-----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, BWL7myhOnQ8iivzVGKBG6j5V/v4iIZBn+cl6t9JFuNxDHuWnn4zEVO+FiQDr8rH/ XIzIJR/n033y6w7iqTXRiA== 0000943440-97-000070.txt : 19971016 0000943440-97-000070.hdr.sgml : 19971016 ACCESSION NUMBER: 0000943440-97-000070 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19971015 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JETBORNE INTERNATIONAL INC CENTRAL INDEX KEY: 0000811786 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MACHINERY, EQUIPMENT & SUPPLIES [5080] IRS NUMBER: 592768257 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-16039 FILM NUMBER: 97695620 BUSINESS ADDRESS: STREET 1: 4010 NW 36TH AVE CITY: MIAMI STATE: FL ZIP: 33142 BUSINESS PHONE: 3056256060 MAIL ADDRESS: STREET 1: 4010 NW 36 AVE CITY: MIAMI STATE: FL ZIP: 33142 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended April 30, 1995 0-16039 (Commission File Number) JETBORNE INTERNATIONAL, INC. (Exact name of Registrant as specified in its charter) Delaware 59-2768257 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 4010 Northwest 36th Avenue Miami, Florida 33142 (Address of Principal Executive Offices) (305) 635-6060 (Registrant's Telephone Number) None (Former Name, Former Address and former Fiscal Year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act None None (Title of Each Class) (Name of Each Exchange on which Registered) Securities registered pursuant to Section 12(g) of the Act Common Stock, None par value $.01 per share (Name of Each Exchange (Title of Each Class) on which Registered) 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 Registrant has not been able to file its Annual Report for the year ended April 30, 1995 despite a filing due date of July 28, 1995 and a prior expired extension on Form 12(b)(25) until the date of this filing. All other periodic reports due during the period of Annual Report delinquency have also not been filed. The Registrant is unable to determine any aggregate market value of the voting stock held by non-affiliates of the Registrant as of September 1, 1997. The Company emerged from Chapter 11 bankruptcy on September 17, 1993. There has been no market for the Registrant's voting stock since approximately the Fourth Quarter of 1991. See Item 5. herein. The number of shares of Common Stock, $.01 par value, of the Registrant issued as of September 1, 1997, was 11,822,280 shares. PART I ITEM 1. BUSINESS Introduction Jetborne International, Inc. (the "Company") was incorporated in the State of Delaware on January 30, 1987. The Company was organized for the purpose of capital formation through an initial public offering to develop and expand the business of Jetborne, Inc., a Florida corporation incorporated on or about April 24, 1980 and generally engaged in the sale of aircraft parts and aircraft components. On February 2, 1987, shortly after the Company's inception, the stockholders of Jetborne, Inc. transferred all of its issued and outstanding common stock to the Registrant, Jetborne International, Inc., in exchange for 3,123,000 shares of the Company's Common Stock. In addition, Jetborne, Inc. transferred all of its ownership interest in its subsidiary companies to the Company. The Company owned no other assets at its inception and intended to operate the business of Jetborne, Inc. and its subsidiaries with net proceeds to be raised from an initial public offering of its own securities. On May 20, 1987, the Company sold 1,150,000 shares of its Common Stock through a public offering for net proceeds to the Company of approximately $3,328,000. Prior to the public offering, the Company issued 3,150,000 shares of Common Stock to five stockholders, including the Company's management and directors, in exchange for stock in its subsidiaries and nominal cash. On December 10, 1991, the Company was placed in an involuntary, Chapter 11 Federal Bankruptcy proceeding, and on December 16, 1991, Jetborne, Inc., the Company's only significant remaining subsidiary at the time, filed a voluntary petition in the same Bankruptcy Court. After the Company converted the original proceeding from involuntary to a voluntary bankruptcy, the bankruptcy cases were consolidated. The Company emerged from bankruptcy protection on September 17, 1993 by entry of the Bankruptcy Court's order confirming its third amended plan of reorganization. The Company continues to be engaged in the sale of aircraft parts from inventory and through brokerage and consignment arrangements. On occasion, the Company also engages in purchase and sale transactions as an agent for the purchaser or the seller. From late 1991 until September 17, 1993, the Company operated as Debtor-In-Possession under Chapter 11 Bankruptcy protection, Case No. 91-16169-BKC-AJC, U.S. Bankruptcy Court Southern District of Florida. See Item 3., "Legal Proceedings" and Item 8., "Financial Statements". Background The Company was originally formed as a holding company for the purpose of consolidating operating subsidiaries and undertaking and completing a public offering of its securities to finance the subsequent commercial activities of its subsidiaries. The Company was frequently unable to timely file its periodic reports under the Securities and Exchange Act of 1934 and has never complied with the Proxy and Annual Report requirements of Rule 14 promulgated under The Securities Act of 1933. As a result, the Company's Common Stock was delisted from the NASDAQ Market Automated Quotation System on October 4, 1991 and can now only be traded, if traded, Over-The-Counter, Bulletin Board. To the Company's knowledge and belief, at September 1, 1997, there are no securities dealers making a market in its Common Stock. The Company continues to be engaged in purchasing aircraft parts for resale and acts as an intermediary for parts not contained in its inventory. In general the Company maintains a declining inventory of parts for various commercial jet aircraft. Much of the Company's revenues are derived from the Company's sale or "brokerage" of aircraft parts - transactions in which the Company seeks and purchases parts for cash in response to specific orders from credit customers. The Company deals in an array of airframe and accessory parts, including hydraulic, pneumatic, electronic and electrical systems, navigation and communication avionics, instrumentation and engines. It's inventory includes parts purchased and then overhauled by contract repair stations for resale. Most of the Company's inventory has been acquired in bulk from large fleet operators. Aircraft parts received are inspected, repaired or overhauled, as necessary, and recertified to Federal Aviation Administration standards. Throughout the receipt-to-resale process the parts and their current status are recorded and catalogued in the Company's computerized inventory control system. Resale prices are determined considering the original manufacturer's list price, the parts' aftermarket value, the customer's required delivery date, the level of availability of the particular part in the aftermarket and the specific relationship that the purchasing customer has with the Company. The Company participates in the Airline Inventory Redistribution System ("AIRS") which provides a comprehensive computerized listing of aircraft parts and material available for sale in the marketplace. Numbered among AIRS subscribers are most major commercial airlines and many parts vendors and suppliers. The System is accessible through the Aeronautical Radio, Inc. or Societé International De Telecommunications Aeronautique networks for domestic and foreign transactions respectively. The Company also subscribes to the Inventory Locator Services, Inc. ("ILS") a computerized aircraft parts availability system. In the Company's view, AIRS is primarily used by aircraft operators to purchase parts and ILS is primarily used by aircraft part vendors and suppliers. The Company also occasionally undertakes an exchange transaction in which it acquires one or more items specifically for the purpose of exchanging specific parts with an airline or other aircraft operator. In these transactions, the Company supplies a replacement part for its customer's unusable part which, in turn, is received and repaired at the customer's cost by an appropriate repair station. The repaired part is then included in general inventory with the overall transaction being supported by an exchange fee paid to the Company by the exchanging customer. Competition The Company's aircraft parts business competes with other independent companies, one or more unaffiliated companies operated by former officers and directors of the Company, as well as directly with air fleet operators and parts manufacturers. Customers for aircraft parts have complete access through computer-generated inventory catalogues to a broad array of competing suppliers, many of which have far greater financial resources; larger and more varied inventories and far more elaborate source networks than the Company. The Company's effectiveness in this highly competitive market depends upon its ability to identify, locate and purchase parts and equipment at favorable prices; to assure that the parts and equipment meet stringent industry quality standards; to deliver promptly and to price competitively. In spite of significant persistent difficulties, the Company continues to believe that it can compete against larger companies offering similar services by emphasizing and focusing on a capacity to rapidly deliver reliable parts and services at favorable prices. See Item 7., Management's Discussion and Analysis of Financial Condition and Results of Operations. Many of the Company's competitors however have far greater financial and personnel resources and have been operating over a longer period of time without the Company's prior Bankruptcy protection and therefore have competitive advantage over the Company. Government Regulation Most of the Company's aviation activities and materials are subject to licensing, certification, and other requirements imposed by the FAA, the U.S. Department of Commerce and regulatory agencies in foreign countries. Inspection, maintenance and repair procedures for the various types of equipment are prescribed by the FAA and can be performed only by certified repair facilities ("station"), certified repairmen or, under certain conditions, manufacturers. Normally this is accomplished in the context of quarterly and annual inspections. The Company is not a FAA station but rather uses various FAA stations as needed. The Company believes that it has all otherwise required aviation related licenses and certifications necessary to the conduct of its current business. The unanticipated loss of any such license or certification would have had a material adverse effect on the Company's business. The operations of the Company are also subject to regulation, other than aviation regulation, normally incident generally to business operations, including occupational safety and health and environmental disposal regulations. Previous subsidiaries of the Company were allegedly in violation of the Metro Dade County Environmental Protection Ordinance and the Florida Administrative Code with regard to these areas. The Company has certain potential liabilities for these alleged violations. Any environmental proceedings regarding the operation of those previous subsidiary companies may have an adverse liability effect upon the Company, directly and through prior agreements as previously reported. The Company was a number of years ago notified by the Dade County Department of Environmental Resource Management ("DERM") of an alleged environmental violation. The Company long ago submitted a correction plan and remains committed to cleanup at an estimated remaining cost of approximately $40,000 if its plan is ultimately accepted by DERM. The Company continues to await, now years later, acceptance of its plan. Employees The Company currently (September 1, 1997) employs approximately five (5) full-time employees. The Company's only officer devotes approximately ten (10%) percent of his time to the Company's affairs. ITEM 2. PROPERTIES The Company's principal offices are located at 4010 N.W. 36th Avenue, Miami, Florida 33142. The Company has been leasing offices and facilities from its former subsidiary, Aircraft Modular Products, Inc. ("AMP"). The Company occupies its premises pursuant to a triple net lease at an annual aggregate rental of $72,000. In addition to monthly rental, the lessee is responsible for its pro-rata share of taxes, insurance and utilities, all services provided to the premises and repairs to the interior of the buildings (including but not limited to all windows, doors, electrical, heating, plumbing and air conditioning systems). In the Company's view, the terms of its leasehold were very competitive with comparable facilities in the local area. The Company's telephone number at that location is (305) 635-6060. The Company leases approximately 18,000 square feet, consisting of 6,000 square feet of offices and 12,000 square feet of warehousing. The lease expires on September 30, 1997. The Company is currently seeking relocation space in the same general area. ITEM 3. LEGAL PROCEEDINGS The Company was a party to the following material legal proceedings in this reporting period (year ended April 30, 1995): 1. United States of America vs. Jetborne International, Inc., Case No. 91-199-CR-MARENO, United States District Court for the Southern District of Florida. This was a previously reported criminal action in which a judgment reflecting a concluded settlement agreement was entered against Jetborne, Inc. on December 3, 1992. During the third week of March, 1994, however the Company was informed by the Export Controls Division of the U.S. Department of State that it is debarred (prohibited) from certain export activities by applicable federal statute as a result of its entry into the settlement agreement. The Company intends to seek reinstatement as an Export Control licensee at some undetermined point in the future. Preparation and subsequent consideration of any such petition and application once prepared and filed will require a further significant period of time before determination of reinstatement is made. 2. Department of Environmental Resources Management ("DERM") The Company was notified of environmental violations on the Company's premises by Dade County Department of Environmental Resources Management ("DERM"). The Company has certain potential liabilities for these alleged violation areas. Any environmental proceedings regarding the operation of the Company's previous subsidiaries will have an adverse liability effect upon the Company directly and through prior agreement in the case. The alleged violations stem from the discharge of waste waters containing metals, hydrocarbons, oil and grease to the ground and groundwaters in the vicinity of the Company's facilities by prior tenants, including AMP's predecessor. The Dade County Department of Environmental Resources Management ("DERM") ordered a hook-up into the city sewer system, abandonment of an underground storage tank and removal of allegedly contaminated soil and sludge. Although the owner of the property (then, Allen Blattner, the Company's former president and principal shareholder, later, Finstock Investments, Ltd., the Company's principal stockholder, and now, following mortgage foreclosure, and subsequent acquisition, AMP) is theoretically responsible for the environmental cleanup of pre-existing conditions, the Company nevertheless hired and partially paid for environmental firms to assist it in remedying the alleged violations. Remedial plans were developed and approved by DERM and the sewer hook-up was completed. A certificate of completion of construction was submitted. A remedial plan for clean-up of violations, estimated at a remaining cost of approximately $40,000, was also submitted to DERM for approval which is, now years later, still pending. See Item 13., "Certain Relationships and Related Transactions". See Item 1., "Business - Government Regulation". 3. Jetborne International, Inc. vs. Allen Blattner, et al The Company holds a Final Judgment against its former officer and director, Allen Blattner in the original principal amount of $4,512,600. The Company also holds a Final Judgment against its former officer and director Michael Levkovitz in the original principal amount of $514,212. As in the case of Allen Blattner, the company considers Michael Levkovitz to be uncollectable. 4. Jetborne International, Inc. vs. Deutsche Lufthansa Aktiengesellschaft, Case No. 91-16169-BKC-AJC. During April, 1992, Lufthansa canceled a consignment agreement due to the Company's bankruptcy filing the previous December. The Company contested the termination and in September, 1993, the consignment agreement was renewed by an Addendum to the original agreement. As a condition of the Addendum, Jetborne agreed to a payment plan regarding the pre-petition debt, paid $20,000 to reduce that debt and placed $10,000 on deposit. In addition, in September, 1993 the Company brought Lufthansa post-petition debt current through May, 1993. The Company then became concerned about non-performance on the part of Lufthansa and withheld further payment pending receipt of additional consignment inventory as set out in the amended agreement. Lufthansa once again notified the Company in November, 1993 that the agreement was to be terminated, this time for non-payment. As a direct consequence of that termination Jetborne filed suit against Lufthansa in the Bankruptcy Court on three counts: (1) Breach of the Consignment Agreement; (2) Willful violation of the automatic stay; and (3) Breach of the Addendum to the Consignment Agreement. On January 9, 1996, the Company entered into an agreement with Lufthansa in settlement of the on-going litigation. Under the settlement agreement, the consignment agreement and its modifications were terminated. The Company agreed to pay a total of $120,000 to Lufthansa by January 20, 1997 pursuant to an agreed schedule in exchange for assignment by Lufthansa to the Company of a bankruptcy court claim against Jetborne, Inc. in the amount of $80,180. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. The Company has never distributed an annual report to shareholders or filed or distributed proxy statement materials in connection with an Annual Meeting. Since completion of its initial public offering, the Company has never held an Annual Meeting (through September 1, 1997). ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a)(1)(i) Market Information. The Company's Common Stock was first offered to the public on May 20, 1987, at a price of $3.75 per share. Trading in the Common Stock began on the National Market Quotation System (NASDAQ) shortly thereafter. On October 4, 1991, due to the Company's extended record of delinquency with regard to periodic filings required under the Securities & Exchange Act of 1934 and its continuing failure to comply with the proxy and shareholder disclosure requirements of Rule 14 promulgated under the Securities Act of 1933, the Company's Common Stock was delisted from quotation on the NASDAQ system. Since delisting, there has been (and now is) no established public trading market for the Company's Common Stock. To the Registrant's knowledge and belief, there are no broker/dealers making a market in its securities at present (September 1, 1997). (a)(1)(iii) The following table sets forth the range of bid and asked prices for the Common Stock on the Over-The-Counter Market for the periods indicated, as reported by the National Quotation Bureau, Inc. The figures shown represent inter-dealer quotations without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. COMMON STOCK
Period Bid Price Asked Price High Low High Low First Quarter, 1991 $0.75 $0.31 $0.88 $0.44 Second Quarter, 1991 $0.75 $0.38 $0.81 $0.38 Third Quarter, 1991 $0.44 $0.13 $0.56 $0.13 Fourth Quarter, 1991 $0.19 $0.19 $0.28 $0.28 First Quarter, 1992 No Market No Market Second Quarter, 1992 No Market No Market Third Quarter, 1992 No Market No Market Fourth Quarter, 1992 No Market No Market First Quarter, 1993 No Market No Market Second Quarter, 1993 No Market No Market Third Quarter, 1993 No Market No Market Fourth Quarter, 1993 No Market No Market First Quarter, 1994 No Market No Market Second Quarter, 1994 No Market No Market Third Quarter, 1994 No Market No market Fourth Quarter, 1994 No Market No market First Quarter, 1995 No Market No Market
Continued.. COMMON STOCK
Period Bid Price Asked Price High Low High Low Second Quarter, 1995 No Market No Market Third Quarter, 1995 No Market No market Fourth Quarter, 1995 No Market No market First Quarter, 1996 No Market No market Second Quarter, 1996 No Market No Market Third Quarter, 1996 No Market No market Fourth Quarter, 1996 No Market No market First Quarter, 1997 No Market No market Second Quarter, 1997 No Market No Market July 1, 1997 through No Market No Market September 1, 1997
(b) Holders. As of September 1, 1997, the approximate number of record holders of Common Stock of the Registrant was 250. This number does not include individual stockholders whose shares are held in brokerage name. See Item 8., "Financial Statements". (c) Dividends. Registrant has paid no dividends since inception and does not now anticipate payment of dividends at any time in the future. See Item 7., Management's Discussion and Analysis of Financial Condition and Results of Operations. ITEM 6. SELECTED FINANCIAL DATA Set forth below is the historical selected financial data with respect to the Company for the years ended April 30, 1991 through 1995, adjusted for the Company's sale of its subsidiary Aircraft Modular Products, Inc. in December, 1990 and of the assets of its former subsidiary, Ablam, Inc., in November, 1990, the shutdown of its former subsidiary, Jetborne, U.K., Ltd. during January, 1992 and the discontinued operations of its former subsidiary, Advanced Aero Hydraulics, Inc. during July, 1992: Summary Income Statement: As of As of As of As of As of 04/30/95 04/30/94 04/30/93 04/30/92 04/30/91 (3) Net Sales $1,125,279 $1,755,763 $ 798,008 $1,109,431 $1,682,481 Net Income(Loss) ($ 701,034) $ 530,691 ($ 164,154) ($ 953,799) $1,235,750 Operating(Loss) ($ 812,652) ($ 192,703) ($ 583,550) ($1,167,573) ($1,635,003) (1) Profit(Loss) per Common Share from continuing operations ($ 0.06) $ 0.01 ($ 0.02) ($ 0.08) ($ 0.85) Net Income(Loss) per Common Sh. ($ 0.06) $ 0.05 ($ 0.03) ($ 0.15) $ 0.22
Summary Balance Sheet Information As of As of As of As of As of 04/30/95 04/30/94 04/30/93 04/30/92 04/30/91 (3) Total Assets $3,749,342 $4,408,316 $7,326,009 $7,813,277 $8,628,296 Inventories (Net) $3,248,136 $3,656,051 $3,667,464 $3,802,540 $4,120,822 Stockholders' loans receivable (payable) $ 3,000 $ -0- $ -0- $ -0- $ -0- (2) Notes payable - current $ 15,828 $ 22,619 $ 318,504 $ 330,026 $ 337,412 Long-Term Liab. $ 138,619 $ 148,356 $ 232,113 $ 297,612 $ 374,005 Minority Interest in Subsidiary $ -0- $ -0- $ 559,000 $ 559,000 $ 559,000 Stockholders' Equity $3,347,763 $4,048,797 $3,316,907 $3,481,061 $4,434,860
(1) The Registrant sustained losses from continuing operations for the year ended April 30, 1991. Net Income realized results primarily from sale of the Company's subsidiary, Aircraft Modular Products, Inc. ("AMP") in December, 1990. (2) Effective April 30, 1991, in keeping with its auditor's recommendation, the Company wrote-off as uncollectable a total of $3,511,470 of loans and notes receivable from shareholders who were former officers including Allen Blattner, David Blattner and Michael Levkovitz. Nevertheless, the Company, on June 10, 1994, secured entry of a Final Default Judgment against Allen Blattner for $4,512,600 in the U.S. Bankruptcy Court in Miami, Florida. However, the Company considers the judgment debt to be uncollectible. See Item 3., "Legal Proceedings" and Item 13., "Certain Relationships and Related Transactions". (3) The effects of the Registrant's Plan of Reorganization, which was confirmed by the U.S. Bankruptcy Court at hearing on August 24, 1993, were reflected in the fiscal year ended April 30, 1994. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Sales of $1,125,279 for the fiscal year ended April 30, 1995 represented a decrease of $630,484 (36%) over the same period a year earlier. Sales of $1,755,763 for the 12 month period ended April 30, 1994 represented an increase of $975,755 (220%) over the year ended April 30, 1993. For the year ended April 30, 1993, sales were $798,008, a decrease of $311,423 (28%) over the comparable period ended April 30, 1992. For the year ended April 30, 1992, sales were $1,109,431, a decrease of $573,050 (34%) over the comparable period ended April 30, 1991. For the year ended April 30, 1991, sales were $1,682,481, a decrease of $5,031,237 (75%) over the comparable period ended April 30, 1990. Parts sales were $1,125,279 in 1995 as compared to $1,755,763 in 1994, $798,008 in 1993, $1,109,431 in 1992 and $1,682,481 in 1991. Sales in fiscal 1992, 1991 and, to a lesser extent, in 1993, were adversely affected by cash shortages and increased competition. The increase in sales in 1994 was due primarily to increased brokerage activity. Despite continuing brokerage transactions in 1995, sales were down by some 36% due once again to inventory depletion, cash shortages and more difficult competition. Gross margins on sales of the Company were 19.4% in 1995 as compared to 36.3% in 1994, 46% in 1993, 40.7% in 1992 and 48.2% in 1991. Fiscal 1995 margins continued to be reduced due to increased brokerage activity which tend to yield a lower markup than stock sales. Selling, general and administrative expenses for the Company were $1,031,091 for the year ended April 30, 1995 as compared to $830,070 for the year ended April 30, 1994, $950,963 for the year ended April 30, 1993, $1,619,039 for the year ended April 30, 1992 and $2,446,064 for the year ended April 30, 1991. Net (losses) from continuing operations for the year ended April 30, 1995 were ($701,034) as compared to net profit from continuing operations for the year ended April 30, 1994 of $116,658, and net (losses) of ($67,922), ($486,484) and ($4,739,434), respectively for the three preceding years.
The Company's Earnings (Loss) per Share 1995 1994 1993 1992 1991 From Continuing Operations ($ .06) $ .05(a) ($ .01) ($ .07) ($ .84) From Discontinued Operations $ .00 $ .00 ($ .01) ($ .07) $1.07 From Minority Interest $ .00 $ .00 ($ .01) ($ .01) ($ .01) Net Income (Loss) per Share $( .06) $ .05 ($ .03) $( .15) $ 0.22
(a) Includes an extraordinary item, a gain recognition on discharge of debt, net of income tax ($.04 per share); See Note 1., "Notes to Financial Statements". (1) Liquidity The Company's liquidity continues to be critically poor. Sales in fiscal 1995 have decreased and expenses have increased. There is no foreseeable trend or event which will improve the situation at April, 1996. At April 30, 1994, the Company had emerged reorganized from its status as Debtor-In-Possession in Chapter 11 Bankruptcy by order of the U.S. Bankruptcy Court. For the year ended April 30, 1994, the Company realized a net profit in the amount of $530,691, or $0.05 per share, due primarily however only to the gain resulting from discharge of debts under the confirmed bankruptcy reorganization plan. After May 1, 1990, significant increases in the shareholder loan account of the Company's former president, Allen Blattner, worsened and intensified the Company's cash flow difficulties. The Company's auditors and management and directorship came to consider these amounts due to the Company to be uncollectable. The Company wrote off more than $3,926,716 at that time in loans to shareholders, all of whom are former officers and directors. Notwithstanding subsequent efforts, which resulted in the entry of a final judgments in the aggregate principal amount of $5,026,812, it continues to be unlikely, since the Company views them as uncollectible, that those debts will ever have a positive effect on the Company's future cash flow. See Item 8., "Notes to Financial Statements"; Item 13., "Certain Relationships and Related Transactions" and Item 3., "Legal Proceedings". In October, 1992, the Company's former subsidiary, Jetborne, Inc., entered into a plea bargain agreement with the United States Customs Service to settle charges stemming from violations of the Export Administration Act and the Arms Export Control Act pursuant to an investigation which began in March, 1990. Jetborne, Inc. pleaded guilty to two counts and paid a fine of $25,260 in order to end the criminal matter and to avoid additional extensive litigation costs and the possibility of substantially higher fines and penalties. A judgment reflecting the settlement agreement was entered against Jetborne, Inc. in December, 1992. During March, 1994, however, the Company was initially informed by the Export Controls Division of the U.S. Department of State that it is "debarred" (prohibited) from certain export activities by applicable federal statute as a result of the settlement agreement. The Company still plans to petition for relief from debarment and for reinstatement as a permissible Export Controls licensee at some indeterminate time in the future. Preparation and subsequent consideration of the Company's petition and application when undertaken will require a number of months. The Company has not been engaged in the export of controlled materials so the debarment is believed as having no immediate adverse effect on its business. The Plan was confirmed by the Bankruptcy Court at hearing in Miami on August 24, 1993 and by the Court's order of confirmation entered September 17, 1993. On August 28, 1993, Messrs. Dobronsky, Trustee and Alouf entered into a voting trust agreement governing their combined 53.8% ownership interest in the Company. See Item 12., Security Ownership of Certain Beneficial Owners and Management. The Company emerged from bankruptcy as a publicly-held entity consolidated with its former subsidiary, Jetborne, Inc., and is now operating, albeit with difficulty from poor cash flow and liquidity, free of prior restraints. The Company was unsuccessful seeking a line of credit in order to have funds available primarily for brokerage transactions in addition to trade credit which has been attained. The Company is also working with other companies on a commission basis to increase brokerage sales so that costs involved will be transaction driven. Financing is also being sought to be able to purchase fresh inventory lots where the inventory will act as the security for the financing. These efforts too were unsuccessful. There was no present assurance whatsoever that any such credit or financing would be available or obtained. At April 30, 1996 there was no assurance that the Company's persistent liquidity problems would be otherwise improved. On August 10, 1997 Messrs. Dobronsky and Alouf completed transfer of a total of 6,400,000 shares of the Company's restricted Common Stock, approximately 54% of the Company's issued and outstanding capital stock to Bodstray Company Limited, a Hong Kong corporation. With transfer of control in this transaction, Bodstray intended to assist with funding the Company's operations as required, in its discretion, with debt financing. The Company continued to seek additional parts consignment arrangements. Consignment, in effect, provides the Company with additional inventory without purchases adversely affecting its liquidity, although markups are lower than those generally realized from sales from owned stock. (2) Capital Resources In December, 1996, the Company acquired an additional $2,700,000 in parts inventory from ADAR, a subsidiary of RADA Electronic Industries, Ltd., an Israeli corporation ("RADA"). RADA extended credit to the Company for the purchase but during the ensuing eight (8) months, the Company was unable to pay for the newly acquired inventory. On August 15, 1997, following a period of negotiation and discussion, the Company and RADA agreed to satisfy the unpaid RADA receivable through the issuance of restricted Common Stock to RADA, effectively transferring forty-nine (49%) percent of the ownership interest in the Company to RADA in full and final satisfaction of the $2,700,000 parts inventory receivable. On August 10, 1997, the Company's Board of Directors determined to reverse-split the Company's Common Stock on a one share for ten shares basis, effective September 30, 1997. In addition to improving the Company's position with respect to re-establishment of a trading market in its securities, the one-for-ten reverse-split would enable the Company to issue sufficient new shares from its authorized but previously unissued Common Stock to satisfy the acquisition of forty-nine (49%) percent ownership by RADA, as agreed. The Company's majority control shareholder, Bodstray Company, Ltd. consented to the reverse-split at once and while the Company is in the process of seeking the consent of its shareholders, Bodstray's approval insures implementation of the reverse-split, effective September 30, 1997. Following its completion, the Company will issue 1,141,630 (post-reverse-split) shares to RADA Electronic Industries, Ltd. to complete the agreed stock for inventory transaction. Other Considerations In February, 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes". Implementation of this statement is required for fiscal years beginning after December 15, 1992. The Company accounts for income taxes in accordance with this statement; there has been no corresponding effect on the Company's financial statements at April 30, 1995, April 30, 1994 or April 30, 1993. Inflation has had a minimal impact on the operations and finances of the Company in this reporting period. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Pages F-1 through F-26, attached. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE During the Registrant's two most recent fiscal years and during the subsequent interim period (through September 1, 1997), there have been no disagreements on any matter of accounting principles or practices. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a)(b) Identification of Directors and Executive Officers The directors, executive officers, former directors and former executive officers of the Company are identified as follows: Name Position with Company Age Eles Dobronsky Chairman of the Board, 55 Chief Executive Officer Amos Alouf Former President/Treasurer/ 63 Director (Appointed June 15, 1994; Resigned March 10, 1997) Raymond Harkus Director 47 Until March 10, 1997, Mr. Alouf was the Company's only officer. Mr. Alouf resigned on March 10, 1997. The Company's former Treasurer/Chief Financial Officer, Stephen G. Martin resigned in June of 1995. Through March 10, 1997, management of the Company's affairs in this reporting period were accomplished primarily through Mr. Alouf's efforts augmented by those of Mr. Dobronsky. Mr. Alouf devoted 100% of his time to the Company's affairs. Mr. Dobronsky devotes approximately 10% of his time to the Company's affairs. The Company considers that its management resources are more than strained with this single officer, minimal attention circumstance. The "thin" management situation (at September, 1997) will be alleviated in the near future with the arrival of RADA Electronic Industries, Ltd. as a principal stockholder. On September 15, 1997, RADA entered into an agreement to acquire an additional twenty-six (26%) percent of the Company's Common Stock from Bodstray Company Limited for 700,000 shares of RADA's ordinary shares. When completed, the RADA purchase from Bodstray will bring RADA's ownership interest in the Company to seventy-five (75%) percent. RADA Electronic Industries, Ltd. Is a publicly-held Israeli corporation listed on the NASDAQ Small Cap Market. Directors of the Company are to be elected at the Company's annual meeting of stockholders to serve three year terms or until their successors are elected and qualified. Since completion of its initial public offering, all of the Company's directors have however, been appointed to vacancies by the then existing Board. The Company has not held an annual stockholders meeting since completion of its initial public offering. The Company plans to solicit proxies for, and hold an Annual Meeting as soon as practicable. In theory, the Company has a staggered board of directors - when the term of each director expires, successors are to be elected to respective three-year terms. Officers are appointed by the Board of Directors and serve at its discretion and pleasure. (e) Business Experience. The following information is supplied with regard to the Company's directors, executive officers, former directors and former officers. Eles Dobronsky was appointed Chairman of the Company's Board of Directors on May 6, 1991 and President, Secretary/Treasurer of the Company on March 10, 1997. Mr. Dobronsky is an affiliate of the Company's previous controlling shareholder, Finstock Investments, Inc. Mr. Dobronsky is, in addition, an Israeli lawyer who has been a practicing attorney in the city of Tel Aviv in his own firm for more than five years. Mr. Dobronsky holds the L.L.B. degree from Hebrew University in Jerusalem. Amos Alouf was employed by Jetborne International, Inc. from a point prior to 1987 through February, 1991 in a non-officer, non-director position. On May 10, 1991, Mr. Alouf was re-employed by Jetborne International, Inc. as its Acting President. The position was later converted to President and director and is the position that Mr. Alouf occupied until his resignation on March 10, 1997. From March, 1991 through May 10, 1991, Mr. Alouf was employed by Jets & Aerospace, Inc. a Miami corporation engaged in essentially the same business as Jetborne International, Inc. On Mr. Alouf's information and belief, 25% of Jets & Aerospace was owned by Allen Blattner, the former President and director of Jetborne International, Inc. with the majority control of Jets & Aerospace, Inc. being held, again on Mr. Alouf's information and belief, by a non-affiliate of Jetborne International, Inc. Mr. Alouf made loans to Jets & Aerospace, Inc. in the aggregate principal amount of approximately $34,000 and relates that he was to be a 25% owner of that corporation but that he never received any stock or other evidence of such ownership and does not now consider himself as ever having been an owner of stock in Jets & Aerospace, Inc. The aggregate loan to Jets & Aerospace, Inc. is a demand loan which was outstanding and unpaid at March 10, 1997. Mr. Alouf is not engaged, directly or indirectly, in the operations, if any, of Jets & Aerospace, Inc. Mr. Alouf was employed by the Company pursuant to an employment agreement as its sole officer. See Item 11., "Executive Compensation", Note 2. Mr. Alouf attended the Hebrew University in Tel Aviv where he took courses in its economics and foreign affairs programs. Raymond Harkus was appointed a director of the Company in May of 1991 in connection with the assumption of management of the Company by its then controlling shareholder, Finstock Investments, Ltd. Mr. Harkus is also a fund raising and investment consultant who owns and operates his own fund raising and investment consulting Company in the United Kingdom. ITEM 11. EXECUTIVE COMPENSATION Compensation Until his resignation on March 10, 1997, Mr. Amos Alouf devoted 100% of his time to the Company's affairs. The Company's Chairman, and sole officer since Mr. Alouf's departure, Mr. Eles Dobronsky, devotes only approximately 10% of his time to the Company's affairs. As reflected in the following Cash Compensation Table, the total compensation received by Executive Officers during the year ended April 30, 1995 was $196,231. SUMMARY COMPENSATION TABLE Annual Compensation Long-Term Compensation Awards Payouts Other Restricted All Name and Annual Stock Options/ LTIP Other Principal Position Year Salary Bonus Compensation Awards SARS Payouts Compensation Eles Dobronsky (4) 1992 $ -0- -- -- -- -- -- -- Chairman of the 1993 $ -0- -- -- -- -- -- -- Board 1994 $ -0- -- $22,400(4) -- -- -- -- 1995 $ -0- -- $46,500(4) -- -- -- -- Amos Alouf(1)(2) 1992 $ 88,563 -- -- -- -- -- -- President/ 1993 $ 93,871 -- -- -- -- -- -- Secretary 1994 $ 93,770 -- -- -- -- -- -- 1995 $122,308 Stephen G. Martin 1992 $ 63,544 -- -- -- -- -- -- Treasurer (3) 1993 $ 66,351 -- -- -- -- -- -- 1994 $ 66,567 -- -- -- -- -- -- 1995 $ 73,923 All Executive 1992 $152,107 -- -- -- -- -- -- Officers as a 1993 $160,222 -- -- -- -- -- -- Group (Two 1994 $160,337 -- $22,400(4) -- -- -- -- Persons) 1995 $196,231 -- $46,500(4) -- -- -- --
(1) Does not include the automobile allowance or other personal benefits received. Mr. Alouf was reimbursed by the Company for costs incurred in his personal lease of an automobile in the aggregate amount of $10,004 in 1994 and $11,426 in 1995. (2) Mr. Alouf was appointed President and Director by order of the Bankruptcy Court on June 15, 1994. He was appointed acting President and Secretary of the Company on May 10, 1991. He was previously employed by the Company in a non-officer capacity and was terminated in February, 1991 prior to the change of control of the Registrant which occurred in June of the same year. Mr. Alouf has been closely associated with Allen Blattner, the Company's former president, chairman and principal stockholder and against whom the Company now holds a Final Judgment in excess of $5,000,000. See Item 13. "Certain Relationships and Related Transactions" and Item 3., "Legal Proceedings". From March, 1991 through May 10, 1991, Mr. Alouf was employed by Jets & Aerospace, Inc. a Miami corporation engaged in essentially the same business as Jetborne International, Inc. On Mr. Alouf's information and belief, 25% of Jets & Aerospace was owned by Allen Blattner, the former President and director of Jetborne International, Inc. with the majority control of that corporation being held, again on Mr. Alouf's information and belief, by a non-affiliate of Jetborne International, Inc. Mr. Alouf made loans to Jets & Aerospace, Inc. in the aggregate principal amount of approximately $34,000 and relates that he was to be a 25% owner of that corporation; but that he never received any stock or other evidence of such ownership and does not now consider himself as ever having been an owner of stock in Jets & Aerospace, Inc. The aggregate Alouf loan to Jets & Aerospace, Inc. is a demand loan which remained outstanding and unpaid at March 10, 1997, the date of Mr. Alouf's resignation as President and director of the Company. The employment contract between the Company and Mr. Alouf, ordered by the Bankruptcy Court on June 15, 1994 for five years at $120,000 per annum plus benefits, was voluntarily transmitted on March 10, 1997 by Mr. Alouf. (3) Mr. Martin was appointed Treasurer of the Company in April, 1992. He was previously employed by the Company as its Comptroller, a non-officer capacity. Mr. Martin left the Company's employ in June, 1995 as the Company's Chief Financial Officer. Mr. Martin's employment was governed by a contract which provided for annual salary review and one months prior notice in the event of termination of the contract by either party. Mr. Martin gave the requisite notice prior to his departure. (4) Mr. Eles Dobronsky, the Company's Chairman since May, 1991, was approved by the Board of Directors on January 17, 1994 to be remunerated for services at the rate of $3,000 per month, effective September 17, 1993. On June 15, 1994, his remuneration was increased to $48,000 per annum by order of the Bankruptcy Court. Stock Option Plans Since inception, the Company had adopted several stock option plans for the benefit of employees and directors of the Company. The Company believes, that all of the options, as of September 1, 1997, were canceled or have expired. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of August 10, 1997, the number of shares of the Company's Common Stock beneficially owned by each director of the Company; by each person known by the Company to own beneficially more than five percent of the Common Stock of the Company outstanding as of such date and; by the executive officers and directors of the Company as a group. See Note (5). (a) Security Ownership of Certain Beneficial Owners
Title of Name and Address Amount and Nature of Percent Class of Beneficial Owner Beneficial Ownership of Class (2)(3) Common Stock Finstock Investments, Ltd. 4010 N.W. 36th Ave. 2,892,000(1) 24.3% Miami, Florida 33412 (1)(2)(3) Common Stock Bodstray Company Limited 6,400,000(4) 53.9% c/o Secretaries Limited 5th Floor, Wing On Centre 111 Connaught Road Central Hong Kong Common Stock RADA Electronic Industries, Ltd. (5) 80 Express Street Plainview, NY 11803
(b) Security Ownership of Management
Title of Name and Address Amount and Nature of Percent Class of Beneficial Owner Beneficial Ownership of Class (2)(3) Common Stock Eles Dobronsky, 221,850 (4) 1.9% Trustee 4010 N.W. 36th Avenue Miami, FL 33412 Common Stock Amos Alouf -0- (4) 0.0% 4010 N.W. 36th Avenue Miami, FL 33142 Common Stock Stephen G. Martin -0- 0.0% 4010 N.W. 36th Avenue Miami, FL 33142
(1) Finstock Investments, Ltd. owns 1,302,650 shares, and holds proxies for an additional 1,589,350 shares as reported in its filing of 1991 Form 13(d), Amendment No. 5. By virtue of its reported total voting power, Finstock controlled the Registrant from May, 1991 through August, 1993. (2) Based upon 11,882,280 (pre-reverse split) shares being issued and outstanding. (3) BankAtlantic had been deemed by the Company to be the beneficial owner of 750,000 shares of the Company's Common Stock registered in Allen Blattner's name since those shares were previously held by BankAtlantic pursuant to the terms of a pledge agreement, with sole power to vote the shares, and later held by BankAtlantic pursuant to a final judgement entered against Allen Blattner. Under the terms of a subsequent bankruptcy settlement agreement, BankAtlantic returned the 750,000 shares to the Company following confirmation by the Bankruptcy Court of the Company's reorganization Plan and the returned shares were subsequently canceled. (4) As an aspect of the Company's Bankruptcy Plan of Reorganization which was confirmed by a court order entered September 17, 1993, the Company's Chairman, Eles Dobronsky, as trustee, and the Company's President, Amos Alouf, each acquired 3.2 Million shares of the Company's authorized but unissued Common Stock. The acquisition placed Messrs. Dobronsky, Trustee and Alouf in control of approximately 54% of the Company's voting Common Stock. The stock acquired was subject to and governed by a certain voting trust agreement entered into by Messrs. Dobronsky, Trustee and Alouf. The stock in question was transferred to Bodstray Company Limited in transactions completed during August, 1997 and the voting trust was mutually terminated. (5) On August 15, 1997, RADA Electronic Industries, Ltd. acquired forty- nine (49%) percent of the Company's ownership in a transaction to be completed after the Company's reverse one-for-ten stock split is implemented on September 30, 1997. The Company had purchased $2,700,000 of parts inventory from a subsidiary of RADA in December, 1996 and through June, 1997 was unable to satisfy the RADA receivable due to poor liquidity. Following negotiation and discussion, the Company and RADA agreed to satisfy the parts inventory purchase obligation through issuance of new common stock to RADA representing a forty-nine (49%) percent ownership interest in the Company. Completion of the transaction required implementation of a one-for-ten reverse split of the Company's Common Stock, an action deemed appropriate by the Board for purposes of improving the prospects for re-establishment of a trading market for the Company's securities in any event. The one-for-ten reverse split is to be effective September 30, 1997 as approved, among others, by the Company's majority control shareholder, Bodstray Company Limited. On September 12, 1997, RADA entered into a certain capital stock purchase agreement with Bodstray Company Limited pursuant to which RADA acquires an additional twenty-six (26%) percent ownership interest in the Company with Bodstray retaining a minor amount of its shares in the Company's restricted Common Stock. When all is completed, RADA Electronic Industries, Ltd. will own seventy-five (75%) percent of the Company's issued and outstanding Common Stock. RADA Electronic Industries, Ltd. is listed on the NASDAQ Small Cap Market. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (a) Transactions with Management and Others The Company's former subsidiary, Aircraft Modular Products, Inc. ("AMP") leased its offices and manufacturing facilities from Finstock, the Company's then controlling stockholder and subsequently acquired the property itself. The Company's current lease with AMP commenced October 1, 1992 and expires in September, 1997 at an aggregate annual rental of $72,000. The Company is currently seeking new leased space in the same general vicinity. ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (a)1. Financial Statements: Independent Auditor's Report dated June 1, 1995, except as to later matters reflected therein. Balance Sheets - April 30, 1995 and 1994. Statements of Income (Loss) - Years ended April 30, 1995, 1994 and 1993. Statements of Changes in Stockholders' Equity - Years ended April 30, 1995, 1994 and 1993. Consolidated Statements of Cash Flows - Years ended April 30, 1995, 1994 and 1993. Notes to Financial Statements. 2. Schedules: Schedule II - Amounts Receivable from Related Parties, Underwriters, Promoters and Employees Other Than Related Parties for Years Ended April 30, 1995, 1994 and 1993. Schedule VII - Guarantees of Securities of Other Issuers April 30, 1995. Schedule IX - Short-term Borrowings for the Year Ended April 30, 1995. Exhibit II - Schedule of Computations of Earnings (Loss) per Share for the Years ended April 30, 1995, 1994 and 1993. (a)(3) Exhibits: (b)(3) Certificate of Incorporation and By-Laws: Articles of Incorporation, as amended, and By-Laws, as amended, incorporated by reference to the filing of the original registration statement on Form S-18, Amendment No. 2. (b)(4) Instruments defining the rights of security holders, including indentures: Stockholder's Agreement dated February 2, 1987 incorporated by reference to the filing of the amended registration statement on Form S-18 and to the Registrant's Form 10-K for the fiscal year ended 4/30/87. (b)(9) Voting Trust Agreement: Voting trust letter agreement dated August 28, 1993 between Eles Dobronsky, Trustee and Amos Alouf - Incorporated by reference to Form 10-K for the fiscal year ended April 30, 1992. (b)(10) Material Contracts: 1987 Incentive Stock Option Plan - Incorporated by reference to Registration Statement on Form S-18. 1989 Stock Option Plan - Incorporated by reference to Form 10-K for fiscal year ended April 30, 1990. Directors' Stock Option Plan - Incorporated by reference to Form 10-K for fiscal year ended April 30, 1990. Amendment to 1987 Incentive Stock Option Plan - Incorporated by reference to Form 10-K for fiscal year ended April 30, 1990. (b)(11) Statement Re: Computation of per share income (loss): See Note 1., Notes to Consolidated Financial Statements and Statements of Income (Loss) Years Ended April 30, 1995, 1994 and 1993. (b)(12) Statements Re: Computation of Ratios: Not applicable. (b)(13) Annual Report to Security Holders, Form 10-Q or quarterly report to security holders: Not applicable. The Registrant has never submitted an Annual Report to its Stockholders. (b)(18) Letter re: Change in accounting principles: Not applicable. (b)(19) Previously unfiled documents: Not applicable. (b)(21) Other Documents or Statements to Security Holders: Not applicable. (b)(22) Subsidiaries of the Registrant: Not Applicable; Former subsidiaries Jetborne, Inc. (eliminated in the Company's confirmed plan of bankruptcy reorganization on September 17, 1993); Jetborne UK Limited (ceased operations and wound up under U.K. Insolvency Act in January, 1992); AAH (ceased operations July 31, 1992); Aircraft Modular Products, Inc. (Sold December, 1990); Ablam Sound Productions, Inc. (ceased operations November 26, 1990). (b)(23) Published report regarding matters submitted to vote of Security Holders: Note applicable. No matters have ever been submitted by the Registrant for a shareholder vote. (b)(24) Consents of experts and counsel: Not applicable (b)(25) Power of Attorney: Not applicable (b)(28) Additional Exhibits: (b) The Registrant filed no reports on Form 8-K during the third quarter of 1995 or through the subsequent period ended July 31, 1997. On September 25, 1997, the Company filed a Current Report on Form 8-K reporting a capital stock for inventory transaction with RADA Electronic Industries, Ltd. and the September 30, 1997 one share for ten shares reverse-split of its Common Stock. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Miami, State of Florida, on the 19th day of September, 1997. JETBORNE INTERNATIONAL, INC. BY:/s/Eles Dobronsky Eles Dobronsky, Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Signatures Title Date i. Principal Executive Officers President/ /s/Eles Dobronsky Chairman 09/19/97 Eles Dobronsky ii. Principal Financial and Accounting Officer /s/Eles Dobronsky Treasurer/CFO 09/19/97 Eles Dobronsky iii. A Majority of the Board of Directors Director __/__/97 Raymond Harkus /s/Eles Dobronsky Director 09/19/97 Eles Dobronsky EX-1 2 JETBORNE INTERNATIONAL, INC. FINANCIAL STATEMENTS APRIL 30, 1995 JETBORNE INTERNATIONAL, INC. INDEX TO FINANCIAL STATEMENTS Item 8. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS Independent Auditors' Report Financial Statements: Balance Sheets April 30, 1995 and 1994 Statements of Income (Loss) For the years ended April 30, 1995, 1994 and 1993 Statements of Changes in Stockholders' Equity For the years ended April 30, 1995, 1994 and 1993 Statements of Cash Flows For the years ended April 30, 1995, 1994 and 1993 Notes to Financial Statements Financial Statement Schedules (included in Item 14.) Schedule II - Amounts Receivable From Related Parties and Underwriters, Promoters and Employees Other Than Related Parties Schedule VII - Guarantees of Securities of Other Issuers Schedule IX - Short-term Borrowings Exhibit II - Schedule of Computations of Earnings (Loss) per Share F-1 NORMAN A. ELIOT & CO. CERTIFIED PUBLIC ACCOUNTANTS Norman A. Eliot, C.P.A. 9400 South Dadeland Boulevard Florence L. Krantz, C.P.A. Miami, Florida 33156 John Blumenthal, C.P.A. Phone: (305) 670-4444 ---- Fax: (305) 670-0105 Vivian R. Shariff, C.P.A. Ramesh Singh, C.P.A. INDEPENDENT AUDITORS' REPORT The Board of Directors Jetborne International, Inc. Miami, FL 33142 We have audited the balance sheets of Jetborne International, Inc. as of April 30, 1995 and 1994, and the related statements of income (loss), changes in stockholders' equity, and cash flows for the years ended April 30, 1995, 1994 and 1993 and the schedules listed in the Index at Item 14. These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Jetborne International, Inc. at April 30, 1995 and 1994, and the results of its operations and its cash flows for the years ended April 30, 1995, 1994 and 1993 in conformity with generally accepted accounting principles, and the schedules referred to above present fairly, in all material respects, when read in conjunction with the related financial statements, the information therein set forth. The accompanying financial statements, presented on pages F-4, F-5, F-6, and F-7 have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the financial statements, the Company has experienced significant net cumulative losses and has incurred significant negative cash flows from operations resulting in the Company having difficulty meeting its obligations. The continued existence of the Company is dependent on the ability of the Company to successfully implement management's plans which are also described in Note 2. The foregoing conditions raise substantial doubt about the F-2 Members: American Institute of Certified Public Accountants Florida Institute of Certified Public Accountants INDEPENDENT AUDITORS' REPORT (continued) Company's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of Jetborne International, Inc. to continue as a going concern. Miami, Florida June 1, 1995, except February 29, 1996 as to certain matters referred to in Notes 1, 2, 5, 9, and 15 for events that took place on August 2, 1995, January 9, 1996, January 18, 1996, February /s/Norman A. Eliot & Co. 14, 1996 and February 29, 1996 Norman A. Eliot & Co. F-3 JETBORNE INTERNATIONAL, INC. BALANCE SHEETS APRIL 30, 1995 AND 1994 A S S E T S -----------
1995 1994 ----------- ----------- CURRENT ASSETS: Cash $ 86,235 $ 301,106 Accounts receivable: Trade, net of allowance for doubtful accounts ($3,607 and $15,996 1995 and 1994, respectively)(Notes 1 and 7) 133,567 131,779 Other 3,535 8,036 Stockholder loan receivable 3,000 0 Inventories (Notes 1, 5 and 7) 3,248,136 3,656,051 Prepaid expenses and other current assets 23,970 19,029 ----------- ----------- Total Current Assets $ 3,498,443 $ 4,116,001 ----------- ----------- PROPERTY AND EQUIPMENT (Notes 1 and 6) $ 633,816 $ 625,247 Less: Accumulated depreciation and amortization 389,148 375,523 ----------- ----------- Net Book Value 244,668 249,724 ----------- ----------- OTHER ASSETS: Security deposits and other assets $ 6,231 $ 42,591 ----------- ----------- TOTAL ASSETS $ 3,749,342 $ 4,408,316 =========== ===========
The accompanying notes are an integral part of these financial statements. F-4A JETBORNE INTERNATIONAL, INC. BALANCE SHEETS APRIL 30, 1995 AND 1994 LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------
1995 1994 ----------- ----------- CURRENT LIABILITIES: Notes payable (Note 7) $ 15,828 $ 22,619 Current maturities of long-term debt (Note 8) 68,302 51,489 Accounts payable 159,197 90,661 Income taxes payable (Note 11) 0 10,000 Customers' deposits 1,552 0 Accrued expenses 86,383 87,883 ----------- ----------- Total Current Liabilities $ 331,262 $ 262,652 ----------- ----------- LONG-TERM DEBT, net of current maturities (Note 8) $ 70,317 $ 96,867 ----------- ----------- COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENTS (Notes 9, 12, 14, and 15) STOCKHOLDERS' EQUITY (Notes 1, 9, 10, and 15): Common stock, $.01 par value (14,000,000 shares authorized; 11,882,280 and 12,635,780 shares issued at April 30, 1995 and 1994) $ 118,823 $ 126,358 Additional paid-in capital 5,097,251 5,093,480 Retained earnings (deficit) (1,868,311) (1,167,277) Treasury stock, 0 and 753,500 shares at April 30, 1995 and 1994, at cost 0 (3,764) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 3,347,763 4,048,797 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,749,342 $ 4,408,316 =========== ===========
The accompanying notes are an integral part of these financial statements. F-4B JETBORNE INTERNATIONAL, INC. STATEMENTS OF INCOME (LOSS) FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
1993 1995 1994 (Note 1) ----------- ----------- ----------- NET SALES $ 1,125,279 $ 1,755,763 $ 798,008 COST OF SALES 906,840 1,118,396 430,595 ----------- ----------- ----------- GROSS PROFIT $ 218,439 $ 637,367 $ 367,413 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,031,091 830,070 950,963 ----------- ----------- ----------- OPERATING LOSS $ (812,652) $ (192,703) $ (583,550) ------------ ------------ ------------ OTHER INCOME (EXPENSES): Interest and other income $ 96,083 $ 316,304 $ 592,843 Interest expense (5,166) (6,943) (77,215) Recovery of stockholders' notes and loans receivable (Note 4) 12,500 0 0 ----------- ----------- ----------- Net Other Income 103,417 309,361 515,628 ----------- ----------- ----------- INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (CREDIT) $ (709,235) $ 116,658 $ (67,922) INCOME TAXES (CREDIT) (Note 11) (8,201) 0 0 ----------- ----------- ----------- INCOME (LOSS) FROM CONTINUING OPERATIONS (FORWARD) $ (701,034) $ 116,658 $ (67,922) ------------ ----------- ------------
The accompanying notes are an integral part of these financial statements. F-5A JETBORNE INTERNATIONAL, INC. STATEMENTS OF INCOME (LOSS) FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
1993 1995 1994 (Note 1) ----------- ----------- ----------- INCOME (LOSS) FROM CONTINUING OPERATIONS (FORWARDED) $ (701,034) $ 116,658 $ (67,922) ------------ ----------- ------------ DISCONTINUED OPERATIONS (Note 3): Loss from discontinued operations, net of income taxes $ 0 $ 0 $ (40,332) ----------- ----------- ------------ INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND MINORITY INTEREST $ (701,034) $ 116,658 $ (108,254) EXTRAORDINARY ITEM: Gain recognition on discharge of debt net of $10,000 provision for income taxes (Note 1) 0 414,033 0 ----------- ----------- ----------- INCOME (LOSS) BEFORE MINORITY INTEREST $ (701,034) $ 530,691 $ (108,254) MINORITY INTEREST (dividend requirement on preferred stock of a subsidiary)(Note 10) 0 0 55,900 ----------- ----------- ----------- NET INCOME (LOSS) $ (701,034) $ 530,691 $ (164,154) =========== =========== =========== EARNINGS (LOSS) PER SHARE (NOTE 1) Continuing operations $ (0.06) $ 0.01 $ (0.02) Net income (loss) (0.06) 0.05 (0.03) WEIGHTED AVERAGE COMMON SHARES AND COMMON SHARE EQUIVALENTS OUTSTANDING (Note 1) 11,882,280 9,730,636 6,232,280 ========== ========== ==========
The accompanying notes are an integral part of these financial statements. F-5B JETBORNE INTERNATIONAL, INC. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
Number of shares of common stock Amounts --------------------- -------- Treasury Common Issued Stock Stock ---------- --------- -------- BALANCE, APRIL 30, 1992 (Note 1) 6,235,780 3,500 $ 62,358 Net loss - - - ---------- -------- -------- BALANCE, APRIL 30, 1993 (Note 1) 6,235,780 3,500 $ 62,358 Net income - - - Common stock issued (Notes 1, 9 and 10) 6,400,000 - 64,000 Common stock acquired on confirmation of plan of reorganization (Notes 1, 9 and 10) - 750,000 - ---------- -------- -------- BALANCE, APRIL 30, 1994 (Note 1) 12,635,780 753,500 $126,358 Net loss Common stock retired (753,500) (753,500) (7,535) ---------- -------- -------- BALANCE, APRIL 30, 1995 (Note 1) 11,882,280 0 $118,823 ========== ======== ========
The accompanying notes are an integral part of these financial statements. F-6A JETBORNE INTERNATIONAL, INC. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
Amounts ------------------------------------- Additional Retained Treasury Paid-in Earnings Stock Capital (Deficit) ---------- ------------ ----------- BALANCE, APRIL 30, 1992 (Note 1) $ (3,763) $ 4,956,280 $(1,533,814) Net loss - - (164,154) -------- ----------- ----------- BALANCE, APRIL 30, 1993 (Note 1) $ (3,763) $ 4,956,280 $(1,697,968) Net income - - 530,691 Common stock issued (Notes 1, 9 and 10) - 137,200 - Common stock acquired on confirmation of plan of reorganization (Notes 1, 9 and 10) (1) - - -------- ----------- ----------- BALANCE, APRIL 30, 1994 (Note 1) $ (3,764) $ 5,093,480 $(1,167,277) Net loss (701,034) Common stock retired 3,764 3,771 -------- ----------- ----------- BALANCE, APRIL 30, 1995 (Note 1) $ 0 $ 5,097,251 $(1,868,311) ========= =========== ===========
The accompanying notes are an integral part of these financial statements. F-6B JETBORNE INTERNATIONAL, INC. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993 Amounts ------------- Total Stockholders' Equity ------------- BALANCE, APRIL 30, 1992 (Note 1) $ 3,481,061 Net loss (164,154) ------------ BALANCE, APRIL 30, 1993 (Note 1) $ 3,316,907 Net income 530,691 Common stock issued (Notes 1, 9 and 10) 201,200 Common stock acquired on confirmation of plan of reorganization (Notes 1, 9 and 10) (1) ------------ BALANCE, APRIL 30, 1994 (Note 1) $ 4,048,797 Net loss (701,034) Common stock retired 0 ------------ BALANCE, APRIL 30, 1995 (Note 1) $ 3,347,763 ============ The accompanying notes are an integral part of these financial statements. F-6C JETBORNE INTERNATIONAL, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
1993 1995 1994 (Note 1) ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (701,034) $ 530,691 $ (164,154) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 29,958 33,774 45,269 Provision for losses on trade accounts receivable 3,607 0 1,325 Write-off of trade accounts receivable, net of recoveries 12,880 7,848 5,971 Loss on discontinued operations 0 0 40,332 Loss from sale of property and equipment 0 1,671 18,535 Recognition of deferred income 0 (193,518) (316,667) Forgiveness of debt (9,300) 0 0 Treasury stock received (nominal value) 0 (1) 0 Changes in certain assets and liabilities: (Increase) decrease in trade accounts receivable (18,275) (6,854) 28,666 Decrease in other accounts receivable 4,501 8,508 37,961 Increase in stockholder loan receivable (3,000) 0 0 Decrease in inventories 407,915 11,413 135,076 (Increase) decrease in prepaid expenses and other current assets (4,941) 190,647 (186,327) Decrease in net assets of discontinued operations 0 88,294 17,560 (Increase) decrease in security deposits and other assets 36,360 (37,054) 30,384 Increase (decrease) in accounts payable 68,536 (94,454) 24,430 Increase (decrease) in indebtedness to stockholder 0 (3,600) 3,600 Increase (decrease) in income taxes payable (10,000) 6,895 3,500 Increase (decrease) in customers' deposits 1,552 (15,375) (729) Decrease in accrued expenses (1,500) (160,912) (71,604) Decrease in net liabilities discharged in bankruptcy 0 (414,033) 0 ---------- ---------- ---------- Net cash used in operating activities $ (182,741) $ (46,060) $ (346,872) ---------- ---------- ----------
The accompanying notes are an integral part of these financial statements. F-7A JETBORNE INTERNATIONAL, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
1993 1995 1994 (Note 1) ---------- ---------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment $ (24,902) $ (2,831) $ (34,595) Proceeds from sale of property and equipment 0 0 5,161 ---------- ---------- --------- Net cash used in investing activities (24,902) (2,831) (29,434) ---------- ---------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments received from notes receivable $ 0 $ 0 $ 650,000 Proceeds from issuance of notes 26,070 20,859 0 Principal repayments on notes payable (23,561) (25,540) (11,522) Principal repayments on long-term debt (9,737) (101,465) (65,499) Proceeds from private placement sale of common stock 0 201,200 0 ---------- ---------- --------- Net cash provided by (used in) financing activities (7,228) $ 95,054 572,979 ---------- ---------- --------- NET INCREASE (DECREASE) IN CASH $ (214,871) $ 46,163 $ 196,673 CASH, BEGINNING 301,106 254,943 58,270 ---------- ---------- --------- CASH, END $ 86,235 $ 301,106 $ 254,943 ========== ========== ========= Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 5,136 $ 6,078 $ 1,990 =========== ========== ========= Income taxes $ 1,799 $ 41,142 $ 0 =========== ========== =========
The accompanying notes to financial statements describe certain non-cash investing and financing activities (some of which affect the changes in certain assets and liabilities) and are taken into consideration in the consolidated statements of cash flows. F-7B JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Business - ------------------------- Jetborne International, Inc. (the "Company") was incorporated January 30, 1987 (under the laws of the State of Delaware) as a holding company in anticipation of a public offering. On February 2, 1987, the stockholders of Jetborne, Inc. (incorporated April 24, 1980 under the laws of the State of Florida) contributed all of the outstanding shares of Jetborne, Inc. common stock to Jetborne International, Inc. (the Company owned no other assets at that date) in exchange for 3,123,000 shares of common stock of the Company and Jetborne, Inc. transferred to the Company its stock in each of its subsidiary companies. On May 20, 1987, the Company sold 1,150,000 shares of its common stock to the public, resulting in net proceeds to the Company of approximately $3,328,000. On September 17, 1993, an order of the United States Bankruptcy Court, Southern District of Florida was entered confirming the Company's third amended plan of reorganization. Prior thereto, $201,200 was deposited to the Company attorneys' trust account as payment for 6,400,000 shares of Company common stock to be issued in accordance with terms of the plan (see below and Note 10). The September 17, 1993 order of the United States Bankruptcy Court was entered conditioned upon the ability of the Company to maintain the level of allowed unsecured claims against the Jetborne International, Inc. estate at a maximum of $2,300,000; accomplished on September 27, 1994 when the Company objection to the claim of a former principal stockholder of the Company was sustained by the United States Bankruptcy Court. Prior thereto, on December 10, 1991, creditors of the Company filed with the United States Bankruptcy Court, placing the Company in an involuntary Chapter 11 bankruptcy proceeding (converted by the Company to a voluntary proceeding on December 26, 1991); Jetborne, Inc., the only then significant operating subsidiary of the Company, filed a voluntary petition on December 16, 1991; subsequently, the two proceedings were consolidated. The Company filed, with the Bankruptcy Court, an Amended Disclosure Statement and Plan dated May 14, 1993 whereby a program was established for the probable payment to all creditors, over various periods not to exceed nine years, of all approved sums due to them (the allowed unsecured claims against the Jetborne, Inc. [see below] estate are to be paid after the payment of allowed unsecured claims against the Jetborne International, Inc. estate); payments to the Jetborne International, Inc. unsecured creditors commenced during January 1995 (thirty days after the December 14, 1994 United States Bankruptcy Court appointment of the designee for the Unsecured Creditors Committee). The principal source of the funds to pay the indebtedness is the January 1, 1993 balance on the note received from the sale of Aircraft Modular Products, Inc. ("AMP")(see Notes 3 and 4). In addition, there are provisions for: Merging Jetborne, Inc. into the Company and the cancellation of the Jetborne, Inc. preferred stock (see Note 10). The Company has, however, registered the name Jetborne, Inc. under the Fictitious Name Act of the State of Florida. F-8 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Organization and Business (continued) - ------------------------------------- The present stockholders of Jetborne International, Inc. maintaining their shares of common stock of the Company (the Company will still be publicly owned). The sale of 6,400,000 shares of the Company's common stock to two new principal stockholders of the Company (see Notes 9 and 10) for $201,200. The sum of the excess of liabilities transferred to the Unsecured Creditors' Committee of Jetborne International, Inc., the cancellation of the preferred stock (and the related assets and liabilities) of Jetborne, Inc. and the Federal "alternative minimum tax" (see Note 11) (based on the excess of alternative minimum tax income over the alternative minimum tax net operating loss carryforward) over the carrying value of the AMP note ($414,033) is reflected on the statement of income (loss) for the year ended April 30, 1994 in the category "gain recognition on discharge of debt, net of $10,000 provision for income taxes (Note 1)". The Company is primarily engaged in the sale of aircraft parts and also coordinates maintenance support and management for aircraft, manages aircraft conversion projects and sells and leases aircraft primarily as a broker. General/Pledged Assets/Reclassifications - ---------------------------------------- The stockholders' equity section of the balance sheets at April 30, 1995 and April 30, 1994 reflect the 6,400,000 shares of Company common stock as if issued at those dates (in accordance with the confirmed plan of reorganization; see above)(not issued at February 29, 1996) and the 750,000 shares of Company common stock as if received in the Treasury at April 30, 1994 (also in accordance with the confirmed plan of reorganization; see Notes 10 and 15)(the 750,000 shares, and 3,500 shares of previously acquired stock, were cancelled on August 10, 1994 thereby reducing the number of shares issued at April 30, 1995). The prior year financial statements are presented, for comparative purposes, as if the Company was not, until September 17, 1993, in re-organization under Chapter 11 of the United States Bankruptcy Code. The statements of income (loss), changes in stockholders' equity and cash flows for the period May 1, 1993 through September 16, 1993 and the year ended April 30, 1993 reflect results of operations and cash flows of the Company and its then wholly owned subsidiaries while it was Debtor-in-Possession. All material inter-company balances and transactions (through September 16, 1993) have been eliminated. Prior to its emergence from the bankruptcy proceedings, substantially all of the Company's assets were pledged as collateral for notes payable and other debt. Effective September 17, 1993, the Company transferred the note receivable (from the purchaser of 100% of the common stock of Aircraft Modular Products, Inc.; see Notes 3 and 4) to the Unsecured F-9 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Creditors' Committee of Jetborne International, Inc. (in accordance with the terms of the Company's third amended plan of reorganization [see above]). Certain amounts in the April 30, 1994 and April 30, 1993 financial statements have been reclassified to conform with the April 30, 1995 presentation and the April 30, 1993 financial statements have been restated to take into consideration the sale/liquidation of subsidiaries (see Note 3). New (Recent) Accounting Standards - --------------------------------- The Company has adopted all recent accounting standards and pronouncements issued by the Financial Accounting Standards Board (FASB) that are applicable (including FASB 109 Accounting for Income Taxes and FASB 121 Accounting for the Impairment of Long Lived Assets). The adoption did not cause a material effect on the Company's financial statements. Accounts and Notes Receivable, Trade/Allowance for Doubtful Accounts - -------------------------------------------------------------------- The Company's policy is to establish an allowance for doubtful accounts when the collectability of the accounts is doubtful and to charge that account, or income, when the accounts are determined to be uncollectable ($16,487, $4,200 and $2,067 [net of recoveries] for the years ended April 30, 1995, 1994 and 1993, respectively)(see Note 4 regarding the write-off of certain non-trade notes and loans receivable). Inventories - ----------- Inventories are stated at the lower of cost or market with cost determined using the average cost method (see Note 5). Property and Equipment - ---------------------- Property and equipment are stated at cost. Expenditures for major betterments and additions are charged to the property and equipment accounts while replacements, maintenance and repairs, which do not improve or extend the life of the respective asset, are charged to expense currently. The cost of assets retired or otherwise disposed of and the accumulated depreciation are relieved from the accounts, and the resulting gain or loss is included in the statement of income. The Company's policy is to capitalize, and record as property and equipment, assets acquired under terms of capital leases. Depreciation is calculated using the straight line and declining balance methods over the estimated useful lives of the assets. For income tax purposes, depreciation is calculated using the accelerated cost recovery system (MACRS) for certain qualifying assets and the straight-line method for other assets (see below). F-10 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income Taxes - ------------ The Company filed consolidated income tax returns through the year ended April 30, 1994 which included the results of its operations and the operations of its wholly owned U.S. subsidiaries through September 16, 1993. Income tax expense was allocated to the subsidiaries that had net income, computed as if each subsidiary were filing a separate return. The subsidiaries' liability, along with other inter-company indebtedness, was eliminated in consolidation. The income tax returns of the Company for the period September 17, 1993 through April 30, 1994 and the year ended April 30, 1995 reflect the results of operations of the Company. Deferred income taxes (none at April 30, 1995 and 1994) are provided in amounts sufficient to give effect to the use of net operating loss carryforwards and timing differences between financial and income tax reporting (see Note 11). Investment tax and research and development tax credits are treated as a reduction of income tax expense in the year in which the related assets are placed in service and when the research and development expense is incurred. Earnings (Loss) Per Share - ------------------------- Earnings (loss) per share have been computed based on the weighted average number of common shares and common share equivalents outstanding. Cash and Cash Equivalents - ------------------------- The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Note 2. LIQUIDITY (see Note 1) The Company has sustained net cumulative losses of approximately $3,700,000 since April 30, 1988 (the net income for the two years that did not reflect losses were generated from either discontinued operations or extraordinary items) and retained earnings have decreased from $1,837,681 to retained earnings (deficit) of $(1,868,311) at April 30, 1995. As referred to in Note 1, the Company emerged from a Chapter 11 bankruptcy proceeding (which commenced December 10, 1991) on September 17, 1993 and, as part of the confirmed plan of reorganization, the Company received $201,200 for the issuance of 6,400,000 shares of Company common stock. Since the end of the last fiscal year, the Company's liquidity has continued to deteriorate, with increasing rapidity, primarily due to a continuing diminishing stock sales trend caused by a lack of current or "fresh" inventory, declining consignment inventory, limited brokerage sales opportunities and excessive professional fees due to previous and on-going litigation. F-11 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 2. LIQUIDITY (see Note 1)(continued) The Company borrowed $30,000 from its Chief Executive Officer on January 18, 1996 (not repaid at February 29, 1996) for the purpose of paying an obligation due that day (see Note 15) and, at February 29, 1996, is indebted to the Chairman of its Board of Directors for five months compensation (see Note 14). Credit financing is being sought to purchase "fresh" inventory lots where the purchased inventory will comprise the collateral for the credit extended. The Company also continues to pursue aircraft parts consignment agreements and other business opportunities within the expertise of its executives. Consignments, in effect, provide the Company with additional inventory without the prior need for purchases which adversely affects liquidity. Management of the Company believes that the referred to programs, if accomplished, will provide sufficient working capital to meet the Company's obligations as they become due. There can be no assurance, however, that the Company will be successful in its efforts nor that it will be able to maintain its operations on a profitable basis even though substantially all claims and lawsuits have been resolved or adequate provision has been made for the ultimate liability (see Note 15). As indicated in Note 3, all operating subsidiaries of the Company were sold, or operations were terminated, during the past five years except Jetborne, Inc. which was effectively merged into the Company. Note 3. SALE/LIQUIDATION OF SUBSIDIARIES As referred to in Note 1, the Company sold 100% of the common stock of Aircraft Modular Products, Inc. during the year-end April 30, 1991 and during the same year sold the operating assets of Alblam Sound Productions, Inc. In addition, a receiver was appointed, during the year ended April 30, 1992, for the Company's principal United Kingdom subsidiary and operations of Advanced Aero Hydraulics, Inc. were terminated during the year ended April 30, 1993. The then only remaining subsidiary of the Company (Jetborne, Inc.) was effectively merged into the Company when the United States Bankruptcy Court entered an order, on September 17, 1993, confirming the Company's third amended joint plan of reorganization (see Note 1). Operations of Advanced Aero Hydraulics, Inc. ("AAH") were terminated on July 31, 1992 and the Company entered into a contract for the sale of AAH's equipment for $60,000. The sale was concluded on March 26, 1993 and the Company received $15,000 with the balance of the contracted amount payable in $15,000 installments (paid in full by July 23, 1993). The results of operations of AAH are included in the statements of income (loss) in the category "loss from discontinued operations, net of income F-12 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 3. SALE/LIQUIDATION OF SUBSIDIARIES (continued) taxes". The following is a summary of AAH's results of operations for the year ended April 30, 1993: Net sales $137,191 (Loss) before income taxes (40,332) Income taxes 0 Net income (loss) (40,332) Note 4. NOTES RECEIVABLE (Non-trade) The Company had, prior to September 17, 1993, ownership of the remaining balance on the note receivable from the purchaser of 100% of the common stock of Aircraft Modular Products, Inc. This note (with the remaining balance at January 1, 1993 of $2,078,350) has been transferred to the Unsecured Creditors' Committee of Jetborne International, Inc. (see Notes 1 and 3). At April 30, 1995 and 1994, the former principal stockholder of the Company and two terminated officers (see Notes 9, 10 and 15) were indebted to the Company as follows: Former principal stockholder $3,310,321 (1) Former Vice President 572,658 (2) Former President 43,738 (3) ---------- Total $3,926,717 ========== These amounts had been written off as uncollectible, or an allowance had been established, based on the then possible offsets and on the probable uncollectability (see below and Notes 9, 10 and 15). ______ (1) On June 10, 1994 a final default judgement for $4,512,600 was entered, by the United States Bankruptcy Court, against the former principal stockholder. (2) On November 10, 1994 the former Vice President, based on his petition, obtained an order from the United States Bankruptcy Court discharging his debts; however, on May 29, 1995, the same Court determined that $514,212 of his debt to the Company was not dischargeable and, accordingly,entered a final summary judgement against him. (3) The indebtedness of the former President was satisfied on September 8, 1994; the Company received $12,500, the former President withdrew his claims against the Company, and mutual releases were exchanged. Note 5. INVENTORIES (see Notes 1 and 7) Inventories of aircraft parts and supplies total $3,248,136 at April 30, 1995 and $3,656,051 at April 30, 1994, net of a reserve for obsolescence of $365,000 and $500,000 respectively. These amounts do not include inventories received on a consignment basis with the Company agreeing to assume all risks and insure at no charge to the consignors. The consignment agreements are summarized as follows: F-13 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 5. INVENTORIES (see Notes 1 and 7)(continued) Consignment agreement dated January 26, 1990 with a major airline with the Company agreeing to use its best efforts to sell the inventory at market value for which it was to receive 35% of the selling price. From inception through April 30, 1992, the Company had received approximately $2,150,000 (valued at estimated selling prices) of parts. As of April 30, 1995 all unsold parts were in the Company's warehouse, however, based on negotiations with, and instructions from, the consignor, all parts were returned to the consignor by November 2, 1995. The various remaining unresolved matters between the Company and the consignor were in progress until January 9, 1996 when a settlement agreement was entered into cancelling and terminating the original consignment agreement and the modifications (see Note 15). Consignment agreement dated December 9, 1992, with a non-related entity, which required the Company to initially place a $125,000 deposit with the consignor (to be reviewed semi-annually as it relates to the value of the consigned parts; reduced to $36,629 at April 30, 1994, and $ 0 at April 30, 1995 based on the reduced amount of the consigned inventory on hand). The Company agreed to use its best efforts to sell the parts for which it receives 40% of the selling price. Either party may cancel the agreement with thirty days written notice. An affiliate of the consignor had guaranteed the deposit. Consignment agreement dated December 1, 1994, with a non-related entity. The Company agreed to use its best efforts to sell the parts for which it receives 40% of the selling price (just prior to each sale title to the inventory items are transferred from the consignor to the Company and the Company sells the parts in its own name). In addition, the Company is to pay a handling fee of 10% of the consignor's acquisition costs for any consignment parts returned to the consignor during the period of the agreement; the 10% handling fee for items returned to the consignor, based on the consignor's request, is to be charged to the consignor. The agreement was to expire November 30, 1995, however, it was cancelled by the Company August 2, 1995. Note 6. PROPERTY AND EQUIPMENT (see Note 1) At April 30, property and equipment consists of:
Estimated useful lives/ 1995 1994 depreciation methods -------- -------- ------------------------- Machinery 5-10 years/straight-line and equipment $142,718 $129,196 and declining balance Leasehold improvements 361,681 361,681 10-25 years/straight-line Office furniture and equipment 110,992 115,945 5-8 years/straight-line Transportation equipment 18,425 18,425 5 year straight-line -------- -------- Total $633,816 $625,247 ======== ========
F-14 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 6. PROPERTY AND EQUIPMENT (see Note 1)(continued) Depreciation and amortization charged to income was $29,958, $33,774 and $45,269 for the years ended April 30, 1995, 1994 and 1993, respectively. Note 7. NOTES PAYABLE (see Notes 1, 4 and 5) At April 30, notes payable consist of:
1995 1994 -------- --------- Remaining balance on a $25,000 note, originally payable on demand, with interest at prime plus 2 points; issued December 11, 1991 with a chattel mortgage encumbering all inventory, all accounts receivable and the AMP note (see Note 3) $ 0 $ 9,300 Installment notes payable monthly ($362 to $1,671 including interest at various rates) through December 15, 1995 15,828 13,319 -------- --------- Total $ 15,828 $ 22,619 ======== ========= Note 8. LONG-TERM DEBT (see Notes 1, 5 and 15) At April 30, long-term debt consist of: 1995 1994 --------- --------- Various unsecured tax obligations payable monthly ($1 to $371 plus interest) from October 1993 through February 1996 $ 27,331 $ 27,331 Agreement to pay a creditor in twenty remaining quarterly installments commencing November 23, 1993 (the first four installments of $5,000 through August 23, 1994 and the remaining sixteen installments of $2,500 through August 25, 1998), without interest (see Note 15 regarding the modification of the amount of the indebtedness and the payment terms) 60,000 60,000 Income tax obligation to Internal Revenue Service payable in monthly installments ($1,151 including interest at 7% per annum) through August 17, 1999 51,288 61,025 -------- -------- Total $138,619 $148,356 Less: Current maturities 68,302 51,489 -------- -------- Long-term debt, net of current maturities $ 70,317 $ 96,867 ======== ========
F-15 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 8. LONG-TERM DEBT (see Notes 1, 5 and 15)(continued) Maturities of long-term debt in each of the next years are as follows: Year ending April 30, Amount -------------------- ------------ 1996 $ 68,302 1997 24,012 1998 23,359 1999 18,410 2000 and thereafter 4,536 ------------ Total $ 138,619 ============ Note 9. RELATED PARTY TRANSACTIONS (see Notes 1, 4, 10, 14 and 15) Prior to March 9, 1991, when a non-related U.K. Limited Liability Company ("U.K. Company") acquired, from the then principal stockholder of the Company, the rights to 3,130,000 shares of the Company's common stock (including options to purchase 430,000 shares; the options expired prior to April 30, 1995), a former employee, officer and chairman of the Board of Directors was the principal stockholder of the Company. On December 30, 1990, the then principal stockholder of the Company signed a $1,960,492 note to the Company which note was not paid and, on June 10, 1994, the Company obtained a default final judgement, in the amount of $4,512,600, against him in connection with the note and related matters. Reference is made to Note 1 which describes a provision in the bankruptcy confirmation order for the receipt by the Company of $201,200 for the issuance of 6,400,000 shares of Company common stock (50% to the Chairman of the Board of Directors of the Company, as trustee [also the representative of U.K. Company; see above and Note 10] and 50% to the Chief Executive Officer of the Company). In connection therewith, and as subsequently confirmed by the United States Bankruptcy Court, the two stockholders entered into a shareholder agreement which contains various provisions including: voting for members of the Board of Directors (as directed by the United States Bankruptcy Court, the current Board of Directors consists of the Chairman of the Board, the Chief Executive Officer and a non-employee who was previously appointed a director by U.K. Company), disposition of shares (including the first right of refusal on possible sale and/or transfer), an employment agreement for the Chief Executive Officer (see Note 14) and compensation for the Chairman of the Board of Directors of the Company (see Note 14). On January 18, 1996, the Company borrowed $30,000 from its Chief Executive Officer (see Note 15)(not repaid at February 29, 1996) and is indebted to the Chairman of its Board of Directors at February 29, 1996 for five months compensation (totalling $20,000; see Note 14). F-16 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 10. STOCKHOLDERS' EQUITY (see Notes 1, 9 and 15) On October 4, 1991, the Company's stock was delisted from NASDAQ. Effective September 17, 1993, the 5,590 shares of 10% cumulative redeemable preferred stock of Jetborne, Inc. was cancelled based on the September 17, 1993 order of the United States Bankruptcy Court, Southern District of Florida, confirming the Company's third amended plan of reorganization (see Notes 1 and 3). In connection with various contractual arrangements, the Company had committed to register 946,850 shares of its common stock in a registration statement to be filed with the Securities and Exchange Commission. Since the commitments were made, significant events have taken place and, presently, it is uncertain whether any of the commitments can be, or will have to be, fulfilled. Stock Option Plans - ------------------ Since inception, the Company adopted several stock option plans for the benefit of employees and directors of the Company. The Company believes that all of the options, as of February 29, 1996, were cancelled or have expired. Common Stock Issued - ------------------- Through May 1, 1991, the Company had issued 6,235,780 shares of its common stock. The status remained the same, subject to outstanding options (see above) until September 17, 1993 when 6,400,000 shares of the Company's common stock were sold to two new principal stockholders of the Company based on an order of the United States Bankruptcy Court, Southern District of Florida, confirming the Company's third amended plan of reorganization (see above and Note 1). On November 10, 1994 the Company was notified that the 221,850 shares of Company common stock purchased by U.K. Company (see Note 9) were transferred to the Chairman of the Board of Directors of the Company, as Trustee (U.K. Company also confirmed that they conveyed to that person, as trustee, all of its ownership interest in the 3,200,000 shares of Company's common stock to be acquired by that person as trustee [see above and Note 1]). Accordingly, U.K. Company only owns the shares of the Company's common stock acquired, on March 9, 1991, from the then principal stockholder of the Company (see Note 9). Common Stock in Treasury - ------------------------ Prior to May 1, 1991, the Company had purchased, from non-related persons, 3,500 shares of its common stock for $3,763. The Company received 750,000 shares of its common stock from the bank that was holding the shares as collateral for an obligation of the then principal stockholder of the Company (see Note 9). The return was negotiated as part of the settlement with that bank (see Note 15) and accordingly it is included in the statement of changes in stockholders' equity for the year ended April 30, 1994 at a nominal value of $1. On August 10, 1994 the 753,500 shares were cancelled (see Note 1). F-17 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 11. INCOME TAXES At May 1, 1992, the Company had, for Federal Income Tax purposes, a net operating loss carryforward of $2,741,731. The following is a summary of the components of the net operating loss carryforward to the fiscal year ending April 30, 1995: Balance at May 1, 1992 $2,741,731 Loss applied to taxable income of fiscal year ended April 30, 1993 (125,272) Loss applied to taxable income of fiscal year ended April 30, 1994 (2,041,621) Increase due to reduction in charitable contributions carryforward 11,698 Loss arising in fiscal year ended April 30, 1995 944,142 ---------- Net operating loss carryforward to fiscal years ending April 30, 1996 through April 30, 2010 $1,530,678 ========== Even though the Company was not required to pay Federal income tax based on taxable income for the year ended April 30, 1994 (as the taxable income was offset by the net operating loss carryforward), Federal income tax of $1,799 was computed based on the "alternative minimum tax" computation. In the event Federal income tax returns for subsequent years reflect Federal income taxes due in excess of the alternative minimum tax, the alternative minimum taxes paid for years ended April 1991 ($59,763) and 1994 ($1,799) can be applied against the computed Federal income tax. No provision has been made for the difference between financial statement and income tax reporting of certain items of revenue and expenses, as the net operating loss carryforward at April 30, 1995 substantially exceeds the difference; nor has a provision been made for deferred income tax credits, based on the possible use of the net operating losses being applied against taxable income in future years (and the use of the "alternative minimum tax" paid) as there is no assurance that the Company's future profitability will exceed the difference. Note 12. LEASES The Company leases warehouse facilities and office space under a long-term agreement. On June 30, 1992, the Company concluded a settlement with Aircraft Modular Products, Inc. ("AMP") which included AMP's purchasing the building occupied by the Company and entering into a new lease with the Company (not including the space then occupied by a former subsidiary [Advanced Aero Hydraulics, Inc.; see Note 3]) covering a period of five years commencing October 1, 1992 (initially for a six month period with options for six months and four years [exercised covering the four years ending September 30, 1997])(with a rent reduction) and relieving the Company of its $85,387 obligation for prior unpaid rent. F-18 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 12. LEASES (continued) The following is a schedule of future minimum lease payments for the above described lease: Year ending April 30 ------------------- 1996 $ 85,679 1997 85,679 1998 35,700 Thereafter 0 ---------- Total $ 207,058 ========== For the years ended April 30, 1995, 1994 and 1993, rental expense for all operating leases was approximately $111,496, $104,000 and $101,000 (net of rent waivers, see above), respectively. Note 13. MAJOR CUSTOMER The Company made sales to major unaffiliated customers of approximately $486,000, $986,000 and $92,000 during the years ended April 30, 1995, 1994 and 1993, respectively. NOTE 14. EMPLOYMENT AGREEMENTS (see Note 9) During April 1992, the then financial controller of the Company was appointed Chief Financial Officer at a salary of $65,000 per annum (increased to $70,000 when an employment agreement was entered into on May 1, 1994). The employee resigned on May 31, 1995 effective June 30, 1995. Another employee was appointed financial controller. On June 15, 1994, modifications to Executive Employment Agreements were approved by the United States Bankruptcy Court and are summarized as follows: A five year employment agreement, effective May 1, 1994, with the Chief Executive Officer at a salary of $120,000 per annum, plus fringe benefits (the agreement contains provisions for termination by the Company and/or the employee and a non-compete clause), and establishment of $48,000 per year compensation to the Chairman of the Board of Directors (effective June 15, 1994). Note 15. LITIGATION (see Notes 4, 9, and 10) At April 30, 1995 and 1994, the Company was a party to several claims and lawsuits arising out of the conduct of its business. Substantially all of the litigation that was unresolved at April 30, 1993 has been resolved by the United States Bankruptcy Court prior to, or on, September 17, 1993 (when the Company's third amended plan of reorganization was confirmed) or subsequently by a separate Bankruptcy Court order. F-19 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 15. LITIGATION (see Notes 4, 9, and 10)(continued) The following is a summary of the claims and lawsuits that have been resolved as of February 29, 1996: On June 10, 1994, a Default Final Judgement was entered against the former principal stockholder, in the amount of $4,512,600 plus interest, based on the lawsuit re-filed in the Bankruptcy Court. Included in the lawsuit were claims against two suspended officers of the Company (see below) and claims against a third suspended officer (see below) and a former sales consultant; these claims have been settled without payment of substantial funds by, or to, the Company (see Note 4). The former sales consultant had filed a $474,000 claim (against Jetborne, Inc.) in the Bankruptcy Court and the Company had disputed it. On September 8, 1994 the Company and the former sales consultant resolved their disputes and both parties signed a stipulation of dismissal (however, the sales consultant still had the right to file a claim in the Bankruptcy Court). An action to recover damages from the Company, as guarantor, on an outstanding $750,000 obligation (plus interest and costs) payable to a bank by the then principal stockholder of the Company. On September 12, 1991 a judgement was awarded to the bank (against the stockholder and the Company, as guarantor). The litigation against the Company was settled on September 17, 1993 when an order was entered confirming the Company's third amended plan of reorganization. The settlement includes the payment to the bank of $100,000 (by the Company), payment to the bank of approximately $1,078,000 (from the proceeds of collection of the note received from the purchaser of Aircraft Modular Products, Inc. [see Notes 1 and 3] and transferred to the Unsecured Creditors' Committee of Jetborne International, Inc.) and the bank's return to the Company of 750,000 shares of the Company's common stock (previously held by the bank as partial collateral and subsequently purchased by the bank for $.05 per share)(see Note 10). A shareholders' derivative suit, on behalf of the Company, commenced during May 1991, which named the former President of the Company, the President (effective February 1991), the Vice President and the Chief Operating Officer as defendants (see above). The complaint purported to set forth claims for conversion, civil theft, breach of fiduciary duty, instructive trust and breach of promise to pay. Injunctive relief was sought, as well as an accounting by the defendants, for the appointment of a receiver for the Company and the involuntary dissolution of the Company. At a meeting held May 10, 1991, the newly elected Board of Directors passed a resolution to investigate the claims and, at the same time, suspended, as officers and employees, the three officers of the Company. Salaries to the three former officers were stopped effective May 10, 1991. There has not been any recent activity and the Company considers the matter closed. In the opinion of management of the Company, any adverse decision in connection with this litigation will not have a material adverse impact on the financial condition of the Company and, if the F-20 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 15. LITIGATION (see Notes 4, 9, and 10)(continued) Company is awarded damages, the collectability is doubtful (see Note 4). During June 1991, the three suspended officers of the Company brought actions against the Company (and the Company filed a lawsuit in the United States Bankruptcy Court against the suspended officers) for breach of employment and indemnity contracts (see above) and alleged damages as a result of the breaches as well as for reimbursement of costs incurred. The Board of Directors completed its investigation in connection with the shareholders' derivative suit (see above) and terminated the employment of the officers. The actions have been resolved (see above and Note 4). During March 1991, the Company was informed that an investigation by the United States Customs Service (which commenced on March 7, 1990, when the United States Customs Service visited the offices of the Company [in the United States and the United Kingdom] and searched the premises and Company files pursuant to a warrant signed by a United States Magistrate to determine if there was a possible violation of the Export Administration Act and the Arms Export Control Act) had been expanded and the Company, and one of its former Vice Presidents, were the targets of an investigation by a Federal Grand Jury for possible criminal violations. The Company had been informed that charges against the former Vice President were dropped, the Company was indicted and the trial scheduled for November 1991. On October 23, 1992, the Company entered into a plea-bargain agreement, and on December 15, 1992 the Company pleaded guilty to two counts and paid $25,260 in fines, to settle all pending litigation and matters in connection with the investigation. During December 1993, the Company was informed that it had been debarred for a period of three years from December 3, 1992 from participating directly or indirectly in the export of defense articles or technical data or in furnishing of defense services for which a license or other approval is required. As referred to in Note 5, there were various unresolved matters between the Company and a major airline in connection with a consignment agreement dated January 26, 1990. On January 9, 1996, a settlement agreement was entered into between the Company and the major airline. The agreement cancelled and terminated the original consignment agreement, and the modifications thereto, and the Company agreed to wire transfer to the major airline $30,000 by January 18, 1996 (timely paid) and an additional $7,500 per month commencing February 20, 1996 (the first payment was paid February 9, 1996) with a final payment on January 20, 1997. The agreement also provides that, when the major airline receives the $120,000 they will assign to the Company their claim filed in the United States Bankruptcy Court against Jetborne, Inc. ($80,180)(see Note 1). On February 14, 1996, a lawsuit filed against the Company by one of its former attorneys was dismissed based on a settlement compromising the fees sought by the attorney. F-21 JETBORNE INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Note 15. LITIGATION (see Notes 4, 9, and 10)(continued) The following is a summary of the claims and lawsuits that have not been resolved as of February 29, 1996: A former attorney for the Company (the escrow agent holding promissory notes, and collateral therefore [and collateral for the payment of Federal income taxes that might have been required with respect to a proposed bonus payable to one former employee], that the Company received from former executives of the Company [see above and Notes 4 and 9]) had deposited with the Court the promissory notes and collateral and had brought an interpleader action requesting that the Court accept the promissory notes and collateral pending the outcome of the matters involved. The Company filed an answer and cross-claim against the issuers of the promissory notes seeking to claim the escrowed promissory notes and collateral. Counsel for the Company is presently evaluating the possibility of having the default final judgement against the former principal stockholder entered into the litigation in the Circuit Court in order to obtain the release, and subsequent return to the Company, of 1,000,000 shares of the Company common stock which were interplead and which were owned by the former principal stockholder of the Company. A possible substantial liability of Advanced Aero Hydraulics, Inc. (see Note 3) as a result of pollution of its business premises. Based on recent studies made on behalf of the Company, a provision of $49,500 had been made in a prior year (approximately $10,000 of the provision was paid by April 30, 1995 and 1994)(included in accrued expenses in the balance sheets). F-22 Schedule II JETBORNE INTERNATIONAL, INC.
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993 Deductions Balances, Additions (Amounts Beginning (Including Collected Name of Debtor of Year Interest) or Credited) Total - ---------------- ---------- ---------- ------------- -------- 1995: A. Blattner(1) $ 0 $ 0 $ 0 $ 0 M. Levkovitz(2) 0 0 0 0 D. Blattner (3) 0 0 0 0 A. Alouf 0 3,000 0 3,000 1994: A. Blattner(1) $ 0 $ 0 $ 0 $ 0 M. Levkovitz(2) 0 0 0 0 D. Blattner (3) 0 0 0 0 1993: A. Blattner(1) $ 0 $ 0 $ 0 $ 0 M. Levkovitz(2) 0 0 0 0 D. Blattner (3) 0 0 0 0
(1) Balance at beginning and end of year ($0) represents a receivable of $3,310,321 less amounts written-off or for which an allowance has been established of $3,310,321 (see Note 4 to the Financial Statements). (2) Balance at beginning and end of year ($0) represents a receivable of $572,658 less amounts written-off or for which an allowance has been established of $572,658 (see Note 4 to the Financial Statements). (3) Balance at beginning and end of year ($0) represents a receivable of $43,738 less amounts written-off or for which an allowance has been established of $43,738 (see Note 4 to the Financial Statements). F-23A Schedule II JETBORNE INTERNATIONAL, INC.
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993 Amounts Written-off or for Which Balances, End Of Year, an Allowance Net of Allowances Has Been ------------------------ Name of Debtor Established Current Non-current - ----------------- ------------ -------- ------------ 1995: A. Blattner(1) $ 0 $ 0 $ 0 M. Levkovitz(2) 0 0 0 D. Blattner (3) 0 0 0 A. Alouf 0 3,000 0 1994: A. Blattner(1) $ 0 $ 0 $ 0 M. Levkovitz(2) 0 0 0 D. Blattner 0 0 0 1993: A. Blattner $ 0 $ 0 $ 0 M. Levkovitz 0 0 0 D. Blattner 0 0 0
(1) Balance at beginning and end of year ($0) represents a receivable of $3,310,321 less amounts written-off or for which an allowance has been established of $3,310,321 (see Note 4 to the Financial Statements). (2) Balance at beginning and end of year ($0) represents a receivable of $572,658 less amounts written-off or for which an allowance has been established of $572,658 (see Note 4 to the Financial Statements). (3) Balance at beginning and end of year ($0) represents a receivable of $43,738 less amounts written-off or for which an allowance has been established of $43,738 (see Note 4 to the Financial Statements). F-23B Schedule VII JETBORNE INTERNATIONAL, INC.
GUARANTEES OF SECURITIES OF OTHER ISSUERS APRIL 30, 1995 Name of Issuer of Title of Issue of Total Amount Securities Guaranteed Each Class of Guaranteed and Amount Owed by by the Company Securities Guaranteed Outstanding the Company - --------------------- --------------------- -------------- -------------- NONE
F-24A Schedule VII JETBORNE INTERNATIONAL, INC.
GUARANTEES OF SECURITIES OF OTHER ISSUERS APRIL 30, 1995 Nature of Default by Amount in Issuer of Securities Treasury Guaranteed in Principal, of Issuer of Interest, Sinking Fund, Securities Nature or Redemption Provisions Guaranteed of Guarantee or Payment of Dividends - --------------- ------------ ------------------------ NONE
F-24B Schedule IX JETBORNE INTERNATIONAL, INC.
SHORT-TERM BORROWINGS FOR THE YEAR ENDED APRIL 30, 1995 Maximum Amounts Average Amount Categories of Aggregate Balances at Outstanding Outstanding Short-term Borrowings End of Year During the Year During the Year - ----------------------- ----------- --------------- --------------- Notes payable to: Banks and other financial institutions $15,828 $ 26,783 $ 14,574
The average amount outstanding during the year represents the average principal balances outstanding during the year. The weighted average interest rates during the year were computed by dividing the actual interest incurred on short-term borrowings by the average amount outstanding during the year. F-25A Schedule IX JETBORNE INTERNATIONAL, INC. SHORT-TERM BORROWINGS FOR THE YEAR ENDED APRIL 30, 1995 Weighted Average Categories of Aggregate Interest Rate Short-term Borrowings During the Year - ----------------------- ---------------- Notes payable to: Banks and other financial institutions 6.92% The average amount outstanding during the year represents the average principal balances outstanding during the year. The weighted average interest rates during the year were computed by dividing the actual interest incurred on short-term borrowings by the average amount outstanding during the year. F-25B JETBORNE INTERNATIONAL, INC.
Exhibit II SCHEDULE OF COMPUTATIONS OF EARNINGS (LOSS) PER SHARE FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993 1995 1994 1993 ----------- ----------- ---------- CONTINUING OPERATIONS: Income (loss) from continuing operations $ (701,034) $ 116,658 $ (123,822) =========== =========== =========== Weighted average number of common shares outstanding during the year 11,882,280 9,730,636 6,232,280 ========== ========= ========= INCOME (LOSS) PER SHARE - CONTINUING OPERATIONS $ (0.06) $ 0.01 $ (0.02) =========== =========== =========== NET INCOME: Net income (loss) $ (701,034) $ 530,691 $ (164,154) =========== =========== =========== Weighted average number of common shares outstanding during the year 11,882,280 9,730,636 6,232,280 ========== ========= ========= EARNINGS (LOSS) PER SHARE - NET INCOME (LOSS) $ (0.06) $ 0.05 $ (0.03) ========== ========== ==========
F-26 EX-27 3
5 This schedule contains summary financial information extracted from Balance Sheet, Statement of Operations, Statements of Cash Flows and Notes thereto incorporated in Part I, Item 8. of this Form 10-K and is qualified in its entirety by reference to such financial statements. YEAR APR-30-1995 APR-30-1995 86,235 0 143,709 3,607 3,248,136 3,498,443 633,816 389,148 3,749,432 331,262 0 0 0 118,823 3,228,940 3,749,342 1,125,279 1,233,862 906,840 1,943,097 0 0 5,166 (709,235) (8,201) (701,034) 0 0 0 (701,034) (0.06) (0.06)
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