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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, 1996, 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.)
540 Ravine Court, Wyckoff, NJ 07481
(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)
Indicated 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. $4,688,385.00 at December 16, 1996.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date. 312,559 Common
Shares at December 16,1996.
DOCUMENTS INCORPORATED BY REFERENCE.
PART I
Item 1. Business
(a) In General. The Registrant was organized in October, 1967, and
commenced doing business on January 1, 1968. Registrant is engaged in the
rental and development of real estate and in developing methods for applying
surgical staples and the technology used to fabricate the equipment used to
apply the staples and was engaged in developing technology for the
manufacture of semiconductor devices until 1994 when such activities were
terminated.
b) Industry Segments. For financial information in regard to Industry
Segments,
reference is made to Note 14 to the Financial Statements for the years ended
September 30, 1996, 1995 and 1994.
(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. Four United States Patents have been received and a
PCT application has been filed on a novel staple. The staple has been
produced and it is anticipated that animal tests will commence during the fiscal
year ending September 30, 1997. If the animal tests are sufficiently
positive, it could take significant additional time before necessary
approvals are obtained from the regulatory agencies before additional testing
commences.
In addition, a significant investment would be required if the Registrant
were to pursue this area of business and may seek a relationship of some sort
with a firm active in the medical equipment area. However, no decision has been
made at this time.
Semiconductor Technology
The Registrant has obtained a United States patent protecting technology
for the deposition of thin films of semiconductor materials, e.g., III-V
materials such as binary or ternary semiconductor materials, on suitable
substrates. Contracts to investigate the technology involved were given by the
Solar Energy Research Institute
(S.E.R.I.) of the United States Department of Energy (USDOE) to Brown
University. This work, in order to support the length of research required to
test the theories, was to test the quality of the materials and potential
applications supplied by the USDOE for the Solasis Solar Research program,
Grant #DE-FG02-84C410203. Subsequently, the Registrant performed additional
investigations of the applications of the technology supported by the USDOE
under the University Participation Program, Contract #XB5-05009-5. These
investigations showed that the film deposition rates with the technology were
faster than with conventional liquid phase epitaxy. However, variations in film
thickness along the direction of flow were observed. If such variation cannot
be solved, it will limit the possible commercial use of the technology. Further
investigation of the technology by Brown University has ceased as governmental
support for their research has terminated. The Registrant has no direct
knowledge at this time of other research taking place using its technology.
There is no assurance that the technology in question will find commercial
application although its use to produce thin films for certain application,
e.g., photovoltaic cells, may be feasible despite variation in film thickness.
During 1993 the Registrant expended $37,615.00 toward development of
semiconductor technology and substantially reduced expenditures during 1994.
Any additional expenditures will be limited to testing of the feasibility of
the thin film production for photovoltaic cells.
During fiscal year 1994, the Registrant discontinued efforts relating to
photovoltaic cells. Work in the field has moved in other directions other than
that of the Registrant's technology. There has been a substantial reduction of
government support in this technical area and funding that had been received by
laboratories exploring the Registrant's technology has terminated.
Real Estate Development and Rental Activities
The Registrant has rented two buildings it owns located at 50 A&S Drive,
Paramus, New Jersey to The Sports Authority, Inc. and to Tandy Corporation 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
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 (continuation 08/09/95
of 08/228,058 and 08/024,501)
3. 08/228,058 Staples (continuation 04/15/94
of 08/024,501 Issued 08/29/95)
4. Canadian Pat. No. Improved Staples (PCT NAT) 03/01/94
2,155,750
5. European Pat. 94910801.3 Staples 03/01/94
6. Australian Pat. 63568/94 Improved Staples 03/01/94
7. Japanese Pat. 6-520120 Staples 03/01/94
8. Brazilian Pat. Staples 03/01/94
PCT/US94/02227
9. 08/502,988 Staple Overlap 07/18/95
10. ---------- Stapler with Alignment Unfiled
Pins and Spacers
11. 07/753,116 Surgical Stapling Method 08/30/91
(Issued 01/19/93)
12. 07/934,858 Surgical Stapling Method 08/24/92
of 07/753,116 and Pat. (Issued 11/23/93)
5,179,964
13. 08/024,501 Staples 03/02/93
(Issued 08/30/94
14. US Pat. #5,445,648 Staples
15. US Pat. #5,342,396 Staples
16. US Pat. #5,263,973 Surgical Stapling Method
The Registrant has also obtained patent protection on technology developed
in the areas of epitaxial growth, peeled films and photovoltaic cells. However,
there is no assurance that any revenue will be received as a result of obtaining
the patents. The Patents issued to the Registrant dealing with the
Semiconductor research are as follows:
1. U.S. Patent No. 4,396,456 "Method of Peeling Epilayers", Melvin S.
Cook.
2. U.S. Patent No. 4,519,871 "Bubble-Mode Liquid Phase Epitaxy," Melvin
S. Cook.
3. U.S. Patent No. 4,548,658 "Growth of Lattice-Graded Epilayers," Melvin
S. Cook.
4. U.S. Patent No. 4,594,126 "Growth of This Epitaxial Films on Moving
Substrates from Flowing Solutions," Melvin S. Cook.
5. U.S. Patent No. 4,594,128 "Liquid Phase Epitaxy," Melvin S. Cook.
6. U.S. Patent No. 4,597,823 "Rapid LPE Crystal Growth," Melvin S. Cook.
7. U.S. Patent No. 4,633,030 "Photovoltaic Cells on Larrice-Mismatched
Crystal Substrates," Melvin S. Cook.
During the year ended September 30, 1987, the Registrant sold U.S. Patent
Nos. 3,612,687 and 3,609,690 to Refac International. These Patents cover
systems for identifying bearers of cards. Refac International entered into
legal action against a number of firms that it believed were using the
technology described in this Patent. The Registrant had no direct
participation in the legal action pursued by Refac other
than responsibility for portions of the "out-of-pocket" expenses incurred by
Refac as a result of Refac's legal action.
On May 13, 1988, the Registrant received $120,000.00 as a result of
settlements in certain of the legal actions. On January 3, 1989, the Registrant
received an additional $91,574.00 in connection with the Refac agreement. These
two payments represented the total income associated with the sale of the
Patents. Expenses relating to the agreement totaled $10,155.00 during the term
of the Refac legal actions. Refac's legal actions concerning these Patents were
discontinued at September 30, 1989.
There were no affiliations between the Registrant, Refac and the firm
retained by Refac other than the sales agreement whereby Refac purchased the
Patents.
(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 production and sales activities are
commenced, would be limited to licensing the technology to other firms or to
forming some type of business relationship with other firms. However, the
technology is in competition with alternative staples, some of which are
well-established and traditional.
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.
The obsolete style building owned by the Registrant prior to and during 1991
made the attraction of suitable office tenants most 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 development of the adjacent site.
In December 1991, the change in zoning was approved. The then existing
building was rented to The Sports Authority, Inc. The market for retail space
in Paramus, New Jersey area, although in recession, was not as adversely
affected as was the market for office space.
During 1994, a 30,000 sq. ft. building was constructed on the Registrant's
site located adjacent to the building leased by The Sports Authority, for use as
a Computer City retail store. Tandy Corp. commenced paying rent in October
1994. Holobeam reimbursed Tandy Corporation up to $1,189,675 for the costs of
constructing the building and paving of the site, after a permanent Certificate
of Occupancy was obtained.
(xi) Research and Development.
The Registrant discontinued engineering and development in connection with
the development of technology associated with semiconductor devices during 1994
and no funds were expended in connection with these activities. During 1993 the
Registrant recorded research and development costs of $37,615.00 on such
technology. There have been no such costs expended during 1994, 1995 and 1996
in connection with this technology. The Registrant anticipates that Research and
Development expenditures with respect to semiconductor technology will be
limited to less than $1,000.00 during the year ending September 30, 1997.
In addition, the Registrant has investigated methods for applying surgical
staples and the technology presently used to fabricate the equipment used to
apply the staples. During 1996, 1995 and 1994, the Registrant expended
$219,001.00, $120,833.00 and $63,917.00, respectively, in connection with
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.
If the semiconductor technology developed had ever reached production, the
Registrant would have engaged an accredited, outside manufacturing firm to
perform the production process. One feature of the Registrant's technology was
the absence of waste materials. Since the Registrant's semiconductor technology
was developed, other technologies have advanced the state-of-the-art and new
directions in this field have rendered the Registrant's technology less
attractive.
The Registrant's activities with regard to medical staple technology, at
present, are limited to engineering and development of medical staple design
with fabrication and manufacturing of prototypes and models sub-contracted to
other firms.
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, 1996, the Registrant employed three persons as compared to
the three persons at September 30, 1995 and three persons at September 30,
1994.
(d) Financial Information About Foreign and Domestic Operations and
Export Sales.
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 540
Ravine Court, Wyckoff, New Jersey. The Registrant leases approximately 1,000
square feet of office and laboratory space on a month-to-month basis from a
member of the Board of Directors. The Registrant owns two buildings of 62,000
square feet and 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.
Pertinent information concerning the Registrant's properties is as
follows. (Reference is made to Schedule XI of the accompanying Financial
statements for the
years ended September 30, 1996 and 1995.)
Building Building
Paramus, NJ Paramus, NJ
Year Acquired 1971 1994
Gross Square Footage 62,000 30,000
Percent Leased at 9/30/95 100% 100%
Acquisition Cost $ 718,881 $2,592,513 (2)
Capital Improvements Since
Acquisition $ 3,649,850 (1) -0-
Total Investment $ 4,587,133 (3) $2,826,883 (4)
Mortgage Balance $ 6,777,260 $ -0-
(1) Includes $3,567,267.00 of improvements to the building paid by The
Sports Authority, Inc. (the Tenant) upon closing of the Mortgage, but
does not include additional amounts expended by The Sports Authority,
Inc. since closing.
(2) Includes construction allowance of $1,189,675.00 for Tandy
Corporation pursuant to the Operating Lease Agreement.
(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 requires new
traffic pattern studies, parking lot re-design and significant additional
changes in order to comply with governmental requirements.
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 Computer City 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 source of funds for any additional improvements will be the
cash and cash equivalents reflected on the Balance Sheet. Such funds represent
the remaining proceeds of the Mortgage and Cash Flows associated with the Rental
Income generated by the Operating Leases. (Reference is made to Note 3 of the
accompanying Financial Statements for the years ended September 30, 1996 and
1995.)
The zoning change approval allowed for retail use of the property and
significantly enhanced the opportunities for attracting a suitable tenant for
the site.
When purchased, the site adjacent to the building owned by the Registrant,
was 12 (twelve) feet below the acceptable construction level and required
significant amounts of fill together with site engineering costs to acquire site
plan approval for a building from the appropriate governmental regulatory
authorities.
In addition, the Registrant expended funds to change the zoning of the
property from office use to retail use. This change in zoning allowed the
Registrant to seek tenants who were engaged in retail operations for the site
and resulted in the October 1994 tenancy of Computer City. (Reference is made to
Note 3 of the accompanying Financial Statements.)
The Registrant had not been able to lease the property since the original
site plan allowing office use was approved until the Computer City occupancy of
October 1994. The market for office space has seen significant decline during
the years ended September 30, 1990, 1991, 1992, 1993 and 1994. The vacancy rate
for such space had reached 28% during the year ended September 30, 1994 and
1993, respectively for the area in which the Registrant competes, Bergen
County, New Jersey.
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:
1996 100%
1995 100%
1994 100%
1993 100%
1992 100%
The building owned by the Registrant and under lease to Tandy Corp. has
been 100% occupied since October 1994. A summary of 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 after
1994.
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, a retail shopping mall
adjacent to the site currently being developed by the Registrant, 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 for
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.
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.
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 offered by Carr Securities Corp. New York, New York on
November 29, 1996 was $11.00 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 13, 1996 was 758.
(c) No dividends have been paid or declared on the Common Stock of the
Registrant during the 1996 or 1995 fiscal year. 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: National Quotation
Bureau). (On July 18, 1993, the Company shares were deleted from NASDAQ.)
1996 1995
---- ----
high low high low
---- --- ---- ---
Quarter Ended Dec. 31 10.50 9.00 10.00 10.00
Quarter Ended Mar. 31 11.00 9.00 10.50 10.00
Quarter Ended June 30 11.00 11.00 10.00 10.00
Quarter Ended Sept. 30 11.00 11.00 10.25 10.00
Such quotation represents prices offered by purchases without retail
mark-up, mark-down or commission and may not represent actual sales
transactions.
Item 6. Selected Financial Data.
Financial information for the five-year period commencing October 1, 1991
and ending September 30, 1996 is presented below.
HOLOBEAM, INC.
SUMMARY OF SELECTED FINANCIAL DATA
FOR THE YEARS ENDED SEPTEMBER 30,
Restated
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Gross Income $1,856,218 $1,895,392 $1,239,344 $1,178,572 $202,378
Net Income (Loss) 306,434 334,594 556,787 222,642 (879,674)
Weighted Average
Number of Common
Share Outstanding 316,992 323,596 335,211 342,906 351,288
Earnings Per Share
(Loss) $0.97 $1.03 $1.66 $0.65 ($0.65)
Total Assets 7,743,614 8,931,962 7,456,189 7,251,966 2,661,086
Long-Term Debt 6,667,298 6,946,564 7,002,162 7,208,283 1,527,130
Shareholders' Equity 558,463 371,422 68,070 (317,631) (480,513)
Gross Rental Income 1,838,216 1,834,829 1,208,217 1,156,167 198,530
Net Rental Income 1,577,254 1,554,791 1,039,686 1,013,412 (487,286)
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
(1) Liquidity.
The Registrant has expended $2,592,513 on Construction, site preparation,
engineering and site plan approvals of a 30,000 sq. ft. building occupied by
Tandy Corporation for use as a Computer City retail store. These costs were
funded in part by the proceeds of the First Mortgage on the 62,000 sq. ft.
building owned by the Registrant, by cash flows generated from the net rental
income under the operating leases for both buildings owned by the Registrant and
in part by the Tenant allowance for Construction pursuant to the lease
agreement. The Registrant reimbursed the Tenant, Tandy Corporation, in cash on
November 9, 1995 for such Construction allowance. (Reference is made to the
Registrant's Annual Report Form 10K, for the year ended September 30, 1994,
Items 1(c) and Item 2 and to Note 3 of the Accompanying financial statement for
the year ended September 30, 1995.)
Net Rental Income should be sufficient to provide cash flows and profits
during the terms of the operating leases which expire in 2009 (Tandy
Corporation) and 2012 (The Sports Authority). If the Tenants exercise the
options to renew the terms of the lease, such revenues will continue beyond 2009
and 2012.
Gross rents increased from $1,834,829 in 1995 to $1,838,216 in 1996. Net
Rental Income increased to $1,577,254 in 1996 as compared to $1,554,791 in
1995. Minimum annual future gross rents approximate $2,000,000 through 2009
and should be adequate to fund the activities of the Registrant in the short and
long-term. Total Minimum future rentals associated with the operating leases
exceeds $31,950,000.00 during the lease terms. (Reference is made to Note 3 to
the Accompanying Financial Statements for the years ended September 30, 1995 and
1996.)
(2) Capital Resources.
The Registrant has reimbursed Tandy Corporation $1,189,675 for a
Construction allowance pursuant to the terms and conditions of the operating
lease for the retail use of the 30,000 sq. ft. building constructed on the
Registrant's site in Paramus, New Jersey. The Construction allowance was paid
in full, in cash, on November 9, 1995 instead of funding through deferred or
delayed rental payments. (Reference is made to Form 10K, Item 7(2), Capital
Resources, for the Fiscal Year ended September 30, 1994.) Since construction
and improvements have been completed, the Registrant does not anticipate future
additional capital expenditures associated with the leased premises other than
those expenditures that are routine and necessary for its real estate rental
activities. The Registrant expects to continue to fund the development,
engineering and associated patent costs connected with the medical staples
technology.
The fabrication and experiments are limited to engineering and development
of staple design and may progress to animal testing during the fiscal year
ending September 30, 1997. Since such tests have not yet been performed, it may
take substantial time before conclusive results can commence and be
evaluated. The Registrant anticipates that such expenditures for the staples
project will approximate $250,000.00 during 1997 and will be funded from cash
flows associated with the real estate rental activities. No revenues are
projected in connection with the medical staples activities during 1997.
During 1995, cash used in investing activities was allocated exclusively to
Capital Expenditures associated with the Construction and development of the
30,000 sq. ft. retail building occupied by Tandy Corporation, while there were
no such expenditures during 1996 and none are anticipated for 1997. Cash flows
from financing activities were provided from the Tenant Construction Allowance
for the Tandy operating lease during 1995. (Reference is made to the Lease with
Tandy Corporation filed as an Exhibit to the 1995 Annual Report, Form 10K.)
(3) Results of Operations.
(a) The results of operations for the year ended September 30, 1996
indicate after-tax income of $306,434.00 as compared to after-tax income of
$334,594.00 for 1995. Performance for the two years remained relatively stable
resulting from revenues received under the operating leases of The Sports
Authority, Inc. and Tandy Corp. Since the buildings are 100% occupied and will
remain so until 2009, revenues are expected to continue to be uniform through
2009. Costs associated with the operating leases are expected to remain at
present levels throughout the terms of the leases with the exception of costs
associated with business liability insurance in connection with the leasing
activities, which are expected to rise with inflation and risk factors.
The Registrant expects to continue to fund research and development costs
associated with the surgical staple project and such costs increased from
$120,833.00 in 1995 to $219,001.00 in 1996. This increase resulted from
additional expenditures for purchases of materials, supplies and design and
drafting services during 1996. The Registrant expects to continue to fund the
development during 1997 and anticipates that such expenditures will approximate
$250,000.00 during 1997.
At present, the fabrication and experiments being performed by the
Registrant in connection with the surgical staples project are limited to
engineering, design and development of staple design and to design of equipment
to apply the staples. Such work may progress to animal testing during 1997 and
if started, may take substantial time before conclusive results can be
evaluated.
The Registrant expects to fund the 1997 portion of the project's
requirements from cash flows associated with the real estate rental activities
of the Registrant's business.
(b) The results of operations for the year ended September 30, 1995
indicate a profit of $334,594.00 as compared to income of $32,201.00 (before
cumulative effect of change in Accounting Principle) for 1994. (Reference is
made to Note 2 of the Financial Statements for the year ended September 30,
1995.) Income before provision for income taxes increased to $563,590.00 when
compared to $32,251.00 for 1994. The improved performance resulted from rental
income associated with the operating lease on the 30,000 sq. ft. building
occupied by Tandy Corporation. The operating lease generated an increase in
gross rentals of approximately $626,600.00 during 1995 as compared to 1994 and
is expected to continue and increase for the term of the lease.
Expenses associated with Registrant's rental activities increased from
$168,531.00 in 1994 to $280,038.00 in 1995. These increased costs resulted
primarily from increased depreciation expense associated with the building that
was put into service during 1995 in the amount of $60,935.00 and increased legal
fees associated with the administration of the real estate rental activities and
lease preparation activities. Such increase approximates $31,695.00. The
remainder of the annual increase results from increases in expenses incident and
necessary to the Registrant's business and activities associated with real
estate development.
Research and development costs in connection with the Registrant's medical
staple development project approximated $120,800.00 for 1995 which represents an
increase of $56,900.00 when compared to the 1994 expenditures. The increase is
associated with an increase in supplies and materials, including sample raw
materials and supplies, used to perform the development activity. Such increase
approximated $49,900.00 during 1995. No revenues were earned in connection with
the medical staples activities during 1995 or 1994.
The Registrant anticipates that revenues associated with the real estate
rental phase of its operations will be sufficient to fund the planned research
and development efforts in connection with the medical staples.
(c) The results of operations for the year ended September 30, 1994
indicate a profit of $32,201 compared to profits of $222,642 for the previous
fiscal year. The decrease in earnings results from an increase in interest
expenses from $542,313 in 1993 to $715,689 in 1994. Such increase reflects
interest costs on the first mortgage incurred for an entire year in 1994 as
compared to eight (8) months for 1993.
Rental expenses also experienced an increase of $25,776 when compared to
1993, resulting from increases in depreciation expense and increases in costs
necessary and incidental to the Registrant's real estate rental activities.
The Registrant anticipates that results of operations will improve with the
tenancy of Computer City (Tandy Corp.) and resultant rental income when the
details of the operating lease are finalized during the new fiscal year.
(Reference is made to Note 12 to the accompanying Financial Statements for the
year ending September 30, 1994.)
No revenues were earned in connection with the medical staple activities nor
were revenues earned in connection with the semiconductor technology development
segment of the Registrant's business activities. Revenue associated with the
real estate rental activities increased $52,050 when compared to fiscal year
1993.
Item 8. Financial Statements and Supplemental Data.
Financial statements, supplementary financial information and Independent
Accountant's Report are filed with this report. (See Financial Statements and
reports thereon of Israelow, Lipton, Gillio, Meyerowitz and Meltzer, for 1995
and of Fredericks and Company for 1996.)
Item 9. Disagreements on Accounting and Financial Disclosure.
None.
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 Director
and the date when he was first elected.
Date First
Name and Age Title Term Elected
- - -------------------------------------------------------------------------------
Melvin S. Cook Chairman of the Board 1999 Annual 1968
Age 65 President of Registrant Meeting
Martin R. Infante Secretary of Registrant 1997 Annual 1976
Age 65 Meeting
William M. Hackett Treasurer of Registrant 2000 Annual 1984
Age 53 Meeting
Beverly Cook Office Manager of Registrant 1998 Annual 1995
Age 60 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 65
William M. Hackett Treasurer of the Registrant Annual 1975
Age 53
Martin R. Infante Secretary of the Registrant Annual 1980
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 identified 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
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.
Martin R. Infante Principal, Martin Infante Associates, a None
construction contractor for more than 30
(thirty) years, Principal, Martin Infante
Agency, an insurance agency whose cli-
entele has a large representation in the
construction industry, for more than 30
(thirty) years. Secretary of Registrant
since 1980. Director of Registrant
since 1976.
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.
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, 1996 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.
HOLOBEAM, INC.
Form 10K
Summary Compensation Table
September 30, 1996
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 1996 $200,000 $-0- $ -0- $-0- $-0- $-0- $-0-
President and CEO 1995 200,000 -0- 70,857 -0- -0- -0- -0-
and Director 1994 154,583 -0- -0- -0- -0- -0- -0-
William M. Hackett 1996 17,550 -0- -0- -0- -0- -0- -0-
Treasurer and 1995 17,550 -0- -0- -0- -0- -0- -0-
Director 1994 17,550 -0- -0- -0- -0- -0- -0-
Martin R. Infante 1996 -0- -0- -0- -0- -0- -0- 29,984
Secretary and 1995 -0- -0- -0- -0- -0- -0- 28,135
Director 1994 -0- -0- -0- -0- -0- -0- 21,862
Beverly Cook 1996 54,167 -0- -0- -0- -0- -0- -0-
1995 28,000 -0- -0- -0- -0- -0- -0-
All Officers and 1996 271,717 -0- -0- -0- -0- -0- 29,984
Directors as a 1995 245,550 -0- 70,857 -0- -0- -0- 28,135
Group 1994 172,133 -0- -0- -0- -0- -0- 21,862
Beverly Cook was elected to the Board of Directors on August 19, 1995.
Martin Infante performed services for the registrant as landlord and
insurance broker. See Item 11(D) of this report.
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. The "other"
compensation paid to Mr. Cook in 1994 represents interest on unpaid salary
accrued from 1989 through 1993.
Mr. Infante received no compensation as an employee of the Registrant. The
amounts paid to Mr. Infante were in connection with his services performed as
insurance agent and landlord. (Reference is made to Notes 4 and 6 to the
accompanying Financial Statements and to Item 11 (d) of this report.)
(a) 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 1996, 1995 and 1994.
(b) 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, 1995.
All Directors and Officers as a Group
Options Granted 0
Options Exercised 0
Unexercised Options Held at 9/30/96 0
(d) During the fiscal year of the Registrant ended on September 30, 1996,
the Registrant utilized the services of Mr. Infante in connection with the
obtaining of insurance and as a landlord. In the opinion of the Registrant, the
amounts paid to Mr. Infante in respect to the foregoing were in all cases fair
to the Registrant and were consistent with the amount which would have been paid
had the transaction occurred with unaffiliated parties. (Reference is made to
Notes 4 and 6 to the Financial Statements of the Registrant for the years ended
September 30, 1996, 1995 and 1994.)
The amounts paid to Mr. Infante during the three most recent fiscal years
ended September 30 are presented below:
1996 1995 1994
Rent Expense $10,908 $10,908 $10,908
Insurance 19,076 17,227 10,954
------ ------ ------
Total Payments $29,984 $28,135 $21,862
====== ====== ======
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 13, 1996
is as follows:
Title of Class Name & Address Amount Owned % of Class
- - -------------------------------------------------------------------------------
Common Stock, Par Melvin S. Cook 123,497 39.5%
Value $0.10 Per Share 540 Ravine Court
Wyckoff, NJ 07481
Common Stock, Par Beverly Cook 95,000 30.4%
Value $0.10 Per Share 540 Ravine Court
Wyckoff, NJ 07481
(b) The stockholding of Officers and Directors as a group as of December
13, 1996 are as follows:
Title of Class Amount Beneficially Owned % of Class
- - -------------------------------------------------------------------------------
Common Stock, Par Value 218,997 70.1%
$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.
Martin R. Infante, Secretary and Director provides services to the
Registrant in his capacity as a principal in the Martin Infante Insurance Agency
and as a landlord.
During the three most recent fiscal years, the amounts paid to Mr. Infante
in connection with such services is as follows:
1996 1995 1994
Rent Expense $10,908 $10,908 $10,908
Insurance 19,076 17,227 10,954
------ ------ ------
Total Payments $29,984 $28,135 $21,862
====== ====== ======
Reference is made to Item 11 (d) of this report and to Notes 4 and 6 to the
accompanying Financial Statements for the year ended September 30, 1996.
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
information 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)
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.
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.
HOLOBEAM, INC.
Form 10K
September 30, 1996
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 12/24/96
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
President and Chairman of the Board
Date:
12/19/96
By:
William M. Hackett
Director and Treasurer
Date:
12/23/96
By:
Martin R. Infante
Director and Secretary
Date:
12/20/96
By:
Beverly Cook
Director
Date:
12/19/96
HOLOBEAM, INC.
FINANCIAL STATEMENTS
WITH INDEPENDENT ACCOUNTANTS' REPORT
YEARS ENDED
SEPTEMBER 30, 1996, AND 1995 AND 1994
HOLOBEAM, INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
INDEPENDENT ACCOUNTANTS' REPORT F-1
FINANCIAL STATEMENTS:
BALANCE SHEETS F-2, 3
SEPTEMBER 30, 1996 AND 1995
STATEMENTS OF OPERATIONS
SEPTEMBER 30, 1996, 1995 AND 1994 F-4
STATEMENTS OF SHAREHOLDER'S EQUITY
SEPTEMBER 20, 1996, 1995 AND 1994 F-5
STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 F-6
NOTES TO FINANCIAL STATEMENTS F-7-16
SCHEDULES FOR THE YEARS ENDED SEPTEMBER 30, 1996,
1995 AND 1994
V PROPERTY AND EQUIPMENT F-17
VI ACCUMULATED DEPRECIATION AND AMORTIZATION
PROPERTY AND EQUIPMENT F-18
X SUPPLEMENTARY INCOME STATEMENT INFORMATION F-19
XI REAL ESTATE AND ACCUMULATED DEPRECIATION F-20
XII MORTGAGE LOANS REAL ESTATE F-21
All other schedules have been omitted because they are not applicable, or the
information is shown in the financial statements or notes thereto.
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders
Holobeam Inc.
Wyckoff, New Jersey
We have audited the accompanying balance sheets of Holobeam, Inc. as of
September 30, 1996 and 1995 and the related statements of operations,
shareholders' equity and statements of cash flows for each of the three years
ended September 30, 1996, and the supporting schedules listed in the
accompanying index. 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 audit. The financial statements of
Holobeam, Inc. as of September 30, 1995 and 1994, were audited by other
auditors whose report dated December 25, 1995, expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides 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, 1996 and 1995, and the results of its operations, shareholders'
equity and cash flows for each of the three years ended September 30, 1996,
in conformity with generally accepted accounting principles. Further, it is
our opinion that the schedules referred to above present fairly the
information set forth therein.
FREDERICKS AND COMPANY
Fairfield, New Jersey
December 12, 1996
F-1
HOLOBEAM, INC.
BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1995
ASSETS
1996 1995
CURRENT ASSETS
Cash (including equivalents of $467,705
in 1996 and $1,238,742 in 1995) $ 598,772 $1,347,540
Accrued Interest - 3,758
Deferred Tax Asset 91,800 -
Prepaid Expenses 6,312 5,704
--------- ---------
TOTAL CURRENT ASSETS 696,884 1,357,002
--------- ---------
PROPERTY AND EQUIPMENT-COST
Real Estate:
Land 452,772 452,772
Buildings and Building Improvements 6,961,244 7,971,952
--------- ---------
Total 7,414,016 8,424,724
Machinery and Equipment 67,227 67,227
Furniture and Fixtures 2,258 2,258
--------- ---------
TOTAL 7,483,501 8,494,209
Less: Accumulated Depreciation and Amortization 1,166,447 1,970,504
--------- ---------
PROPERTY AND EQUIPMENT-NET 6,317,054 6,523,705
--------- ---------
OTHER ASSETS
Patents and Patent application cost, net of
accumulated amortization of $176,881 in 1996
and $161,953 in 1995 88,171 73,051
Deferred Charges 592,275 633,384
Other Receivables 49,230 49,230
Deferred Tax Asset - 295,590
--------- ---------
TOTAL OTHER ASSETS 729,676 1,051,255
--------- ---------
TOTAL ASSETS $7,743,614 $8,931,962
========= =========
The accompanying notes are an integral part of the financial statements.
F-2
HOLOBEAM, INC.
BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
1996 1995
CURRENT LIABILITIES
Mortgage Payable-Current Portion $ 245,412 $ 224,911
Loan Payable-Tandy Corporation - 1,137,175
Accounts Payable 159,767 114,645
Franchise Taxes Payable 4,345 2,900
Income Taxes Payable 2,000 -
Other Accrued Expenses 106,329 134,345
--------- ---------
TOTAL CURRENT LIABILITIES 517,853 1,613,976
--------- ---------
LONG-TERM DEBT
Mortgage Payable (Net of Current Portion) 6,531,848 6,777,251
Real Estate Commissions Payable 135,450 169,313
--------- ---------
TOTAL LONG-TERM LIABILITIES 6,667,298 6,946,564
--------- ---------
TOTAL LIABILITIES 7,185,151 8,560,540
--------- ---------
SHAREHOLDERS' EQUITY
Common Stock, Par Value $.10 per Share
Authorized 2,000,000 Shares
Issued 1,052,598 in 1996 and 1995 105,260 105,260
Additional Paid in Capital 12,399,699 12,399,699
Accumulated Deficit (9,418,439) (9,724,873)
---------- ----------
TOTAL 3,086,520 2,780,086
Less: Cost of Shares in Treasury (739,079
in 1996 and 730,455 in 1995) (2,528,057) (2,408,664)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 558,463 371,422
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,743,614 $8,931,962
========== ==========
The accompanying notes are an integral part of the financial statements
F-3
HOLOBEAM, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30,
1996 1995 1994
REVENUES
Rental Income $1,838,216 $1,834,829 $1,208,217
Interest Income 18,002 60,519 31,126
Other - 44 1
--------- --------- ---------
TOTAL 1,856,218 1,895,392 1,239,344
--------- --------- ---------
COSTS AND EXPENSES
Rental Expense 260,962 280,038 168,531
General Expense 253,146 304,192 256,833
Interest Expense 607,719 626,638 715,689
Research and Development 219,001 120,833 63,917
Other - 101 123
--------- --------- ---------
TOTAL 1,340,828 1,331,802 1,207,093
--------- --------- ---------
INCOME BEFORE INCOME TAXES 515,390 563,590 32,251
INCOME TAX EXPENSE 208,956 228,996 9,696
--------- --------- ---------
INCOME BEFORE TAX BENEFIT AND
A CHANGE IN ACCOUNTING PRINCIPLE 306,434 334,594 22,555
TAX BENEFIT-NOL CARRY FORWARD - - 9,646
--------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF
A CHANGE IN ACCOUNTING PRINCIPLE 306,434 334,594 32,201
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE - - 524,586
--------- --------- ---------
NET INCOME $ 306,434 $ 334,594 $ 556,787
========= ========= =========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 316,992 323,596 335,211
--------- --------- --------
INCOME PER SHARE OF COMMON STOCK
Continuing Operations Before
Income Tax Benefit and a Change
in Accounting Principle $ 0.97 $ 1.03 $ 0.07
Tax Benefit-NOL Carryforward - - 0.03
Change in Accounting Principle - - 1.56
--------- ------- --------
Net Income $ 0.97 $ 1.03 $ 1.66
--------- ------- --------
The accompanying notes are an integral part of the financial statements.
F-4
HOLOBEAM, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
Additional Treasury
Common Stock Paid-In Accumulated Stock
Shares Amount Capital Deficit Shares Amount
BALANCE, SEPTEMBER 30, 1993 1,052,598 $105,260 $12,399,699 $(10,616,254) 711,977 $2,206,336
Net Income 556,787
Purchase of Treasury Stock 15,444 171,086
--------- ------- ---------- ----------- ------- ---------
BALANCE, SEPTEMBER 30, 1994 1,052,598 $105,260 $12,399,699 $(10,059,467) 727,421 $2,377,422
Net Income 334,594
Purchase of Treasury Stock 3,034 31,242
--------- ------- ---------- ----------- ------- ---------
BALANCE, SEPTEMBER 30, 1995 1,052,598 $105,260 $12,399,699 $(9,724,873) 730,455 2,408,664
Net Income 306,434
Purchase of Treasury Stock 8,624 119,393
--------- -------- ---------- ---------- ------- ---------
BALANCE, SEPTEMBER 30, 1996 1,052,598 $105,260 $12,399,699 $(9,418,439) 739,079 $2,528,057
========= ======= ========== ========== ======= =========
The accompanying notes are an integral part of the financial statements.
F-5
HOLOBEAM, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30,
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $306,434 $334,594 $556,787
------- ------- -------
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating
Activities:
Cumulative effect of a Change in
Accounting Principle - - (524,586)
Depreciation 206,651 202,714 142,296
Amortization 56,037 56,545 33,790
Patent and Patent Application Cost (30,048) (22,168) (19,120)
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 20,551 72,054 7,422
Real Estate Brokers Commissions (33,863) 169,313 -
Decrease (Increase) in:
Other Receivables - (5,422) (42,778)
Deferred Tax Asset 203,790 228,996 -
Deferred Charges - (330,056) -
Accounts Receivable 3,758 (2,115) (314)
Prepaid Expenses (608) (2,236) 274
-------- -------- -------
Total Adjustments 426,268 367,625 (403,016)
-------- -------- -------
Net Cash Provided by Operating Activities 732,702 702,219 153,771
-------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures - (1,193,187) (43,435)
------- --------- ------
Net Cash Used by Investing Activities - (1,193,187) (43,435)
------- --------- ------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Payments on First Mortgage (224,902) (206,121) (188,900)
Purchase of Treasury Stock (119,393) (31,242) (171,086)
Proceeds of Mortgages and Loans
on Real Estate-Tandy - 1,189,675 -
Principal Payments on Loan Payable
- - -Tandy (1,137,175) (52,500) -
--------- --------- -------
Net Cash Provided (Used) by
Financing Activities (1,481,470) 899,812 (359,986)
--------- -------- -------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (748,768) 408,844 (249,650)
--------- -------- -------
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 1,347,540 938,696 1,188,346
CASH AND CASH EQUIVALENTS AT
END OF YEAR $598,772 $1,347,540 $938,696
======== ========= =======
SUPPLEMENTAL CASH FLOWS DISCLOSURES
Interest Paid $609,359 $628,142 $716,921
Income Taxes Paid $ 3,041 $ 150 $ 50
The accompanying notes are an integral part of the financial statements.
F-6
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Nature of Operations
The Company is engaged in the rental of real property for retail
use and in development of methods for applying surgical
staples and the technology used to fabricate the equipment
used to apply the staples.
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. Income per share
Income per share of common stock has been computed by dividing
the income by the weighted average number of common shares
outstanding during the year.
d. Capitalized real estate taxes
The Company capitalized real estate taxes related to the property
upon which the Company intended to construct a commercial
building. Such taxes were capitalized until the property was
put into service on October 1, 1994. The amount capitalized in
1994 was $12,622.
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, 1996, 1995 AND 1994
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Income taxes
The Company adopted Statement of Financial Accounting Standards
(SFAS) No. 109 "Accounting for Income Taxes". SFAS No. 109 is an
asset and liability method for accounting for income taxes.
Generally, SFAS No. 109 allows recognition of deferred tax
assets in the current period for the future benefit of net
operating loss carryforwards and items for which expenses have
been recognized for financial statement purposes, but will be
deductible in future periods. 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.
NOTE 2. INCOME TAXES
The deferred tax assets recorded on the balance sheet as of September
30, are as follows:
1996 1995 1994
Deferred tax asset $ 91,800 $ 295,590 $ 524,586
Valuation allowance - - -
------ ------- -------
Net deferred tax asset $ 91,800 $ 295,590 $ 524,586
====== ======= =======
Net operating loss carryovers of the Company, which aggregate
approximately $270,000 at September 30, 1996, and $326,716 at
September 30, 1995 and $872,513 at September 30, 1994 will be
available to offset future taxable income through 2008. Such
operating losses will expire as follows:
Year Amount
2008 $270,000
F-8
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
NOTE 2. INCOME TAXES (Continued)
The sources of deferred income taxes for the years ended September 30,
are as follows:
1996 1995 1994
Depreciation $ - $413,371 $ 440,921
Net Operating Loss Carryover 270,000 326,716 872,513
------- ------- ---------
$270,000 $740,087 $1,313,434
======= ======= =========
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:
1996 1995 1994
Statutory federal income tax rate 34% 34% 34%
State tax provisions, net of
federal benefits 6 6 6
NOL carryforward - - (30)
Other 1 1 (10)
--- --- ---
Effective income tax expense rate 41% 41% 0%
=== === ===
Income tax expense (benefit) consisted of the following:
1996 1995 1994
Current
Federal $ 2,916 $ - $ -
State 2,125 - 50
Deferred
Federal 184,508 194,938 -
State 19,407 34,058 -
------- ------- -----
$ 208,956 $228,996 $ 50
======= ======= =====
Capital losses of the Company which approximates $0 in 1996, $17,575
in 1995, and $36,325 in 1994 were available to offset future capital
gains. Capital losses of $17,575 expired in 1995 and $18,750
expired in 1994.
In 1996, 1995 and 1994, the net operating loss carryovers do not agree
with the accumulated deficit on the balance sheets for the same
periods because some net operating losses have expired and because
capital losses are not included in the net operating loss carryovers.
The financial statements for the year ended September 30, 1994, have
been restated for the change as if the provisions of SFAS No. 109 had
been in effect for that year.
F-9
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
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
Computer City 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.
1996 1995 1994
Buildings and building improvements:
Cost $7,414,016 $8,424,724 $7,231,537
Accumulated depreciation 1,126,687 1,937,408 1,742,989
--------- --------- ---------
Net buildings and building
improvements $6,287,329 $6,487,316 $5,488,548
========= ========= =========
The minimum future rentals on noncancellable operating leases for the
years ending September 30, are as follows:
1997 $1,918,425 2002 $2,108,447 2007 $2,322,194
1998 1,925,717 2003 2,116,467 2008 2,331,017
1999 1,925,717 2004 2,116,467 2009 2,331,017
2000 2,020,217 2005 2,225,142 2010 1,497,842
2001 2,020,217 2006 2,225,142 2011 1,497,842
2012 1,373,022
----------
Total $31,954,892
==========
Net rental income consists of the following:
1996 1995 1994
Rental income $1,838,216 $1,834,829 $1,208,217
Depreciation expense (199,987) (194,419) (133,484)
Other expenses (60,975) (85,619) (35,047)
--------- --------- ---------
Rental income, net $1,577,254 $1,554,791 $1,039,686
========= ========= =========
In 1996, 1995, and 1994, depreciation expenses included all
depreciation of the rental buildings and building improvements.
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.
F-10
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
NOTE 3. RENTAL INCOME UNDER OPERATING LEASES (Continued)
The Company obtained additional mortgage financing totalling
$7,500,000 in order to fund reimbursement to The Sports Authority,
Inc., whose 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 8).
The base 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.
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.
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.
F-11
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
NOTE 3. RENTAL INCOME UNDER OPERATING LEASES (Continued)
The construction allowance was payable to Tandy Corporation two (2)
months after a permanent certificate of occupancy was issued by
local governmental authorities. According to the terms and
conditions of the lease agreement, Tandy Corporation could
accrue interest at the annual rate of 7% on the unpaid balance and
could also cease paying rent until such amounts payable by the
Company were paid. Accordingly, the Company elected to pay the
amounts in full on November 9, 1995.
NOTE 4. RELATED PARTY TRANSACTIONS
A member of the Board of Directors, who is an insurance broker and
landlord, performed services for the Company in 1996, 1995, 1994.
The services consisted of the following:
1996 1995 1994
Landlord-Office rental
and related services $10,908 $10,908 $10,908
Insurance 19,076 17,227 10,954
------ ------ ------
$29,984 $28,135 $21,862
====== ====== ======
NOTE 5. RESEARCH AND DEVELOPMENT
Research and development expenses in the amount of $219,001 in 1996,
$120,833 in 1995, and $63,917 in 1994 were charged to operations and
included in costs and expenses.
NOTE 6. RENT EXPENSE
The Company leases approximately 1,000 square feet of office space on
a month to month basis. The monthly rental is $909. This property is
leased from a member of the Board of Directors. (See Note 4).
Rent expense was $10,908 in 1996, 1995 and 1994.
NOTE 7. 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. 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 terminated.
The Company is continuing its efforts in the area of medical staples
for use in internal surgery. Four United States Patents have been
issued and a PCT application has been filed on a novel staple. The
staple has been produced and its is anticipated that animal tests
will commence during 1996. Research and development costs in the
amounts of $219,001, $120,833 and $63,917 have been expended in
connection with the surgical staple during 1996, 1995 and 1994,
respectively.
F-12
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
NOTE 8. LONG-TERM DEBT
The mortgage consists of two loans, one in the amount of $6,000,000
payable in monthly installments of $55,328 including interest at
8.7% until 2013. The second is in the amount of $1,500,000 payable
in monthly installments of $13,767 including interest at 8.7% until
2013.
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 9. The expense for the next five (5) years is presented
below:
1997 $5,126
1998 5,126
1999 5,126
2000 5,126
2001 5,126
The balance outstanding for each debt issued at the end of 1996, 1995,
and 1994 is as follows:
1996 1995 1994
First Mortgage on
62,000 sq. ft. Building $6,777,260 $7,002,162 $7,208,283
Loan Payable-Tandy Corp. - 1,137,175 -
--------- --------- ---------
6,777,260 8,139,337 7,208,283
Real Estate Brokers
Commissions Payable 135,450 169,313 -
--------- --------- ---------
Total 6,912,710 8,308,650 7,208,283
Less Current Portion 245,412 1,362,086 206,121
--------- --------- ---------
Long-Term Portion $6,667,298 $6,946,564 $7,002,162
========= ========= =========
There was no outstanding long-term debt at September 30, 1996, other
than the first mortgage and real estate brokers commissions payable
after September 30, 1996. The mortgage is secured by the operating
lease agreement. (See Note 3).
The principle payments of long-term debt for the term of the mortgage
is as follows:
1997 $245,412 2002 $379,611 2007 $581,197
1998 267,783 2003 444,217 2008 640,727
1999 292,195 2004 451,978 2009 609,136
2000 318,832 2005 493,181 2010 762,870
2001 347,897 2006 538,140 2011 338,084
F-13
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
NOTE 9. DEFERRED CHARGES
The composition of deferred charges and related amortization is as
follows:
Deferred Real Estate
Mortgage Brokers Commissions
Total Costs Sports Authority Tandy Corp.
Original Cost $712,160 $102,520 $279,584 $330,056
Accumulated
Amortization 119,885 18,795 57,082 44,008
------- ------- ------- -------
Balance 9/30/96 $592,275 $83,725 $222,502 $286,048
======= ======= ======= =======
NOTE 10. 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. No
depreciation or amortization was recorded until the year ended
September 30, 1995. Depreciation expense recorded during 1995 on
the deferred site costs transferred to the 30,000 sq. ft. building
and on the building costs amount to $60,935.
NOTE 11. OTHER EMPLOYEE BENEFITS
The Financial Accounting Standards Board issued SFAS No. 106 "
Employers Accounting for Postretirement Benefits" and SFAS No. 112
"Employers Accounting for Postemployment Benefits", which changed
employers' accounting for these benefits. Since the Company has no
post-retirement benefits plan, and does not offer postemployment
benefits, SFAS No. 106 and SFAS No. 112 are not applicable.
NOTE 12. CONCENTRATION OF CREDIT RISK
The Company maintains a cash balance in a financial institution in
excess of the $100,000 guarantee by the Federal Deposit Insurance
Corporation (FDIC). At September 30, 1996, this excess amounted to
$38,076. 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)
F-14
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
NOTE 13. FINANCIAL REPORTING BY BUSINESS SEGMENTS
A summary description of the Company's business segments is as
follows:
Medical Staples-Engaged in engineering and design of staples for use
in internal surgery, and in the technology used to fabricate the
equipment issued to apply the staples.
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.
Rental-Engaged in leasing to tenants, the two retail building owned by
the Company at 50 A&S Drive, Paramus, New Jersey.
Revenues
1996 1995 1994
Business Segments:
Surgical Staples $ - $ - $ -
Electro-Optical - - -
Real Estate Rental 1,838,216 1,834,829 1,208,217
Corporate 18,002 60,563 31,127
--------- --------- ---------
Total $1,856,218 $1,895,392 $1,239,344
========= ========= =========
Business Segments: Income (Loss)
1996 1995 1994
Surgical Staples $ (219,001) $ (120,833) $ (63,917)
Electro-Optical - - -
Real Estate Rental 1,577,254 1,554,791 1,039,687
--------- --------- ---------
Total 1,358,253 1,433,958 975,770
--------- --------- ---------
General and Administrative
Expenses (253,146) (304,192) (258,833)
Interest Expense (607,719) (626,638) (715,689)
Other Income (Expense) 18,002 60,462 31,003
Cumulative Effect of Change in
Accounting Tax Expense - - 524,586
Income Tax Expense (208,956) (228,996) (50)
--------- --------- --------
Total (1,051,819) (1,099,364) (418,983)
--------- --------- --------
Net Income $ 306,434 $ 334,594 $ 556,787
========= ========= ========
Business Segments: Identifiable Assets
1996 1995 1994
Surgical Staples $ 61,729 $ 37,312 $ 18,164
Electro-Optical 26,442 35,739 48,155
Real Estate Rental 6,885,752 7,126,240 5,836,453
Corporate and Other
Non-segment Items 769,691 1,732,671 1,553,417
--------- --------- ---------
TOTAL ASSETS $7,743,614 $8,931,962 $7,456,189
========= ========= =========
F-15
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
NOTE 14. 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, 1996, 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 judgment 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-16
SCHEDULE V
HOLOBEAM, INC.
PROPERTY AND EQUIPMENT
SEPTEMBER 30, 1994, 1995 AND 1996
Balance at Balance at
Beginning End of
CLASSIFICATIONS Of Year Additions Retirements Year
Year Ended September 30, 1994:
Machinery and Equipment $ 56,736 $ 22,504 $ 12,013 $ 67,227
Furniture and Fixtures 2,258 0 0 2,258
------ ------ ------ -------
TOTAL $ 58,994 $ 22,504 $ 12,013 $ 69,485
------ ------ ------ -------
Year Ended September 30, 1995:
Machinery and Equipment $ 67,227 $ 0 $ 0 $ 67,227
Furniture and Fixtures 2,258 0 0 2,258
------ ------ ------ ------
TOTAL $ 69,485 $ 0 $ 0 $ 69,485
------ ------ ------ ------
YEAR ENDED SEPTEMBER 30, 1996:
Machinery and Equipment $ 67,227 $ 0 $ 0 $ 67,227
Furniture and Fixtures 2,258 0 0 2,258
------ ------ ------ ------
TOTAL $ 69,485 $ 0 $ 0 $ 69,485
====== ====== ====== ======
The accompanying notes are an integral part of the financial statements.
F-17
SCHEDULE VI
HOLOBEAM, INC.
ACCUMULATED DEPRECIATION AND AMORTIZATION
PROPERTY AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1994, 1995 AND 1996
Balance at Balance at
Beginning End of
CLASSIFICATIONS Of Year Additions Retirements Year
Year Ended September 30, 1994:
Machinery and Equipment $ 21,413 $ 8,579 $ 7,208 $ 22,784
Furniture and Fixtures 1,786 231 0 2,017
------ ------ ------ ------
TOTAL $ 23,199 $ 8,810 $ 7,208 $ 24,801
------ ------ ------ ------
Year Ended September 30, 1995:
Machinery and Equipment $ 22,784 $ 8,108 $ 0 $ 30,892
Furniture and Fixtures 2,017 187 0 2,204
------ ------ ------- ------
TOTAL $ 24,801 $ 8,295 $ 0 $ 33,096
------- ------ ------- ------
YEAR ENDED SEPTEMBER 30, 1996:
Machinery and Equipment $ 30,892 $ 8,300 $ 0 $ 39,192
Furniture and Fixtures 2,204 52 0 2,256
------- ------ ------ ------
TOTAL $ 33,096 $ 8,352 $ 0 $ 41,448
======= ====== ====== ======
The accompanying notes are an integral part of the financial statements.
F-18
SCHEDULE X
HOLOBEAM, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30,
1996 1995 1994
Maintenance and Repairs $ 945 $ 964 $13,529
Depreciation and Amortization of
Intangible Assets $56,037 $56,545 $33,789
Taxes, Other than Payroll and Income
Tax
Franchise $ 4,740 $ 3,000 $ 4,250
Real Estate 0 0 0
Other 300 24 13
------ ------ ------
TOTAL $ 5,040 $ 3,024 $ 4,263
====== ====== ======
Royalties $ 0 $ 0 $ 0
Advertising $ 0 $ 0 $ 0
The accompanying notes are an integral part of the financial statements.
F-19
SCHEDULE XI
HOLOBEAM, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 1996
Life
Cost Capitalized Gross Amount at In Which
Initial Subsequent Which Carried At Deprec.
Cost to Company To Acquisition Close of Period Date in Latest
Incumb- Bldg & Carrying Bldg & Accum. of Date Income St.
rances Land Improv Improv Costs Land Improv Total Depre. Constr. Acqu. 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 Improv. 6,777,260 0 718,881 3,649,850 0 0 4,368,731 4,368,731 999,277 1958 1971 3
to
40
years
Building
II at
Paramus,
NJ 0 0 2,592,513 0 0 0 2,592,513 2,592,513 127,410 1995 1995 30
years
--------- ------- --------- --------- - ------- --------- --------- ---------
$6,777,260 $391,967 $3,311,394 $3,710,655 0 $452,772 $6,961,244 $7,414,016 $1,126,687
========= ======= ========= ========= = ======= ========= ========= =========
(1)Activity for the three years (2)Activity for the three years
ended September 30, 1996 is ended September 30, 1996 is
as follows: 1996 1995 1994 as follows: 1996
1995 1994
Balance at Beginning of Year $8,424,724 $7,231,537 $7,205,801 Balance at Beginning of Year $1,937,408 $1,742,989 $1,609,503
Additions: Additions:
Improvements 0 0 25,736 Depreciation 199,987 194,419 133,486
Acquisitions 0 1,193,187 0 Less Retirement 1,010,708 0 0
--------- --------- --------- --------- ------- ---------
8,424,724 8,424,724 7,231,537
Deductions During Year: Balance at End of Year $1,126,687 $1,937,408 $1,742,989
========= ========= =========
Retirements 1,010,708 0 0
Cost of Real
Estate Sales 0 0 0
--------- --------- ---------
Balance at End of Year $7,414,816 $8,424,724 $7,231,537
========= ========= =========
The aggregate cost for Federal income tax purposes
at September 30, 1996 is $7,414,816.
The accompanying notes are an integral part of these financial statements.
F-20
SCHEDULE XII
HOLOBEAM, INC.
MORTGAGE LOANS ON REAL ESTATE
SEPTEMBER 30, 1996
Principal Amount
Periodic Face Amount Carrying Amount of Loans Subject to
Interest Final Maturity Payment Prior of of Delinquent Principal
Rate Date Terms Items Mortgage Mortgage or Interest
Mortgage Payable
Building and Improvements 8.70% February 5, 2011 $13,367 None $1,500,000 $1,354,693 None
Mortgage Payable
Building and Improvements 8.77% February 5, 2011 $56,328 None $6,000,000 $5,422,567 None
---------
$6,777,260
=========
Activity for the three
years ended September 30,
1996 is as follows:
1996 1995 1994
Balance at Beginning of Year: $8,139,337 $7,208,283 $7,397,163
Addition During Year
Commercial Loans 0 1,189,675 0
New Mortgages 0 0 0
--------- --------- ---------
8,139,337 8,397,958 7,397,183
Deductions During Year:
Principal Payments 224,902 258,621 188,900
Mortgage Payments 1,137,175 0 0
--------- --------- ---------
Balance at End of Year $6,777,260 $8,139,337 $7,208,283
========= ========= =========
The cost for Federal income taxes
Purpose at 9/30/96 $6,777,260
The Loan was paid in full
on November 9, 1995
The accompanying notes are an integral part of these financial statements.
F-21