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FORM 10 K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For this fiscal year ended September 30, 2001, Commission file number 03385
HOLOBEAM, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-1840647
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
217 First Street, P.O. Box 287, Ho-Ho-Kus, NJ 07423-0287
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 201-445-2420
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on which
Title of each class registered
Common Stock, Par Value $0.10 per share Over the Counter
Securities registered pursuant to Section 12(g) of the Act:
(Title of Class)
(Title of Class)
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
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant. The aggregated market value shall be computed
by references to the price at which the stock sold, or the average bid and asked
prices of such stock, as of a specified date within 60 days prior to date of
filing. $3,921,912.00 at December 10, 2001.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date. 290,512 Common
Shares at December 10,2001.
DOCUMENTS INCORPORATED BY REFERENCE.
1. Annual Report Form 10K for the year ended September 30, 1994.
2. Financial Statements for the year ended September 30, 1995.
3. Financial Statements for the years ended September 30, 1990 and 1989.
4. Annual Report Form 10K for the years ended September 30, 1996 and
1997.
5. Holobeam, Inc. Defined Benefit Plan.
6. Financial Statements for the years ended September 30, 1998 and
1999.
7. Financial Statements for the years ended September 30, 2000 and
1999.
PART I
Item 1. Business
(a) In General. The Registrant was organized in October, 1967, and
commenced doing business on January 1, 1968. The Registrant is engaged in the
rental and development of real estate and in developing surgical staples and the
technology used to apply the staples.
b) Industry Segments. For financial information in regard to Industry
Segments, reference is made to Note 12 to the Financial Statements for the years
ended September 30, 2001, 2000 and 1999.
(c) Description of Business.
(i) Principal Activities and
(ii) Status of products and Real Estate Properties.
Medical Staples
The Registrant is continuing its efforts in the area of medical staples for
use in internal surgery. Several United States Patents and foreign patents have
been received covering a novel staple. The has been produced and animal testing
took place during 1999 and 2000. The Registrant presently intends to continue
the project.
A significant investment would be required if the Registrant were to pursue
this area of business independently. The Registrant may seek a relationship of
some sort with a firm active in the medical equipment area. However, no
decision as to such a relationship has been made at this time.
Real Estate Development and Rental Activities
The Registrant has rented two buildings it owns located at A&S Drive,
Paramus, New Jersey: one to The Sports Authority, Inc. and the other to
Comp USA, both for retail purposes.
(iii) Raw Materials
The Registrant believes that the components and materials necessary or
useful to its operations will be available from diverse sources of supply. The
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materials used for the Registrant's research activities have been acquired
through commercial businesses engaged in the distribution of such supplies. The
materials that the Registrant would require for development of commercial
production of medical staples are widely available.
(iv) Patents.
The Registrant has filed several patent applications and has several
patents issued in connection with medical staples for use in internal surgery.
These applications and patents are as follows:
No. Serial No. Title of Invention Issue Date
1. PCT/US94/02227 Staples 03/01/94
2. 08/512,766 Staples 08/09/95
3. 08/228,058 Staples 08/29/95
4. Canadian Pat. No. 2,155,750 Improved Staples (PCT NAT) 08/18/98
5. European Pat. 94910801.3 Staples 03/01/94
6. Australian Pat. 63568/94 Improved Staples 09/15/94
7. Japanese Pat. 6-520120 Staples 03/01/94
8. Brazilian Pat. PCT/US94/02227 Staples 03/01/94
9. 08/502,988 Staple Overlap 08/18/95
10. 07/753,116 Surgical Stapling Method 01/19/93
11. 07/934,858 Surgical Stapling Method 11/23/93
12. 08/024,501 Staples 08/30/94
13. US Pat. #5,445,648 Staples 08/29/95
14. US Pat. #5,342,396 Staples 08/30/94
15. US Pat. #5,263,973 Surgical Stapling Method 11/23/93
16. US Pat. #5,667,527 Staples 09/16/97
17. US Pat. #5,749,896 Staple Overlap 05/12/98
18. Japanese Pat. #2672713 Improved Staples 07/11/97
19. Brazilian Pat. #9405840-7 Improved Staples 09/01/95
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20. US Pat. #6,083,242 Improved Staples 07/04/00
21. Australian Pat. #704533 Improved Staples 08/05/99
(v) Non-seasonal Business.
The Registrant does not believe that its products are subject to
material seasonal changes.
(vi) Working Capital.
Not relevant.
(vii) Customers.
Not relevant.
(viii) Backlog.
Not relevant.
(ix) Governmental Contracts. Not relevant.
(x) Competition.
It is presently contemplated that Registrant's activities with respect
to medical staples, if actual commercial activities are commenced, may be
limited to forming some type of business relationship with other firms. The
technology is in competition with alternative staples technology. Some
suppliers of surgical staplers are well-established and have significant
capital resources.
Competition in the real estate office rental segment of the Registrant's
business activities was significant in the Bergen County, New Jersey market in
which the Registrant competes during the period when the Registrant was
seeking suitable tenants for its rental properties.
The obsolete style of the building owned by the Registrant prior to and
during 1991 made the attraction of suitable tenants difficult.
In an effort to increase the marketability of the Registrant's
properties, the Registrant applied to the Borough of Paramus for a zoning
change to allow retail use for the office building and for the adjacent site.
In December 1991, the necessary change in zoning was approved. The then
5
existing building was rented to The Sports Authority, Inc., a retailer of
sporting goods. This building was substantially renovated by The Sports
Authority, Inc. and Holobeam reimbursed them for their costs in connection
with this renovation.
During 1994, a 30,000 sq. ft. building was constructed on the
Registrant's site located adjacent to the building leased to The Sports
Authority, Inc. for use as a Computer City retail store. Tandy Corp., parent
corporation of Computer City, commenced paying rent in October 1994. Holobeam
reimbursed Tandy Corporation $1,189,675 as an allowance for costs of
constructing the building and paving of the site, after a permanent
Certificate of Occupancy was obtained. During 1998, Computer City Retail
Stores were acquired by Comp USA. Tandy Corp. remains on the lease as
guarantor.
(xi) Research and Development.
The Registrant has investigated methods for applying surgical staples
and the technology presently used to fabricate and apply such staples. During
2001, 2000 and 1999, the Registrant expended $183,089.00, $192,085.00 and
$194,364.00, respectively, in connection with the furtherance of this
activity. Such costs have been currently expensed and consist principally of
materials, supplies and costs associated with design and development.
(xii) Environmental Compliances.
The Registrant does not believe that compliance with Federal, State or
Local provisions of a governmental nature which have been enacted or adopted
regulating the discharge of material into the environment will have a
materially adverse effect upon the capital expenditure requirements, earnings
or competitive position of the Registrant.
The Registrant's activities with regard to medical staple technology, at
present, are limited to engineering, development and animal testing of medical
staple design with fabrication and manufacturing of prototypes and models
sub-contracted to other firms.
6
The Registrant is not aware of any potential liabilities or costs
associated with the disposal or handling of waste materials and is not aware
of any potential violations of local, state or federal laws which regulate the
technology.
(xiii) Employees.
At September 30, 2001 the Registrant employed three persons as compared
to three persons at September 30, 2000 and three persons at September 30,
1999.
(d) Financial Information About Foreign and Domestic Operations
and Export Sales.
The Registrant is not engaged in foreign operations and does not export
to foreign countries.
Item 2. Properties
The Registrant's headquarters and principal facilities are located at
217 First Street, Ho-Ho-Kus, New Jersey 07423-0287. The Registrant leases
approximately 1,000 square feet of office and laboratory space. The
Registrant owns two office buildings, one of 62,000 square feet and another of
30,000 square feet located at 50 A&S Drive, Paramus, New Jersey. One building
was placed in service in October 1994, the other in 1982. (Reference is made
to Notes 4, 8, 9 and 10 to the Financial Statements for the fiscal year ended
September 30, 1995, 1991, 1990 and 1989.)
Pertinent information concerning the Registrant's properties is as fol-
lows. (Reference is made to Schedule XI of the Registrant's Financial state-
ments for the years ended September 30, 1997 and 1996.)
7
Building Building
Paramus, NJ Paramus, NJ
Year Acquired 1971 1994
Gross Square Footage 62,000 30,000
Percent Leased at 09/30/01 100% 100%
Acquisition Cost $ 718,881 $2,592,513 (2)
Capital Improvements Since
Acquisition $3,649,850 (1) -0-
Total Investment $4,587,133 (3) $2,826,843 (4)
Mortgage Balance $5,305,151 $ -0-
(1) Includes $3,567,267.00 of improvements to the building repaid to
The Sports Authority, Inc. (the Tenant) upon closing of the
Mortgage, but does not include additional amounts expended by The
Sports Authority, Inc. since said closing.
(2) Includes construction allowance of $1,189,675.00 for Tandy
Corporation pursuant to the Operating Lease Agreement. (Now Comp
USA.)
(3) Includes land cost of $218,402 for the 62,000 sq. ft. building.
(4) Includes land cost of $234,370 for the 30,000 sq. ft. building.
In 1983, the Registrant purchased 2.799 acres of land located in
Paramus, New Jersey and adjacent to the building owned by the Registrant at 50
A&S Drive. The purchase price was $173,565 which was paid in cash. Since
1983, the Registrant has incurred costs in the amount of $60,805 for various
improvements and architectural work relating to development of this property.
During 1992, 1991 and 1990, the Registrant spent $293,784, $78,051 and $50,667
respectively in connection with an application for a use variance for the site
and various site improvements that would enable the construction of a
commercial or retail building on the site. The change in zoning to retail use
was approved by the Borough of Paramus in December 1991. The change in zoning
to allow retail use also required new site plan approval because the change in
use required new traffic pattern studies, parking lot re-design and
significant additional changes in order to comply with governmental
requirements.
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In addition, the Registrant expended $964,505 through September 30, 1994
for site plan approval and changes, and toward construction of a building on
the site. No depreciation or amortization was recorded until the building and
site were put into service. During October 1994, construction was completed by
Tandy Corporation of a retail building on the Registrant's site. The building
is now being used for a CompUSA retail store. (Reference is made to Note 13
to the Registrant's 1994 Financial Statements and to Item 1, Part X of the
1994 Form 10K.)
The zoning change approval allowed for retail use of the property and
significantly enhanced the opportunities for attracting a suitable tenants for
the site.
When purchased, the site adjacent to the building owned by the Regis-
trant, required site engineering and costs to acquire site plan approval for a
building from the appropriate governmental regulatory authorities.
In addition, the Registrant expended funds during its efforts to change
the zoning of the property from office use to retail use. This change in
zoning allowed the Registrant to seek tenants engaged in retail operations and
resulted in the October 1994 tenancy of Computer City. (Reference is made to
Note 12 of the Financial Statements for the year ended September 30, 1997.)
The Registrant was not able to lease the property since the original
site plan allowing office use was not approved for retail use until the
Computer City occupancy of October 1994. The market for office space had seen
significant decline during 1990, 1991, 1992, 1993 and 1994.
The occupancy rate for the building owned by the Registrant and under
lease to The Sports Authority Inc. for the past five (5) years is as follows:
2001 100%
2000 100%
1999 100%
1998 100%
1997 100%
The building owned by the Registrant and under lease to Tandy Corp. (now
occupied by CompUSA) has been 100% occupied since October 1994. A summary of
9
the amounts expended for such approvals for the three most recent fiscal years
during which such expenditures were made appears below. No such expenditures
were made in 1996, 1997, 1998, 1999, 2000 or 2001.
1994 1993 1992
Zoning Changes and Site Plan Approvals:
Legal Fees $ 2,859 $ 10,093 $ 15,840
Governmental Fees 11,827 55,811 19,990
Engineering 11,049 39,171 57,954
Paramus Park -0- -0- 200,000
------- ------- -------
Total Related Costs $25,735 $105,075 $293,784
======= ======= =======
The payment of $200,000 during 1992 to Paramus Park was a one-time fee
in connection with removal of an existing deed restriction which prohibited
adjacent retail activity. The balance of the payments for site plan approvals
were paid to various engineering, legal and surveying firms in connection with
professional services rendered to obtain governmental approvals.
No payments to affiliated parties were made in connection with the
zoning changes nor were any payments made to affiliated or related parties for
the acquisition of site plan approval. Any payments to affiliated parties are
unrelated to the cost of such activities and are detailed and disclosed in
Item 11 (d) of this report.
During 1998, Computer City, Inc. retail stores were acquired by CompUSA,
Inc., another retailer of computers, computer accessories and software. The
Registrant accepted assignment of the Computer City lease by CompUSA and Tandy
Corporation remains on the lease as the guarantor.
Item 3. Legal Proceedings.
There are no legal proceedings of a material nature to which the
Registrant is a party other than ordinary, routine litigation incidental to
the business of the Registrant.
Item 4. Submission to Matters to a Vote of Security Holders.
None.
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PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.
(a) The Registrant's common stock is traded on the over-the-counter
market. The bid price listed (Source: S&P Comstock) on December 10, 2001 was
$14.00 per share. On July 18, 1983, the Registrant's shares were deleted from
the NASDAQ system when no market maker for the Registrant's common stock any
longer maintained registration as such with the NASDAQ System.
(b) The approximate number of holders of Common Stock securities of
the Registrant as of December 10, 2001 was 516.
(c) No dividends have been paid or declared on the Common Stock of the
Registrant during the 2001, 2000 or 1999 fiscal years. In making decisions
regarding the possible payment of dividends, the Board of Directors considers
the Requirements of the Registrant in such ongoing activities as real estate
development and the research, development and engineering efforts of the
Registrant as well as such obligations as mortgages and debentures.
(d) Changes in Securities.
(Reference is made for Form 10Q for the six-month period ended March 31,
1984, wherein the Registrant completed an exchange of common stock for 5%
Debentures payable March 1, 1989. Reference is made to Notes 9 and 10 to the
Financial Statements for the years ended September 30, 1989 and 1990.)
The high and low bid information of the Registrant's common stock for
the last two years was estimated to be as follows:(Source: S&P Comstock)
11
2001 2000
high low high low
Quarter Ended Dec. 31 15.00 14.50 16.00 16.00
Quarter Ended Mar. 31 15.00 14.50 16.00 16.00
Quarter Ended June 30 15.00 14.00 16.00 16.00
Quarter Ended Sept. 30 14.00 13.50 16.00 16.00
Such quotation represents prices offered by purchases without retail
mark-up, mark-down or commission and may not represent actual sales transac-
tions.
Item 6. Selected Financial Data.
Financial information for the five-year period commencing October 1,
1996 and ending September 30, 2001 is presented below.
HOLOBEAM, INC.
SUMMARY OF SELECTED FINANCIAL DATA
FOR THE YEARS ENDED SEPTEMBER 30,
RESTATED FOR PRIOR PERIOD ADJUSTMENT
2001 2000 1999 1998 1997
Gross Income $2,109,020 $2,109,860 $2,053,703 $2,053,520 $2,053,703
Net Income (Loss) 168,830 220,147 273,953 243,682 428,798
Weighted Average
Number of
Common Shares
Outstanding 290,960 294,013 298,101 304,237 310,426
Earnings Per
Share (Loss) 0.58 0.75 0.92 0.80 1.38
Total Assets 7,931,825 8,143,623 8,252,151 8,216,004 8,385,603
Long-Term Debt 4,925,540 5,305,149 5,653,044 5,984,002 6,310,060
Shareholders'
Equity 1,906,433 1,767,071 1,628,040 1,433,089 1,245,781
Gross Rental
Income 2,053,703 2,053,703 2,053,703 2,053,520 2,053,703
Net Rental
Income 1,794,699 1,790,823 1,795,908 1,795,014 1,786,204
It should be noted that years ended 2000, 1999, 1998 and 1997 have been
restated with reference to financial statement footnote #16.
12
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
(1) Liquidity.
The Registrant's operations for the year ended September 30,
2001 resulted in approximately $342,100.00 in cash flows which
compares to $495,000.00 for the year ended September 30, 2000.
Although cash flows have declined, the Registrant anticipates that
revenues from its real estate rental activities will be sufficient
to sustain operations for the balance of the terms of the
operating leases. (Reference is made to Note 3 of the
accompanying financial statements for the years ended September
30, 2001 and 2000.)
Minimum future rental revenues associated with the
Registrant's operating leases approximate $22,144.600.00 and are
expected to provide the revenues and cash flows capable of funding
the Registrant's operations through 2009 and 2012 when the leases
expire. Such revenues may continue beyond 2009 and 2012 as there
are renewal options contained in the leases.
Working Capital at September 30, 2001 was $358,268.00 which
represented a decrease of $36,927.00 when compared to Working
Capital at September 30, 2000. In the opinion of the Registrant,
current revenues are expected to provide sufficient cash flows to
fund the Registrant's activities during the terms of the operating
leases.
(2) Capital Resources
The Registrant does not expect future capital requirements
in connection with its properties other than those that are
routine and incidental to its real estate rental operations. The
Registrant's properties, located at 50 A&S Drive, Paramus, New
Jersey do not presently require new construction or refurbishment
in order to
13
sustain real estate rental operations and no
renovations are planned at this time. Operating expenses for real
estate taxes and maintenance are the responsibility of the
respective tenants and cost increases will not adversely affect
the Registrant's operations.
Insurance costs, although expected to increase, will not
have any materially adverse effect upon the Registrant's financial
position.
The Registrant also intends to fund a final series of
experiments in connection with the development of the medical
staples project to determine if the product has commercial value.
If feasibility cannot be demonstrated, the project will be
discontinued. (Reference is made to Annual Report 10K, Item 7 for
the years ended September 30, 1998, 1999 and 2000.) The
Registrant expects to provide funding for the experiments during
2002 for approximately $300,000.00 and such funds will be provided
by cash flows from the Registrant's real estate rental operations
as no revenues are anticipated from the medical staples
technology.
The Registrant also funded contributions to its defined
benefit pension plan in the amount of $341,102.00 for the year
ended September 30, 2001 and such funding was charged to
operations. The Registrant's funding policy is to make annual
contributions in amounts sufficient to fully provide for all
eligible employees benefits by the time they retire. At present,
continued funding is not expected to have any adverse effect upon
the Registrant's financial condition. (Reference is made to Note
15 to the Registrant's Financial Statements for the years ended
September 30, 2000, 1999 and 1998.)
(3) Results of Operations.
14
(a) The Registrant's after-tax earnings for the year ended
September 30, 2001 were $168,830.00 as compared to $220,147.00 for the
year ended September 30, 2000. Earnings per share were $0.58 and $0.75
respectively. Revenues decreased $4,840.00 to $2,105,020.00 while
general expenses increased $129,235.00. Cost increases were partially
offset by a $29,276.00 decrease in interest expense associated with the
Mortgage on the rental property owned by the Registrant. During 2001
the Registrant adopted FASB 13, accounting for leases. The effect of
FASB 13 is to apportion escalation revenues contained in the operating
leases in equal annual adjustments over the terms of the leases. The
Registrant's Statements of Operations for the years ended September 30,
2000, 1999 and 1998 have been restated to reflect this change.
(Reference is made to Note 16 to the accompanying financial statements
for the years ended September 30, 2000 and 1999.)
The Registrant's properties at 50 A&S Drive, Paramus, New Jersey
have had occupancy rates of 100% during 2001 and the rates are expected
to continue at 100% until 2009 when the Comp USA lease expires. Rental
expenses were $259,004.00 for 2001 and are expected to increase at or
below the current inflation rate for the geographic area in which the
Registrant has its real estate rental activities. The Registrant
anticipates no material effect upon its financial condition as a result
of such increases.
The Registrant continued to fund the medical staple project during
2001. Expenses associated with the engineering, research and
development of the project totaled $183,089.00 for the year as compared
to $92,085.00 for 2000.
During 2002, the Registrant expects to continue funding of the
medical staple project and to conduct a final series of tests to
determine the economic feasibility for the staple. If results do not
15
indicate favorable economic potential, funding will be discontinued
after 2002.
(b) During 2000, the Registrant recognized after-tax earnings of
$220,147.00 as compared to $273,953.00 for the fiscal year ended
September 30, 1999. The results of operations reflect performance
consistent with prior years and results from increased revenues
associated with the Registrant's real estate rental activities and
proportionate reduction in related expenses. When compared to 1999,
revenues increased $21,612.00 while interest expense associated with the
Registrant's mortgage decreased $26,837.00 to $513,106.00. The
favorable effect of interest reduction and increased revenues was
partially offset by increased income tax and general expenses.
Funding of the Registrant's surgical staple project continued
during 2000 with expenditures amounting to $192,085.00 as compared to
$194,364.00 in 1999. Efforts are proceeding to continue initial testing
during 2001 and the Registrant intends to fund the project with
resources generated from its operating activities. Such funding is
anticipated to approximate $300,000.00 during 2001.
The Registrant's occupancy rates for the real estate rental
properties was 100@ during 2000 and it is anticipated to remain at 100%
during 2001 which should result in comparable favorable performance to
2001. Rental expenses, which approximated $262,900.00 in 2000 are
expected to increase approximately 5% and are not expected to have any
materially adverse effect upon the Registrant's financial condition.
The Registrant's defined benefit pension plan was funded in the
amount of $330,122.00 during the fiscal year ended September 30, 2000 as
compared to $311,388.00 for 1999. The Registrant anticipates continued
funding of plan requirements with the cash flows presently generated by
its operations. Funding of the plan is not expected to have any material
16
adverse effect upon its financial condition.
(c) During 1999, the Registrant recorded after-tax income of
$275,953.00 as compared to $166,891.00 for the year ended September 30,
1998. The results of operations reflect improved performance as a
result of decreased interest expense associated with the Registrant's
mortgage on the rental properties and in reduced expenditures in
connection with the Registrant's medical staples project. When compared
to 1998 costs, interest expense decreased $24,582.00 and Research and
Development decreased $30,677.00. Gains associated with decreased
expenses were partially offset by increased income tax expense.
During 1999, the Registrant funded the research and development
activities associated with the medical staple project in the amount of
$194,364.00 which represents a reduction of $30,677.00 when compared to
expenditures for 1998. The Registrant expects to continue funding this
project with the cash flows associated with its real estate rental
activities during 2000. When definitive testing results can be
obtained, the Registrant will determine if funding should continue into
fiscal year 2001. The Registrant expects to fund the project during
2000 for testing, development and patent activities in the amount of
approximately $300,000.00.
Funding of the Registrant's defined benefit plan during the year
ended September 30, 1999 was $311,388.00 as compared to $307,773.00 for
1998. The Registrant expects to continue funding the plan on an annual
basis. The expenses associated with annual funding of the plan are not
expected to have a materially adverse effect upon the Registrant's
financial condition. (Reference is made to Exhibit entitled "Defined
Benefit Plan" filed with Quarterly Report Form 10Q for the Quarter ended
June 30, 1998 and filed on August 8, 1998.)
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(4) Other Matters
The Registrant was able to positively resolve the potential impact
of the Year 2000 on the processing of data-sensitive information by the
Registrant's computerized information system. The Year 2000 problem is
the result of computer programs being written using two digits (rather
than four) to define the applicable year. Any of the Registrant's
programs that have time-sensitive software could recognize a date using
"00" as the year 1900 rather than the year 2000, which may have caused
miscalculations or systems failures. The costs of addressing this issue
did not have a material adverse impact on the Registrant's financial
position, results of operations or cash flows. The Registrant devoted
the necessary resources and resolved all significant Year 2000 issues.
Item 8. Financial Statements and Supplemental Data.
Financial statements, supplementary financial information and Accoun-
tant's Report are filed with this report. (See Financial Statements and re-
ports thereon of R.A. Fredericks and Company for 2000 and 2001.)
Item 9. Disagreements on Accounting and Financial Disclosure.
None.
18
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) The following Table identifies each Director of the Registrant and
indicates his position with the Registrant, the duration of his term as Direc-
tor and the date when he was first elected.
Date First
Name and Age Title Term Elected
Melvin S. Cook Chairman of the Board 2002 Annual 1968
Age 70 President of Registrant Meeting
William M. Hackett Treasurer of Registrant 2003 Annual 1984
Age 58 Meeting
Beverly Cook Office Manager and 2004 Annual 1995
Age 65 Secretary of Registrant Meeting
(b) The following Table represents the name and age of each officer of
the Registrant, the positions and offices held by each, the term of each
office and the period which each has served in the indicated office.
Date First
Name and Age Title Term Elected
Melvin S. Cook Chairman of the Board Annual 1968
Age 70
William M. Hackett Treasurer of Registrant Annual 1975
Age 58
Beverly Cook Secretary of Registrant Annual 1997
Age 65
(1) Each officer has been selected to serve until the next Annual
Meeting of the Board of Directors or until his respective successor shall be
elected and shall quality.
(c) There are no significant employees other than those identi-
fied in (a) and (b) above.
(d) The following Table summarizes the business experience and
principal occupation during the last five years of each person who serves as a
director of executive officer of the Registrant, as well as any other
19
directorship held by persons serving as directors of the Registrant.
Other
Name Business Experience/Occupation Directorship
Melvin S. Cook Chairman of the Board of Directors and None
President of the Registrant since its
formation.
William M. Hackett Vice President of Registrant from None
August 23, 1975 until June 1, 1981 and
Controller of Registrant and member of
accounting staff from October 1973 to
August 1975. Treasurer of Registrant
from June 1981 to present. Vice President
of CMA Co., Inc. from November 1986 to
present. Elected President of CMA Co., Inc.
in 1998.
Beverly Cook Office Manager of Registrant from June 1, None
1981 until present. Married to Melvin S.
Cook, President and Chairman of the
Board of Directors.
(f) Not applicable.
Item 11. Management Compensation.
(a) The following Table shows all direct remunerations paid by the
Registrant during the fiscal year ended September 30, 2001 to each Director or
Officer of the Registrant whose aggregate direct remuneration exceeds
$100,000.00, and the direct remuneration paid all Directors and Officers of
the Registrant as a group for such fiscal year.
20
HOLOBEAM, INC.
Form 10K
Summary Compensation Table
September 30, 2001
Long Term Compensation
Name and Annual Compensation Awards Payouts All Other
Principal Position Year Salary Bonus Other Restricted Stock SUO/SARS LTIP
Payouts Compensation
Melvin S. Cook 2001 $400,000 -0- -0- -0- -0- -0- -0-
President and CEO 2000 306,250 -0- -0- -0- -0- -0- -0-
and Director 1999 250,000 -0- -0- -0- -0- -0- -0-
William M. Hackett 2001 25,000 -0- -0- -0- -0- -0- -0-
Treasurer and 2000 23,138 -0- -0- -0- -0- -0- -0-
Director 1999 17,550 -0- -0- -0- -0- -0- -0-
Beverly Cook 2001 99,999 -0- -0- -0- -0- -0- -0-
2000 93,750 -0- -0- -0- -0- -0- -0-
1999 75,000 -0- -0- -0- -0- -0- -0-
All Officers and 2001 $524,999 -0- -0- -0- -0- -0- -0-
Directors as a 2000 423,138 -0- -0- -0- -0- -0- -0-
Group 1999 342,550 -0- -0- -0- -0- -0- -0-
21
Item 11 (cont'd.)
The Summary Compensation Table represents all aggregate forms of
remuneration to the executive officers of the Registrant. There were no other
payments or compensation awarded to the officers of the Registrant.
(b) The Directors who are not employees of the Registrant receive
standard attendance fees of $200 plus applicable expenses for travel. No
Directors' fees were paid during 2001, 2000 and 1999.
(c) The following Table sets forth all the options to purchase securities
from the Registrant which were granted to or exercised by any of its directors
and each officer whose direct remuneration exceeds $100,000.00 as well as all
officers and directors as a group since October 1, 2000.
All Directors and Officers as a Group
Options Granted 0
Options Exercised 0
Unexercised Options Held at 9/30/01 0
(d) The following Table sets forth information about the Company's
defined benefit pension plan benefits:
Pension Plan Table
Years of Service
Remuneration 36
60,000 60,000
160,000 107,112
200,000 107,112
Pensions are based upon average annual earnings (salary and bonus) for the
highest three consecutive years of employment with the Registrant. For Melvin
Cook and Beverly Cook, the amounts equaled $107,112 and $60,000, respectively,
as of September 30, 2001. Melvin Cook and Beverly Cook will be credited at
normal retirement date with 36 years service each under the Pension Plan as of
September 30, 2001. Pensions may be adjusted for a surviving spouse's pension
22
or other options under the Pension Plan. Pensions are not subject to any other
deduction for Social Security or any other amounts.
23
PART IV
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) The stockholding of each person who is known by the Registrant to own
beneficially more than 5% of any classes of securities as of December 10, 2001
is as follows:
Title of Class Name & Address Amount Owned % of Class
Common Stock, Par Melvin S. Cook 123,497 42.5%
Value $0.10 Per Share 217 First Street
Ho-Ho-Kus, NJ 07423
Common Stock, Par Beverly Cook 95,000 32.7%
Value $0.10 Per Share 217 First Street
Ho-Ho-Kus, NJ 07423
(b) The stockholding of Officers and Directors as a group as of December
1, 1999 are as follows:
Title of Class Amount Beneficially Owned % of Class
Common Stock, Par Value 218,497 75.2%
$0.10 Per Share
(c) There are no contractual arrangements that might result in a change
of control of Registrant.
Item 13. Certain Relationships and Related Transactions - Not Applicable
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8K
(a) Index to Financial Statement filed as part of the Annual Report and
attached.
(b) Reports on Form 8K.
(c) Lease with The Sports Authority, Inc. filed as part of the 1993
Annual Report Form 10K-A.
(d) Financial Statement Schedules.
(e) Lease with Tandy Corp. filed as part of the 1995 Annual Report Form
10K.
The following is a list of Financial Statement Schedules filed as part of
this Annual Report on Form 10K. All other schedules omitted herein are so
omitted because either (1) they are not applicable, or (2) they required infor-
24
mation is shown in the Financial Statements.
Schedules
V Property and Equipment
VI Accumulated Depreciation and Amortization of
Property and Equipment
VIII Allowances and Reserves
X Supplementary Income Statement Information
XI Real Estate and Accumulated Depreciation
XII Mortgage Loans on Real Estate
(e) Exhibits, including those incorporated by references.
The following is a list of Exhibits filed as part of this Annual Report on
Form 10K. Where so indicated by footnotes, Exhibits that were previously filed
are incorporated by references.
Legend for Documents
Incorporated
by Reference
Articles of Incorporation and By Laws
Articles of Incorporation (1)
By-Laws (1)
By Laws as Amended (2)
Instruments Defining Rights of Share-
holders Including Indentures
Specimen Certificate for Shares of
Common Stock (1)
Security Combination Agreement (1)
Additional Exhibits - Exchange Offer (3)
- Lease with Sports
Authority, Inc. (4)
- Lease with Tandy
Corporation (5)
Form 8K - Change in Certifying Accountants (6)
Form 8K-A - Change in Certifying Accountants (7)
25
Defined Benefit Plan (8)
Legend
(1) Filed September 21, 1968 as an Exhibit to Form 10K and incorporated
herein by reference.
(2) Filed December 15, 1986 as part of proxy statement and incorporated
herein by reference.
(3) Filed December 23, 1983 - Exchange Offer.
(4) Filed October 12, 1994 as an exhibit to Form 10K-A and incorporated
herein by reference.
(5) Filed December 21, 1995 as an exhibit to Form 10K.
(6) Filed November 15, 1996 and incorporated herein by reference.
(7) Filed November 20, 1996 and incorporated herein by reference.
(8) Filed August 8, 1998 with Quarterly Report 10Q and incorporated
herein by reference.
Supplemental Information
No annual report or proxy material has been sent to security holders. Such
annual report and proxy material are to be furnished to security holders
subsequent to the filing of the annual report on this form. Copies of such
material will be furnished to the Commission when it is sent to security holders
26
HOLOBEAM, INC.
Form 10K
September 30, 2001
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Registrant Holobeam, Inc.
By William M. Hackett
Date December 24, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
HOLOBEAM, INC.
By: Melvin S. Cook
Melvin S. Cook
President and Chairman of the Board
Date: December 24, 2001
By: William M. Hackett
William M. Hackett
Director and Treasurer
Date: December 24, 2001
By: Beverly Cook
Beverly Cook
Director
Date: December 24, 2001
December 24,2001
US Securities and Exchange Commission
6432 General Green Way
Alexandria, VA 22312
Attn: File Support
Re: Holobeam, Inc., File No. 03385
Dear Sir or Madam:
Enclosed you will find one (1) paper format copy of Holobeam,
Inc. Annual Report, Form 10K for the year ended September 30, 2001
which has been previously filed/transmitted via the EDGAR system.
Kindly acknowledge receipt by signing the enclosed photocopy
of this letter and return it to us in the accompanying stamped,
self-addressed envelope.
Very truly yours,
William M. Hackett
Treasurer
mjb
Encs.
HOLOBEAM, INC.
217 First Street
P.O. Box 287
Ho-Ho-Kus, New Jersey 07423-0287
December 31, 2001
U.S. Securities and Exchange Commission
Mellon Bank - Account 910-8739
Box 360055M
Pittsburgh, PA 15251
Dear Sir or Madam:
Enclosed you will find our Check No. 1136 which has been
issued for payment of the Annual Report Form 10K filing fee. Our
file number is 0-3385.
Kindly acknowledge receipt by signing a copy of the enclosed
letter and return it to us in the accompanying stamped, self-
addressed envelope.
Very truly yours,
W.M. Hackett
Treasurer
mjb
Enc.
HOLOBEAM, INC.
FINANCIAL STATEMENTS
WITH INDEPENDENT ACCOUNTANTS' REPORT
YEARS ENDED
SEPTEMBER 30, 2001, 2000 AND 1999
R.A. FREDERICKS & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS
MANAGEMENT CONSULTANTS
HOLOBEAM, INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
INDEPENDENT ACCOUNTANTS' REPORT F-1
FINANCIAL STATEMENTS:
BALANCE SHEETS F-2-3
STATEMENTS OF OPERATIONS F-4
STATEMENTS OF SHAREHOLDERS' EQUITY F-5
STATEMENTS OF CASH FLOWS F-6
NOTES TO FINANCIAL STATEMENTS F-7-22
SCHEDULES FOR THE YEARS ENDED SEPTEMBER 30, 2001,
2000 AND 1999
V PROPERTY AND EQUIPMENT F-23
VI ACCUMULATED DEPRECIATION AND AMORTIZATION
PROPERTY AND EQUIPMENT F-24
X SUPPLEMENTARY INCOME STATEMENT INFORMATION F-25
XI REAL ESTATE AND ACCUMULATED DEPRECIATION F-26
XII MORTGAGE LOANS ON REAL ESTATE F-27
ALL OTHER SCHEDULES HAVE BEEN OMITTED BECAUSE THEY ARE NOT
APPLICABLE,
OR THE INFORMATION IS SHOWN IN THE FINANCIAL STATEMENTS OR NOTES
THERETO.
R.A. FREDERICKS & COMPANY, LLP
Certified Public Accountants
Ralph A. Fredericks, CPA
Ellen T. O'Donnell, CPA
Robert J. Rosenberg, CPA
Eric Frank Zach, CPA
John Plesniarski, CPA
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders
Holobeam Inc.
Ho-Ho-Kus , New Jersey
We have audited the accompanying balance sheets of Holobeam, Inc. as of
September 30, 2001 and 2000 and the related statements of operations,
shareholders' equity and statements of cash flows for the years ended
September 30, 2001, 2000, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit includes,
examining on a test basis, evidence supporting the amounts and disclosures
in the 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 financial statements referred to above present fairly,
in all material respects the financial position of Holobeam, Inc. as of
September 30, 2001 and 2000, and the results of its operations and its cash
flows for the years ended September 30, 2001, 2000, 1999, in conformity
with accounting principles generally accepted in the United States of America.
Further, it is our opinion that the schedules referred to in the accompanying
index present fairly the information set forth therein.
R.A. FREDERICKS & COMPANY, LLP
Montville, New Jersey
December 7, 2001
F-1
170 Changebridge Road Unit B-4, Montville, New Jersey 07045
Tel: (973) 575-6200 Tel: (212) 544-2204 Fax: (973) 575-5444
Members of the SEC Practice Section of the AICPA Division for CPA Firms.
HOLOBEAM, INC.
BALANCE SHEETS
SEPTEMBER 30, 2001 AND 2000
ASSETS
(Restated)
2001 2000
CURRENT ASSETS
Cash (including cash equivalents of $896,486
in 2001 and $203,598 in 2000) $ 924,463 $ 250,400
Short-term Investments - 738,517
Accrued Interest - 713
Accounts Receivable 46 31
Prepaid Income Taxes 45,000 -
Prepaid Expenses 27,259 27,979
-------- --------
TOTAL CURRENT ASSETS 996,768 1,017,640
-------- --------
PROPERTY AND EQUIPMENT-COST
Real Estate:
Land 452,772 452,772
Buildings and Building Improvements 6,961,244 6,961,244
-------- --------
TOTAL 7,414,016 7,414,016
Machinery and Equipment 63,052 66,939
Furniture and Fixtures 24,910 20,633
-------- --------
TOTAL 7,501,978 7,501,588
Less: Accumulated Depreciation and Amortization 2,170,484 1,992,387
-------- --------
PROPERTY AND EQUIPMENT-NET 5,331,494 5,509,201
-------- --------
OTHER ASSETS
Patents and Patent Application Cost, net of
accumulated amortization of $245,042 in 2001
and $231,513 in 2000 60,953 66,549
Deferred Charges 386,730 427,839
Unbilled Rents Receivable 1,155,880 1,122,394
-------- --------
TOTAL OTHER ASSETS 1,603,563 1,616,782
-------- --------
TOTAL ASSETS $ 7,931,825 $ 8,143,623
======== ========
The accompanying notes are an integral part of the financial statements.
F-2
HOLOBEAM, INC.
BALANCE SHEETS
SEPTEMBER 30, 2001 AND 2000
LIABILITIES AND SHAREHOLDERS' EQUITY
(Restated)
2001 2000
CURRENT LIABILITIES
Mortgage Payable-Current Portion $ 379,611 $ 347,897
Accounts Payable 24,894 29,303
Income Taxes Payable - 55,600
Other Accrued Expenses 37,014 33,949
Accrued Pension 158,271 114,448
Accrued Interest Payable 38,710 41,248
-------- --------
TOTAL CURRENT LIABILITIES 638,500 622,445
-------- --------
LONG-TERM DEBT
Mortgage Payable (Net of Current Portion) 4,925,540 5,305,149
-------- --------
TOTAL LONG-TERM DEBT 4,925,540 5,305,149
-------- --------
OTHER LONG-TERM LIABILITIES
Deferred Income Taxes 462,352 448,958
-------- --------
TOTAL LONG-TERM LIABILITIES 5,387,892 5,754,107
-------- --------
TOTAL LIABILITIES 6,026,392 6,376,552
-------- --------
SHAREHOLDERS' EQUITY
Common Stock, Par Value $.10 Per Share
Authorized 2,000,000 Shares, Issued
305,598 30,559 30,559
Additional Paid in Capital 9,825,498 9,825,498
Accumulated Deficit (7,708,183) (7,877,013)
-------- --------
TOTAL 2,147,874 1,979,044
Less: Cost of Shares in Treasury (15,086
in 2001 and 13,251 in 2000) (242,441) (211,973)
-------- ---------
TOTAL SHAREHOLDERS' EQUITY 1,905,433 1,767,071
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,931,825 $8,143,623
======== ========
The accompanying notes are an integral part of the financial statements
F-3
HOLOBEAM, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
(Restated) (Restated)
2001 2000 1999
REVENUES
Rental Income $ 2,053,703 $2,053,703 $2,053,703
Interest Income 47,354 44,024 34,545
Gain on sale of fixed assets 3,963 12,133 -
Other - - -
------------ ---------- ----------
TOTAL 2,105,020 2,109,860 2,088,248
------------ ---------- ----------
COSTS AND EXPENSES
Rental Expense 259,004 262,880 257,795
General Expense 879,812 750,577 637,167
Interest Expense 483,830 513,106 539,943
Research and Development 183,089 192,085 194,364
------------ ---------- ----------
TOTAL 1,805,735 1,718,648 1,629,269
------------ ---------- ----------
INCOME BEFORE INCOME TAXES 299,285 391,212 458,979
INCOME TAX EXPENSE 130,455 171,065 185,026
------------ ---------- ----------
NET INCOME $ 168,830 $ 220,147 $ 273,953
============ ========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 290,960 294,013 298,101
------------ ---------- ----------
EARNINGS PER SHARE $ .58 $ .75 $ .92
============ ======== ==========
The accompanying notes are an integral part of the financial statements.
F-4
HOLOBEAM, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
Additional
Common Stock Paid-In Accumulated Treasury Stock
Shares Amount Capital Deficit Shares Amount
BALANCE, SEPTEMBER 30, 1998
AS PREVIOUSLY REPORTED 305,598 $30,559 $9,825,498 $(8,947,666) 3,395 $51,855
Prior Period adjustment 576,553
------- ------ --------- --------- ----- ------
BALANCE, SEPTEMBER 30, 1998
AS ADJUSTED 305,598 30,559 9,825,498 (8,371,113) 3,395 51,855
Net Income (Restated) 273,953
Purchase of Treasury Stock 5,297 82,002
------- ------ --------- --------- ----- ------
BALANCE, SEPTEMBER 30, 1999 305,598 30,559 9,825,498 (8,097,160) 8,692 133,857
Net Income (Restated) 220,147
Purchase of Treasury Stock 4,559 78,116
------- ------ --------- --------- ----- ------
BALANCE, SEPTEMBER 30, 2000 305,598 30,559 9,825,498 (7,877,013) 13,251 211,973
Net Income 168,830
Purchase of Treasury Stock 1,835 30,468
------- ------ --------- --------- ----- ------
BALANCE, SEPTEMBER 30, 2001 305,598 $ 30,559 $ 9,825,498 $(7,708,183) 15,086 $242,441
======= ====== ========= ========= ===== =======
The accompanying notes are an integral part of the financial statements.
F-5
HOLOBEAM, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
(Restated) (Restated)
2001 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $168,830 $220,147 $ 273,953
-------- ------- --------
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 209,890 211,115 211,865
Amortization 54,638 54,772 54,958
Patent and Patent Application Costs (7,933) (9,962) (8,075)
Gain on sale of fixed assets (3,963) - -
Increase (Decrease) in:
Accounts Payable and Accrued Expenses (15,659) 54,876 119,052
Real Estate Brokers Commissions - - (33,862)
Deferred Income Taxes 13,394 13,395 51,194
Decrease (Increase) in:
Unbilled rents receivable (33,486) (33,486) (127,986)
Accounts and Other Receivables (15) (3) 28
Interest Receivable 713 1,159 3,951
Prepaid Expenses 720 (17,269) -
Prepaid Income Taxes (45,000) - (2,618)
-------- ------- --------
Total Adjustments 173,299 274,597 268,451
-------- ------- --------
Net Cash Provided by Operating Activities 342,129 494,744 542,404
-------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Short-term Investments - (738,517) -
Capital Expenditures (39,320) - -
Sale of Short-Term Investments 738,517 - 421,282
Sale of Capital Assets 11,100 - -
-------- ------- --------
Net Cash Provided (Used) by
Investing Activities 710,297 (738,517) 421,282
-------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Payments on First Mortgage (347,895) (318,830) (292,188)
Purchase of Treasury Stock (30,468) (78,116) (82,002)
-------- ------- --------
Net Cash Used by Financing Activities (378,363) (396,946) (374,190)
-------- ------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 674,063 640,719 589,496
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 250,400 891,119 301,623
-------- ------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 924,463 $ 250,400 $ 891,119
======== ======= ========
SUPPLEMENTAL CASH FLOWS DISCLOSURES
Interest Paid $ 486,368 $ 515,433 $ 542,075
Income Taxes Paid $ 217,660 $ 118,890 $ 115,072
The accompanying notes are an integral part of the financial statements.
F-6
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Nature of Operations
The Company is engaged in the rental of real property located in New
Jersey for retail use and in development of surgical staples and the
technology used to apply the staples for use in internal surgery, nationwide.
b. Depreciation and Amortization
It is the policy of the Company to provide for depreciation and amortization
of the building and equipment on a straight-line and accelerated basis in
amounts sufficient to write-off the cost of the assets over their estimated
useful lives, which are as follows:
Building and Building Improvements 31. 5 to 40 years
Machinery and Equipment 5 to 7 years
Furniture and Fixtures 7 to 10 years
Maintenance and repairs are charged to operations in the year in which
incurred, while replacements and betterments are capitalized by charges to
the appropriate asset accounts. The cost and accumulated depreciation
and amortization with respect to assets retired or otherwise disposed, are
eliminated from the assets and related accumulated depreciation and
amortization accounts and any profit or loss resulting therefrom is reflected
in operations.
Patent and patent application costs are amortized on a straight-line basis
over a ten year period.
c. Earnings Per Share
Earnings per share of common stock has been computed by dividing net
income by the weighted average number of common shares outstanding
during the year. Diluted earnings per share of common stock is the same
as earnings per share prior to dilution.
d. Common Stock
Each share of common stock is entitled to one vote. No such shares of
common stock were reserved at September 30, 2001, 2000, or 1999.
e. Statement of Cash Flows
For purposes of reporting cash flows, all liquid investments with original
maturities of three months or less are considered cash equivalents.
F-7
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Income Taxes
Deferred income taxes are provided on temporary differences between
financial statement and income tax bases of assets and liabilities.
Generally, deferred tax assets are recognized in the current period for the
future benefit of net operating loss carry forwards and items for which
income has been recognized for financial statement purposes, but will be
included in future periods for tax purposes. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount
expected to be realized.
g. Deferred Charges
It is the policy of the Company to charge costs associated with the
acquisition of long term debt (mortgages) to expense over the term of the
mortgage.
In addition, the Company charges costs associated with the procurement
of operating leases, specifically real estate brokers commissions, to
expense during the term of the operating lease.
h. Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from these estimates.
I. Short-Term Investments
The Company accounts for marketable securities in accordance with the
provisions of SFAS No. 115 "Accounting for Certain Investments in Debt
and Equity Securities".
Short-term investments have an original maturity of more than three months
and a remaining maturity of less than 1 year. These investments consist of
marketable debt securities which are stated at amortized cost as the
Company has classified these securities as held-to-maturity.
j. Revenue Recognition
Base rental revenue is recognized on a straight-line basis over the terms of
the respective leases. Unbilled rents receivable represents the amount by
which straight-line rental revenue exceeds rents currently billed in
accordance with the lease agreements.
F-8
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 2. INCOME TAXES
2001 2000 1999
Current taxes:
Federal $ 89,950 $122,221 $104,229
State 27,110 35,449 29,603
-------- ------- --------
Total $117,060 $157,670 $133,832
-------- ------- --------
Deferred taxes:
Federal 11,385 11,385 43,515
State 2,010 2,010 7,679
-------- ------- --------
Total 13,395 13,395 51,194
-------- ------- --------
Provision for
income taxes $130,455 $171,065 $185,026
======== ======= ========
The deferred tax assets and liabilities recorded on the consolidated
balance sheet as of June 30, are as follows:
2001 2000 1999
Deferred tax
liabilities:
Federal $392,994 $381,610 $370,227
State 69,358 67,348 65,338
-------- ------- --------
Total $462,352 $448,958 $435,565
======== ======= ========
The sources of deferred income taxes for the years ended June 30, are
as follows:
2001 2000 1999
Unbilled Rents
Receivable $1,155,880 $1,122,394 $1,088,908
======== ======== =========
The difference between the statutory federal income tax rate on income before
income taxes and the Company's effective income tax rate is as follows:
2001 2000 1999
Federal statutory
income tax rate 34% 34% 34%
State tax provisions,
net of
federal benefits 6 6 6
Other 4 4 0
-------- ------- --------
Effective income tax
expense rate 44% 44% 40%
======== ======= ========
F-9
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 3. RENTAL INCOME UNDER OPERATING LEASES
The Company has leased two buildings at its A & S Drive, Paramus, N.J.
site for retail use. The Sports Authority, Inc. has leased the 62,000 sq.
ft. building for a lease term of twenty (20) years and the Tandy Corporation
has leased the 30,000 sq. ft. building for use as a Comp USA retail store
for a lease term of fifteen (15) years. The tenants are also responsible
for real estate taxes and other assessments as defined in the operating
lease agreements.
2001 2000 1999
Buildings and building improvements:
Cost $ 6,961,244 $6,961,244 $6,961,244
Accumulated depreciation 2,126,482 1,926,523 1,726,564
---------- ---------- ---------
Net buildings and building
improvements $ 4,834,762 $5,034,721 $5,234,680
========== ========== =========
The minimum future rentals on noncancellable operating leases for the
years ending September 30, are as follows:
2002 $2,108,447 2007 $2,322,194 2012 $1,373,022
2003 2,116,467 2008 2,331,017
2004 2,116,467 2009 2,331,017
2005 2,225,142 2010 1,497,842
2006 2,225,142 2011 1,497,842
Total $22,144,599
===========
Net rental income consists of the following:
(Restated) (Restated)
2001 2000 1999
Rental income $2,053,703 $2,053,703 $2,053,703
Depreciation expense (199,959) (199,959) (199,959)
Other expenses (59,045) (62,921) (57,836)
-------- --------- ---------
Rental income, net $ 1,794,699 $1,790,823 $1,795,908
========= ========= =========
F-10
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 3. RENTAL INCOME UNDER OPERATING LEASES (Continued)
In 2001, 2000, and 1999, depreciation expense included all depreciation
of the rental buildings and building improvements.
a) The Company entered into a triple net lease agreement with The Sports
Authority, Inc., Fort Lauderdale, Florida. The term of the lease is
twenty (20)years with four (4) options to extend the term for an
additional period of five (5) years in each option.
The Company was responsible for funding certain improvements to the
building pursuant to the lease agreement and incurred costs amounting to
$3,567,276 at September 30, 1993. The Company reimbursed The Sports
Authority, Inc. for such improvements and on February 5, 1993 the original
lease was amended and the base rent was increased to reflect the improved
condition of the building.
The Company obtained additional mortgage financing totaling $7,500,000 in
order to fund reimbursement to The Sports Authority, Inc., whose former
parent company, K-Mart Corporation (K-mart Corporation is a public company
and financial information regarding K-mart is publicly available) has
guaranteed the incremental monthly rental payments over the remaining life
of the lease. (See Note 7).
The base annual rents under the amended lease were increased as follows:
2nd through 5th years $1,208,217
6th through 10th years 1,295,716
11th through 15th years 1,391,967
16th through 20th years 1,497,842
In addition to the rent, the tenant is responsible for real estate taxes
and other assessments as defined in the operating lease.
b) Tandy Corporation has constructed a 30,000 sq.ft. building on the Company's
site located in Paramus, N.J. for use as a Computer City retail store. Tandy
Corporation commenced paying rent to the Company pursuant to the terms
of the operating lease on October 1, 1994. The lease term is for fifteen (15)
years at an annual rental of $630,000 for the first five years, $724,500 for the
second five years and $833,175 for the last five years. Tandy Corporation
has three (3) options to extend the term of the lease for an additional period
of five (5) years for each such option.
Pursuant to the terms and conditions of the lease, the Company agreed to
reimburse Tandy Corporation up to $1,200,000 plus the costs of paving the
driveway and parking area and one-half (1/2) the cost of exterior lighting
not attached to the building. This construction allowance was amended
to $1,189,675 and paid in cash to Tandy Corporation on November 9, 1995.
F-11
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 3. RENTAL INCOME UNDER OPERATING LEASES (Continued)
Costs associated with the 30,000 sq. ft. building are as follows:*
Construction allowance paid to Tandy Corporation $1,189,675
Costs incurred by the Company for use variance
and site improvement (deferred until put in
service at October 1, 1994) 434,821
Construction costs incurred through September 30,
1994 (deferred until put in service at October 1, 1994) 964,505
Construction costs incurred during 1995 3,512
-------
Total costs of 30,000 sq. ft. building occupied
by Tandy Corporation. $2,592,513
=========
(*) Does not include costs of improvements incurred by the tenant.
Tandy Corporation sold Computer City, Inc. to CompUSA, Inc. on September
1, 1998, the lease was assigned to CompUSA, Inc. and continues to be
guaranteed by Tandy Corporation. On May 18, 2000 Tandy Corporation
changed its name to Radioshack Corporation.
On January 23, 2000, CompUSA, Inc. entered into a merger agreement with
Grupo Sanborns, S.A. de C.V. and TPC Aquisition Corp., a subsidiary of
Grupo Sanborns, S.A. de C.V. The financial information for Grupo Sanborns,
S.A. de C.V. is unavailable. The lease continues to be guaranteed by Tandy
Corporation.
F-12
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 3. RENTAL INCOME UNDER OPERATING LEASES (Continued)
The following is a condensed summary of financial information on the above
publicly held companies:
Radioshack The Sports
Corporation Authority K-Mart
12/31/00 2/03/01 1/31/01
(In Millions) (In Thousands) (In Millions)
Current assets $ 1,818 $ 433,312 $ 7,624
------ -------- -------
Total assets 2,577 662,547 14,630
------ -------- -------
Current liabilities 1,232 273,112 3,799
------ -------- -------
Total liabilities 1,596 520,230 7,660
------ -------- -------
Total stockholders'
equity 880 142,317 6,970
------ -------- -------
Net sales 4,795 1,501,592 37,028
------ -------- -------
Cost of sales 2,425 1,097,953 29,658
------ -------- -------
Gross profit 2,370 403,639 7,370
------ -------- -------
Income (loss) before
income taxes
(continuing) 594 6,779 (332)
------ -------- -------
Income tax expense (benefit) 226 - (134)
------ -------- -------
Net income (loss) $ 368 $ 25,426 $ (244)
------ -------- -------
NOTE 4. RESEARCH AND DEVELOPMENT
Research and development expenses in the amount of $183,089 in 2001, $192,085
in 2000, and $194,364 in 1999, were charged to operations and included in costs
and expenses.
F-13
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 5. RENT EXPENSE
The Company leases approximately 1,000 square feet of office and
laboratory space on an annual basis. Lease payments are $950 per
month. Rent expense was $11,400 in 2001, $11,400 in 2000 and
$11,400 in 1999.
NOTE 6. PATENTS
The Company has discontinued efforts relating to solar cells and
semi-conductor technology. Work in the field has moved in other
directions than that of the Company's technology and there has
been a substantial reduction of government support in this technical
area. The funding that had been received by laboratories
exploring the Company's technology has also terminated.
The Company is continuing its efforts in the area of surgical staple
design for use in internal surgery. Several United States Patents have
been issued and foreign applications have been filed on a novel staple.
The staple has been produced and it is anticipated that tests will continue
during 2001 at a medical center. Research and development costs in the
amounts of $183,089, $192,085 and $194,364 have been expended in
connection with the surgical staple during 2001, 2000 and 1999,
respectively.
NOTE 7. LONG-TERM DEBT
Long-term debt consists of two loans, one in the amount of $6,000,000
payable in monthly installments of $55,328 including interest at 8.77%
until 2011. The second loan in the amount of $1,500,000 is payable in
monthly installments of $13,767 including interest at 8.7% until 2011.
Costs incurred in connection with this mortgage amounted to $102,520
and are charged to expense over the life of the mortgage. This amount
is included in the balance of deferred charges as detailed in Note 8.
The expense for the next five (5) years is presented below:
2002 $5,126
2003 5,126
2004 5,126
2005 5,126
2006 5,126
F-14
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 7. LONG-TERM DEBT (Continued)
The combined balance outstanding for each debt issued at the end of 2001,
2000, and 1999 is as follows:
2001 2000 1999
First Mortgage on
62,000 sq. ft. Building $5,305,151 $5,653,046 $5,971,876
Less Current Portion 379,611 347,897 318,832
------- ------- -------
Long-Term Portion $4,925,540 $5,305,149 $5,653,044
========= ========= =========
The mortgage is secured by the land, building and operating lease agreement
with The Sports Authority, Inc. (See Note 3).
The principle payments of long-term debt for the term of the mortgage is
as follows:
2002 $379,611 2007 $587,197
2003 414,217 2008 640,727
2004 451,978 2009 699,136
2005 493,181 2010 762,870
2006 538,140 2011 338,094
NOTE 8. DEFERRED CHARGES
The composition of deferred charges and related amortization is as follows:
Real Estate
Mortgage Brokers Commissions
Total Costs Sports Authority Tandy Corp.
Original Cost $712,160 $102,520 $279,584 $330,056
Accumulated
Amortization 325,430 44,425 126,979 154,026
-------- ------- ------- --------
Balance 9/30/01 $386,730 $ 58,095 $152,605 $176,030
======== ======= ======= ========
Original Cost $712,160 $102,520 $279,584 $330,056
Accumulated
Amortization 284,321 39,299 112,999 132,023
-------- ------- ------- --------
Balance 9/30/00 $427,839 $63,221 $166,585 $198,033
======== ======= ======= ========
F-15
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 9. DEFERRED SITE COST
The Company incurred costs in connection with an application for a use
variance and site improvements for the property owned by the Company at
50 A&S Drive, Paramus, New Jersey, adjacent to the building owned by the
Company and leased to the Sports Authority, Inc. Such costs amounting
to $806,656 have been considered to be part of the site cost and are
included in fixed assets.
NOTE 10. OTHER EMPLOYEE BENEFITS
The Financial Accounting Standards Board issued SFAS No. 106 " Employers
Accounting for Post Retirement Benefits", and SFAS No. 112 "Employers
Accounting for Post Employment Benefits", which changed employers'
accounting for these benefits. Since the Company has no post-retirement
benefit plans, and does not offer post employment benefits, SFAS No. 106
and SFAS No. 112 are not applicable. During 1999 the Financial Accounting
Standards Board issued SFAS No. 132 "Employers' Disclosures about Pensions
and Other Post Retirement Benefits." SFAS No. 132 is not applicable for
post employment benefits, but is applicable to the company's pension
plan (See Note 14).
NOTE 11. CONCENTRATION OF CREDIT RISK
Substantially all of the Company's income is rental income received
from two tenants.
These tenants are subject to long-term lease agreements. (See Note 3)
NOTE 12. FINANCIAL REPORTING BY BUSINESS SEGMENTS
In 1999, the Company adopted Financial Accounting Standards Board
Statement (SFAS) No. 131 "Disclosures About Segments of an Enterprise
and Related Information". The Company's reportable segments are
strategic business units that involve different products and services.
They are managed by a single management team.
The Company has three business segments as follows:
Surgical Staples-Engaged in engineering and design of surgical staples
for use in internal surgery, and in the technology used to fabricate
the equipment issued to apply the staples. This segment of the Company's
business is still in the research and development stage.
Electro-Optical-Engaged in engineering and development of equipment for
the semi-conductor industry. The company has discontinued efforts relating
to the electro-optical segment of its business.
F-16
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 12. FINANCIAL REPORTING BY BUSINESS SEGMENTS (Continued)
Rental-Engaged in the leasing of real estate the two retail buildings
owned by the Company at 50 A&S Drive, Paramus, New Jersey. Approximately
98% of the Company revenues are earned by this segment, all of which is
received from two tenants (see Note 11).
The accounting policies of the segments are the same as those described
in thesummary of significant accounting policies. The Company evaluates
the performance of its operating segments based on income before income
taxes. There are no intercompany sales. The Company derives all of its
revenue in the United States.
Summarized financial information concerning the Company's reportable
segments is shown in the following table. The "Other" column includes
corporate income and expense items not allocated to reportable segments.
Revenues
(Restated) (Restated)
2001 2000 1999
Business Segments:
Surgical Staples $ - $ - $ -
Electro-Optical - - -
Real Estate Rental 2,053,703 2,053,703 2,053,703
Other 51,317 56,157 34,545
--------- --------- ---------
Total $ 2,105,020 $2,109,860 $2,088,248
========= ========= =========
Business Segments: Income (Loss)
(Restated) (Restated)
2001 2000 1999
Surgical Staples $ (183,089) $ (192,085) $ (194,364)
Electro-Optical - - -
Real Estate Rental 1,794,699 1,790,823 1,795,908
--------- --------- ---------
Total 1,611,610 1,598,738 $1,601,544
--------- --------- ---------
General and Administrative
Expenses (879,812) (750,577) (637,167)
Interest Expense (483,830) (513,106) (539,943)
Other Income 51,317 56,157 34,545
Income Tax Expense (130,455) (171,065) (185,026)
--------- --------- ---------
Total (1,442,780) (1,378,591) (1,327,591)
--------- --------- ---------
Net Income $ 168,830 $ 220,147 $ 273,953
========= ========= =========
Business Segments: Identifiable Assets
(Restated) (Restated)
2001 2000 1999
Surgical Staples $ 56,906 $ 59,804 $ 59,778
Electro-Optical 4,047 6,745 10,472
Real Estate Rental 6,830,145 7,037,727 7,245,309
Other 1,040,727 1,039,347 936,592
--------- --------- ---------
TOTAL ASSETS $ 7,931,825 $8,143,623 $8,252,151
========= ========= =========
F-17
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 12. FINANCIAL REPORTING BY BUSINESS SEGMENTS (Continued)
Business Segments: Capital Expenditures
2001 2000 1999
Surgical Staples $ - $ - $ -
Electro-Opitical - - -
Real Estate Rental - - -
Other 39,320 - 7,976
--------- --------- ---------
$ 39,320 $ - $ 7,976
========= ========= =========
Property and Equipment
Business Segments Depreciation
2001 2000 1999
Surgical Staples $ - $ - $ -
Electro-Optical - - -
Real Estate Rental 199,959 199,959 199,959
Other 9,931 11,156 11,906
--------- --------- ---------
$209,890 $211,115 $211,865
========= ========= =========
Intangible Assets
Amortization
2001 2000 1999
Surgical Staples $ 10,831 $ 9,937 $ 9,034
Electro-Optical 2,698 3,726 4,815
Real Estate Rental 41,109 41,109 41,109
Other - - -
--------- --------- ---------
$ 54,638 $ 54,772 $ 54,958
========= ========= =========
NOTE 13. FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company has a number of financial instruments, none of which are
held for trading purposes. The Company estimates that the fair value
of all financial instruments at September 30, 2001, does not differ
materially from the aggregate carrying values of its financial instruments
recorded in the accompanying balance sheet. The estimated fair value
amounts have been determined by the Company using available market
information and appropriate valuation methodologies. Considerable judgement
is necessarily required in interpreting market data to develop the estimates
of fair value, and accordingly, the estimates are not necessarily indicative
of the amounts that the Company could realize in a current market exchange.
F-18
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 14. PENSION PLAN
The Company established a defined benefit plan covering all eligible
employees, who have completed one year of service. Benefits are based
on years of service and the average compensation during the best three
years of participation.
The Company's funding policy is to make annual contributions to the plan
in amounts such that all employees' benefits will be fully provided for
by the time they retire. Contributions are intended to provide not only
for benefits attributed to service to date but also for those expected
to be earned in the future.
Although it has not expressed any intention to do so, the Company has
the right under the plan to discontinue its contributions at any time
and to terminate the Plan subject to the provisions set forth in ERISA.
In 1999, the Company adopted SFAS No. 132 "Employers' Disclosures about
Pensions and Other Post Retirement Benefits". The provisions of SFAS
No. 132 revise employers' disclosures about pension and other post
retirement benefit plans. It does not change the measurement or recognition
of this plan. It standardizes the disclosure requirements for pensions and
other post retirement benefits to the extent practicable.
The Company provides defined benefit pension plan to the employees. The
following provides a reconciliation of benefit obligations, plan assets,
and funded status of the plan.
2001 2000
Changes in benefit obligation:
Benefit obligation at October 1 $1,126,448 $ 719,594
Service cost 328,535 328,003
Interest cost 185,032 78,851
--------- ---------
Benefit obligation at September 30 $1,640,015 $1,126,448
========= =========
2001 2000
Change in plan assets:
Fair value of plan assets at October 1 $1,014,185 $ 640,223
Company contributions 341,103 330,122
Actual return on plan assets 52,669 43,840
--------- ---------
Fair value of plan assets at September 30, $1,407,957 $1,014,185
========= =========
Funded status of Plan $ (232,058) $(112,263)
Unrecognized Net (Gain) Loss 159,063 80,346
--------- ---------
(Accrued) or Prepaid Pension $ (72,995) $ (31,917)
========= =========
F-19
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 14. PENSION PLAN (Continued)
The net periodic pension cost for the year ended September 30, includes the
following components:
2001 2000
1. Service cost - benefits earned
during the period $ 328,535 $ 328,003
--------- ---------
2. Interest cost on projected benefit
obligation 114,801 78,851
--------- ---------
3. Actual return on plan assets (52,629) (43,840)
--------- ---------
4. Net amortization and deferral:
a. Amortization of unrecognized net
obligation (asset) at transition - -
b. Amortization of unrecognized
prior service cost - -
c. Amortization of unrecognized net
(gain) or loss (18,364) (975)
d. Asset gain or (loss) deferred - -
--------- ---------
e. Total (18,364) (975)
--------- ---------
5. Net periodic pension cost (credit) =
(Item 1 + item 2 + item 3 + item 4 (e) $ 372,343 $362,039
========= =========
The net periodic pension cost for 2001 and 2000 was determined based on a 7%
discount rate and a long - term rate of return of 7% on plan assets.
NOTE 15. MARKETABLE SECURITIES
At September 30, 2001, 2000 and 1999, all short-term marketable debt
securities were classified as held-to-maturity and carried at amortized
cost. Investments consisted of the following:
2001 2000 1999
U.S. Government Securities $ - $738,517 $ -
--------- --------- ---------
$ - $738,517 $ -
========= ========= =========
At September 30, 2000 the fair value of investments approximated its
amortized cost and therefore there were no significant unrealized gains
or losses.
All investments at September 30 mature in one year or less.
F-20
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 16. PRIOR PERIOD ADJUSTMENT
The accompanying financial statements for the years ended September 30,
2000 and 1999 have been restated to correct an understatement of rental
income due to an error in the computation of annual rental income.
The effect of prior period accounting errors relating to rental income
resulted in the following changes as of September 30,:
2000 1999
As previously As As previously As
Reported Restated Reported Restated
Balance Sheet:
Rents Receivable $ - $1,122,394 $ - $1,088,908
Deferred Taxes Payable - 448,958 - 435,563
Deficit (8,550,449) (7,877,013) (8,750,505) (8,097,160)
Statement of Operations:
Rental Income 2,020,217 2,053,703 1,925,717 2,053,703
Income Before Income
Taxes 357,726 391,212 330,993 458,979
Income Taxes 157,670 171,065 133,832 185,026
Net Income 200,056 209,909 197,161 220,147
Earnings Per Share $ .68 $ .75 $ .68 $ .92
Retained earnings as of October 1,1998 has been increased by $576,554 for the
effects of the restatement on prior years.
NOTE 17. SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)
For the Fiscal Year Ended September 30, 2001
Restated Restated Restated
First Second Third Fourth
Quarter Quarter Quarter Quarter
Total Revenues 525,023 513,832 513,820 552,345
Gross Profit N/A N/A N/A N/A
Income Before
Extraordinary
Items 75,662 53,810 65,717 (26,359)
Weighted Average
Number of Shares 291,567 291,213 290,547 290,960
Earnings Per Share .26 .18 .23 (.09)
Net Income 75,662 53,810 65,717 (26,359)
F-21
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
NOTE 17. SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)
(Continued)
For the Fiscal Year Ended September 30, 2000
Restated Restated Restated Restated
First Second Third Fourth
Quarter Quarter Quarter Quarter
Total Revenues 515,091 513,583 516,956 564,230
Gross Profit N/A N/A N/A N/A
Income Before
Extraordinary
Items 76,925 51,707 113,202 (21,687)
Weighted Average
Number of Shares 296,105 294,487 293,081 292,374
Earnings Per Share .26 .18 .39 (.07)
Net Income 76,925 51,707 113,202 (21,687)
The first, second and third quarter of 2001 and all quarters for 2000 have been
restated for the prior period adjustment (Note 16.)
F-22
HOLOBEAM, INC.
SCHEDULE V
PROPERTY AND EQUIPMENT
SEPTEMBER 30, 2001, 2000 AND 1999
Balance at Balance at
Beginning End of
CLASSIFICATIONS of Year Additions Retirements Year
YEAR ENDED SEPTEMBER 30, 1999:
Machinery and Equipment $ 66,939 $ - $ - $ 66,939
Furniture and Fixtures 20,633 - 20,633
-------- ----------- ----------- --------
TOTAL $ 87,572 $ - $ - $ 87,572
======== =========== =========== ========
YEAR ENDED SEPTEMBER 30, 2000:
Machinery and Equipment $ 66,939 $ 35,043 $ 38,930 $ 63,052
Furniture and Fixtures 20,633 4,277 - 24,910
-------- ----------- ----------- --------
TOTAL $87,572 $ 39,320 $ 38,930 $ 87,962
======== =========== =========== ========
YEAR ENDED SEPTEMBER 30, 2001:
Machinery and Equipment $ 66,939 $ 35,043 $ 38,930 $ 63,052
Furniture and Fixtures 20,633 4,277 - 24,910
-------- ----------- ----------- --------
TOTAL $ 87,572 $ 39,320 $ 38,930 $ 87,962
======== =========== =========== ========
The accompanying notes are an integral part of the financial statements.
F-23
HOLOBEAM, INC. SCHEDULE VI
ACCUMULATED DEPRECIATION AND AMORTIZATION
PROPERTY AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
Balance at Balance at
Beginning End of
CLASSIFICATIONS of Year Additions Retirements Year
YEAR ENDED SEPTEMBER 30, 1999:
Machinery and Equipment $ 40,681 $ 9,287 $ - $ 49,968
Furniture and Fixtures 2,120 2,620 - 4,740
-------- ----------- ----------- --------
TOTAL $ 42,801 $ 11,907 $ - $ 54,708
======== =========== =========== ========
YEAR ENDED SEPTEMBER 30, 2000:
Machinery and Equipment $ 49,968 $ 8,536 $ - $ 58,504
Furniture and Fixtures 4,740 2,620 - 7,360
-------- ----------- ----------- --------
TOTAL $ 54,708 $ 11,156 $ - $ 65,864
======== =========== =========== ========
YEAR ENDED SEPTEMBER 30, 2001:
Machinery and Equipment $ 58,504 $ 7,138 $ 31,793 $ 33,849
Furniture and Fixtures 7,360 2,793 - 10,153
-------- ----------- ----------- --------
TOTAL $ 65,864 $ 9,931 $ 31,793 $ 44,002
======== =========== =========== ========
The accompanying notes are an integral part of the financial statements.
F-24
HOLOBEAM, INC. SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
2001 2000 1999
Maintenance and Repairs $ - $ - $ -
======= ========== =======
Depreciation and Amortization of
Intangible Assets $54,638 $ 54,772 $ 54,958
======= ========== =======
Taxes, Other than Payroll and
Income Tax
Franchise $ 10,620 $ 10,572 $ 9,500
Real Estate - - -
Other 58 35 518
------- ---------- -------
$10,672 $ 10,607 $10,018
======= ========== =======
Royalties $ - $ - $ -
======= ========== =======
Advertising $ 189 $ - $ -
======= ========== =======
The accompanying notes are an integral part of the financial statements.
F-25
HOLOBEAM, INC. SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 2001
Life in
Which
Deprec-
Cost Capitalized Gross Amount at (2) iaton
Initial Subsequent Which Carried at Accum- in Latest
Cost to Company To Acquisition Close of Period (1) ulated Date Date Income
Incum - Bldg & Carrying Bldg & Deprec- of Acqu- Stmt is
brances Land Improv Improv Costs Land Improv Total iation Constr. ired Computed
Improved Land
Paramus, NJ $ 0 $218,402 $ 0 $ 0 $ 0 $218,402 $ 0 $ 218,402 $ 0 1971 -
Improved Land
Paramus, NJ 0 173,565 0 60,805 0 234,370 0 234,370 0 1983 -
Building I
Paramus, NJ
Improvements 6,777,260 0 718,881 3,649,850 0 0 4,368,731 4,368,731 1,666,699 1958 1971 3 to 40
years
Building II
Paramus, NJ 0 0 2,592,513 0 0 0 2,592,513 2,592,513 459,783 1995 1995 30 Years
--------- ------- --------- --------- -- ------- --------- --------- ---------
$6,777,260 $391,967 $3,311,394 $3,710,655 $ 0 $452,772 $6,961,244 $7,414,016 $2,126,482
========= ======= ========= ========= == ======= ========= ========= =========
(1)Activity for the three years (2)Activity for the three years
ended September 30, 2001 is ended September 30, 2001 is
as follows: 2001 2000 1999 as follows: 2001 2000 1999
Balance at Balance at
Beginning Beginning
of Year $7,414,016 $7,414,016 $7,414,016 of Year $1,926,523 $1,726,564 $1,526,605
Additions: Additions:
Improvements 0 0 0 Depreciation 199,959 199,959 199,959
Acquisitions 0 0 0 Less Retirements 0 0 0
--------- --------- --------- --------- --------- ---------
7,414,016 7,414,016 7,414,016
Deductions Balance at
During Year: End of Year: $2,126,482 $1,926,523 $1,726,564
Retirements 0 0 0 ========= ========= =========
Cost of Real
Estate Sales 0 0 0
--------- --------- ---------
Balance at
End of Year $7,414,016 $7,414,016 $7,414,016
========= ========= =========
The aggregate cost for Federal income tax purposes
at September 30, 2001 is $7,414,016.
The accompanying notes are an integral part of these financial statements.
F-26
HOLOBEAM, INC. SCHEDULE XII
MORTGAGE LOANS ON REAL ESTATE
SEPTEMBER 30, 2001
Principal Amount
of Loans
Face Carrying Subject to
Periodic Amount Amount Delinquent
Interest Final Maturity Payment Prior of of Principal
Rate Date Terms Items Mortgage Mortgage(1) or Interest
Mortgage Payable
Building and Improvements 8.7% February 5, 2011 $13,367 None $1,500,000 $1,059,473 None
Mortgage Payable
Building and Improvements 8.77% February 5, 2011 $56,328 None $6,000,000 $4,245,679 None
---------
$5,305,152
=========
Activity for the three
years ended September 30,
2001 is as follows:
2001 2000 1999
Balance at Beginning of Year $5,653,046 $5,971,876 $6,264,064
Additions During Year:
Commercial Loans 0 0 0
New Mortgages 0 0 0
--------- --------- ---------
5,653,046 5,971,876 6,264,064
Deductions During Year:
Principal Payments 347,894 318,830 292,188
Mortgage Payments 0 0 0
--------- --------- ---------
Balance at End of Year $5,305,152 $5,653,046 $5,971,876
========= ========= =========
(1) The cost for Federal income tax
Purposes at 9/30/01 $5,305,152
The accompanying notes are an integral part of these financial statements.
F-27