U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Check One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- ----- OF 1934. For the quarterly period ended August 31, 1995.
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- ----- OF 1934. For the transition period from _____ to_____.
0-16401
(Commission File Number)
ADVANCED MATERIALS GROUP, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 33-0215295
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20211 SOUTH SUSANA ROAD, RANCHO DOMINQUEZ, CALIFORNIA 90221
(Address of principal executive offices)
(310) 537-5444
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
----- -----
State the number of shares outstanding of each of the issuer's class of common
stock, as of the latest practicable date:
COMMON STOCK, $.001 PAR VALUE, 9,173,541 SHARES OUTSTANDING AS OF
AUGUST 31, 1995.
Transitional Small Business Disclosure Format (check one) Yes No X
------ -------
ADVANCED MATERIALS GROUP, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1: Financial Statements 1
Condensed Consolidated Balance Sheets 1
August 31, 1995 and November 30, 1994
Condensed Consolidated Statements of Operations 2
Nine months ended August 31, 1995 and 1994
Condensed Consolidated Statements of Operations 3
Three months ended August 31, 1995 and 1994
Condensed Consolidated Statements of Shareholders' Equity 4
Nine months ended August 31, 1995
Condensed Consolidated Statements of Cash Flows 5
Nine months ended August 31, 1995 and 1994
Notes to Condensed Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of 9
Financial Conditions and Results of
Operations
PART II. OTHER INFORMATION
Item 5 - Other Information 13
Item 6 - Exhibits and Reports on Form 8-K 13
SIGNATURES 14
Item 1: FINANCIAL STATEMENTS
ADVANCED MATERIALS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
August 31, November 30,
1995 1994
(Unaudited)
---------------- ----------------
ASSETS
Current assets:
Cash $ 13,000 $ 50,000
Marketable securities 125,000 175,000
Accounts and notes receivable 1,849,000 3,827,000
Inventories 2,016,000 2,086,000
Prepaid expenses 166,000 163,000
---------------- ----------------
Total current assets 4,169,000 6,301,000
Fixed assets, net of accumulated
depreciation 2,530,000 2,492,000
Investments in affiliates 3,296,000 4,169,000
Goodwill 3,526,000 3,730,000
Other assets 502,000 566,000
---------------- ----------------
$ 14,023,000 $ 17,258,000
---------------- ----------------
---------------- ----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,152,000 $ 1,863,000
Accrued expenses 891,000 1,160,000
Notes payable 1,674,000 1,642,000
Current portion of long-term debt 182,000 493,000
---------------- ----------------
Total current liabilities 3,899,000 5,158,000
Long-term debt:
Notes payable and other long-term debt 3,151,000 2,843,000
Deferred compensation 1,189,000 1,121,000
Convertible debentures 535,000 535,000
---------------- ----------------
Total long-term debt 4,875,000 4,499,000
Shareholders' equity:
Preferred stock - $.001 par value;
5,000,000 shares authorized; no
shares issued or outstanding -- --
Common stock - $.001 par value;
25,000,000 shares authorized;
9,173,541 issued and outstanding
at August 31, 1995 and November
30, 1994 respectively 7,000 7,000
Paid in capital 9,486,000 9,554,000
Unrealized holding gain on securities 2,042,000 2,965,000
Accumulated deficit (6,286,000) (4,925,000)
---------------- ----------------
Total shareholders' equity 5,249,000 7,601,000
$ 14,023,000 $ 17,258,000
---------------- ----------------
---------------- ----------------
See accompanying notes to condensed consolidated financial statements
1
Advanced Materials Group, Inc.
Condensed Consolidated Statements of Operations
Nine months ended August 31,
----------------------------------
1995 1994
---------------- ---------------
(Unaudited) (Unaudited)
Net sales $ 11,638,000 $ 11,061,000
Cost of sales (exclusive ofdepreciation
and amortization shown below) 9,761,000 8,726,000
---------------- ---------------
Gross profit 1,877,000 2,335,000
---------------- ---------------
Operating expenses:
Marketing and selling 521,000 578,000
General and administrative 1,440,000 1,730,000
Depreciation and amortization 677,000 634,000
Research and development 12,000 149,000
---------------- ---------------
Total operating expenses 2,650,000 3,091,000
Loss from operations (773,000) (756,000)
Interest expense, net 585,000 325,000
Unrealized loss on securities - 741,000
---------------- ---------------
Loss before income taxes (1,358,000) (1,822,000)
Income taxes 3,000 4,000
---------------- ---------------
Net loss $ (1,361,000) $ (1,826,000)
---------------- ---------------
---------------- ---------------
Loss per common share $ (.15) $ (.21)
---------------- ---------------
---------------- ---------------
Weighted average common shares
outstanding 9,174,000 8,729,000
---------------- ---------------
---------------- ---------------
See accompanying notes to condensed consolidated financial statements
2
Advanced Materials Group, Inc.
Condensed Consolidated Statements of Operations
Three months ended August 31,
---------------------------------
1995 1994
------------- -------------
(Unaudited) (Unaudited)
Net sales $ 3,850,000 $ 4,330,000
Cost of sales (exclusive of depreciation
and amortization shown below) 3,244,000 3,386,000
------------- --------------
Gross profit 606,000 944,000
------------- --------------
Operating expenses:
Marketing and selling 191,000 206,000
General and administrative 503,000 548,000
Depreciation and amortization 242,000 221,000
Research and development -- 11,000
------------- --------------
Total operating expenses 936,000 986,000
Loss from operations (330,000) (42,000)
Interest expense, net 201,000 128,000
Unrealized loss on securities -- --
------------- --------------
Loss before income taxes (531,000) (170,000)
Income taxes -- --
------------- --------------
Net loss $ (531,000) $ (170,000)
------------- --------------
------------- --------------
Loss per common share $ (.06) $ (.02)
------------- --------------
------------- --------------
Weighted average common shares
outstanding 9,174,000 9,174,000
------------- --------------
------------- --------------
See accompanying notes to condensed consolidated financial statements
3
ADVANCED MATERIALS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the nine months ending August 31, 1995
Common Stock Unrealized Gain Total
----------------------- Paid-In on Securities Accumulated Shareholders'
Shares Amount Capital held for sale Deficit Equity
---------- --------- ------------ --------------- ------------- -------------
Balance, November 30, 1994 9,173,541 $ 7,000 $ 9,554,000 $ 2,965,000 $ (4,925,000) $ 7,601,000
Unrealized holding loss on
available-for-sale securities (923,000) (923,000)
Offering costs -- -- (68,000) -- (68,000)
Net loss -- -- -- (1,361,000) (1,361,000)
---------- --------- ------------ --------------- ------------- --------------
Balance, August 31, 1995 9,173,541 $ 7,000 $ 9,486,000 $ 2,042,000 $ (6,286,000) $ 5,249,000
---------- --------- ------------ --------------- ------------- --------------
---------- --------- ------------ --------------- ------------- --------------
See accompanying notes to condensed consolidated financial statements
4
ADVANCED MATERIALS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended August 31,
------------------------------------
1995 1994
(Unaudited) (Unaudited)
---------------- --------------
Cash flows from operating activities:
Net loss $ (1,361,000) $ (1,826,000)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 677,000 634,000
Amortized discount on deferred
compensation 119,000 111,000
Services paid through issuance of
common stock -- 60,000
Unrealized loss on securities held
for sale -- 741,000
Changes in operating assets and
liabilities:
Accounts and notes receivable 488,000 (918,000)
Inventories 70,000 108,000
Prepaid expenses and other (3,000) (50,000)
Accounts payable and accrued
liabilities (980,000) 252,000
---------------- --------------
Net cash used by operating activities (990,000) (888,000)
---------------- --------------
Cash flows from investing activities:
Decrease (increase) in notes receivable 1,490,000 (324,000)
Decrease (increase) in other assets (6,000) (104,000)
Purchase of equipment (441,000) (450,000)
---------------- --------------
Net cash (used in) provided by
investing activities 1,043,000 (878,000)
---------------- --------------
Cash flows from financing activities:
Proceeds from sale of common stock,
net of offering costs (68,000) 1,199,000
Payments of debt (834,000) (1,878,000)
Issuance of debt 812,000 2,401,000
---------------- --------------
Net cash (used in) provided by financing
activities (90,000) 1,722,000
---------------- --------------
Net change in cash (37,000) (44,000)
Cash, beginning of period 50,000 159,000
---------------- --------------
Cash, end of period $ 13,000 $ 115,000
---------------- --------------
---------------- --------------
See accompanying notes to condensed consolidated financial statements
5
ADVANCED MATERIALS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
August 31, 1995
NOTE 1 - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been prepared
in accordance with SEC requirements for interim financial statements.
Therefore, they do not include all disclosures that would be presented in the
Company's Annual Report on Form 10-KSB. The financial statements should be read
in conjunction with the financial statements contained in the Company's Annual
Report on Form 10-KSB for the year ended November 30, 1994.
The information furnished reflects all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary for a
fair presentation of financial position for the interim period. The results are
not necessarily indicative of results to be expected for the full year.
NOTE 2 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Nine months ended August 31,
-------------------------------------
1995 1994
---- ----
Cash paid during the period
for:
Interest $ 476,000 $ 200,000
----------------- ----------------
----------------- ----------------
Income taxes $ 3,000 $ 4,000
----------------- ----------------
----------------- ----------------
NOTE 3 - LOSS ON SECURITIES HELD FOR SALE
Beginning in fiscal 1994, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," which addresses the accounting and reporting for investments in
equity securities which have readily determinable fair values and all
investments in debt securities. In accordance with this statement, the
Company's marketable equity securities, consisting of 100,240 shares of common
stock in Wilshire Technologies, Inc. ("WTI") and 2,554,504 shares of Innovative
Technologies Group plc ("IT") have been classified as available-for-sale and
have been reported at fair value. As of August 31, 1995 these investments had
an aggregate market value of approximately $3,422,000 and the Company recorded
an unrealized holding loss of $923,000 which has been included in a separate
component of shareholders' equity.
6
ADVANCED MATERIALS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
August 31, 1995
NOTE 4 - NOTES PAYABLE AND SHAREHOLDERS' EQUITY
In 1995, the Company incurred costs of approximately $68,000 in connection with
the registration of certain shares of common stock previously issued. Such
costs have been reflected as a reduction of shareholders' equity.
On January 13, 1995 the Company amended the Credit and Security Agreements on a
$700,000 line of credit with Dominion Capital, Inc. to substitute as collateral
for the note 800,000 shares of IT common stock in place of certain promissory
notes due from IT such notes having been paid-in-full in December, 1994. The
termination date of the note was extended to January 13, 1996.
On June 30, 1995, the Company's subsidiary, Advanced Materials, Inc. ("AMI")
renewed a revolving line of credit with a commercial lender for an additional
term of twelve months. The maximum credit was increased to $2,000,000 with a
$600,000 sublimit applying to eligible inventory. Borrowings under the line are
limited to a percentage of eligible receivables and inventory with a limit of
approximately $1,396,000 on August 31, 1995. Interest on the revolving line was
reduced to prime plus 4% and the monthly administrative fee on the inventory
portion of the line was reduced to .25%. Covenants were added to the loan
agreement requiring AMI to remain cash flow positive for the remainder of fiscal
year 1995 and profitable in fiscal year 1996 and thereafter, with no more than
one quarter of losses in any year. The amended agreement includes provisions
for additional twelve month terms at the discretion of AMI and the lender.
On August 16, 1995 the Company amended and restated two unsecured promissory
notes due to a former owner of the predecessor business of AMI. The due dates
of the promissory notes in the amounts of $265,000 and $200,000 were extended
for a period of one year to November 30, 1996 and June 1, 1997 respectively.
Interest on the $265,000 note was increased to 10% from 8% per annum; accrued
interest of approximately $104,000 will be payable on November 30, 1995 after
which payments of interest are due monthly. Other than extending the due date,
terms of the $200,000 note remain unchanged with interest of 12% per annum due
monthly.
NOTE 5 - LEASE COMMITMENTS
On August 31, 1995 AMI executed an agreement with its current landlord extending
the lease of its manufacturing facility in Dallas, Texas for a period of five
years effective December 1, 1995 and ending December 1, 2000.
7
ADVANCED MATERIALS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
August 31, 1995
The lease calls for rental payments of $330,000 per year plus certain excess
costs as defined in the agreement. The lease contains a renewal option for one
additional five year term. The lease also contains three one year options for
the reduction of up to one third of the leased area if WTI fails to exercise any
of the renewal options of their sublease or upon termination of the sublease at
the end of its term as described below.
Concurrent with the execution of the facility lease in Texas, AMI as landlord
entered into an agreement with WTI as tenant to continue their sublease of
approximately one-third of the Texas facility for a period of one year effective
December 1, 1995 and ending November 30, 1996. The sublease calls for rental
payments of $108,900 per year plus certain excess costs as defined in the
agreement. The sublease calls for two one year renewal options.
8
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Advanced Materials Group, Inc. ("AMG" or "the Company"), through its
subsidiaries, develops, manufactures and markets a wide variety of industrial
products. The Company's principal subsidiary, Advanced Materials, Inc. ("AMI"),
is a forty year old business that converts specialty foams, foils, films and
adhesive composites into components and finished products such as printer inking
felts, disk drive gaskets, automobile air conditioning insulators, water and
dust seals, surgical pads, electrosurgical grounding pads, sponges, neck braces,
knee pads and other specialty foam products. The Company's Condor Utility
Products, Inc. ("Condor") subsidiary produces specialized systems for mixing and
dispensing multi-component chemicals, which, when combined, form sealants which
are sold to end-users, chemical manufacturers and repackagers for use in the
telecommunications and power utility industries. The Company owns a 12.3% equity
interest in Innovative Technologies Group plc ("IT") and has an exclusive
worldwide license to manufacture and sell products made from a hydrophilic
polymer developed by IT.
In December, 1994 AMI completed the restructuring plan announced in the fourth
quarter of 1993 by vacating its manufacturing plant in Carson, Ca. and
relocating its California manufacturing operations into a 56,000 square foot
building in Rancho Dominguez, Ca.
Comparative financial information shown for 1994 has been adjusted to give
retroactive effect to a 1994 fourth quarter adjustment wherein the amortized
discount on certain deferred compensation due to the former owners of AMI has
been classified from amortization expense to interest expense.
RESULTS OF OPERATIONS
Net sales decreased $480,000 or 11.1% from $4,330,000 in the third quarter of
1994 to $3,850,000 in the third quarter of 1995. Year to date net sales,
representing nine months results, increased $577,000 or 5.2% from $11,061,000 in
1994 to $11,638,000 in 1995. Third quarter, 1994 sales for AMI included $585,000
for a customer which, although not known to the Company at the time, actually
represented approximately six months supply of product thereby distorting third
quarter, 1994 sales on a comparative basis. Third quarter, 1995 sales to this
customer totaled $178,000, typical of more recent quarters, with the difference
of $407,000 subsequently found by the Company to represent overstocking by the
customer. Third quarter, 1995 sales for AMI were also impacted by a $350,000
decrease in expected sales as a major customer worked down excess inventories.
Increased year to date sales were largely due to revenue gains at AMI from high
tech industrial and traditional fabrication product lines. Sales for the
Company's Condor Utility Products, Inc. subsidiary also declined due to labor
disputes, recently settled, within a major market segment that temporarily
reduced demand for its foam sealant injection product.
9
Gross profit declined from $944,000 in the third quarter of 1994 to $606,000 in
the third quarter of 1995. Year to date gross profit decreased $458,000 or 19.6%
from $2,335,000 in 1994 to $1,877,000 in 1995. Third quarter, 1995 gross profit
decreased due to a reduction in sales, higher raw material costs and a shift in
product mix to less profitable lines. These factors also impacted year to date
gross profit. Prices for base raw materials have increased 12% to 36% in the
last eighteen months. The range reflects the individual circumstances for the
raw material varying from a tightening of supply capacity to acute allocation of
base chemicals. Historically, the Company's results in passing through cost
increases to the existing customer base has been only partially successful.
However the Company has focused efforts to bring customer pricing into line with
current costs. Recent efforts have produced increases averaging 5 to 6 percent
which should translate into higher gross margins for the remainder of the year.
The Company also experienced productivity declines in January, 1995 due to
flooded conditions while moving the California facility.
Marketing and selling costs decreased by 7.3% from $206,000 in the third quarter
of 1994 to $191,000 in the third quarter of 1995. Year to date marketing and
selling costs decreased $57,000 or 9.9% from $578,000 in 1994 to $521,000 in
1995. Cost cutting initiatives included combining job duties and reducing
headcount in an effort to increase efficiency by reducing costs while
maintaining customer service at optimum levels.
General and administrative costs decreased 8.2% or $45,000 from $548,000 in the
third quarter of 1994 to $503,000 in the third quarter of 1995. Year to date
general and administrative costs decreased 16.8% or $290,000 from $1,730,000 in
1994 to $1,440,000 in 1995. Rent and utility costs were down for the year
reflecting the restructuring plan results. Also reduced were costs related to
investor relations and consulting fees associated with the Company's acquisition
program. General and administrative costs were further reduced by personnel
reductions taken in 1994 and early 1995.
Depreciation and amortization costs increased $21,000 from $221,000 in the third
quarter of 1994 to $242,000 in the third quarter of 1995. Year to date
depreciation and amortization costs increased $43,000 from $634,000 in 1994 to
$677,000 in 1995. Depreciation expense increased principally due to $694,000 in
capital purchases made in the past twelve months.
No research and development costs were incurred in the third quarter of 1995
compared to $11,000 in the third quarter of 1994. Year to date research and
development costs decreased $137,000 from $149,000 in 1994 to $12,000 in 1995.
Research and development costs in 1994 were solely related to product
development efforts required under the terms of the license agreement with IT.
Other than minimum funding for consultants in Europe, expenditures by the
Company have decreased pending the results from a new pilot testing line to be
installed by IT in calendar 1995. Research and development spending should be
increasing by the end of the first quarter of 1996.
10
Net interest expense increased $73,000 from $128,000 in the third quarter of
1994 to $201,000 in the third quarter of 1995. Year to date interest expense
increased $260,000 from $325,000 in 1994 to $585,000 in 1995. Higher interest
costs were caused by increased debt between the two periods, higher interest
expense on all debt with variable interest tied to the rising prime rate and
significantly higher short term interest rates associated with the revolving
line of credit established in May of 1994.
In the third quarter of 1994, the Company took a charge of $741,000, net of tax
effect, against earnings as an unrealized holding loss on its investment in
100,240 shares of common stock of Wilshire Technologies, Inc. In accordance
with Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," the Company had classified
the shares as available-for-sale and determined that the decrease in fair value
was other than temporary.
The Company sustained losses for financial reporting and income tax purposes for
both the third quarter and year to date 1994 and 1995. Accordingly, no
provision for income taxes, except minimum state franchise taxes, were made.
Net losses for the third quarter of 1995 totaled $531,000 compared to a loss of
$170,000 in the third quarter of 1994. Year to date net losses totaled
$1,361,000 for 1995 compared to $1,826,000 for 1994. Profits for the quarter
were adversely impacted by lower than expected sales, less profitable product
mix and higher interest expense partially offset by a $50,000 decrease in
operating expenses. Year to date operating expenses have been reduced by
$441,000 or 14.3%. Also, while interest expense was up from this same quarter
last year, total interest expense decreased $17,000 from the second quarter of
1995 principally due to the extension of a credit agreement with a commercial
lender at much improved rates and terms. Year to date profits were further
impacted by higher raw material costs. Price increases made effective through
the third quarter of 1995 should have a favorable impact for the remainder of
the year.
LIQUIDITY AND CAPITAL RESOURCES
In December, 1994 the Company collected $1,490,000 from Innovative Technologies,
Inc. due on notes receivable. In January, 1995 the Company collected an
additional $201,000 in interest due on the notes. The funds collected were used
to pay down short term debt and other general working capital purposes.
In January 13, 1995 the Company amended the Credit and Security Agreements on a
$700,000 line of credit with Dominion Capital, Inc. to substitute as collateral
for the note 800,000 shares of IT common stock in place of certain promissory
notes due from IT such notes having been paid-in-full in December, 1994. The
termination date of the note was extended to January 13, 1996. As of August 31,
1995 the amount owed under the credit line was $450,000. On June 30, 1995,
Dominion contributed the line of credit, along with stock and warrants of the
Company and securities in other companies to Trilon
11
Dominion Partners, L.L.C., a limited liability company ("Trilon") in exchange
for a Class B non-voting membership interest in Trilon.
On June 30, 1995, AMI renewed a revolving line of credit with a commercial
lender for an additional term of twelve months. In addition, the maximum credit
was increased to $2,000,000 with a $600,000 sublimit applying to eligible
inventory. Borrowings under the line are limited to a percentage of eligible
receivables and inventory with a limit of approximately $1,396,000 on August 31,
1995. The balance owed at August 31, 1995 was $1,144,000. Interest on the
revolving line was reduced to prime plus 4% and the monthly administrative fee
on the inventory portion of the line was reduced to .25%. Covenants were added
to the loan agreement requiring AMI to remain cash flow positive for the
remainder of fiscal year 1995 and profitable in fiscal year 1996 and thereafter,
with no more than one quarter of losses in any year. The amended agreement
includes provisions for additional twelve month terms at the discretion of AMI
and the lender.
On August 16, 1995 the Company amended and restated two unsecured promissory
notes due to a former owner of the predecessor business of Advanced Materials,
Inc. The due dates of the promissory notes in the amounts of $265,000 and
$200,000 were extended for a period of one year to November 30, 1996 and June
1, 1997 respectively. Interest on the $265,000 note was increased to 10% from
8% per annum; accrued interest of approximately $104,000 will be payable on
November 30, 1995 after which payments of interest are due monthly. Other than
extending the due date, terms of the $200,000 note remain unchanged with
interest of 12% per annum due monthly.
The Company made capital purchases of $441,000 in the first three quarters of
1995. At the end of the third quarter, the Company had no material commitments
for capital expenditures.
The Company anticipates that cash from operations, along with existing lines of
credit, will supply sufficient working capital for the next twelve months.
12
PART II - OTHER INFORMATION
Item 5. Other Information
In a transaction reported on a Schedule 13D filed by Dominion Resources, Inc.,
Dominion Capital, Inc. ("Dominion"), VC Holdings, Inc. and Ronald W. Cantwell
dated June 30, 1995, Dominion contributed its ownership of common stock of the
Company, including warrants to acquire common stock of the Company and a line of
credit, to a limited liability company, Trilon Dominion Partners, L.L.C.
(formerly known as Venture Capital Equities, L.L.C.)("Trilon") in exchange for a
non-voting Class B membership interest in Trilon. The Operating Agreement for
Trilon dated as of June 30, 1995 provides that Trilon may not sell the shares of
the Company's common stock contributed by Dominion for less than the agreed fair
market value of such shares at the time of their contribution without (except in
certain limited circumstances) the consent of Dominion. William J. Hopke,
Chairman of the Company's Board of Directors, was formerly Senior Vice President
and Treasurer of Dominion is now Executive Vice President and Director of
Trilon. In its Schedule 13D filing dated as of June 30, 1995, describing the
transaction, Dominion stated that it may be considered to be an indirect
beneficial owner of such shares of the Company's common stock, although it
disclaims such beneficial ownership.
Item 6. Exhibits and Reports on Form 8-k
(a) Exhibits
10.1 Amendment #5 dated July 14, 1995 to Loan Agreement dated May 1,
1994 between Concord Growth Corporation and Advanced Materials,
Inc.
10.2 Amended and Restated Promissory Notes dated August 16, 1995
between Advanced Material Group, Inc. and Hiram H. Johnson and
Beth A. Johnson.
10.3 Industrial Lease Agreement executed August 31, 1995 between New
York Life Insurance and Annuity corporation, as Landlord, and
Advanced Materials, Inc., as Tenant.
10.4 Industrial Sublease Agreement executed August 31, 1995 between
Advanced Materials, Inc., as Landlord, and Wilshire Technologies,
Inc., as Tenant.
27 Financial Data Schedule.
(b) Reports on Form 8-K - None
13
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ADVANCED MATERIALS GROUP, INC.
/s/ J. E. Fullerton
----------------------------------------
Dated: October 9, 1995 By: J. E. Fullerton
Vice President and Controller
(Principal Accounting Officer)
14