-----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, K/4j8xm9eLyx6YCf50lrJDevzfyVVsJnPJB2/Z8Lgx5t+7dwDgXxIEt5bVwDNdeV 179Mckcqo0as/WQqgPk8FQ== 0000950148-97-003089.txt : 19971223 0000950148-97-003089.hdr.sgml : 19971223 ACCESSION NUMBER: 0000950148-97-003089 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971031 FILED AS OF DATE: 19971222 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEGACY BRANDS INC CENTRAL INDEX KEY: 0001021663 STANDARD INDUSTRIAL CLASSIFICATION: COOKIES & CRACKERS [2052] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-22917 FILM NUMBER: 97742593 BUSINESS ADDRESS: STREET 1: 2424 PROFESSIONAL DRIVE STREET 2: SUITE A CITY: ROSEVILLE STATE: CA ZIP: 95661 BUSINESS PHONE: 916-782-2029 MAIL ADDRESS: STREET 1: 2200 B DOUGLAS BLVD STREET 2: STE 100 CITY: ROSEVILLE STATE: CA ZIP: 95661 10QSB 1 FORM 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB --------------- (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended October 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commission file number 0-22917 --------------- LEGACY BRANDS, INC. (Exact name of registrant as specified in its charter) California 68-0323138 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 2424 Professional Drive, Suite A Roseville, California 95661 (Address of principal executive offices, including zip code) --------------- Registrant's phone number, including area code: (916) 782 - 2029 --------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes [ ] No [X] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of October 31, 1997. Class Outstanding at October 31, 1997 ----- ------------------------------- Common Stock, No Par Value 3,100,345 2 LEGACY BRANDS, INC. Index ---------------
Page Number ------ Part I. Financial Information Item 1. Financial Statements Statements of Operations Three and Nine Months Ended October 31, 1997 and 1996 3 Balance Sheets October 31, 1997; January 31, 1997 and October 31, 1996 4 Statements of Cash Flows Nine Months Ended October 31, 1997 and 1996 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial 10 Condition and Results of Operations Part II Other Information Item 1. Legal Proceedings 13 Item 6. Exhibits and Reports on Form 8-K 14
2 3 LEGACY BRANDS, INC. Statements of Operations (Unaudited)
Three months ended Nine months ended October 31, October 31, ---------------------- ---------------------- 1997 1996 1997 1996 --------- --------- --------- --------- (In thousands, except per share data) Net sales $ 1,451 $ 1,155 $ 3,839 $ 2,810 Cost of goods sold 904 691 2,334 1,692 --------- --------- --------- --------- Gross profit 547 464 1,505 1,118 Marketing expenses 282 204 758 578 General and administrative 240 248 684 661 --------- --------- --------- --------- Operating income (loss) 25 12 63 (121) Interest expense and other, net 103 153 424 455 --------- --------- --------- --------- Loss before income taxes and extraordinary item (78) (141) (361) (576) Income tax expense -- -- 1 1 --------- --------- --------- --------- Loss before extraordinary item (78) (141) (362) (577) Extraordinary gain, debt forgiveness 272 -- 272 -- --------- --------- --------- --------- Net income (loss) $ 194 $ (141) $ (90) $ (577) ========= ========= ========= ========= Earnings (loss) per common and common equivalent share: Primary: Loss before extraordinary item $ (0.03) $ (0.07) $ (0.16) $ (0.28) Extraordinary item $ 0.10 -- 0.12 -- --------- --------- --------- --------- Primary earnings (loss) per share $ 0.07 $ (0.07) $ (0.04) $ (0.28) ========= ========= ========= ========= Shares used in computing primary earnings (loss) per share 2,619,522 2,137,610 2,332,958 2,043,904 ========= ========= ========= ========= Assuming full dilution: Loss before extraordinary item $ (0.02) $ (0.07) $ (0.16) $ (0.28) Extraordinary item $ 0.10 -- 0.12 -- --------- --------- --------- --------- Fully diluted earnings (loss) per share $ 0.08 $ (0.07) $ (0.04) $ (0.28) ========= ========= ========= ========= Shares used in computing fully diluted earnings (loss) per share 2,744,022 2,137,610 2,332,958 2,043,904 ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements 3 4 LEGACY BRANDS, INC. Balance Sheets
October 31, January 31, October 31, 1997 1997 1996 (Unaudited) (Audited) (Unaudited) ----------- ----------- ----------- (In thousands, except share data) $ ASSETS Current Assets: Cash $ 290 $ 22 $ 44 Accounts receivable from related party --- --- 28 Accounts receivable 247 23 194 Inventory 145 50 154 Prepaid expenses & other 50 7 --- ------- ------- ------- Total current assets 732 102 420 Office equipment - net 19 8 7 Debt issuance costs - net 88 268 407 Organization costs - net 1 2 2 Licenses - net 2,321 2,431 2,451 Package design costs - net 85 --- --- Deferred offering costs --- 336 56 ------- ------- ------- Total assets $ 3,246 $ 3,147 $ 3,343 ======= ======= ======= LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIT) Current Liabilities: Line of credit $ 728 $ --- $ --- Accounts payable 367 551 653 Accrued expenses & other 780 488 259 Notes payable, current: Related parties 60 60 60 Other --- 595 600 Liability to manufacturer, current 348 348 375 ------- ------- ------- Total current liabilities 2,283 2,042 1,947 Notes payable, noncurrent, to related parties 587 566 560 Liability to manufacturer, noncurrent 833 1,050 1,167 ------- ------- ------- Total liabilities 3,703 3,658 3,674 Shareholders' Equity (deficit): Common stock, no par value; 30,000,000 shares authorized; 3,100,345 and 2,763,145 and 2,698,045 shares issued and outstanding at October 31, 1997 (unaudited) and at January 31, 1997 and at October 31, 1996 (unaudited) $ 5,246 $ 5,094 $ 5,016 Contributed capital 560 560 560 Notes receivable from shareholders (1,536) (1,528) (1,519) Accumulated deficit (4,727) (4,637) (4,388) ------- ------- ------- Total shareholders' equity (deficit) (457) (511) (331) ------- ------- ------- Total liabilities & shareholders' equity (deficit) $ 3,246 $ 3,147 $ 3,343 ======= ======= =======
The accompanying notes are an integral part of these financial statements. 4 5 LEGACY BRANDS, INC. Statements of Cash Flows (Unaudited)
For the nine months ended ------------------------ October 31, October 31, 1997 1996 ----------- ----------- (In thousands) Cash flows from operating activities: Net loss $ (90) $(577) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 122 64 Amortization of debt issuance costs 227 348 Common stock issued for services -- 4 Forgiveness of debt (272) -- Changes in assets and liabilities: Decrease in accounts receivable, related parties -- 22 (Increase) in accounts receivable (224) (194) Decrease in other receivables -- 15 (Increase) in inventory (95) (154) (Increase) in prepaid expenses & other (43) (56) Increase in accounts payable 89 70 (Decrease) increase in accrued expenses & other liabilities 90 (21) Payments on liability to manufacturer (217) (203) ----- ----- Net cash used in operating activities (413) (682) ----- ----- Cash flows from investing activities: Purchase of office equipment (12) (4) Payment toward purchase of license -- (13) Payment of packaging costs (92) -- ----- ----- Net cash used in investing activities (104) (17) ----- ----- Cash flows from financing activities: Proceeds from issuance of common stock, net of commissions 703 -- Payment of offering costs (43) -- Proceeds from issuance of loans payable -- 445 Payments on credit line and loan payable (715) -- Proceeds from issuance of notes payable to related parties -- 379 Payment of debt issuance costs (8) (163) Proceeds from line of credit 848 -- ----- ----- Net cash provided from financing activities 785 661 ----- ----- Increase (decrease) in cash 268 (38) Cash, beginning of period 22 82 ----- ----- Cash, end of period $ 290 $ 44 ===== ===== Interest paid $ 31 $ 38 ===== ===== Income taxes paid $ 1 $ 1 ===== =====
The accompanying notes are an integral part of these financial statements 5 6 LEGACY BRANDS, INC. Notes To Financial Statements -------------------------- NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES Organization and Operations: Legacy Brands, Inc. is a California corporation that primarily markets frozen cookie dough through alliances with Mrs. Fields Cookies and a single manufacturer. The Company became subject to the Securities Exchange Act of 1934 (the "1934 Act") in late September 1997 at which time the Form 10SB as filed with the Securities and Exchange Commission became effective. The Company is in the process of responding to Securities and Exchange Commission comments to its Form 10SB and plans to file an amended Form 10SB. The Company's common stock is not yet traded on any market. Accounting Change: In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings Per Share. Statement No. 128, which is effective for both interim and annual financial statements ending after December 15, 1997, establishes revised standards for computing and reporting earnings per share. The Company will change the method currently used to compute earnings per share and restate all prior periods in its annual report for the year ended January 31, 1998, to be filed on Form 10-KSB. The impact on earnings per share has not yet been determined. Deferred Offering Costs: Deferred offering costs consist primarily of legal, accounting and printing costs which were netted against the proceeds of the offering of common stock more fully described in these footnotes and in the Company's Form 10SB. At October 31, 1997, all deferred offering costs of $655,151 were netted against the proceeds of the offering. Mrs. Fields License: As part of the Mrs. Fields License, the Company paid a non-refundable fee described as a prepaid royalty of $2,500,000 to Mrs. Fields. The fee is being amortized on a straight-line basis over the life of the Mrs. Fields License plus each extension term for a total of 30 years. In addition, the Company pays a royalty equal to $1 per 12 pound equivalent case sold, net of damages, returns and credits. Such royalties included in marketing expense were $177,574 for the year ended January 31, 1997 and $102,670 (unaudited) and $166,726 (unaudited) for the nine months ended October 31, 1996 and 1997, respectively. The contract with Mrs. Fields requires a minimum royalty of $285,000 for the calendar year ended December 31, 1997. The Company has accrued an additional $50,000 over the royalty liability based on actual cookie sales as of October 31, 1997 as uncertainty exists as to whether the Company will be able to meet the minimum royalty requirement solely as a result of sales. The Company believes it continues to be in compliance with the insolvency provisions of the agreement with Mrs. Fields and has received no notice to the contrary. Earnings (Loss) Per Share: Primary earnings (loss) per share for the three month period ended October 31, 1997 was computed by dividing earnings (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. The number of common shares was increased by the number of shares issuable upon the exercise of warrants and shares issued upon exercise of warrants for notes, using the treasury stock method. Primary earnings (loss) per share for the three month period ended October 31, 1997 would have been as follows had the C. Brands convertible debt been converted at the beginning of the period: Loss before extraordinary item $(0.02) Extraordinary item 0.10 ------ Net income $ 0.08 Fully diluted earnings per share for the three month period ended October 31, 1997 was computed assuming that the C. Brands convertible debt was converted at the beginning of the period. 6 7 For the three month period ended October 31, 1996, and for each of the nine month periods ending October 31, 1997 and 1996, loss per share has been computed based on the weighted average number of shares outstanding during those respective periods. Common stock equivalents are anti-dilutive for each of those periods and, therefore are not included in the computations of primary and fully diluted loss per share. NOTE 2 - BASIS OF PRESENTATION In the opinion of management, the accompanying financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of the Company's financial position as of October 31, 1997 and its results of operations for the three and nine months ended October 31, 1997 and 1996. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's financial statements contained within the Form 10SB filed with the Securities and Exchange Commission in late July, 1997. NOTE 3 - ACCOUNTS PAYABLE AND EXTRAORDINARY ITEM The Company is currently in the process of negotiating settlements of certain old accounts payable, primarily dating back to summer 1994, which have been recorded at the billed amounts. These negotiations relate to substantiation of the extent of goods and services received in relation to the billed amounts. Such amounts included in accounts payable were $422,202 at January 31, 1997 and $150,000 and $425,702 at October 31, 1997 and 1996, respectively. Management determined as of October 31, 1997 that $272,202 of the old accounts payable accrued should be reversed and recorded as an extraordinary item for debt forgiveness. NOTE 4 - CONVERTIBLE NOTES PAYABLE In the period August 1995 through October 1996, C. Brands Management, L.L.C. (C. Brands), a company whose principal manager is a shareholder of the Company, received notes from the Company, for cash consideration in the aggregate principal amount of $622,500. The carrying value on balance sheet of the C. Brands notes is $586,857, which is net of unaccreted discount of $35,643. Pursuant to the notice of conversion provided by C. Brands, the notes were converted into 124,500 shares of common stock at the close of the private placement offering on November 27, 1997. The interest accrued and payable to C. Brands through October 31, 1997 totaled $107,966 which the Company also believes is to be converted into stock of the Company, but is seeking clarification with respect thereto. The unamortized debt issuance costs related to the C. Brands notes at October 31, 1997 totaled $73,518. Had the C. Brands notes, excluding the accrued interest, been converted into stock of the Company at October 31, 1997, total assets would have been reduced by $73,518, long-term and total liabilities would have been reduced by $586,857. Total shareholders' equity would have increased by $513,339. Total assets would have been $3,172,885, total liabilities would have been $3,116,519 and total shareholders' equity would have been $56,366. NOTE 5 - CREDIT LINE PAYABLE Effective June 10, 1997, the Company entered into a formal agreement with DayStar L.L.C. (DayStar), pursuant to which DayStar agreed to provide a credit facility to the Company in an amount not to exceed $440,000 to be used for working capital purposes (DayStar Credit Facility).As part of the agreement, the 7 8 Company is currently negotiating a due diligence fee of $40,000. As of October 31, 1997, the entire credit facility of $440,000 is outstanding. The interest rate on the DayStar credit facility is currently 12%, and will non-retroactively increase to 15% in January, 1998. The DayStar Credit Facility will be due at the earlier of: i) July, 1998 or, ii) pursuant to an amended agreement entered into in December, 1997, within five business days of the Company raising $1,750,000 in connection with a financing transaction. On July 1, 1997, the Company entered into a second agreement with DayStar pursuant to which DayStar agreed to provide to the Company a supplemental credit facility (Supplemental DayStar Credit Facility) in the aggregate amount of $400,000, plus a facility fee of 2% of the amount advanced, to be used to repay certain Bridge Notes which matured on June 30, 1997. Pursuant to the Supplemental DayStar Credit Facility, the Company has executed a promissory note providing for the payment of interest on the amounts outstanding at an interest rate of 1% per week.With regard to the Supplemental DayStar Credit Facility, the Company has repaid $120,000 through October 31, 1997 and an additional $78,000 through December 10, 1997. Accordingly, the principal due at October 31, 1997 was $288,000 and as of December 10, 1997 is $210,000. An agreement was entered into in December 1997 with respect to the Supplemental DayStar Credit Facility to provide the same maturity provisions as applicable to the DayStar Credit Facility. As of October 31, 1997, the total accrued interest payable to DayStar was $5,955. DayStar converted $75,000 of accrued interest into 30,000 shares common stock of the Company on October 31, 1997 pursuant to the provisions of the private offering of securities more fully discussed in Note 10. NOTE 6 - LIABILITY TO MANUFACTURER During 1994, the Company arranged for the manufacture of approximately $2,500,000 of frozen cookie dough product. In 1995, all of this product was either discarded by the manufacturer due to obsolescence or reworked and sold to reduce the loss. Based upon a troubled debt restructuring negotiated with the manufacturer, $2 per case of new product sold since March, 1995 is deducted from the monthly amount received by the Company from the manufacturer related to current product sales and applied to the liability. The Company may negotiate with the manufacturer related to a discount for early payoff of the liability. Such discount, if any, will be recorded when final settlement is made. Estimated aggregate future payments based on historical data are as follows:
OCTOBER 31, JANUARY 31, OCTOBER 31, 1997 1997 1996 (UNAUDITED) (AUDITED) (UNAUDITED) ----------- ---------- ---------- PERIOD ENDING: 1997 $ --- $ --- $ 375,000 1998 348,092 348,092 525,000 1999 348,092 348,092 641,748 2000 348,092 348,092 --- 2001 136,603 353,586 --- ---------- --------- ---------- Total $1,180,879 1,397,862 1,541,748 Less current portion (348,092) (348,092) (375,000) ---------- ---------- ---------- Noncurrent portion $ 832,787 $1,049,770 $1,166,748 ========== ========== ==========
8 9 NOTE 7 - INCOME TAXES The Company continues to maintain a 100% valuation allowance against its deferred tax assets, which primarily relate to net operating loss carry forwards. NOTE 8 - STOCK OPTION PLAN The Company maintains a stock option plan adopted in October, 1996. No options have been granted under the plan and there have not been any amendments or restatements to the plan since the April 30, 1997 financial statements included within the Form 10SB filed by the Company. NOTE 9 - RELATED-PARTY TRANSACTIONS Effective November 1, 1997, the Company moved its principal office to a building owned by the Company's Chief Executive Officer and another shareholder of the Company. The owners of the building are in the process of engaging an objective third party expert in determining the fair rental value of the Company's office space as compared to similar office space in the area. As of December 22, 1997, no payments have been made by the Company as a deposit or for rent. In connection with the Company's now concluded private placement of its common stock, the Company entered into a placement agent agreement with Capitol Bay Securities, a related party. The Company has total expense to Capitol Bay Securities of $103,700 through October 31, 1997 with $52,400 unpaid as of October 31, 1997, but paid in full by December 22, 1997. The offering of equity securities, which closed November 27, 1997, is more fully discussed in Note 10 of these financial statements. NOTE 10 - OFFERING OF EQUITY SECURITIES The Company commenced an offering to private investors, on a best efforts basis, of up to 1,600,000 shares of its common stock at a price of $2.50 per share, or a total of $4,000,000, in July, 1997. Through October 31, 1997, net proceeds of $778,129 had been raised. Of the $778,129, a total of $703,129 had been raised from private investors and $75,000 of accrued interest payable to DayStar on the credit line were converted into stock of the Company. The Company had extended the offering which would have expired on August 29, 1997 until November 27, 1997. The offering was closed on November 27, 1997. NOTE 11 - CONTINGENCIES The founder and former director of the Company, who is a shareholder holding in excess of 5% of the Company's outstanding stock, had advised the Company that he has a number of claims against the Company and others. These claims relate to an agreement entered into by the shareholder and the Company and other parties in August, 1995, (Exhibit 1 hereto) with respect to the transfer of certain stock in the Company, providing additional capital to the Company and to alleged back wages due to him and the repayment of amounts allegedly advanced by him to the Company. On November 19, 1997, the founder and former director filed a lawsuit against the Company with regard to these matters. Counsel and management are of the opinion that the transfer of certain shares of common stock pursuant to the August, 1995, agreement are valid and in force. The Company also believes it has substantial defenses to and offsets against any claims which are asserted in the litigation brought by the shareholder with respect to these matters. As a result, the Company has not accrued a liability with respect to these contingencies. 9 10 LEGACY BRANDS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations INTRODUCTION The following discussion and analysis of the Company's results of operations and financial condition should be read in conjunction with the information set forth in the financial statements and notes thereto included elsewhere herein and the financial statements and the notes thereto included in the Form 10SB filed with the Securities and Exchange Commission in late July, 1997 which are incorporated herein by reference thereto. OVERVIEW The Company markets primarily Mrs. Fields super premium frozen cookie dough products and cookie ice cream sandwiches which are distributed throughout North America in supermarkets, club stores, convenience stores such as 7-Eleven and other mass merchandisers. The Company commenced sales of the Gumby freeze pop in summer of 1997 with limited success due to the late introduction into the 1997 season. Sales attributable to the ice cream sandwiches and Gumby pops during 1997 through October 31 were $406,785 and $130,007, respectively. The remainder of the approximately $3,839,000 of total sales through October 31, 1997 is attributable to the sale of cookie dough. COMPARATIVE QUARTERLY RESULTS Total Revenues. Total revenues for the nine and three months ended October 31, 1997 were $3,839,357 and $1,451,330, respectively, as compared to $2,809,989 and $1,155,234 for the nine and three months ended October 31, 1996, respectively. These increases represent sales growth of 36.6% and 25.6% for the nine and three months ended October 31, 1997, and are attributable to the 1997 introductions of the Mrs. Fields ice cream sandwiches and Gumby freeze pops as well as the expanded distribution of the cookie dough products. Cost of Goods Sold. Cost of goods sold for the nine and three months ended October 31, 1997 were $2,334,763 and $904,332, respectively, as compared to $1,691,743 and $691,050 for the nine and three months ended October 31, 1996, respectively. As a percentage of sales, cost of goods sold were 60.8% for the nine ended October 31, 1997 as compared to 60.2% for the nine months ended October 31, 1996. Such costs were 62.3% of sales for the three months ended October 31, 1997 as compared to 59.8% for the same 1996 period. The percentages remained consistent with regard to the nine month numbers, but are somewhat higher for the three month numbers due to higher costs of production on the ice cream sandwiches and Gumby freeze pops which are new 1997 products. The nine month percentages are not materially higher in light of the sales mix being dominated by cookie dough sales. Gross Profit. Gross profits for the nine and three months ended October 31, 1997 were $1,504,594 and $546,998, respectively, as compared to $1,118,246 and $464,184 for the nine and three months ended October 31, 1996. As a percentage of sales, gross profits were 39.2% for the nine months 10 11 ended October 31, 1997 as compared to 39.8% for the nine months ended October 31, 1996. Gross profits were 37.7% of sales for the three months ended October 31, 1997 as compared to 40.2% for the same 1996 period. Marketing Expenses. Marketing expenses for the nine and three months ended October 31, 1997 were $757,662 and $282,604, respectively, as compared to $578,022 and $204,005 for the nine and three months ended October 31, 1996, respectively. As a percentage of sales, marketing expenses were 19.7% for the nine months ended October 31, 1997 as compared to 20.6% for the nine months ended October 31, 1996. Such costs were 19.5% of sales for the three months ended October 31, 1997 as compared to 17.7% for the same 1996 period. The percentages in all cases remain consistent. The Company expended, at cost, approximately $43,000 in free ice cream sandwiches to the 7-Eleven retailers carrying the product in the second and third quarters of 1997. This cost, as a percentage of ice cream sandwich sales through October 31, 1997 is approximately 11%, and approximately 1% of total sales as of the same date. The Company anticipates that the free cases will be a one-time charge with regard to existing retailers, but anticipates similar promotions for new retailers in the future. General and Administrative Expenses. General and administrative expenses for the nine and three months ended October 31, 1997 were $684,215 and $239,761, respectively, as compared to $661,475 and $248,287 for the nine and three months ended October 31, 1996, respectively. As a percentage of sales, general and administrative expenses were 17.8% for the nine ended October 31, 1997 as compared to 23.5% for the nine months ended October 31, 1996. Such costs were 16.5% of sales for the three months ended October 31, 1997 as compared to 21.5% for the same 1996 period. The nine and three month amounts of 1997 and 1996 are consistent which is expected as general and administrative expense is comprised of fixed costs. The percentages, as compared to sales, has dropped due to the increased sales in each of the nine and three month comparative periods. Operating Income (Loss). The operating income for the nine and three months ended October 31, 1997 was $62,717 and $24,633, respectively, as compared to an operating loss of $(121,251) and operating income of $11,892 for the nine and three months ended October 31, 1996, respectively. As a percentage of sales, operating income was 1.6% for the nine months ended October 31, 1997 as compared to a negative (4.3%) for the nine months ended October 31, 1996. Operating profits were 1.7% of sales for the three months ended October 31, 1997 as compared to 1.0% for the same 1996 period. Most notable is the absolute dollar increase of $183,968 in operating income for the nine month period ended October 31, 1997 as compared to the nine month period ended October 31, 1996. Interest Expense and Other. Interest expense for the nine and three months ended October 31, 1997 were $413,519 and $102,679, respectively, as compared to $430,175 and $154,757 for the nine and three months ended October 31, 1996, respectively. As a percentage of sales, interest expense was 10.8% for the nine ended October 31, 1997 as compared to 15.3% for the nine months ended October 31, 1996. Such expense was 7.1% of sales for the three months ended October 31, 1997 as compared to 13.4% for the same 1996 period. Although the total expense and comparative percentages have dropped, the Company continues to maintain substantial debt. Refer to Notes 5 and 10 of the financial statements included herewith. The "other" expense totaled $10,000 and $24,692 for the nine month periods ended October 31, 1997 and 1996, respectively. In each year the other expenses were incurred prior to the third quarter. 11 12 The 1996 expense relates to costs paid on a potential merger candidate which was abandoned, while the 1997 costs relate to an abandoned deposit made with an underwriting firm in contemplation of filing Form SB-2. Net Income (Loss). The net loss for the nine months and net income for the three months ended October 31, 1997 was $(89,400) and $194,156, respectively, as compared to net losses of $(576,918) and $(141,365) for the nine and three months ended October 31, 1996, respectively. As a percentage of sales, net losses were (2.3%) for the nine months ended October 31, 1997 as compared to (20.5%) for the nine months ended October 31, 1996. Net income was 13.4% of sales for the three months ended October 31, 1997 as compared to a net loss of (12.2%) for the same 1996 period. Because of the extraordinary gain in the October 31, 1997 quarter, which is discussed in Note 3 to the financial statements, the amounts and percentages are different than might be expected in future periods. LIQUIDITY AND CAPITAL RESOURCES The Company has primarily financed its activities through the issuance of common stock and debt. The cumulative losses from the Company's inception through October 31, 1997, total $(4,726,767) with negative shareholders' equity of $(456,973) as of the same date. With the conversion of the C. Brands obligation (Note 4 to the financial statements) on November 27, 1997, total shareholders' equity would have been $56,366 had the conversion taken place on October 31, 1997. Current liabilities exceeded current assets at October 31, 1997 and October 31, 1996 by $(1,551,972) and $(1,527,689), respectively. Current liabilities exceeded current assets by $(1,939,734) at January 31, 1997. From January 31, 1997 to October 31, 1997, current assets increased by $629,597 and current liabilities increased by $241,835. The increase in current assets is primarily attributable to the increase in cash from the equity offering as well as increases in accounts receivable and inventory associated with the introduction of ice cream sandwiches and freeze pops. Most notable in analyzing the current liabilities is the payment in full of notes in the amount of $595,000 during the second quarter and the new credit line obligation undertaken in the aggregate amount of $728,000 as of October 31, 1997 (The DayStar Obligations). As noted in Note 3 to the financial statements included herewith and the analysis above regarding the extraordinary gain, current liabilities decreased by $272,202 with respect to the reversal of the accrual regarding certain contested old accounts payable. Management had anticipated repayment of the entire DayStar credit line obligations by October 31, 1997 from the proceeds of the private offering of securities. See Note 5 to the financial statements. The DayStar obligations were due within five business days from the close of the private offering. The Company has entered into an agreement with respect to an amendment to the DayStar Obligations providing that they are not due until the earlier of: i) July 1998 or ii) at such time as the Company raises an aggregate of $1,750,000 through other financings. Long-term liabilities decreased from January 31, 1997 to October 31, 1997 by $196,556 due primarily to the repayment on the liability to the manufacturer (Financial statements, Note 6) in the amount of $216,983. The remaining difference of $20,427 represents the accretion of discounts on debt 12 13 for the nine month period ended October 31, 1997. As of October 31, 1997, the Company held three notes, originally issued in 1994, payable to two unrelated parties and a third party that is currently the beneficial owner of in excess of 5% of the common stock, totaling $60,000 in principal. The Company had intended to satisfy these obligations from the proceeds of the private equity offering concluded November 27, 1997, but was unable to do so. The Company is in the process of negotiating that the debt be satisfied with the issuance of common stock, warrants or a combination thereto. Should negotiations fail, the Company anticipates satisfying the obligation from a future equity offering. Even with the conversion of the C. Brands convertible debt obligations at November 27, 1997, the Company still maintains large debt. The need for equity continues in light of the debt and also with the working capital demands necessary to expand the distribution of the ice cream sandwiches and freeze pops. Management is in the process of interviewing underwriters for the purpose of undertaking a new offering of the Company's securities, although no assurances can be provided that the engagement of such new underwriter(s) will occur or that an offering of securities will commence or be successful. Impact of Inflation. The Company does not believe that inflation has had a material adverse effect on sales or costs of production nor does management believe that moderate increases in interest rates of commercial lenders or moderate rates of inflation will have a significant impact upon future operations. Forward Looking Statements. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statement. Certain information contained in this Form 10-QSB and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements, electronic statements or other written statements made or to be made by the Company) contain statement that are forward-looking, such as statements relating to plans for future product development, settlements of disputes or outstanding obligations as well as with respect to capital expenditures, financial sources and the effects of competition. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. These risks and uncertainties may include, but are not limited to those relating to the ability of the Company to meet its obligations with respect to the Mrs. Fields License, new product development, expansion of sales of existing products, the prospects of settlements of disputes with third parties, obtaining sufficient financing, seasonal differences in sales volumes, price and other competitive pressures, the quality of the Company's products, dependence on discretionary consumer spending, dependence on existing management, general economic conditions, or changes in federal or state laws or regulations. PART II - OTHER INFORMATION Item 1. Legal Proceedings On November 19, 1997 an action was filed by Gregory B. Plunkett ("Plunkett") against the Company in the Superior Court of the State of California in San Francisco; Gregory B. Plunkett v. Legacy Brands, Inc. case number 991187. Plunkett is the founder of the Company, a former director and 13 14 holder in excess of 5% of the outstanding common stock of the Company. Plunkett seeks $112,500 in compensatory damages allegedly due with respect to a promissory note issued to him by the Company; $99,000 in allegedly unpaid wages and a declaration by the Court that the agreement entered into as evidenced by the August 8, 1995 Memorandum is void and further to declare that Plunkett is the owner of 9,300,000 shares of the Company's common stock (930,000 shares after giving effect to the 1:10 reverse stock split effective October, 1996), rather than the 400,000 (after giving effect to the 1:10 reverse stock split) shares which are currently reflected in the Company's records as owned by Plunkett. While no assurance can be given with respect to the ultimate outcome of any such litigation, management of the Company continues to be of the view that all of the material provisions of the August 8, 1995 Memorandum have been complied with and that it has substantial defenses to and offsets against any claims asserted by Mr. Plunkett. Item 6. Exhibits and Reports on Form 8-K A. Exhibits: 1.0 Memorandum of Agreement dated August 8, 1995, by and among Gregory B. Plunkett, CBG Partnership, Capital Bay Group, BKP Partners and Greg Plunkett, Inc. B. Reports on Form 8-K: The Company was not required to and did not file any reports on Form 8-K during the quarter ended October 31, 1997. 14 15 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, thereunto duly authorized. Legacy Brands, Inc. (Registrant) By: /s/ Thomas E. Kees Date: December 15, 1997 ------------------------------------- Thomas E. Kees, President and Chief Executive Officer 15 EX-1 2 EXHIBIT 1 1 MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT ("Memorandum") is entered into as of August 8th, 1995 by and among Gregory B. Plunkett ("Plunkett"), CBG Partnership, a California general partnership ("CBG"), Capital Bay Group, a California corporation ("CapBay"), BKP Partners ("BKP") and Greg Plunkett, Inc., a California corporation (the "Company"). This Memorandum of Agreement is made with respect to the following facts and circumstances: A. Plunkett, CBG, CapBay and BKP desire to restructure in part the capitalization of the Company as described in this Memorandum. B. The parties desire to establish a management committee (the "Management Committee") to govern the business of the Company pursuant to the provisions of this Memorandum. NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. CBG Shares. CBG shall immediately: (a) relinquish and reconvey to the Company an aggregate of 635,000 common shares at no cost to the Company; (b) transfer to BKP at no cost to BKP an aggregate of 300,000 common shares; (c) transfer and convey up to 300,000 common shares at no cost as directed by CapBay pursuant to the provisions of paragraph 5(a) below; and (d) transfer and convey up to 165,000 common shares at no cost pursuant to the provisions of paragraph 5(b) below. 2. Plunkett Shares. Plunkett shall immediately: (a) relinquish and reconvey to the Company an aggregate of 1,515,000 common shares at no cost to the Company; (b) transfer to BKP at no cost to BKP an aggregate of 700,000 common shares; (c) transfer and convey up to 700,000 common shares at no cost as directed by CapBay pursuant to the provisions of paragraph 5(a) below; and (d) transfer and convey up to 385,000 common shares at no cost pursuant to the provisions of paragraph 5(b) below. 1 2 3. Management Committee. The Management Committee shall immediately be formed. The members of the Management Committee shall consist of Plunkett, Steven Kircher, a representative of BKP and a representative CBG. The Management Committee shall be empowered to administer the business of the Company. Each member of the Management Committee shall have one vote and the actions of the Management Committee shall be governed by a majority of the voting member. All contractual obligations undertaken by the Company, all modifications to any existing contractual obligations, all expenditures of funds, capital issuances and all material decisions with respect to the operation of the Company shall be subject to the prior approval of the Management Committee. Plunkett shall remain as President of the Company but shall not undertake any matters with respect to the Company subject to the control of the Management Committee without the prior consent of the Management Committee. The Management Committee shall coordinate the efforts of Steven Riccardelli ("Riccardelli") and Douglas Shannon ("Shannon") as such individuals are involved in the business of the Company and in particular in connection with the resolution of the immediate problems relating to the Mrs. Fields license. The Management Committee will immediately commence a search for a chief executive officer for the Company and at the direction of the Management Committee the individual as selected by the Management Committee will be promptly appointed as the Chief Executive Officer and shall thereafter exercise the authority of the Chief Executive Officer of the Company subject to the continuing authority of the Management Committee. Plunkett will continue to explore the possibilities of new licenses for the Company and will assist in marketing the products of the Company subject to the control of the Management Committee and subject to the Chief Executive Officer when appointed. 4. BKP Shares. As provided in paragraph 1(b) and paragraph 2(b) above, Plunkett and CBG shall immediately convey to BKP 700,000 and 300,000 shares respectively of the common stock of the Company at no cost to BKP. Such shares to be conveyed to BKP, together with 1,822,858 common shares of the Company currently held by BKP (an aggregate amount of 2,822,858 common shares) shall constitute the total share ownership in the Company held by BKP as of the date hereof. It is acknowledged that as of the date of this Memorandum, BKP holds no common shares or rights to common shares (including warrants) or promissory notes other than as set forth in this paragraph 4. 5. Additional Shares. (a) CapBay has agreed to endeavor to raise the sum of $500,000 for the immediate needs of the Company by offering to investors shares at the rate of $0.50 per common share of the Company. For each such share purchased by an investor as issued by the Company, such investor as designated by CapBay shall be entitled to receive an additional share of common stock of the Company at not cost to the investor. Each such additional share to be conveyed to the investor as designated by CapBay, shall be conveyed seven-tenths (0.7) by Plunkett and three-tenths (0.3) by CBG from the shares as described in paragraph 2(c) and paragraph 1(c) respectively above. The equity funds to raised by CapBay shall be raised pursuant to that certain letter agreement, dated August 1, 1995, ("Letter Agreement") a copy of which is attached to this Memorandum as Exhibit A. The 2 3 parties acknowledge that any inconsistency between the provisions of this Memorandum and the provisions of the Letter Agreement shall be governed by the provisions of this Memorandum. (b) CapBay, or designee of CapBay, shall in addition be entitled to receive, at no cost, an aggregate of 50,000 common shares of the Company and one share of common stock of the Company for each one dollar ($1) raised pursuant to the provisions of this paragraph 5 and the Letter Agreement up to a maximum of 500,000 shares. Each such share shall be conveyed seven-tenths (0.7) by Plunkett and three-tenths (0.3) by CBG from shares as described in paragraph 2(d) and paragraph 1(d), respectively, above. 6. Captions. The captions or paragraph headings used herein are for convenience only and not a part of this Memorandum. They shall not be referred to in construing or interpreting this Memorandum. 7. Necessary Document. Each of the parties does hereby agree to do any act and to execute any other or further documents necessary or convenient to the carrying out of the provisions of this Memorandum. 8. Kay & Merkle. The parties hereto acknowledge that certain principals of Kay & Merkle participate as partners of CBG and that Kay & Merkle has represented and may in the future represent one or more of the parties to this Memorandum and that therefore the potential for conflict of interest exists. Each of the parties acknowledges and agrees that Kay & Merkle has not represented any party in connection with the negotiation or preparation of this Memorandum. 9. Release of Claims. As a material consideration for this Memorandum, each of the parties hereto hereby releases and forever discharges each of the other parties (and its employees, officers, partners, and representatives) from any and all claims, causes of action, or liabilities of any kind whatsoever, known or unknown, arising out of or relating in any fashion to the Company, issuance of shares of the Company or any other matters as described in this Memorandum. Each of the parties waives the provisions of section 1542 of the Civil Code of California which states: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." 10. Inurement. This Memorandum shall be binding on and shall inure to the benefit of the parties hereto, their respective heirs, legal representatives, successors and assigns. 11. California Law. This Memorandum shall be governed by and be construed according to the laws of the State of California. 3 4 12. Severability. In the event that any provision of this Memorandum shall be found to be unenforceable or invalid, such provision shall be severed from the balance of this Memorandum and the balance of this Memorandum shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed and delivered as of the day and year first above written. Plunkett: CapBay: /s/ GREGORY B. PLUNKETT Capital Bay Group, a California - ------------------------------- corporation Gregory B. Plunkett CBG: By: /s/ STEVEN KIRCHER --------------------------------- CBG Partnership, a California Steven Kircher, President general partnership BKP: BKP Partners By: /s/ - ------------------------------- General Partner The Company: By: /s/ ROBERT PRYT ---------------------------------- Robert Pryt, C.E.O. Greg Plunkett, Inc. By: /s/ GREGORY B. PLUNKETT - ------------------------------- Gregory B. Plunkett, President 4 5 STATE OF CALIFORNIA ] ] ss. COUNTY OF SAN FRANCISCO ] _____________________________] On August 8, 1995 before me, Carlanne Foushee, personally appeared Gregory B. Plunkett, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity, and that by his/her/their signature(s) on the instrument, the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. CARLANNE FOUSHEE Comm. # 1034372 Notary Public- California San Francisco County My Comm. Expires July 31, 1998 /s/ CARLANNE FOUSHEE [SEAL] - ----------------------------- Carlanne Foushee STATE OF CALIFORNIA ] ] ss. COUNTY OF SAN FRANCISCO ] _____________________________] On August 8, 1995 before me, Carlanne Foushee, personally appeared W. Bruce Bercovich, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity, and that by his/her/their signature(s) on the instrument, the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. CARLANNE FOUSHEE Comm. # 1034372 Notary Public- California San Francisco County My Comm. Expires July 31, 1998 /s/ CARLANNE FOUSHEE [SEAL] - ----------------------------- Carlanne Foushee 5 6 STATE OF CALIFORNIA ] ] ss. COUNTY OF ________________ ] _____________________________] On August __, 1995 before me, __________________, personally appeared Steven Kircher, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity, and that by his/her/their signature(s) on the instrument, the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. [SEAL] - ----------------------------- STATE OF CALIFORNIA ] ] ss. COUNTY OF ________________ ] _____________________________] On August __, 1995 before me, __________________, personally appeared Robert Pryt, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity, and that by his/her/their signature(s) on the instrument, the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. [SEAL] - ----------------------------- 6 7 C.B. MANAGEMENT, L.L.C. 220-B Douglas Boulevard Suite 100 Roseville, California 95661 Telephone: (916) 782-5522 Facsimile: (916) 782-6779 August 1, 1995 Mr. Gregory B. Plunkett GREG PLUNKETT, INC. 600 California Street, Suite 1300 San Francisco, CA 91408 Mr. Bruce Bercovich CBG PARTNERSHIP 100 The Embarcadero, Penthouse San Francisco, CA 94105 Re: Greg Plunkett, Inc. Financing Dear Messers. Plunkett and Bercovich: The following sets forth the agreement of C.B. Management ("CBM"), an Arizona Limited Liability Corporation, to purchase newly issued common stock of Greg Plunkett, Inc., a California Corporation ("Company"). The terms and conditions under which CBM agrees to purchase such common stock of the Company are summarized as follows: 1. CBM has retained Capitol Bay Securities ("CBS") to raise up to $500,000 of additional capital on behalf of CBM through a private placement of securities (the "Offering"). CBM will use all net proceeds from the Offering to purchase newly issued common stock of the Company ("Common Stock") at $0.50 per share (the "Investment"). CBM will use its best efforts to complete the Investment within 30 days from the date hereof but will purchase a minimum of $75,000 of Common Stock by August 4, 1995 (the "Initial Investment"); 2. As a condition of the Investment, Gregory B. Plunkett ("Plunkett") and CBG Partnership ("CBG") will jointly convey, from their respective holdings, Company common stock to CBM or its designated assign or nominee as follows: a. Two (2) Company common shares for every dollar of the Investment at the time any portion of the Investment is consummated; b. Fifty Thousand (50,000) Company common shares upon completion of the Initial Investment for use of services to be performed by a law firm, designated by CBM; and Exhibit A 8 Mr. Gregory B. Plunkett Mr. W. Bruce Bercovich August 1, 1995 Page 2 c. One Company common share for every dollar of the Investment at the time any portion of the Investment is consummated as compensation for arranging the Investment. Company common stock conveyed to CBM under this provision will come 2/3 from Plunkett and 1/3 from CBG. 3. In connection with this issuance of shares to CBM and CBS, the Company acknowledges that it may not currently be in compliance with both the federal securities laws and the securities laws of the State of California, as a result of earlier issuance of its securities. Therefore, the Company agrees in a timely manner to take all steps necessary to bring itself into compliance with the relevant statutory provisions of which it is currently in violation, if any, and to provide to CBM and CBS written documentation that any and all disqualifications arising from such earlier violations have been waived. 4. As a further condition of the Investment, Plunkett agrees that, upon completion of the Initial Investment, all affairs of the Company will be managed exclusively by a management committee (the "Committee"). The Committee shall be comprised of two representatives of CBS, one representative of CBG, and Plunkett. The Committee shall be responsible for coordinating the day-to-day management of the Company and Steven Riccardelli, and Douglas Shannon, a consultant retained by the Company in conjunction with the Mrs. Fields project and all other Company projects. 5. It is agreed by the parties that the allocation of the Investment shall be determined by the Committee. The parties contemplate that the proceeds will be allocated by the Committee in the following order: a. Up to $25,000 shall be paid to Douglas Shannon and Steven Riccardelli as reimbursement for past wages and expenses; b. Up to $60,000 shall be paid to Mr. Fields, to satisfy past-due royalty payments and to amend the Mrs. Fields license provisions regarding minimum annual case sales to the Company's satisfaction; c. Up to $40,000 shall be paid to Haagen-Dazs and Van Der Bergh Foods, the specific allocation of which shall be determined by the Committee; d. Up to $15,000 shall be used to provide immediate working capital; and e. Up to $10,000 shall be paid to Plunkett for past wages and expenses. 9 Mr. Gregory B. Plunkett Mr. W. Bruce Bercovich August 1, 1995 Page 3 f. The remaining sums shall be used to make payment upon, and retire, any additional past due obligations of the Company or used for working capital. 6. It is further acknowledged by the parties that the Company, through the Committee, shall proceed with negotiations concerning a reverse merger or acquisition of the Company with a company whose shares are currently publicly traded. These negotiations shall be conducted in a prompt and expeditious manner, so as to permit the Company to begin listing its shares for public trading as soon as practicable. 7. The parties further agree that, within 14 days from receipt of the Initial Investment, the Company shall relocate its principal place of business as soon as practicable from its present location to 50 California Street, San Francisco, California. In connection with this arrangement, the Company shall pay rent to CBS, and a monthly management fee to CBS, in consideration for the preparation of financial statements and other financial reports not currently prepared by the Company, which may be necessary for the continued operation of the Company. The amount of the rental payments and management fees must be satisfactory to the Company prior to relocating its principal place of business as contemplated herein. 8. CBS agrees that prior to the Initial Investment, it will waive all current defaults under its $100,000 loan to the Company and will extend the maturity of such loan for a period of not less than 6 months from the date hereof. The principal amount of the loan, accrued interest to date, and the type and extent of security for the loan will be confirmed by CBS and the Company prior to the aforementioned restructuring. CBS and the Company agree to use their respective best efforts to convert CBS's loan into Company common stock as soon as practicable. If this letter accurately reflects the agreement of the parties involved, please sign below where indicated and return a copy to Capitol Bay Securities via facsimile at (916) 782-6779 and at 2200-B Douglas Blvd., Suite 100, Roseville, California 95661. Sincerely, /s/ STEPHEN C. KIRCHER Stephen C. Kircher President 10 Mr. Gregory B. Plunkett Mr. W. Bruce Bercovich August 1, 1995 Page 4 AGREED & ACCEPTED: /s/ W. BRUCE BERCOVICH - ---------------------------------- W. Bruce Bercovich as representative for CBG Partners Dated: August 1, 1995 ---------------------------- AGREED AND ACCEPTED: AGREED AND ACCEPTED: /s/ GREGORY B. PLUNKETT /s/ GREGORY B. PLUNKETT - ---------------------------------- ----------------------------------- Gregory B. Plunkett, President Gregory B. Plunkett, an individual Greg Plunkett, Inc. Dated: August 1, 1995 Dated: August 1, 1995 ---------------------------- ----------------------------- EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED FINANCIAL STATEMENTS OF THE COMPANY FOR THE NINE MONTH PERIOD ENDED OCTOBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB. 9-MOS JAN-31-1998 FEB-01-1997 OCT-31-1997 290 0 247 0 145 732 25 6 3,426 2,283 0 0 0 5,246 (5,703) 3,246 3,839 3,839 2,334 3,776 0 0 425 (361) 1 (362) 0 272 0 (90) (0.04) (0.04)
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