Item 1. Business (a) In General. The Registrant was organized in October, 1967, and commenced doing business on January 1, 1968. The Registrant is engaged in the rental and development of real estate and in developing surgical staples and the technology used to apply the staples. b) Industry Segments. For financial information in regard to Industry Segments, reference is made to Note 13 to the Financial Statements for the years ended September 30, 2000, 1999 and 1998. (c) Description of Business. (I) Principal Activities and (ii) Status of products and Real Estate Properties. Medical Staples The Registrant is continuing its efforts in the area of medical staples for use in internal surgery. Several United States Patents and foreign patents have been received covering a novel staple. The has been produced and animal testing took place during 1999 and 2000. The Registrant presently intends to continue the project. A significant investment would be required if the Registrant were to pursue this area of business independently. The Registrant may seek a relationship of some sort with a firm active in the medical equipment area. However, no decision as to such a relationship has been made at this time. Real Estate Development and Rental Activities The Registrant has rented two buildings it owns located at A&S Drive, Paramus, New Jersey: one to The Sports Authority, Inc. and the other to CompUSA, both for retail purposes. (iii) Raw Materials The Registrant believes that the components and materials necessary or useful to its operations will be available from diverse sources of supply. The
materials used for the Registrant's research activities have been acquired through commercial businesses engaged in the distribution of such supplies. The materials that the Registrant would require for development of commercial production of medical staples are widely available. (iv) Patents. The Registrant has filed several patent applications and has several patents issued in connection with medical staples for use in internal surgery. These applications and patents are as follows:
No.	Serial No.				Title of Invention		Issue Date 1.	PCT/US94/02227			Staples				03/01/94
2.	08/512,766				Staples				08/09/95
3.	08/228,058				Staples				08/29/95
4.	Canadian Pat. No. 2,155,750	Improved Staples (PCT NAT)	08/18/98
5.	United Kingdom Pat. 94910801.3 Improved Staples			03/01/94
6.	Australian Pat. 63568/94	Improved Staples			09/15/94
7.	Japanese Pat. 6-520120		Staples				03/01/94
8.	Brazilian Pat. PCT/US94/02227 Improved Staples			09/15/94
9.	08/502,988				Staple Overlap			08/18/95
10.	07/753,116				Surgical Stapling Method	01/19/93
11.	07/934,858				Surgical Stapling Method	11/23/93
12.	08/024,501				Staples				08/30/94
13.	US Pat. #5,445,648		Staples				08/29/95
14.	US Pat. #5,342,396		Staples				08/30/94
15.	US Pat. #5,263,973		Surgical Stapling Method	11/23/93
16.	US Pat. #5,667,527		Staples				09/16/97
17.	US Pat. #5,749,896		Staple Overlap			05/12/98
18.	Japanese Pat. #2672713		Improved Staples			07/11/97
19.	Brazilian Pat. #9405840-7	Improved Staples			09/01/95
20.	US Patent #6,083,242		Improved Staples			07/04/00
21.	Australian Patent #704533	Improved Staples			08/05/99
(v) Non-seasonal Business. The Registrant does not believe that its products are subject to material seasonal changes. (vi) Working Capital. Not relevant. (vii) Customers. Not relevant. (viii) Backlog. Not relevant. (ix) Governmental Contracts. Not relevant. (x) Competition. It is presently contemplated that Registrant's activities with respect to medical staples, if actual commercial activities are commenced, may be limited to forming some type of business relationship with other firms. The technology is in competition with alternative staples technology. Some suppliers of surgical staplers are well-established and have significant capital resources. Competition in the real estate office rental segment of the Registrant's business activities was significant in the Bergen County, New Jersey market in which the Registrant competes during the period when the Registrant was seeking suitable tenants for its rental properties. The obsolete style of the building owned by the Registrant prior to and during 1991 made the attraction of suitable tenants difficult. In an effort to increase the marketability of the Registrant's properties, the Registrant applied to the Borough of Paramus for a zoning change to allow retail use for the office building and for the adjacent site. In December 1991, the necessary change in zoning was approved. The then
existing building was rented to The Sports Authority, Inc., a retailer of sporting goods. This building was substantially renovated by The Sports Authority, Inc. and Holobeam reimbursed them for their costs in connection with this renovation. During 1994, a 30,000 sq. ft. building was constructed on the Registrant's site located adjacent to the building leased to The Sports Authority, Inc. for use as a Computer City retail store. Tandy Corp., parent corporation of Computer City, commenced paying rent in October 1994. Holobeam reimbursed Tandy Corporation $1,189,675 as an allowance for costs of constructing the building and paving of the site, after a permanent Certificate of Occupancy was obtained. During 1998, Computer City Retail Stores were acquired by Comp USA. Tandy Corp. remains on the lease as guarantor. (xi) Research and Development. The Registrant has investigated methods for applying surgical staples and the technology presently used to fabricate and apply such staples. During 2000, 1999 and 1998, the Registrant expended $192,085.00, $194,364.00 and $225,041.00, respectively, in connection with the furtherance of this activity. Such costs have been currently expensed and consist principally of materials, supplies and costs associated with design and development. (xii) Environmental Compliances. The Registrant does not believe that compliance with Federal, State or Local provisions of a governmental nature which have been enacted or adopted regulating the discharge of material into the environment will have a materially adverse effect upon the capital expenditure requirements, earnings or competitive position of the Registrant. The Registrant's activities with regard to medical staple technology, at present, are limited to engineering, development and animal testing of medical staple design with fabrication and manufacturing of prototypes and models sub-contracted to other firms.
The Registrant is not aware of any potential liabilities or costs associated with the disposal or handling of waste materials and is not aware of any potential violations of local, state or federal laws which regulate the technology. (xiii) Employees. At September 30, 2000 the Registrant employed three persons as compared to three persons at September 30, 1999 and three persons at September 30, 1998. (d) Financial Information About Foreign and Domestic Operations and Export Sales. The Registrant is not engaged in foreign operations and does not export to foreign countries. Item 2.
Item 2. Properties The Registrant's headquarters and principal facilities are located at 217 First Street, Ho-Ho-Kus, New Jersey 07423-0287. The Registrant leases approximately 1,000 square feet of office and laboratory space. The Registrant owns two office buildings, one of 62,000 square feet and another of 30,000 square feet located at 50 A&S Drive, Paramus, New Jersey. One building was placed in service in October 1994, the other in 1982. (Reference is made to Notes 4, 8, 9 and 10 to the Financial Statements for the fiscal year ended September 30, 1995, 1991, 1990 and 1989.) Pertinent information concerning the Registrant's properties is as follows. (Reference is made to Schedule XI of the Registrant's Financial statements for the years ended September 30, 1997 and 1996.)
Building Building Paramus, NJ Paramus, NJ
Year Acquired 1971 1994
Gross Square Footage 62,000 30,000
Percent Leased at 9/30/99 100% 100%
Acquisition Cost $ 718,881 $2,592,513 (2)
Capital Improvements Since Acquisition $3,649,850 (1) -0-
Total Investment $4,587,133 (3) $2,826,843 (4)
Mortgage Balance $5,653,046 $ -0-
(1) Includes $3,567,267.00 of improvements to the building repaid to The Sports Authority, Inc. (the Tenant) upon closing of the Mortgage, but does not include additional amounts expended by The Sports Authority, Inc. since said closing.
(2) Includes construction allowance of $1,189,675.00 for Tandy Corporation pursuant to the Operating Lease Agreement. (Now Comp USA.)
(3) Includes land cost of $218,402 for the 62,000 sq. ft. building.
(4) Includes land cost of $234,370 for the 30,000 sq. ft. building.
In 1983, the Registrant purchased 2.799 acres of land located in Paramus, New Jersey and adjacent to the building owned by the Registrant at 50 A&S Drive. The purchase price was $173,565 which was paid in cash. Since 1983, the Registrant has incurred costs in the amount of $60,805 for various improvements and architectural work relating to development of this property. During 1992, 1991 and 1990, the Registrant spent $293,784, $78,051 and $50,667 respectively in connection with an application for a use variance for the site and various site improvements that would enable the construction of a commercial or retail building on the site. The change in zoning to retail use was approved by the Borough of Paramus in December 1991. The change in zoning to allow retail use also required new site plan approval because the change in use required new traffic pattern studies, parking lot re-design and significant additional changes in order to comply with governmental requirements.
In addition, the Registrant expended $964,505 through September 30, 1994 for site plan approval and changes, and toward construction of a building on the site. No depreciation or amortization was recorded until the building and site were put into service. During October 1994, construction was completed by Tandy Corporation of a retail building on the Registrant's site. The building is now being used for a CompUSA retail store. (Reference is made to Note 13 to the Registrant's 1994 Financial Statements and to Item 1, Part X of the 1994 Form 10K.) The zoning change approval allowed for retail use of the property and significantly enhanced the opportunities for attracting a suitable tenants for the site. When purchased, the site adjacent to the building owned by the Registrant, required site engineering and costs to acquire site plan approval for a building from the appropriate governmental regulatory authorities. In addition, the Registrant expended funds during its efforts to change the zoning of the property from office use to retail use. This change in zoning allowed the Registrant to seek tenants engaged in retail operations and resulted in the October 1994 tenancy of Computer City. (Reference is made to Note 12 of the Financial Statements for the year ended September 30, 1997.) The Registrant was not able to lease the property since the original site plan allowing office use was not approved for retail use until the Computer City occupancy of October 1994. The market for office space had seen significant decline during 1990, 1991, 1992, 1993 and 1994. The occupancy rate for the building owned by the Registrant and under lease to The Sports Authority Inc. for the past five (5) years is as follows:
		2000			100% 		1999			100% 		1998			100% 		1997			100% 		1996			100%
The building owned by the Registrant and under lease to Tandy Corp. (now occupied by CompUSA) has been 100% occupied since October 1994. A summary of the
amounts expended for such approvals for the three most recent fiscal years during which such expenditures were made appears below. No such expenditures were made in 1996, 1997, 1998, 1999 or 2000.
						1994			1993			1992
Zoning Changes and Site Plan Approvals:
Legal Fees	 		$ 2,859	$ 10,093		$ 15,840 Governmental Fees		 11,827	 55,811		 19,990 Engineering			 11,049	 39,171		 57,954 Paramus Park			 -0- 	 -0- 		 200,000 						-------	--------		-------- Total Related Costs	$25,735	$105,075		$293,784 				 		=======	========		========
The payment of $200,000 during 1992 to Paramus Park was a one-time fee in connection with removal of an existing deed restriction which prohibited adjacent retail activity. The balance of the payments for site plan approvals were paid to various engineering, legal and surveying firms in connection with professional services rendered to obtain governmental approvals. No payments to affiliated parties were made in connection with the zoning changes nor were any payments made to affiliated or related parties for the acquisition of site plan approval. Any payments to affiliated parties are unrelated to the cost of such activities and are detailed and disclosed in Item 11 (d) of this report. During 1998, Computer City, Inc. retail stores were acquired by CompUSA, Inc., another retailer of computers, computer accessories and software. The Registrant accepted assignment of the Computer City lease by CompUSA and Tandy Corporation remains on the lease as the guarantor. Item 3.
Item 3. Legal Proceedings. There are no legal proceedings of a material nature to which the Registrant is a party other than ordinary, routine litigation incidental to the business of the Registrant. Item 4.
Item 4. Submission to Matters to a Vote of Security Holders. None.
PART II Item 5.
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. (a) The Registrant's common stock is traded on the over-the-counter market. The bid price listed (Source: S&P Comstock) on December 7, 2000 was $16.00 per share. On July 18, 1983, the Registrant's shares were deleted from the NASDAQ system when no market maker for the Registrant's common stock any longer maintained registration as such with the NASDAQ System. (b) The approximate number of holders of Common Stock securities of the Registrant as of December 7, 2000 was 578. (c) No dividends have been paid or declared on the Common Stock of the Registrant during the 2000, 1999 or 1998 fiscal years. In making decisions regarding the possible payment of dividends, the Board of Directors considers the Requirements of the Registrant in such ongoing activities as real estate development and the research, development and engineering efforts of the Registrant as well as such obligations as mortgages and debentures. (d) Changes in Securities. (Reference is made for Form 10Q for the six-month period ended March 31, 1984, wherein the Registrant completed an exchange of common stock for 5% Debentures payable March 1, 1989. Reference is made to Notes 9 and 10 to the Financial Statements for the years ended September 30, 1989 and 1990.) The high and low bid information of the Registrant's common stock for the last two years was estimated to be as follows: (Source: S&P Comstock).
						1999				2000
					high		low		high		low
Quarter Ended Dec. 31		15.50		14.25		16.00		16.00
Quarter Ended Mar. 31		14.50		14.50		16.00		16.00
Quarter Ended June 30		16.50		15.50		16.00		16.00
Quarter Ended Sept. 30		16.50		15.50		16.00		16.00
Such quotation represents prices offered by purchases without retail mark-up, mark-down or commission and may not represent actual sales transactions.
Item 6.
Item 6. Selected Financial Data. Financial information for the five-year period commencing October 1, 1995 and ending September 30, 2000 is presented below. HOLOBEAM, INC. SUMMARY OF SELECTED FINANCIAL DATA FOR THE YEARS ENDED SEPTEMBER 30,
			2000	 	1999 		1998	 	 1997	 	1996
Gross Income 	$2,076,374	 $1,960,262	$1,964,562	 $1,873,382	$1,856,218
Net Income (Loss)	 200,056	 197,161	 166,891	 303,882	 306,434
Weighted Average Number of Common Shares Outstanding	 294,013	 298,101 304,237 310,426	 316,992
Earnings Per Share (Loss)	 	 0.66	 0.66	 0.55	 	0.98 		0.97
Total Assets 	7,021,229 	7,163,243 	7,255,082	 7,552,667	 7,743,614
Long-Term Debt	 5,305,149 5,653,044	 5,984,002	 6,310,060	 6,667,298
Shareholders' Equity	 	1,093,635 	971,695	 856,536	 748,020	 558,463
Gross Rental Income		 2,020,217	 1,925,717	 1,925,534	 1,845,509	 1,838,216
Net Rental Income		 1,757,337	 1,667,922	 1,667,028	 1,578,010	 1,577,254
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. (1) Liquidity. Cash flows from the Registrant's real estate rental activities approximated $495,000.00 during the fiscal year ended
September 30, 2000 as compared to approximately $540,000.00 for the previous fiscal year. The Registrant anticipates that cash flows sufficient to fund its operating estimates will continue during the terms of its operating leases for its rental properties. (Reference is made to Note 3 Rental Income under operating leases, to the accompanying financial statements for the years ended September 30, 2000 and 1999.) Working capital at September 30, 2000 was 395,195.00, representing an increase of $19,970.00 when compared to the working capital at September 30, 1999. The Registrant expects revenues related to the operating leases to be sufficient to provide the funding for its operations until the leases expire in 2009 and 2012. The leases also contain renewal options that will extend revenues beyond 2009 and 2012. Minimum future rental income expected from the operating leases approximated $24,164,816.00 and is available during the lease term to provide cash flows capable of sustaining the Registrant's profitable operations. (2) Capital Resources The Registrant's properties, located at 50 A&S Drive, Paramus, New Jersey, do not presently require renovation or additional construction in order to maintain real estate rental operations. The Registrant does not anticipate future capital requirements associated with its properties other than those that are routine and incidental to its real estate rental activities. Expenditures for maintenance taxes and insurance are expected but these are not planned capital expenditures that would have a materially adverse effect upon the Registrant's financial condition.
The Registrant intends to fund the development of the medical staples project during 2001. Additional testing during 2001 will be performed and the Registrant will decide if such activities are to continue after the fiscal year ending September 30, 2001. Funding during 2001 is anticipated to approximate $300,000.00 and will be provided by cash flows generated from the Registrant's real estate rental operations. No revenues are expected from the medical staple technology during 2001. The Registrant funded contributions to its defined benefit pension plan in the amount of $330,122.00 and was charged to current general expense on the statements of operations for the fiscal year ended September 30, 2000. The Registrant's funding policy is to make annual contributions in amounts sufficient to fully provide for all eligible employees benefits by the time they retire. Continued funding is not expected to have an adverse effect upon the Registrant's financial condition. (Reference is made to Note 15 to the Registrants Financial Statements for the years ended September 30, 2000, 1999 and 1998.) (3) Results of Operations. (a) During 2000, the Registrant recognized after-tax earnings of $200,056.00 as compared to $197,161.00 for the fiscal year ended September 30, 1999. The results of operations reflect performance consistent with prior years and results form increased revenues associated with the Registrant's real estate rental activities and proportionate reduction in related expenses. When compared to 1999, revenues increased $116,112.00 while interest expense associated with the Registrant's mortgage decreased $26,837.00 to $513,106.00. The favorable effect of interest reduction and
increased revenues was partially offset by increased income tax and general expenses. Funding of the Registrant's surgical staple project continued during 2000 with expenditures amounting to $192,085.00 as compared to $194,364.00 in 1999. Efforts are proceeding to continue initial testing during 2001 and the Registrant intends to fund the project with resources generated from its operating activities. Such funding is anticipated to approximate $300,000.00 during 2001. The Registrant's occupancy rates for the real estate rental properties was 100% during 2000 and it is anticipated to remain at 100% during 2001 which should result in comparable favorable performance fo 2001. Rental expenses, which approximated $262,900.00 in 2000 are expected to increase approximately 5% and are not expected to have any materially adverse effect upon the Registrant's financial condition. The Registrant's defined benefit pension plan was funded in the amount of $330,122.00 during the fiscal year ended September 30, 2000 as compared to $311,388.00 for 1999. The Registrant anticipates continued funding of plan requirements with the cash flows presently generated by its operations. Funding of the plan is not expected to have any material adverse effect upon its financial condition. (b) During 1999, the Registrant recorded after-tax income of $197,161.00 as compared to $166,891.00 for the year ended September 30, 1998. The results of operations reflect improved performance as a result of decreased interest expense associated with the Registrant's mortgage on the rental properties and in reduced expenditures in connection with the Registrant's medical staples project. When compared to 1998 costs, interest expense decreased $24,582.00 and Research and Development decreased $30,677.00. Gains associated with decreased expenses were partially offset by increased income tax expense.
The Registrant has 100% tenant occupancy in its rental properties resulting in consistent earnings performance for the fiscal years ended September 30, 1998 and 1999. The Registrant anticipates that such performance will continue during the next twelve (12) months. As the Registrant's properties age, it is anticipated that the buildings will require more upkeep and maintenance costs. Such costs are not expected to materially effect the long-term performance of the Registrant's real estate rental activities. During 1999, the Registrant funded the research and development activities associated with the medical staple project in the amount of $194,364.00 which represents a reduction of $30,677.00 when compared to expenditures for 1998. The Registrant expects to continue funding this project with the cash flows associated with its real estate rental activities during 2000. When definitive testing results can be obtained, the Registrant will determine if funding should continue into fiscal year 2001. The Registrant expects to fund the project during 2000 for testing, development and patent activities in the amount of approximately $300,000.00. Funding of the Registrant's defined benefit plan during the year ended September 30, 1999 was $311,388.00 as compared to $307,773.00 for 1998. The Registrant expects to continue funding the plan on an annual basis. The expenses associated with annual funding of the plan are not expected to have a materially adverse effect upon the Registrant's financial condition. (Reference is made to Exhibit entitled "Defined Benefit Plan" filed with Quarterly Report Form 10Q for the Quarter ended June 30, 1998 and filed on August 8, 1998.) (c) The Registrant recorded net income for the year ended September 30, 1998 in the amount of $166,891.00 as compared to $303,882.00 for the year ended September 30, 1997. The results of operations reflect
improved revenues and income associated with the Registrant's real estate rental activities as net rental income was $1,667,028.00 as compared to $1,578,010.00 in 1997. The Registrant continues to experience consistent earnings performance due to 100% occupancy of the Registrant's rental properties and the favorable long-term operating leases. Costs associated with the Registrant's real estate rental activities are expected to remain at present levels during the short-term as are the revenues associated with such operating leases. Long-term, costs are expected to rise with inflation and some capital maintenance and repairs are expected as the buildings mature and require more intensive upkeep. Since there are rental income escalation provisions contained in the operating leases, revenues are expected to be sufficient to provide for such costs, which are not expected to have any materially adverse effects upon the results of operations during the term of the leases. The Registrant continued to fund the engineering and development activities related to the surgical staple technology it has developed. Expenditures in connection with this project for 1998 were $225,041.00, which represented an increase of $77,479.00 when compared to the 1997 expenditures for the staples project. The Registrant expects to continue funding this project during 1999 and will utilize the cash flows and revenues from its real estate rental activities to fund the ongoing testing and development for the staples project. Testing has commenced at a medical center. If definitive favorable results are obtained, the Registrant will analyze its position and determine if funding should continue beyond fiscal year 1999. The Registrant anticipates funding testing, development and patent activities in conjunction with the staples project during 1999 to approximate $300,000.00.
During 1998, the Registrant contributed $307,773.00 to its defined benefit plan (pension plan) which covers all eligible employees who have completed one year of service. (Reference is made to Exhibit entitled"Defined Benefit Plan" filed with Quarterly Report 10Q for the Quarter ended June 30, 1998 and filed on August 8, 1998.) The Registrant expects to continue to fund the pension plan on an annual basis and does not expect the expense of such plan to have a materially adverse effect upon its financial condition. (4) Other Matters The Registrant was able to positively resolve the potential impact of the Year 2000 on the processing of date-sensitive information by the Registrant's computerized information system. The Year 2000 problem is the result of computer programs being written using two digits (rather than four) to define the applicable year. Any of the Registrant's programs that have time-sensitive software could recognize a date using "00" as the year 1900 rather than the year 2000, which may have caused miscalculations or systems failures. The costs of addressing this issue did not have a material adverse impact on the Registrant's financial position, results of operations or cash flows. The Registrant devoted the necessary resources and resolved all significant Year 2000 issues.
Item 8.
Item 8. Financial Statements and Supplemental Data. Financial statements, supplementary financial information and Accountant's Report are filed with this report. (See Financial Statements and reports thereon of R.A. Fredericks and Company for 1999 and 2000.)
Item 9.
Item 9. Disagreements on Accounting and Financial Disclosure. None.
PART III Item 10.
Item 10. Directors and Executive Officers of the Registrant. (a) The following Table identifies each Director of the Registrant and indicates his position with the Registrant, the duration of his term as Director and the date when he was first elected. Date First Name and Age Title Term Elected
Melvin S. Cook Chairman of the Board 2002 Annual 1968 Age 69 President of Registrant Meeting
William M. Hackett Treasurer of Registrant 2003 Annual 1984 Age 57 Meeting
Beverly Cook Office Manager and 2001 Annual 1995 Age 64 Secretary of Registrant Meeting
(1) Martin R. Infante, Secretary of the Registrant and member of the Board of Directors served the Registrant in such capacities until his death while in office during the year ended September 30, 1997.
(b) The following Table represents the name and age of each officer of the Registrant, the positions and offices held by each, the term of each office and the period which each has served in the indicated office.
Date First Name and Age(1) Title Term Elected
Melvin S. Cook Chairman of the Board Annual 1968 Age 69
William M. Hackett Treasurer of the Registrant Annual 1975 Age 57
Beverly Cook Secretary of the Registrant Annual 1997 Age 64
(1) Martin R. Infante, Secretary of the Registrant and member of the Board of Directors of the Registrant served in such capacities until his death during the year ended September 30, 1997.
(1) Each officer has been selected to serve until the next Annual Meeting of the Board of Directors or until his respective successor shall be elected and shall quality. (c) There are no significant employees other than those identified in (a) and (b) above.
(d) The following Table summarizes the business experience and principal occupation during the last five years of each person who serves as a director of executive officer of the Registrant, as well as any other director-
ship held by persons serving as directors of the Registrant. Other Name(1) Business Experience/Occupation Directorship
Melvin S. Cook Chairman of the Board of Directors and None President of the Registrant since its formation.
William M. Hackett Vice President of Registrant from None August 23, 1975 until June 1, 1981 and Controller of Registrant and member of accounting staff from October 1973 to August 1975. Treasurer of Registrant from June 1981 to present. Vice President of CMA Co., Inc. from November 1986 to present. Elected President of CMA Co., Inc. in 1998.
Beverly Cook Office Manager of Registrant from June 1, None 1981 until present. Married to Melvin S. Cook, President and Chairman of the Board of Directors.
(1) Martin R. Infante, Secretary of the Registrant and member of the Board of Directors of the Registrant served in such capacities until his death during the year ended September 30, 1997. (f) Not applicable. Item 11.
Item 11. Management Compensation. (a) The following Table shows all direct remunerations paid by the Registrant during the fiscal year ended September 30, 2000 to each Director or Officer of the Registrant whose aggregate direct remuneration exceeds $100,000.00, and the direct remuneration paid all Directors and Officers of the Registrant as a group for such fiscal year.
Item 11 (cont'd.) The Summary Compensation Table represents all aggregate forms of remuneration to the executive officers of the Registrant. There were no other payments or compensation awarded to the officers of the Registrant. (b) The Directors who are not employees of the Registrant receive standard attendance fees of $200 plus applicable expenses for travel. No Directors' fees were paid during 2000, 1999 and 1998. (c) The following Table sets forth all the options to purchase securities from the Registrant which were granted to or exercised by any of its directors and each officer whose direct remuneration exceeds $100,000.00 as well as all officers and directors as a group since October 1, 1999. All Directors and Officers as a Group Options Granted 0 Options Exercised 0 Unexercised Options Held at 9/30/00 0 (d) The following Table sets forth information about the Registrant's defined benefit pension plan benefits: Pension Plan Table
							Years of Service 			Remuneration		 36 			 60,000			 60,000 			160,000			107,112 			200,000			107,112
Pensions are based upon average annual earnings (salary and bonus) for the highest three consecutive years of employment with the Registrant. For Melvin Cook and Beverly Cook, the amounts equaled $107,112 and $60,000, respectively, as of September 30, 2000. Melvin Cook and Beverly Cook will be credited at normal retirement date with 36 years service each under the Pension Plan as of September 30, 2000. Pensions may be adjusted for a surviving spouse's
pension or other options under the Pension Plan. Pensions are not subject to any other deduction for Social Security or any other amounts.
PART IV Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management. (a) The stockholding of each person who is known by the Registrant to own beneficially more than 5% of any classes of securities as of December 7, 2000 is as follows: Title of Class Name & Address Amount Owned % of Class
Common Stock, Par Melvin S. Cook 123,497 42.3% Value $0.10 Per Share 217 First Street Ho-Ho-Kus, NJ 07423
Common Stock, Par Beverly Cook 95,000 32.4% Value $0.10 Per Share 217 First Street Ho-Ho-Kus, NJ 07423
(b) The stockholding of Officers and Directors as a group as of December 7, 2000 are as follows: Title of Class Amount Beneficially Owned % of Class
Common Stock, Par Value 218,497 74.7% $0.10 Per Share
(c) There are no contractual arrangements that might result in a change of control of Registrant. Item 13.
Item 13. Certain Relationships and Related Transactions - Not Applicable Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8K (a) Index to Financial Statement filed as part of the Annual Report and attached. (b) Reports on Form 8K. (c) Lease with The Sports Authority, Inc. filed as part of the 1993 Annual Report Form 10K-A. (d) Financial Statement Schedules. (e) Lease with Tandy Corp. filed as part of the 1995 Annual Report Form 10K. The following is a list of Financial Statement Schedules filed as part of this Annual Report on Form 10K. All other schedules omitted herein are so omitted because either (1) they are not applicable, or (2) they required information
is shown in the Financial Statements. Schedules
V Property and Equipment
VI Accumulated Depreciation and Amortization of Property and Equipment
X Supplementary Income Statement Information
XI Real Estate and Accumulated Depreciation
XII Mortgage Loans on Real Estate
(e) Exhibits, including those incorporated by references.
The following is a list of Exhibits filed as part of this Annual Report on Form 10K. Where so indicated by footnotes, Exhibits that were previously filed are incorporated by references. Legend for Documents Incorporated by Reference
Articles of Incorporation and By Laws
Articles of Incorporation (1)
By-Laws (1)
By Laws as Amended (2)
Instruments Defining Rights of Share- holders Including Indentures
Specimen Certificate for Shares of Common Stock (1)
Security Combination Agreement (1)
Additional Exhibits - Exchange Offer (3)
- Lease with Sports Authority, Inc. (4)
- Lease with Tandy Corporation (5)
Form 8K - Change in Certifying Accountants (6)
Form 8K-A - Change in Certifying Accountants (7)
Defined Benefit Plan (8)
Legend (1) Filed September 21, 1968 as an Exhibit to Form 10K and incorporated herein by reference. (2) Filed December 15, 1986 as part of proxy statement and incorporated herein by reference. (3) Filed December 23, 1983 - Exchange Offer. (4) Filed October 12, 1994 as an exhibit to Form 10K-A and incorporated herein by reference. (5) Filed December 21, 1995 as an exhibit to Form 10K. (6) Filed November 15, 1996 and incorporated herein by reference. (7) Filed November 20, 1996 and incorporated herein by reference. (8) Filed August 8, 1998 with Quarterly Report 10Q and incorporated herein by reference.
Supplemental Information No annual report or proxy material has been sent to security holders. Such annual report and proxy material are to be furnished to security holders subsequent to the filing of the annual report on this form. Copies of such material will be furnished to the Commission when it is sent to security holders.
HOLOBEAM, INC. Form 10K September 30, 2000
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.
Registrant Holobeam, Inc.
By William M. Hackett
Date December 24, 2000
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 dates indicated.
HOLOBEAM, INC.
By: Melvin S. Cook Melvin S. Cook President and Chairman of the Board
Date: December 24, 2000
By: William M. Hackett William M. Hackett Director and Treasurer
Date: December 24, 2000
By: Beverly Cook Beverly Cook Director
Date: December 24, 2000
December 24,2000
US Securities and Exchange Commission 6432 General Green Way Alexandria, VA 22312
Attn: File Support
Re: Holobeam, Inc., File No. 03385
Dear Sir or Madam:
Enclosed you will find one (1) paper format copy of Holobeam, Inc. Annual Report, Form 10K for the year ended September 30, 2000 which has been previously filed/transmitted via the EDGAR system.
Kindly acknowledge receipt by signing the enclosed photocopy of this letter and return it to us in the accompanying stamped, self-addressed envelope.
Very truly yours,
William M. Hackett Treasurer
mjb Encs.
HOLOBEAM, INC. 217 First Street P.O. Box 287 Ho-Ho-Kus, New Jersey 07423-0287
December 31, 2000
U.S. Securities and Exchange Commission Mellon Bank - Account 910-8739 Box 360055M Pittsburgh, PA 15251
Dear Sir or Madam:
Enclosed you will find our Check No. which has been issued for payment of the Annual Report Form 10K filing fee. Our file number is 0-3385.
Kindly acknowledge receipt by signing a copy of the enclosed letter and return it to us in the accompanying stamped, self-addressed envelope.
Very truly yours,
W.M. Hackett Treasurer
mjb Enc.
HOLOBEAM, INC.
FINANCIAL STATEMENTS WITH INDEPENDENT ACCOUNTANTS' REPORT
YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
R.A. FREDERICKS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS
HOLOBEAM, INC.
PAGE INDEPENDENT ACCOUNTANTS' REPORT
FINANCIAL STATEMENTS:
BALANCE SHEETS -3
STATEMENTS OF OPERATIONS
STATEMENTS OF SHAREHOLDERS' EQUITY
STATEMENTS OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS -20
SCHEDULES FOR THE YEARS ENDED SEPTEMBER 30, 2000 1999 AND 1998
V PROPERTY AND EQUIPMENT
VI ACCUMULATED DEPRECIATION AND AMORTIZATION PROPERTY AND EQUIPMENT
X SUPPLEMENTARY INCOME STATEMENT INFORMATION
XI REAL ESTATE AND ACCUMULATED DEPRECIATION
XII MORTGAGE LOANS ON REAL ESTATE
ALL OTHER SCHEDULES HAVE BEEN OMITTED BECAUSE THEY ARE NOT APPLICABLE, OR THE INFORMATION IS SHOWN IN THE FINANCIAL STATEMENTS OR NOTES THERETO.
R.A. FREDERICKS & COMPANY, LLP
Certified Public Accountants Ralph A. Fredericks, CPA Ellen T. O'Donnell, CPA Robert J. Rosenberg, CPA Eric Frank Zach, CPA
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders Holobeam Inc. Ho-Ho-Kus , New Jersey
We have audited the accompanying balance sheets of Holobeam, Inc. as of September 30, 2000 and 1999 and the related statements of operations, shareholders' equity and statements of cash flows for the years ended September 30, 2000, 1999, 1998. 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 financial statements are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects the financial position of Holobeam, Inc. as of September 30, 2000 and 1999, and the results of its operations and its cash flows for the years ended September 30, 2000, 1999, 1998, in conformity with accounting principles generally accepted in the United States. Further, it is our opinion that the schedules referred to in the accompanying index present fairly the information set forth therein.
R.A. FREDERICKS & COMPANY, LLP
Montville, New Jersey December 15, 2000
170 Changebridge Road Unit B-4, Montville, New Jersey 07045 Tel: (973) 575-6200 Tel: (212) 544-2204 Fax: (973) 575-5444
HOLOBEAM, INC.
BALANCE SHEETS SEPTEMBER 30, 2000 AND 1999
ASSETS
2000 1999
CURRENT ASSETS Cash (including cash equivalents of $203,598 in 2000 and $774,084 in 1999) $ 250,400 $ 891,119 Short-term Investments 738,517 - Accrued Interest 713 1,872 Accounts Receivable 31 28 Prepaid Expenses 27,979 10,710 							--------	 ------- TOTAL CURRENT ASSETS 1,017,640 903,729 								 ---------	 ------- PROPERTY AND EQUIPMENT-COST Real Estate: Land 452,772 452,772 Buildings and Building Improvements 6,961,244 6,961,244 								 --------- --------- TOTAL 7,414,016 7,414,016 								 --------- --------- Machinery and Equipment 66,939 66,939 Furniture and Fixtures 20,633 20,633 								 --------- --------- TOTAL 7,501,588 7,501,588
Less: Accumulated Depreciation and Amortization 1,992,387 1,781,272 								 --------- --------- PROPERTY AND EQUIPMENT-NET 5,509,201 5,720,316 								 --------- --------- OTHER ASSETS Patents and Patent Application Cost, net of accumulated amortization of $231,513 in 2000 and $217,850 in 1999 66,549 70,250 Deferred Charges 427,839 468,948 									 ------- ------- TOTAL OTHER ASSETS 494,388 539,198 								 ---------- --------- TOTAL ASSETS $ 7,021,229 $ 7,163,243 								 ========== =========
The accompanying notes are an integral part of the financial statements.
HOLOBEAM, INC.
BALANCE SHEETS SEPTEMBER 30, 2000 AND 1999
LIABILITIES AND SHAREHOLDERS' EQUITY
2000 1999 CURRENT LIABILITIES Mortgage Payable-Current Portion $ 347,897 $ 318,832 Accounts Payable 29,303 6,510 Deferred Rent - 107,976 Franchise Taxes Payable - 1,980 Income Taxes Payable 55,600 24,340 Other Accrued Expenses 33,949 23,158 Accrued Pension 114,448 - Accrued Interest Payable 41,248 43,575 Accrued Commissions Payable - 12,133 									 ------- ------- TOTAL CURRENT LIABILITIES 622,445 538,504 									 ------- ------- LONG-TERM DEBT Mortgage Payable (Net of Current Portion) 5,305,149 5,653,044 								 --------- --------- TOTAL LONG-TERM LIABILITIES 5,305,149 5,653,044 								 --------- --------- TOTAL LIABILITIES 5,927,594 6,191,548 								 --------- --------- SHAREHOLDERS' EQUITY Common Stock, Par Value $.10 Per Share Authorized 2,000,000 Shares, Issued 305,598 30,559 30,559 Additional Paid in Capital 9,825,498 9,825,498 Accumulated Deficit (8,550,449) (8,750,505) 								 --------- --------- TOTAL 1,305,608 1,105,552
Less: Cost of Shares in Treasury (13,251 in 2000 and 8,692 in 1999) (211,973) (133,857) 									-------- -------- TOTAL SHAREHOLDERS' EQUITY 1,093,635 971,695 								 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,021,229 $7,163,243 								 ========= =========
The accompanying notes are an integral part of the financial statements
HOLOBEAM, INC.
STATEMENTS OF OPERATIONS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
2000 1999 1998
REVENUES
Rental Income $ 2,020,217 $1,925,717 $1,925,534 Interest Income 44,024 34,545 38,977 Other 12,133 - 51 							 --------- --------- --------- TOTAL 2,076,374 1,960,262 1,964,562 							 ---------	 ---------	 	 ---------
COSTS AND EXPENSES
Rental Expense 262,880 257,795 258,506 General Expense 750,577 637,167 633,625 Interest Expense 513,106 539,943 564,525 Research and Development 192,085 194,364 225,041 							 --------		 --------		 -------- TOTAL 1,718,648 1,629,269 1,681,697 							 ---------	 ---------		 --------- INCOME BEFORE INCOME TAXES 357,726 330,993 282,865
INCOME TAX EXPENSE 157,670 133,832 115,974 							 ---------	 	--------		 -------- NET INCOME $ 200,056 $ 197,161 $ 166,891 							 =========		 ========		 ======== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 294,013 298,101 304,237 							 --------		 --------		 ------- EARNINGS PER SHARE $ .68 $ .66 $ .55 							 =========		 ========		 ========
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
HOLOBEAM, INC.
STATEMENTS OF CASH FLOWS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
2000 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $200,056 $197,161 $ 166,891 									 ------- ------- -------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 211,115 211,865 214,427 Amortization 54,772 54,958 54,442 Patent and Patent Application Costs (9,962) (8,075) (5,495)
Increase (Decrease) in: Accounts Payable and Accrued Expenses 54,876 119,052 (104,454) Real Estate Brokers Commissions - (33,862) (33,863)
Decrease (Increase) in: Accounts and Other Receivables (3) (28) - Interest Receivable 1,159 3,951 (1,772) Prepaid Expenses (17,269) (2,618) 1,556 									 ------- ------- ------- Total Adjustments 294,688 345,243 124,841 									 ------- ------- ------- Net Cash Provided by Operating Activities 494,744 542,404 291,732 									 ------- ------- ------ CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Short-term Investments (738,517) - (21,282) Capital Expenditures - - (7,976) Sale of Short-Term Investments - 421,282 - 									 ------- ------- ------- Net Cash Provided (Used) by Investing Activities(738,517) 421,282 (29,258) 									 ------- ------- ------ CASH FLOWS FROM FINANCING ACTIVITIES
Principal Payments on First Mortgage (318,830) (292,188) (267,784) Purchase of Treasury Stock (78,116) (82,002) (58,375) 									 ------- ------- ----- Net Cash Used by Financing Activities (396,946) (374,190) (326,159) 									 ------- ------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (640,719) 589,496 (63,685)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 891,119 301,623 365,308 									 ------- ------- -------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 250,400 $ 891,119 $ 301,623 									 ======= ======= ======== SUPPLEMENTAL CASH FLOWS DISCLOSURES Interest Paid $ 515,433 $ 542,075 $ 566,479
Income Taxes Paid $ 118,890 $ 115,072 $ 107,198
The accompanying notes are an integral part of the financial statements.
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Nature of Operations
The Company is engaged in the rental of real property for retail use and in development of surgical staples and the technology used to apply the staples for use in internal surgery.
b. Depreciation and Amortization
It is the policy of the Company to provide for depreciation and amortization of the building and equipment on a straight-line and accelerated basis in amounts sufficient to write-off the cost of the assets over their estimated useful lives, which are as follows:
Building and Building Improvements 31. 5 to 40 years Machinery and Equipment 5 to 7 years Furniture and Fixtures 7 to 10 years
Maintenance and repairs are charged to operations in the year in which incurred, while replacements and betterments are capitalized by charges to the appropriate asset accounts. The cost and accumulated depreciation and amortization with respect to assets retired or otherwise disposed, are eliminated from the assets and related accumulated depreciation and amortization accounts and any profit or loss resulting therefrom is reflected in operations.
Patent and patent application costs are amortized on a straight-line basis over a ten year period.
c. Earnings Per Share
Earnings per share of common stock has been computed by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings per share of common stock is the same as earnings per share prior to dilution.
d. Common Stock
Each share of common stock is entitled to one vote. No such shares of common stock were reserved at September 30, 2000, 1999, or 1998. On February 19, 1998, the Company retired 747,000 shares of Treasury Stock purchased between 1970 and January of 1998 at a cost of $2,648,902.
e. Statement of Cash Flows
For purposes of reporting cash flows, all liquid investments with original maturities of three months or less are considered cash equivalents.
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Income Taxes
Deferred income taxes are provided on temporary differences between financial statement and income tax bases of assets and liabilities. Generally, deferred tax assets are recognized in the current period for the future benefit of net operating loss carry forwards and items for which expenses have been recognized for financial statement purposes, but will be deductible in future periods. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
g. Deferred Charges
It is the policy of the Company to charge costs associated with the acquisition of long term debt (mortgages) to expense over the term of the mortgage.
In addition, the Company charges costs associated with the procurement of operating leases, specifically real estate brokers commissions, to expense during the term of the operating lease.
h. Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates.
I. Short-Term Investments
The Company accounts for marketable securities in accordance with the provisions of SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities".
Short-term investments have an original maturity of more than three months and a remaining maturity of less than 1 year. These investments consist of marketable debt securities which are stated at amortized cost as the Company has classified these securities as held-to-maturity.
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 2. INCOME TAXES
The difference between the statutory federal income tax rate on income before income taxes and the Company's effective income tax rate is as follows: 2000 1999 1998
Federal statutory income tax rate 34% 34% 34% State tax provisions, net of federal benefits 6 6 6 Other 4 1 1 				 ---	 ----	 ---- Effective income tax expense rate 44% 41% 41% 								 ===	 ====	 === Income tax expense consists of the following:
2000 1999 1998 Current Federal $ 122,221 $ 104,229 $ 89,716 State 35,449 29,603 26,258 							 ------- ------- -------- $ 157,670 $ 133,832 $ 115,974 								=======		 ======= 	 ======= NOTE 3. RENTAL INCOME UNDER OPERATING LEASES
The Company has leased two buildings at its A & S Drive, Paramus, N.J. site for retail use. The Sports Authority, Inc. has leased the 62,000 sq. ft. building for a lease term of twenty (20) years and the Tandy Corporation has leased the 30,000 sq. ft. building for use as a Comp USA retail store for a lease term of fifteen (15) years. The tenants are also responsible for real estate taxes and other assessments as defined in the operating lease agreements.
2000 1999 1998 Buildings and building improvements: Cost $ 6,961,244 $6,961,244 $6,961,244 Accumulated depreciation 1,926,523 1,726,564 1,526,605 							 --------- --------- ---------- Net buildings and building improvements $ 5,034,721 $5,234,680 $5,434,639 						 	 =========	 =========	 =========
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 3. RENTAL INCOME UNDER OPERATING LEASES (Continued)
The minimum future rentals on noncancellable operating leases for the years ending September 30, are as follows:
2001 $2,020,217 2006 $2,225,142 2011 $1,497,842 2002 2,108,447 2007 2,322,194 2012 1,373,022 2003 2,116,467 2008 2,331,017 			 --------- 2004 2,116,467 2009 2,331,017 2005 2,225,142 2010 1,497,842 Total $24,164,816 													 ========== Net rental income consists of the following: 2000 1999 1998
Rental income $2,020,217 $1,925,717 $1,925,534 Depreciation expense (199,959) (199,959) (199,959) Other expenses (62,921) (57,836) (58,547) 				 --------- ---------		 --------- Rental income, net $ 1,757,337 $1,667,922 $1,667,028 								 =========		 =========	 ========= In 2000, 1999, and 1998, depreciation expense included all depreciation of the rental buildings and building improvements.
a) The Company entered into a triple net lease agreement with The Sports Authority, Inc., Fort Lauderdale, Florida. The term of the lease is twenty (20) years with four (4) options to extend the term for an additional period of five (5) years in each option.
The Company was responsible for funding certain improvements to the building pursuant to the lease agreement and incurred costs amounting to $3,567,276 at September 30, 1993. The Company reimbursed The Sports Authority, Inc. for such improvements and on February 5, 1993 the original lease was amended and the base rent was increased to reflect the improved condition of the building.
The Company obtained additional mortgage financing totaling $7,500,000 in order to fund reimbursement to The Sports Authority, Inc., whose former parent company, K-Mart Corporation (K-mart Corporation is a public company and financial information regarding K-mart is publicly available) has guaranteed the incremental monthly rental payments over the remaining life of the lease. (See Note 7).
The base rents under the amended lease were increased as follows:
2nd through 5th years $1,208,217 6th through 10th years 1,295,716 11th through 15th years 1,391,967 16th through 20th years 1,497,842
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 3. RENTAL INCOME UNDER OPERATING LEASES (Continued)
In addition to the rent, the tenant is responsible for real estate taxes and other assessments as defined in the operating lease.
b) Tandy Corporation has constructed a 30,000 sq.ft. building on the Company's site located in Paramus, N.J. for use as a Computer City retail store. Tandy Corporation commenced paying rent to the Company pursuant to the terms of the operating lease on October 1, 1994. The lease term is for fifteen (15) years at an annual rental of $630,000 for the first five years, $724,500 for the second five years and $833,175 for the last five years. Tandy Corporation has three (3) options to extend the term of the lease for an additional period of five (5) years for each such option.
Pursuant to the terms and conditions of the lease, the Company agreed to reimburse Tandy Corporation up to $1,200,000 plus the costs of paving the driveway and parking area and one-half (1/2) the cost of exterior lighting not attached to the building. This construction allowance was amended to $1,189,675 and paid in cash to Tandy Corporation on November 9, 1995.
Costs associated with the 30,000 sq. ft. building are as follows:*
Construction allowance paid to Tandy Corporation $1,189,675 Costs incurred by the Company for use variance and site improvement (deferred until put in service at October 1, 1994) 434,821 Construction costs incurred through September 30, 1994 (deferred until put in service at October 1, 1994) 964,505 Construction costs incurred during 1995 3,512 															 --------- Total Costs of 30,000 sq. ft. building occupied by Tandy Corporation. $2,592,513 																 ========= (*) Does not include costs of improvements incurred by the tenant.
The construction allowance was payable to Tandy Corporation two (2) months after a permanent certificate of occupancy was issued by local governmental authorities. According to the terms and conditions of the lease agreement, Tandy Corporation could accrue interest at the annual rate of 7% on the unpaid balance and could also cease paying rent until such amounts payable by the Company were paid. Accordingly, the Company elected to pay the amounts in full on November 9, 1995.
On September 1, 1998, Tandy Corporation sold Computer City, Inc. to CompUSA, Inc. The lease was assigned to CompUSA, Inc. and is still guaranteed by Tandy Corporation.
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 3. RENTAL INCOME UNDER OPERATING LEASES (Continued)
On January 23, 2000, CompUSA, Inc. entered into a merger agreement with Grupo Sanborns, S.A. de C.V. and TPC Aquisition Corp., a subsidiary of Grupo Sanborns, S.A. de C.V. The financial information for Grupo Sanborns, S.A. de C.V. is unavailable. The lease is still guaranteed by Tandy Corporation.
The following is a condensed summary of financial information on the above publicly held companies: Tandy The Sports Corporation Authority K-Mart 12/31/99 1/29/00 1/26/00 (In Millions) (In Thousands) (In Millions) Current assets $ 1,403 $ 414,351 $ 8,160 							 ------ 	 -------		 -------- Total assets 2,142 643,003 15,104 							 ------ 	 -------		 -------- Current liabilities 925 352,249 4,076 							 ------ 	-------		 -------- Total liabilities 1,290 526,893 7,814 							 ------ 	-------		 -------- Common stock put option 21 - - 							 ------ 	-------		 -------- Total stockholders' equity 831 116,110 7,290 							 ------ 	-------		 -------- Net sales 4,126 1,494,689 35,925 							 ------ 	-------		 -------- Cost of sales 2,043 1,132,296 28,102 							 ------ 	 -------		 -------- Gross profit 2,083 362,393 7,823 							 ------ 	-------		 -------- Income (loss) before income taxes (continuing) 481 (143,340) 1,300 							 ------ 	-------		 -------- Income taxes 183 (22,721) 337 							 ------ 	-------		 -------- Net income (loss) $ 298 $ (160,544) $ 518 							 ------ 	 -------		 --------
NOTE 4. RESEARCH AND DEVELOPMENT
Research and development expenses in the amount of $192,085 in 2000, $194,364 in 1999, and $225,041 in 1998, were charged to operations and included in costs and expenses.
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 5. RENT EXPENSE
The Company occupies approximately 1,000 square feet of office and laboratory space on an annual lease. Lease payments are $950 per month. Rent expense was $11,400 in 2000, $11,400 in 1999 and $11,400 in 1998.
NOTE 6. PATENTS
The Company has discontinued efforts relating to solar cells and semi-conductor technology. Work in the field has moved in other directions than that of the Company's technology and there has been a substantial reduction of government support in this technical area. The funding that had been received by laboratories exploring the Company's technology has also terminated.
The Company is continuing its efforts in the area of surgical staple design for use in internal surgery. Several United States Patents have been issued and foreign applications have been filed on a novel staple. The staple has been produced and it is anticipated that tests will continue during 2001 at a medical center. Research and development costs in the amounts of $192,085, $194,364 and $225,041 have been expended in connection with the surgical staple during 2000, 1999 and 1998, respectively.
NOTE 7. LONG-TERM DEBT
Long-term debt consists of two loans, one in the amount of $6,000,000 payable in monthly installments of $55,328 including interest at 8.77% until 2011. The second is in the amount of $1,500,000 payable in monthly installments of $13,767 including interest at 8.7% until 2011.
Costs incurred in connection with this mortgage amounted to $102,520 and are charged to expense over the life of the mortgage. This amount is included in the balance of deferred charges as detailed in Note 8. The expense for the next five (5) years is presented below:
2001 $5,126 2002 5,126 2003 5,126 2004 5,126 2005 5,126
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 7. LONG-TERM DEBT (Continued)
The balance outstanding for each debt issued at the end of 2000, 1999, and 1998 is as follows: 2000 1999 1998 First Mortgage on 62,000 sq. ft. Building $5,653,046 $5,971,876 $6,264,064 Real Estate Brokers Commissions Payable - - 12,133 							 ---------- --------- --------- Total 5,653,046 5,971,876 6,276,197
Less Current Portion 347,897 318,832 292,195 							 ---------- --------- --------- Long-Term Portion $5,305,149 $5,653,044 $5,984,002 							 ========= ========= ========= The mortgage is secured by the land and building and operating lease agreement with The Sports Authority, Inc. (See Note 3).
The principle payments of long-term debt for the term of the mortgage is as follows:
2001 $347,897 2006 $538,140 2011 $338,092 2002 379,611 2007 587,197 2003 414,217 2008 640,727 2004 451,978 2009 699,136 2005 493,181 2010 762,870
NOTE 8. DEFERRED CHARGES
The composition of deferred charges and related amortization is as follows:
Real Estate Mortgage Brokers Commissions Total Costs Sports Authority Tandy Corp. Original Cost $712,160 $102,520 $279,584 $330,056 Accumulated Amortization 284,321 39,299 112,999 132,023 						--------		 -------	 -------	 	 ------- Balance 9/30/00 $427,839 $ 63,221 $166,585 $198,033 						========	 =======		 =======	 	 ======= Original Cost $712,160 $102,520 $279,584 $330,056 Accumulated Amortization 243,212 34,174 99,019 110,019 			--------	 -------		 -------	 	 ------- Balance 9/30/99 $468,948 $68,346 $180,565 $220,037 						========	 =======		 =======	 =======
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 9. DEFERRED SITE COST
The Company incurred costs in connection with an application for a use variance and site improvements for the property owned by the Company at 50 A&S Drive, Paramus, New Jersey, adjacent to the building owned by the Company and leased to the Sports Authority, Inc. Such costs amounting to $806,656 have been considered to be part of the site cost and are included in fixed assets.
NOTE 10. OTHER EMPLOYEE BENEFITS
The Financial Accounting Standards Board issued and SFAS No. 106 " Employers Accounting for Post Retirement Benefits", and SFAS No. 112 "Employers Accounting for Post Employment Benefits", which changed employers' accounting for these benefits. Since the Company has no post-retirement benefit plans, and does not offer post employment benefits, SFAS No. 106 and SFAS No. 112 are not applicable. During 1999 the Financial Accounting Standards Board issued SFAS No. 132 "Employers' Disclosures about Pensions and Other Post Retirement Benefits." SFAS No. 132 is not applicable for post employment benefits, but is applicable to the company's pension plan (See Note 14).
NOTE 11. CONCENTRATION OF CREDIT RISK
Substantially all of the Company's income is rental income received from two tenants. These tenants are subject to long-term lease agreements. (See Note 3)
NOTE 12. FINANCIAL REPORTING BY BUSINESS SEGMENTS
In 1999, the Company adopted Financial Accounting Standards Board Statement (SFAS) No. 131 "Disclosures About Segments of an Enterprise and Related Information". The information for 1998 has been restated to conform to the 2000 and 1999 presentation. The Company's reportable segments are strategic business units that involve different products and services. They are managed by a single management team.
The Company has three business segments as follows:
Surgical Staples-Engaged in engineering and design of surgical staples for use in internal surgery, and in the technology used to fabricate the equipment issued to apply the staples. This segment of the Company's business is still in the research and development stage.
Electro-Optical-Engaged in engineering and development of equipment for the semi- conductor industry. The company has discontinued efforts relating to the electro-optical segment of its business.
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 12. FINANCIAL REPORTING BY BUSINESS SEGMENTS (Continued)
Rental-Engaged in leasing to tenants, the two retail buildings owned by the Company at 50 A&S Drive, Paramus, New Jersey. Approximately 98% of the Company revenues are earned by this segment, all of which is received from two tenants (see Note 11).
The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates the performance of its operating segments based on income before income taxes. There are no intercompany sales. The Company derives all revenue in the United States.
Summarized financial information concerning the Company's reportable segments is shown in the following table. The "Other" column includes corporate income and expense items not allocated to reportable segments. Revenues 2000 1999 1998 Business Segments:
Surgical Staples $ - $ - $ - Electro-Optical - - - Real Estate Rental 2,020,217 1,925,717 1,925,534 Other 56,157 34,545 39,028 							 ---------		 ---------	 	--------- Total $ 2,076,374 $1,960,262 $1,964,562 							 =========		 =========	 	========= Business Segments: Income (Loss) 2000 1999 1998 Surgical Staples $ (192,085) $ (194,364) $ (225,041) Electro-Optical - - - Real Estate Rental 1,757,337 1,667,922 1,667,028 							 ---------	 ---------		 --------- Total $ 1,565,252 $1,473,558 $1,441,987 							 ---------	 	 ---------		 --------- General and Administrative Expenses (750,577) (637,167) (633,625) Interest Expense (513,106) (539,943) (564,525) Other Income 56,157 34,545 39,028 Income Tax Expense (157,670) (133,832) (115,974) 							 ---------		 ---------	 	--------- Total (1,365,196) (1,276,397) (1,275,096) 							 ---------		 ---------		 --------- Net Income $ 200,056 $ 197,161 $ 166,891 							 =========		 =========		 ========= Business Segments: Identifiable Assets 2000 1999 1998 Surgical Staples $ 59,804 $ 59,778 $ 60,738 Electro-Optical 6,745 10,472 15,286 Real Estate Rental 5,915,333 6,156,401 6,397,468 Other 1,039,347 936,592 781,590 							 ---------	 	 ---------	 	--------- TOTAL ASSETS $ 7,021,229 $7,163,243 $7,255,082 							 =========		 =========	 	=========
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 12. FINANCIAL REPORTING BY BUSINESS SEGMENTS (Continued)
Business Segments: Capital Expenditures 2000 1999 1998 Surgical Staples $ - $ - $ - Electro-Opitical - - - Real Estate Rental - - - Other - - 7,976 							 ---------		 --------		 --------- $ - $ - $ 7,976 							 =========		 =========		 =========
Property and Equipment Business Segments Depreciation 2000 1999 1998 Surgical Staples $ - $ - $ - Electro-Optical - - - Real Estate Rental 199,959 199,959 199,959 Other 11,156 11,906 14,468 							 ---------		 ---------		 --------- $211,115 $211,865 $214,427 							 =========		 =========		 ========= Intangible Assets Amortization 2000 1999 1998 Surgical Staples $ 9,937 $ 9,034 $ 8,356 Electro-Optical 3,726 4,815 4,977 Real Estate Rental 41,109 41,109 41,109 Other - - - 							 ---------		 ---------		 --------- $ 54,772 $ 54,958 $ 54,442 							 =========		 =========		 ========= NOTE 13. FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company has a number of financial instruments, none of which are held for trading purposes. The Company estimates that the fair value of all financial instruments at September 30, 2000, does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgement is necessarily required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 14. PENSION PLAN
The Company established a defined benefit plan in 1998 covering all eligible employees, who have completed one year of service. Benefits are based on years of service and the average compensation during the best three years of participation.
The Company's funding policy is to make annual contributions to the plan in amounts such that all employees' benefits will be fully provided for by the time they retire. Contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future.
Although it has not expressed any intention to do so, the Company has the right under the plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA.
In 1999, the Company adopted SFAS No. 132 "Employers' Disclosures about Pensions and Other Post Retirement Benefits". The provisions of SFAS No. 132 revise employers' disclosures about pension and other post retirement benefit plans. It does not change the measurement or recognition of this plan. It standardizes the disclosure requirements for pensions and other post retirement benefits to the extent practicable.
The Company provides defined benefit pension plan to the employees. The following provides a reconciliation of benefit obligations, plan assets, and funded status of the plan.
2000 1999 Changes in benefit obligation: Benefit obligation at October 1 $ 719,594 $ 307,773 Service cost 328,003 309,163 Interest cost 78,851 21,544 								---------		 ------- Benefit obligation at September 30 $1,126,448 $638,480 													=========		 ======= 2000 1999 Change in plan assets: Fair value of plan assets at October 1 $ 640,223 $ 313,645 Company contributions 330,122 307,754 Actual return on plan assets 43,840 18,824 							---------		 ------- Fair value of plan assets at September 30, $1,014,185 $640,223
Funded status of Plan $ (112,263) $ 1,743 Unrecognized Net Gain (Loss) 80,346 (5,377) 													---------		 ------- (Accrued) or Prepaid Pension $ (31,917) $ (3,634) 													=========		 =======
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 14. PENSION PLAN (Continued)
The net periodic pension cost for the year ended September 30, includes the following components: 2000 1999 1. Service cost - benefits earned during the period $ 328,003 $ 309,163 													 ---------		 ------- 2. Interest cost on projected benefit obligation 78,851 32,708 													 ---------		 ------- 3. Actual return on plan assets (43,840) (18,824) 											 ---------		 ------- 4. Net amortization and deferral:
a. Amortization of unrecognized net obligation (asset) at transition - - b. Amortization of unrecognized prior service cost - - c. Amortization of unrecognized net (gain) or loss (975) (11,659) d. Asset gain or (loss) deferred - - 											 ---------		 ------- e. Total (975) (11,659) 												 ---------		 ------- 5. Net periodic pension cost (credit) = (Item 1 + item 2 + item 3 + item 4 (e) $ 362,039 $ 311,388 													 =========		 ======= The net periodic pension cost for 2000 and 1999 was determined based on a 7% discount rate and a long - term rate of return of 7% on plan assets.
NOTE 15. MARKETABLE SECURITIES
At September 30, 2000, 1999 and 1998, all short-term marketable debt securities were classified as held-to-maturity and carried at amortized cost. Investments consisted of the following:
2000 1999 1998 Certificate of deposit $ - $ - $ 421,282 U.S. Government Securities 738,517 - - 											 -------		 -----------	 		 ------- $738,517 $ - $ 421,282 											 =======	 	 ===========		 	 ======= At September 30, 2000,1999 and 1998, the fair value of investments approximated its amortized cost and therefore there were no significant unrealized gains or losses.
All investments at September 30, 2000, 1999 and 1998 mature in one year or less.
HOLOBEAM, INC.
NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
NOTE 16. SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)
For the Fiscal Year Ended September 30, 2000 First Second Third Fourth Quarter Quarter Quarter Quarter
Total Revenues $506,719 $505,211 $508,584 $555,860
Gross Profit N/A N/A N/A N/A
Income Before Extraordinary Items 71,902 46,684 108,179 (26,709)
Weighted Average Number of Shares 296,105 294,487 293,081 292,374
Earnings Per Share .24 .16 .37 (.09)
Net Income 71,902 46,684 108,179 (26,709)
For the Fiscal Year Ended September 30, 1999 First Second Third Fourth Quarter Quarter Quarter Quarter
Total Revenues $496,849 $479,667 $480,438 $503,308
Gross Profit N/A N/A N/A N/A
Income Before Extraordinary Items 62,464 44,171 49,087 41,439
Weighted Average Number of Shares 298,518 297,618 297,512 297,406
Earnings Per Share .21 .15 .16 .14
Net Income 62,464 44,171 49,087 41,439
HOLOBEAM, INC. SCHEDULE VI ACCUMULATED DEPRECIATION AND AMORTIZATION PROPERTY AND EQUIPMENT YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
Balance at Balance at Beginning End of CLASSIFICATIONS of Year Additions Retirements Year
YEAR ENDED SEPTEMBER 30, 1998:
Machinery and Equipment $ 28,077 $ 12,604 $ - $ 40,681 Furniture and Fixtures 256 1,864 - 2,120 		 		 -------		 ------	 	------			 ------- TOTAL $ 28,333 14,468 $ - $ 42,801 						 =======		 ======		 ======			 ======= YEAR ENDED SEPTEMBER 30, 1999:
Machinery and Equipment $ 40,681 $ 9,287 $ - $ 49,968 Furniture and Fixtures 2,120 2,620 - 4,740 						 -------		 ------		------			 ------- TOTAL $ 42,801 $11,907$ - $ 54,708 						 =======		 ======		======			 ======= YEAR ENDED SEPTEMBER 30, 2000:
Machinery and Equipment $ 49,968 $ 8,536 $ - $ 58,504 Furniture and Fixtures 4,740 2,620 - 7,360 						 -------		 ------		------			 ------- TOTAL $ 54,708 $ 11,156 $ - $ 65,864 			 =======		 ======		======			 =======
The accompanying notes are an integral part of the financial statements.
HOLOBEAM, INC. SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
2000 1999 1998 Maintenance and Repairs $ - $ - $ - 							 ======= ======== ======= Depreciation and Amortization of Intangible Assets $54,772 $ 54,958 $ 54,442 							 ======= ======== ======= Taxes, Other than Payroll and Income Tax Franchise $ 10,572 $ 9,500 $ 3,600 Real Estate - - - Other 35 518 - 							 ------- -------- ------- $10,607 $ 10,018 $ 3,600 							 ======= ======== ======= Royalties $ - $ - $ - 							 ======= ======== ======= Advertising $ - $ - $ - 						 ======= ======== =======
The accompanying notes are an integral part of the financial statements.
HOLOBEAM, INC. SCHEDULE V
PROPERTY AND EQUIPMENT SEPTEMBER 30, 2000, 1999 AND 1998
Balance at Balance at Beginning End of CLASSIFICATIONS of Year Additions Retirements Year
YEAR ENDED SEPTEMBER 30, 1998:
Machinery and Equipment $ 66,939 $ - $ - $ 66,939 Furniture and Fixtures 12,657 7,976 - 20,633 						 -------		 ------		------	 	 ------- TOTAL $ 79,596 $ 7,976 $ - $ 87,572 						 =======		 ======		======	 	 ======= YEAR ENDED SEPTEMBER 30, 1999:
Machinery and Equipment $ 66,939 $ - $ - $ 66,939 Furniture and Fixtures 20,633 - - 20,633 		 -------		 ------		------	 	 ------- TOTAL $87,572 $ - $ - $ 87,572 						 =======		 ======		======	 	 ======= YEAR ENDED SEPTEMBER 30, 2000:
Machinery and Equipment $ 66,939 $ - $ - $ 66,939 Furniture and Fixtures 20,633 - - 20,633 						 -------		 ------		------	 	 ------- TOTAL $ 87,572 $ - $ - $ 87,572 						 =======		 ======		======	 	 =======
The accompanying notes are an integral part of the financial statements.
HOLOBEAM, INC. SCHEDULE XII
Activity for the three years ended September 30, 2000 is as follows: 2000 1999 1998 Balance at Beginning of Year $5,971,876 $6,264,064 $6,531,848 Addition During Year Commercial Loans 0 0 0 New Mortgages 0 0 0 					 --------- --------- --------- 5,971,876 6,264,064 6,531,848 Deductions During Year: Principal Payments 318,830 292,188 267,784 Mortgage Payments 0 0 0 					 --------- --------- --------- Balance at End of Year $5,653,046 $5,971,876 $6,264,064 					 ========= ========= ========= (1) The cost for Federal income tax Purposes at 9/30/00 $5,653,046
The accompanying notes are an integral part of these financial statements.
HOLOBEAM, INC. SCHEDULE XI
The aggregate cost for Federal income tax purposes at September 30, 2000 is $7,414,016.
The accompanying notes are an integral part of these financial statements.