U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the thirteen week period ended March 30, 1996
Commission file number 1-13158
The Great Train Store Company
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 75-2539189
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
14180 Dallas Parkway, Suite 618, Dallas, Texas 75240
(Address of Principal Executive Offices) (Zip Code)
(214) 392-1599
(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 Securities Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the Issuer's classes
of common equity, as of the latest practicable date:
Number of Shares Outstanding
Title of Class of Common Stock as of March 30, 1996
- - ------------------------------ --------------------
Common Stock $0.01 par value 3,145,000
THE GREAT TRAIN STORE COMPANY
-----------------------------
QUARTERLY REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE FISCAL QUARTER ENDED
March 30, 1996
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements Page
-------------------- ----
Unaudited Consolidated Balance Sheet as of March 30, 1996 3
Unaudited Consolidated Statements of Operations for the thirteen
weeks ended April 1, 1995 and March 30, 1996 4
Unaudited Consolidated Statements of Cash Flows for the thirteen
weeks ended April 1, 1995 and March 30, 1996 5
Notes to Unaudited Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis 7
------------------------------------
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 10
--------------------------------
SIGNATURE PAGE 11
EXHIBIT INDEX 12
2
THE GREAT TRAIN STORE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS March 30,
1996
---------------
CURRENT ASSETS:
Cash and cash equivalents $ 1,214,534
Merchandise inventories 3,809,488
Accounts receivable and other current assets 148,026
---------------
Total current assets 5,172,048
PROPERTY AND EQUIPMENT:
Store construction and leasehold improvements 2,219,520
Furniture, fixtures, and equipment 731,415
---------------
2,950,935
Less - Accumulated depreciation and amortization (1,068,980)
---------------
Property and equipment, net 1,881,955
OTHER ASSETS, net 168,959
---------------
Total assets $ 7,222,962
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,589,177
Sales taxes payable 62,427
Current portion of notes payable to management 343,685
Current portion of capital lease obligations 98,266
---------------
Total current liabilities 2,093,555
NOTES PAYABLE TO MANAGEMENT, net of current portion 535,833
CAPITAL LEASE OBLIGATIONS, net of current portion 265,406
---------------
Total liabilities 2,894,794
---------------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Preferred stock; $.01 par value; 2,000,000 shares
authorized; none issued and outstanding
Common stock; $.01 par value; 18,000,000 shares
authorized; 3,145,000 shares issued and outstanding 31,450
Paid-in capital 4,446,949
Unearned compensation - restricted stock (1,416)
Accumulated deficit (148,815)
---------------
Total stockholders' equity 4,328,168
---------------
Total liabilities and stockholders' equity $ 7,222,962
===============
The accompanying notes are an integral part of these consolidated financial
statements.
3
THE GREAT TRAIN STORE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Thirteen Weeks Ended
April 1, 1995 March 30, 1996
------------- ---------------
NET SALES $ 1,799,316 $ 2,421,011
COST OF SALES 964,188 1,284,884
------------- ---------------
Gross profit 835,128 1,136,127
------------- ---------------
OPERATING EXPENSES:
Store operating expenses 503,154 725,226
Occupancy expenses 363,763 456,737
Selling, general, and administrative expenses 336,828 377,330
Depreciation and amortization 49,965 73,292
------------- ---------------
Total operating expenses 1,253,710 1,632,585
OPERATING LOSS (418,582) (496,458)
------------- ---------------
OTHER INCOME (EXPENSE):
Interest expense (28,185) (30,909)
Interest income 43,000 17,442
Other income 3,559 2,429
------------- ---------------
Total other income (expense), net 18,374 (11,038)
------------- ---------------
NET LOSS $ (400,208) $ (507,496)
============= ===============
NET LOSS PER SHARE $ (0.13) $ (0.16)
============= ===============
WEIGHTED AVERAGE SHARES
OUTSTANDING 3,145,000 3,145,000
============= ===============
The accompanying notes are an integral part of these consolidated financial
statements.
4
THE GREAT TRAIN STORE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Thirteen Weeks Ended
April 1, 1995 March 30, 1996
------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (400,208) $ (507,496)
Adjustments to reconcile net loss to net cash used in operating
activities -
Depreciation and amortization 49,965 73,292
Amortization of unearned compensation restricted stock 4,250 4,249
Changes in assets and liabilities -
Merchandise inventories (397,840) (926,529)
Accounts receivable and other current assets 14,463 74,613
Other assets 15,440 (28,511)
Accounts payable and accrued liabilities (292,778) (153,373)
Sales taxes payable (128,864) (174,365)
------------- ------------
Net cash used in operating activities (1,135,572) (1,638,120)
------------- ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of marketable securities (335,985) -
Purchase of property and equipment (116,359) (327,058)
------------- ------------
Net cash used in investing activities (452,344) (327,058)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 90,666 6,731
Repayment of notes payable and capital leases (83,984) (64,715)
------------- ------------
Net cash provided by (used in) financing activities 6,682 (57,984)
------------- ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,581,234) (2,023,162)
CASH AND CASH EQUIVALENTS, beginning of period 1,983,953 3,237,696
------------- ------------
CASH AND CASH EQUIVALENTS, end of period $ 402,719 1,214,534
============= ============
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:
Assets financed through capital lease obligations $ - $ -
============= ============
The accompanying notes are an integral part of these consolidated statements.
5
THE GREAT TRAIN STORE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements of The Great Train
Store Company and subsidiaries (the "Company") for the thirteen weeks ended
March 30, 1996 and April 1, 1995 have been prepared in accordance with the rules
and regulations of the Securities and Exchange Commission ("SEC") and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation of the results of the interim periods have been included. Operating
results for any interim period are not necessarily indicative of the results
that may be expected for the entire fiscal year. The Company's business is
heavily dependent on fourth quarter sales. Historically, the fourth quarter has
accounted for a disproportionate share of the Company's sales and earnings.
These statements should be read in conjunction with the financial statements and
notes thereto for the year ended December 30, 1995 included in the Company's
1995 Annual Report on Form 10-KSB as filed with the SEC.
Prior year balances include certain reclassifications to conform to the current
year presentation.
On May 10, 1996 the Company accepted a letter of commitment from Bank One, Texas
for a $3,000,000 revolving line of credit. The line of credit will have an
initial contract period of two years and be secured by certain assets of the
Company, including inventory. Outstanding borrowings will bear interest at the
bank's base rate plus 1 1/2% per annum and a commitment fee of 1/2% per annum
will be charged on the unused portion of the line.
Effective December 31, 1995, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." This statement requires
that long-lived assets and certain identifiable intangibles to be held and used
by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recovered. The adoption of this statement had no effect on the consolidated
financial statements.
On March 15, 1996, the Company opened one new store in Holyoke, Massachusetts.
In addition, the Company has completed negotiations and signed leases to open
additional new stores in Kansas City, Missouri; Orlando, Florida; Louisville,
Kentucky; Troy (near Detroit), Michigan and has agreed in principle to five
other locations for 1996. The Company continues to actively negotiate with
respect to other possible new store locations for 1996 and 1997 openings.
6
ITEM 2. Management's Discussion and Analysis
Results of Operations
- - ---------------------
Operating results for any interim period are not necessarily indicative of the
results that may be expected for the entire fiscal year. The Company's business
is heavily dependent on fourth quarter sales which historically have accounted
for a disproportionate share of the Company's annual sales and earnings. The
results of operations in any particular quarter may be significantly impacted by
the opening of new stores. Prior year balances include certain reclassifications
to conform to the current year presentation. The following table sets forth, for
the periods indicated, selected statements of operations data expressed as a
percentage of net sales:
For the Thirteen Weeks Ended
April 1, 1995 March 30, 1996
------------- --------------
Net Sales 100.0% 100.0%
Cost of Sales 53.6 53.1
------ ------
Gross profit 46.4 46.9
Store operating expenses 28.0 29.9
Occupancy expenses 20.2 18.9
Selling, general, & administrative expenses 18.7 15.6
Depreciation and amortization 2.8 3.0
------ ------
Operating loss (23.3) (20.5)
Interest expense (1.6) (1.3)
Interest income 2.4 .7
Other income .2 .1
------ ------
Net Loss (22.3)% (21.0)%
Comparison of Thirteen Week Period Ended April 1, 1995 to the Thirteen Week
Period Ended March 30, 1996
- - ---------------------------
Net sales increased approximately $622,000, or 34.5%, for the thirteen weeks
ended March 30, 1996 compared with April 1, 1995. Of this increase,
approximately $771,000 was attributable to net sales generated by seven stores
which were not open in the comparable period in 1995. This increase was
partially offset by a decrease in comparable store sales of approximately
$22,000 or 1.3% over the comparable period in the prior year, a decrease of
approximately $19,000 related to the St. Louis store's temporary closing for
renovation and a decrease of approximately $108,000 attributable to sales
received in the prior period from the Columbus location, which was closed on
December 30, 1995. The decrease in comparable store sales was primarily related
to very bad weather conditions across the country in January and February, as
well as the major reconstruction of the Company's original store in St. Louis
Union Station during the entire month of February and parts of January and
March. Comparable store sales are net sales for stores opened for both of the
months in the periods being compared. Comparable store sales for the thirteen
week period are calculated by accumulating comparable store sales for each month
in the thirteen week period.
7
Gross profit increased approximately $301,000, or 36.0%, for the thirteen weeks
March 30, 1996, compared with April 1, 1995. As a percentage of net sales, gross
profit increased to 46.9% for the thirteen weeks ended March 30, 1996 compared
with 46.4% for April 1, 1995.
Store operating expenses increased approximately $222,000, or 44.1%, for the
thirteen weeks ended March 30, 1996 compared with April 1, 1995. Approximately
$218,000 of the increase resulted from the operation of the seven stores which
were not open in the comparable period in 1995 and approximately $42,000 was due
to an increase in comparable store operating expenses. This increase was
partially offset by the elimination of operating expenses (approximately
$38,000), related to the Columbus store location which was closed on December
30, 1995. As a percentage of net sales, store operating expenses increased to
29.9% for the quarter ended March 30, 1996, from 28.0% for the quarter ended
April 1, 1995.
Occupancy expenses increased approximately $93,000, or 25.6%, for the thirteen
weeks ended March 30, 1996 compared with April 1, 1995. Approximately $141,000
of the increase in occupancy expenses was attributable to the seven stores which
were not open in the comparable period in 1995. This was partially offset by an
approximate $37,000 decrease due to the closing of the Columbus store. As a
percentage of net sales, overall occupancy expenses decreased to 18.8% for the
thirteen weeks ended March 30, 1996, from 20.2% for April 1, 1995 .
Selling, general and administrative expenses increased approximately $41,000, or
12.0%, for the thirteen weeks ended March 30, 1996 compared with April 1, 1995.
The increase in selling, general, and administrative expenses was primarily due
to approximately $27,000 of additional expenses related to salaries and related
expenses for additional corporate personnel in anticipation of future growth of
the Company. The Company anticipates that selling, general and administrative
expenses will increase further as a result of increased staffing and other costs
in anticipation of opening additional stores pursuant to the Company's expansion
strategy. As a percentage of net sales, selling, general, and administrative
expenses decreased to 15.5% for the first quarter of 1996, from 18.7% for the
same period in 1995. The Company anticipates that as additional stores are
opened, selling, general and administrative expenses will increase at a slower
rate than the rate of sales growth.
Depreciation and amortization expense increased approximately $23,000, or 46.7%,
for the thirteen weeks ended March 30, 1996 compared with April 1, 1995. Such
increase was primarily the result of an increase in the asset base due to the
opening of new stores and the addition in all stores of new management
information systems. As a percentage of net sales, depreciation and amortization
expense increased to 3.0% for the quarter ended March 30, 1996, from 2.8% for
the quarter ended April 1, 1995 primarily due to the addition of management
information systems.
Interest expense increased approximately $3,000, or 9.7%, for the thirteen weeks
ended March 30, 1996 compared with April 1, 1995. The increase was primarily due
to interest expense in the first quarter of 1996 related to the financing of new
management information systems which was not in place during the first quarter
of 1995. This increase was partially offset by a decrease in the average
outstanding principal balance of other notes.
8
Interest income decreased approximately $26,000, or 59.4% for the thirteen weeks
ended March 30, 1996 compared with April 1, 1995 due to the lower balance of
remaining net proceeds from the Company's initial public offering.
As a result of the foregoing, the Company recorded a net loss of approximately
$507,000 for the thirteen weeks ended March 30, 1996 compared with a net loss of
approximately $400,000 for period ended April 1, 1995. The Company anticipates
that it will continue to incur seasonal net losses throughout the first part of
the year. As the Company's stores typically lose money in the first part of the
year, the losses will most likely be increased by stores which open prior to the
fourth quarter. As a percentage of net sales, net loss decreased to 21.0% for
the first quarter of 1996, from 22.2% for the first quarter of 1995.
Liquidity and Capital Resources
- - -------------------------------
The Company's primary uses of cash have been for the purchase of merchandise
inventories, of new store openings and capital expenditures.
For the thirteen weeks ended March 30, 1996, net cash used in operating
activities was approximately $1,638,000 compared to approximately $1,136,000 for
April 1, 1995. The increase in net cash used in operating activities was
primarily related to rebuilding and increasing inventory after the Christmas
selling season.
As of March 30, 1996, the Company's total debt and lease obligations (exclusive
of trade credit) consisted of approximately $880,000 payable to the holders of
notes payable to management and approximately $364,000 payable under capital
lease obligations related to the management information systems, fixtures and
equipment. Of such debt obligations, approximately $215,000 principal amount of
the notes payable to management and approximately $76,000 under the fixtures and
equipment financing arrangements are payable during 1996.
On March 15, 1996, the Company opened one new store in Holyoke, Massachusetts.
In addition, the Company has completed negotiations and signed leases to open
additional new stores in Kansas City, Missouri; Orlando, Florida; Louisville,
Kentucky; Troy (near Detroit), Michigan and has agreed in principle to five
other locations for 1996. The Company continues to actively negotiate with
respect to other possible new store locations for 1996 and 1997 openings.
The Company intends to finance a portion of its anticipated capital
expenditures, working capital needs and debt obligations from the remaining net
proceeds of its public offering, cash from the Company's operating activities,
1andlord allowances, possible fixtures and equipment or inventory financing and
trade credit. The Company presently has outstanding 1,245,000 warrants to
purchase the Company's common stock at $5.00 per share. The warrants expire on
August 4, 1996. Unless a substantial portion of the presently outstanding
warrants and options to purchase common stock are exercised in 1996, the Company
will most likely require additional external financing to continue
implementation of its growth strategy. If necessary, the Company's number of new
store openings will be reduced to conserve available financial resources. On May
10, 1996 the Company accepted a letter of commitment from Bank One, Texas for a
$3,000,000 secured revolving line of credit. There can be no assurance that a
definitive loan agreement will be executed or that funds thereunder will be
sufficient to support the Company's growth strategies.
9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) See Exhibit Index.
(B) No current reports on Form 8-K have been filed during
the thirteen week period March 30, 1996.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE GREAT TRAIN STORE COMPANY
May 13, 1996 /s/ Cheryl A. Taylor
- - ------------ --------------------
Date Cheryl A. Taylor
Vice President - Finance and Administration,
Principal Financial Officer
11
EXHIBIT INDEX
Exhibit No. Description Page
- - ----------- ----------- ----
11 Statement Re: Computation of Per Share Earnings 13
99.1 Cautionary Statement Identifying Important Factors that
Could Cause the Company's Actual Results to Differ from
those Projected in Forward Looking Statements 14
12
EXHIBIT 11
The Great Train Store Company
Computation of Per Share Earnings
For the Thirteen Weeks Ended
April 1, 1995 March 30, 1996
----------- -----------
Weighted Average of:
Common Stock Outstanding 3,145,000 3,145,000
Stock Options Outstanding - -
Bridge Warrants Outstanding - -
----------- -----------
Shares Outstanding 3,145,000 3,145,000
=========== ===========
Net Loss $ (400,208) $ (507,496)
Shares Outstanding 3,145,000 3,145,000
Net Loss Per Share $ (0.13) $ (0.16)
13
Exhibit 99.1
Cautionary Statement Identifying Important Factors that Could Cause the
Company's Actual Results to Differ from those Projected in Forward Looking
Statements
----------
The following factors could affect The Great Train Store Company's actual future
results, including its merchandise sales, expenses and net income, and could
cause them to differ from any forward-looking statements made by or on behalf of
the Company:
* Due to the importance of the Christmas selling season to many retailers,
including the Company, and the Company's efforts to open new stores late in
the year to capitalize on increased net sales during the Christmas season,
net sales in the fourth quarter of each year constitute a highly
disproportionate amount of net sales for the entire year and, historically,
has represented all of the Company's income from operations. As a result,
the Company's annual earnings have been and will continue to be heavily
dependent on the results of operations in the fourth quarter of each year.
* Changes in consumer tastes, spending habits, national, regional or local
economic conditions, population and traffic patterns, any of which could
adversely affect Company sales, expenses and profitability. In particular,
the Company could be affected by an adverse change in the popularity of
trains in general or in the Shining Time Station television series in
particular, products related to which have represented a significant
portion of the Company's annual net sales in the past few years. There can
be no assurance that the Company will be able to successfully anticipate
and respond to changing conditions affecting consumer acceptance of its
merchandise.
* The results achieved to date by The Great Train Stores may not be
indicative of future operating results. Moreover, because of the relatively
small number of stores, poor operating results at any one store or any
unsuccessful new store opening could negatively impact the Company's
results from operations to a greater extent than would be the case in a
larger chain.
* The Company's continued success and expansion depends, in large part, on
the continued availability of its existing locations and on the Company's
ability to identify and secure suitable additional locations on acceptable
terms in which to construct new stores. The rate of new store openings is
subject to various contingencies, many which are beyond the Company's
control. These contingencies include, among others, the availability of new
retail space on terms considered acceptable by the Company and the progress
of construction of the Company's new stores and of the shopping centers in
which they are to be located. Moreover, store construction and opening
costs could be higher than expected, and the Company may reduce the rate at
which it opens new stores. While some of the Company's leases contain
provisions for renewal terms, there can be no assurance that such space
will continue to be available to the Company after the expiration of the
renewal terms, or if available, that such space could be obtained on terms
considered acceptable by the Company. Further, certain of the renewal terms
provide for substantial increases in occupancy costs. In addition,
deterioration of shopping centers in which The Great Train Stores are
located or increased competition from newly constructed centers could
necessitate renovation of The Great Train Store or of the center in which
it is located. The need for such renovations could involve unanticipated
capital expenditures or result in a decrease in customer traffic, either of
which could adversely affect the Company's operating results.
14
* The Company faces substantial competition for consumer dollars, suitable
retail locations, management personnel and products from specialty
retailers and mass merchandisers, including toy stores and merchandisers of
gifts alternative to those offered by the Company. The Company also
experiences significant competition for customers from companies which
market products primarily or exclusively by mail order. Competition from
such sources could increase in the future. Certain of the Company's
competitors have substantially greater financial, marketing and other
resources than the Company, and there can be no assurance that the Company
will be able to compete successfully with them in the future.
* In order to successfully continue and manage its expansion strategy, the
Company will be dependent on its ability to retain existing personnel and
to hire, train and supervise additional personnel for the new stores to be
opened while maintaining satisfactory levels of customer service at
existing stores.
* The Company's quarterly operating results can be expected to fluctuate as a
result of seasonal fluctuations in consumer demand for the Company's
products which is highest during the fourth quarter. A significant portion
of the Company's operating expenses are relatively fixed and there can be
no assurance that the Company will report income from operations in any
particular quarter. Accordingly, the market price of the common stock and
the warrants could be subject to wide fluctuations in price and volume in
response to actual or anticipated variations in quarterly operating results
and a variety of other factors.
* The trading of the Company's securities on the Nasdaq Small Cap Market and
on The Pacific Stock Exchange ("PSE") is conditioned on the Company meeting
certain asset, capital and surplus, earnings and stock price tests. If the
Company fails any of these tests, the common stock may be delisted from
trading on the Nasdaq Small Cap Market or on PSE. The effects of delisting
include the limited release of the market prices of the Company's
securities and more limited news coverage of the Company. Delisting may
restrict investors' interest in the Company's securities and materially
adversely affect the trading market and prices for such securities and the
Company's ability to issue additional securities or to secure additional
financing. In addition to the risk of volatility of stock prices, in
general, and possible delisting, low price stocks are subject to the
additional risks of additional federal and state regulatory requirements
and the potential loss of effective trading markets. In particular, if the
common stock were delisted from trading on the Nasdaq Small Cap Market and
the trading price of the common stock was less than $5.00 per share, the
common stock could be subject to Rule 15g-9 under the Securities Exchange
Act of 1934, as amended, which, among other things, requires that
broker/dealers satisfy special sales practice requirements, including
making individualized written suitability determinations and receiving a
purchaser's written consent prior to any transaction. If the Company's
securities were delisted and the trading price was less than $5.00 per
share, the Company's securities could also be deemed penny stocks under the
Securities Enforcement and Penny Stock Reform Act of 1990, which would
require additional disclosure in connection with trades in the Company's
securities, including the delivery of a disclosure schedule explaining the
nature and risks of the penny stock market. Such requirements could
severely limit the liquidity of the Company's securities and the ability of
stockholders to sell their securities in the secondary market.
* The Company's Certificate of Incorporation and Bylaws include certain
provisions providing for staggered election of directors, broad authority
for the Board of Directors to issue up to 2,000,000 shares of preferred
stock having such attributes as it may determine without stockholder
approval and restrictions on the ability of stockholders to call special
meetings of stockholders. Each of these provisions could have the effect of
discouraging, delaying or preventing a change in control of the Company,
diminishing opportunities for stockholder participation in tender offers,
reducing the influence of stockholders in corporate governance and
inhibiting fluctuations in the market price of the common stock that could
result from attempted takeovers of the Company.
* Unless a substantial portion of the presently outstanding warrants and
options to purchase common stock are exercised during 1996, the Company
will likely require additional financing. There can be no assurance,
however, that any such external funding will be available to the Company,
or, if available, that such funding will be available on terms acceptable
to the Company.
15