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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, 1997, 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)
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.
$4,691,363.00 at December 10, 1997.
1
Indicate the number of shares outstanding of each of
the Registrant's classes of common stock, as of the latest
practicable date. 306,010 Common Shares at December 10,1997.
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.
2
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 and was formerly engaged in developing
technology for 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 13 to the
Financial Statements for the years ended September 30, 1997,
1996 and 1995.
(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 foreign applications have been
filed on a novel staple. The staple has been produced and it is
anticipated that animal tests will continue during the fiscal
year ending September 30, 1998.
A significant investment would be required if the Registrant
were to pursue this area of business. 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.
Semiconductor Technology
The Registrant had obtained a United States patent covering
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
3
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
and the funds were supplied by the USDOE on the Solaris Solar
Research program, Grant #DE-FG02-84C410203. Subsequently, Brown
University 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 and were of high quality. However, variations in film
thickness along the direction of flow were observed. If such
variation cannot be solved, it would 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. During 1993 the
Registrant expended $37,615.00 toward development of
semiconductor technology and substantially reduced expenditures
during 1994.
During fiscal year 1994, the Registrant discontinued efforts
relating to photovoltaic cells. Work in the field has moved in
directions away from 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
A&S Drive, Paramus, New Jersey: one to The Sports Authority, Inc.
and the other to Tandy Corporation for retail purposes.
(iii) Raw Materials
4
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 08/09/95
3. 08/228,058 Staples 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. 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
5
The Registrant has 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.
(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.
6
It is presently contemplated that Registrant's activities
with respect to medical staples, if actual commercial
activities are commenced, may be limited to licensing the
technology to other firms or to forming some type of business
relationship with other firms. The technology is in competition
with alternative staples, some of the suppliers of which are
well-established.
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 of the office 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 $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
7
in connection with this technology. The Registrant anticipates
that no Research and Development expenditures will be made with
respect to semiconductor technology during the year ended
September 30, 1998.
The Registrant has investigated methods for applying
surgical staples and the technology presently used to fabricate
and apply such staples. During 1997, 1996 and 1995, the
Registrant expended $147,562.00, $219,001.00 and $120,833.00,
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
significant 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, development
and testing 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
8
technology.
(xiii) Employees.
At September 30, 1997, the Registrant employed three persons
as compared to the three
persons at September 30, 1996 and three persons at September 30,
1995.
(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 217 First Street,
Ho Ho Kus, New Jersey 07423-0287. The Registrant leases
approximately 1,000 square feet of office and laboratory space on
a 12 month lease that is annually renewable. The Registrant owns
two office 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. (Reference
is made to Notes 4, 8, 9 and 10 to the Financial Statements for
the fiscal year ended September 30, 1991, 1990 and 1989.)
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, 1997 and 1996.)
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) $2,826,843 (4)
Mortgage Balance $6,531,848 $ -0-
9
(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, and if
necessary, the Cash Flows associated with the Rental Income
generated by the Operating Leases. (Reference
10
is made to Note 3 of the accompanying Financial Statements for
the years ended September 30, 1997 and 1996.)
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 12 of the accompanying Financial Statements.)
The Registrant was not able to lease the property since the
original site plan allowing office use was approved until the
Computer City occupancy of October 1994 for retail use. 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:
1997 100%
1996 100%
1995 100%
1994 100%
1993 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
11
such approvals for the three most recent fiscal years during
which such expenditures were made appears below. No such
expenditures were made in 1995.
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.
12
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 Walsh Manning
Securities Inc., New York, New York on December 10, 1997 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 10, 1997 was 685.
(c) No dividends have been paid or declared on the Common
Stock of the Registrant during the 1997 or 1996 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.)
13
1997 1996
---- ----
high low high low
---- --- ---- ---
Quarter Ended Dec. 31 11.00 11.00 10.50 9.00
Quarter Ended Mar. 31 11.00 11.00 11.00 9.00
Quarter Ended June 30 11.00 11.00 11.00 11.00
Quarter Ended Sept. 30 11.00 11.00 11.00 11.00
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, 1992 and ending September 30, 1997 is presented below.
HOLOBEAM, INC.
SUMMARY OF SELECTED FINANCIAL DATA
FOR THE YEARS ENDED SEPTEMBER 30,
Restated
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Gross Income $1,873,382 $1,856,218 $1,895,392 $1,239,344 $1,178,572
Net Income (Loss) 303,882 306,434 334,594 556,787 222,642
Weighted Average Number of
Common Share Outstanding 310,426 316,992 323,596 335,211 342,906
Earnings Per Share (Loss) $0.98 $0.97 $1.03 $1.66 $0.65
Total Assets 7,552,667 7,743,614 8,931,962 7,456,189 7,251,966
Long-Term Debt 6,310,060 6,667,298 6,946,564 7,002,162 7,208,283
Shareholders' Equity 748,020 558,463 371,422 68,070 (317,631)
Gross Rental Income 1,845,509 1,838,216 1,834,829 1,208,217 1,156,167
Net Rental Income 1,578,010 1,577,254 1,554,791 1,039,686 1,013,412
Item 7. Management's Discussion and Analysis of Financial
Condition and
Results of Operations.
(1) Liquidity.
The Registrant funded construction site preparation,
engineering and site plan approvals for a 30,000 sq. ft. building
presently occupied by Tandy Corporation as a Computer City retail
store. Total costs related to
14
the building construction amounted to $2,592,513 and the
building was placed in service during the fiscal year ended
September 30, 1995. (Reference is made to the Registrant's
Annual Report, Form 10K for the year ended September 30, 1994,
Item 1(c), Item 2 and to Note 3 to the Registrant's financial
statements for the year ended September 30, 1995.)
These construction costs were funded in part by the
proceeds of the First Mortgage on the 62,000 sq. ft. building
owned by the Registrant (and occupied by The Sports Authority),
in part by the Tenant allowance for construction pursuant to the
lease agreement and by cash flows associated with the operating
leases for both buildings.
Gross Rents and net rental income associated with the
operating leases on the properties of the Registrant are
sufficient to provide the cash flows necessary to fund the
Registrant's operations. The lease terms expire in 2009 (Tandy
Corporation) and 2012(The Sports Authority) and include options
for renewal. In the event that the lease options are exercised,
revenue will continue beyond 2009 and 2012.
Total minimum future rental income associated with
these leases approximates $30,036,000.00 and should be adequate
to fund the Registrant's real estate rental activities and to
provide the cash flows necessary to fund the surgical staple
development and engineering project.
(2) Capital Resources
Since building construction has been completed, the
Registrant does not anticipate future additional capital
requirements for the rental properties other than those that are
routine and incidental to its rental operations. Expenses are
expected in connection with maintenance, insurance and taxes, but
no major capital projects are planned at this time.
The Registrant expects to continue to fund the
development and
15
engineering associated with its activities with the medical
staples technology. Animal testing is expected to continue
during 1998 and results will be evaluated before additional
testing occurs. The Registrant expects that the maximum funding
requirement during 1998 in connection with the development,
engineering and testing will approximate $250,000.00 and will be
funded from cash flows provided by the real estate rental
activities. No revenues are projected in connection with the
medical staples technology during 1998.
(3) Results of Operations.
(a) The results of operations for the year ended
September 30, 1997 indicate after tax income of $303,882.00 as
compared to $306,434.00 for the fiscal year ended September 30,
1996. The Registrant has experienced consistent results of
operations since the real estate rental properties have been 100%
occupied and under favorable operating lease agreements. Because
the buildings are under lease to The Sports Authority and to
Tandy Corporation, such revenues are expected to continue to be
uniform through 2009 when the Tandy lease expires. Costs are
also expected to remain at present levels during the short term.
Long Term, the Registrant expects costs to increase,
particularly with liability insurance, during the life of the
leases. It is also expected that maintenance costs may increase
as the buildings mature and may require more substantial and
costly repairs. Funding of these costs is not expected to have a
materially adverse effect upon the results of operations during
the term of the leases.
As previously discussed, the Registrant also expects to
fund engineering and development activities associated with its
medical staple technology in the maximum amount of $250,000.00
during 1998 which will be supported by the cash flows associated
with the real estate rental
16
activities. The Registrant funded the medical staples
technology development in the amount of $147,562.00 during the
year ended September 30, 1997
(b) The results of operations for the year ended
September 30, 1996 indicate 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
17
activities of the Registrant's business.
(c) 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 accompanying Financial Statements for the year ended
September 30, 1995.) Income before provision for income taxes
increased $531,339.00 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.
18
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.
Item 8. Financial Statements and Supplemental Data.
Financial statements, supplementary financial information
and Accountant's Report are filed with this report. (See
Financial Statements and reports thereon of Fredericks and
Company for 1996 and 1997.)
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 66 President of Registrant Meeting
Martin R. Infante Secretary of Registrant 1997 Annual 1976
Age 65 (1) Meeting
William M. Hackett Treasurer of Registrant 2000 Annual 1984
Age 54 Meeting
Beverly Cook Office Manager of Registrant 1998 Annual 1995
Age 61 Meeting
(1) Martin R. Infante, Secretary of the Registrant and member of
the Board of Directors served the Registrant in such capacities
until his death while in office during the year ended September
30, 1997.
(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.
19
Date First
Name and Age Title Term Elected
- -----------------------------------------------------------------
Melvin S. Cook Chairman of the Board Annual 1968
Age 66
William M. Hackett Secretary and Treasurer of Annual 1975
Age 54 the Registrant
Martin R. Infante (1)Secretary of the Registrant Annual 1980
Age 65
(1) Martin R. Infante, Secretary of the Registrant and member of
the Board of Directors of the Registrant served in such
capacities until his death during the year ended September 30,
1997.
(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(1)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.
(1) Martin R. Infante, Secretary of the Registrant and member of
the Board of Directors of the Registrant served in such
capacities until his death during the year ended September 30,
1997.
20
Other
Name Business Experience/Occupation Directorship
- -----------------------------------------------------------------
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, 1997
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.
21
HOLOBEAM, INC.
Form 10K
Summary Compensation Table
September 30, 1997
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 1997 $250,000 -0- -0- -0- -0- -0- -0-
President and CEO 1996 200,000 -0- -0- -0- -0- -0- -0-
and Director 1995 200,000 -0- $70,857 -0- -0- -0- -0-
William M. Hackett 1997 17,550 -0- -0- -0- -0- -0- -0-
Treasurer and 1996 17,550 -0- -0- -0- -0- -0- -0-
Director 1995 17,550 -0- -0- -0- -0- -0- -0-
Martin R.Infante 1997 -0- -0- -0- -0- -0- -0- 9,999
Secretary and 1996 -0- -0- -0- -0- -0- -0- 29,984
Director 1995 -0- -0- -0- -0- -0- -0- 28,135
Beverly Cook 1997 75,000 -0- -0- -0- -0- -0- -0-
1996 54,167 -0- -0- -0- -0- -0- -0-
1995 28,000 -0- -0- -0- -0- -0- -0-
All Officers and 1997 342,550 -0- -0- -0- -0- -0- 9,999
Directors as a 1996 271,717 -0- -0- -0- -0- -0- 29,984
Group 1995 245,550 -0- 70,857 -0- -0- -0- 28,135
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.
Mr. Infante died during the year ended September 30, 1997
22
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 1995 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.
During 1997, Mr. Infante's payments were limited to rental
payments amounting to $9,999.00. (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 1997, 1996 and
1995.
(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, 1996.
All Directors and Officers as a Group
Options Granted 0
Options Exercised 0
Unexercised Options Held at 9/30/97 0
(d) During the fiscal year of the Registrant ended on
September 30, 1997, the Registrant utilized the services of Mr.
Infante 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 5
to the Financial Statements of the Registrant for the years ended
September 30, 1997, 1996 and 1995.)
23
The amounts paid to Mr. Infante during the three most recent
fiscal years ended September 30 are presented below:
1997 1996 1995
Rent Expense $ 9,999 $10,908 $10,908
Insurance -0- 19,076 17,227
------ ------ ------
Total Payments $ 9,999 $29,984 $28,135
====== ====== ======
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, 1997 is as follows:
Title of Class Name & Address Amount Owned % of Class
- -----------------------------------------------------------------
Common Stock, Par Melvin S. Cook 123,497 40.4%
Value $0.10 Per Share 540 Ravine Court
Wyckoff, NJ 07481
Common Stock, Par Beverly Cook 95,000 31.0%
Value $0.10 Per Share 540 Ravine Court
Wyckoff, NJ 07481
(b) The stockholding of Officers and Directors as a group
as of December 10, 1997 are as follows:
Title of Class Amount Beneficially Owned % of Class
- -----------------------------------------------------------------
Common Stock, Par Value 218,497 71.4%
$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
24
in connection with such services were as follows:
1997 1996 1995
Rent Expense $ 9,999 $10,908 $10,908
Insurance -0- 19,076 17,227
------ ------ -------
Total Payments $ 9,999 $29,984 $28,135
====== ====== ======
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, 1997.
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
25
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.
26
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.
27
HOLOBEAM, INC.
Form 10K
September 30, 1997
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 19, 1997
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 12, 1997
By: William M. Hackett
William M. Hackett
Director and Treasurer
Date: December 19, 1997
By: Beverly Cook
Beverly Cook
Director
Date: December 12, 1997
HOLOBEAM, INC.
FINANCIAL STATEMENTS
WITH INDEPENDENT ACCOUNTANTS' REPORT
YEARS ENDED
SEPTEMBER 30, 1997, AND 1996 AND 1995
HOLOBEAM, INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
INDEPENDENT ACCOUNTANTS' REPORT F-1
FINANCIAL STATEMENTS:
BALANCE SHEETS F-2,3
SEPTEMBER 30, 1997 AND 1996
STATEMENTS OF OPERATIONS F-4
SEPTEMBER 30, 1997, 1996 AND 1995
STATEMENTS OF SHAREHOLDERS' EQUITY F-5
SEPTEMBER 30, 1997, 1996 AND 1995
STATEMENTS OF CASH FLOWS F-6
SEPTEMBER 30, 1997, 1996 AND 1995
NOTES TO FINANCIAL STATEMENTS F-7-17
SCHEDULES FOR THE YEARS ENDED SEPTEMBER 30, 1997,
1996 AND 1995
V PROPERTY AND EQUIPMENT F-18
VI ACCUMULATED DEPRECIATION AND AMORTIZATION
PROPERTY AND EQUIPMENT F-19
X SUPPLEMENTERY INCOME STATEMENT INFORMATION F-20
XI REAL ESTATE AND ACCUMULATED DEPRECIATION F-21
XII MORTGAGE LOANS REAL ESTATE F-22
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, 1997 and 1996 and the related statements of
operations, shareholders' equity and statements of cash flows for
the years then ended . 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. The financial statements of Holobeam, Inc. as of
September 30, 1995, were audited by other auditors whose report
dated December 25, 1995, expressed an unqualified opinion on
those statements.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the 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, 1997 and 1996, and the
results of its operations, shareholders' equity and its cash
flows for the years then ended in conformity with generally
accepted accounting principles. 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 12, 1997
F-1
HOLOBEAM, INC.
BALANCE SHEETS
SEPTEMBER 30, 1997 AND 1996
ASSETS
1997 1996
---- ----
CURRENT ASSETS
Cash (including equivalents of $227,732
in 1997 and $467,705 in 1996) $ 365,308 $ 598,772
Short-term Investments 400,000 -
Accrued Interest 4,051 -
Deferred Tax Asset - 91,800
Prepaid Income Taxes 3,196 -
Prepaid Expenses 6,452 6,312
---------- ---------
TOTAL CURRENT ASSETS 779,007 696,884
---------- ---------
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 66,939 67,227
Furniture and Fixtures 12,657 2,258
---------- ---------
TOTAL 7,493,612 7,483,501
Less: Accumulated Depreciation and Amortization 1,354,980 1,166,447
---------- ---------
PROPERTY AND EQUIPMENT-NET 6,138,632 6,317,054
---------- ---------
OTHER ASSETS
Patents and Patent application cost, net of
accumulated amortization of $190,668 in 1997
and $176,881 in 1996 83,862 88,171
Deferred Charges 551,166 592,275
Other Receivables - 49,230
--------- ---------
TOTAL OTHER ASSETS 635,028 729,676
--------- ---------
TOTAL ASSETS $ 7,552,667 $ 7,743,614
========= ==========
The accompanying notes are an integral part of the financial statements.
F-2
HOLOBEAM, INC.
BALANCE SHEETS
SEPTEMBER 30, 1997 AND 1996
LIABILITIES AND SHAREHOLDERS' EQUITY
1997 1996
---- ----
CURRENT LIABILITIES
Mortgage Payable-Current Portion $ 267,783 $ 245,412
Accounts Payable 116,172 159,767
Franchise Taxes Payable 8,593 4,345
Income Taxes Payable - 2,000
Other Accrued Expenses 102,039 106,329
-------- ----------
TOTAL CURRENT LIABILITIES 494,587 517,853
--------- ----------
LONG-TERM DEBT
Mortgage Payable (Net of Current Portion) 6,264,065 6,531,848
Real Estate Commissions Payable 45,995 135,450
--------- ---------
TOTAL LONG-TERM LIABILITIES 6,310,060 6,667,298
--------- ---------
TOTAL LIABILITIES 6,804,647 7,185,151
--------- ---------
SHAREHOLDERS' EQUITY
Common Stock, Par Value $.10 Per Share
Authorized 2,000,000 Shares
Issued 1,052,598 in 1997 and 1996 105,260 105,260
Additional Paid in Capital 12,399,699 12,399,699
Accumulated Deficit (9,114,557) (9,418,439)
---------- ----------
TOTAL 3,390,402 3,086,520
Less: Cost of Shares in Treasury (746,573
in 1997 and 739,079 in 1996) (2,642,382) (2,528,057)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 748,020 558,463
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,552,667 $7,743,614
========== ==========
The accompanying notes are an integral part of the financial statements
F-3
HOLOBEAM, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
1997 1996 1995
---- ---- ----
REVENUES
Rental Income $1,845,509 $1,838,216 $1,834,829
Interest Income 27,873 18,002 60,519
Other - - 44
--------- --------- ----------
TOTAL 1,873,382 1,856,218 1,895,392
--------- --------- ----------
COSTS AND EXPENSES
Rental Expense 267,499 260,962 280,038
General Expense 347,556 253,146 304,192
Interest Expense 587,061 607,719 626,638
Research and Development 147,562 219,001 120,833
Other 10,022 - 101
--------- --------- ---------
TOTAL 1,359,700 1,340,828 1,331,802
--------- --------- ---------
INCOME BEFORE INCOME TAXES 513,682 515,390 563,590
INCOME TAX EXPENSE 209,800 208,956 228,996
--------- ---------- ----------
NET INCOME $ 303,882 $ 306,434 $ 334,594
========= ========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 310,426 316,992 323,596
--------- ---------- ----------
EARNINGS PER SHARE $ .98 $ .97 $ 1.03
========= ========== ==========
The accompanying notes are an integral part of the financial statements.
F-4
HOLOBEAM, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
Additional
Common Stock Paid-In Accumulated Treasury Stock
Shares Amount Capital Deficit Shares Amount
------ ------ ---------- ----------- ------ ------
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
Net Income 303,882
Purchase of Treasury Stock 7,494 114,325
--------- -------- ----------- ------------ ------- ----------
BALANCE, SEPTEMBER 30, 1997 1,052,598 $105,260 $12,399,699 $ (9,114,557) 746,573 $2,642,382
========= ======== =========== ============= ======= ==========
The accompanying notes are an integral part of the financial statements.
F-5
HOLOBEAM, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
1997 1996 1995
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $303,882 $306,434 $ 334,594
-------- -------- ----------
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Loss on disposition of assets 10,022 - -
Depreciation 212,487 206,651 202,714
Amortization 54,895 56,037 56,545
Patent and Patent Application Costs (9,477) (30,048) (22,168)
Increase (Decrease) in:
Accounts Payable and Accrued Expenses (45,637) 20,551 72,054
Real Estate Brokers Commissions (89,455) (33,863) 169,313
Decrease (Increase) in:
Other Receivables 49,230 - (5,422)
Deferred Tax Asset 91,800 203,790 228,996
Deferred Charges - - (330,056)
Interest Receivable (4,051) 3,758 (2,115)
Prepaid Expenses (3,336) (608) (2,236)
------- ------- -------
Total Adjustments 266,478 426,268 367,625
------- ------- -------
Net Cash Provided by Operating Activities 570,360 732,702 702,219
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short-term investments (400,000) - -
Capital Expenditures (51,587) - (1,193,187)
Proceeds from sale of assets 7,500 - -
------- ------ ---------
Net Cash Used in Investing Activities (444,087) - (1,193,187)
------- ------ ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Payments on First Mortgage (245,412) (224,902) (206,121)
Purchase of Treasury Stock (114,325) (119,393) (31,242)
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 (359,737) (1,481,470) 899,812
------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (233,464) (748,768) 408,844
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 598,772 1,347,540 938,696
--------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 365,308 $ 598,772 $1,347,540
========= ========== ==========
SUPPLEMENTAL CASH FLOWS DISCLOSURES
Interest Paid $ 588,852 $ 609,359 $ 628,142
Income Taxes Paid $ 124,925 $ 3,041 $ 150
The accompanying notes are an integral part of the financial statements.
F-6
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
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
surgical staples and the technology 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. 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.
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.
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, 1997, 1996 AND 1995
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 liability's. Generally,
deferred tax assets are recognized 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.
I. Short-Term Investments
Short-term investments have an original maturity of
more than three months and a remaining maturity of
less than 1 year. These investments are stated at
cost as it is the intent of the company to hold
these securities until maturity.
NOTE 2. INCOME TAXES
The deferred tax assets recorded on the balance sheet as
of September 30, are as follows:
1997 1996 1995
Deferred tax asset $ - $ 91,800 $ 295,590
Valuation allowance - - -
--------- ------- --------
Net deferred tax asset $ - $ 91,800 $ 295,590
========= ======= ========
Net operating loss carryovers of the Company, aggregated
approximately $0 at September 30, 1997, and $270,000 at
September 30, 1996 and $326,716 at September 30, 1995.
F-8
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
NOTE 2. INCOME TAXES (Continued)
The sources of deferred income taxes for the years ended
September 30, are as follows:
1997 1996 1995
Depreciation $ -$ - $ 413,371
Net operating loss carryover - 270,000 326,716
---------- --------- --------
$ - $ 270,000 $ 740,087
========== ========= ========
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:
1997 1996 1995
Federal statutory income tax rate 34% 34% 34%
State tax provisions, net of
federal benefits 6 6 6
Other 1 1 1
--- --- ---
Effective income tax expense rate 41% 41% 41%
=== === ===
Income tax expense (benefit) consisted of the following:
1997 1996 1995
Current
Federal $ 69,000 $ 2,916 $ -
State 49,000 2,125 -
Deferred
Federal 91,800 184,508 194,938
State - 19,407 34,058
-------- ---------- ---------
$209,800 $ 208,956 $ 228,996
======== ========== =========
Capital losses of the Company which approximates $0 in
1997, $0 in 1996, and $17,575 in 1995 were available to
offset future capital gains. Capital losses of $17,575
expired in 1995.
In 1997, 1996 and 1995, 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.
F-9
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
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.
1997 1996 1995
Buildings and building improvements:
Cost $6,961,244 $6,961,244 $8,424,724
Accumulated depreciation 1,326,646 1,126,687 1,937,408
--------- --------- ----------
Net buildings and building
improvements $5,634,598 $5,834,557 $6,487,316
========= ========= =========
The minimum future rentals on noncancellable operating
leases for the years ending September 30, are as follows:
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
2002 2,108,447 2007 2,322,194 2012 1,373,022
-----------
Total $30,036,467
===========
Net rental income consists of the following:
1997 1996 1995
Rental income $1,845,509 $1,838,216 $1,834,829
Depreciation expense (199,959) (199,987) (194,419)
Other expenses (67,540) (60,975) (85,619)
---------- --------- ---------
Rental income, net $1,578,010 $1,577,254 $1,554,791
========== ========= =========
In 1997, 1996, and 1995, depreciation expense 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, 1997, 1996 AND 1995
NOTE 3. RENTAL INCOME UNDER OPERATING LEASES (Continued)
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
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, 1997, 1996 AND 1995
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.
The following is a condensed summary of financial
information on the above publicly held companies:
Tandy Corporation The Sports Authority K-Mart
12/31/96 1/28/97 1/31/97
(In Millions) (In Thousands) (In Millions)
Current assets $ 1,940 $ 445,111 $7,733
------- ---------- ------
Total assets 2,583 754,270 14,286
------- ---------- ------
Current liabilities 1,194 269,114 3,602
------- ---------- ------
Total liabilities 1,318 443,850 8,214
------- ---------- ------
Total stockholders' equity 1,265 310,317 6,072
------- ---------- ------
Net sales 6,285 1,274,461 31,437
------- ---------- ------
Cost of sales 4,263 905,923 24,390
------- ---------- ------
Gross profit 2,022 368,538 7,047
------- ---------- ------
Income (loss) before income taxes (146) 48,032 330
------- ---------- ------
Income taxes (benefit) (54) 19,597 68
------- ---------- ------
Minority Interest - (1,570) -
------- ---------- ------
Net income (loss) continuing (92) 30,005 231
------- ---------- ------
Discontinued Operations - - (451)
------- ---------- ------
Net income (loss) $ (92) $ 30,005 $ (220)
------- ---------- ------
NOTE 4. RELATED PARTY TRANSACTIONS
An officer and member of the Board of Directors, acted in
the capacity as insurance broker and was the Company's
landlord until his death during the year ended September
30, 1997.
1997 1996 1995
Landlord-Office rental
and related services $9,999 $10,908 $10,908
Insurance - 19,076 17,227
----- ------- ------
$9,999 $29,984 $28,135
===== ======= =======
NOTE 5. RESEARCH AND DEVELOPMENT
Research and development expenses in the amount of
$147,562 in 1997, $219,001 in 1996, and $120,833 in 1995
were charged to operations and included in costs and
expenses.
F-12
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
NOTE 6. RENT EXPENSE
The Company had leased approximately 1,000 square feet of
office space on a month to month basis at a monthly
rental of $909 from a member of the Board of Directors
(See Note 4) until August 31, 1997. The Company moved its
headquarters to Hohokus, New Jersey and occupies
approximately 1,000 square feet of office and laboratory
space on an annual lease. Lease payments are $950 per
month and are paid to an unaffiliated landlord. Rent
expense was $11,449 in 1997, $10, 908 in 1996 and 1995.
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 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
medical 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
animal tests will continue during 1998. Research and
development costs in the amounts of $147,562, $219,000
and $120,833 have been expended in connection with the
surgical staple during 1997, 1996 and 1995, respectively.
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 8.77% until 2011. The second is in
the amount of $1,500,000 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 9. The expense for
the next five (5) years is presented below:
1998 $5,126
1999 5,126
2000 5,126
2001 5,126
2002 5,126
F-13
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
NOTE 8. LONG-TERM DEBT (Continued)
The balance outstanding for each debt issued at the end
of 1997, 1996, and 1995 is as follows:
1997 1996 1995
First Mortgage on
62,000 sq. ft. Building $6,531,848 $6,777,260 $7,002,162
Loan Payable-Tandy Corp. - - 1,137,175
---------- ---------- ---------
6,531,848 6,777,260 8,139,337
Real Estate Brokers Commissions
Payable 45,995 135,450 169,313
---------- ---------- ---------
Total 6,577,843 6,912,710 8,308,650
Less Current Portion 267,783 245,412 1,362,086
---------- ---------- ---------
Long-Term Portion $6,310,060 $6,667,298 $6,946,564
========== ========== ==========
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 land and 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:
1998 $267,783 2003 $414,217 2008 $640,727
1999 292,195 2004 451,978 2009 699,136
2000 318,832 2005 493,181 2010 762,870
2001 347,897 2006 538,140 2011 338,084
2002 379,611 2007 587,197
NOTE 9. 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 160,994 23,921 71,061 66,012
-------- -------- -------- --------
Balance 9/30/97 $551,166 $ 78,599 $208,523 $264,044
======== ======== ======== ========
Original Cost $712,160 $102,520 $279,584 $330,056
Accumulated Amoritzation 119,885 18,795 57,082 44,008
-------- -------- -------- --------
Balance 9/30/96 $592,275 $83,725 $222,502 $286,048
======== ======== ======== ========
F-14
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
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 amounted to
$60,935.
NOTE 11. 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 benefits plan, and does not offer post
employment benefits, SFAS No. 106 and SFAS No. 112 are
not applicable.
NOTE 12. CONCENTRATION OF CREDIT RISK
The Company maintains its cash balances in several
financial institutions in excess of the $100,000
guarantee by the Federal Deposit Insurance Corporation
(FDIC). At September 30, 1997, this excess amounted to
$169,827. The Company also maintains its short-term
investments in a certificate of deposit in which the
entire balance of $400,000 is in excess of the FDIC
insured balance.
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 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
buildings owned by the Company at 50 A&S Drive, Paramus,
New Jersey.
F-15
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
NOTE 13. FINANCIAL REPORTING BY BUSINESS SEGMENTS (Continued)
Revenues
1997 1996 1995
Business Segments:
Surgical Staples $ - $ - $ -
Electro-Optical - - -
Real Estate Rental 1,845,509 1,838,216 1,834,829
Corporate 27,873 18,002 60,563
---------- ---------- ----------
Total $1,873,382 $1,856,218 $1,895,392
========== ========== ==========
Business Segments: Income (Loss)
1997 1996 1995
Surgical Staples $ (147,562)$ (219,001) $(120,833)
Electro-Optical - - -
Real Estate Rental 1,578,010 1,577,254 1,554,791
---------- ---------- ---------
Total 1,430,448 1,358,253 1,433,958
---------- ---------- ---------
General and Administrative
Expenses (347,556) (253,146) (304,192)
Interest Expense (587,061) (607,719) (626,638)
Other Income 17,851 18,002 60,462
Income Tax Expense (209,800) (208,956) (228,996)
--------- --------- --------
Total (1,126,566) (1,051,819)(1,099,364)
--------- --------- ---------
Net Income $ 303,882 $ 306,434 $ 334,594
========= ========= =========
Business Segments: Identifiable Assets
1997 1996 1995
Surgical Staples $ 63,599 $ 61,729 $ 37,312
Electro-Optical 20,263 26,442 35,739
Real Estate Rental 6,638,536 6,885,752 7,126,240
Corporate and Other
Non-segment Items 830,269 769,691 1,732,671
--------- --------- ---------
TOTAL ASSETS $7,552,667 $7,743,614 $8,931,962
========= ========= =========
F-16
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
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, 1997, 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 estmates of fair
value, and accordingly, the estimates are not
neccessarily indicative of the amounts that the Company
could realize in a current market exchange.
F-17
Schedule VI
HOLOBEAM, INC.
ACCUMULATED DEPRECIATION AND AMORTIZATION
PROPERTY AND EQUIPMENT
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
Balance at Balance at
Beginning End of
CLASSIFICATIONS of Year Additions Retirements Year
YEAR ENDED SEPTEMBER 30, 1995:
Machinery and Equipment $ 22,784 $ 8,108 $ 0 $ 30,892
Furniture and Fixtures 2,107 187 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
------- ------ ------- -------
YEAR ENDED SEPTEMBER 30, 1997:
Machinery and Equipment $39,192 $10,581 $21,696 $28,077
Furniture and Fixtures 2,256 256 2,256 256
------- ------ ------ ------
$41,448 $10,837 $23,952 $28,333
======= ====== ====== ======
The accompanying notes are an integral part of the financial statements.
F-19
Schedule X
HOLOBEAM, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
1997 1996 1995
Maintenance and Repairs $10,610 $ 945 $ 964
====== ======= =======
Depreciation and Amortization of
Intangible Assets $54,895 $56,037 $ 56,545
====== ====== =======
Taxes, Other than Payroll and Income Tax
Franchise $ 3,060 $ 4,740 $ 3,000
Real Estate 0 0 0
Other 6,004 300 24
------ ------ ------
$ 9,064 $ 5,040 $ 3,024
====== ======== ======
Royalties $ 0 $ 0 $ 0
Advertising $ 0 $ 0 $ 0
The accompanying notes are an integral part of the financial statements.
F-20
Schedule V
HOLOBEAM, INC.
PROPERTY AND EQUIPMENT
SEPTEMBER 30, 1997, 1996 AND 1995
Balance at Balance at
Beginning End of
CLASSIFICATIONS of Year Additions Retirements Year
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
------- ------ ------- -------
YEAR ENDED SEPTEMBER 30, 1997:
Machinery and Equipment $67,227 $38,930 $39,218 $66,939
Furniture and Fixtures 2,258 12,657 2,258 12,657
------- ------- ------ ------
$69,485 $51,587 $41,476 $79,596
======= ======= ====== ======
The accompanying notes are an integral part of the financial statements.
F-18
Schedule XII
HOLOBEAM, INC.
MORTGAGE LOANS ON REAL ESTATE
SEPTEMBER 30, 1997
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 8.7% February 5, 2011 $13,367 None $1,500,000 $1,305,424 None
Mortgage Payable
Building and Improvements 8.77% February 5, 2011 $56,328 None $6,000,000 $5,226,424 None
---------
$6,531,848
=========
Activity for the three
years ended September 30,
1997 is as follows:
1997 1996 1995
Balance at Beginning of Year: $6,777,260 $8,139,337 $7,208,283
Addition During Year
Commercial Loans 0 0 1,189,675
New Mortgages 0 0 0
--------- --------- ---------
6,777,260 8,139,337 8,397,958
Deductions During Year:
Principal Payments 245,412 224,902 258,621
Mortgage Payments 0 1,137,175 0
--------- --------- ---------
Balance at End of Year $6,531,848 $6,777,260 $8,139,337
========= ========= =========
The cost for Federal income taxes
Purpose at 9/30/97 $6,531,848
The Loan was paid in full
on November 9, 1995
The accompanying notes are an integral part of these financial statements.
F-22
Schedule XI
HOLOBEAM, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
SEPTEMBER 30, 1997
Life in
Which
Cost Capitalized Gross Amount at Deprec.
Initial Subsequent Which Carried at in Latest
Cost to Company To Acquisition Close of Period (1) (2) Date Income
Incumb Bldg & Carrying Bldg & Accumulated of Date Stmt
Brances Land Improv Improv Costs Land Improv Total Depreciation Constr. Acqd Comp.
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
Improvments 6,777,260 0 718,881 3,649,850 0 0 4,368,731 4,368,731 1,132,761 1958 1971 3 to
40
Years
Building II
Paramus, NJ 0 0 2,592,513 0 0 0 2,592,513 2,592,513 193,885 1995 1995 30
Years
--------- ------- --------- --------- --- ------- --------- --------- ---------
$6,777,260 $391,967 $3,311,394 $3,710,655 $ 0 $452,772 $6,961,244 $7,414,016 $1,326,646
========= ======= ========= ========= === ======= ========= ========= =========
(1)Activity for the three years (2)Activity for the three years
ended September 30, 1997 is ended September 30, 1997 is
as follows: 1997 1996 1995 as follows: 1997 1996 1995
Balance at Beginning of Year $7,414,016 $8,424,724 $7,231,537 Balance at Beginning of Year $1,126,687 $1,937,408 $1,742,989
Additions: Additions:
Improvements 0 0 0 Depreciation 199,959 199,987 194,419
Acquisitions 0 0 1,193,187 Less Retirements 0 1,010,708 0
--------- --------- --------- ---------- --------- ---------
7,414,016 8,424,724 8,424,724
Deductions During Year: Balance at End of Year $1,326,646 $1,126,687 $1,937,408
Retirements 0 1,010,708 0 ========= ========= =========
Cost of Real
Estate Sales 0 0 0
--------- --------- ---------
Balance at End of Year $7,414,016 $7,414,016 $8,424,724
========= ========= =========
The aggregate cost for Federal income tax purposes
at September 30, 1997 is $7,414,016.
The accompanying notes are an integral part of these financial statements.
F-21