999
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Combined Balance Sheets
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Assets
1998 1997
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 226,747 327,231
Accounts receivable 141,111 131,554
Other related party receivable 1,110,000 --
Current portion of notes receivable 21,362 29,211
Inventories 90,145 91,527
---------- ----------
1,589,365 579,523
Property, plant and equipment:
Plant and equipment 2,526,274 2,481,546
Less: accumulated depreciation 2,204,296 2,021,993
---------- ----------
321,978 459,553
Land 55,169 55,169
Construction in progress -- 7,350
---------- ----------
377,147 522,072
---------- ----------
Other assets:
Noncurrent notes receivable 231,324 251,600
Deposits -- 300
---------- ----------
231,324 251,900
---------- ----------
$2,197,836 1,353,495
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
Liabilities, Common Stock and Equity
------------------------------------
<TABLE>
<CAPTION>
1998 1997
----------------- -----------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 34,452 34,856
Other related party payable 964,925 78,278
Accrued expenses 96,033 79,657
---------- ---------
1,095,410 192,791
---------- ---------
Stockholders' Equity:
Capital Stock 1,300 1,300
Additional paid in capital 1,798,106 1,798,106
Retained earnings (deficit) (696,980) (638,702)
---------- ---------
1,102,426 1,160,704
---------- ---------
$2,197,836 1,353,495
========== =========
</TABLE>
3
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Combined Statements of Income
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
----------------- ----------------
<S> <C> <C>
Operating revenues:
Car wash and detail $5,162,974 4,972,926
Lube and other services
Fuel 1,237,762 1,480,755
Merchandise 152,039 151,082
---------- ---------
6,552,775 6,604,763
---------- ---------
Cost of sales:
Car wash and detail 3,269,875 3,085,098
Lube and other services
Fuel 1,163,142 1,405,477
Merchandise 92,270 109,386
---------- ---------
4,525,287 4,599,961
---------- ---------
2,027,488 2,004,802
---------- ---------
Operating expense:
Depreciation 182,303 172,699
Sales, general and administrative 1,914,124 1,705,591
---------- ---------
2,096,427 1,878,290
---------- ---------
Operating income (loss) (68,939) 126,512
---------- ---------
Other revenue and (expense):
Net interest income 4,694 5,800
Other income 5,967 580
---------- ---------
10,661 6,380
---------- ---------
Net income (loss) $ (58,278) 132,892
========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
GENIE CAR WASH INC. AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Combined Statements of Changes in Stockholders' Equity
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Retained
Common Additional Earnings
Stock Paid in Capital (Deficit) Total
------- --------------- --------- -----
<S> <C> <C> <C> <C>
Balance at January 1, 1997 $1,300 1,798,106 (681,594) 1,117,812
Net Income -- -- 132,892 132,892
Distribution -- -- (90,000) (90,000)
------ --------- -------- ---------
Balance at December 31, 1997 1,300 1,798,106 (638,702) 1,160,704
Net Income -- -- (58,278) (58,278)
------ --------- ------- ---------
Balance at December 31, 1998 $1,300 1,798,106 (696,980) 1,102,426
====== ========= ======= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Combined Statements of Cash Flows
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ (58,278) 132,892
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Depreciation 182,303 172,699
Changes in assets and liabilities:
(Increase) in accounts receivable (9,557) (47,556)
Decrease in inventory 1,382 26,282
(Increase) decrease in other related party
receivable (1,110,000) 82,125
Decrease in deposits 300 --
Increase (decrease) in accounts payable (404) 34,049
Increase in other related party payable 886,647 78,278
Increase (decrease) in accrued expenses 16,376 (50,651)
---------- ----------
(32,953) 295,226
---------- ----------
Net cash provided (used) by operating
activities (91,231) 428,118
---------- ----------
Cash Flows from Investing Activities:
Collections on notes receivable 28,125 24,158
Purchase of property, plant and equipment (37,378) (302,556)
Additions to construction-in-progress -- (7,350)
---------- ----------
Net cash (used) by investing activities (9,253) (285,748)
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Cash Flows from Financing Activities:
Shareholder distribution -- (90,000)
---------- ----------
-- (90,000)
---------- ----------
Net increase (decrease) in cash and cash equivalents (100,484) 52,370
Cash and cash equivalents at beginning of year 327,231 274,861
---------- ----------
Cash and cash equivalents at end of year $ 226,747 327,231
========== ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $ 53,315 37,511
========== ==========
</TABLE>
7
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Notes to Combined Financial Statements
December 31, 1998 and 1997
(1) Summary of Significant Accounting Policies
------------------------------------------
Nature of Operations
--------------------
The accompanying combined financial statements include the accounts of
Genie Car Wash Inc. of Austin, Genie Car Care Center, Inc. and Genie Car
Service Center, Inc. These Companies are related through common ownership
and management. Management believes that the presentation of combined
financial statements for the Companies is appropriate based upon the
agreement to sell substantially all of the Companies assets as discussed in
Note 6. All significant intercompany balances and transactions have been
eliminated in combination.
Each Company owns and operates a car wash in the Austin, Texas area under
the name of Genie Car Wash. Each car wash provides a range of car care
services including gasoline and diesel fuel sales, full service car wash,
self-service car wash, self-service wash bays and a custom detail shop.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents for purposes of the statement of cash flows are
as follows:
<TABLE>
<CAPTION>
1998 1997
--------- -------
<S> <C> <C>
Cash in bank and on hand $226,747 327,231
======== =======
</TABLE>
The Companies have funds on deposit with one financial institution which
exceeds the federally insured limit of $100,000.
continued
8
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Notes to Combined Financial Statements
Inventories
-----------
Inventories consist of fuel, soap, car wash chemicals and merchandise. Fuel
is stated at lower cost (first in - first out) or market. All other
inventory is stated at an estimated value based on purchases. Inventories
by major categories are as follows:
<TABLE>
<CAPTION>
1998 1997
-------- ------
<S> <C> <C>
Gasoline $26,552 34,076
Diesel 7,002 11,782
Merchandise 16,123 24,679
Soap and car wash chemicals 40,468 20,990
------- ------
$90,145 91,527
======= ======
</TABLE>
Property, Plant and Equipment and Related Depreciation
------------------------------------------------------
Plant and equipment are stated at cost less accumulated depreciation. The
straight-line and declining balance methods are used to calculate
depreciation with the estimated useful lives as follows:
Buildings 10 - 20 years
Furniture, fixtures and equipment 5 years
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
1998 1997
----------- ---------
<S> <C> <C>
Buildings $ 397,624 397,624
Furniture, fixtures and equipment 2,128,650 2,083,922
---------- ---------
$2,526,274 2,481,546
========== =========
</TABLE>
Maintenance, repairs and minor renewals are charged to operations during
the year incurred. Major renewals and betterments are charged to the
property accounts. Upon the sale or retirement of property, plant and
equipment, the cost thereof and the accumulated depreciation are removed
from the accounts. Gains or losses on the sale or retirement of property,
plant and equipment are credited or charged to operations.
continued
9
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Notes to Combined Financial Statements
Common Stock and Equity
-----------------------
Each of the Companies has 100,000 shares of common stock authorized with a
par value of $1 per share and carries voting rights of one vote per share.
At December 31, 1998 and 1997 the shares issued and outstanding are as
follows:
<TABLE>
<CAPTION>
1998 1997
----------------- -----------------
# shares Value # shares Value
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Genie Car Wash Inc. of Austin 100 $ 100 100 $ 100
Genie Car Care Center, Inc. 100 100 100 100
Genie Car Service Center, Inc. 1,100 1,100 1,100 1,100
----- ------ ----- ------
1,300 $1,300 1,300 $1,300
===== ====== ===== ======
</TABLE>
(2) Accounts Receivable
-------------------
Accounts receivable are stated at estimated net realized value. Detail
concerning accounts receivable is presented below:
<TABLE>
<CAPTION>
1998 1997
---------- --------
<S> <C> <C>
Genie Oil Company $130,464 121,161
Lube wash receivable 10,815 10,904
Employees (168) (511)
-------- -------
$141,111 131,554
======== =======
</TABLE>
The Companies sell gasoline and diesel fuel under the Conoco brand name.
The Companies purchase substantially all of their gasoline and diesel from
Genie Oil Company (see Note 5), a petroleum marketer for Conoco. The
Companies also process all credit card transactions through Genie Oil
Company. The credit card receipts are netted against fuel purchases at the
end of each period creating either a receivable or payable on the
Companies' accounts.
The Companies also have an agreement with several quick lube outlets in the
Austin, Texas area whereby oil change customers can either receive a
discount on oil changes or a coupon for a free car wash. Coupons redeemed
for car washes are submitted to the quick lube outlets for payment.
continued
10
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Notes to Combined Financial Statements
(3) Notes receivable
----------------
A summary of long-term notes receivable is as follows:
<TABLE>
<CAPTION>
1998 1997
--------- -------
Note from K-Wash, a Texas Corporation,
collateralized by a secondary lien on
car wash property located in Waco, Texas
with a primary lien to Texas First Bank.
Original amount of $300,000 due in
monthly installments of principal and
interest of $3,335 through August 15,
2008. Interest rate is 10% at
<S> <C> <C>
December 31, 1998. $ 247,338 268,840
Note from an individual, collateralized
by a car wash in Valley Mills,
Texas in the original amount of $30,000
with monthly installments of
principal and interest of $615 through
August 15, 2001. Interest rate is 8.50%
at December 31, 1998. 5,348 11,971
-------- -------
252,686 280,811
Less current portion 21,362 29,211
-------- -------
$ 231,324 251,600
======== =======
</TABLE>
(4) Federal income taxes
--------------------
The Companies are taxed as S Corporations under the Internal Revenue Code
and applicable state statutes. Under an S Corporation election, the income
of the corporation flows through to the stockholders to be taxed at the
individual level rather than the corporate level. Accordingly, the
Companies will have no tax liability (with limited exceptions) as long as
the S Corporation election is in effect.
(5) Related Parties Transactions
----------------------------
The Companies, along with Genie Oil Company, Cornett L.P., CACR L.P., and
Tenroc Investments are owned in whole or in part by Mike Cornett. Each of
the Companies had significant transactions with the other related parties.
Genie Oil Company provides management services for the Companies by
providing accounting services, insurance coverage and management personnel.
Each of the Companies pays a monthly management fee and a monthly office
charge. Each of the Companies is also billed for insurance coverage and
management salaries. In addition, Genie Car Wash Inc. of Austin and Genie
Car Care Center, Inc. pay a monthly rental fee for land and buildings to
Cornett L.P.
continued
11
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Notes to Combined Financial Statements
A summary of expenses paid to Genie Oil Company and Cornett L.P. for the
years ended December 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1998 1997
----------- ---------
<S> <C> <C>
Management fees $ 568,616 631,182
Management salaries 640,938 445,762
Payroll taxes 44,598 31,018
Office expense 108,004 108,000
Insurance 189,330 181,236
Rent 360,000 360,000
---------- ---------
$1,911,486 1,757,198
========== =========
</TABLE>
As discussed in Note 2, the Companies purchase substantially all of their
gasoline and diesel fuel from Genie Oil Company. A summary of purchases
for the years ended December 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1998 1997
----------- ---------
<S> <C> <C>
Gasoline and diesel $1,150,837 1,870,575
========== =========
</TABLE>
In the normal course of business, the Companies have an agreement with the
other related parties to provide short-term advances as needed for
operations. Interest is charged based upon the prevailing rate at the time
of the advance. A summary of the net short-term advances at December 31,
1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
----------- --------
<S> <C> <C>
Advances from Genie Oil Company $ (964,925) (73,278)
Advances to (from) other
related parties 1,110,000 (5,000)
---------- -------
$ 145,075 (78,278)
========== =======
</TABLE>
A summary of interest paid to and received from related parties is as
follows:
<TABLE>
<CAPTION>
1998 1997
---------- --------
<S> <C> <C>
Interest income $ 31,930 19,784
Interest expense (53,315) (37,511)
-------- -------
$(21,385) (17,727)
======== =======
</TABLE>
<TABLE>
<S> <C>
(6) Commitments
-----------
</TABLE>
On May 18, 1999, Mike Cornett entered into an agreement to sell
substantially all of the Companies assets along with the land and buildings
owned by Cornett L.P. to Mace Securities International, Inc. for
$11,750,000.
12
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Combined Balance Sheets
March 31, 1999 and 1998
(Unaudited)
Assets
------
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 211,739 315,187
Accounts receivable 9,800 15,860
Other related party receivable 531,527 437,610
Current portion of notes receivable 19,363 23,558
Inventories 74,062 85,768
---------- ---------
846,491 877,983
---------- ---------
Property, plant and equipment:
Plant and equipment 2,526,274 2,481,546
Less: accumulated depreciation 2,234,059 2,064,421
---------- ---------
292,215 417,125
Land 55,169 55,169
Construction in progress - 7,350
---------- ---------
347,384 479,644
---------- ---------
Other assets:
Noncurrent notes receivable 227,052 249,784
Deposits - 300
---------- ---------
227,052 250,084
---------- ---------
$1,420,927 1,607,711
========== =========
</TABLE>
See accompanying selected notes.
1
<PAGE>
Liabilities, Common Stock and Equity
------------------------------------
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 35,953 35,953
Other related party payable 229,380 289,978
Accrued expenses 74,451 68,828
---------- ---------
339,784 394,759
---------- ---------
Stockholders' Equity:
Capital Stock 1,300 1,300
Additional paid in capital 1,798,106 1,798,106
Retained earnings (718,263) (586,454)
---------- ---------
1,081,143 1,212,952
---------- ---------
$1,420,927 1,607,711
========== =========
</TABLE>
2
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Combined Statements of Income
Three months ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------------- ----------------
<S> <C> <C>
Operating revenues:
Car wash and detail $1,379,954 1,238,374
Lube and other services
Fuel 337,173 316,320
Merchandise 37,460 37,755
---------- ---------
1,754,587 1,592,449
---------- ---------
Cost of sales:
Car wash and detail 931,035 800,388
Lube and other services
Fuel 319,360 299,787
Merchandise 18,207 21,279
---------- ---------
1,268,602 1,121,454
---------- ---------
485,985 470,995
---------- ---------
Operating expense:
Depreciation 29,763 42,428
Sales, general and administrative 483,086 380,484
---------- ---------
512,849 422,912
---------- ---------
Operating income (loss) (26,864) 48,083
---------- ---------
Other revenue and (expense):
Net interest income 5,581 4,165
---------- ---------
5,581 4,165
---------- ---------
Net income (loss) $ (21,283) 52,248
========== =========
</TABLE>
See accompanying selected notes.
3
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC
AND GENIE CAR SERVICE CENTER, INC.
Combined Statements of Changes in Stockholders' Equity
Three months ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999
-----------------------------------------------------------
Common Additional Retained
Stock Paid in Capital Earnings Total
----------- ----------------- ------------ -------------
<S> <C> <C> <C> <C>
Balance at January 1, 1999 $1,300 1,798,106 (696,980) 1,102,426
Net (loss) - - (21,283) (21,283)
------ --------- -------- ---------
Balance at March 31, 1999 $1,300 1,798,106 (718,263) 1,081,143
====== ========= ======== =========
</TABLE>
<TABLE>
<CAPTION>
1998
----------------------------------------------------------
Common Additional Retained
Stock Paid in Capital Earnings Total
----------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
Balance at January 1, 1998 $1,300 1,798,106 (638,702) 1,160,704
Net income - - 52,248 52,248
------ --------- -------- ---------
Balance at March 31, 1998 $1,300 1,798,106 (586,454) 1,212,952
====== ========= ======== =========
</TABLE>
See accompanying selected notes.
4
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Combined Statements of Cash Flows
Three months ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------------- ----------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ (21,283) 52,248
--------- --------
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Depreciation 29,763 42,429
Changes in assets and liabilities:
Decrease in accounts receivable 131,311 115,694
Decrease in inventory 16,083 5,759
(Increase) decrease in other related party
receivable 578,473 (437,610)
Increase in accounts payable 1,501 1,097
Increase (decrease) in other related
party payable (735,545) 211,700
(Decrease) in accrued expenses (21,582) (10,829)
--------- --------
Total adjustments 4 (71,760)
--------- --------
Net cash (used) by operating activities (21,279) (19,512)
--------- --------
Cash Flows from Investing Activities:
Collections on notes receivable 6,271 7,468
--------- --------
Net cash provided by investing activties 6,271 7,468
--------- --------
</TABLE>
See accompanying selected notes.
5
<PAGE>
<TABLE>
<CAPTION>
1999 1998
----------------- ----------------
<S> <C> <C>
Cash Flows from Financing Activities:
Shareholder distribution - -
----------------- ----------------
- -
----------------- ----------------
Net (decrease) in cash and cash equivalents (15,008) (12,044)
Cash and cash equivalents at beginning of period 226,747 327,231
---------------- -------
Cash and cash equivalents at end of period $211,739 315,187
================ =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - 11,323
================ =======
</TABLE>
6
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Selected Notes to Combined Financial Statements
March 31, 1998 and 1997
(1) Summary of Significant Accounting Policies
------------------------------------------
Nature of Operations
--------------------
The accompanying combined financial statements include the accounts of
Genie Car Wash Inc. of Austin, Genie Car Care Center, Inc. and Genie Car
Service Center, Inc. These Companies are related through common ownership
and management. All significant intercompany balances and transactions
have been eliminated in combination.
Each Company owns and operates a car wash in the Austin, Texas area under
the name of Genie Car Wash. Each car wash provides a range of car care
services including gasoline and diesel fuel sales, full service car wash,
self-service car wash, self-service wash bays and a custom detail shop.
Unaudited Financial Statements
------------------------------
The combined financial statements for the three months ended March 31, 1999
are unaudited; however, in the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary for a fair
presentation of the combined financial statements for the interim period
have been included.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Inventories
-----------
Inventories consist of fuel, soap, car wash chemicals and merchandise. Fuel
is stated at lower cost (first in - first out) or market. All other
inventory is stated at an estimated value based on purchases.
7
<PAGE>
GENIE CAR WASH INC. OF AUSTIN,
GENIE CAR CARE CENTER, INC.
AND GENIE CAR SERVICE CENTER, INC.
Selected Notes to Combined Financial Statements
Property, Plant and Equipment and Related Depreciation
------------------------------------------------------
Plant and equipment are stated at cost less accumulated depreciation. The
straight-line and declining balance methods are used to calculate
depreciation with the estimated useful lives as follows:
Buildings 10 - 20 years
Furniture, fixtures and equipment 5 years
Maintenance, repairs and minor renewals are charged to operations during
the year incurred. Major renewals and betterments are charged to the
property accounts. Upon the sale or retirement of property, plant and
equipment, the cost thereof and the accumulated depreciation are removed
from the accounts. Gains or losses on the sale or retirement of property,
plant and equipment are credited or charged to operations.
(2) Subsequent Events
-----------------
On May 18, 1999, Mike Cornett entered into an agreement and sold
substantially all of the Companies assets along with the land and buildings
owned by Cornett L.P. to Mace Securities International, Inc. for
$11,750,000.
8
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
23.1 Consent of D. Williams & Co., P.C.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements of
Mace Security International, Inc. on Form S-8 (Registration No. 333-31757, filed
on July 22, 1997) of our report dated June 18, 1999, with respect to the
combined financial statements of Genie Car Wash Inc. of Austin, Genie Car Care
Center, Inc. and Genie Car Service Center, Inc. included in Mace Security
International, Inc.'s Current Report on Form 8-K dated May 18, 1999 (as amended
August 2, 1999 on Form 8-K/A), filed with the Securities and Exchange
Commission.
/s/ D. Williams & Co., P.C.
Lubbock, Texas
July 28, 1999
