U.S. Securities and Exchange Commission
Washington, D.C 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ........to ...........
Commission file number 1-13856
Sel-Leb Marketing, Inc.
(Exact name of small business issuer as
specified in its charter)
New York 11-3180295
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1435 51st Street, North Bergen, NJ 07047
(Address of principal executive offices)
201-864-3316
(Issuer's telephone number)
(Former Name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such report(s)), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 7,475,000 shares of common
stock as of August 8, 1996.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
SEL-LEB MARKETING, INC.
TABLE OF CONTENTS
Page No.
Part I Financial Information
Item 1. Financial Statements (Unaudited)
Balance sheet at December 31, 1995 1
Balance sheet at June 30, 1996 2
Statement of Income for the three months 3
ending June 30, 1996 and 1995
Statement of Income for the six months 4
ending June 30, 1996 and 1995
Statement of Cash Flows for the six months
ending June 30, 1996 and 1995 5
Statement of Shareholder's Equity at June 30,
1996. 6
Notes to Financial Statements
7 - 9
Item 2. Management's Discussion and Analysis or Plan
Of Operation
10 - 12
Part II Other Information
Item 2. Changes in Securities 13
Item 4. Submission of Matters to a Vote of Security Holders
13 - 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 14
<PAGE>
SEL-LEB MARKETING, INC.
AUDITED BALANCE SHEET
DECEMBER 31, 1995
ASSETS
Current Assets:
Cash and cash equivalents $ 832,970
Accounts receivable - net 2,175,813
Inventory 2,470,086
Prepaid expenses and other
current assets 353,557
Deferred income tax asset,
net of valuation allowance 52,000
----------
Total current assets 5,884,426
Property and equipment - net 270,703
Goodwill 280,823
Other assets 3,611
----------
Total assets
$6,439,563
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 941,242
Due to affiliates 118,310
Income taxes payable 269,525
----------
Total current liabilities 1,329,077
Long-term debt related
parties 469,000
----------
Total liabilities 1,798,077
----------
Common Stock - $.01 par value;
authorized 40,000,000 shares, issued
and outstanding 7,440,000 shares (Note 1) 74,400
Additional paid-in capital 4,136,563
Retained earnings 430,523
----------
Shareholders' equity 4,641,486
----------
Total Liabilities and Shareholders' Equity $6,439,563
==========
See Notes to Financial Statements
1
<PAGE>
SEL-LEB MARKETING, INC.
UNAUDITED BALANCE SHEET
JUNE 30, 1996
ASSETS
Current Assets:
Cash and cash equivalents $ 37,263
Accounts receivable - net 2,496,207
Due from affiliates 50,000
Inventory 3,042,088
Prepaid expenses and other
current assets 243,785
Deferred income tax asset,
net of valuation allowance 52,000
----------
5,921,343
Total current assets
319,455
Property and equipment - net 266,660
Goodwill 3,611
----------
Other assets
$6,511,069
==========
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $1,014,554
Due to affiliates 84,067
Income taxes payable 307,884
Loan payable 225,000
----------
Total current liabilities 1,631,505
----------
Total liabilities 1,631,505
----------
Common Stock - $.01 par value;
authorized 40,000,000 shares, issued
and outstanding 7,440,000 shares (Note 1) 74,400
Additional paid-in capital 4,183,464
Retained earnings 621,700
----------
Shareholders' equity 4,879,564
----------
Total Liabilities and Shareholders' Equity $6,511,069
==========
See Notes to Financial Statements
2
<PAGE>
SEL-LEB MARKETING, INC.
UNAUDITED STATEMENTS OF INCOME
THREE MONTHS ENDED
------------------
(Note 1)
JUNE 30, JUNE 30,
-------- --------
1996 1995
---- ----
Revenue:
Net Sales $3,339,281 $2,688,525
Operating Expenses:
Cost of sales 2,493,772 1,986,352
Selling, general and administrative 667,533 523,824
---------- ---------
expenses
3,161,305 2,510,176
Total operating expenses
Operating income 177,976 178,349
Interest income 318 0
Interest expense (1,745) (43,308)
----------- ------------
Income before provision for
income taxes 176,549 135,041
Provision for income taxes (Note 4) 75,916 14,855
------------ ----------
Net income $ 100,633 $ 120,186
============= ============
Pro forma information
Net income (Note 4) $ 100,633 $ 76,973
============= ============
Primary earnings per share $ .02 $ .02
============= ============
Fully diluted earnings per share $ .01 $ .02
============= ============
See Notes to Financial Statements
3
<PAGE>
SEL-LEB MARKETING, INC.
UNAUDITED STATEMENTS OF INCOME
SIX MONTHS ENDED
----------------
(Note 1)
JUNE 30, JUNE 30,
-------- --------
1996 1995
Revenue:
Net Sales $6,410,046 $5,043,373
Operating Expenses:
Cost of sales 4,780,609 3,763,715
Selling, general and administrative 1,309,422 958,636
-------------- -----------
expenses
6,090,031 4,722,351
Total operating expenses
Operating income 320,015 321,022
Interest income 10,221 0
Interest expense (13,987) (81,261)
----------- -----------
Income before provision for
income taxes 316,249 239,761
Provision for income taxes (Note 4) 125,072 26,374
----------- -----------
Net income $ 191,177 $ 213,387
============ ============
Pro forma information (unaudited)
Net income (Note 4) $ 191,177 $ 136,664
============ ============
Primary earnings per share $ 0.03 $ 0.03
============ ============
Fully diluted earnings per share $ 0.01 $ .03
============ ============
See Notes to Financial Statements
4
<PAGE>
SEL-LEB MARKETING, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------
1996 1995
---- ----
(Note 1)
Cash flow from operating activities:
<S> <C> <C>
Net income $191,177 $213,387
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Imputed interest on noninterest bearing loans 0 4,226
Depreciation 57,015 425
Changes in operating assets and liabilities:
(Increase) in accounts receivable (320,394) (884,250)
(Increase) in due from affiliates (50,000) 0
(Increase) in inventories (572,002) (255,351)
Increase in due from affiliates 0 (59,820)
Decrease in prepaid expenses and
other current assets 109,772 107,982
Increase in accounts payable, accrued expenses
and income taxes payable 111,671 685,201
(Decrease) in due to affiliates (34,243) 0
------- ----------
Net cash used in operating
activities ($507,004) ($188,200)
---------- ----------
Cash flow from investing activities:
Expenditures for capital equipment (91,604)
---------- -----------
Cash flow from financing activities:
Net proceeds from bridge loan 0 250,000
Net proceeds from notes to bank 225,000 50,000
Net repayment of long term debt
to related parties (422,099) 0
Net proceeds from receivables in connection with stock 0 21,000
Deferred offering costs paid from IPO 0 (175,350)
---------- ---------
Net cash provided by (used in) financing
activities ( 197,099) 145,650
---------- ---------
Net increase (decrease) in cash ( 795,707) (42,550)
========= ==========
Cash at beginning of period 832,970 177,394
======== ===========
Cash at end of period $ 37,263 $ 134,844
========= ============
</TABLE>
See Notes to Financial Statements
5
<PAGE>
SEL-LEB MARKETING, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common Shares Paid-In Retained Shareholders'
Shares Amount Capital Earnings Equity
------ ------ ------- -------- ------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 7,440,000 $74,400 $4,136,563 $430,523 $4,641,486
Discount in connection
with repayment of
related party debt --- 46,901 --- 46,901
Net income --- --- 191,177 191,177
----------- --------- ----------- -------- --------
Balance at June 30, 1996 7,440,000 $74,400 $4,183,464 $621,700 $4,879,564
========= ======= ========== ======== ==========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
SEL-LEB MARKETING, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(The information pertaining to the six month periods ended June 30, 1995 and
1996 are unaudited)
1. Basis of Presentation, Events, and Initial Public Offering
The financial statements of Sel-Leb Marketing, Inc., ("the Company")
included herein have been prepared pursuant to generally accepted
accounting principles and have not been examined by independent public
accountants. In the opinion of management all adjustments which are of a
normal recurring nature necessary to present fairly the results of
operation have been made. Pursuant to Securities and Exchange Commission
("SEC") rules and regulations, certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
from these statements unless significant changes have taken place since the
end of the most recent fiscal year. The disclosures contained herein
should be read in conjunction with the financial statements and notes
included in the Company's Form 10-KSB filed with the SEC on March 31, 1996
and its Registration Statement on Form SB-2, Registration No. 333-6057,
declared effective on July 12, 1996 by the SEC. The results of operations
for the six month period ended June 30, 1996 are not necessarily indicative
of the results to be expected for the full year.
The Company completed in July 1995 its initial public offering ("IPO") of
920,000 units (the "IPO Units"), each IPO Unit consisting of one share of
common stock and one warrant entitling the holder to purchase one share of
common stock at an exercise price of $6.00 per share. The Warrants are
exercisable for a three year period commencing July 13, 1996. The Company
used a portion of the net proceeds of the IPO to repay bank and bridge
loans outstanding as of the date of the IPO.
On January 4, 1995, the Company increased its authorized number of shares
to 10,000,000 shares of common stock, effected a 17,760.8 for 1 stock split
and changed the par value of its common stock from no par to $.01 par. On
May 18, 1995, the Company effected a .810706 reverse stock split. In
February 1996, the Company increased its authorized number of shares to
40,000,000 shares of common stock and consummated a 3 for 1 stock split,
which was effected as a share distribution pursuant to which each holder of
a share of common stock received two additional shares for each share
held.In connection with the February 1996 3-for-1 stock split, the Company
adjusted the terms of the warrants to provide that each warrant would
thereafter entitle the holder to purchase three shares of common stock at
an exercise price of $2.00 per share. On June 6, 1996, the Company elected
to split the warrants, as a result of which, effective June 20, 1996, each
warrant to purchase three shares of common stock at an exercise price of
$2.00 per share was converted into three warrants, each to purchase one
share of common stock at an exercise price of $2.00 per share. The
increase in authorized shares and the stock splits have
7
<PAGE>
SEL-LEB MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
been given retroactive effect in the accompanying financial statements.
On May 18, 1995, the Company and Linette Cosmetics, Inc. ("Linette"), two
companies with the same ownership interests, merged, with the Company as
the surviving corporation. In addition, certain shareholders of the
Company contributed their 60% interest in Lea Cosmetics, Inc. ("Lea") to
the Company in connection with the IPO. The Company purchased the
remaining 40% interest in Lea immediately prior to consummation of its IPO
and Lea was subsequently merged into the Company in August 1995. The
purchase price for the 40% interest in Lea consisted of 180,000 shares of
common stock, 90,000 of which were issued in January 1996 upon Lea's
achieving certain sales volume for 1995.
The merger of Linette with and into the Company and the contribution of the
60% interest in Lea to the Company, have been reported at historical cost
in a manner similar to a pooling of interests. The purchase of the 40%
interest in Lea by the Company has been accounted for as a purchase. The
accompanying unaudited statement of income for the three and six months
period ended June 30, 1995 presents the results of operations of the
Company as if these transactions had occurred on January 1, 1995.
2. Earnings Per Share
Earnings per share amounts are computed based on the weighted average
numbers of shares actually outstanding plus the shares that would be
outstanding assuming exercise of diluted stock options and warrants, all of
which are considered to be common stock equivalents. The number of shares
that would be issued from the exercise of stock options and warrants has
been reduced by the number of shares that could have been purchased from
the proceeds of such exercise at the average market price of the Company's
stock.
Pursuant to the modified treasury stock method, the number of shares
purchased has been limited to 20% of the outstanding shares and the balance
of funds has been hypothetically invested in U.S. government securities or
commercial paper with appropriate recognition of any income tax effect.
For the three andsix months ended June 30, 1996, the number of shares used
in the computation of primary earnings per share and fully diluted earnings
per share were 13,976,911 and 14,275,994, respectively. For the comparable
period in 1995 the number of shares used for both calculations amounted to
4,969,089.
3. Acquisition
In July 1995, the Company purchased the 40% interest in Lea in a business
combination
8
<PAGE>
SEL-LEB MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
accounted for as a purchase. The purchase price was 180,000 shares of
newly issued, unregistered shares of the Company's common stock, 90,000 of
which were issued in January 1996 upon Lea's achieving certain sales volume
for 1995. The accompanying financial statements reflect the issuance of
these shares of common stock as if they were issued on December 31, 1995.
The fair value of the assets acquired, including approximately $283,000
allocated to goodwill, which is being amortized over 10 years, amounted to
approximately $384,000 and liabilities assumed amounted to approximately
$101,000. Amortization expense related to goodwill and charged to
operations amounted to $14,163 for the six months ended June 30, 1996.
The Company reviews the carrying value of goodwill for impairment
periodically and whenever events or changes in circumstances indicate that
the amount may not be recoverable. The review for recoverability includes
an estimate by the Company of the future undiscounted cash flows expected
to result from the use of the assets acquired and their eventual
disposition. An impairment will be recognized if the carrying value of the
assets exceeds the estimated future undiscounted cash flows of those
assets.
4. Provision for Income Tax and Pro Forma Information
The provision for income tax for the three and six month periods ended June
30, 1996 and the pro forma provision for the three and six month periods
ended June 30, 1995 reflects the Company's earnings taxed for Federal and
certain State income tax purposes at statutory rates. Prior to the merger
of Linette with and into the Company, the Company was treated as an S-
Corporation, with its earnings taxed for federal and certain state income
tax purposes directly to its shareholders. In addition, pro forma net
income for the three and six month periods included minority interest in
earnings of subsidiary. For the three month period ended June 30, 1995
the amount included was $18,475 and for the six month period ended June
30, 1995 the amount included was $90,498.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
The following discussion and analysis of the Company's results of
operations, liquidity and financial condition should be read in conjunction with
the Financial Statements of the Company and related notes thereto. This
Quarterly Report on Form 10-QSB contains certain forward-looking statements.
Actual results could differ materially from those projected in the forward-
looking statements due to a number of factors, including but not limited to
general trends in the retail industry, the ability of the Company to
successfully implement its expansion plans, consumer acceptance of any products
developed and sold by the Company, the ability of the Company to develop its
"celebrity" product business and other factors set forth herin or in reports
and other documents filed by the Company with the SEC.
Results of Operations: Three and Six Month Periods Ended June 30, 1996
- --------------------------------------------------------------------------
Compared to the Corresponding Periods Ended June 30, 1995
- ---------------------------------------------------------
Net sales for the three months ended June 30, 1996 were $3,339,281 compared
to $2,688,525 for the three months ended June 30, 1995, representing an increase
of 24%. For the six month period ended June 30, 1996 net sales was $6,410,046
compared to $5,043,373 for the corresponding period in 1995 representing an
increase of 27.1%. This increase in net sales resulted from increases in both
the sales of the Company's own proprietary brand name line of beauty aids and
cosmetics and sales of merchandise acquired in connection with the Company's
opportunistic purchasing business.
Cost of sales increased from $1,986,352 for the three month period in 1995
to $2,493,772 for the same period in 1996. For the six month period ending June
30, 1995 and 1996 cost of sales were $3,763,715 and $4,780,609 respectively. The
cost of goods sold as a percentage of sales, 74.6% in both 1995 and 1996 for
the six month period ended June 30, remained unchanged.
Selling, general and administrative ("SG&A") expenses increased from
$523,824 for the three month period ending June 30 1995 compared to $667,533
for the comparable period in 1996. SG&A for the six month period ending June
30th was $958,636 in 1995 and $1,309,422 in 1996. The principal components of
SG&A are payroll, rent, commissions, insurance, legal, accounting and other
fees paid to third parties and travel and promotional expenses. The increase
in SG&A expenses in 1996 resulted primarily from the increased payroll and
travel incurred by the Company in connection with its status as a public
company and increased sales activity relating to the development of new
accounts and product lines.
As a result of the increase in the cost of sales and the increase in SG&A
expenses, total operating expenses increased from $2,510,250 in 1995 to
$3,161,305 in 1996 for the three month period and $4,722,351 in 1995 to
$6,090,031 in 1996 for the six month period.
As a result of the increase in operating expenses, operating income
decreased for the six month period from $321,022 in 1995 to $320,015 in 1996.
The increase in interest income of $10,221 in 1996 compared to $-0- in 1995 and
the decrease in interest expense from $81,261 in 1995 to $13,987 in 1996
resulted in an increase in income before provision for income tax of $239,761 in
1995 to $316,249 in 1996 for the six month period. For the three months ended
June 30, 1995 the operating income was $178,349 compared to $177,976 for the
three months ended June 30, 1996.
10
<PAGE>
The reduction of interest expense from $43,308 for the three months ended June
30, 1995 to $1,745 for the comparable three months in 1996 resulted in an
increase in income before provision for income tax from $135,041 in 1995
to $176,549 in 1996. The pro forma net income for the three and six-month
periods ended June 30, 1995 reflects an adjustment to the earnings of the
Company for income taxes as if the Company's S corporation status had
terminated at the beginning of the period.
Liquidity and Capital Resources
- -------------------------------
During 1995, the Company completed the IPO, in which it sold an aggregate
of 920,000 IPO Units with each IPO Unit consisting (after giving
effect to the February 1996 3-for-1 stock split and the related adjustments to
and split of the warrants) of three shares of common stock and three warrants,
at a price of $5.00 per IPO Unit for gross proceeds of $4,600,000.
In May 1995, the Company borrowed, for working capital purposes and to pay
a portion of the expenses of the IPO, an aggregate of $250,000 (the "Bridge
Financing") from an accredited investor unaffiliated with the Company or any of
its executives or directors (the "Bridge Investor"). In connection with the
Bridge Financing, the Company issued to the Bridge Investor (I) a note, which
bore interest at the rate of 8% per annum and was due and payable on the
earlier of the consummation of the IPO or November 23, 1995 (the "Bridge Note")
and (ii) 1,000,000 warrants (the "Bridge Warrants"), each of which was
exercisable until November 23, 1995 and entitled the holder thereof to purchase
three shares of common stock at an exercise price of $2.00 per share. Upon the
consummation of the IPO, each Bridge Warrant automatically converted into a
warrant having the same terms as the warrants issued in the IPO. The Company
used a portion of the proceeds of the IPO to repay the entire principal amount
of the Bridge Note, plus accrued interest thereon.
During the first six months of 1996, the Company used working capital to
pay long term debt to related parties in the amount of $422,099. The Company
received a discount of $46,901 on the outstanding balance and increased
additional paid in capital by a corresponding amount. The Company also used
cash to take advantage of buying opportunities in order to increase inventory
available for subsequent periods. The payment, to related parties, together
with the increase in inventory of $572,002 during the period, resulted in
decreases in cash from $832,970 as of December 31, 1995 to $37,263 on June 30,
1996.
On November 6, 1995, the Company entered into a Loan and Security Agreement
(the "Loan Agreement") with United Jersey Bank (the "Lender") pursuant to which
it obtained a revolving line of credit for general working capital purposes in
an aggregate principal amount up to $2,000,000, subject to a borrowing base
limitation. The line of credit bears interest at fluctuating rates per annum
based on the "Prevailing Base Rate" (as defined in the Loan Agreement) of the
Lender. The Company had $225,000 of borrowings under such line of credit as of
June 30, 1996. As of August 8, 1996, the Company had outstanding $550,000 under
this line of credit. Any funds borrowed by the Company under the Loan
Agreement are secured primarily by the inventory and receivables of the Company.
The Loan Agreement terminates on May 31, 1997. There can be no assurance that
the Loan Agreement will be renewed at such time.
At June 30, 1996, the Company had working capital of $4,292,185.
11
<PAGE>
The Company anticipates that its working capital, together with anticipated
cash flow from the Company's operations and proceeds received from the exercise
of warrants, if any, will be sufficient to satisfy the Company's cash
requirements for at least twelve months. In the event the Company's plans
change (due to unanticipated expenses or difficulties or otherwise), or if the
working capital and projected cash flow otherwise prove insufficient to fund
operations, the Company could be required to seek additional financing sooner
than currently anticipated. Except for the Loan Agreement, which expires on May
31, 1997, the Company has no current arrangements with respect to, or sources
of, additional financing. Accordingly, there can be no assurance that
additional financing will be available to the Company when needed, on
commercially reasonable terms, or at all. The Company's inability to obtain
such additional financing could have a material adverse effect on the Company's
long-term liquidity and on the proposed business expansion plans of the Company.
12
<PAGE>
Part II Other Information
Item 2. Changes in Securities
---------------------
In connection with a three-for-one split of the common stock, par
value $.01 per share, of the Company ("Common Stock") which was effected in the
form of a share distribution on February 29, 1996 (the "Share Distribution"),
the terms of the Company's redeemable warrants ("Warrants") were adjusted,
pursuant to the terms of the Warrant Agreement, dated as of July 20, 1995 (the
"Warrant Agreement"), between the Company, Duke & Co., Inc. and Continental
Stock Transfer & Trust Company, to reflect the Share Distribution. Accordingly,
effective February 29, 1996, the terms of the Warrants, which had originally
entitled the holder thereof to purchase one share of Common Stock at an exercise
price of $6.00 per share at any time during the three-year period commencing
July 13, 1996 (the "Exercise Period"), were adjusted to provide that each
Warrant would thereafter entitle the holder to purchase three shares of Common
Stock at an exercise price of $2.00 per share at any time during the Exercise
Period. In addition, the redemption terms of the Warrants, which originally
provided that the Warrants would be redeemable by the Company at any time
commencing July 13, 1996 upon notice of not less than 30 days, at a price of
$.05 per Warrant (the "Redemption Price"), provided that the closing bid
quotation of the Common Stock on the Nasdaq Small-Cap Market ("NASDAQ") exceeded
$10.00 per share (subject to adjustment) for a period of 20 consecutive trading
days during the Exercise Period, were adjusted to provide that the Warrants
would not be redeemable unless the closing bid quotation on Nasdaq exceed $3.33
per share during the prescribed period.
As permitted by the terms of the Warrant Agreement, the Board of
Directors of the Company elected, on June 6, 1996, to adjust the number of
Warrants outstanding (the "Warrant Split"). Pursuant to the Warrant Split,
effective on June 20, 1996, each Warrant to purchase three shares of Common
Stock at an exercise price of $2.00 per share was converted into three Warrants,
each to purchase one share of Common Stock at an exercise price of $2.00 per
share. In addition, pursuant to the Warrant Agreement, the Company also
adjusted the Redemption Price to $.0167 in order to reflect the Warrant Split.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of Shareholders of the Company (the "Annual
Meeting") was held on May 29, 1996. At the Annual Meeting, the shareholders of
the Company voted upon the election of eight directors, with all eight nominees
being elected. The election of directors was the only matter voted upon at the
Annual Meeting, with the votes being cast as set forth below. No other
director's term of office continued after the Annual Meeting.
13
<PAGE>
NUMBER OF VOTES NUMBER OF VOTES
NAME FOR WITHHELD
---- ----------------- --------------------
Harold Markowitz 7,423,837 3,600
Paul Sharp 7,423,837 3,600
Jan S. Mirsky 7,423,837 3,600
Jorge Lazaro 7,423,837 3,600
Jack Koegel 7,423,837 3,600
Stanley R. Goodman 7,423,837 3,600
Edward C. Ross 7,423,837 3,600
L. Douglas Bailey 7,423,837 3,600
Item 6 Exhibits and Reports on Form 8-K
--------------------------------
A. Exhibits
10.1 First Amendment to Loan and Security Agreement dated as of May 31,
1996 between Registrant and United Jersey Bank.
11. Statement re computation of earnings (not required because the
relevant computation can be clearly determined from material contained in the
financial statements).
27. Financial Data Schedule
B. Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant.
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized .
SEL-LEB MARKETING, INC.
/s/ Jan S. Mirsky
---------------------------------------------
Jan S. Mirsky
Executive Vice President - Finance and
Chief Operating Officer
Dated: August 14, 1996 as both duly authorized officer of the registrant
and as principal financial officer of registrant.
14
Exhibit 10.1
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
This First Amendment to Loan and Security Agreement (the "Amendment")
dated as of May 31, 1996 by and between United Jersey Bank, a state banking
association organized and existing under the laws of the State of New
Jersey (the "Lender") with an office at 210 Main Street, Hackensack, New
Jersey 07602 and Sel-Leb Marketing, Inc., a New York corporation
("Borrower") having a principal place of business located at 1435 51st
Street, North Bergen, New Jersey 07047.
WHEREAS, on November 6, 1995, the Lender provided a certain credit
facility (the "Loan") to Borrower pursuant to the terms and conditions of a
certain Loan and Security Agreement dated as of November 6, 1995 (the "Loan
Agreement") as evidenced by a certain Line of Credit Note dated November 6,
1995 in the principal amount of Two Million ($2,000,000.00) Dollars (the
"Note");
WHEREAS, the Borrower has requested that the Lender extend the Line of
Credit Loan Termination Date; and
WHEREAS, the Lender is willing to extend the Line of Credit Loan
Termination Date subject to the terms and conditions set forth within this
Amendment.
NOW, THEREFORE, in consideration of the recitals and the mutual
covenants contained herein, the parties hereto agree as follows:
1. All capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them pursuant to the Loan
Agreement and the Note. Notwithstanding anything to the
<PAGE>
contrary contained in either the Loan Agreement or the Note, the terms of
this Amendment shall control.
2. Section 1.1(y) of the Loan Agreement is hereby stricken and
replaced with the following:
"(y) "Line of Credit Loan Termination Date" shall mean May 31,
1997."
3. The reference to the "Line of Credit Note" in Section 1.1(aa) of
the Loan Agreement shall be deemed to refer to the Note as modified by that
certain First Modification of Line of Credit Note attached hereto as
Exhibit A and by this reference made a part hereof as if fully set forth
herein.
4. The reference to "Loan Documents" in Section 1.1(bb) of the Loan
Agreement shall be deemed to include the Amendment and the First
Modification of Line of Credit Note.
5. The Borrower acknowledges and agrees that: (a) as of the date
hereof the unpaid principal balance of the Note is Two Hundred Seventy Five
Thousand ($275,000.00) Dollars; (b) the obligation of the Borrower to repay
the Note is absolute and unconditional and is not subject to any defense,
counterclaim, set-off, right of recoupment, abatement or other claim or
determination, and (c) the Note is and shall be governed by the terms and
provisions of the Loan Agreement, and as set forth in this Amendment.
6. The Lender and the Borrower hereby agree and consent to the terms
and provisions of this Amendment and the transactions contemplated hereby.
7. The Borrower shall pay all of the Lender's reasonable costs and
expenses incurred in connection with the preparation,
-2-
<PAGE>
execution and delivery of this Amendment, including, without limitation,
reasonable legal fees and disbursements of Lender's counsel.
8. Except as expressly otherwise provided herein, the terms of the
Loan Agreement shall remain in full force and effect and are incorporated
herein by reference. In the event of a conflict between the terms of this
Amendment and the Loan Agreement, the terms of this Amendment shall
control.
9. The Borrower acknowledges that the Lender has no obligation to
make any further amendments to the Loan Agreement or any other agreement
executed in connection therewith, including but not limited to this
Amendment and the Note.
10. This Amendment shall be construed in accordance with, and shall
be governed by, the laws of the State of New Jersey. This Amendment shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
IN WITNESS WHEREOF, the undersigned have caused this First Amendment
to Loan and Security Agreement to be executed by their proper and duly
authorized officers as of the date first set forth above.
UNITED JERSEY BANK
By: /s/ Richard Mady
---------------------------------------------
Richard Mady, Vice President
ATTEST. SEL-LEB MARKETING, INC.
/s/ JORGE LAZARO By: /s/ Jan Mirsky,
------------------------ ---------------------------------------------
JORGE LAZARO, Secretary Jan Mirsky, Executive Vice President
of Finance
- 3 -
<PAGE>
EXHIBIT A
---------
FIRST MODIFICATION OF LINE OF CREDIT NOTE
-----------------------------------------
This First Modification of Line of Credit Note ("Modification") dated
as of the 31st day of May, 1996 by and between UNITED JERSEY BANK, a state
banking association (the "Lender") with an office at 210 Main Street,
Hackensack, New Jersey 08602 and SEL-LEB MARKETING, INC., a New York
corporation ("Borrower") having a principal place of business located at
1435 51st Street, North Bergen, New Jersey, 07047.
WHEREAS, on November 6, 1995, the Lender provided a certain credit
facility (the "Loan") to Borrower pursuant to the terms and conditions of a
certain Loan and Security Agreement dated as of November 6, 1995 (the
"Loan Agreement") as evidenced by a certain Line of Credit Note dated
November 6, 1995 in the principal amount of Two Million ($2,000,000.00)
Dollars (the "Note");
WHEREAS, pursuant to the terms and conditions of the Loan Agreement
and the Note, the entire balance of all principal and interest under the
Loan becomes due and payable on May 31, 1996;
WHEREAS, the Borrower has requested that the Lender extend the
maturity of the Loan; and
WHEREAS, in accordance with the terms of the Loan Agreement, the
Borrower and Lender have agreed to modify and change certain terms,
conditions and provisions of the Note.
NOW, THEREFORE, in consideration of the recitals and the mutual
covenants contained herein, the parties hereto agree as follows:
<PAGE>
1. Subsection 3(b) of the Note shall be stricken and replaced with
the following:
"(b) Payor shall make a final payment of the entire
unpaid principal balance and all accrued interest under
this Note and all other costs, expenses and charges of
any nature whatsoever due or assessable hereunder on May 31,
1997."
2. The Note, and all the terms, provisions and conditions therein,
is hereby ratified and restated in its entirety and shall remain in full
force and effect, except as modified by this Modification, and in the event of
any inconsistency between the Note and the Note as modified by this
Modification, then the Note as modified by this Modification shall govern.
3. From and as of the date hereof, the Note shall be deemed to refer
to the Note, as modified by this Modification.
4. This modification shall be construed in accordance with, and
shall be governed by, the laws of the State of New Jersey.
5. This Modification shall be binding upon Lender and Borrower and
their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this First
Modification of Line of Credit Note as of the day and year first above
written.
UNITED JERSEY BANK
By: /s/Richard Mady
------------------------------------
Richard Mady, Vice President
ATTEST. SEL-LEB MARKETING, INC.
/s/ JORGE LAZARO By: /s/Jan Mirsky,
------------------------ ----------------------------------
JORGE LAZARO, Secretary Jan Mirsky, Executive Vice
President of Finance
- 2 -
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