-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GXA1a4N1D31Ezi7AmW0j3MMk8BNXoc/3Xha4lYHI6fIntCrqXbvZdwt70/Qt5kIo 74VTQXTDkNtDcYsNQckTuA== 0000931763-02-003294.txt : 20021025 0000931763-02-003294.hdr.sgml : 20021025 20021025125116 ACCESSION NUMBER: 0000931763-02-003294 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020826 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOBILE AREA NETWORKS INC CENTRAL INDEX KEY: 0001029454 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 593482752 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-18439 FILM NUMBER: 02798304 BUSINESS ADDRESS: STREET 1: 1275 LAKE HEATHROW LANE, SUITE 115 STREET 2: SUITE 115 CITY: HEATHROW STATE: FL ZIP: 32746 BUSINESS PHONE: (407)333-2350 8-K/A 1 d8ka.txt FORM 8-K AMENDMENT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K /A Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) August 26, 2002 Mobile Area Networks, Inc. ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) Florida ---------------------------------------------- (State or Other Jurisdiction of Incorporation) 333-18439 59-3482752 ------------------------ ------------------------------- (Commission File Number) (I.R.S. Employer Identification No.) 1275 Lake Heathrow Lane, Suite 115, Heathrow, Florida 32746 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) 407-333-2350 - ---------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Item 2. Acquisition or Disposition of Assets. (a) On August 12, 2002 Mobile Area Networks, Inc. (the "Registrant") entered into an agreement to acquire all of the operating assets of Vintage Industries, Inc. in a stock for assets purchase. (i) The assets being acquired consist of an ongoing business with computerized plastics molds engineering and manufacturing equipment including a complete machine tool shop, Patents pending for a process that rapidly produces plastic injection molds, numerous plastics injection molding presses, all office and support equipment, and the existing customer base of the company. (ii) The Registrant will issue 1,440,000 (having a market value of approximately $274,000 at August 12, 2002) of its Restricted Common Shares to be disbursed equally among the current shareholders of Vintage Industries, Inc. Vintage Industries, Inc. will be dissolved and all future operations may continue within Mobile Area Networks, Inc. or as a separate business segment. The Registrant has also agreed to assume responsibility for the current liabilities of Vintage. After the issuance of the shares used in this transaction the effect will be that the former owners of Vintage will own jointly approximately 4% of the then outstanding shares of the Registrant which if taken as a control group will not change the control of the Registrant. (iii) The amount of consideration was derived by arms-length negotiations with the shareholders of Vintage Industries, Inc. and is not a representation as to current or future share value of either company. (iv) The four shareholders of Vintage Industries, Inc. consist of three family members; Russell C.Vallone, and his sons Joseph R. and James C. Vallone; plus a close associate Mark F. Welzbacher. All the shares used in this transaction to be held by the selling group if voted as a block would not constitute a change in control of the Registrant. There is no relationship between any of the shareholders of Vintage and any Director, Officer, or associate of the Registrant. (b) The assets being acquired in this transaction consist of various small and large plastic injection molding equipment and molds, machine tool equipment for manufacturing plastics molds and other equipment, raw material inventories, and many other such items as may be required in the plastics molding business, as well as a Patent Pending technology and method to build very high precision production molds rapidly. (i) The assets of the business have been used in the business of design engineering and production of intricate plastics molds and produced plastic and metal parts. (ii) It is the intent of the Registrant to continue to devote the assets to the same purpose for which they were being used. Item 7. Financial Statements and Exhibits. (i) Financial statements for the privately held company from which assets are being acquired had not previously been audited. Audits have been completed by the Registrant's Certifying Accountant for the years 2000, 2001 and are herewith included along with Interim Unaudited Statements for the Six Months as Exhibits to this amended 8-K/A. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Mobile Area Networks, Inc. -------------------------- (Registrant) Date: October 23, 2002 By: /s/ George Wimbish ------------------------- George Wimbish, President & Chief Executive Officer EX-99.1 3 dex991.txt DECEMBER 2001 FINANCIALS EXHIBIT 99.1 VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida --------------------------------- FINANCIAL REPORTS AT DECEMBER 31, 2001 --------------------------------- VINTAGE INDUSTRIES, INC. (A FLORIDA Corporation) Longwood, Florida TABLE OF CONTENTS - ----------------------------------------------------------------------------- Independent Auditors' Report 1 Balance Sheets at December 31, 2001 and 2000 2 Statements of Changes in Stockholders' Equity (Deficit) for the Years Ended December 31, 2001 and 2000 3 Statements of Operations for the Years Ended December 31, 2001 and 2000 4 Statements of Cash Flows for the Years Ended December 31, 2001 and 2000 5 Notes to Financial Statements 6-12 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders Vintage Industries, Inc. (A Florida Corporation) Longwood, Florida We have audited the accompanying balance sheets of Vintage Industries, Inc. (A Florida Corporation) as of December 31, 2001 and 2000, and the related statements of changes in stockholders' equity (deficit), operations, and cash flows for the years ended December 31, 2001 and 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 presentation of the financial statements. 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 Vintage Industries, Inc. as of December 31, 2001 and 2000, and the results of its operations and its cash flows for the years ended December 31, 2001 and 2000, in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note M to the financial statements, the Company has suffered recurring losses, has substantial debt and, at December 31, 2001, liabilities exceed assets. These factors, and others discussed in Note M, raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Rotenberg & Company, LLP Rotenberg & Company, LLP Rochester, New York September 20, 2002 VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida
BALANCE SHEETS - ----------------------------------------------------------------------------------------- December 31, 2001 2000 - ----------------------------------------------------------------------------------------- ASSETS Current Assets Cash and Cash Equivalents $ 26,031 $ 8,484 Accounts Receivable - Net of Allowance for Doubtful Accounts 319,170 334,490 Inventory 124,548 174,394 - ----------------------------------------------------------------------------------------- Total Current Assets 469,749 517,368 Property and Equipment - Net of Accumulated Depreciation 323,821 383,666 Other Assets Security Deposits 17,947 17,947 - ----------------------------------------------------------------------------------------- Total Assets $ 811,517 $ 918,981 ========================================================================================= LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Line of Credit $ 125,000 $ 125,000 Notes and Capital Leases Payable - Due Within One Year 100,577 79,015 Accounts Payable and Accrued Expenses 183,054 214,426 - ----------------------------------------------------------------------------------------- Total Current Liabilities 408,631 418,441 Other Liabilities Notes and Capital Leases Payable - Due After One Year 543,002 641,206 - ----------------------------------------------------------------------------------------- Total Liabilities 951,633 1,059,647 - ----------------------------------------------------------------------------------------- Stockholders' Deficit Common Stock: $1.00 Par; 7,000 Shares Authorized, 2,250 Shares Issued and 1,000 Shares Outstanding 2,250 2,250 Additional Paid-In Capital 485,381 485,381 Accumulated Deficit (596,247) (596,797) - ----------------------------------------------------------------------------------------- (108,616) (109,166) Less: Treasury Stock - 1,250 Shares, at Cost 31,500 31,500 - ----------------------------------------------------------------------------------------- Total Stockholders' Deficit (140,116) (140,666) - ----------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Deficit $ 811,517 $ 918,981 =========================================================================================
The accompanying notes are an integral part of these financial statements. - 2 - VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - -------------------------------------------------------------------------------------------------------------- Additional Number Common Paid-In Accumulated Treasury Stockholders' of Shares Stock Capital Deficit Stock Equity (Deficit) - -------------------------------------------------------------------------------------------------------------- Balances - December 31, 1999 2,250 $ 2,250 $ 485,381 $(296,530) $(31,500) $ 159,061 Net Loss -- -- -- (300,267) -- (300,267) - -------------------------------------------------------------------------------------------------------------- Balances - December 31, 2000 2,250 2,250 485,381 (596,797) (31,500) (140,666) Net Income -- -- -- 550 -- 550 - -------------------------------------------------------------------------------------------------------------- Balances - December 31, 2001 2,250 $ 2,250 $ 485,381 $(596,247) $(31,500) $(140,116) ==============================================================================================================
The accompanying notes are an integral part of these financial statements. - 3 - VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------- Years Ended December 31, 2001 2000 - ------------------------------------------------------------------------------- Revenues $ 2,060,028 $ 2,012,994 Cost of Goods Sold 1,538,675 1,382,598 - ------------------------------------------------------------------------------- Gross Profit 521,353 630,396 - ------------------------------------------------------------------------------- Operating Expenses Bad Debts (Recovery) (67,944) 197,793 Depreciation 109,267 137,178 Finance Charges 71,438 65,237 Interest 75,276 62,047 Officers' Salaries - Leased 258,406 287,110 Professional Services 74,102 35,849 Other Operating Expenses 161,225 122,427 - ------------------------------------------------------------------------------- Total Operating Expenses 681,770 907,641 - ------------------------------------------------------------------------------- Operating Loss Before Other Expenses (160,417) (277,245) Other Expenses Loss on Forfeited Real Estate Deposits -- (23,022) Legal Settlement (7,033) -- - ------------------------------------------------------------------------------- Loss Before Extraordinary Item (167,450) (300,267) Extraordinary Item Business Loss Insurance Recovery, Net of Taxes 168,000 -- - ------------------------------------------------------------------------------- Net Income (Loss) $ 550 $ (300,267) ===============================================================================
The accompanying notes are an integral part of these financial statements. - 4 - VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------ Years Ended December 31, 2001 2000 - ------------------------------------------------------------------------------------ Cash Flows from Operating Activities Net Income (Loss) $ 550 $(300,267) Adjustments to Reconcile Net Income (Loss) to Net Cash Flows from Operating Activities: Bad Debts (Recovery) (67,944) 197,793 Depreciation 109,267 137,178 Changes in Assets and Liabilities: Accounts Receivable 83,264 (167,577) Inventory 49,846 8,407 Security Deposits -- 14,100 Accounts Payable and Accrued Expenses (31,372) 32,408 - ------------------------------------------------------------------------------------ Net Cash Flows From Operating Activities 143,611 (77,958) - ------------------------------------------------------------------------------------ Cash Flows from Investing Activities Acquisition of Property and Equipment (49,422) (11,022) - ------------------------------------------------------------------------------------ Cash Flows from Financing Activities Repayment of Notes Receivable - Employees -- 28,455 Line of Credit Borrowings -- 125,000 Repayment of Debt (76,642) (64,468) - ------------------------------------------------------------------------------------ Net Cash Flows from Financing Activities (76,642) 88,987 - ------------------------------------------------------------------------------------ Net Increase in Cash and Cash Equivalents 17,547 7 Cash and Cash Equivalents - Beginning of Year 8,484 8,477 - ------------------------------------------------------------------------------------ Cash and Cash Equivalents - End of Year $ 26,031 $ 8,484 ==================================================================================== SUPPLEMENTAL DISCLOSURES - ------------------------------------------------------------------------------------ Interest Paid $ 73,522 $ 67,673 Income Taxes Paid $ -- $ -- ==================================================================================== NON-CASH INVESTING AND FINANCING ACTIVITIES ==================================================================================== Acquisition of Equipment via Capital Leases Payable $ -- $ 115,507 ====================================================================================
The accompanying notes are an integral part of these financial statements. - 5 - VINTAGE INDUSTRIES, INC. (A FLORIDA Corporation) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note A - Nature of Operations Vintage Industries, Inc. (the "Company") was formed on September 1, 1991 under the laws of the State of Florida. The Company is authorized to issue 7,000 shares of common stock at a $1.00 par value. The Company is primarily engaged in the business of design engineering and production of intricate plastic molds and the production of plastic and metal parts. Note B - Summary of Significant Accounting Policies Method of Accounting The Company maintains its books and prepares its financial statements on the accrual basis of accounting. Cash and Cash Equivalents Cash and cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less. Accounts Receivable Factoring The Company has an arrangement with a financial services company, in which the Company delivers current sales invoices to the financial services company in return for cash. Under the arrangement, proceeds typically received from the delivery of invoices approximate 63%, which is net of fees and interest of approximately 22% and a holdback allowance of approximately 15%. Customer invoices which are or become ineligible reduce the proceeds received from delivery of future customer invoices. Ineligible customer invoices revert back to the Company for collection. The holdback allowance balance at December 31, 2001 and 2000 was $58,444 and $43,931, respectively. Allowance for Doubtful Accounts The Company provides for estimated losses on accounts receivable based on prior bad debt experience and a review of existing receivables. Based on these factors, there is an allowance for doubtful accounts of $39,319 and $63,912 at December 31, 2001 and 2000, respectively. Inventory Inventory consists of raw materials, work-in-process, and finished goods, and is stated at the lower of cost or market using the first-in, first-out method. Property, Equipment and Depreciation Property and equipment are stated at cost, less accumulated depreciation computed using the straight line method over the estimated useful lives as follows: Equipment 5 - 7 Years Computer Equipment 5 - 7 Years Maintenance and repairs are charged to expense. The cost of the assets retired or otherwise disposed of and the related accumulated depreciation are removed from the accounts. Revenue Recognition Revenues from product sales are recognized when the goods are shipped. - continued - - 6 - VINTAGE INDUSTRIES, INC. (A FLORIDA Corporation) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note B - Summary of Significant Accounting Policies - continued Income Taxes Effective September 1, 1991, the Company elected to be treated as an "S" Corporation for both Federal and Florida State Tax purposes. Thus, profits, losses and tax credits flow through to the individual stockholders. Therefore, no provision for income taxes is reflected in these financial statements. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results can differ from those estimates. Concentrations of Credit Risk Financial instruments, which potentially expose the Company to significant concentrations of credit risk, consist principally of bank deposits, which may at times exceed federally insured limits. The Company had no cash balances that exceeded insured limits at December 31, 2001 or 2000. Cash is placed primarily in high quality short term interest bearing financial instruments. The Company had three significant customers for the years ended December 31, 2001 and 2000. The respective amount of sales during the years ended December 31, 2001 and 2000 and portion of the accounts receivable balance at December 31, 2001 and 2000 are as follows: -------------------------------------------------------------------- Sales for the Years Ended Accounts Receivable Balance December 31, at December 31, -------------------------------------------------------- 2001 2000 2001 2000 -------------------------------------------------------------------- Company A $ 388,508 $ 63,943 $ 64,166 $ 340 Company B $ 391,603 $ 278,093 $ 51,557 $ 51,770 Company C $ 322,816 $ 398,230 $ 40,072 $ 40,605 ==================================================================== The Company periodically monitors the credit worthiness of its customers to which it grants credit terms in the ordinary course of business. Note C - Accounts Receivable Accounts receivable consisted of the following: ------------------------------------------------------------------- December 31, 2001 2000 ------------------------------------------------------------------- Trade $ 352,977 $ 394,536 Reproductions 5,512 3,866 ------------------------------------------------------------------- $ 358,489 $ 398,402 Less: Allowance for Doubtful Accounts 39,319 63,912 ------------------------------------------------------------------- Net Accounts Receivable $ 319,170 $ 334,490 ------------------------------------------------------------------- - 7 - VINTAGE INDUSTRIES, INC. (A FLORIDA Corporation) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------ Note D - Inventory Inventory consisted of the following: -------------------------------------------------------------------- December 31, 2001 2000 -------------------------------------------------------------------- Raw Materials $ 34,875 $ 35,099 Work-in-Process 36,117 71,544 Finished Goods 53,556 67,751 -------------------------------------------------------------------- Total Inventory $ 124,548 $ 174,394 -------------------------------------------------------------------- Note E - Property and Equipment Property and equipment consisted of the following: -------------------------------------------------------------------- December 31, 2001 2000 -------------------------------------------------------------------- Equipment $ 1,161,294 $1,120,819 Computer Equipment 17,326 8,379 Equipment Held Under Capital Leases 115,507 115,507 -------------------------------------------------------------------- $ 1,294,127 $1,244,705 Less: Accumulated Depreciation 970,306 861,039 -------------------------------------------------------------------- Net Property and Equipment $ 323,821 $ 383,666 -------------------------------------------------------------------- Depreciation expense for the years ended December 31, 2001 and 2000 was $109,267 and $137,178, respectively. Note F - Line of Credit The Company has a $125,000 line of credit with Stearns Bank National Association. The balance at December 31, 2001 and 2000 was $125,000. The line bears interest at prime plus 2% (6.75% at December 31, 2001), with interest payable monthly. It has personal guarantees by the stockholders and a guarantee by the Small Business Association and is secured by the Company's equipment and inventory. The line of credit expired on March 28, 2002 and is in default. The Company is in negotiations with the lender for payment of the outstanding principal balance, and is continuing to make the monthly interest payments. Interest expense on the line of credit for the years ended December 31, 2001 and 2000 was $11,206 and $4,765, respectively. - 8 - VINTAGE INDUSTRIES, INC. (A FLORIDA Corporation) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note G - Notes and Capital Leases Payable Notes and capital leases payable consisted of the following:
------------------------------------------------------------------------------------------------ December 31, 2001 2000 ------------------------------------------------------------------------------------------------ Notes Payable Business Loan Center, Inc. Note payable due December 2007, payable in monthly installments of $4,191, including principal and interest at prime plus 2 3/4% (7.50% at December 31, 2001). The loan is secured by all assets of the company with personal guarantees by the stockholders and their spouses, with their residences pledged as additional security, assignment of life insurance in the amount of $350,000 on each of the stockholders, and a guarantee by the Small Business Association. $ 232,954 $ 258,906 GE Capital Small Business Finance Corporation Note payable due June 2008, payable in monthly installments of $5,258, including principal and interest at prime plus 2 1/4% (7.00% at December 31, 2001). The loan is secured by all assets of the company in excess of $350,000 with personal guarantees by the stockholders, with their residences pledged as additional security, and a guarantee by the Small Business Association. 335,021 362,555 Capital Leases Payable Intech Funding Corp. Equipment lease for a four-year term, due February 2004, payable in monthly installments of $1,333, including principal and interest at 9.406%. 31,244 43,660 Associates Leasing, Inc. Equipment lease for a five-year term, due February 2005, payable in monthly installments of $273, including principal and interest at 11.383%. 8,685 10,841 Copelco Capital, Inc. Equipment lease for a five-year term, due March 2005, payable in monthly installments of $1,099, including principal and interest at 11.383%. 35,675 44,259 ------------------------------------------------------------------------------------------------ Total Notes and Capital Leases Payable $ 643,579 $ 720,221 Less: Amount Due Within One Year 100,577 79,015 ------------------------------------------------------------------------------------------------ Amount Due After One Year $ 543,002 $ 641,206 ================================================================================================ - continued -
- 9 - VINTAGE INDUSTRIES, INC. (A FLORIDA Corporation) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Note G - Notes and Capital Leases Payable - continued Annual maturities of notes and capital leases payable for the five years succeeding December 31, 2001 are as follows:
2002 2003 2004 2005 2006 Thereafter Total -------------------------------------------------------------------------------- $ 100,577 $ 108,957 $ 104,249 $ 96,766 $ 99,942 $ 133,088 $ 643,579 ================================================================================
The present value of future minimum lease payments is as follows:
--------------------------------------------------------------------------------- December 31, 2001 2000 --------------------------------------------------------------------------------- Total Future Minimum Lease Payments $ 87,890 $ 120,350 Less: Amount Representing Interest 12,286 21,590 --------------------------------------------------------------------------------- Present Value of Net Future Minimum Lease Payments $ 75,604 $ 98,760 ---------------------------------------------------------------------------------
Interest expense on the notes and capital leases payable for the years ended December 31, 2001 and 2000 was $64,070 and $57,282, respectively Note H - Leases On April 1, 1999, the Company entered into a building lease, for office and manufacturing space, with an unrelated third party, commencing October 1, 1999. The term of the lease is for three years, with monthly rental payments of $4,134 for the first year, and increasing each year thereafter based on the Consumer Price Index. The monthly rental payment as of December 31, 2001 is $4,556. The lease expires on September 30, 2002 and the Company has executed an agreement to extend the terms on a month-to-month basis until November 30, 2002. The extended terms required a non-refundable deposit of $20,000. Management has decided to obtain an alternate sight with larger space for office and manufacturing operations. On January 1, 1998, the Company entered into a building lease, for grips production space, with an unrelated third party. The term of the lease was for one year, with a renewal option for two additional years. The lease required monthly rental payments of $544. On January 1, 2001, the lease was verbally extended on a month-to-month basis, with the monthly rental payment remaining at $544. On March 19, 2001, the Company entered into a building lease, for an engineering office, with an unrelated third party. The term of the lease is for one year, commencing April 15, 2001, with a renewal option for one additional year. The lease requires monthly rental payments of $868. Future minimum lease payments for the five years succeeding December 31, 200 1 is as follows: 2002 2003 2004 2005 2006 Total ------------------------------------------------------------------- $ 44,042 $-- $-- $-- $-- $ 44,042 =================================================================== - 10 - VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note I - Litigation On October 24, 2001, a complaint was filed against the Company with the Circuit Court of the Fifth Judicial Circuit in Hernando County, Florida by Excalibur Manufacturing Corporation, for unpaid sums past due under an open account arrangement in the amount of $13,200. On March 18, 2002, this complaint was settled for $7,033. The settlement has been recorded in the financial statements during the year ended December 31, 2001. Note J - Other Matters Forfeited Real Estate Deposits The loss represents non-refundable deposits made on potential building locations that were subsequently abandoned. Extraordinary Item - Business Loss Insurance Recovery On September 4, 2001, the primary manufacturing facility and the administrative offices of the Company received a direct lightning strike. This resulted in a majority of the manufacturing equipment and computer systems and some of the administrative computer system being either damaged and/or made inoperable. The income represents insurance proceeds received for compensation from loss of business, during the time needed by the Company to repair or replace the damaged equipment and computer systems. Note K - Subsequent Events On January 22, 2002, the Company entered into a building lease, for warehouse space, with an unrelated third party. The lease is on a month-to-month basis and requires monthly rental payments of $273. On August 12, 2002, the Company entered into an asset purchase agreement with Mobile Area Networks, Inc., where the Company would become a division of Mobile Area Networks, Inc. The Company would receive 1,440,000 shares of restricted common stock of Mobile Area Networks, Inc., with a fair market value of approximately $274,000 on August 12, 2002, in exchange for substantially all assets and the assumption of certain liabilities of the Company. The agreement also includes a Non-competition Agreement for the principal stockholders for three years. On September 12, 2002, the Company entered into an asset purchase agreement for equipment from Recoton Corporation for $50,000. Payment terms are $14,000 in the assumption of liabilities and the satisfaction of purchase orders of Recoton customers amounting to $36,000. On October 3, 2002, a complaint was filed against the Company with the Circuit Court of Seminole County, Florida by David Byron, a former stockholder of the Company, for non-delivery of 288,000 shares of restricted common stock of Mobile Area Networks, Inc., per the general mutual release and separation agreement between Vintage Industries, Inc. and Mr. Byron. Mr. Byron is seeking immediate delivery of the 288,000 shares of restricted common stock of Mobile Area Networks, Inc. and damages in the amount of the value of the stock. The Company is withholding the delivery of the shares pending the return of Company owned assets allegedly held by Mr. Byron. The Company intends to vigorously defend its position and does not believe the range of loss, if any, can be reasonably estimated at this time. Accordingly, no provision for possible loss has been made in these financial statements. - 11 - VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note L - Recently Issued Accounting Standards In June 2002, the Financial Accounting Standards Board issued FASB Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146). SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Costs covered by SFAS 146 include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. SFAS 146 applies to all exit or disposal activities initiated after December 31, 2002. The Company is assessing, but does not expect the adoption of SFAS 146, as of January 1, 2003, to have a material effect on its future financial position and results of operations. Note M - Going Concern The company has sustained significant net losses totaling approximately $300,000 in fiscal years 2001 and 2000. The primary causes of the decreases were attributable to increasing costs (partly due to the extraordinary item described in Note J) and interest and finance charges on debt and the factoring of receivables. Because of the deteriorating financial conditions, substantial doubt exists about the Company's ability to continue as a going concern. As described in Note K, the Company has entered into a sale agreement with Mobile Area Networks, Inc. a publicly traded company. The Company plans to raise sufficient working capital through equity investors and plans to restructure the debt to lower its interest costs. - 12 - EX-99.2 4 dex992.txt FINANCIALS JUNE 2002 EXHIBIT 99.2 VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida ----------------------------------------- FINANCIAL REPORTS AT JUNE 30, 2002 ----------------------------------------- VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida TABLE OF CONTENTS - ------------------------------------------------------------------------------- Independent Accountants' Report on Interim Financial Information 1 Balance Sheets at June 30, 2002 (Unaudited) and December 31, 2001 2 Statements of Changes in Stockholders' Deficit for the Six Months Ended June 30, 2002 and 2001 (Unaudited) 3 Statements of Operations for the Six Months Ended June 30, 2002 and 2001 (Unaudited) 4 Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2001 (Unaudited) 5 Notes to Financial Statements 6-12 INDEPENDENT ACCOUNTANTS' REPORT To the Board of Directors and Stockholders Vintage Industries, Inc. (A Florida Corporation) Longwood, Florida We have reviewed the accompanying balance sheet of Vintage Industries, Inc. as of June 30, 2002, and the related statements of changes in stockholders' deficit, operations, and cash flows for the six months ended June 30, 2002 and 2001. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the balance sheet of Vintage Industries, Inc. as of December 31, 2001 (presented herein), and the related statements of changes in stockholders' equity (deficit), operations, and cash flows (not presented herein) for the year then ended; and in our report dated September 20, 2002, we expressed doubt on the Company's ability to continue as a going concern. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2001 is fairly stated, in all material respects. No auditing procedures have been performed subsequent to the date of our report. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note L to the financial statements, the Company has suffered recurring losses, has substantial debt and, at June 30, 2002, liabilities exceed assets. These factors, and others discussed in Note L, raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Rotenberg & Company, LLP Rotenberg & Company, LLP Rochester, New York September 20, 2002 VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida BALANCE SHEETS - ------------------------------------------------------------------------------------------------------- (Unaudited) June 30, December 31, 2002 2001 - ------------------------------------------------------------------------------------------------------- ASSETS Current Assets Cash and Cash Equivalents $ -- $ 26,031 Accounts Receivable - Net of Allowance for Doubtful Accounts 341,670 319,170 Inventory 154,549 124,548 - ------------------------------------------------------------------------------------------------------- Total Current Assets 496,219 469,749 Property and Equipment - Net of Accumulated Depreciation 273,065 323,821 Other Assets Security Deposits 23,534 17,947 - ------------------------------------------------------------------------------------------------------- Total Assets $ 792,818 $ 811,517 ======================================================================================================= LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Line of Credit $ 125,000 $ 125,000 Notes and Capital Leases Payable - Due Within One Year 102,516 100,577 Cash Overdraft 8,860 -- Accounts Payable and Accrued Expenses 241,699 183,054 - ------------------------------------------------------------------------------------------------------- Total Current Liabilities 478,075 408,631 Other Liabilities Notes and Capital Leases Payable - Due After One Year 488,852 543,002 - ------------------------------------------------------------------------------------------------------- Total Liabilities 966,927 951,633 - ------------------------------------------------------------------------------------------------------- Stockholders' Deficit Common Stock: $1.00 Par; 7,000 Shares Authorized, 2,250 Shares Issued and 1,000 Shares Outstanding 2,250 2,250 Additional Paid-In Capital 485,381 485,381 Accumulated Deficit (630,240) (596,247) - ------------------------------------------------------------------------------------------------------- (142,609) (108,616) Less: Treasury Stock - 1,250 Shares, at Cost 31,500 31,500 - ------------------------------------------------------------------------------------------------------- Total Stockholders' Deficit (174,109) (140,116) - ------------------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Deficit $ 792,818 $ 811,517 =======================================================================================================
The accompanying notes are an integral part of these financial statements. See Accountants' Review Report - 2 - VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (UNAUDITED) - ------------------------------------------------------------------------------------------------------------------------ Additional Number Common Paid-In Accumulated Treasury Stockholders' of Shares Stock Capital Deficit Stock Deficit - ------------------------------------------------------------------------------------------------------------------------ Balances - December 31, 2000 2,250 $ 2,250 $ 485,381 $(596,797) $(31,500) $(140,666) Net Income for the Period (Unaudited) -- -- -- 31,050 -- 31,050 - ------------------------------------------------------------------------------------------------------------------------ Balances - June 30, 2001 (Unaudited) 2,250 $ 2,250 $ 485,381 $(565,747) $(31,500) $(109,616) ======================================================================================================================== Balances - December 31, 2001 2,250 $ 2,250 $ 485,381 $(596,247) $(31,500) $(140,116) Net Loss for the Period (Unaudited) -- -- -- (33,993) -- (33,993) - ------------------------------------------------------------------------------------------------------------------------ Balances - June 30, 2002 (Unaudited) 2,250 $ 2,250 $ 485,381 $(630,240) $(31,500) $(174,109) ========================================================================================================================
The accompanying notes are an integral part of these financial statements. See Accountants' Review Report - 3 - VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida STATEMENTS OF OPERATIONS (UNAUDITED) - ----------------------------------------------------------------------------
Six Months Ended June 30, 2002 2001 - ---------------------------------------------------------------------------- Revenues $ 946,358 $ 1,215,025 Cost of Goods Sold 572,713 863,975 - ---------------------------------------------------------------------------- Gross Profit 373,645 351,050 - ---------------------------------------------------------------------------- Operating Expenses Bad Debts (Recovery) 37,037 (52,738) Depreciation 50,756 54,252 Finance Charges 48,497 39,447 Interest 30,111 34,309 Officers' Salaries - Leased 123,933 124,450 Professional Services 37,578 31,750 Other Operating Expenses 79,726 88,530 - ---------------------------------------------------------------------------- Total Operating Expenses 407,638 320,000 - ---------------------------------------------------------------------------- Net Income (Loss) for the Period $ (33,993) $ 31,050 - ----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. See Accountants' Review Report - 4 - VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida
STATEMENTS OF CASH FLOWS (UNAUDITED) - ------------------------------------------------------------------------------------ Six Months Ended June 30, 2002 2001 - ------------------------------------------------------------------------------------ Cash Flows from Operating Activities Net Income (Loss) for the Period $ (33,993) $ 31,050 Adjustments to Reconcile Net Income (Loss) for the Period to Net Cash Flows from Operating Activities: Bad Debts (Recovery) 37,037 (52,738) Depreciation 50,756 54,252 Changes in Assets and Liabilities: Accounts Receivable (59,537) 107,139 Inventory (30,001) 30,625 Security Deposits (5,587) -- Accounts Payable and Accrued Expenses 67,505 (62,207) - ------------------------------------------------------------------------------------ Net Cash Flows From Operating Activities 26,180 108,121 - ------------------------------------------------------------------------------------ Cash Flows from Investing Activities Acquisition of Property and Equipment -- (23,371) - ------------------------------------------------------------------------------------ Cash Flows from Financing Activities Repayment of Debt (52,211) (59,473) - ------------------------------------------------------------------------------------ Net Increase (Decrease) in Cash and Cash Equivalents (26,031) 25,277 Cash and Cash Equivalents - Beginning of Period 26,031 8,484 - ------------------------------------------------------------------------------------ Cash and Cash Equivalents - End of Period $ -- $ 33,761 - ------------------------------------------------------------------------------------ Supplemental Disclosures - ------------------------------------------------------------------------------------ Interest Paid $ 30,640 $ 33,432 Income Taxes Paid $ -- $ -- - ------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. See Accountants' Review Report - 5 - VINTAGE INDUSTRIES, INC. (A FLORIDA Corporation) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note A - Nature of Operations Vintage Industries, Inc. (the "Company") was formed on September 1, 1991 under the laws of the State of Florida. The Company is authorized to issue 7,000 shares of common stock at a $1.00 par value. The Company is primarily engaged in the business of design engineering and production of intricate plastic molds and the production of plastic and metal parts. Note B - Summary of Significant Accounting Policies Method of Accounting The Company maintains its books and prepares its financial statements on the accrual basis of accounting. Cash and Cash Equivalents Cash and cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less. Accounts Receivable Factoring The Company has an arrangement with a financial services company, in which the Company delivers current sales invoices to the financial services company in return for cash. Under the arrangement, proceeds typically received from the delivery of invoices approximate 63%, which is net of fees and interest of approximately 22% and a holdback allowance of approximately 15%. Customer invoices which are or become ineligible reduce the proceeds received from delivery of future customer invoices. Ineligible customer invoices revert back to the Company for collection. The holdback allowance balance at June 30, 2002 (Unaudited) and December 31, 2001 was $280,451 and $58,444, respectively. Allowance for Doubtful Accounts The Company provides for estimated losses on accounts receivable based on prior bad debt experience and a review of existing receivables. Based on these factors, there is an allowance for doubtful accounts of $76,356 and $39,319 at June 30, 2002 (Unaudited) and December 31, 2001, respectively. Inventory Inventory consists of raw materials, work-in-process, and finished goods, and is stated at the lower of cost or market using the first-in, first-out method. Property, Equipment and Depreciation Property and equipment are stated at cost, less accumulated depreciation computed using the straight line method over the estimated useful lives as follows: Equipment 5 - 7 Years Computer Equipment 5 - 7 Years Maintenance and repairs are charged to expense. The cost of the assets retired or otherwise disposed of and the related accumulated depreciation are removed from the accounts. Revenue Recognition Revenues from product sales are recognized when the goods are shipped. - continued - - 6 - VINTAGE INDUSTRIES, INC. (A FLORIDA Corporation) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note B - Summary of Significant Accounting Policies - continued Income Taxes Effective September 1, 1991, the Company elected to be treated as an "S" Corporation for both Federal and Florida State Tax purposes. Thus, profits, losses and tax credits flow through to the individual stockholders. Therefore, no provision for income taxes is reflected in these financial statements. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results can differ from those estimates. Concentrations of Credit Risk Financial instruments, which potentially expose the Company to significant concentrations of credit risk, consist principally of bank deposits, which may at times exceed federally insured limits. The Company had no cash balances that exceeded insured limits at June 30, 2002 (Unaudited) and December 31, 2001. Cash is placed primarily in high quality short term interest bearing financial instruments. The Company had three significant customers for the six months ended June 30, 2002 and 2001. The respective amount of sales during the six months ended June 30, 2002 and 2001 and the corresponding portion of the accounts receivable balance at June 30, 2002 and 2001 are as follows:
-------------------------------------------------------------------- (Unaudited) (Unaudited) Sales for the Six Months Accounts Receivable Balance Ended June 30, at June 30, ----------------------------------------------------- 2002 2001 2002 2001 -------------------------------------------------------------------- Company A $ 192,419 $ 194,254 $ 37,077 $ 32,253 Company B $ 215,885 $ 195,802 $ 6,000 $ 51,664 Company C $ 54,892 $ 161,408 $ 16,393 $ 40,339 --------------------------------------------------------------------
The Company periodically monitors the credit worthiness of its customers to which it grants credit terms in the ordinary course of business. Note C - Accounts Receivable Accounts receivable consisted of the following:
--------------------------------------------------------------------------- (Unaudited) June 30, December 31, 2002 2001 --------------------------------------------------------------------------- Trade $ 412,275 $ 352,977 Reproductions 5,751 5,512 --------------------------------------------------------------------------- $ 418,026 $ 358,489 Less: Allowance for Doubtful Accounts 76,356 39,319 --------------------------------------------------------------------------- Net Accounts Receivable $ 341,670 $ 319,170 ---------------------------------------------------------------------------
- 7 - VINTAGE INDUSTRIES, INC. (A FLORIDA Corporation) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note D - Inventory Inventory consisted of the following:
-------------------------------------------------------------------- (Unaudited) June 30, December 31, 2002 2001 -------------------------------------------------------------------- Raw Materials $ 64,226 $ 34,875 Work-In-Process 56,255 36,117 Finished Goods 34,068 53,556 -------------------------------------------------------------------- Total Inventory $ 154,549 $ 124,548 --------------------------------------------------------------------
Note E - Property and Equipment Property and equipment consisted of the following:
-------------------------------------------------------------------- (Unaudited) June 30, December 31, 2002 2001 -------------------------------------------------------------------- Equipment $ 1,161,294 $ 1,161,294 Computer Equipment 17,326 17,326 Equipment Held Under Capital Leases 115,507 115,507 -------------------------------------------------------------------- $ 1,294,127 $ 1,294,127 Less: Accumulated Depreciation 1,021,062 970,306 -------------------------------------------------------------------- Net Property and Equipment $ 273,065 $ 323,821 --------------------------------------------------------------------
Depreciation expense for the six months ended June 30, 2002 and 2001 was $50,756 and $54,252, respectively. Note F - Line of Credit The Company has a $125,000 line of credit with Stearns Bank National Association. The balance at June 30, 2002 (Unaudited) and December 31, 2001 was $125,000. The line bears interest at prime plus 2% (6.75% at June 30, 2002), with interest payable monthly. It has personal guarantees by the stockholders and a guarantee by the Small Business Association and is secured by the Company's equipment and inventory. The line of credit expired on March 28, 2002 and is in default. The Company is in negotiations with the lender for payment of the outstanding principal balance, and is continuing to make the monthly interest payments. Interest expense on the line of credit for the six months ended June 30, 2002 and 2001 was $4,184 and $5,603, respectively. - 8 - VINTAGE INDUSTRIES, INC. (A FLORIDA Corporation) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note G - Notes and Capital Leases Payable Notes and capital leases payable consisted of the following:
------------------------------------------------------------------------------------------------ (Unaudited) June 30, December 31, 2002 2001 ------------------------------------------------------------------------------------------------ Notes Payable Business Loan Center, Inc. Note payable due December 2007, payable in monthly installments of $4,041, including principal and interest at prime plus 2 3/4% (7.50% at June 30, 2002). The loan is secured by all assets of the company with personal guarantees by the stockholders and their spouses, with their residences pledged as additional security, assignment of life insurance in the amount of $350,000 on each of the stockholders, and a guarantee by the Small Business Association. $ 216,968 $ 232,954 GE Capital Small Business Finance Corporation Note payable due June 2008, payable in monthly installments of $5,217, including principal and interest at prime plus 2 1/4% (7.00% at June 30, 2002). The loan is secured by all assets of the company in excess of $350,000 with personal guarantees by the stockholders, with their residences as additional security, and a guarantee by the Small Business Association. 311,298 335,021 Capital Leases Payable Intech Funding Corp. Equipment lease for a four-year term, due February 2004, payable in monthly installments of $1,333, including principal and interest at 9.406%. 24,586 31,244 Associates Leasing, Inc. Equipment lease for a five-year term, due February 2005, payable in monthly installments of $273, including principal and interest at 11.383%. 7,512 8,685 Copelco Capital, Inc. Equipment lease for a five-year term, due March 2005, payable in monthly installments of $1,099, including principal and interest at 11.383%. 31,004 35,675 ------------------------------------------------------------------------------------------------ Total Notes and Capital Leases Payable $ 591,368 $ 643,579 Less: Amount Due Within One Year 102,516 100,577 ------------------------------------------------------------------------------------------------ Amount Due After One Year $ 488,852 $ 543,002 ================================================================================================ - continued -
- 9 - VINTAGE INDUSTRIES, INC. (A FLORIDA Corporation) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note G - Notes and Capital Leases Payable - continued Annual maturities of notes and capital leases payable for the five years succeeding June 30, 2002 are as follows:
2003 2004 2005 2006 2007 Thereafter Total ---------------------------------------------------------------------------- $102,516 $ 105,689 $ 98,723 $ 93,702 $ 100,698 $ 90,040 $ 591,368 ===========================================================================
The present value of future minimum lease payments is as follows:
----------------------------------------------------------------------------------- (Unaudited) June 30, December 31, 2002 2001 ----------------------------------------------------------------------------------- Total Future Minimum Lease Payments $ 71,661 $ 87,890 Less: Amount Representing Interest 8,559 12,286 ----------------------------------------------------------------------------------- Present Value of Net Future Minimum Lease Payments $ 63,102 $ 75,604 -----------------------------------------------------------------------------------
Interest expense on the notes and capital leases payable for the six months ended June 30, 2002 and 2001 was $25,927 and $28,706, respectively Note H - Leases On April 1, 1999, the Company entered into a building lease, for office and manufacturing space, with an unrelated third party, commencing October 1, 1999. The term of the lease is for three years, with monthly rental payments of $4,134 for the first year, and increasing each year thereafter based on the Consumer Price Index. The monthly rental payment as of June 30, 2002 is $4,594. The lease expires on September 30, 2002 and the Company has executed an agreement to extend the terms on a month-to-month basis until November 30, 2002. The extended terms required a non-refundable deposit of $20,000. Management has decided to obtain an alternate sight with larger space for office and manufacturing operations. On January 1, 1998, the Company entered into a building lease, for grips production space, with an unrelated third party. The term of the lease was for one year, with a renewal option for two additional years. The lease required monthly rental payments of $544. On January 1, 2001, the lease was verbally extended on a month-to-month basis, with the monthly rental payment remaining at $544. On March 19, 2001, the Company entered into a building lease, for an engineering office, with an unrelated third party. The term of the lease was for one year, commencing April 15, 2001, with a renewal option for one additional year. The lease required monthly rental payments of $868. On April 16, 2002, the lease was verbally extended on a month-to-month basis, with the monthly rental payment remaining at $868. On January 22, 2002, the Company entered into a building lease, for warehouse space, with an unrelated third party. The lease is on a month-to-month basis and requires monthly rental payments of $273. - continued - - 10 - VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note H - Leases - continued Future minimum lease payments for the five years succeeding June 30, 2002 are as follows: 2003 2004 2005 2006 2007 Total -------------------------------------------------------------------- $ 13,782 $-- $-- $-- $-- $ 13,782 -------------------------------------------------------------------- Note I - Litigation On October 24, 2001, a complaint was filed against the Company with the Circuit Court of the Fifth Judicial Circuit in Hernando County, Florida by Excalibur Manufacturing Corporation, for unpaid sums past due under an open account arrangement in the amount of $13,200. On March 18, 2002, this complaint was settled for $7,033. The settlement was recorded in the financial statements during the year ended December 31, 2001. Note J - Subsequent Events On August 12, 2002, the Company entered into an asset purchase agreement with Mobile Area Networks, Inc., where the Company would become a division of Mobile Area Networks, Inc. The Company would receive 1,440,000 shares of restricted common stock of Mobile Area Networks, Inc., with a fair market value of approximately $274,000 on August 12, 2002, in exchange for substantially all assets and the assumption of certain liabilities of the Company. The agreement also includes a Non-competition Agreement for the principal stockholders for three years. On September 12, 2002, the Company entered into an asset purchase agreement for equipment from Recoton Corporation for $50,000. Payment terms are $14,000 in the assumption of liabilities and the satisfaction of purchase orders of Recoton customers amounting to $36,000. On October 3, 2002, a complaint was filed against the Company with the Circuit Court of Seminole County, Florida by David Byron, a former stockholder of the Company, for non-delivery of 288,000 shares of restricted common stock of Mobile Area Networks, Inc., per the general mutual release and separation agreement between Vintage Industries, Inc. and Mr. Byron. Mr. Byron is seeking immediate delivery of the 288,000 shares of restricted common stock of Mobile Area Networks, Inc. and damages in the amount of the value of the stock. The Company is withholding the delivery of the shares pending the return of Company owned assets allegedly held by Mr. Byron. The Company intends to vigorously defend its position and does not believe the range of loss, if any, can be reasonably estimated at this time. Accordingly, no provision for possible loss has been made in these financial statements. Note K - Recently Issued Accounting Standards In June 2002, the Financial Accounting Standards Board issued FASB Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146). SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Costs covered by SFAS 146 include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. SFAS 146 applies to all exit or disposal activities initiated after December 31, 2002. The Company is assessing, but does not expect the adoption of SFAS 146, as of January 1, 2003, to have a material effect on its future financial position and results of operations. - 11 - VINTAGE INDUSTRIES, INC. (A FLORIDA CORPORATION) Longwood, Florida NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Note L - Going Concern The company has sustained significant net losses totaling approximately $300,000 in fiscal years 2001 and 2000. The primary causes of the decreases were attributable to increasing costs (partly due to the extraordinary item occurring in September 2001, in which the Company received a direct lightning strike) and interest and finance charges on debt and the factoring of receivables. Because of the deteriorating financial conditions, substantial doubt exists about the Company's ability to continue as a going concern. As described in Note J, the Company has entered into a sale agreement with Mobile Area Networks, Inc. a publicly traded company. The Company plans to raise sufficient working capital through equity investors and plans to restructure the debt to lower its interest costs. - 12 - -----END PRIVACY-ENHANCED MESSAGE-----