UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
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OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2005
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to_______
Commission file number 1-7708
MARLTON TECHNOLOGIES, INC.
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(Exact name of issuer as specified in its charter)
Pennsylvania 22-1825970
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(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
2828 Charter Road Philadelphia PA 19154
---------------------------------------- -------------- -------- ------------
(Address of principal executive offices) City State Zip
Issuer's telephone number (215) 676-6900
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Former name, former address and former fiscal year, if changed since last
report: ____________________
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ______ No ___X___
Indicate by check mark whether the issuer is an accelerated filer (as defined in
Rule 12b-2 of the Exchange Act). Yes ______ No ___X___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by court.
Yes ______ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of
each of the issuer's classes of common stock as of the last practicable date:
12,939,696
MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
September 30,
2005 December 31,
ASSETS (UNAUDITED) 2004
-------------- ---------------
Current:
Cash and cash equivalents $ 1,305 $ 311
Accounts receivable, net of allowance
of $554 and $444, respectively 17,100 10,157
Inventories 6,630 7,069
Prepaid and other current assets 934 400
-------------- ---------------
Total current assets 25,969 17,937
Property and equipment, net of accumulated
depreciation of $11,370 and $10,792, respectively 3,069 2,469
Rental assets, net of accumulated depreciation
of $4,686 and $4,239, respectively 2,730 2,875
Goodwill 2,750 2,750
Other intangible assets, net of accumulated amortization of $299 4,841 --
Other assets, net of accumulated amortization
of $1,823 and $1,781, respectively 105 126
Notes receivable 122 178
-------------- ---------------
Total assets $ 39,586 $ 26,335
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,067 $ 83
Accounts payable 6,571 5,596
Accrued expenses and other current liabilities 9,951 7,722
-------------- ---------------
Total current liabilities 17,589 13,401
Long-term liabilities:
Long-term debt, net of current portion 9,869 5,070
Other long-term liabilities 1,674 --
-------------- ---------------
Total long-term liabilities 11,543 5,070
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Total liabilities 29,132 18,471
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Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, no par value - shares authorized
10,000,000; no shares issued or outstanding -- --
Common stock, no par value - shares authorized 50,000,000;
12,939,696 outstanding at September 30, 2005 and December 31, 2004 -- --
Stock warrants 1,528 742
Additional paid-in capital 32,998 32,998
Accumulated deficit (23,924) (25,728)
-------------- ---------------
10,602 8,012
Less cost of 148,803 treasury shares (148) (148)
-------------- ---------------
Total stockholders' equity 10,454 7,864
-------------- ---------------
Total liabilities and stockholders' equity $ 39,586 $ 26,335
============== ===============
The accompanying notes and the notes to the consolidated financial
statements included in the Registrant's Annual Report on Form 10-K are an
integral part of these financial statements.
2
MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands except per share data)
For the three months ended For the nine months ended
September 30, September 30,
2005 2004 2005 2004
-------------- ------------- -------------- -------------
Sales $ 24,723 $ 16,796 $ 69,528 $ 55,901
Cost of sales 19,370 13,462 53,903 43,574
-------------- ------------- -------------- -------------
Gross profit 5,353 3,334 15,625 12,327
Selling 2,973 1,889 7,936 6,044
Administrative and general 1,935 1,524 5,483 4,726
-------------- ------------- -------------- -------------
Operating profit (loss) 445 (79) 2,206 1,557
Other income (expense):
Other income 42 50 111 50
Interest expense (191) (156) (513) (381)
-------------- ------------- -------------- -------------
Income (loss) before income taxes 296 (185) 1,804 1,226
Provision for income taxes -- -- -- --
-------------- ------------- -------------- -------------
Net income (loss) 296 (185) 1,804 1,226
============== ============= ============== =============
Net income (loss) per common share:
Basic $ 0.02 $ (0.01) $ 0.14 $ 0.10
============== ============= ============== =============
Diluted $ 0.02 $ (0.01) $ 0.10 $ 0.09
============== ============= ============== =============
The accompanying notes and the notes in the consolidated financial statements
included in the Registrant's Annual Report on Form 10-K are an integral part of
these financial statements.
3
MARLTON TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
For the nine months ended
September 30,
2005 2004
---------- ----------
Cash flows from operating activities:
Net income $ 1,804 $ 1,226
Adjustments to reconcile net income to cash
used in operating activities:
Depreciation and amortization 1,366 1,546
Change in assets and liabilities:
Increase in accounts receivable, net (5,630) (4,020)
(Increase) decrease in inventories 1,005 (77)
(Increase) decrease in prepaid and other assets (534) 134
Decrease in notes and other receivables 56 246
Increase (decrease) in accounts payable,
accrued expenses and other current liabilities 1,668 (267)
---------- ----------
Net cash used in operating activities (265) (1,212)
---------- ----------
Cash flows from investing activities:
Acquisition of business (2,752) --
Capital expenditures (668) (840)
Proceeds from affiliate, net 19 50
---------- ----------
Net cash used in investing activities (3,401) (790)
---------- ----------
Cash flows from financing activities:
Proceeds from revolving credit facility, net 4,089 2,511
Proceeds from term loan, net 850 --
Payments for leasehold improvement obligation (34) (34)
Proceeds from (payments for) capital lease obligations (28) 107
Payments for loan origination fees (40) (133)
Payments for assumed SBA loan (76) --
Payments for contingent acquisition obligations (101) (163)
---------- ----------
Net cash provided by financing activities 4,660 2,288
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Increase in cash and cash equivalents 994 286
Cash and cash equivalents - beginning of period 311 241
---------- ----------
Cash and cash equivalents - end of period $ 1,305 $ 527
========== ==========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES
Acquisition of Showtime Enterprises, Inc. Assets and Specified Liabilities:
Cash purchase price $ 2,752
Long-term debt incurred 982
Other long-term liabilities incurred 1,775
Fair value of stock warrants 786
----------
Total purchase price $ 6,295
==========
Working capital acquired $ 343
Fair value of property, equipment and rental assets acquired 812
Covenants not to compete acquired 570
Customer relationships acquired 4,570
----------
Total purchase price $ 6,295
==========
The accompanying notes and the notes in the consolidated financial statements
included in the Registrant's Annual Report on Form 10-K are an integral part
of these financial statements.
4
MARLTON TECHNOLOGIES, INC. AND SUBSDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The consolidated financial statements included herein are unaudited and have
been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial reporting and Securities and
Exchange Commission regulations. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. In the opinion of management, the financial statements
reflect all adjustments (of a normal and recurring nature), which are necessary
to present fairly the financial position, results of operations and cash flows
for the interim periods. Operating results for the quarter and nine month
periods are not necessarily indicative of the results that may be expected for
the full year or for future periods. These financial statements should be read
in conjunction with the Form 10-K for the year ended December 31, 2004.
2. ACQUISITION OF BUSINESS:
On March 15, 2005, Sparks Exhibits & Environments Corp., a subsidiary of the
Company, acquired substantially all of the assets and assumed specified
liabilities of Showtime Enterprises, Inc. and its subsidiary, Showtime
Enterprises West, Inc. (collectively "Showtime"). Showtime designed, marketed
and produced trade show exhibits, point of purchase displays, museums and
premium incentive plans. Showtime had sales of approximately $21 million in
2004. The aggregate purchase price was $6.3 million, comprised of $2.8 million
paid in cash, $1.7 million for contingent royalty and percentage of sales
payments, $1 million of long-term debt assumption and $0.8 million for stock
warrants. The Company financed this acquisition by increasing its revolving
credit facility borrowing capacity and obtaining a new term loan. The Company's
Audit Committee engaged the Company's registered public accounting firm to
perform the required audit of Showtime's financial statements. It was
subsequently determined that such audit could not be performed. The inability to
file these audited financial statements may limit the Company's ability to
engage in certain types of transactions requiring Securities and Exchange
Commission review, including without limitation, public offerings and certain
private offerings of securities and business combination transactions requiring
shareholder approval.
The estimated fair values of the assets acquired and liabilities assumed are
summarized in the following table. At March 15, 2005 (in thousands)
Current assets $1,880
Property, equipment and rental assets 812
Covenants not to compete 570
Customer relationships 4,570
------
$7,832
Current liabilities $1,537
Long-term debt 982
Other long-term liabilities 1,775
Stock warrants 786
------
Net assets acquired $2,752
======
5
MARLTON TECHNOLOGIES, INC. AND SUBSDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Covenants not to compete will be amortized over 6 years and customer
relationships will be amortized over an estimated life of 10 years. The
covenants not to compete and customer relationships are reviewed periodically by
management for impairment.
3. MAJOR CUSTOMERS AND CONCENTRATIONS:
During the first nine months of 2005 and 2004, one customer accounted for 12.8%
and 11.3%, respectively, of the Company's total sales. At September 30, 2005,
this customer accounted for 12.9% of total accounts receivable and another
customer accounted for 16.4% of total accounts receivable.
4. PER SHARE DATA:
The following table sets forth the computation of basic and diluted net income
(loss) per common share (in thousands except per share data):
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
------- ------- ------- -------
Net income (loss) $ 296 $ (185) $ 1,804 $ 1,226
======= ======= ======= =======
Weighted average common
shares outstanding used to compute
basic net income per common share 12,940 12,845 12,940 12,845
Additional common shares to be issued
assuming the exercise of stock options,
net of shares assumed reacquired 4,309 -- 4,309 1,174
------- ------- ------- -------
Total shares used to compute diluted
net income per common share 17,249 12,845 17,249 14,019
======= ======= ======= =======
Basic net income (loss) per share $ 0.02 $ (0.01) $ 0.14 $ 0.10
======= ======= ======= =======
Diluted net income (loss) per share $ 0.02 $ (0.01) $ 0.10 $ 0.09
======= ======= ======= =======
Excluded in the computation of diluted income per common share were outstanding
options and warrants to purchase 1,120,000 shares of common stock at September
30, 2005 and 333,000 shares of common stock at September 30, 2004 because the
option or warrant exercise prices were greater than the market price of the
common shares.
5. INVENTORIES:
Inventories, as of the respective dates, consist of the following (in
thousands):
September 30, 2005 December 31, 2004
------------------ -----------------
Raw materials $ 673 $ 440
Work in process 2,841 3,231
Finished goods 3,116 3,398
------ ------
$6,630 $7,069
====== ======
6
MARLTON TECHNOLOGIES, INC. AND SUBSDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2002, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 146, "Accounting for Exit or
Disposal Activities" ("FAS 146"). FAS 146 addresses significant issues regarding
the recognition, measurement, and reporting of costs associated with exit and
disposal activities, including restructuring activities that are currently
accounted for pursuant to the guidance that the Emerging Issues Task Force
("EITF") has set forth in EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." Effective in the first
quarter of 2003, the Company adopted the provisions of FAS 146. This new
accounting principle had an impact on the timing and recognition of costs
associated with the Showtime acquisition and subsequent relocation and
integration.
In December 2004, FASB issued FASB Statement No. 123 (revised 2004), Share-Based
Payment ("FAS123(R)" or the "Statement"). FAS 123(R) requires that the
compensation cost relating to share-based payment transactions, including grants
of employee stock options, be recognized in financial statements. That cost will
be measured based on the fair value of the equity or liability instruments
issued. FAS 123(R) covers a wide range of share-based compensation arrangements
including stock options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans. The effect of the
Statement will require entities to measure the cost of employee services
received in exchange for stock options based on the grant-date fair value of the
award, and to recognize the cost over the period the employee is required to
provide services for the award. FAS 123(R) permits entities to use any
option-pricing model that meets the fair value objective in the Statement. The
Company will be required to apply FAS 123(R) starting January 1, 2006. FAS
123(R) allows two methods for determining the effects of the transition: the
modified prospective transition method and the modified retrospective method of
transition. Under the modified prospective transition method, an entity would
use the fair value based accounting method for all employee awards granted,
modified, or settled after the effective date. As of the effective date,
compensation cost related to the non-vested portion of awards outstanding as of
that date would be based on the grant-date fair value of those awards as
calculated under the original provisions of Statement No. 123; that is, an
entity would not re-measure the grant-date fair value estimate of the unvested
portion of awards granted prior to the effective date of FAS 123(R). An entity
will have the further option to either apply the Statement to only the quarters
in the period of adoption and subsequent periods, or apply the Statement to all
quarters in the fiscal year of adoption. Under the modified retrospective method
of transition, an entity would revise its previously issued financial statements
to recognize employee compensation cost for prior periods presented in
accordance with the original provisions of Statement No. 123. Although it has
not yet completed its study of the transition methods, the Company believes it
will elect the modified prospective transition method. Under this method, the
Company estimates that the adoption of FAS 123(R) would require the Company to
record approximately $15,000 of stock compensation expense in 2005 related to
employee options issued and outstanding at December 31, 2004 and $235,000 of
stock compensation expense in 2005 related to employee options issued in the
second quarter of 2005. Based on expected vesting of stock options outstanding
at September 30, 2005, the Company may record compensation expense of
approximately $300,000 beginning in 2006 through 2009 and approximately $55,000
in 2010. Any further impact of this Statement on the Company in fiscal 2005 and
beyond will depend upon various factors including future compensation strategy.
The pro forma compensation costs are calculated using
7
MARLTON TECHNOLOGIES, INC. AND SUBSDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
the Black-Scholes option pricing model and may not be indicative of amounts
which should be expected in future years.
7. STOCK-BASED COMPENSATION
The Company accounts for grants of stock options under its stock option plans
based on the recognition and measurement principles of APB Opinion No. 25 and
related Interpretations. The following table illustrates the effect on net
income and earnings per share if the Company had applied the fair value
recognition provisions of FASB Statement No. 123 to stock-based employee
compensation (in thousands except per share data):
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
------ ------- ------ ------
Net income (loss), as reported $ 296 $ (185) $1,804 $1,226
------ ------- ------ ------
Deduct: Total stock-based employee
compensation expense determined under fair
value based method, net of tax (83) (8) (180) (43)
------ ------- ------ ------
Pro-forma net income $ 213 $ (193) $1,624 $1,183
====== ======= ====== ======
Net income (loss) per share:
Basic:
As Reported $ 0.02 $ (0.01) $ 0.14 $ 0.10
====== ======= ====== ======
Pro-forma $ 0.02 $ (0.02) $ 0.13 $ 0.09
====== ======= ====== ======
Diluted:
As reported $ 0.02 $ (0.01) $ 0.10 $ 0.09
====== ======= ====== ======
Pro-forma $ 0.01 $ (0.02) $ 0.09 $ 0.08
====== ======= ====== ======
The fair value of each option grant is estimated on the date of the grant using
the Black-Scholes option-pricing model.
8. REVERSE STOCK SPLIT
On September 22, 2005, the Company announced that its Board of Directors
approved a reverse stock split of its Common Stock to relieve the Company of the
substantial and increasing expense of remaining a Securities and Exchange
Commission ("SEC") reporting company. If approved by the Company's shareholders,
the reverse stock split will reduce shareholders of record to less than 300,
which will permit the Company to terminate its obligation to file reports with
the SEC. As a result of the reverse stock split, the Company's Common Stock
would be delisted from the American Stock Exchange, but would be expected to
trade in the over-the-counter market.
The Board's approval followed the recommendation of a special committee of
independent directors which was established to review the reverse stock split.
The special committee retained an investment
8
banking firm to advise it and to review the fairness of the consideration to be
paid to shareholders in the reverse stock split.
Pursuant to the terms of the 1 for 5,000 reverse stock split approved by the
Company's Board, shareholders owning less than 5,000 shares would be paid $1.25
in cash per share. Shareholders owning more than 5,000 shares would remain as
shareholders of the Company after the reverse stock split and would have
fractional shares redeemed at the same rate. The Company estimates that an
aggregate of $1,600,000 would be paid to its shareholders to complete the
reverse stock split. Funding for the transaction is anticipated to be provided
under the Company's existing revolving credit facility, subject to certain
conditions on availability under the borrowing formula.
The Board will recommend that Company's shareholders approve the reverse stock
split in proxy materials to be filed with the SEC in connection with a special
meeting of shareholders to be held in December 2005.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For the three and nine months ended September 30, 2005 and 2004.
SALES
(In thousands)
Three months ended
September 30,
2005 2004 % change
------- -------- --------
Trade show exhibits group $14,394 $ 8,191 75.7%
Permanent and scenic displays group 10,329 8,605 20.0%
------- -------- ------
Total sales $24,723 $16,796 47.2%
======= ======== ======
Nine months ended
September 30,
2005 2004 % change
------- -------- --------
Trade show exhibits group $45,273 $ 34,892 29.8%
Permanent and scenic displays group 24,255 21,009 15.5%
------- -------- ------
Total sales $69,528 $ 55,901 24.4%
======= ======== ======
Total net sales of $24.7 million for the third quarter of 2005 increased 47.2%
from the third quarter of 2004, and total net sales of $69.5 million for the
first nine months of 2005 increased 24.4% above the comparable prior year
period. The third quarter increase was principally attributable to incremental
sales of $4.7 million resulting from the Showtime business acquired on March 15,
2005 and to new customers obtained near the end of 2004. The sales increase for
the first nine months of 2005 was primarily due to sales of $8.7 million
contributed by the Showtime business as well as to sales to new customers.
GROSS PROFIT
Gross profit, as a percentage of net sales, increased to 21.7% in the third
quarter of 2005 from 19.8% in the same prior year period and to 22.5% for the
first nine months of 2005 from 22.1% in the comparable period of 2004. The third
quarter improvement was primarily due to the favorable effect of higher sales
volume as compared with fixed manufacturing overhead costs. The improvement for
the nine month period was also due to the leverage of higher sales volume on
fixed costs, partially offset by transition costs incurred in connection with
the Showtime business acquisition.
10
SELLING EXPENSES
Selling expenses increased $1.1 million in the third quarter of 2005 and $1.9
million for the nine months of 2005 from the corresponding prior year periods.
As a percentage of net sales, selling expenses increased to 12.0% and 11.4% in
the third quarter and first nine months of 2005, respectively, from 11.4% and
10.8% for the same 2004 periods. These increases were largely the result of
additional selling costs incurred in connection with the Showtime business
acquisition and to the impact of higher sales on variable selling expenses.
ADMINISTRATIVE AND GENERAL EXPENSES
Administrative and general expenses increased $0.4 million in the third quarter
of 2005 and $0.8 million in the first nine months of 2005 from the expense
levels for the comparable periods of 2004. The third quarter increase was
largely due to higher accrued incentive compensation and costs incurred in
connection with the proposed reverse stock split discussed under liquidity and
capital resources. The increase in general and administrative expenses for the
nine months of 2005 was due to these third quarter factors, as well as to costs
incurred in connection with the Showtime business acquisition.
OPERATING PROFIT
Operating profit of $445,000 for the third quarter of 2005 compared favorably to
an operating loss of $79,000 for the same 2004 period. For the nine months of
2005, operating profit increased to $2.2 million from $1.6 million reported for
the comparable prior year period. These increases were primarily due to higher
sales, partially offset by costs incurred in connection with the Showtime
business acquisition.
OTHER INCOME/(EXPENSE)
Interest expense increased to $191,000 in the third quarter of 2005 from
$156,000 in the same 2004 period and to $513,000 for the first nine months of
2005 from $381,000 for the nine months of 2004. These increases were primarily
due to higher borrowing from the Company's revolving credit facility largely as
a result of financing higher accounts receivable as well as the Showtime
business acquisition and as a result of higher interest rates on the Company's
credit facility discussed below.
PROVISION FOR INCOME TAXES
The Company is currently using operating loss carry-forwards to offset its
taxable income. As a result, the Company did not record an income tax provision
for the first nine months of 2005 or 2004. The Company currently has a full
valuation allowance against its operating loss carry-forwards. This allowance is
reviewed by management for possible recovery on a periodic basis.
NET INCOME
The Company generated net income of $296,000 ($0.02 per fully diluted share) in
the third quarter of 2005 as compared with a net loss of $185,000 ($0.01 per
fully diluted share) in the same prior year period. For the first nine months of
2005, net income increased to $1.8 million ($0.10 per fully diluted share) from
$1.2 million ($0.09 per fully diluted share) for the comparable 2004 period.
These improvements were principally attributable to higher sales volume,
partially offset by costs incurred in connection with the Showtime business
acquisition.
11
BACKLOG
The Company's backlog of orders was approximately $35 million at September 30,
2005 and $16 million at September 30, 2004. This increase includes large
multi-year permanent exhibit projects, as well as the backlog of orders from the
Showtime business and new customers. The increase in the backlog is expected to
yield lower gross profit margins, as a percentage of sales, due to changes in
sales mix. Specifically, a significant portion of the backlog increase is
related to permanent and scenic display projects which generally yield lower
gross profit margins than the Company's trade show exhibit and other projects.
LIQUIDITY AND CAPITAL RESOURCES
On February 6, 2004, the Company replaced its revolving credit and security
agreement with a new credit facility provided by a commercial asset-based
lender. The new credit facility originally expired on February 6, 2007 and
provided for maximum borrowing capacity of up to $12 million based on a
percentage of eligible accounts receivable and inventories. This facility has
interest based on the 30-day dealer placed commercial paper rate plus a
formula-determined spread, restricts the Company's ability to pay dividends, and
includes certain financial covenants (fixed charge coverage ratio and maximum
capital expenditure amount). The effective interest rate for this credit
facility was 7.45% at September 30, 2005.
On March 21, 2005, the Company amended its credit facility to increase the
maximum borrowing capacity from $12 million to $15 million, to increase the
maximum borrowings on certain inventories and to extend the term by one year to
February 6, 2008. The Company also obtained a one-year term loan for $1 million,
bearing interest at the commercial paper rate plus 3.75% and requiring monthly
principal payments of $25,000 starting on April 1, 2005, with the remaining
balance of $700,000 due on March 21, 2006. This credit facility amendment and
term loan were obtained to finance the Showtime acquisition. The Company had
borrowings of approximately $9.1 million and additional borrowing capacity of
approximately $3.5 million at September 30, 2005. In September 2005, the
Company's commercial lender sold this credit facility to a bank.
The Company's working capital increased $3.9 million in the first nine months of
2005 to $8.4 million at September 30, 2005 from $4.5 million at December 31,
2004, largely due to a $6.9 million increase in accounts receivable and a $1
million increase in cash, partially offset by a $4.2 million increase in current
liabilities. The accounts receivable increase was principally attributable to
higher sales at the end of the third quarter of 2005 as compared with sales at
the end of 2004. The increase in cash was largely due to the timing of accounts
payable payments. The increase in current liabilities was largely due to timing
of accounts payable payments, an increase in customer deposits and the term loan
discussed above.
The Company anticipates capital expenditures of approximately $1 million for
2005.
On September 22, 2005, the Company announced that its Board of Directors
approved a reverse stock split of its Common Stock to relieve the Company of the
substantial and increasing expense of remaining a Securities and Exchange
Commission ("SEC") reporting company. If approved by the Company's shareholders,
the reverse stock split will reduce shareholders of record to less than 300,
which will permit the Company to terminate its obligation to file reports with
the SEC. As a result of the reverse stock split, the Company's Common Stock
would be delisted from the American Stock Exchange, but would be expected to
trade in the over-the-counter market.
12
The Board's approval followed the recommendation of a special committee of
independent directors which was established to review the reverse stock split.
The special committee retained an investment banking firm to advise it and to
review the fairness of the consideration to be paid to shareholders in the
reverse stock split.
Pursuant to the terms of the 1 for 5,000 reverse stock split approved by the
Company's Board, shareholders owning less than 5,000 shares would be paid $1.25
in cash per share. Shareholders owning more than 5,000 shares would remain as
shareholders of the Company after the reverse stock split and would have
fractional shares redeemed at the same rate. The Company estimates that an
aggregate of $1,600,000 would be paid to its shareholders to complete the
reverse stock split. Funding for the transaction is anticipated to be provided
under the Company's existing revolving credit facility, subject to certain
conditions on availability under the borrowing formula.
The Board will recommend that Company's shareholders approve the reverse stock
split in proxy materials to be filed with the SEC in connection with a special
meeting of shareholders to be held in December 2005.
The Company has lease commitments for certain facilities under non-cancelable
operating leases. Timing of future lease commitments as well as maturities of
long-term debt is as follows:
Payment due by period (in thousands)
------------------------------------
2006 to 2009 to More than 5
Contractual Obligations Total 2005 2008 2011 Years
----------------------- ----- ---- ---- ---- -----
Long-Term Debt Obligations $10,936 $129 $10,348 $ 459 $ --
Capital Lease Obligations -- -- -- -- --
Operating Lease Obligations 6,306 587 4,993 726 --
Purchase Obligations -- -- -- -- --
Other Long-Term Liabilities
Reflected on the Registrant's
Balance Sheet Under GAAP 1,674 -- 1,318 356 --
------- ---- ------- ------ ----
Total $18,916 $716 $16,659 $1,541 --
======= ==== ======= ====== ====
The Company jointly leases a 31,000 square foot facility with International Expo
Services ("IES"), in which the Company holds a minority interest. The annual
lease commitment for this facility is $214,000 through September 22, 2007, which
is not included with the above future operating lease commitments since IES
occupies this entire facility and pays the rent.
The Company leases a facility from a partnership controlled by two shareholders
of the Company. This lease, which expires on May 14, 2019, contains an option
for the Company to terminate after May 14, 2009 subject to the landlord's
ability to re-rent the premises. The minimum annual rent is $771,000 through May
14, 2009 and is reset thereafter (not included in the table above). The Company
is also responsible for taxes, insurance and other operating expenses for this
facility.
13
OUTLOOK
The Company expects sales volume in 2005 and 2006 to increase from the 2004
sales level due to new clients and the Showtime acquisition. Sales increases
from a higher backlog of orders are expected to yield lower margins due to less
favorable sales mix.
The Company wrote off accounts receivable and inventories in 2001 as a result of
K-Mart, a Sparks Custom Retail LLC customer, filing for bankruptcy. The
subsequent settlement from its bankruptcy claim was for shares of Sears Holding
Corp (previously K-Mart) common stock. Based on the current market price of
Sears Holding Corp common stock, the Company has a contingent additional bad
debt recovery of approximately $90,000 for the remaining 753 shares from this
bankruptcy settlement.
The Company acquired a past-due accounts receivable from mPhase Technologies,
Inc. ("mPhase") in connection with the 2003 acquisition of Exhibit Crafts, Inc.
In March 2005, the Company settled the claim with this customer for 213,000
shares of mPhase restricted common stock. Based on the current market value of
this common stock, the Company has a contingent gain of approximately $50,000.
Any gain will be recognized when the restrictions on the Company's right to sell
this common stock expire.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2002, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 146, "Accounting for Exit or
Disposal Activities" ("FAS 146"). FAS 146 addresses significant issues regarding
the recognition, measurement, and reporting of costs associated with exit and
disposal activities, including restructuring activities that are currently
accounted for pursuant to the guidance that the Emerging Issues Task Force
("EITF") has set forth in EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." Effective in the first
quarter of 2003, the Company adopted the provisions of FAS 146. This new
accounting principle had an impact on the timing and recognition of costs
associated with the Showtime acquisition and subsequent relocation and
integration.
In December 2004, FASB issued FASB Statement No. 123 (revised 2004), Share-Based
Payment ("FAS123(R)" or the "Statement"). FAS 123(R) requires that the
compensation cost relating to share-based payment transactions, including grants
of employee stock options, be recognized in financial statements. That cost will
be measured based on the fair value of the equity or liability instruments
issued. FAS 123(R) covers a wide range of share-based compensation arrangements
including stock options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans. The effect of the
Statement will require entities to measure the cost of employee services
received in exchange for stock options based on the grant-date fair value of the
award, and to recognize the cost over the period the employee is required to
provide services for the award. FAS 123(R) permits entities to use any
option-pricing model that meets the fair value objective in the Statement. The
Company will be required to apply FAS 123(R) starting January 1, 2006. FAS
123(R) allows two methods for determining the effects of the transition: the
modified prospective transition method and the modified retrospective method of
transition. Under the modified prospective transition method, an entity would
use the fair value based accounting method for all employee awards granted,
modified, or settled after the effective date. As of the effective date,
compensation cost related to the non-vested portion of awards outstanding as of
that date would be based on the grant-date fair value of those awards as
calculated under the original provisions of Statement No. 123; that is, an
entity would not re-measure the grant-date fair value estimate of the unvested
portion of awards granted prior to the effective date of FAS
14
123(R). An entity will have the further option to either apply the Statement to
only the quarters in the period of adoption and subsequent periods, or apply the
Statement to all quarters in the fiscal year of adoption. Under the modified
retrospective method of transition, an entity would revise its previously issued
financial statements to recognize employee compensation cost for prior periods
presented in accordance with the original provisions of Statement No. 123.
Although it has not yet completed its study of the transition methods, the
Company believes it will elect the modified prospective transition method. Under
this method, the Company estimates that the adoption of FAS 123(R) would require
the Company to record approximately $15,000 of stock compensation expense in
2005 related to employee options issued and outstanding at December 31, 2004 and
$235,000 of stock compensation expense in 2005 related to employee options
issued in the second quarter of 2005. Based on expected vesting of stock options
outstanding at September 30, 2005, the Company may record compensation expense
of approximately $300,000 beginning in 2006 through 2009 and approximately
$55,000 in 2010. Any further impact of this Statement on the Company in fiscal
2005 and beyond will depend upon various factors including future compensation
strategy. The pro forma compensation costs are calculated using the
Black-Scholes option pricing model and may not be indicative of amounts which
should be expected in future years.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. When used in this report, the
words "intends," "believes," "plans," "expects," "anticipates," "probable,"
"could" and similar words are used to identify these forward looking statements.
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, there are certain important factors that could
cause the Company's actual results to differ materially from those included in
such forward-looking statements. Some of the important factors which could cause
actual results to differ materially from those projected include, but are not
limited to: the Company's ability to integrate the acquired Showtime business
and maintain the customer base; the Company's proposed reverse stock split;
continued availability of financing to provide additional sources of funding for
capital expenditures, working capital and investments; the Company's ability to
continue to identify and enter new markets and expand existing business; the
effects of competition on products and pricing; growth and acceptance of new
product lines through the Company's sales and marketing programs; changes in
material and labor prices from suppliers; changes in customers' financial
condition; the Company's ability to attract and retain competent employees; the
Company's ability to add and retain customers; changes in sales mix; the
Company's ability to integrate and upgrade technology; uncertainties regarding
accidents or litigation which may arise; uncertainties about the impact of the
threat of future terrorist attacks on business travel and related trade show
attendance; and the effects of, and changes in the economy, monetary and fiscal
policies, laws and regulations, inflation and monetary fluctuations as well as
fluctuations in interest rates, both on a national and international basis.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Fluctuations in interest rates, foreign currency exchange rates and commodity
prices do not significantly affect the Company's financial position and results
of operations. The Company's revolving credit facility bears an interest rate
based on 30-day dealer placed commercial paper rate, plus a formula amount based
on the Company's fixed charge ratio, which resulted in 7.45% at September 30,
2005.
15
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures
The Company established a Disclosure Committee chaired by the
Company's Chief Financial Officer and comprised of managers
representing the Company's major areas, including financial
reporting and control, sales, operations and information
technology. This Committee carried out an evaluation of the
effectiveness and operation of the Company's disclosure controls
and procedures, and established ongoing procedures to monitor and
evaluate these controls and procedures in the future. Based upon
that evaluation, within the 90 days prior to the date of this
report, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures
are effective in alerting them on a timely basis to material
information relating to the Company (including its consolidated
subsidiaries) required to be included in the Company's periodic
SEC filings.
(b) Changes in internal controls
There were no changes in the Company's internal controls over
financial reporting identified in connection with the Item 4 (a)
evaluation that occurred during the last fiscal quarter that has
materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial reporting.
16
PART II - OTHER INFORMATION
Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
2.1 Agreement and Plan of Merger of the Company (Incorporated by
reference to the Company's Proxy Statement dated September 27,
2001, filed with the Commission).
2.2 Asset Purchase Agreement made as of January 11, 2005, by and
among Showtime Enterprises, Inc., Showtime Enterprises West,
Inc., and Sparks Exhibits & Environments Corp. (Incorporated
by reference to Exhibit 2.2 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2004, filed with the
Commission).
2.3 Order entered March 4, 2005 in the United States Bankruptcy
Court for the District of New Jersey in Showtime Enterprises,
Inc. and Showtime Enterprises West, Inc. (Case Nos. 05-11089
and 05-11090). (Incorporated by reference to Exhibit 2.3 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 2004, filed with the Commission).
3.1 Articles of Incorporation of the Company (Incorporated by
reference to the Company's Proxy Statement dated September 27,
2001, filed with the Commission).
3.2 Amended and Restated By-laws of the Company (Incorporated by
reference to Exhibit 3(ii)(a) of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2002,
filed with the Commission).
4.1 Warrant issued to Argosy Investment Partners II, L.P. to
acquire shares of Marlton common stock at an exercise price of
$0.98 per share (Incorporated by reference to Exhibit 4.1 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 2004, filed with the Commission).
4.2 Warrant issued to Argosy Investment Partners II, L.P. to
acquire shares of Marlton common stock at an exercise price of
$1.48 per share. (Incorporated by reference to Exhibit 4.2 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 2004, filed with the Commission).
4.3 Warrant issued to Alliance Mezzanine Investors, L.P. to
acquire shares of Marlton common stock at an exercise price of
$0.98 per share. (Incorporated by reference to Exhibit 4.3 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 2004, filed with the Commission).
17
4.4 Warrant issued to Alliance Mezzanine Investors, L.P. to
acquire shares of Marlton common stock at an exercise price of
$1.48 per share. (Incorporated by reference to Exhibit 4.4 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 2004, filed with the Commission).
10.1 Amended and Restated Employment Agreement dated November 20,
2001 between the Company and Robert B. Ginsburg (Incorporated
by reference to the Company's September 27, 2001 Proxy
Statement, filed with the Commission).*
10.2 Employment Agreement dated 11/20/01 between the Company and
Jeffrey K. Harrow (Incorporated by reference to the Company's
September 27, 2001 Proxy Statement, filed with the
Commission).*
10.3 Employment Agreement dated 11/20/01 between the Company and
Scott Tarte (Incorporated by reference to the Company's
September 27, 2001 Proxy Statement, filed with the
Commission).*
10.4 Form of Warrants issued by the Company to Jeffrey K. Harrow,
Scott Tarte, Robert B. Ginsburg and Alan I. Goldberg on
11/20/01 (Incorporated by reference to the Company's September
27, 2001 Proxy Statement, filed with the Commission). Schedule
of grants (Incorporated by reference to Exhibit 10(f) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2001, filed with the Commission).
10.5 Stockholders' Agreement dated 11/20/01 among Jeffrey K.
Harrow, Scott Tarte, Robert B. Ginsburg and the Company
(Incorporated by reference to the Company's September 27, 2001
Proxy Statement, filed with the Commission).*
10.6 Registration Rights Agreement dated 11/20/01 among Jeffrey K.
Harrow, Scott Tarte, Robert B. Ginsburg, Alan I. Goldberg and
the Company (Incorporated by reference to the Company's
September 27, 2001 Proxy Statement, filed with the
Commission).
10.7 Amended Agreement of Employment, dated December 11, 1992,
between the Company and Alan I. Goldberg. (Incorporated by
reference to Exhibit 10(g) to the Company's Annual Report on
Form 10-K for the year ended December 31, 2003, filed with the
Commission).*
10.8 Letter Agreement dated January 2, 1998 to Amended Employment
Agreement with Alan I. Goldberg (Incorporated by reference to
Exhibit 7(2) to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998, filed with the
Commission).*
18
10.9 Letter Agreement dated 11/20/01 to Amended Employment
Agreement with Alan I. Goldberg. (Incorporated by reference to
Exhibit 10(k) to the Company's Annual Report on Form 10-K for
the year ended December 31, 2001, filed with the Commission).*
10.10 Employment Agreement dated November 24, 1999 with Stephen P.
Rolf (Incorporated by reference to Exhibit 10(l) to the
Company Annual Report of Form 10-K for the year ended December
31, 1999, filed with the Commission).*
10.11 Option Agreement dated January 10, 2000 with Stephen P. Rolf
(Incorporated by reference to Exhibit 10(x) to the Company
Quarterly Report on Form 10-Q for the quarter ended September
30, 2000, filed with the Commission).*
10.12 Option Agreements with Outside Directors (Incorporated by
reference to Company Proxy Statement dated April 30, 1999,
filed with the Commission).*
10.13 Option Agreements dated August 7, 2000 with Outside Directors
(Incorporated by reference to Exhibit 10(x) to the Company
Quarterly Report on Form 10-Q for the quarter ended June 30,
2000, filed with the Commission).*
10.14 Option Agreements dated March 1, 2002 with Outside Directors
(Incorporated by reference to Exhibit 10(e) to the Company's
Annual Report on Form 10-K for the year ended December 31,
2001, filed with the Commission).*
10.15 2000 Equity Incentive Plan (Incorporated by reference to
Exhibit 10(n) to the Company's Annual Report on Form 10-K for
the year ended December 31, 2001, filed with the Commission).*
10.16 2001 Equity Incentive Plan (Incorporated by reference to
Exhibit 10(ee) to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001, filed with the
Commission).*
10.17 Lease for Premises located at 2828 Charter Road, Philadelphia,
PA dated May 14, 1999 (Incorporated by reference to Exhibit
10(f) to the Company Annual Report on Form 10-K for the year
ended December 31, 1999, filed with the Commission).
10.18 Amendment to Lease 2828 Charter Road, Philadelphia, PA dated
February 25, 2000 (Incorporated by reference to Exhibit 10(g)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, filed with the Commission).
19
10.19 Lease for Premises located at 8125 Troon Circle, Austell, GA
30001 (Incorporated by reference to Exhibit 10(s) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2003, filed with the Commission).
10.20 Exhibit removed.
10.21 Loan and Security Agreement dated as of February 6, 2004 with
General Electric Capital Corporation. (Incorporated by
reference to Exhibit 10(u)) to the Company's Annual Report on
Form 10-KK for the year ended December 31, 2003, filed with
the Commission).
10.22 Option Agreement dated June 3, 2002 with Robert B. Ginsburg
(Incorporated by reference to Exhibit 10(cc) to the Company`s
Quarterly Report on Form 10-Q for the quarter ended June 30,
2002, filed with the Commission).*
10.23 Option Agreement dated June 3, 2002 with Alan I. Goldberg
(Incorporated by reference to Exhibit 10(dd) to the Company`s
Quarterly Report on Form 10-Q for the quarter ended June 30,
2002, filed with the Commission).*
10.24 Option Agreement dated October 23, 2002 with Washburn
Oberwager (Incorporated by reference to Exhibit 10ee) to the
Company`s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002, filed with the Commission).*
10.25 Fourth Amendment to Lease Agreement dated September 11, 2003
for premises located at 8125 Troon Circle, Austell, GA 30001
(Incorporated by reference to Exhibit 10(cc) to the Company's
Quarterly Report on Form 10-Q for the quarter ended September
30, 2003, filed with the Commission).
10.26 Exhibit removed.
10.27 Exhibit removed
10.28 Lease Agreement, First and Second Amendments for Premises
located at Building J, 10232 Palm Drive, Santa Fe Springs, CA
90670 (Incorporated by reference to Exhibit 10(ff) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003, filed with the Commission).
10.29 Lease Agreement, First and Second Amendments for Premises
located at Building G, Heritage Springs Business Park, Santa
Fe Springs (Incorporated by reference to Exhibit 10(gg) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003, filed with the Commission).
10.30 Option Agreement dated May 13, 2004 with Stephen P. Rolf
(Incorporated by reference to Exhibit 10(c) to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2004, filed with the Commission).*
20
10.31 Fifth Amendment to Lease Agreement dated April 27, 2004 for
the Premises located at 8125 Troon Circle, Austell, GA
(Incorporated by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2004).
10.32 Lease dated November 17, 1998 by and between Sunset & Valley
Distribution Center Joint Venture (the "Joint Venture") and
Showtime Enterprises West, Inc. ("Showtime West"), as amended
by and together with, the first amendment thereto dated June
22, 1999, the second amendment thereto dated March 31, 2000,
by and between The Northwestern Mutual Life Insurance Company
("Northwestern"), Sunset and Valley View Partners ("Partners")
and Showtime West the third amendment thereto dated March 27,
2003 by and between Northwestern, Partners and Showtime West
and the fourth amendment thereto dated February 29, 2004 by
and between Northwestern, Partners and Showtime West.
(Incorporated by reference to the Company's Annual Report
dated December 31, 2004, filed with the Commission).
10.33 Employment Agreement dated March 15, 2005 by and between
Sparks Exhibits & Environments Corp. and David S. Sudjian*
(Incorporated by reference to Exhibit 10.33 to the Company's
Annual Report on Form 10-K for the year ended December 31,
2004, filed with the Commission).
10.34 Employment Agreement dated March 15, 2005 by and between
Sparks Exhibits & Environments Corp. and Harold Jensen.*
(Incorporated by reference to Exhibit 10.34 to the Company's
Annual Report on Form 10-K for the year ended December 31,
2004, filed with the Commission).
10.35 Royalty Agreement dated March 15, 2005 by and among Sparks
Exhibits & Environments Corp., Argosy Investment Partners II,
LP and Alliance Mezzanine Investors, L. P. (Incorporated by
reference to Exhibit 10.35 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2004, filed with the
Commission).
10.36 Stock Option Agreement dated as of March 15, 2005 by Marlton
Technologies, Inc and David S. Sudjian with respect to the
grant of 500,000 shares of Marlton common stock .*
(Incorporated by reference to Exhibit 10.36 to the Company's
Annual Report on Form 10-K for the year ended December 31,
2004, filed with the Commission).
10.37 Stock Option Agreement dated as of March 15, 2005 by Marlton
Technologies, Inc and Harold Jensen with respect to the grant
of 500,000 shares of Marlton common stock.* ((Incorporated by
reference to Exhibit 10.37 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2004, filed with the
Commission).
21
10.38 Letter agreement dated March 15, 2005 by and among Sparks
Exhibits & Environments Corp., David S. Sudjian and Harold
Jensen.* (Incorporated by reference to Exhibit 10.38 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2004, filed with the Commission).
10.39 First Amendment to Loan and Security Agreement with General
Electric Capital Corporation (Incorporated by reference to
Exhibit 10(f) to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2004, filed with the
Commission).
10.40 Consent and Second Amendment to Loan and Security Agreement
dated as of March 15, 2005 by and among General Electric
Capital Corporation, Sparks Exhibits & Environments Corp.,
Sparks Exhibits & Environments, Ltd., Sparks Exhibits &
Environments, Inc. and DMS Store Fixtures LLC. (Incorporated
by reference to Exhibit 10.40 to the Company's Annual Report
on Form 10-K for the year ended December 31, 2004, filed with
the Commission).
10.41 Term Note issued by Sparks Exhibits & Environments Corp. in
favor of General Electric Capital Corporation. (Incorporated
by reference to Exhibit 10.41 to the Company's Annual Report
on Form 10-K for the year ended December 31, 2004, filed with
the Commission).
10.42 Note dated April 23, 2002 in favor of the United States
Business Administration (the "SBA Note"). (Incorporated by
reference to Exhibit 10.42 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2004, filed with the
Commission).
10.43 Promissory Note made by Sparks Exhibits & Environments Corp.
in face amount of $257,144 in favor of Argosy Investment
Partners II, L.P. (Incorporated by reference to Exhibit 10.43
to the Company's Annual Report on Form 10-K for the year ended
December 31, 2004, filed with the Commission).
10.44 Promissory Note made by Sparks Exhibits & Environments Corp.
in face amount of $142,856 in favor of Alliance Mezzanine
Investors, L.P. (Incorporated by reference to Exhibit 10.44 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 2004, filed with the Commission).
10.45 Agreement for Assumption of Indebtedness dated December 14,
2004 by and among the U.S. Small Business Administration,
Showtime Enterprises, Inc. and Sparks Exhibits & Environments
Corp. (Incorporated by reference to Exhibit 10.45 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2004, filed with the Commission).
22
10.46 Unconditional Guarantee issued by Marlton Technologies, Inc.
in favor of the U.S. Small Business Administration with
respect to the SBA Note . (Incorporated by reference to
Exhibit 10.46 to the Company's Annual Report on Form 10-K for
the year ended December 31, 2004, filed with the Commission).
10.47 Option Agreement with Jeffrey Harrow dated December 20, 2004 *
(Incorporated by reference to Exhibit 10.47 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
2005, filed with the Commission).
10.48 Option Agreement with Scott Tarte, dated December 20, 2004 *
(Incorporated by reference to Exhibit 10.48 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
2005, filed with the Commission).
10.49 Agreement dated March 15, 2005 by and between Sparks Exhibits
& Environments Corp., Argosy Investment Partners II, L.P. and
Alliance Mezzanine Investors, L.P. (Incorporated by reference
to Exhibit 10.49 to the Company's Annual Report on Form 10-K
for the year ended December 31, 2004, filed with the
Commission).
10.50 Amendment to Employment Agreement with Scott Tarte dated May
12, 2005 * (Incorporated by reference to Exhibit 10.50 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2005, filed with the Commission).
10.51 Amendment to Employment Agreement with Jeffrey Harrow dated
May 12, 2005* (Incorporated by reference to Exhibit 10.51 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2005, filed with the Commission).
10.52 Amendment to Employment Agreement with Robert B. Ginsburg
dated May 12, 2005* (Incorporated by reference to Exhibit
10.52 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2005, filed with the Commission).
10.53 Amendment to Employment Agreement with Alan I. Goldberg dated
May 12, 2005* (Incorporated by reference to Exhibit 10.53 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2005, filed with the Commission).5
10.54 Amendment to Employment Agreement with Stephen P. Rolf dated
May 12, 2005* (Incorporated by reference to Exhibit 10.54 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2005, filed with the Commission).
23
10.55 Lease for premises located at 2001 Woodhaven Road,
Philadelphia, Pennsylvania 19154, dated October 12, 2005.
10.56 Bank of America consent letter with respect to proposed
reverse stock split
14 Code of Ethics (Incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31,
2003, filed with the Commission)
21 Subsidiaries of the Company (Incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2003, filed with the Commission)
31.1 Rule 13a - 14(a) / 15(d) - 14 (a) Certification, Chief
Executive Officer
31.2 Rule 13a - 14(a) / 15(d) - 14 (a) Certification, Chief
Financial Officer
32 Section 1350 Certifications
* Management contract or compensatory plan or arrangement
SIGNATURES
In accordance with 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.
MARLTON TECHNOLOGIES, INC.
By: /s/ Robert B. Ginsburg
---------------------------
Robert B. Ginsburg
President and Chief Executive Officer
By: /s/ Stephen P. Rolf
-----------------------
Stephen P. Rolf
Chief Financial Officer
Dated: October 31, 2005
24