-----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, OUWse1BfmFN6+tFAISFlwLMRHw5UNoevYxPbFYNwAt+/XSZAT/tgYpgNdoKhwKQ1 IuGEGEe2YYU/1vFcj0su9w== 0000912057-96-015854.txt : 19960801 0000912057-96-015854.hdr.sgml : 19960801 ACCESSION NUMBER: 0000912057-96-015854 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960730 ITEM INFORMATION: Other events FILED AS OF DATE: 19960731 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNICO INC CENTRAL INDEX KEY: 0000797564 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-DIRECT MAIL ADVERTISING SERVICES [7331] IRS NUMBER: 731215433 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15303 FILM NUMBER: 96601419 BUSINESS ADDRESS: STREET 1: 1101 B SOVEREIGN ROW CITY: OKLAHOMA CITY STATE: OK ZIP: 73108 BUSINESS PHONE: 4058489511 MAIL ADDRESS: STREET 1: 1101 B SOVEREIGN ROW STREET 2: 1101 B SOVEREIGN ROW CITY: OKLAHOMA CITY STATE: OK ZIP: 73108 FORMER COMPANY: FORMER CONFORMED NAME: CMS ADVERTISING INC DATE OF NAME CHANGE: 19891107 8-K 1 FORM 8K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) For the Quarter Ended June 30, 1996 --------------------------------------------------------------- UNICO, Inc. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 0-15303 733-1215433 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 8380 Alban Road, Springfield, Virginia 22150 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (703) 644-0200 ------------------------------ ITEM 5. OTHER EVENTS The Company accepted the resignation of its Chief Financial Officer, Robert Pulliza, effective June 18, 1996. Subhash Ghei, the Company's Controller and Vice President of Finance and Administration since 1994 has been appointed as Mr. Pulliza's successor. On July 30, 1996, the Board of Directors of UNICO, Inc., approved a Loan Conversion Agreement and Addendum to Loan Conversion Agreement, dated July 12, 1996 and July 30, 1996, respectively, by and between UNICO, Inc., Renaissance Capital Partners, Ltd., a Texas Limited Partnership, and Duncan Smith Investments Co., a Texas Corporation. The Loan Conversion Agreement and Addendum to Loan Conversion Agreement are attached hereto and incorporated by reference herein as Exhibits 1 and 2, respectively. The net effect of these Agreements is to convert $1,757,569 of subordinated debt into $1,757,569 of convertible preferred stock. The Company has attached a full Balance Sheet and Statement of Operations as of July 30, 1996. These documents are incorporated by reference herein as Exhibits 3 through 5. The pro forma results of this conversion on the Company's Balance Sheet are as follows: June 30, 1996 Conversion June 30, 1996 ------------------------------------------------------------------------- Total Assets $6,192,837 N/A $6,192,837 Total Liabilities $5,627,255 ($1,757,569) $3,869,686 Shareholder Equity $ 565,579 $1,757,569 $2,323,148 EXHIBITS --------- 1 Loan Conversion Agreement dated July 12, 1996, effective July 30, 1996, by and between UNICO, Inc., Renaissance Capital Partners, Ltd. and Duncan Smith Investments Co. (incorporated by reference into item 5). 2 Addendum to Loan Conversion Agreement dated July 30, 1996 by and between UNICO, Inc., Renaissance Capital Partners, Ltd. and Duncan Smith Investments Co. (incorporated by reference into item 5 above). 3 Consolidated Balance Sheets, June 30, 1996 and December 31, 1995 (incorporated by reference into item 5 above). 4 Consolidated Statements of Operations for the Quarter Ended June 30, 1996 and for the Six Months Ended June 30, 1996 (incorporated by referenced into item 5 above). 5 Notes to Interim Consolidated Financial Statements (incorporated into Item 5 above). 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. UNICO, INC. ---------------------------------------- (Registrant) Date 7/30/96 By /s/ Gerard R. Bernier ---------------- -------------------------------------- Exhibit 1 LOAN CONVERSION AGREEMENT This loan conversion agreement the "Conversion Agreement" is entered into as of this 12th day of July, 1996 by and between UNICO, Inc., a Delaware corporation ("UNICO"), Renaissance Capital Partners, Ltd., a Texas limited partnership ("Renaissance") and Duncan Smith Investments Co., a Texas Corporation, ("Duncan Smith"); WITNESSETH: Whereas UNICO and its wholly owned subsidiaries and Renaissance are parties to a certain Convertible Debenture Loan Agreement dated December 31, 1991 (the "Loan Agreement") and a Registration Rights Agreement of even date therewith (the "Registration Rights Agreement"); and Whereas pursuant to the Loan Agreement UNICO has borrowed $1,250,000, in principal amount, and Renaissance is the owner and holder of a 12.5% Convertible Debenture issued December 31, 1991 in the face amount of $1,250,000 (the "Debenture") issued pursuant to the Loan Agreement and the aforesaid borrowing; and Whereas Renaissance is the holder and UNICO is the maker of eight 10% convertible notes designated numbers R1 through R8 in the aggregate principal sum of $150,000 (collectively, the "Renaissance Convertible Notes"); and Whereas unpaid interest has accrued under the Loan Agreement evidenced by the Debenture as of and through the date hereof in the amount of $163,058; and Whereas unpaid interest has accrued under the Renaissance Convertible Notes as of and through the date hereof in the amount of $17,599; and Whereas Duncan Smith is the holder and UNICO is the maker of eight 10% convertible notes designated numbers DS1 through DS8 in the aggregate principal sum of $150,000 (collectively, the "Duncan Smith Convertible Notes"); and Whereas unpaid interest has accrued under the Duncan Smith Convertible Notes as of and through the date hereof in the amount of $17,599; and Whereas the parties have agreed to convert, redeem and exchange the Debenture, the Renaissance Convertible Notes and the Duncan Smith Convertible Notes (the Renaissance Convertible Notes and the Duncan Smith Convertible Notes being collectively referred to herein as the "Convertible Notes") and the full amount of all principal and accrued interest thereon for UNICO's Series B Preferred Stock more particularly described herein; 2 Now therefore in consideration of the mutual promises herein contained and further valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Series B Preferred Stock By resolution duly adopted in accordance with its charter, bylaws and the General Corporation Law of the State of Delaware, UNICO has created and reserved up to 2,000,000 shares of Series B Preferred Stock designating therefor rights and privileges to the holder thereof identical in each and every respect to the rights and privileges of holders of shares of Common Stock except in the following respects: a. Voting Rights In respect to any questions coming before or to be voted upon by the stockholders of UNICO, each share of Series B Preferred Stock shall be entitled to four votes, whereas each share of Common Stock shall be entitled to one vote, and the Series B Preferred Stock and the Common Stock shall vote together as one class. 3 b. Dividends Holders of Series B Preferred Stock and the holders of Common Stock shall be entitled to receive, when and as declared by the Board of Directors, dividends (payable in cash, stock or otherwise) out of any funds legally available therefore, provided that neither the Series B Preferred Stock nor the Common Stock shall be preferred over the other as to any dividend or distribution except as provided in Subsection 1c hereof and except as so provided. Neither the holders of the Series B Preferred Stock nor the holders of the Common Stock shall be entitled to receive any dividend or distribution which is not identical in kind, record and payment date per share for each class except as provided in subsection 1c. The amount of any dividend or distribution to the holders of Series B Preferred Stock shall be four times that of the dividend or distribution to any holder of Common Stock. c. Liquidating Preference In the event of a voluntary or involuntary liquidation, dissolution or winding up of UNICO, the holders of Series B Preferred Stock shall be entitled to be paid the sum of $1.00 per share before any distribution or payment shall be made to the holder of any Common Stock. 4 d. Call, Redemption or Conversion Neither the Series B Preferred Stock nor the Common Stock into which it may be converted shall be subject to or enjoy any call or redemption rights by UNICO or the holders thereof except as follows: The holders of Series B Preferred Stock shall have the right, at the holders option, at any time, to convert all or in multiples of 250 shares any part of their holdings of Series B Preferred Stock into such number of fully paid and nonassessable shares of Common Stock $.01 par value of UNICO as shall be provided for herein. i. Conversion Ratio Each share of Series B Preferred Stock shall be convertible into four shares of UNICO's Common Stock, subject to adjustment at the time of conversion in accordance with the provisions hereof. ii. Adjustment to Conversion Ratio The parties acknowledge their intent to establish a preferred stock conversion ratio which yields one share of UNICO Common Stock for every $.25 of indebtedness under the Debenture and Convertible Notes converted, redeemed and 5 exchanged hereunder. If and whenever any additional shares of Common Stock are issued by UNICO for a net consideration per share less than $.25 per share then in each such case the conversion price shall be reduced to the net consideration received per share and the number of shares issuable to the holder of Series B Preferred Stock shall be proportionately increased. Further, in the event that UNICO shall at any time change as a whole by subdivision or combination in any manner or by the making of a stock dividend the number of shares of Common Stock then outstanding into a different number of shares, with or without par value, then thereafter the number of shares of Common Stock issuable upon the conversion of Series B Preferred Stock shall be increased or decreased as the case may be in direct proportion to the increase or decrease in the number of shares of Common Stock by reason of such change; provided however that no adjustment in the conversion ratio shall be made hereunder in either of the following cases: 1. A stock dividend on the Common Stock where the identical stock dividend in Common Stock was paid in the Series B Preferred Stock; and 2. A subdivision or combination of the Common Stock where the identical subdivision or combination was made on the Series B Preferred Stock. Further, in the event of any capital reorganization or reclassification of Common Stock of the corporation (other than a change in par value or from par value to no par value or from no par value to par value as a result of a subdivision or combination), or in case of the consolidation or merger of the corporation with or into any other corporation 6 (other than a consolidation or merger in which the corporation is the continuing corporation and which does not result in any change in the Common Stock), or of the sale of the properties and assets of the corporation as, or substantially as, an entity to any other corporation, each share of Series B Preferred Stock shall after such capital reorganization, reclassification of capital stock, consolidation, merger or sale entitle the holder to obtain the kind and number of shares of Common Stock or other securities or property of the corporation or of the corporation resulting from such consolidation or surviving such merger or to which such sale shall be made, as the case may be, to which such holder would have been entitled if he had held the Common Stock issuable upon conversion of such shares of Series B Preferred Stock immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger or sale. All calculations under this subsection shall be made to the nearest share or dollar as the case may be. iii. Automatic Conversion On August 1, 1998 or, if earlier, the date upon which a registration statement with respect to an offering of UNICO's securities is declared effective, (the "Automatic Conversion Date"), the Series B Preferred Stock shall thereupon be automatically converted into Common Stock in accordance with the conversion ratio above specified. From and after the Automatic Conversion Date, each outstanding certificate which prior to the Automatic Conversion Date represented Series B Preferred Stock shall be deemed for all corporate purposes to evidence the ownership of the whole 7 number of duly issued and outstanding shares of Common Stock into which the shares of Series B Preferred Stock have been so converted and upon surrender of such certificate the holder shall be entitled to receive in exchange therefore a certificate or certificates representing the whole number of shares of Common Stock into which the shares of Series B Preferred Stock theretofore represented by such certificate have been converted as aforesaid. iv. Certificates Upon Conversion As promptly as practicable after surrender for conversion of a certificate representing shares of Series B Preferred Stock, UNICO shall deliver to or upon written order of the holder of the share of Series B Preferred Stock so surrendered a certificate representing the number of fully paid and nonassessable shares of Common Stock into which such Series B Preferred Stock may be converted in accordance with the provisions hereof. With respect to conversions prior to the Automatic Conversion Date such conversion shall be deemed to be made at the close of business on the date that such Series B Preferred Stock shall have been surrendered for conversion so that the rights of the holder of such Series B Preferred Stock as a holder of Series B Preferred Stock shall cease at such time and the person or persons entitled to receive the shares of Common Stock upon the conversion of such Series B Preferred Stock shall be treated for all purposes as having become the record holder or holders of such shares of Common Stock at such time. 8 v. Registration Rights Upon conversion of the Series B Preferred Stock into Common Stock, Renaissance shall have with respect to such Common Stock as is issued in exchange for UNICO's indebtedness under the Loan Agreement and Debenture, the demand and piggyback registration rights provided for in the Registration Rights Agreement. Duncan Smith and Renaissance shall have with respect to such Common Stock as is issued in exchange for UNICO's indebtedness under the Convertible Notes, the demand registration rights provided for in the Convertible Notes. 2. CONVERSION REDEMPTION AND EXCHANGE Contemporaneous with the execution hereof Renaissance and UNICO agree to convert, redeem and exchange 1,580,657 shares of UNICO's Series B Preferred Stock for all indebtedness created pursuant to and evidenced by the Loan Agreement, the Debenture and the Renaissance Convertible Notes and UNICO, as borrower, and its subsidiaries, as guarantors, are released of any further liability thereunder. Contemporaneous with the execution hereof Duncan Smith and UNICO agree to convert, redeem and exchange 167,599 shares of UNICO's Series B Preferred Stock for all indebtedness created pursuant to and 9 evidenced by the Duncan Smith Convertible Notes and UNICO, as borrower, and its subsidiaries, as guarantors, are released of any further liability thereunder. 3. NECESSARY DOCUMENTS The parties agree to execute such documents and certificates as may be reasonable and necessary to effectuate the purposes of this agreement. 4. CONTEMPORANEOUS BANK CLOSING The parties acknowledge that the effectiveness of this agreement is contingent upon the contemporaneous closing of a refinancing of UNICO's indebtedness to its primary lender Bank First extending the payment terms of its existing indebtedness on terms agreeable to the parties. 5. MISCELLANEOUS a. This Conversion Agreement contains the entire agreement between the parties and supersedes all prior agreements and understandings of any relating to the subject matter hereof and thereof. 10 b. Sections headings are for the convenience of reference only and except as a means of identification of reference shall in no way effect the interpretation of this Conversion Agreement. 6. MULTIPLE COUNTERPARTS This Conversion Agreement may be executed in any number of counterparts all of which taken together shall constitute one and the same agreement and any of the parties hereto may execute this Conversion Agreement by signing any such counterpart. In witness whereof the parties have executed this Conversion Agreement as of the date and year first above written. UNICO, Inc. Renaissance Capital Partners, Ltd. By: /s/ Gerard R. Bernier By: /s/ Russell Cleveland ------------------------------- -------------------------------- Duncan Smith Investments Co. By: /s/ Goodhue Smith -------------------------------- 11 EX-2 2 EXHIBIT 2 ADDENDUM TO LOAN ADDENDUM TO LOAN CONVERSION AGREEMENT THIS ADDENDUM to a certain Loan Conversion Agreement dated July 12, 1996, by and between UNICO, Inc., a Delaware corporation ("UNICO"), Renaissance Capital Partners, Ltd., a Texas Limited Partnership ("Renaissance"), and Duncan Smith Investments Co., a Texas Corporation ("Duncan Smith")(the "Conversation Agreement") is entered into as of the 30th day of July 1996, by and between the aforesaid parties for the purpose of amending in the matter hereinafter set forth the Conversation Agreement: WITNESSETH: WHEREAS, paragraph 4 of the Conversion Agreement required the contemporaneous closing of a refinancing of UNICO's indebtedness to its primary lender, BancFirst extending the payment terms of its existing indebtedness on terms agreeable to the parties; and WHEREAS, BancFirst has issued a commitment letter dated July 24, 1996 (the "Commitment Letter"), the terms of which are sufficiently agreeable to the parties so as to permit a conversion described in the Conversion Agreement to proceed; and WHEREAS, the parties desire to supplement and amend the Conversion Agreement in the manner hereinafter set forth; 1 NOW THEREFORE, in consideration for the mutual promises herein contained and further valuable consideration, receipt and sufficiency is hereby acknowledged, the parties hereto agree to amend and supplement the Conversion Agreement in the manner hereinafter set forth: 1. The parties hereby waive the requirement of contemporaneous closing of the refinance set forth in paragraph 4 of the Conversion Agreement and agree that the exchange and conversion provided for in the Conversion Agreement shall be effective as of July 30, 1996 (the "Effective Date"). As the Company has heretofore issued Series B Preferred Stock, reference in the Conversion Agreement to Series B Preferred Stock is amended to refer to Series C Preferred Stock 2. In accordance with the revised Effective Date of the conversion, the unpaid interest accrued under the Loan Agreement evidenced by the Debenture as of and through the Effective Date is the sum of $170,871, the unpaid interest which has accrued under the Renaissance Convertible Notes as of and through the Effective Date is the sum of $18,349; and the unpaid interest which has accrued under the Duncan Smith Convertible Notes as of and through the Effective Date is the sum of $18,349. Accordingly, the share of Series B (now Series C) Preferred Stock recited in Paragraph 2 of the Conversion Agreement to be issued to Renaissance and to Duncan Smith are revised to be 1,589,220 and 168,349,respectively. 2 3. In connection with the refinancing of the Company's indebtedness to BancFirst, Renaissance agrees to loan the Company the sum of $50,000 to satisfy the Bank's conditions set forth in paragraph 5. of its Commitment Letter. Such loan shall be evidenced by a promissory note providing a maturity date of December 15, 1998, interest at the rate of 9.25% per annum, payable monthly provided payments to BancFirst are current and shall be guaranteed by United Coupon Corporation ("UCC") and secured by UCC's accounts receivable, subordinate to BancFirst. 4. Except as set forth herein, the terms and conditions of the Conversion Agreement shall remain as originally stated therein, all capitalized terms not herein defined shall have the meaning described in the Conversion Agreement. UNICO, Inc. Renaissance Capital Partners, Ltd. By: /s/ Gerard R. Bernier By: /s/ Russell Cleveland -------------------------- ------------------------------ Duncan Smith Investments Co. By: /s/ Goodhue Smith ------------------------------ EX-3 3 EXHIBIT 3 PART 1 FINANCIAL INFORMATION EXHIBIT 3 PART 1. FINANCIAL INFORMATION UNICO, Inc. CONSOLIDATED BALANCE SHEETS 1 of 2 ------ June 30, December 31 ASSETS 1996 1995 ---------- ----------- CURRENT: Cash and cash equivalents $234,097 $300,821 Accounts Receivable: Trade (net of allowance for uncollectible accounts of $882,820 and $377,793) 539,962 771,495 Inventory 188,969 254,505 Notes receivable 94,615 189,707 Notes receivable-Stockholders 280,000 280,000 Prepaid expenses 100,845 171,203 Accrued revenues 87,602 0 ---------- ---------- Total current assets 1,526,091 1,967,731 PROPERTY: Furniture, fixtures & equipment 4,415,402 4,285,322 Leasehold improvements 161,593 152,470 Less accumulated depreciation (1,779,622) (1,552,175) ---------- ---------- Property, net 2,797,373 2,885,617 GOODWILL (net of amortization of $342,561 and $317,309) 1,682,461 1,707,713 DEPOSITS AND OTHER 186,912 200,619 ---------- ---------- TOTAL $6,192,837 $6,761,680 ---------- ---------- ---------- ---------- The accompanying notes are an integral part of the consolidated financial statements. UNICO, Inc. CONSOLIDATED BALANCE SHEETS 2 of 2 ------ June 30, December 31 LIABILITIES AND STOCKHOLDER'S EQUITY 1996 1995 ---------- ----------- CURRENT LIABILITIES: Accounts payable $1,352,218 $1,258,768 Accrued liabilities 469,893 242,844 Notes payable, current portion 1,059,785 781,715 Deferred revenue 110,921 ---------- ---------- Total current liabilities 2,881,896 2,394,248 LONG-TERM LIABILITIES Notes payable, net of current portion 805,021 Convertible debenture-Affiliate 1,400,000 1,386,750 Subordinated debenture 1,010,000 996,750 Other 335,359 91,933 ---------- ---------- Total long-term liabilities 2,745,359 3,280,454 ---------- ---------- Total liabilities 5,627,255 5,874,702 REDEEMABLE PREFERRED STOCK: Preferred stock - $.01 par value: 5,000,000 shares authorized; Series A and B Redeemable Preferred stock - 280 shares issued and outstanding (Redemption value of $280,000) 3 3 COMMITMENTS AND CONTINGENCIES (Note 2) STOCKHOLDERS' EQUITY: Preferred stock - $.01 par value; 5,000,000 shares authorized; Series A Convertible Preferred Stock- 0 shares issued and outstanding -- -- Common stock-$.01 par value; 20,000,000 shares authorized; 8,158,095 shares outstanding 78,830 78,830 Additional paid in capital 4,974,034 4,974,034 Accumulated deficit (4,487,285) (3,965,889) ---------- ---------- Total stockholders' equity 565,579 1,086,975 ---------- ---------- TOTAL $6,192,837 $6,761,680 ---------- ---------- ---------- ---------- The accompanying notes are an integral part of the consolidated financial statements. EX-4 4 EXHIBIT 4 CONSOLIDATED STATEMENTS OF OPERATION EXHIBIT 4 UNICO, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1996 AND 1995 1996 1995 ---- ---- REVENUES: Coupon and advertising sales, net of discounts and allowances $1,698,817 $3,337,200 Franchise fees 28,290 28,150 Other 6,331 166,549 ---------- ---------- TOTAL REVENUES 1,733,438 3,531,899 EXPENSES: Production 1,120,833 2,470,180 General and administrative 640,554 709,770 Franchise development 88,395 96,949 Interest expense-Affiliate 15,000 39,384 Interest expense-Other 79,826 65,356 ---------- ---------- TOTAL EXPENSES 1,944,608 3,381,639 ---------- ---------- NET INCOME (LOSS) BEFORE INCOME TAXES (211,170) 150,260 PROVISIONS FOR INCOME TAX 9,000 6,741 ---------- ---------- NET INCOME (LOSS) $ (220,170) $ 143,519 ---------- ---------- ---------- ---------- WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 8,158,095 7,728,342 NET INCOME (LOSS) PER COMMON SHARE $ (0.027) $ 0.02 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 1996 1995 ---- ---- REVENUES: Coupon and advertising sales, net of discounts and allowances $3,941,510 $6,384,074 Franchise fees 120,423 28,150 Other 76,904 259,518 ---------- ---------- TOTAL REVENUES 4,138,837 6,671,742 EXPENSES: Production 2,488,032 4,568,344 General and administrative 1,260,072 1,566,066 Franchise development 177,397 195,277 Interest expense-Affiliate 58,563 77,912 Interest expense-Other 138,502 107,061 Restructuring cost 520,000 ---------- ---------- TOTAL EXPENSES 4,642,566 6,514,660 ---------- ---------- NET INCOME (LOSS) BEFORE INCOME TAXES (503,729) 157,082 PROVISIONS FOR INCOME TAX 17,667 9,470 ---------- ---------- NET INCOME (LOSS) $ (521,396) $ 147,612 ---------- ---------- ---------- ---------- WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 8,158,095 7,557,533 NET INCOME (LOSS) PER COMMON SHARE $ (0.064) $ 0.02 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. EX-5 5 EXHIBIT 5 NOTES TO INTERMIN UNICO, INC. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1996 AND 1995 1. BASIS OF PRESENTATION The interim consolidated financial statements at June 30, 1996 and for the three month and six month periods ended June 30, 1996 and 1995 are unaudited, but include all adjustments which the Company considers necessary for a fair presentation. The December 31, 1995 balance sheet was derived from the Company's audited financial statements. The accompanying unaudited financial statements are for the interim period and do not include all disclosures normally provided in annual financial statements and should be read in conjunction with the Company's audited financial statements. The accompanying unaudited interim financial statements for the six month period ended June 30, 1996 are not necessarily indicative of the results which can be expected for the entire year. 2. COMMITMENTS & CONTINGENCIES Prior to 1995, the Florida Department of Revenue issued a Notice of Intent to levy additional sales taxes with penalty and interest charges totaling approximately $480,000 against the Company's subsidiary, Cal-Central Marketing Corporation. A liability for a portion of this matter was recorded by Cal-Central and was included in other long-term liabilities in the financial statements at December 31, 1994. Subsequent to December 31, 1995, written settlement was reached with Florida authorities whereby Cal-Central agreed to a payout of $35,000, payable at $5,000 per quarter, over seven quarters beginning in June 1996. The agreed to amount is recorded as a liability at December 31, 1995 and June 30, 1996. The Company is exposed to various other legal matters encountered in the normal course of business. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company's consolidated financial position or results of operations. 3. INCOME TAXES The Company accounts for income taxes in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), deferred tax assets or liabilities are computed on the difference between the financial statement and income tax bases of assets and liabilities ("temporary differences") using the enacted marginal tax rate. Deferred income tax expenses or benefits are based on the changes in the deferred tax asset or liability from period to period. Management has determined that it is not more likely than not the Company will be able to realize all the tax benefits from available net operating loss carryforwards and has, therefore, provided a valuation allowance of an equal amount. The deferred income tax expense of $17,667 for the six month period and the $9,000 for the quarter ended June 30, 1996 reflected in the respective Statement of Operations represents state income taxes payable by the Company's subsidiary, United Coupon Corporation on profits that are not impacted by the net operating loss carryforwards. 4. SUBSIDIARY RESTRUCTURING The Company acquired Cal-Central Marketing Corporation as a wholly owned subsidiary on October 27, 1993. Operating profitability and cash flow for the subsidiary have been below management's expectations and anticipated potential since the acquisition. During the third quarter of 1995, management determined that it was in the best interest of the shareholders and the Company to close the Fort Lauderdale, Florida facility and consolidate all art and printing functions for Cal-Central into the Company's newly expanded facility in Springfield, Virginia. This transition was accomplished during December 1995, and a restructuring charge of $772,433 was recorded during 1995 to reflect initial costs associated with the restructuring. During the quarter ended March 31, 1996, the Company further evaluated the collectibility of remaining accounts receivable of Cal-Central, including receivables related to advertising commitments completed during the period. As a result of this review, the company recorded an additional accounts receivable impairment of $520,000 related to the restructuring of Cal-Central. Remaining accounts receivable of Cal-Central, deemed to be collectible following this additional impairment allowance, is $107,413. 5. CORPORATE RESTRUCTURING On March 4, 1996, the Company entered into a Third Restated and Amended Loan Agreement with BancFirst which provided for the renewal of the Company's existing term and revolving credit facilities until January 31, 1997. In consideration of the plan to consolidate the corporate office functions from Oklahoma City to the expanded offices of the Company in Springfield, Virginia, the Company's Chairman, Chief Executive Officer and President, W. Douglas Frans, and its Chief Financial Officer, Ted W. Strickland, proposed to resign their positions following completion of specific key objectives encompassing the bank restructuring and annual audit. The Board of Directors approved this plan on March 22, 1996, and appointed Gerard R. Bernier, current Chief Executive Officer and President of United Coupon Corporation, and Robert F. Pulliza, former Executive Vice President and Chief Operating Officer of United Coupon Corporation, as their respective successors. This transition of corporate authority and relocation of corporate headquarters became effective March 31, 1996. -----END PRIVACY-ENHANCED MESSAGE-----