UNITED STATES
Securities and Exchange Commission
Washington, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended April 30, 1999
Or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition period from to
Commission File Number 0-3255
JAYARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-1864519
(State or jurisdiction of incorporation or organization) (IRS EIN)
PO Box 741528, Houston, Texas 77274
(Address of principal executive office) (Zip Code)
Telephone number, including area code: (713) 783-9184
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, par value $.01 per share
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 [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (section 229.405 of this
chapter) is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-
affiliates of the Registrant is $169,115 as of June 30, 1999.
The number of shares outstanding of Registrant's Common Stock is
27,663,597 as of July 1, 1999.
PART I
Item 1. Business
General
Jayark Corporation ("Jayark" or "the Company") conducts its operations
through two wholly owned subsidiaries, AVES Audiovisual Systems, Inc.
("AVES") and MED Services Corp. ("Med"), each of which constitute a
business segment for financial reporting purposes.
AVES distributes and rents a broad range of audio, video and
presentation equipment, and supplies. Its customer base includes
businesses, churches, hospitals, hotels and educational institutions.
The warehousing, sales and administrative operations of AVES are
located in Houston, Texas.
Med finances the manufacture, sale and rental of medical equipment.
It had one customer in fiscal 1999, Vivax Medical Corporation, a
company that manufactures, sells and rents durable medical equipment
to hospitals, nursing homes and individuals. The administrative
operations of Med are located in Vestal, New York.
The Company was originally incorporated in New York in 1958. In 1991,
the Company changed its state of incorporation to Delaware. In July
1998 the Company amended its Certificate of Incorporation increasing
its authorized Common Stock to 30,000,000 shares and decreasing the
par value of its Common Stock from $.30 to $.01 per share.
Discontinued Operations
As a result of continued losses due to a soft retail market, low
margins, competitive pressures, and price reductions, in 1997 the
Company discontinued the operations of Rosalco Inc., ("Rosalco") a
wholly owned subsidiary of Jayark. Rosalco had been headquartered in
Jeffersonville, Indiana and had been in the business of the
distribution of more than 300 different products, including occasional
furniture, brass beds, custom jewelry cases and accessories, most of
which were imported from outside the continental United States.
Shortly after the closing, a receiver was assigned to liquidate the
secured assets of Rosalco to satisfy the loan principal. In fiscal
1997, Jayark incurred a $5,795,000 loss on discontinued operations,
which included $3,294,000 loss from operations for the year ended
April 30, 1997, the establishment of accruals in the amount of
$300,000 for expenses and guarantees related to the closing, the write
off of an intercompany receivable and other assets of $476,000, and
the write off of the remaining net assets of Rosalco of $1,725,000.
Recent Events
In September 1998, the Company offered to each stockholder, the right
to purchase, pro rata, two shares of Common Stock at a price of $.10
per share. The Company filed a Registration Statement on Form S-1
with the Securities and Exchange Commission in order to register such
rights to purchase Common Stock, under the Securities Act of 1933, as
amended.
The Rights Offering expired on October 30, 1998. The total offering
of 18,442,398 shares was fully subscribed with 111,600 shares
purchased with cash and the balance subscribed by conversion of debt.
The Company issued the new shares in November 1998. The conversion of
debt to stock in conjunction with the Rights Offering resulted in a
$1,000,000 reduction in notes payable to related parties, a $761,000
reduction in subordinated debt, and a $72,000 reduction in accrued
interest. The end result was $1,794,000 of equity enhancement.
The Koffman Group, which consists of David Koffman, Chairman of the
Board of Directors and President of the Company, Burton Koffman,
Richard Koffman, Milton Koffman, Jeffrey Koffman, Sara Koffman,
Ruthanne Koffman, Elizabeth Koffman, Steven Koffman, and three
entities controlled by members of the Koffman family, agreed to
acquire all shares not purchased by other stockholders on Primary
Subscription. As a result, the Koffman Group beneficially owns
20,417,188 shares of Common Stock, which represents approximately 74%
of the Common Stock outstanding.
On November 13, 1998 Jayark Corporation, through its newly formed,
wholly owned subsidiary Med, terminated its Purchase and Sale,
Distribution, and Custody Agreements with Vivax Medical Corporation
("Vivax"), a company that manufactures, sells and rents durable
medical equipment to hospitals, nursing homes and individuals. Under
the terms of the Purchase and Sale Agreement, dated June 17, 1998, Med
purchased certain medical equipment from Vivax for cash of $579,700
and a $144,925 unsecured promissory note due in five years. Med then
entered into a Consignment Agreement with Vivax whereby this medical
equipment was consigned to Vivax to rent through its distribution
network. In consideration of Vivax renting and maintaining the Med
equipment, Vivax was entitled to a range of forty-eight to sixty-seven
percent of the rental proceeds, based upon the equipment rented.
Vivax had an option to repurchase the medical equipment from Med after
the twenty-fourth, thirty-six and forty-eighth month of the
consignment period. Med, under the Purchase and Sale Agreement had an
option, through October 31, 1999 to purchase an additional $2,475,000
of medical equipment from Vivax. The results of Med's operations were
immaterial in fiscal 1999.
In consideration for terminating the Agreements, Med received $840,000
after eliminating net accounts receivable and notes payable of $44,925
from Vivax. Med, in turn, paid off the outstanding balance on its
revolving line of credit to the bank and outstanding interest due on
the line. As a result of the termination, Med realized a $203,000
gain on the sale of assets.
Description of AVES' Business
Products
AVES distributes and rents a broad range of audio, video and
presentation equipment, and supplies. Among the items distributed are
video, filmstrip and slide projectors; projection screens and lamps;
video cameras and camcorders; laser videodisk, video projection, TV
monitors and receivers; video recorders; still imaging systems; public
address systems, microphones and headsets; tape recorders, record
players, cassette recorders, and related accessories and supplies.
Some of the items sold (such as blank audio cassettes, headsets and
cassette recorders, duplicating equipment and supplies, laminating
film and equipment for document protection) are either assembled by
AVES or purchased from private label and other sole source suppliers
and distributed under the "AVES" and/or "LAMCO" names. AVES also
distributes the products of brand name manufacturers such as RCAT,
GET, Mitsubishi, Elmo, Panasonic, Sanyo, Ikegami, Videotek, Hitachi,
Pioneer, Leitch, Quasar, Telex Corporation, Kodak, Dukane, Sharp,
Sony, 3M Brand, Luxor and various other brand names. Brand name and
"house" brand products account for approximately 97% and 3% of AVES
product sales, respectively. The Company also offers repair services,
audio visual consulting & design, engineering, installation and
servicing of audiovisual systems to businesses, churches, hospitals,
hotels and educational institutions.
Raw Materials
The sources and availability of raw materials are not significant for
an understanding of AVES' business since competitive products are
obtainable from alternative suppliers. AVES carries an inventory of
merchandise for resale and for rental operations that is adequate to
meet the rapid delivery requirements (frequently same day shipments)
of its distribution business.
Patents
There are no patents, trademarks, licenses, franchises or concessions
that are material to AVES business.
Sales
AVES currently distributes and rents its products in the United
States, primarily by means of catalogs, direct mail, telephone orders
and a field sales force. AVES exhibits at various regional shows to
expose its products to an interested audience. AVES' sales are not
seasonal, except that sales to schools typically are higher from April
through July than at other times during the year.
Customers
In fiscal 1999, 74% of AVES' revenue was derived from sales to schools
and other educational institutions. The remaining 26% of revenues
came from sales to businesses (24%) and rental of AVES equipment (2%).
In 1998, 72% of revenue came from sales to schools and educational
institutions, while 25% came from sales to businesses and 3% came from
rentals. In 1997, 70% of revenue came from sales to schools and
educational institutions, while 27% came from sales to businesses and
3% came from rentals.
Backlog
The amount of unfilled sales orders of AVES at April 30, 1999, was
$1,040,000 as compared with $904,000 at April 30, 1998, and $758,000
at April 30, 1997. The amount of unfilled sales orders is not a
material measure of AVES' operations.
Competition
The Company believes that AVES is one of the most diversified national
audio visual purveyors in the United States, given the different types
of services and products offered. AVES' principal means of
competition are its aggressive pricing, technical expertise, quick
delivery and the broad range of product lines and brands available
through its distribution channels.
Employees
At April 30, 1999, AVES had 20 employees.
Description of Med's Business
Products / Services
For the fiscal year ending April 30, 1999 Med financed the
manufacture, sale and rental of durable medical equipment by Vivax, a
company that manufactures, sells and rents this equipment to
hospitals, nursing homes and individuals. The Company intends to
pursue additional opportunities in the medical field.
Raw Materials
The sources and availability of raw materials are currently not
applicable to Med's business.
Patents
There are no patents, trademarks, licenses, franchises or concessions
that are material to Med's business.
1999 Transactions
In November 1998 Med terminated its Purchase and Sale, Distribution,
and Custody Agreements with Vivax. Under the terms of the Purchase
and Sale Agreement, dated June 17, 1998, Med purchased certain medical
equipment from Vivax for cash of $579,700 and a $144,925 unsecured
promissory note due in five years. Med then entered into a
Consignment Agreement with Vivax whereby this medical equipment was
consigned to Vivax to rent through its distribution network. In
consideration of Vivax renting and maintaining the Med equipment,
Vivax was entitled to a range of forty-eight to sixty-seven percent of
the rental proceeds, based upon the equipment rented. Vivax had an
option to purchase the medical equipment from Med after the twenty-
fourth, thirty-six and forty-eighth month of the consignment period.
Med, under the Purchase and Sale Agreement had an option, through
October 31, 1999 to purchase an additional $2,475,000 of medical
equipment from Vivax.
Customers
During the fiscal year ending April 30, 1999, Vivax was Med's only
customer.
Backlog
Med does not currently have any backlog orders.
Item 2. Properties
The Company's Corporate office is located in Houston, Texas in a
modern, two story, stone and glass building which includes adjoining
parking for up to 50 cars. The Corporate office and AVES' business
are conducted from approximately 13,000 square feet; 5,500 of which
are used for office, sales and demonstration purposes and 7,500 for
warehouse purposes. The current lease term expires on April 30, 2001.
The current rental is $5,200 per month.
Item 3. Legal Proceedings
None
Item 4. Submission Of Matters To A Vote Of Security Holders
On May 22, 1998, the Board of Directors of the Company approved and
authorized an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of the Company's common
stock, par value of $.30 per share, from 10,000,000 shares to
30,000,000 shares and to change the par value to $.01 per share. As
of May 22, 1998, the Company had 9,221,199 issued and outstanding
shares of Common Stock. Each share of Common Stock is entitled to one
vote on any matter brought to a vote of the Company's stockholders.
By written consent dated May 22, 1998, a majority of the Company's
stockholders representing 4,898,245 shares, or 53% of the outstanding
shares entitled to vote, approved the amendment.
PART II
Item 5. Market For Registrant's Common Stock And Related Stockholder
Matters
Effective July 10, 1997, the Company's Common Stock was delisted due
to the Company's non-compliance with the NASDAQ's minimum capital and
surplus requirement. Bid quotations for the Company's Common Stock
may be obtained from the "pink sheets" published by the National
Quotation Bureau, and the Common Stock is traded in the over-the-
counter market.
The following table presents the quarterly high and low trade prices
of the Company's common stock for the periods indicated, in each
fiscal year as reported by NASDAQ. As of July 1, 1999, there were
approximately 827 stockholders of record of common stock.
The Company has not paid any dividends on its common stock during the
last five years and does not plan to do so in the foreseeable future.
1999 Common Stock Trade Price 1998 Common Stock Trade Price
High Low High Low
First Quarter .09 .09 .31 .19
Second Quarter .09 .03 .19 .19
Third Quarter .08 .06 .19 .19
Fourth Quarter .06 .05 .17 .09
Item 6. Selected Financial Data
Years Ended April 30, 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Results of Operations:
Net Revenues $15,288,215 $13,604,558 $12,638,072 $11,856,148 $11,631,370
Earnings (Losses)
from Cont Oper $445,805 $75,992 ($264,372) ($284,390) $814
Earnings (Losses)
from Disc Oper $0 $0 ($5,794,839)($6,900,857) $772,479
Net Earnings (Losses) $445,805 $75,992 ($6,059,211)($7,185,247) $773,293
Basic and Diluted Earnings (Loss)
per share from Cont Oper $.02 $.01 ($.03) ($.04) $.00
Basic and Diluted Earnings (Loss) per share
from Disc Oper -- -- ($.66) ($.88) $.11
Weighted Avg
Shares Oustanding 18,366,607 9,221,199 8,802,528 7,833,990 6,867,083
At April 30,
Balance Sheet Information:
Total Assets $2,779,891 $2,634,964 $2,754,072 $8,327,357 $18,084,616
Long Term
Obligations $1,424,229 $3,446,021 $3,407,207 $1,972,020 $1,542,628
Working Capital
(Deficit) $370,914 $157,069 ($7,003) ($233,256) $2,066,560
Stockholders' Equity
(Deficit) $(685,523)($2,925,566) ($3,001,558) $2,585,541 $8,614,426
Item 7. Management's Discussion and Analysis Of Financial Condition
And Results Of Operations
Comparison of Fiscal Year Ended April 30, 1999 With Fiscal Year Ended
April 30, 1998
Net Revenues
Consolidated Revenues of $15,288,000 increased $1,684,000, or 12.4%,
from fiscal 1998. The increase was the result of a $1,584,000
increase in AVES' sales and the addition of $100,000 in rental income
from the new subsidiary, Med.
Cost of Revenues
Consolidated Cost of Revenues of $12,999,000 increased $1,553,000, or
13.6%, from the prior fiscal year which is directly related to the
increase in revenues.
Gross Margin
Consolidated Gross Margin of $2,290,000 was 15.0% of revenues, as
compared with $2,159,000, or 15.9%, for the same period last year.
Selling, General and Administrative Expense
Consolidated Selling, General and Administrative Expenses of
$1,754,000 increased $37,000, or 2.2%, as compared with the prior
reporting year. This increase was due to $66,000 in expenses for the
new subsidiary, Med and a $6,000 increase in Corporate spending. AVES
decreased spending by $35,000 which partially offset the increases
experienced by Med and Corporate. Although expenses at Corporate are
up from the prior year, this $6,000 increase is a result of a
difference in miscellaneous tax expense of $60,000. Taxes in the
current year were $6,000 versus a credit of $54,000 in the prior year.
The prior year's credit was a result of miscellaneous tax refunds
received. Corporate recognized an overall decrease in spending of
$54,000 in all other expense categories due to their continued efforts
to reduce costs. The savings at AVES were attributable to reductions
in payroll expenses.
Operating Income
Consolidated Operating Income of $536,000 increased $94,000, or 21.3%,
from last year's operating income of $442,000. This increase was
directly related to the increase in sales.
Interest Expense
Consolidated Interest Expense of $283,000 decreased $83,000 or 22.6%
as compared with the same period last year. This decrease was
primarily a result of the decrease in subordinated debt and notes
payable attributed to the conversion of debt in conjunction with the
Rights Offering which expired on October 30, 1998. As compared with
the prior period, subordinated debt was down $787,000, with an
interest rate reduction on the $613,000 in remaining principal from
12% to 8%, and notes payable decreased $1,000,000 due to the exchange
of equity for debt. The resulting decline in interest was partially
offset by higher interest experienced from increased borrowing levels
on the Company's line of credit.
Gain (Loss) on Sale of Assets
Consolidated Gain on Sale of Assets of $203,000 resulted from the
termination of Med's Purchase and Sale, Distribution and Custody
Agreements with Vivax.
Pre Tax Earnings
Pre Tax Earnings of $456,000 for the fiscal year ended April 30, 1999
increased $380,000, or 500.0%, as compared with the same period last
year. This increase was due to higher revenues, decreased interest
expense, and the $203,000 gain on sale from Med's termination of its
agreements with Vivax. These increases were partially offset by a
slight increase in selling, general and administrative expenses.
Provision for Income Taxes
Provision for Income Taxes of $10,000 for the fiscal year ended April
30, 1999 as compared with $0 for the same period last year.
Net Income (Loss)
Consolidated Net Income of $446,000 for the fiscal year ended April
30, 1999 as compared with $76,000 for the same period last year.
Comparison of Fiscal Year Ended April 30, 1998 With Fiscal Year Ended
April 30, 1997
Net Revenues
Consolidated Revenues of $13,605,000 increased $967,000, or 7.6%, from
fiscal 1997. The increase was the result of a $1,130,000 increase in
direct sales due to volume increases. These increases were partially
offset by decreases in rental sales ($206,000).
Cost of Revenues
Consolidated Cost of Revenues of $11,446,000 increased $854,000, or
8.1%, from the prior fiscal year primarily due to increased revenues.
Gross Margin
Consolidated Gross Margin of $2,159,000 was 15.9% of revenues, as
compared with $2,046,000, or 16.2%, for the same period last year.
Selling, General and Administrative Expense
Consolidated Selling, General and Administrative Expenses of
$1,717,000 decreased $253,000 or 12.9% as compared with the prior
reporting year. Jayark Corporate recognized cost reductions in legal
and professional fees of $119,000 due to reduced legal representation
in the current year and higher than normal audit and accounting fees
incurred in Fiscal 1997; an $88,000 decrease in taxes due to
miscellaneous expense reduction and refunds received from prior year
returns; and decreases in other miscellaneous expense accounts of
$86,000 as a result of the Company's overall cost reduction plan.
These decreases were partially offset by a $78,000 decrease in other
income as a result of 1997 gains on the disposal of fixed assets and
other miscellaneous income. AVES decreased spending $38,000,
primarily a result of an increase in miscellaneous income.
Operating Income
Consolidated Operating Income of $442,000 increased $366,000, or
481.6%, from operating income of $76,000 during the same period last
year. This increase was due to $113,000 in increased margin from
higher revenues and a $253,000 reduction in selling, general and
administrative expenses.
Interest Expense
Consolidated Interest Expense of $366,000 increased $26,000, or 7.6%,
due to increased borrowing levels.
Income (Loss) from Continuing Operations
Consolidated Income from Continuing Operations was $76,000 as compared
with a prior year's net loss of $264,000. This was a result of higher
revenues combined with lower selling, general and administrative
expenses.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 1999, consolidated open lines of credit available to the
Company for borrowing, were $1,250,000 as compared with $950,000 at
April 30, 1998. It is the opinion of the Company's management that
operating expenses, as well as obligations coming due during the next
fiscal year, will be met primarily by cash flow generated from
operations and from available borrowing levels.
Working Capital
Working capital was $371,000 at April 30, 1999, compared with $157,000
at April 30, 1998. The increase in working capital is largely due to
cash flows from operations.
Net cash provided by operating activities was $321,000 in 1999 as
compared with $386,000 in 1998.
Cash flows provided by investing activities during the year ended
April 30, 1999 were $68,000 as a result of sale of assets relating to
the Med subsidiary, offset by capital expenditures by the AVES
subsidiary.
Cash used by financing activities of $418,000 is due to payment on the
Company's line of credit and principal payments on notes payable to
related parties. The majority of the common stock issued in
conjunction with the Rights Offering was subscribed using conversion
of debt. Consequentially, there was little to no cash provided by the
transaction.
The Company had no material commitments for capital expenditures as of
April 30, 1999.
Impact of Inflation
Management of the Company believes that inflation has not
significantly impacted either net sales or net earnings during the
year ended April 30, 1999.
Effect of New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income," which establishes standards for
reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all
changes in equity except those resulting from investments by owners
and distributions to owners. This standard is effective for financial
statements beginning fiscal 1999. There is no significant impact on
current financial statement disclosures.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
Accounting for Derivative Instruments and Hedging Activities. SFAS
133 is effective for transactions entered into after January 1, 2000.
SFAS 133 requires that all derivative
instruments be recorded on the balance sheet at fair value. Changes
in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a
derivative is designated as part of the hedge transaction and the type
of hedge transaction. The ineffective portion of all hedges will be
recognized in earnings. The Company does not expect this standard to
have a significant impact on future financial statement disclosures.
Year 2000
The year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year.
Certain information technology systems and their associated software
("IT Systems"), and certain equipment that uses programmable logic
chips to control aspects of their operation ("embedded chip
equipment"), may recognize "00" as a year other than the year 2000.
The year 2000 issue could result, at the Company and elsewhere, in
system failures or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process
transactions or to engage in other normal business activities.
The Company has addressed, and continues to address, its year 2000
issues, including efforts relating to IT Systems and embedded chip
equipment used within the Company, efforts to address issues the
Company faces if third parties who do business with the Company are
not prepared for the year 2000, and contingency planning. The Company
has used both internal and external resources to identify, correct,
upgrade or replace and test its IT systems and embedded chip equipment
for year 2000 compliance.
The Company's IT Systems have been tested and determined to be
compliant in a simulated year 2000 environment. As a result, the
Company believes that its IT systems are ready for the year 2000,
although isolated incidences of non-compliance may be experienced.
The Company plans to allocate internal resources and retain dedicated
consultants and vendor representatives to be ready to take action
should these events occur.
The Company has identified some non-IT systems, embedded chip
equipment, such as telephones, fax machines, climate control devices
and building security systems, which may be impacted by the year 2000
problem, and is in the process of determining what actions may be
required to make the equipment year 2000 compliant. These non-IT
systems are minor in nature and would not significantly impact the
Company's operations.
With respect to the IT and non-IT Systems of critical third parties,
such as product vendors, utilities, communications, transportation,
government, banking and other important services, the Company has
established communication to obtain assurances regarding their
respective year 2000 efforts. While the Company expects such third
parties to address the year 2000 issues based on the representations
it has received to date, the Company cannot guarantee that these
systems will be made year 2000 compliant in a timely manner. Computer
errors or failures in any of these areas may have the potential to
disrupt business operations. The Company will continue to monitor the
progress of such third parties throughout the next fiscal year.
Although the Company values established relationships with key
vendors, substitute products for most goods may be obtained from other
vendors. If certain vendors are unable to deliver product on a timely
basis, due to their own year 2000 issues, the Company anticipates that
there will be others who will be able to deliver similar goods.
However, the lead time involved in sourcing certain goods may result
in temporary shortages of relatively few items.
The Company expects all expenditures relating to their year 2000
readiness to be funded by cash flows from operations and that this
will not materially impact other operating or investment plans.
The Company believes that the IT and non-IT technologies which support
its critical functions will be ready for the transition to the year
2000. There can be no assurance that similar unresolved issues for
key third parties will not cause an adverse effect on the Company. As
a result, the Company is in the process of developing and finalizing
the appropriate contingency plans, which plans will be established and
then revised as necessary during the course of 1999. Although the
Company believes that its efforts to address the year 2000 issue will
be sufficient to avoid a material adverse impact on the Company, there
can be no assurances that these efforts will be fully effective.
Item 8. Financial Statements And Supplementary Data
The Report of Independent Certified Public Accountants, Financial
Statements and Notes to Consolidated Financial Statements filed as a
part of this report are listed in the accompanying Index to Financial
Statements and Schedules.
Item 9. Change In and Disagreement With Accountants on Accounting And
Financial Disclosure
None
PART III
Item 10. Directors And Executive Officers Of The Registrant
Set forth below is a list of the directors, executive officers and key
employees of the Company and their respective ages as of June 30,
1999, and, as to directors, the expiration date of their current term
of office:
CURRENT DIRECTORS
Term Director
Name Age Expires Position Presently Held Since
- --------------------------------------------------------------------------------
David Koffman 40 2000 Chairman, President, Chief Executive 1983
Officer and Director
Frank Rabinovitz 56 2000 Executive Vice President, Chief 1989
Operating Officer, Director and
President of AVES
Robert C. Nolt 51 2001 Chief Financial Officer and Director 1998
Arthur G. Cohen 70 1999 Director 1990
David L. Koffman was elected President and Chief Executive Officer of
the Company in December 1988. Prior to that time, he served as
Director and Vice President of the Company for over seven years.
Frank Rabinovitz was elected Executive Vice President, Chief Operating
Officer and Director of the Company in 1989. In addition, he is the
President of the Company's audiovisual subsidiary and has served in
this capacity for more than twelve years, as well as in various other
executive and management capacities since 1980.
Robert C. Nolt is Chief Financial Officer and Director of the Company.
In addition, Mr. Nolt is Chief Financial Officer of Binghamton
Industries, Inc., a company controlled by the principal shareholders
of the Company. Prior to joining the Company, Mr. Nolt was Vice
President of Finance of RRT-Recycle America, Inc. Mr. Nolt is a
Certified Public Accountant with over 26 years of experience in the
Accounting field and has served in a number of executive positions.
Before joining RRT in 1993, Mr. Nolt was Chief Financial Officer for
the Vestal, NY based Ozalid Corporation.
Arthur G. Cohen has been a real estate developer and investor for more
than eight years. Mr. Cohen is a Director of Baldwin and Arlen, Inc.
Burton I. Koffman and Richard E. Koffman are parties to an agreement
with Arthur G. Cohen pursuant to which they have agreed to vote their
shares in favor of the election of Mr. Cohen to the Board of Directors
of the Company.
Information Concerning Operations of the Board of Directors
The Executive Committee of the Board of Directors consists of Mr.
David L. Koffman (Chair) and Mr. Frank Rabinovitz. The function of
the Executive Committee is to exercise the powers of the Board of
Directors to the extent permitted by Delaware law. As a rule, the
Executive Committee meets to take action with respect to matters
requiring Board of Directors approval and which cannot await a regular
meeting of the Board or the calling of a special meeting. Under
Delaware law and the Company's By-laws, both the Board and Executive
Committee can act by unanimous written consent to all members.
The Stock Option Committee of the Board of Directors was created to
administer the Company's 1981 Incentive Stock Option Plan, as amended,
pursuant to resolution adopted November 24, 1981, giving it authority
to exercise powers of the Board with respect to the Plan. The Stock
Option Committee consists of Mr. Frank Rabinovitz and Mr. Robert Nolt.
The Audit Committee of the Board of Directors was created in 1991 to
administer and coordinate the activities and results of the annual
audit of the Company by independent accountants and to comply with
NASDAQ listing requirements. The Audit Committee is comprised of Mr.
Frank Rabinovitz and Mr. Robert Nolt.
The Compensation Committee of the Board of Directors was created in
1993 to administer and review compensation structure, policy and
levels of the Company. The Compensation Committee is composed of Mr.
Frank Rabinovitz and Mr. David Koffman.
Item 11. Executive Compensation
Set forth in the following table is certain information relating to
the approximate remuneration paid by the Company during the last three
fiscal years to each of the most highly compensated executive officers
whose total compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE (1,2,3)
Annual
Compensation
Year Salary Bonus
David L. Koffman 1999 $141,750 --
Chairman, President 1998 162,000 --
and Chief Executive Officer 1997 162,000 --
Frank Rabinovitz 1999 $162,000 $50,000
Director, Executive Vice President, Chief 1998 162,000 50,000
Operating Officer, President of AVES 1997 162,000 50,000
(1) Does not include the value of non-cash compensation to the named
individuals, which did not exceed the lesser of $50,000 or, 10% of
such individuals' total annual salary and bonus. The Company provides
a vehicle to each of the named executives for use in connection with
Company business but does not believe the value of said vehicles and
other non-cash compensation, if any, exceeds the lesser of $50,000 or
10% of the individual's total annual salary and bonus.
(2) The Company has entered into Split Dollar Insurance Agreements
with David L. Koffman and Frank Rabinovitz, pursuant to which the
Company has obtained insurance policies on their lives in the
approximate amounts of $5,743,400 and $497,700, respectively. The
premium is paid by the Company. Upon the death of the individual, the
beneficiary named by the individual is entitled to receive the
benefits under the policy. The approximate amounts paid by the
Company during the fiscal year ended April 30, 1999 for this insurance
coverage were $0 and $25,373, respectively. Such amounts are not
included in the above table.
(3) The Company has accrued Mr. Koffman's 1999 salary, however, he
has deferred payment until such time as the Company's working capital
position improves.
The following table sets forth-certain information relating to the
value of stock options at April 30, 1999:
Number of Unexercised Value of Unexercised In-
Options at Fiscal Year End The-Money Options at
Fiscal Year End
-------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ----- ----------- ------------- ---------- --------------
Frank Rabinovitz 100,000 0 $0 0
Based on the $0.05 per share closing bid price of the common
stock on the NASDAQ Stock Exchange on April 30, 1999
Effective November 24, 1981 and approved at the annual stockholders
meeting in 1982, the 1981 Incentive Stock Option Plan (ISOP) was
adopted. An amendment to the ISOP was adopted on December 11, 1989.
This amendment increased the number of incentive stock options that
can be granted from 150,000 shares to 600,000 shares. The ISOP
provides for the granting to key employees and officers of incentive
stock options, as defined under current tax laws. The stock options
are exercisable at a price equal to or greater than the market value
on the date of the grant. No stock options were granted during the
fiscal year ended April 30, 1999.
Effective September 15, 1994 and approved at the annual stockholders
meeting in 1994, the 1994 NonEmployee Director Stock Option Plan (the
"Director Plan") was adopted and 200,000 shares of the Company's
common stock reserved for issuance under the Director Plan. The
Director Plan provides for the automatic grant of nontransferable
options to purchase common stock to nonemployee directors of the
Company; on the date immediately preceding the date of each annual
meeting of stockholders in which an election of directors is
concluded, each nonemployee then in office will receive options
exercisable for 5,000 shares (or a pro rata share of the total number
of shares still available under the Director Plan). No option may be
granted under the Director Plan after the date of the 1998 Annual
Meeting of Stockholders.
Options issued pursuant to the Director Plan are exercisable at an
exercise price equal to not less than 100% of the fair market value
(as defined in the Director Plan) of shares of common stock on the day
immediately preceding the date of the grant. Options are vested and
fully exercisable as of the date of the grant. Unexercised options
expire on the earlier of (i) the date that is ten years from the date
on which they were granted, (ii) the date which is three calendar
months from the date of the termination of the optionee's directorship
for any reason other than death or disability (as defined in the
Director Plan), or (iii) one year from the date of the optionee's
disability or death while serving as a director.
The Director Plan became effective immediately following the 1994
Annual Meeting of Shareholders. Each nonemployee director in office
on the date immediately preceding the date of each year's annual
meeting will receive options exercisable for 5,000 shares of common
stock.
During fiscal year ended April 30, 1999, no director options were
granted to nonemployee directors.
Report of the Compensation Committee of the Board of Directors on
Executive Compensation
Except pursuant to its ISOP and the Director Plan, the Company does
not have any formal annual incentive program, cash or otherwise, nor
does it make annual grants of stock options. Cash bonuses and stock
options, including bonuses and options paid to executive officers,
have generally been awarded based upon individual performance,
business unit performance and corporate performance, in terms of cash
flow, growth and net income as well as meeting budgetary, strategic
and business plan goals.
The Company is committed to providing a compensation program that
helps attract and retain the best people for the business. The
Company endeavors to achieve symmetry of compensation paid to a
particular employee or executive and the compensation paid to other
employees or executives both inside the Company and at comparable
companies.
The remuneration package of the Chief Executive Officer includes a
percentage bonus based on the Company's profitable performance.
Item 12. Security Ownership Of Certain Beneficial Owners And
Management
The following table sets forth as of April 30, 1999, the holdings of
the Company's Common Stock by those persons owning of record, or known
by the Company to own beneficially, more than 5% of the Common Stock,
the holdings by each director or nominee, the holdings by certain
executive officers and by all of the executive officers and directors
of the Company as a group.
PRINCIPAL STOCKHOLDERS
Amount and Nature
of Beneficial Note % of
Name and Address of Beneficial Owner Ownership (1) Class
- ------------------------------------ ----------------- ----- -----
David L. Koffman
300 Plaza Drive, Vestal,NY 13850 12,830,326 46.4%
Burton I. Koffman
300 Plaza Drive, Vestal, NY 13850 1,868,190 2,3 6.8%
Campobello Holding, LP
Box 4485, Great Neck, NY 11024 1,863,643 6.7%
Ruthanne Koffman
300 Plaza Drive, Vestal, NY 13850 1,830,652 6.6%
Jeffrey P. Koffman
150 East 52nd Street, New York, NY 10022 1,461,023 5.3%
Frank Rabinovitz
6116 Skyline Drive, Houston, TX 77057 684,260 2.5%
All Directors & Exec Officers as a group 13,514,586 48.9%
1.All shares are owned directly by the individual named, except as
set forth herein. Includes actual shares beneficially owned and
Employee and Director Stock Options exercisable within 60 days. David
L. Koffman and Jeffrey P. Koffman are sons of Burton I. Koffman.
Ruthanne Koffman is the wife of Burton I. Koffman.
2.Excludes 37,000 shares owned by a charitable foundation of which
Burton I. Koffman is President and Trustee.
3.Includes 537,000 shares owned as tenants in common by brothers
Richard E. Koffman and Burton I. Koffman.
Item 13. Certain Relationships And Related Transactions
On March 12, 1997, in connection with the State Street Bank financing
and the establishing of the BSB Bank & Trust line of credit, the
Company issued stock warrants totaling 4,166,667 to A-V Texas Holding,
LLC, an affiliate of the Company of which David Koffman is a principal
shareholder. The warrants allowed the holder to purchase 4,166,667
shares of the Company's common stock at a warrant price of $.30. On
March 31, 1999, A-V Texas Holding, LLC and the Company mutually agreed
to cancel the warrants.
In September 1998, the Company offered to each stockholder, the right
to purchase, pro rata, two shares of Common Stock at a price of $.10
per share. The Company filed a Registration Statement on Form S-1
with the Securities and Exchange Commission in order to register such
rights to purchase Common Stock, under the Securities Act of 1933, as
amended.
The Rights Offering expired on October 30, 1998. The total offering
of 18,442,398 shares was fully subscribed with 111,600 shares
purchased with cash and the balance subscribed by conversion of debt.
The Company issued the new shares in November 1998. The conversion of
debt to stock in conjunction with the Rights Offering resulted in a
$1,000,000 reduction in notes payable to related parties, a $761,000
reduction in subordinated debt, and a $72,000 reduction in accrued
interest. The end result was $1,794,000 of equity enhancement.
The Koffman Group, which consists of David Koffman, Chairman of the
Board of Directors and President of the Company, Burton Koffman,
Richard Koffman, Milton Koffman, Jeffrey Koffman, Sara Koffman,
Ruthanne Koffman, Elizabeth Koffman, Steven Koffman, and three
entities controlled by members of the Koffman family, agreed to
acquire all shares not purchased by other stockholders on Primary
Subscription. As a result, the Koffman Group beneficially owns
20,417,188 shares of Common Stock, which represents approximately 74%
of the Common Stock outstanding.
PART IV
Item 14. Exhibits, Financial Statement Schedules And Reports On Form 8-K
(a) Documents filed as part of this report:
1. And 2. Financial Statements.
The Report of Independent Certified Public Accountants,
Financial Statements and Notes to
Consolidated Financial Statements which are filed as a part of
this report are listed in the Index to Financial Statements.
Note - no financial statement schedules were required to be
filed.
3. Exhibits, which are filed as part of this report, are
listed in the accompanying Exhibit Index.
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
JAYARK CORPORATION
By:
/s/ David L. Koffman Chairman of the Board and Director July 19, 1999
DAVID L. KOFFMAN
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the date indicated.
/s/ David L. Koffman Chairman of the Board, President,
DAVID L. KOFFMAN Chief Executive Officer and Director July 19, 1999
/s/ Frank Rabinovitz Executive Vice President, Chief
FRANK RABINOVITZ Operating Officer and Director July 19, 1999
/s/ Robert C. Nolt Chief Financial Officer and Director July 19, 1999
ROBERT C. NOLT
/s/ Arthur G. Cohen Director July 19, 1999
ARTHUR G. COHEN
JAYARK CORPORATION AND SUBSIDIARIES
Index Page
- -------------------------------------------------------------------------------
Consolidated Financial Statements:
Report of Independent Certified Public Accountants 20
Balance Sheets - April 30, 1999 and 1998 21
Statements of Operations - For the years ended April 30, 1999, 1998 and 1997 22
Statements of Stockholders' Equity -
For the years ended April 30,1999, 1998 and 1997 23
Statements of Cash flows - For the years ended April 30, 1999, 1998 and 1997 24
Notes to Consolidated Financial Statements 25-33
Report of Independent Certified Public Accountants
To the Shareholders and Directors
Jayark Corporation
We have audited the accompanying consolidated balance sheets of Jayark
Corporation and Subsidiaries as of April 30, 1999 and 1998 and the
related consolidated statements of operations, changes in
stockholders' equity, and cash flows for each of the three years in
the period ended April 30, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Jayark Corporation and Subsidiaries as of April 30, 1999 and 1998,
and the results of their operations and their cash flows for each of
the three years in the period ended April 30, 1999 in conformity with
generally accepted accounting principles.
BDO Seidman, LLP
New York, New York
July 8, 1999
Jayark Corporation and Subsidiaries
Consolidated Balance Sheets
April 30, 1999 and 1998
Assets 4/30/99 4/30/98
- ------ --------- ---------
Current Assets
Cash and Cash Equivalents $209,724 $238,858
Accounts Receivable-Trade, Less Allowance For Doubtful
Accounts of $59,000 at 4/30/99 and $38,000 at 4/30/98 1,818,214 1,723,833
Inventories 337,914 271,564
Other Current Assets 46,247 37,323
--------- ---------
Total Current Assets 2,412,099 2,271,578
Non Current Assets
Property & Equipment, Less Accumulated Depreciation
and Amortization 120,410 94,644
Excess of Cost Over Net Assets of Businesses Acquired, Less
Accumulated Amortization of $485,000 at 4/30/99 and
$464,000 at 4/30/98 247,382 268,742
--------- ---------
Total Non-Current Assets 367,792 363,386
--------- ---------
Total Assets $2,779,891 $2,634,964
========= =========
Liabilities
- ------------
Current Liabilities
Notes Payable & Line of Credit $0 $300,000
Current Maturities of Long Term Debt 161,332 5,899
Accounts Payable 689,209 881,266
Accrued Expenses 253,796 197,192
Accrued Salaries 392,420 298,734
Accrued Interest 504,510 336,000
Other Current Liabilities 39,918 95,418
--------- ---------
Total Current Liabilities 2,041,185 2,114,509
Long Term Debt 1,424,229 3,446,021
--------- ---------
Total Liabilities $3,465,414 $5,560,530
Stockholders' Equity (Deficit)
- ------------------------------
Common Stock of $.01 Par Value at 4/30/99 and $.30 at 4/30/98.
Authorized 30,000,000 Shares at 4/30/99 and 10,000,000 Shares at 4/30/98;
Issued 27,663,597 Shares at 4/30/99 and
9,221,199 Shares at 4/30/98 276,636 2,766,359
Additional Paid-In Capital 12,350,084 8,066,122
Deficit (13,312,243) (13,758,047)
--------- ---------
Total Stockholders' Equity (Deficit) $(685,523) $(2,925,566)
--------- ---------
Total Liabilities & Stockholders' Equity (Deficit) $2,779,891 $2,634,964
========= =========
See accompanying notes to consolidated financial statements
Jayark Corporation and Subsidiaries
Consolidated Statements of Operations
For the Years Ended April 30, 1999, 1998 and 1997
1999 1998 1997
------- ------ -------
Net Revenues $15,288,215 $13,604,558 $12,638,072
Cost of Revenues 12,998,508 11,445,669 10,591,857
---------- ---------- ----------
Gross Margin 2,289,707 2,158,889 2,046,215
Selling, General and Administrative 1,754,169 1,717,242 1,970,725
---------- ---------- ----------
Operating Income 535,538 441,647 75,490
Other Income (Expense):
Interest Expense (283,165) (365,655) (339,862)
Gain on Sale of Assets 203,432 -- --
---------- ---------- ----------
Pre Tax Earnings (losses) 455,805 75,992 (264,372)
Provision for Income Taxes 10,000 -- --
---------- ---------- ----------
Income(loss) from Continuing Operations 445,805 75,992 (264,372)
---------- ---------- ----------
Income (loss) from Discontinued Operations,net of
taxes of $-, $-, $350,000 respectively -- -- (3,294,109)
Loss on disposition of subsidiary -- -- (2,500,730)
---------- ---------- ----------
Net Income (loss) $445,805 $75,992 $(6,059,211)
========== ========== ==========
Basic and Diluted Earnings (Loss)per Common Share:
Continuing Operations $.02 $.01 $(.03)
Discontinued Operations -- -- $(.66)
---------- ---------- ----------
Net Income (Loss) $.02 $.01 $(.69)
========== ========== ==========
Weighted Average Common Shares:
Basic and Diluted 18,366,607 9,221,199 8,802,528
See accompanying notes to consolidated financial statements
Jayark Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
For the Years Ended April 30, 1999, 1998 and 1997
Common Paid In Total
Stock Capital Deficit Equity
-------- -------- ---------- ---------
Balance at April 30, 1996 $2,393,639 $7,966,730 $(7,774,828) $2,585,541
Issue of 1,242,400
shares of stock 372,720 99,392 -- 472,112
Net Loss -- -- (6,059,211) (6,059,211)
-------- -------- ---------- ---------
Balance at April 30, 1997 2,766,359 8,066,122 (13,834,039) (3,001,558)
Net Income -- -- 75,992 75,992
-------- -------- ---------- ---------
Balance at April 30, 1998 2,766,359 8,066,122 (13,758,047) (2,925,566)
Decreased Par Value to $.01
from $.30 per Share (2,674,147) 2,674,147 -- --
Issue of 18,442,398 shares
in Offering 184,424 1,609,814 -- 1,794,238
Net Income -- -- 445,805 445,805
-------- -------- ---------- ---------
Balance at April 30, 1999 $276,636 $12,350,083 $(13,312,242) $(685,523)
======== ======== ========== =========
See accompanying notes to consolidated financial statements
Jayark Corporation and Subsidiaries
Consolidated Statement of Cash Flows
For the Years Ended April 30, 1999, 1998 and 1997
1999 1998 1997
------ ------ ------
Cash Flows From Operating Activities:
Net Income (loss) $445,805 $75,992 $(6,059,211)
Adjustments to Reconcile Earnings (Loss) to Cash From Operating Activities:
Depr and Amort of Property and Equipment 109,353 79,542 40,089
Amortization of Excess of Cost Over Net Assets of
Businesses Acquired 21,360 21,360 21,360
Net Assets of Discontinued Operations - written off -- -- 4,268,849
Miscellaneous Write Off (26,027) -- --
(Gain) Loss on Disposition of Assets (203,432) -- 21,516
Changes In Assets and Liabilities:
(Increase) Decrease in Deferred Federal Income Tax
Expense (Benefit) -- -- 350,000
(Increase) Decrease in Accounts Receivable Net (94,381) 114,752 (105,667)
(Increase) Decrease in Federal and State Income
Taxes Refundable -- -- 695,501
(Increase) Decrease in Inventories (66,350) 141,282 91,709
(Increase) Decrease in Other Current Assets (8,924) (14,474) (12,685)
Increase (Decrease) in Accounts Payable (134,417) (24,141) 320,349
Increase (Decrease) in Accrued Expenses 56,605 (272,387) (513,045)
Increase (Decrease) in Accrued Salaries 93,687 192,202 (77,374)
Increase (Decrease) in Accrued Interest 183,239 168,000 168,000
Increase (Decrease) in Other Liabilities (55,503) (96,093) (281,153)
------ ------ ------
Net Cash Provided By(Used In)
Operating Activities 321,015 386,035 (1,071,762)
Cash Flows From Investing Activities:
Purchase of Assets (724,625) -- --
Sale of Assets 884,925 -- --
Purchases of Property and Equipment (91,987) (51,636) (83,556)
------ ------ ------
Net Cash Provided By (Used In)
Investing Activities 68,313 (51,636) (83,556)
Cash Flows From Financing Activities:
Payment of Long Term Debt -- (8,702) (27,555)
Proceeds From Issuance of Notes Payable -- 46,021 2,001,084
Payments of Notes Payable &
Subordinated Debentures (379,622) (200,000) (1,101,997)
Proceeds From Issuance of Common Stock 11,160 -- --
Costs Paid for Issuance of Common Stock (50,000) -- --
------ ------ ------
Net Cash Provided By (Used In)
Financing Activities (418,462) (162,681) 871,532
Net Increase (Decrease) in Cash
and Cash Equivalents (29,134) 171,718 (283,786)
Cash & Cash Equivalents at Beginning of Year 238,858 67,140 350,926
------ ------ ------
Cash & Cash Equivalents at End of Year $209,724 $238,858 $67,140
See accompanying notes to consolidated financial statements
Notes to Consolidated Financial Statements
April 30, 1999, 1998 and 1997
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Jayark
Corporation and its wholly owned subsidiaries (the "Company"). All
material intercompany profits, transactions and balances have been
eliminated.
Prior to April 30, 1997, a decision was made to discontinue the
operations of Rosalco, Inc. ("Rosalco"), a wholly owned subsidiary of
the Company. Rosalco was officially closed on October 22, 1997 and
shortly thereafter a receiver was assigned to liquidate its assets.
The accompanying financial statements have been adjusted retroactively
to segregate and report separately the net assets and results of
operations of Rosalco as a discontinued operation.
Inventories
Inventories comprise finished goods and are stated at the lower of
cost (first in, first out method) or market value.
Property and Equipment, Depreciation and Amortization
Property and equipment are recorded at cost. Depreciation and
amortization are computed using the straight-line method over the
estimated useful lives of the assets, ranging from approximately 3 to
20 years. On sale or retirement, the cost of assets sold or retired
and related accumulated depreciation or amortization is eliminated
from the accounts and any resulting gain or loss is included in
operations. Maintenance and repairs are expensed as incurred;
expenditures for major renewals and betterments are capitalized and
amortized by charges to operations.
Intangibles
The accounts of purchased companies are included in the consolidated
financial statements from the dates of acquisition. The excess of
cost over the fair value of net assets of businesses acquired is being
amortized using the straight-line method over a 40-year period
commencing with the dates of acquisition.
Revenue Recognition
Revenues are recorded when products are shipped. Allowances are
recorded for estimated returns and losses.
Income Taxes
The Company follows the asset and liability method required by
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 109 in accounting for income taxes. Deferred tax assets
and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
The effect of deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date. Deferred tax assets are reduced by a valuation
allowance when there is uncertainty as to the ultimate realization of
the asset.
Earnings per Share
In the third quarter of fiscal 1998, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings per Share", which
requires the presentation of both basic and diluted earning per share
on the face of the Statements of Operations and the restatement of all
prior periods earnings per share amounts. Assumed exercise of options
are not included in the calculation of diluted earnings per share for
the fiscal years ended April 30, 1999, 1998 and 1997 since the effect
would be antidilutive. Accordingly, basic and diluted net earnings
per share do not differ for any period presented.
The following table summarizes securities that were outstanding as of
April 30, 1999, 1998 and 1997 but not included in the calculation of
diluted net earnings per share because such shares are antidilutive.
For the year ending April 30, 1999 1998 1997
- ---------------------------------------------------------
Stock Options 105,000 242,500 242,500
Convertible Subordinated -- 933,333 933,333
Debentures
Warrants -- 4,166,667 4,166,667
Changes in Financial Presentation
Certain reclassifications have been made in the 1997 and 1998
financial statements to conform to the presentation used in 1999.
Statements of Cash Flows
For purposes of the statements of cash flows, the Company considers
all highly liquid investments with original maturities of three months
or less to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from these estimates.
Long-Lived Assets
Long-lived assets, such as property, equipment, and goodwill are
evaluated for impairment when events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable
through the estimated undiscounted future cash flows from the use of
these assets. When any such impairment exists, the related assets
will be written down to their fair value. This policy is in
accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets to be Disposed
Of", which was adopted on May 1, 1996. No write-downs have been
necessary through April 30, 1999, except for assets of the
discontinued operation (Note 13).
Stock-Based Compensation
The Company uses the intrinsic value method for accounting for stock
compensation plans, as permitted by Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", which
was adopted on May 1, 1996. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price
of the Company's stock at the date of the grant over the amount the
employee must pay to acquire the stock.
Effect of new accounting pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income," which establishes standards for
reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all
changes in equity except those resulting from investments by owners
and distributions to owners. This standard is effective for financial
statements beginning fiscal 1999. There is no significant impact on
current financial statement disclosures.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
Accounting for Derivative Instruments and Hedging Activities. SFAS
133 is effective for transactions entered into after January 1, 2000.
SFAS 133 requires that all derivative
instruments be recorded on the balance sheet at fair value. Changes
in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a
derivative is designated as part of the hedge transaction and the type
of hedge transaction. The ineffective portion of all hedges will be
recognized in earnings. The Company does not expect this standard to
have a significant impact on future financial statement disclosures.
(2) Business
The Company operates in two reportable business segments as follows:
The Company's audio-visual subsidiary, AVES Audio Visual Systems, Inc.
("AVES"), distributes and
rents a broad range of audio, video and presentation equipment, and
supplies to businesses, churches, hospitals, hotels and educational
institutions
The Company's other wholly owned subsidiary, MED Services Corp.
("Med"), finances the manufacture, sales and rental of medical
equipment. It had one customer in fiscal 1999, Vivax Medical
Corporation, a company that manufactures, sells and rents durable
medical equipment to hospitals, nursing homes and individuals. Due to
their immateriality, the operating results and assets of this segment
have not been separately reported.
(3) Related Party Transactions
The Company has subordinated notes (Note 7) with related parties
amounting to $232,228 and $795,712 at April 30, 1999 and 1998,
respectively. The annual interest rate was reduced from 12% to 8% on
November 1, 1998. Interest expense relating to subordinated notes
payable to related parties was $49,224, $95,485 and $95,485 in 1999,
1998 and 1997, respectively.
The Company had long term notes payable to related parties amounting
to $972,298 and $2,046,021 at April 30, 1999 and 1998, respectively.
The interest rate on the $972,298 is 7.5%. The maturity date of the
note has been extended to December 31, 2004. Interest expense
relating to these notes for the years ended April 30, 1999 and 1998
was $134,986 and $172,139, respectively.
Accrued interest to related parties for the years ended April 30, 1999
and 1998 was $323,223 and $190,970, respectively.
(4) Property and Equipment
Property and equipment are summarized as follows:
April 30, April 30,
1999 1998
-------- ---------
Machinery and equipment $28,048 $59,144
Furniture and fixtures 48,601 80,329
Leasehold improvements 12,290 37,290
Automobiles and trucks 182,862 200,580
Rental and demonstration equipment 157,939 74,073
-------- ---------
Total property and equipment 429,740 451,416
Less accumulated depreciation
and amortization 309,330 356,772
-------- ---------
Net property and equipment $120,410 $94,644
======== =========
(5) Lines of Credit
In March 1997, AVES negotiated a line of credit with BSB Bank & Trust,
Binghamton, New York. The line of credit permits AVES to borrow up to
an aggregate amount of $1,250,000. The interest rate is 8.75% annually
and the line is due and payable on March 1, 2000. The line of credit
is secured by the AVES' accounts receivable and inventories. There
are no financial covenants associated with the line of credit. At
April 30, 1999 and 1998, $0 and $300,000, respectively, was
outstanding on the above line of credit.
In connection with the guarantee for the AVES line of credit described
above and the interim financing of the Rosalco discontinued operations
by State Street Bank, the Company issued stock warrants totaling
4,166,667 to A-V Texas Holding, LLC, an affiliate of the Company. The
warrants allowed the holder to purchase 4,166,667 shares of the
Company's common stock at $.30 per share. The warrants were deemed to
have a minimal fair value and no amount was recorded for them. On
March 31, 1999, A-V Texas Holding, LLC and the Company mutually agreed
to cancel the warrants.
(6) Long Term Debt
Long term debt is summarized as follows:
Year ended April 30, 1999 1998
- ------------------------------------------------------------------------------
Notes Payable to a bank with interest rate of 9% per annum and
a maturity date of March 1999,collateralized by vehicles $-- $5,899
Notes Payable to Related Parties (Note 3) 972,298 2,046,021
Subordinated Debentures (Notes 3 and 7) 613,263 1,400,000
-------- ---------
Total Long Term Debt 1,585,561 3,451,920
Less: Current Maturities of Long Term Debt 161,332 5,899
-------- ---------
Long Term Debt, excluding current maturities $1,424,229 $3,446,021
(7) Subordinated Debentures
On December 19, 1989, the Company issued $2,000,000 of 12% convertible
subordinated debentures to affiliates of the Company due December
1995, and later extended to December 1999. Through April 30, 1998,
the Company had retired $600,000 of debentures. The conversion of
debt to stock in conjunction with the common stock Rights Offering
(Note 15), resulted in a $761,000 reduction in subordinated
debentures. On November 1, 1998, new notes were issued for the
remaining $613,263 in subordinated debt reducing the annual interest
rate from 12% to 8%. The new notes provide for interest payments due
quarterly beginning January 31, 1999 and annual principal payments in
the amount of $61,332 starting December 31, 1999 with the balance due
on December 31, 2004. The new subordinated debenture agreements have
no conversion rights.
(8) Income Taxes
Income tax expense (benefit) attributable to income before income
taxes consists of:
Year ended
April 30, Current Deferred Total
--------- -------- ------- -------
1999 $10,000 $0 $10,000
1998 $0 $0 $0
1997 $0 $350,000 $350,000
At April 30, 1999, the Company had, for federal tax reporting
purposes, net operating loss carryforwards of approximately
$12,000,000, expiring in years through 2013.
The actual tax expense (benefit) differs from the "expected" tax
expense (computed by applying the U.S. Corporate rate of 34%) in each
of the 3 years ended April 30, 1999 primarily as a result of valuation
allowances against potential deferred tax assets. In fiscal 1999
alternative minimum tax of $10,000 was incurred due to utilization of
net operating loss carryforwards.
Deferred tax assets were approximately $5,160,000 as of April 30, 1999
and 1998, arising primarily as a result of net operating losses.
Valuation allowances of $5,160,000 as of April 30, 1999 and 1998
offset the deferred tax assets, resulting in net deferred tax assets
of $0 as of April 30, 1999 and 1998.
(9) Leases
The Company has several operating leases that expire at various dates
ranging through April 2001. Future minimum lease payments related to
operating leases are detailed as follows:
Year ending April 30, Operating Leases
- ---------------------------------------
2000 $62,400
2001 62,400
Thereafter 0
- ---------------------------------------
Total minimum lease payments $124,800
- ---------------------------------------
Total rental expense for operating leases was $62,430, $72,559 and
$73,559 for the years ended April 30, 1999, 1998, and 1997,
respectively.
(10) Stock Options
At April 30, 1999, the Company had two stock options plans which are
described below. The Company applies APB Opinion 25 - "Accounting for
Stock Issued to Employees", and related Interpretations in accounting
for the plans. In terms of APB Opinion 25, when the exercise price of
the Company's employee stock options equals the market price of the
underlying stock on the date of the grant, no compensation cost is
recognized.
The Company's Incentive Stock Option Plan ("ISOP"), as amended, allows
for the granting of 600,000 shares of the Company's common stock. The
ISOP provides for the granting to key employees and officers of
incentive stock options, as defined, under current tax laws. The
stock options are exercisable at a price equal to or greater than the
market value on the date of the grant.
Option activity under the ISOP is as follows:
Stock Option - ISOP Options Exercise Price Weighted
Range Average
- ---------------------------------------------------------
Outstanding 4/30/96 242,500 $.44 - $1.05 $0.50
Granted -
Exercised -
Terminated/Expired -
- ---------------------------------------------------------
Outstanding 4/30/97 242,500 $.44 - $1.05 $0.50
Granted -
Exercised -
Terminated/Expired -
- ---------------------------------------------------------
Outstanding 4/30/98 242,500 $.44 - $1.05 $0.50
Granted -
Exercised -
Terminated/Expired (137,500) $0.55
- ---------------------------------------------------------
Outstanding 4/30/99 105,000 $0.44 $0.44
- ---------------------------------------------------------
Exercisable at year end:
April 30, 1997 242,500 $.44 - $1.05 $0.50
April 30, 1998 242,500 $.44 - $1.05 $0.50
April 30, 1999 105,000 $0.44 $0.44
Available for future grants:
April 30, 1997 357,500
April 30, 1998 357,500
April 30, 1999 495,000
The following summarizes information regarding stock options
outstanding at April 30, 1999.
Number Outstanding at 4/30/99 105,000
Weighted Average remaining contractual life (years) 3.6
Weighted Average Exercise Price $0.44
Effective September 17, 1994 and approved at the annual stockholders'
meeting in 1994, the 1994 Non-Employee Director Stock Option Plan (the
"Director's Plan") was adopted and 200,000 shares of the Company's
Common Stock reserved for issuance under the Director's Plan. The
Director's Plan provides for the automatic grant of nontransferable
options to purchase common stock to nonemployee directors of the
Company, on the date immediately preceding the date of each annual
meeting of stockholders in which an election of directors is
concluded. Each nonemployee director then in office will receive
options exercisable for 5,000 shares (or a pro rata share of the total
number of shares still available under the Director's Plan). No
option may be granted under the Director's Plan after the date of the
1998 annual meeting of stockholders.
Options issued pursuant to the Director's Plan are exercisable at an
exercise price equal to not less than 100% of the fair market value
(as defined in the Director's Plan) of shares of Common Stock on the
day immediately preceding the date of the grant. Options are vested
and fully exercisable as of the date of the grant. Unexercised
options expire on the earlier of (i) the date that is ten years from
the date on which they were granted, (ii) the date which is three
calendar months from the date of the termination of the optionee's
directorship for any reason other than death or disability (as defined
in the Director's Plan), or (iii) one year from the date of the
optionee's disability or death while serving as a director.
Option activity under the Plan is as follows:
Stock Option - ISOP Options Exercise Price Weighted Options
Range Average Exercisable
- -----------------------------------------------------------------------
Outstanding 4/30/96 25,000 $0.49 $0.49 25,000
Granted -
Terminated/Expired -
- -----------------------------------------------------------------------
Outstanding 4/30/97 25,000 $0.49 $0.49 25,000
Granted -
Terminated/Expired -
- -----------------------------------------------------------------------
Outstanding 4/30/98 25,000 $0.49 $0.49 25,000
Granted -
Terminated/Expired (20,000)
- -----------------------------------------------------------------------
Outstanding 4/30/99 5,000 $0.49 $0.49 5,000
Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock - Based Compensation", requires the Company to
provide pro forma disclosure of net income (loss) and earnings (loss)
per as if the optional fair value method had been applied to determine
compensation costs for the Company's Stock option plans. Since no
options were granted in the years ended April 30, 1999, 1998 and 1997,
no pro forma disclosures are applicable.
(11) Financial Instruments
The carrying amounts of financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable and notes payable
approximated fair value as of April 30, 1999 due to the short maturity
of these items. The fair value of the convertible debentures is not
reasonably determinable.
(12) Fourth Quarter Adjustments
No material adjustments were made in the fourth quarter of fiscal
1999. During the fourth quarter of fiscal 1997, the Company recorded
the effects of the discontinuance of Rosalco. See Note 13.
(13) Discontinued Operations
As a result of continued losses due to a soft retail market, low
margins, competitive pressures, and price reductions, in 1997 the
Company discontinued the operations of Rosalco. Rosalco had been
headquartered in Jeffersonville, Indiana and had been in the business
of the distribution of more than 300 different products, including
occasional furniture, brass beds, custom jewelry cases and
accessories, most of which are imported from outside the continental
United States. Shortly after the closing, a receiver was assigned to
liquidate the secured assets of the company to satisfy the loan
principal. As a result, Jayark incurred a $5,794,000 loss on
Discontinued operations, which includes $3,294,000 loss from
operations for the year ended April 30, 1997, the establishment of
accruals in the amount of $300,000 for expenses and guarantees related
to the closing, the write off of an intercompany receivable and other
assets of $476,000, and the remaining net asset of Rosalco of
$1,725,000.
The Rosalco business has been presented as a discontinued operation,
and the consolidated statements of operations have been restated to
conform with this presentation. Financial results of the Rosalco
operation are as follows:
Operating Data: 4/30/97
- -------------------------------------------------------
Net Revenues $37,505,589
Costs & Expenses 40,449,698
Income Before Tax (2,994,109)
Provision for (Benefit From) Income Tax 350,000
Net Income (Loss) $(3,294,109)
(14) Common Stock
In July 1998 the Company amended its Certificate of Incorporation
increasing its authorized Common Stock to 30,000,000 shares and
decreasing the par value of its Common Stock from $.30 to $.01 per
share.
(15) Common Stock Rights Offering
During fiscal 1999 the Company issued to its shareholders rights to
purchase shares of the Company's $.01 par value Common Stock. The
subscription price of $.10 per share was good for an aggregate of up
to 18,442,398 shares. The Common Stock could have been purchased
either with cash or by tendering to the Company debt of the Company in
a principal amount equal to the subscription price.
The primary shareholders of the Company chose to participate in the
offering and as such all offered shares were issued. In lieu of cash,
these shareholders tendered debt of the Company in exchange for the
shares. As a result of these transactions, the Company effectively
extinguished approximately $1,000,000 of notes payable to related
parties (Note 3), $761,000 of subordinated debentures (Note 7) and
$72,000 of accrued interest.
The shareholders who participated in the offering were primarily
related parties and as such the resulting gains and losses from the
extinguishment of debt were recorded as additional paid in capital in
the Statement of Stockholders' Equity.
(16) Statement of Cash Flows
Year Ended April 30, 1999 1998 1997
- ------------------------------------------------------------------------------
Interest Paid $142,939 $87,626 $171,862
- ------------------------------------------------------------------------------
Taxes Paid -- -- --
- ------------------------------------------------------------------------------
Non-Cash Transactions Relating to Financing:
Common Stock Issued in Connection with LCL Investment $-- $-- $472,112
- ------------------------------------------------------------------------------
Extinguishment of notes payable to related parties
in exchange for Common Stock of the Company 1,000,000 -- --
- ------------------------------------------------------------------------------
Reduction of convertible subordinated debentures
in exchange for Common Stock of the Company 760,710 -- --
- ------------------------------------------------------------------------------
Interest previously accrued exchanged for Common
Stock of the Company 72,370 -- --
- ------------------------------------------------------------------------------
Exhibit Index
3(1) Certificate of Incorporation of the Company. Incorporated
herein by reference to the Company's
Proxy Statement for its 1991 Annual Meeting of Shareholders,
Exhibit B thereto.
3(2) Bylaws of the Company. Incorporated herein by reference to
the Company's Proxy Statement
for its 1991 Annual Meeting of Shareholders, Exhibit C thereto.
4(1) Specimen Certificate of Common Stock, par value $0.30 per share,
incorporated herein by
reference from Registration Statement on Form S-1, File Number 2-
18743, Exhibit 4 thereto.
4(2) 12% Convertible Subordinated Debenture due 1994,
incorporated herein by reference to the
Report on Form 8-K filed January 4, 1990, Exhibit 28(a) thereto.
4(3) Registration rights agreement dated as of December 20, 1989, by
and between the Company and
Rosalco, Inc., incorporated herein by reference to the Report on
Form 8-K filed January 4, 1990, Exhibit 28(c) thereto.
10(1)* 1981 Incentive Stock Option Plan, as amended as of December
15, 1989, incorporated herein by
reference to the Annual Report on Form 10-K for the year ended
April 30, 1990, Exhibit 10(1)
thereto.
10(2) Notes and Loan and Security Agreements (Inventory & Accounts
Receivable) each dated as of
January 20, 1992, between Jayark Corporation, AVES Audio Visual
Systems, Inc., Rosalco, Inc.,
Rosalco Woodworking, Inc., Diamond Press Company, and State
Street Bank & Trust Company
of Boston, Massachusetts, incorporated herein by reference from
the Annual Report on Form
10-K for the year ended April 30, 1992, Exhibit 10(3) thereto.
10(3) Letter Agreement dated December 6, 1989, among Arthur Cohen,
Burton I. Koffman, and
Richard E. Koffman. Incorporated herein by reference to the
Annual Report on Form 10-K for
the year ended April 30, 1990, Exhibit 10(3) thereto.
10(4) Indemnity escrow Agreement dated as of December 20, 1989, by
and between the Company,
Rosalco, Inc. and certain individuals named therein, incorporated
herein by reference to the
Report on Form 8-K filed January 4, 1990, Exhibit 28(c) thereto.
10(5) Factoring Agreements dated as of February 7, 1992, by and
between the Company, Pilgrim Too
Sportswear, Inc., J.F.D. Distributors, Inc., and others named
therein, and Barclays Commercial
Corporation, incorporated herein by reference to the Annual
Report on Form 10-K for the year
ending April 30, 1992, Exhibit 10(10) thereto.
10(6) Diamond Press Asset Sale and Purchase Agreement dated as of
November 23, 1992 by and
between the Company and Harstan, Inc., incorporated herein by
reference to the Company's
Form 8-K, as amended, as of November 23, 1992, Exhibit 2 thereto.
10(7) Asset Sale and Lease Termination Agreement, by and between
Pilgrim Too Manufacturing
Company, Inc., New Images, Inc., Victor Freitag, Jr. and wife
Gilbert R. Freitag, and Robert E.
Skirboll and wife Robin T. Skirboll, dated as of April 2, 1993;
Asset Purchase Agreement by and
between the Company, Pilgrim Too Sportswear, Inc., Pilgrim Too
Manufacturing Company, Inc.
Stage II Apparel Corp., Shambuil Ltd., and Pilgrim II Apparel
Corp., dated as of April 2, 1993;
both incorporated herein by reference to the Company's Form 8-K
as of April 2, 1993, Exhibits thereto.
10(8) Amendment to certain Notes and Loan and Security Agreements
each dated as of January 20,
1992, incorporated herein by reference from the Annual Report on
Form 10-K for the year ended
April 30, 1993, Exhibit 10(8) thereto.
10(9) Amendment to certain Notes and Loan and Security Agreements
each dated as of December 31,
1993, incorporated herein by reference from the Annual Report on
Form 10-K for the year ended
April 30, 1994, Exhibit 10(9) thereto.
10(10) Asset Purchase Agreement, dated June 5, 1995, among LIB-Com
Ltd., Liberty Bell Christmas,
Inc., Ivy Mar Co., Inc., Creative Home Products, Inc., and
Liberty Bell Christmas Realty, Inc. as
the sellers and LCL International Traders, Inc. as the buyer,
incorporated herein by reference
from the Company's report on Form 8-K dated June 27, 1995,
Exhibit 2(a) thereto.
10(11) Asset Purchase Agreement, dated June 5, 1995, between Award
Manufacturing Corporation as
the seller, and LCL International Traders, Inc., as the buyer,
incorporated herein by reference
from the Company's report on Form 8-K dated June 27, 1995,
Exhibit 2(b) thereto.
10(12) Guarantee Agreement, dated June 5, 1995, by Award
Manufacturing Corporation in favor of
LCL International Traders, Inc., incorporated herein by reference
from the Company's report on
Form 8-K dated June 27, 1995, Exhibit 2(c) thereto.
10(13) Guarantee Agreement, dated June 5, 1995, by LIB-Com Ltd.,
Liberty Bell Christmas, Inc., Ivy
Mar Co., Inc., Creative Home Products, Inc., and Liberty Bell
Christmas Realty, Inc. in favor of
LCL International Traders, Inc., incorporated herein by reference
from the Company's report on
Form 8-K dated June 27, 1995, Exhibit 2(d) thereto.
10(14) Promissory Note of LCL International Traders, Inc., due July
29, 1998, payable to the order of
Commerzbank AG, Hong Kong Branch, incorporated herein by
reference from the Company's
report on Form 8-K dated June 27, 1995, Exhibit 2(e) thereto.
10(15) Confirmation Letter Agreement dated June 22, 1995, among
Citibank, N.A., Commerzbank AG,
Bayerische Vereinsbank AG, LCL International Traders, Inc., and
Jayark Corporation,
incorporated herein by reference from the Company's report on
Form 8-K dated June 27, 1995, Exhibit 2(f) thereto.
10(16) Factoring Agreement dated June 23, 1995, between LCL
International Traders, Inc. and the CIT
Group/Commercial Services, Inc., incorporated herein by reference
from the Company's report
on Form 8-K dated June 27, 1995, Exhibit 99(a) thereto.
10(17) Inventory Security Agreement dated June 23, 1995, between
LCL International Traders, Inc. and
the CIT Group/Commercial Services, Inc., incorporated herein by
reference from the Company's
report on Form 8-K dated June 27, 1995, Exhibit 99(b) thereto.
10(18) Letter Agreement dated June 23, 1995, between LCL
International Traders, Inc. and the CIT
Group/Commercial Services, Inc., incorporated herein by reference
from the Company's report
on Form 8-K dated June 27, 1995, Exhibit 99(c) thereto.
10(19) Letter Agreement dated June 23, 1995, between LCL
International Traders, Inc. and the CIT
Group/Commercial Services, Inc., Liberty Bell Christmas, Inc.,
Ivy Mar Co., Inc., and Creative
Home Products, Inc., incorporated herein by reference from the
Company's report on Form 8-K
dated June 27, 1995, Exhibit 99(d) thereto.
10(20) Amendment to certain Notes and Loan and Security Agreements
each dated as of December 31,
1994, incorporated herein by reference from the Annual Report on
Form 10-K for the year ended
April 30, 1995, Exhibit 10(20) thereto.
10(21) Loan and Security Agreements dated April 29, 1996 between
Rosalco, Inc., and State Street
Bank & Trust Company of Boston, Massachusetts.
10(22) Loan and Security Agreements dated April 29, 1996 between
AVES Audio Visual Systems, Inc.,
and State Street Bank & Trust Company of Boston, Massachusetts.
10(23) First amendment to Loan and Security Agreements dated as of
September 19, 1996 between
Rosalco, Inc. and State Street Bank & Trust Company of Boston,
Massachusetts.
10(24) Agreement of Extension of Maturity of 12% Convertible
Subordinated Debentures dated April 30, 1990.
10(25) Forbearance and Modification Agreement dated March 12, 1997,
between Jayark Corporation,
Rosalco, Inc., AVES Audio Visual Systems, Inc., David L.
Koffman, and State Street Bank and
Trust Company of Boston, Massachusetts.
10(26) Stock Pledge Agreement dated March 12, 1997, between Jayark
Corporation and State Street Bank and Trust Company of Boston,
Massachusetts.
10(27) Subordination Agreement dated March 12, 1997, between Jayark
Corporation, Rosalco, Inc.,
AVES Audio Visual Systems, Inc., David L. Koffman, and
State Street Bank and Trust Company of Boston, Massachusetts.
10(28) Revolving Note dated March 12, 1997 between Jayark Corporation
and A-V Texas Holding, LLC.
10(29) Stock Pledge Agreement dated March 12, 1997 between Jayark
Corporation and A-V Texas Holding, LLC.
10(30) Stock Warrant to purchase 3,666,667 shares of common stock
dated March 12, 1997 between
Jayark Corporation and A-V Texas Holding, LLC.
10(31) Commercial Security Agreement dated February 18, 1997, between
AVES Audio Visual Systems, Inc. and BSB Bank and Trust Company.
10(32) Promissory Note dated February 18,1997, between AVES Audio
Visual Systems, Inc. and BSB
Bank and Trust Company.
10(33) Commercial Guaranty dated February 18, 1997, between AVES Audio
Visual Systems, Inc., David L. Koffman and BSB Bank and Trust
Company.
10(34) Subordinated Promissory Note date March 12, 1997 between
Rosalco, Inc. and Jayark Corporation.
10(35) Second Forbearance and Modification Agreement dated June 1,
1997, between State Street Bank
and Trust Company of Boston, Massachusetts, Rosalco, Inc.,
and Jayark Coporation.
10(36) Stock Warrant to purchase 500,000 shares of common stock dated
March 12, 1997 between Jayark Corporation and A-V Texas Holding, LLC.
10(37) Certificate of Amendment of The Certificate of Incorporation of
Jayark Corporation dated July 10, 1998.
10(38) Purchase and Sale Agreement dated June 1, 1998, between Vivax
Medical Corporation and MED Services Corp.
10(39) Distribution Agreement dated June 1, 1998, between MED Services
Corp. and Vivax Medical Corporation.
10(40) Revolving Line of Credit Grid Promissory Note dated August 7,
1998, between MED Services Corp. and Atlantic Bank of New York.
10(41) Security Agreement dated August 7, 1998, between MED Services
Corp. and Atlantic Bank of New York.
10(42) Amendment to certain 12% Convertible Subordinated Debentures
dated April 30, 1990.
10(43) Amendment to certain Note dated March 12, 1997 between Jayark
Corporation and A-V Texas Holding, LLC.
[ARTICLE] 5
[CIK] 0000053260
[NAME] JAYARK CORPORATION
[MULTIPLIER] 1000
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] APR-30-1999
[PERIOD-START] MAY-1-1998
[PERIOD-END] APR-30-1999
[CASH] 210
[SECURITIES] 0
[RECEIVABLES] 1,877
[ALLOWANCES] 59
[INVENTORY] 338
[CURRENT-ASSETS] 2,412
[PP&E] 430
[DEPRECIATION] 309
[TOTAL-ASSETS] 2,780
[CURRENT-LIABILITIES] 2,041
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 277
[OTHER-SE] (962)
[TOTAL-LIABILITY-AND-EQUITY] 2,780
[SALES] 15,288
[TOTAL-REVENUES] 15,288
[CGS] 12,999
[TOTAL-COSTS] 12,999
[OTHER-EXPENSES] 1,551
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 283
[INCOME-PRETAX] 456
[INCOME-TAX] 10
[INCOME-CONTINUING] 446
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 446
[EPS-BASIC] .02
[EPS-DILUTED] .02