Brake Headquarters USA Inc – ‘POS AM’ on 9/22/98

As of:  Tuesday, 9/22/98   ·   Accession #:  950116-98-1903   ·   File #:  333-58343

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: POS AM      Post Effective Amendment No. 1 to Form S-3            60    274K 
 2: EX-5.1      Opinion re: Legality                                   1      7K 
 3: EX-23.2     Consent of Experts or Counsel                          1      5K 
 4: EX-23.3     Consent of Experts or Counsel                          1      5K 

POS AM   —   Post Effective Amendment No. 1 to Form S-3
Document Table of Contents

POS AM
1st Page of 60
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
  As filed with the Securities and Exchange Commission on September 22, 1998
                                                  Registration No. 333-58343
==============================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, D.C. 20549  

POST EFFECTIVE
AMENDMENT NO. 1 TO  
FORM S-3  
REGISTRATION STATEMENT  
Under 
THE SECURITIES ACT OF 1933  

--------------------------------- 
BRAKE HEADQUARTERS U.S.A., INC. 
(Name of Registrant as Specified in Its Charter)  
--------------------------------- 

Delaware                                 22-3048534 
-----------------------                       ----------------    
(State or Jurisdiction                        (I.R.S. Employer    
of Incorporation or                          Identification   
Organization)                                 Number)   

33-16 Woodside Avenue 
Long Island City, New York 11101  
(718) 779-4800  
(Address, including zip code, and telephone number, 
including area code, of registrant's principal executive offices) 
----------------------------------  
Joseph Ende, President  
Brake Headquarters U.S.A., Inc. 
33-16 Woodside Avenue 
Long Island City, New York 11101  
(718) 779-4800  
(Name, address, including zip code, and telephone number, 
including area code, of agent for service)  

Copies to:  
Elliot H. Lutzker, Esq. 
Snow Becker Krauss P.C. 
605 Third Avenue  
New York, New York 10158  
Telephone: (212) 687-3860 
Fax: (212) 949-7052 

     Approximate Date of Commencement of Proposed Sale to the Public: As
soon as practicable after the Registration Statement becomes effective.         

If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the   
following box [ ]                                                               

  If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the         
Securities Act of 1933, other than securities offered only in connection with   
dividend or interest reinvestment plans, check the following box. [X]           

   If this Form is a post-effective amendment filed pursuant to Rule
462(b) under the Securities Act, check the following box and list the           
Securities Act registration statement number of the earlier effective           
registration statement for the same offering. [ ]                               

   If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the           
Securities Act registration statement number of the earlier effective           
registration statement for the same offering. [ ]                               

       If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]                                        

POS AM
2nd Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 2nd
--------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE 
--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]

    Title of Each Class of                             Proposed Maximum    Proposed Maximum                  
 Securities to be Registered        Amount to be        Offering Price    Aggregate Offering    Amount of    
         Fee                        Registered           Per Share(1)         Price(1)        Registration   
 ---------------------------    ---------------------  ----------------  ------------------   -------------  
                                                                                                             

Common Stock, $.001 par value     604,196 shs. (2)(3)     $2.60(4)          $ 1,570,910         $  463.42    
Common Stock, $.001 par value      22,727 shs. (5)        $2.00(6)          $    45,454         $   13.41    
Common Stock, $.001 par value      60,000 shs. (5)        $2.00(7)          $   120,000         $   35.40    
Common Stock, $.001 par value      15,000 shs. (8)        $3.90(8)          $    58,500         $   17.26    
Common Stock, $.001 par value   4,423,077 shs. (9)        $0.40(10)         $ 1,769,231         $  521.92    
                               --------------                               -----------         ---------    
           TOTAL:               5,125,000 shs.                              $ 3,564,095         $1,051.41(11)
                               ===============                              ===========         =========    

------------                                                                    
(1) Estimated solely for the purpose of calculating the registration fee        
pursuant to Rule 457 under the Securities Act of 1933, as amended (the  
"Securities Act").                                                      

ii

POS AM
3rd Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 3rd
(2)  Issuable upon conversion (at a current rate of $2.60 per share) of         
  $1,500,000 of 8% Subordinated Convertible Debentures, sold in April 1998
("1998 Debentures") and interest payable thereon converted into an    
additional 27,273 shares of Common Stock. See Note (9) below.         

(3)  Pursuant to Rule 416 under the Securities Act, this Registration           
  Statement also covers such indeterminable number of additional shares as
may become issuable as a result of anti-dilution adjustments in       
accordance with the terms of the Warrants and the 1998 Debentures.    

 iii

POS AM
4th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 4th
(4)  Pursuant to Rule 457(c) under the Securities Act, the registration fee     
has been based upon the $2.60 per share conversion price for the 1998 
 Debentures when the shares were registered on May 8, 1998. See Note (7)
below.                                                                

(5)  These shares are issuable for interest due on the 1998 Debentures described
in note (2) above.                                                    

(6)  Pursuant to Rule 457(c) under the Securities Act, the registration fee has 
  been based upon the $2.00 per share closing price of the Common Stock on
June 26, 1998, as reported by NASDAQ.                                 

(7)  Pursuant to Rule 457(c) under the Securities Act, the registration fee has 
been based upon the $2.00 per share conversion price for the 1998     
Debentures when the shares were registered on July 16, 1998.          

(8)  Issuable upon exercise of Warrants issued in connection with the sale of   
the 1998 Debentures referred to in note (2) above at $3.90 per share. 

(9)  Additional shares issuable upon conversion of the $1,500,000 of 1998       
Debentures referred to in Note (2) above at a conversion rate of $0.40
rather than $2.60 per share, when first registered on May 8, 1998.    

(10) Pursuant to Rule 457(c) under the Securities Act, the registration fee has 
been based upon the $.40 per share conversion price for the 1998      
Debentures.                                                           

(11) Of the total Registration Fee $494.09 was previously paid by the Company   
pursuant to Amendment No. 1 to the Registration Statement on Form S-3,
    Registration No. 333-44615, filed on May 8, 1998; $35.40 was paid with the
 Amendment on July 16, 1998 and the remaining $521.92 is being paid with
this Amendment.                                                       

----------

Pursuant to Rule 429 under the Act, this Registration Statement relates to the  
Registration Statement on Form-S-3 (File No. 333-44615), as amended.            

iv

POS AM
5th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 5th
The Information contained herein is subject to completion or amendment. A       
registration statement relating to these securities has been filed with the     
Securities and Exchange Commission. These securities may not be sold nor may    
offers to buy be accepted prior to the time the registration statement becomes  
effective. This prospectus shall not constitute an offer to sell or the         
solicitation of an offer to buy nor shall there be any sale of these            
securities in any State in which such offer, solicitation or sale would be      
unlawful prior to registration or qualification under the securities laws of    
any such State.                                                                 

PROSPECTUS                                                                      
----------                                                                      

SUBJECT TO COMPLETION, DATED AUGUST 7, 1998 
701,923 Shares of Common Stock    

BRAKE HEADQUARTERS U.S.A., INC. 

      This Prospectus relates to up to 701,923 shares of Common Stock, par
value $.001 per share ("Common" Stock), of Brake Headquarters U.S.A., Inc. (the 
"Company") that may be sold by certain selling stockholders named herein, and/or
their transferees and assignees consisting of: (i) up to 576,923 shares with up 
to an additional 4,423,077 shares registered as part of this Registration       
Statement to cover the actual number of shares of Common Stock issuable upon the
conversion of up to $1,500,000 aggregate principal amount of 8% Convertible     
Subordinated Debentures (the "1998 Debentures") sold in April 1998 and an       
additional 110,000 shares issuable upon conversion of all interest due thereon  
as set forth in the following paragraph; and (ii) up to 15,000 shares issuable  
upon the exercise of Warrants issued to the holders of the 1998 Debentures (the 
"1998 Debenture Warrants").                                                     

         This Prospectus covers all of the shares of Common Stock that have been
issued or are issuable upon the conversion of the 1998 Debentures and the 1998  
Debenture Warrants (collectively, the "Convertible Securities"). There are      
limitations on the number of shares of Common Stock that can be issued upon     
conversion at any particular time. To the extent such a conversion would result 
in a holder beneficially owning more than 9.99% of the then outstanding Common  
Stock the holder would be limited in the number of shares of Common Stock which 
could be converted. See "Recent Developments"; "Selling Securityholders"; and   
"Plan of Distribution."                                                         

The date of this Prospectus is August __, 1998

 1

POS AM
6th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 6th
  The Common Stock may be offered from time to time by the selling
stockholders and selling securityholders named herein and/or their transferees  
and assignees (collectively, the "Selling Securityholders") through ordinary    
brokerage transactions in the over-the-counter market, in negotiated            
transactions or otherwise, at market prices prevailing at the time of sale or   
at negotiated prices. The Company will not receive any of the proceeds from     
the sale of Common Stock by the Selling Securityholders. See "Selling           
Securityholders" and "Plan of Distribution."                                    

      Management of the Company holds an aggregate of approximately 47% of
the Company's issued and outstanding Common Stock. These persons will be able   
to control the outcome of all matters requiring a vote, including elections     
for the Board of Directors for which the Company's President and Principal      
Stockholder currently has the exclusive right to elect a majority of the Board  
of Directors.                                                                   

         The Common Stock is traded in the over-the-counter market and is quoted
on the NASDAQ SmallCap Market ("NASDAQ") under the symbol BHQU. On August __,   
1998, the closing sale price per share of the Common Stock as reported by       
NASDAQ was $.__.                                                                
--------------------

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A 
HIGH DEGREE OF RISK AND SHOULD NOT BE PURCHASED BY  
INVESTORS WHO CANNOT AFFORD THE LOSS OF THEIR 
ENTIRE INVESTMENT. SEE "RISK FACTORS" 
ON PAGE 8.  
--------------------------  

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY 
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE 
SECURITIES COMMISSION NOR HAS THE SECURITIES AND  
EXCHANGE COMMISSION OR ANY STATE SECURITIES 
COMMISSION PASSED UPON THE ACCURACY OR  
ADEQUACY OF THIS PROSPECTUS. ANY  
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 

 2

POS AM
7th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 7th
  The registration of the securities being offered hereby is being
effected pursuant to registration rights granted by the Company to the Selling  
Securityholders. In accordance with the terms of the registration rights        
granted to the Selling Securityholders, the Company will bear the expenses of   
such registration, estimated to be $10,000, except that the Selling             
Securityholders will bear the cost of all brokerage commissions and discounts   
incurred in connection with the sale of this securities being offered hereby    
and their respective legal expenses.                                            

     Any brokers, dealers or agents that participate in the distribution
of the securities offered hereby may be deemed to be underwriters under         
Section 2(11) of the Securities Act of 1933, as amended, (the "Securities       
Act") and any commissions or discounts received by them on the resale of such   
Securities may be deemed to be underwriting compensation under the Securities   
Act. The sale of Securities by the Selling Securityholders is subject to the    
prospectus delivery and other requirements of the Securities Act. See "Plan of  
Distribution."                                                                  

 AVAILABLE INFORMATION

 The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in        
accordance therewith, files reports, proxy statements, information statement    
and other information with the Securities and Exchange Commission (the          
"Commission"). The Company has filed a Registration Statement on Form S-3       
under the Securities Act with the Commission in Washington, D.C. with respect   
to the shares of Common Stock offered hereby. This Prospectus, which is part    
of the Registration Statement, does not contain all of the information set      
forth in the Registration Statement and the exhibits thereto. For further       
information with respect to the Company, reference is made to the Registration  
Statement and such exhibits as well as the reports, proxy and information       
statements and other information filed under the Exchange Act, which can be     
inspected and copied at the Public Reference section of the Commission at Room  
1024, Judiciary Plaza, 450 5th Street, N.W., Washington, D.C. 20549 and at the  
Commission's regional offices at 500 West Madison Street, Suite 1400, Chicago,  
Illinois 60661 and Suite 1300, 7 World Trade Center, New York, New York 10048.  
Copies of such material can also be obtained from the Public Reference Section  
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at         
prescribed rates. The Commission maintains a web site (http://www.sec.gov)      
that contains reports, proxy and information statements and other information   
regarding registrants that file electronically.                                 

 INFORMATION INCORPORATED BY REFERENCE

      The following documents filed by the Company with the Securities and
Exchange Commission are incorporated herein by reference:                       

         (a) Annual Report on Form 10-K for the year ended December 31, 1997, as
amended on June 30, 1998 ("Form 10-K");                                         

        (b) Quarterly Report on Form 10-Q for the Quarter ended March 31, 1998
("Form 10-Q") as amended on June 19, 1998;                                      

(c) Information Statement dated April 3, 1998;                

    (d) Current Report on Form 8-K for November 17, 1997 as amended on
February 2, 1998, May 22, 1998 and July 15, 1998; and                           

(e) The description of the Company's Common Stock and Warrants
contained in its Registration Statement on Form S-1 (Commission File No.        
333-13533) declared effective on November 12, 1996.                             

3 

POS AM
8th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 8th
       All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after date of this Prospectus and prior to the  
termination of the offering of the Securities offered hereby shall be deemed    
to be incorporated by reference herein and to be a part hereof on the date of   
filing of such documents. Any statement contained in a document incorporated    
or deemed to be incorporated by reference herein shall be deemed to be          
modified or superseded for purposes of this prospectus to the extent that a     
statement contained herein or in any other subsequently filed document which    
also is or is deemed to be incorporated by reference herein modifies or         
supersedes such statement. Any such statement so modified or superseded shall   
not be deemed, except as so modified or superseded, to constitute a part of     
this prospectus.                                                                

  The Company will provide without charge to each person to whom a
Prospectus is delivered upon written or oral request of such person, a copy of  
any documents incorporated herein by reference (other than exhibits to such     
documents unless such exhibits are specifically incorporated by reference into  
the documents that this Prospectus incorporates). Requests should be directed   
to Mr. Marc Ruskin, Chief Financial Officer, Brake Headquarters U.S.A., Inc.,   
33-16 Woodside Avenue, Long Island City, New York 11101; telephone:             
(718)779-4800.                                                                  

PROSPECTUS SUMMARY

    The following summary is qualified in its entirety by reference to
the more detailed information and financial statements, including the notes     
thereto, appearing elsewhere in this Prospectus. Each prospective investor is   
urged to read this Prospectus in its entirety. This Prospectus contains, in     
addition to historical information, forward-looking statements that involve a   
number of risks and uncertainties. The Company's actual results may differ      
materially from the results discussed in the forward-looking statements.        
Factors that might cause or contribute to such differences include, but are     
not limited to, intense competition; the Company's dependence on the            
automotive industry, which is cyclical; historical decreases in internal        
growth rates; the Company's ability to manage growth; and other risks           
discussed under "Risk Factors," as well as those discussed elsewhere herein     
and in reports filed by the Company with the Commission from time to time.      

 4

POS AM
9th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 9th
 The Company

    Brake Headquarters U.S.A., Inc. (the "Company")is a publicly-owned
holding company, substantially all of its current business operations are       
conducted through two of its wholly-owned subsidiaries, Sanyo Automotive        
Parts, Ltd. ("Sanyo Automotive") and WAWD, Inc. ("WAWD"). Sanyo Automotive is   
a specialized distributor in the automotive aftermarket of a complete line of   
brake system products including brake drums and rotors, brake master            
cylinders, wheel cylinders, brake pads, brake shoes and brake hoses for         
virtually all makes and models of domestic and foreign passenger cars and       
light trucks from model year 1976 to the present. The Company also sells a      
variety of other "undercar" parts, including ride control products,             
steering/suspension parts, drive shafts, shock absorbers and clutches. The      
brake line products are sold primarily under the registered trademarks "Brake   
Headquarters, U.S.A., "Brake Headquarters" and other private labels.            

WAWD is a direct importer of automotive parts. WAWD's primary 
customers and channel of distribution of the products sold are to jobbers and   
high-line European and Asian installer markets. Products are normally sold in   
the manufacturers' packaging and very few parts are sold under the WAWD name.   
WAWD maintains coverage for over 30,000 stock keeping units ("SKU's"). The      
products carried include such product lines as filters, clutches, brakes,       
water pumps, ignition, wire sets, hoses, belts, exhaust, air conditioning,      
radiators, pistons, gaskets, shock absorbers, cables, headlights, brakes,       
hydraulics, electrical and rotating electrical parts, and steering and          
suspension parts. The product lines sold by WAWD are primarily replacement      
parts for the import car market.                                                

       Other operating subsidiaries include ABS Brakes, Inc., which operates
a plant for the assembly of domestic brake pads; and Quality First Brakes,      
Inc., which operates a wholesale warehouse in Long Island, New York. Sales are  
primarily made to installers within the area, and sell a similar product line   
to those of Sanyo Automotive.                                                   

   The Company was incorporated in the State of Delaware on July 13,
1988 as a blind pool which did not conduct business operations until July       
1992, when it acquired in a reverse acquisition (the "Reverse Merger"), all of  
the outstanding capital stock of Sanyo Automotive, a New York corporation       
formed in 1976. In connection with the Reverse Merger, the Company changed its  
name to Sanyo Industries, Inc. and on August 8, 1995, Sanyo Industries, Inc.,   
changed its name to Brake Headquarters U.S.A., Inc. In November 1997, the       
Company acquired by way of a merger, substantially all of the assets and        
certain liabilities of WAWD.                                                    

       The Company's executive offices are located at 33-16 Woodside Avenue,
Long Island City, New York 11101; and its telephone number is (718) 779-4800.   

 5

POS AM
10th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 10th
The Offering

Common Stock Offered...................   701,923 shares of Common Stock        

Common Stock outstanding (1)...........   4,563,321 shares                      

Common Stock to be Outstanding                                                  
Upon Exercise of Outstanding                                                    
Warrants and Convertible                                                        
Securities.............................   6,542,810 shares(2)                   

Use of Proceeds........................   The Company may receive a range of    
                                     net cash proceeds from zero up to
                                      approximately $48,500 from time to
                                       time upon exercise of the Warrants.
                                   The amount of proceeds actually
                                       received by the Company will depend
                                        upon the number of Warrants actually
                                       exercised. The Company will use the
                                        net proceeds for working capital and
                                   general corporate purposes. The
                                Company will not receive any
                                       proceeds from sales of Common Stock
                                       by the Selling Securityholders. See
                      "Use of Proceeds."

Risk Factors...........................   The securities offered hereby are     
                                  speculative and involve a high
                                    degree of risk and should not be
                                     purchased by investors who cannot
                                   afford the loss of their entire
                                    investments. See "Risk Factors."

NASDAQ Symbol                                                                   

Common Stock...........................   BHQU                                  

----------                                                                      

(1)  Based on shares outstanding on June 12, 1998, but does not include any     
shares issuable under footnote (2) below.                             

(2)  Gives effect to the issuance of an aggregate of 1,979,489 shares (subject  
  to adjustment) of Common Stock consisting of (i) 566,000 shares reserved
for issuance upon exercise of redeemable Class A Common Stock Purchase
Warrants (the "Class A Warrants"); (ii) 264,000 shares (subject to    
    adjustment) reserved for issuance upon conversion and/or redemption of the
$600,000 aggregate principal amount of the Company's 8% Convertible   
   Subordinated Promissory Notes due November 7, 1998, as amended (the "1997
Notes"); (iii) an aggregate of 362,566 shares (subject to adjustment) 
    reserved for issuance upon conversion with interest and/or upon redemption
of the $1,000,000 aggregate principal amount of the Company's 5%      
Convertible Subordinated Debentures due November 7, 1998 (the "1997   
 Debentures"); (iv) 576,923 shares (subject to adjustment, with up to an
additional 4,423,077 shares registered as part of this Registration   
Statement to cover the actual number of shares issued upon conversion)
reserved for issuance upon conversion of the 1998 Debentures issued on
   April 29, 1998, and an additional 110,000 shares issuable upon conversion
  of interest due thereon; (v) up to 15,000 shares (subject to adjustment)
   reserved for issuance upon exercise of the 1998 Debenture Warrants issued
    on April 29, 1998; (vi) 45,000 shares (subject to adjustment) reserved for
  issuance upon the exercise of a Warrant issued to a lender in connection
with a loan transaction ("Creditor's Warrant"); (vii) 10,000 shares   
     (subject to adjustment) reserved for issuance upon exercise of the Warrants
until November 7, 2002 ("Investor Warrants"); and (viii) 30,000 shares
     reserved for Walsh Manning Securities, LLC. Does not include 100,000 shares
  reserved for issuance under the Employee Stock Bonus Plan; 10,000 shares
    reserved for issuance upon conversion of the Company's outstanding Class B
Preferred Stock; 1,248,000 shares underlying options granted and      
   outstanding under the Company's 1994 Stock Option Plan, 1995 Stock Option
Plan, or otherwise (collectively, the "Option Plans"). See "Selling   
Stockholders," "Recent Developments" and "Plan of Distribution."      

 6

POS AM
11th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 11th
SUMMARY FINANCIAL DATA  

                                                        [Enlarge/Download Table]


Statement of                                                                                                    Three Months Ended  
Operations Data:                                             Year Ended December 31,                                  March 31,     
------------------------------------------------------------------------------------------------------------  --------------------- 
                                      1997             1996             1995          1994            1993       1998       1997    
                                      ----             ----             ----          ----            ----       ----       ----    
                                                                                                                                    
Net sales......................  $30,181,965       $32,599,096    $30,463,730     $25,094,473   $17,717,023  $16,388,509 $7,531,420 

Income (loss) from operations..     (682,554)          240,85l        569,690      (1,041,037)(1)    70,009      142,036    141,476 

Interest expense...............     (991,962)         (875,305)      (774,762)       (520,602)     (314,796)    (448,645)  (202,083)

Net income (loss)..............     (949,330)         (466,454)      (179,072)     (1,968,909)(1)    41,187     (182,989)    33,239 

Net income (loss) per basic                                                                                                         
  and diluted common share (2). $       (.22)      $      (.13)  $       (.10)    $      (.92)   $      .00  $      (.04) $      .01

Balance Sheet Data:                               As of December 31,                             As of March 31, 1998               
-------------------------------------------------------------------------------------------  --------------------------             

                          1997          1996         1995        1994          1993           Actual      As Adjusted(3)            
                          ----          ----         ----        ----          ----           ------      --------------            

Working capital        $23,737,661  $ 9,334,035   $3,237,259   $ 3,706,239   $ 1,823,459    $22,836,408   $24,254,908               

Total assets            38,180,367   21,023,644   15,496,294    11,937,143    10,189,885     37,081,667    38,500,167               

Long-term debt          16,239,285    5,665,870      630,494       216,469       133,927     15,590,397    16,960,397               

Total                                                                                                                               
stockholders'                                                                                                                       
equity                   6,449,166    5,506,395    3,855,804      4,124,961    2,176,102      6,266,177     6,314,677               

----------                                                                      
1)       After a non-cash compensatory charge of $2,314,000 resulting from the  
  release of escrow shares, the exercisability of warrants and the
    conversion of preferred stock upon the Company's attainment of the
    specified 1994 income level under the July 1992 Reverse Merger and
    certain cumulative levels for the three year period ended December
31, 1994.                                                     

(2)      Net income (loss) per share is computed on the basis described in      
     Note 1 of Notes to Consolidated Financial Statements including, but
       not limited to, the adjustment for the $112,730 dividend on preferred
stock in 1995.                                                

(3)      Gives pro forma effect to the April 29, 1998 issuance of the 1998      
       Debentures and the Company's receipt of net proceeds of approximately
         $1,370,000. Also assumes the exercise of the Warrants and the Company's
      receipt of net proceeds of approximately $48,500 and the use of such
    proceeds for working capital purposes without the repayment of any
long-term debt. See "Use of Proceeds."                        

 7

POS AM
12th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 12th
 RECENT DEVELOPMENTS

 On April 29, 1998, the Company completed a private financing of
$1,500,000 principal amount of 8% subordinated convertible debentures due       
April 30, 2000 (the "1998 Debentures"). The two foreign investors (the          
"Purchasers") also received five-year warrants to purchase an aggregate of      
15,000 shares of Common Stock at $3.93 per share. The 1998 Debentures are       
convertible, commencing the earlier of 60 days from the date of Closing or the  
effective date of this Registration Statement covering the shares of Common     
Stock underlying the 1998 Debentures and the 1998 Debenture Warrants, at a      
conversion rate equal to the greater of (a) the lower of (i) 80% of the Market  
Price on the Conversion Date, or (ii) $3.76; or (b)the Floor Price of $2.00     
per share which is subject to adjustment in certain circumstances. The 1998     
Debentures are redeemable, with the consent of the Company's lender, at any     
time at 120% of their principal amount plus all accrued interest and are        
subject to mandatory redemption by the Company if the Market Price falls below  
the Floor Price.                                                                

       In connection with the above-described financing, the Purchasers also
agreed to purchase up to $4,000,000 of additional securities on or before April 
30, 2000 subject to certain contingencies. For all of the above reasons, the    
Company believed that this arms length negotiated transaction was the best      
alternative for the Company in raising money, although the shares are issuable  
at a discount to the market.                                                    

RISK FACTORS  

In evaluating an investment in the securities offered hereby, 
prospective investors should consider carefully, among other things, the        
following risk factors, as well as the other information contained in this      
Prospectus. This Prospectus contains, in addition to historical information,    
forward-looking statements that involve a number of risks and uncertainties.    
The Company's actual results may differ materially from the results discussed   
in the forward-looking statements. Factors that might cause or contribute to    
such differences include, but are not limited to, intense competition; the      
Company's dependence on the automotive industry, which is cyclical; historical  
decreases in internal growth rates; the Company's ability to manage growth;     
and other risks discussed below, as well as those discussed elsewhere herein    
and in reports filed by the Company with the Commission from time to time.      

       Lack of Historical Profitability. Potential investors should be aware
that the Company has not reported a full fiscal year of profitability since     
calendar 1993, and there can be no assurance that the Company will achieve      
profitability in the future or maintain consistent profitability. During 1997   
the Company experienced an overall decrease of 7.8% in gross sales levels. The  
Company experienced a 20.1% decrease in gross sales, exclusive of the effects   
of its acquisition of WAWD. In 1997, the Company incurred a net loss of         
$949,330, including an accounts receivable bad debt provision of $892,000. The  
Company's prospects must therefore be evaluated in light of the problems,       
expenses, delays and complications associated with operating, managing,         
integrating and attempting to achieve profitability based on expanded           
operations. See "Management's Discussion and Analysis of Financial Condition    
and Results of Operations" and the Consolidated Financial Statements.           

      Ability to Manage Growth. The Company acquired WAWD in November 1997
and intends to continue to expand its current level of operations. WAWD         
reported gross sales of approximately $44,515,000 and $45,097,000, for the      
years ended December 31, 1997 and 1996, respectively. The Company's rapid       
growth is expected to place significant demands on the Company's management,    
technical, financial and other resources. In addition, successful expansion of  
the Company's operations will depend on, among other things, its ability to     
attract, hire and retain skilled management and other personnel, secure         
adequate sources of products on commercially reasonable terms and successfully  

8 

POS AM
13th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 13th
manage growth, none of which can be assured. To manage growth effectively, the  
Company will need to improve operational, financial and management information  
systems, procedures and controls. There can be no assurance that the Company    
will be able to manage its future growth effectively, and failure to do so      
could have a material adverse effect on the Company's business, financial       
condition and/or operating results. See "Management's Discussion and Analysis   
of Financial Condition and Results of Operations."                              

     Integration of Acquisition. The Company has not been able to expand
internally because of its loss of a principal customer, Autozone, Inc.          
("Autozone"), which has not been fully replaced. Therefore, a key component of  
the Company's future success depends upon its ability to combine the            
operations of WAWD into a coherent vertically integrated company. There can be  
no assurance that the Company will be able to effectively integrate WAWD with   
its own operations, and failure to do so could have a material adverse effect   
on the Company's business, financial condition and/or operating results. See    
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations."                                                                    

Leverage. The Company incurred approximately $7,900,000 of    
indebtedness in connection with its acquisition of WAWD and its refinancing     
with its senior lender in November 1997 plus an additional $1,500,000 of 1998   
Debentures sold in April 1998. The Company remains leveraged and its present    
debt service requirements are approximately $130,000 per month, inclusive of    
the April 1998 Debenture financing at interest rates ranging from LIBOR plus    
2.25% to prime plus 1%. The effect of such leverage may negatively impact,      
without limitation, the ability of the Company (i) to obtain additional         
financing on favorable terms; (ii) to service existing debt; and (iii) to       
comply with financial and other covenants and operating restrictions imposed    
under the terms of its existing long-term indebtedness.                         

       The ability of the Company to satisfy such obligations will primarily
depend upon the future financial and operating performance of its operating     
subsidiaries and upon the Company's ability to renew or refinance bank          
borrowings and/or to raise additional equity capital. The Company's future      
performance is dependent upon financial, business and other economic factors    
affecting the Company and the automotive aftermarket industry in particular,    
many of which are beyond the control of the Company and its subsidiaries. See   
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations - Liquidity and Capital Resources."                                  

     Highly Competitive Industry. The automotive aftermarket industry in
general, and the brake parts market in particular, is highly competitive. The   
direct competitors to the Company's distribution activities include             
manufacturers consisting of Brake Parts, Inc.; Wagner Brakes, a subsidiary of   
Cooper Industries, Inc.; EIS Brake Plants Division of Standard Motor Products,  
Inc.; and the ITT Automotive Aftermarket Division of ITT/AIMCO. Many of the     
Company's competitors are larger and have substantially greater financial       
resources than the Company and may be able to sell merchandise at lower prices  
than the Company. In addition, manufacturers who compete with the Company are   
not dependent on relationships with suppliers as is the Company. The Company's  
direct competitors who are distributors include Universal Brake Parts and       
California Drum and Rotor.                                                      

9 

POS AM
14th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 14th
Dependence on Automotive Industry. The Company's business is  
dependent upon the automotive industry, which industry is cyclical and has      
historically experienced periodic downturns. These downturns are difficult to   
predict and have often had a material adverse effect on the undercar parts      
industry. Management believes, based on its experience, that it operates in a   
recession resistant segment of the automotive industry. This is because         
vehicle owners tend to repair automobiles rather than purchase new ones and     
drivers will not normally neglect brake repairs. Nevertheless, the Company's    
future performance may be adversely affected by automotive industry downturns.  

     Loss of Principal Customer, Decreases in Internal Growth Rates. The
Company's net sales increased by 42% in 1994, 21% in 1995, and 7% in 1996       
before a 7% decrease in 1997 (including $4,444,970 of sales by WAWD), as        
compared to the applicable prior year. During 1995 and 1996, net sales to       
Autozone, which become a customer in 1993, accounted for approximately 17% and  
28%, respectively, of the Company's net sales before terminating its            
relationship with the Company in the fourth quarter of 1996. There were no      
other 10% or greater customers in 1996 or in 1997 and WAWD did not have any     
10% or greater customers in 1996 or in 1997. The Company's loss of Autozone     
resulted in a decrease in sales of approximately $9.1 million in 1997. See      
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations."                                                                    

       Dependence on Suppliers. The Company depends upon close relationships
with its suppliers of automotive parts and equipment and its ability to         
purchase products at prices and on terms comparable to similarly situated       
companies. The Company's ability to purchase at comparable prices and terms     
was the result of the Company's large volume of purchases from these            
manufacturers. The Company does not maintain supply contracts with any of its   
suppliers, because it believes alternative sources exist for most of the        
products the Company distributes. The loss of any one supplier is not expected  
to have a material adverse effect on the Company. However, if a new supplier    
is not obtained in a timely manner and upon acceptable terms, then the          
Company's operations may be adversely affected.                                 

       Regulatory Considerations and Labor Relations. The Company is subject
to federal, state and local laws and regulations concerning workplace safety,   
zoning and other matters relating to its business. In addition, the Company's   
warehouse employees in New York and Illinois are subject to collective          
bargaining agreements. From time to time, the Company has been and may          
continue to be subject to disputes with its union, none of which has had to     
date a material adverse effect on the Company's operations. Although to date,   
the costs and expenses of complying with government regulations have not had a  
material effect on the Company, a material increase in the cost of such         
compliance could have a material adverse effect on the Company and its          
operations.                                                                     

Possible Need for Additional Financing. To date, the Company's
capital requirements have been significant. The Company anticipates, based on   
its currently proposed plans and assumptions relating to its operations, that   
cash flow from operations and currently available financing arrangements, will  
be sufficient to satisfy its anticipated cash requirements for the next 12      
months. In the event that the Company's plans or assumptions change or prove    

10

POS AM
15th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 15th
to be inaccurate, there can be no assurance that additional financing will not  
be required. See "Use of Proceeds."                                             

The Company's recent acquisition of WAWD, as well as any other
acquisitions the Company may conclude, may also require additional financing    
and/or the issuance of additional equity securities which could result in       
further dilution to the public stockholders. The Company incurred indebtedness  
in connection with its acquisition of WAWD and will be subject to risks         
associated therewith, including the risks of interest rate fluctuations and     
insufficiency of cash flow to pay interest and principal. There can be no       
assurance that additional funds, whether in the form of debt or equity, will    
be available to the Company on commercially reasonable terms or at all.         

      Dependence on President. The Company's success is dependent upon the
efforts of Joseph Ende, the Company's President and Chief Executive Officer.    
In July 1995, the Company entered into a three-year employment agreement with   
Mr. Ende, which automatically renews for consecutive one-year periods unless    
terminated on 30 days' prior written notice. The loss of Mr. Ende's services    
would have a material adverse effect on the Company and its operations. The     
Company maintains a key man life insurance of $3 million on Mr. Ende's life,    
the proceeds of which are assigned as collateral security for indebtedness      
owing to a bank.                                                                

       Control by President and Principal Stockholder and Effects of Certain
Anti-Takeover Provisions. Joseph Ende beneficially owned approximately 47% of   
the Company's outstanding Common Stock as of April 6, 1998. In addition, as     
the sole stockholder of the Company's Series B Preferred Stock, which stock     
votes as a separate class, Mr. Ende has the exclusive right to elect a          
majority of the Company's Board of Directors until the earlier of the (a)       
March 31, 2001 redemption date and (b) the date the Company the reports at      
least $75 million in revenues for any year through December 31, 2000. THIS      
THRESHOLD HAS BEEN ARBITRARILY SELECTED BY THE COMPANY AND IS NOT TO BE         
CONSTRUED AS PROJECTIONS OF FUTURE COMPANY OPERATIONS. In the event of any      
liquidation, dissolution or winding-up, the holder of shares of the Preferred   
Stock will be entitled to an aggregate preference of $50,000, his basis in the  
stock; any remaining proceeds of liquidation will be distributed pro rata to    
holders of the Common Stock. The above-stated $75 million revenue level will    
be determined by the Company and reported on its audited financial statements.  
The Series B Preferred Stock could be utilized, under certain circumstances,    
as a method of discouraging, delaying or preventing a change in control of the  
Company.                                                                        

The Company is subject to the provisions of Section 203 of the
General Corporation Law of Delaware ("GCL"). In general, Section 203 prohibits  
a publicly held Delaware corporation from engaging in a "business combination"  
with an "interested stockholder" for a period of three years after the date of  
the transaction in which such person becomes an interested stockholder, unless  
(i) the business combination is approved in a prescribed manner or (ii) such    
interested stockholder owns at least 85% of the corporation's voting stock      
(excluding shares held by certain designated stockholders) upon completion of   
the transaction in which such stockholder becomes an interested stockholder.    

11

POS AM
16th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 16th
This effect of such GCL provision could be delayed and make business            
combinations more difficult even if the business combination could be           
beneficial to the interests of the stockholders. This provision of the GCL      
also could limit the price certain investors might be willing to pay in the     
future for shares of the Common Stock. Consequently, Mr. Ende has the ability   
to direct substantially all of the Company's affairs.                           

      Payment of Dividends. No cash dividends have been paid on the Common
Stock since the Company's inception. On April 30, 1995, the Company declared a  
cash dividend of $112,730 on 2,000,000 shares of Class A Preferred Stock of     
the Company held by its President, Joseph Ende, which amount represented        
accrued cumulative dividends. Of this amount, $50,000 was exchanged for 1,000   
shares of Series B preferred Stock of the Company and the balance was credited  
to the payment of certain advances made to Mr. Ende by the Company. No cash     
dividends are contemplated in the foreseeable future, and the Company           
presently intends to retain all of its earnings for the future operations and   
growth of its business. The Company's loan agreement with one of its lenders    
prohibits the payment of dividends on its outstanding capital stock.            

        Effect of Outstanding Warrants, Debentures and Options. As of July 10,
1998, the Company had outstanding warrants, debentures, and options to purchase 
up to an aggregate of approximately 3,859,489 shares of Common Stock, including 
the Class A Warrants to purchase up to 566,000 shares, the Investor Warrants to 
purchase up to 10,000 shares, the Creditor's Warrant to purchase up to 45,000   
shares, and the 1998 Debenture Warrants to purchase up to 15,000 shares, at     
exercise prices ranging from $2.00 to $9.88 (collectively, the "Warrants"); and 
options granted under the Option Plans to purchase up to 1,248,000 shares (plus 
an additional 552,000 shares available for grant under the Option Plans), at    
exercise prices ranging from $2.25 to $6.88. In addition, at such date, the     
Company had outstanding $3,150,000 aggregate principal amount of Convertible    
Securities currently convertible into an aggregate of up to approximately       
1,313,489 shares of Common Stock (with up to an additional 4,423,077 shares     
registered as part of this Registration Statement to cover the actual number of 
shares of Common Stock issued upon the conversion of the 1998 Debentures        
(subject to further adjustment)) and 1,000 shares of Series B Preferred Stock   
convertible into 10,000 shares of Common Stock. The terms upon which the Company
will be able to obtain additional equity financing may be adversely affected    
since the holders of outstanding Warrants, options and Convertible Securities   
can be expected to exercise or convert them at a time when, in all likelihood,  
the Company would be able to obtain any needed capital on terms more favorable  
to the Company than those provided by such securities. See "Risk Factors -      
Shares Eligible for Future Sale, Registration Rights" and "Recent Developments."

Shares Eligible for Future Sale; Registration Rights. Of the  
4,563,321 shares of Common Stock currently issued and outstanding,              
approximately 2,200,000 shares of Common Stock (excluding the shares offered    
hereby) are "restricted securities," as that term is defined under Rule 144     
promulgated under the Securities Act ("Rule 144"), and may not be sold in the   
absence of registration under the Securities Act, unless an exemption from      
registration is available, including the exemption provided by Rule 144.        

12

POS AM
17th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 17th
       The Company has granted certain registration rights to the holders of
an aggregate of approximately 2,647,566 shares (as well as the additional       
4,423,077 shares registered to cover the actual issuance pursuant to the        
conversion of the 1998 Debentures) of Common Stock (including those issuable    
upon the exercise of the Warrants and upon conversion of the Convertible        
Securities registered hereby, but excluding shares now saleable under Rule 144) 
and has agreed to maintain a current prospectus to permit the exercise of the   
Warrants and Convertible Securities. In particular, the Company has granted     
shelf-registration rights pursuant to a Registration Rights Agreement, dated    
November 7, 1997, with respect to the shares of Common Stock underlying the     
Debentures, any such shelf-registration to be continuously effective until the  
earlier of (i) all shares of the Registrable Securities, as defined in the      
Registration Rights Agreement have been sold or (ii) the second anniversary of  
the effective date of this Registration Statement. No prediction can be made as 
to the effect, if any, that sales of shares of Common Stock pursuant to such    
registration rights, or otherwise, or even the availability of such shares for  
sale will have on the market price of the Common Stock prevailing from time to  
time. The possibility that substantial amounts of Common Stock may be sold in   
the public market may adversely affect the prevailing market price for the      
Common Stock and could impair the Company's ability in the future to raise      
capital through the sale of its equity securities.                              

      During the respective terms of the Company's outstanding options and
Warrants, the holders thereof may be able to purchase Common Stock at prices    
substantislly below the then current market price of the Company's public       
market may adversely affect the prevailing market price for the Common Stock    
and could impair the Company's ability in the future to raise capital through   
the sale of its equity securities.                                              

      During the respective terms of the Company's outstanding options and
Warrants, the holders thereof may be able to purchase Common Stock at prices    
substantially below the then current market price of the Company's Common       
Stock with a resultant dilution in the interests of the existing shareholders.  
In addition, the exercise of outstanding options and Warrants and the           
subsequent public sales of Common Stock by holders of such securities pursuant  
to a registration statement effected at their demand, under Rule 144 or         
otherwise, could have an adverse effect upon the market for and price of the    
Company's securities. See "Plan of Distribution"; and "Management" and          
"Executive Compensation" in the Company's Form 10-K.                            

    Securities Market Factors. In recent years, the securities markets
have experienced a high level of volume volatility and market prices for many   
companies, and particularly small and emerging growth companies have been       
subject to wide fluctuations in response to quarterly variations in operating   
results. The securities of many of these companies which trade in the           
over-the-counter market, have experienced wide price fluctuations, which in     
many cases were unrelated to the operating performance of, or announcements     
concerning, the issuers of the affected stock. Factors such as the Company's    
operating results, the expansion of the Company's operations pursuant to a      
recent acquisition announcements by the Company or its competitors concerning   
proprietary innovations, new products, government regulations and developments  
or disputes relating to proprietary rights and factors affecting the            
automobile industry generally may have a significant impact on the market for   

13

POS AM
18th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 18th
the Company's securities. General market price declines or market volatility    
in the future could adversely affect the future price of the Company's          
securities. See "Price Range of Common Stock" in the Company's Form 10-K.       

      Possible Delisting of Securities from the Nasdaq Stock Market; Risks
Associated with Low-Priced Stock. The Company's Common Stock became listed on   
the Nasdaq SmallCap Market ("NASDAQ") on June 6, 1996. No assurance can be      
given that the shares of Common Stock will remain qualified for listing on      
NASDAQ. In order to continue to be listed on NASDAQ, the Company must maintain  
$2,000,000 in net assets, a $4,000,000 market value of the public float and a   
minimum bid price of $1.00. The failure to meet these maintenance criteria may  
result in the delisting of the Common Stock from NASDAQ, and the trading of     
the Common Stock, if any, would be conducted in the over-the-counter market     
through the OTC Electronic Bulletin Board. As a result of such delisting, an    
investor may find it more difficult to dispose of, or obtain accurate           
quotations as to the market value of, the Company's Common Stock.               

     Furthermore, if the Common Stock is not listed on NASDAQ or were to
become delisted from trading on NASDAQ and the trading price of the Common      
Stock remains below $5.00 per share, trading in the Common Stock would also be  
subject to the requirements of certain rules promulgated under the Exchange     
Act, which require additional disclosure by broker-dealers in connection with   
any trades involving a stock defined as a penny stock (generally, any           
non-NASDAQ equity security that has a market price of less than $5.00 per       
share, subject to certain exceptions). Such rules require the delivery, prior   
to any penny stock transaction, of a disclosure schedule explaining the penny   
stock market and the risks associated therewith, and impose various             
restrictions on sales practices by broker-dealers who sell penny stocks to      
persons other than established customers and accredited investors. For these    
types of transactions, the broker-dealer must make a special suitability        
determination for the purchaser and receive the purchaser's written consent to  
the transaction prior to sale. The additional burdens imposed upon              
broker-dealers by such requirements may discourage them from effecting          
transactions in the Common Stock, which could severely limit the liquidity of   
the Common Stock and the ability of the Selling Securityholders to sell the     
Common Stock in the secondary market. See "Plan of Distribution."               

   FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH HEREIN, THE
PURCHASE OF THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. ANY   
PERSON CONSIDERING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE     
AWARE OF THESE AND OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THE SECURITIES   
SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO ABSORB A LOSS OF THEIR    
INVESTMENT IN THE COMPANY AND HAVE NO NEED FOR A RETURN ON THEIR INVESTMENT.    

14

POS AM
19th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 19th
 USE OF PROCEEDS

    The Company will not receive the proceeds of sales of Common Stock
offered hereby. The Company may receive a range of aggregate gross cash         
proceeds from zero up to approximately $58,500 from the exercise of the         
outstanding 1998 Debenture Warrants. The amount of proceeds actually received   
by the Company will depend upon the number of Warrants actually exercised. The  
Company will use the net proceeds (after deduction of $10,000 of offering       
expenses) for working capital and general corporate purposes.                   

     Pending utilization of the net proceeds from the exercise prices of
the Warrants, the Company may use funds to temporarily reduce its credit        
facilities and otherwise invest in interest-bearing investments.                

15

POS AM
20th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 20th
 SELECTED FINANCIAL DATA

      The selected consolidated financial data as of and for the five-year
period ended December 31, 1997 have been derived from the Company's             
Consolidated Financial Statements. Such data should be read in conjunction      
with the Consolidated Financial Statements and related Notes for the            
three-year period ended December 31, 1997 and Management's Discussion and       
Analysis of Financial Condition and Results of Operations. The consolidated     
balance sheet data as of December 31, 1997 and 1996 and the consolidated        
statements of operations data for each of the three years in the period ended   
December 31, 1997, are audited and included in this Prospectus. The             
consolidated balance sheet data as of the December 31, 1995, 1994 and 1993 and  
the consolidated statements of operations data for the years ended December     
31, 1994 and 1993 are derived from audited consolidated statements of the       
Company which are not presented in this Prospectus. The selected data           
presented below for, and as of the end of, the three months ended March 31,     
1998 and 1997 are derived from the unaudited consolidated financial statements  
of the Company appearing in this Prospectus. In the opinion of management, the  
unaudited consolidated financial statements for the interim period include all  
adjustments (consisting only of normal recurring accruals) necessary for a      
fair presentation of the results for such period. The results of operations     
for the three months ended March 31, 1998 are not necessarily indicative of     
the results to be expected for the full year.                                   

Statement of                                                                    
Operations Data:                                                                

                                                        [Enlarge/Download Table]

                                                                      Year Ended December 31,                                  
                                                                      -----------------------                                  
                                             1997             1996             1995               1994               1993      
                                             ----             ----             ----               ----               ----      
                                                                                                                               
Net sales .............................  $30,181,965      $ 32,599,096      $ 30,463,730      $ 25,094,473        $ 17,717,023 
Income (loss) from operations .........     (682,554)          240,85l           569,690        (1,041,037)(1)         370,009 
Interest expense ......................     (991,962)         (875,305)         (774,762)         (520,602)           (314,796)
Net income (loss) .....................     (949,330)         (466,454)         (179,072)       (1,968,909)(1)          41,187 
Net income (loss) per basic and                                                                                                
   diluted common share (2) ...........  $      (.22)     $       (.13)     $       (.10)     $       (.92)       $        .00 

Balance Sheet Data:                                                                                                            
                                                                      As of December 31,                                       
                                                                     ------------------                                        
                                             1997             1996                1995               1994          1993        
                                             ----             ----                ----               ----          ----        

Working capital .....................    $23,737,661        $ 9,334,035        $ 3,237,259       $ 3,706,239    $ 1,823,459    
Total assets ........................     38,180,367         21,023,644         15,496,294        11,937,143     10,189,885    
Long-term debt ......................     16,239,285          5,665,870            630,494           216,469        133,927    
Total stockholders' equity ..........      6,449,166          5,506,395          3,855,804         4,124,961      2,176,102    

POS AM
21st Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 21st
Statement of                                                                                                                   
Operations Data:                                                                                                               
                                             Three Months Ended March 31,                                                      
                                             ----------------------------                                                      
                                              1998            1997                                                             
                                              ----            ----                                                             

Net sales                                $ 16,388,509     $ 7,531,420                                                          
Income (loss) from operations                 142,036         141,476                                                          
Interest expense                             (448,645)       (202,083)                                                         
Net income (loss)                            (182,989)         33,239                                                          
Net income (loss) per basic and                                                                                                
   diluted common share (2)             $        (.04)    $      (.01)                                                         

                                                As of March 31,                                                                
                                        -----------------------------                                                          
                                              1998            1997                                                             
                                              ----            ----                                                             
Balance Sheet Data:                                                                                                            
Working capital .....................   $  22,836,408     $ 9,693,017                                                          
Total assets ........................      37,081,667      19,082,213                                                          
Long-term debt ......................      15,590,397       5,948,206                                                          
Total stockholders' equity ..........       6,266,177       5,913,084                                                          

----------                                                                      
(1)      After a non-cash compensatory charge of $2,314,000 resulting from the  
  release of escrow shares, the exercisability of warrants and the
     conversion of preferred stock, upon the Company's attainment of the
   specified 1994 pre-tax income level under the Company's July 1992
 Reverse Merger and certain cumulative levels for the three-year
period ended December 31, 1994.                               

(2)      Net income (loss) per share is computed on the basis described in      
      Note 1 of Notes to Consolidated Financial Statements, including, but
       not limited to, the adjustment for the $112,730 dividend on preferred
stock in 1995.                                                

16

POS AM
22nd Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 22nd
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Material Changes in Results of Operations                                       

Three Months Ended March 31, 1998 Compared                                      
to Three Months Ended March 31, 1997                                            

   Gross sales in the three months ended March 31, 1998 increased by
$9,034,131, or 110.9%, to $17,179,005 compared to $8,144,874 for the three      
months ended March 31, 1997. This increase was primarily due to the sales of    
WAWD (a newly acquired subsidiary in November 1997) of $10,318,329. Sales from  
the Company, exclusive of the acquisition, decreased by $1,284,198, primarily   
due to the loss of a major customer.                                            

      The Company has agreed to accept the return of merchandise under
certain circumstances. In order to obtain new customers, merchandise is         
exchanged, and replaced with current Company merchandise. The merchandise is    
brought back to the Company where it is reboxed, relabeled and placed back in   
inventory. This is a common occurrence within the industry. As the marketplace  
has grown more competitive, the amount of sales returns to the Company has      
significantly increased. The merchandise does not deteriorate, and obsolescence 
is therefore not a problem. All merchandise which is defective and returned by  
customers is returned to or credited by vendors.                                

         Gross profit for the three months ended March 31, 1998 increased by
$2,797,813, or 146.4% to $4,708,908 compared to $1,911,095 for the three months 
ended March 31, 1997. WAWD accounted for $2,724,144 of the increase. Gross      
profit margins increased for the first quarter of 1998 to 28.73% compared to    
25.37% for the first quarter of 1997, as a result of the higher gross profit    
margins from the WAWD sales, and improved efficiencies in purchasing.           

          Operating expenses during the three months ended March 31, 1998 were
$4,566,872 an increase of $2,797,253 or 158.1% from $1,769,619 for the three    
months ended March 31, 1997. WAWD's operating expenses were $2,778,632 for the  
period ended March 31, 1998, a net increase of $111,622 or 6.3% which is        
primarily due to increased freight and office administration.                   

          Income from operations for the three months ended March 31, 1998 was
$142,036 compared with $141,476 for the same period in 1997. During the three   
months ended March 31, 1998, WAWD incurred a loss from operations of $54,488.   

     Other income for the three months ended March 31, 1997 includes
$100,000 which relates to the sale of certain intangible assets previously      
amortized through 1995 by the Company.                                          

     Interest expense during the three months ended March 31, 1998 was
$448,645 an increase of $246,562 over the interest expense of $202,083 during   
the corresponding period in 1997. The increase is attributed to additional      
borrowings in November 1997 used to finance the acquisition of WAWD of          
approximately $761,000 on existing credit lines, and $162,265 of additional     
interest expense from WAWD for the three months ended March 31, 1998.           

           As a result of the foregoing, the Company recorded a net loss for the
three months ended March 31, 1998 of $182,989 or $.04 per share, as compared to 
net income of $33,239, or $.01 per share, for the three months ended March 31,  
1997.                                                                           

POS AM
23rd Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 23rd
1997 Compared to 1996                                                           

     Gross sales for the year ended December 31, 1997 ("1997") decreased
$2,792,979, or 7.8%, to $33,155,500, as compared to $35,948,479 for the year    
ended December 31, 1996 ("1996"). The Company's loss of a major customer,       
Autozone, Inc., as described below under 1996 Compared to 1995, resulted in a   
decrease in sales of approximately $9.1 million for 1997. The addition of new   
customers and expanded sales to current customers, offset, in part, the         
reduction in sales. The Company's 1997 gross sales included $4,444,970 of       
sales for WAWD from November 17, 1997, the date of acquisition, to December     
31, 1997. WAWD had sales of $44,515,000 and $45,097,000 for the years ended     
December 31, 1997 and 1996, respectively.                                       

  The Company has agreed to accept the return of merchandise under
certain circumstances. In order to obtain new customers, merchandise is         
exchanged, and replaced with current Company merchandise. The merchandise is    
brought back to the Company where it is reboxed, relabeled and placed back in   
inventory. This is a common occurrence within the industry. As the marketplace  
has grown more competitive, the amount of sales returns to the Company has      
significantly increased. The merchandise does not deteriorate, and              
obsolescence is therefore not a problem. All merchandise which is defective     
and returned by customers is returned to or credited by vendors.                

    Gross profit for 1997 was $8,944,944 as compared to $8,324,076 for
the same period in 1996. This represents an increase of $620,868, or 7.5%.      
Gross profit increased notwithstanding lower sales as a result of continued     
cost efficiencies in 1997 and the charge incurred in 1996 of $534,000 relating  
to returned merchandise from Autozone, Inc. Gross profit, as a percentage of    
net sales, for 1997 increased to 29.6%, as compared to 25.5% for 1996 due to    
the continued emphasis by the Company purchasing more efficiently in 1997 and   
the Autozone charge in 1996 (1.6%). Additionally, in 1997, there was an         
increase in the market share of more profitable new lines of business, thus     
adding to the increase in the gross margin percentage.                          

Operating expenses for 1997 were $9,627,498, an increase of   
$1,544,273, or 19.1%, from $8,083,225 for 1996. The acquisition of WAWD added   
additional operating expenses which accounted for 17.4% of this increase or     
$1,406,095. The provision for bad debts was $892,000 in 1997, compared with     
$481,000 in 1996. The difference of $411,000 accounted for a 5.8% increase in   
operating expenses.                                                             

     Most of the Company's payments to vendors are made in United States
dollars and, therefore, the amount of foreign currency is immaterial.           

      In 1997, the loss from operations was $682,554 as compared to income
of $240,851 for 1996. This was a decrease of $923,405, or 383%. Income from     
operations for 1997 decreased primarily due to the increase in overhead         
expenses noted above.                                                           

       Interest expense for 1997, increased by $116,657 to $991,962 compared
to $875,305 for 1996. The increase was a result of additional borrowing in the  
fourth quarter to fund the acquisition of WAWD.                                 

      Other income for 1997 consisted of $100,000 from the sale of certain
intangible assets previously amortized through 1995 and a gain on the sale of   
marketable equity securities of $48,000.                                        

      For 1997, the Company's net loss was $949,330, or $.22 per share, as
compared to $466,454 or $.13 per share for 1996.                                

      Excluding the results of WAWD, during the fourth quarter of 1997 the
Company experienced a dramatic decrease in sales levels. In the fourth quarter  
of 1997, the Company had net sales of $4,009,821 as compared with $7,404,405    
during the fourth quarter of 1996. This decrease was caused by the loss of      
Autozone, Inc. The Company had sales to this customer of approximately $3.4     
million during the fourth quarter of 1996, as compared with no sales to this    
customer in the fourth quarter of 1997. Included within                         

17  

POS AM
24th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 24th
operating expenses for 1997 was an increase in the provision for doubtful       
accounts of $867,000 during the fourth quarter. The increase in the provision   
for doubtful accounts was primarily a result of the adjustment in the carrying  
value in two large accounts receivable balances. The Company incurred           
additional borrowings during the fourth quarter of 1997 to support the          
increase in inventory levels and for the WAWD acquisition. As a result,         
interest expense increased to $290,246 during the fourth quarter of 1997 from   
$200,210 during the third quarter of 1997. These combined factors contributed   
to the pre-tax loss of $1,526,330 for 1997.                                     

      The Company had generated taxable income for each of the three years
prior to the year ended December 31, 1996. The loss for income tax purposes     
generated in 1996 was carried back in full to prior years resulting in a        
refund of taxes paid to such extent. As such, the Company believed that         
positive evidence existed and that it was more likely than not that the         
deferred tax asset at December 31, 1996 would be realized and therefore no      
valuation allowance was deemed necessary.                                       

1996 Compared to 1995                                                           

Gross sales for 1996 increased by $3,565,177, or 11.0%, to    
$35,948,479 compared to $32,383,302 for the year ended December 31, 1995        
("1995"). This increase was due primarily to increased sales to existing        
customers, the Company's introduction of new undercar parts product lines and   
the continued expansion of its customer base. Autozone, Inc. a large retail     
chain, which became a customer in late 1993, accounted for approximately 28%    
of the Company's net sales for 1996. However, in the fourth quarter of 1996     
this customer informed the Company that it was consolidating vendors, and they  
would no longer use the Company as a prime supplier. The Company added several  
new retail chains late in 1996, which were anticipated to make up a portion of  
the loss by this single customer.                                               

     Gross profit for 1996 increased by $267,462, or 3.3%, to $8,324,076
compared to $8,056,614 for 1995. Gross profit, as a percentage of net sales,    
for 1996 and 1995 remained constant at 26%. The Company accepted the return of  
merchandise from Autozone, Inc. and incurred $534,000 of costs for relabeling,  
and freight. This charge reduced the gross profit percentage by 2% in 1996      
which was offset by other cost efficiencies.                                    

Operating expenses for 1996 increased by $596,301, or 8.0%, to
$8,083,225, compared to $7,486,924 for 1995. Operating costs increased in       
proportion to the increased sales volume.                                       

    Income from operations for 1996, decreased by $328,839 to $240,851
compared to $569,690 for 1995, primarily as a result of the increase in         
operating expenses noted above.                                                 

Interest expense for 1996, increased by $100,543, or 13.0% to 
$875,305 compared to $774,762 for 1995. The increase was a result of            
additional borrowings in support of the growth in sales and assets.             

18  

POS AM
25th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 25th
As a result of the foregoing, the Company's net loss for 1996 
increased by $287,382 to $466,454, or $ .13 per share, as compared to           
$179,072, or $.10 per share for 1995.                                           

Liquidity and Capital Resources                                                 

Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997 

   The Company has continued to use funds generated from proceeds from
the sale of stock, exercise of warrants, and borrowings to finance working      
capital requirements.                                                           

     Cash provided by operations during the three months ended March 31,
1998 was $871,005 compared to $660,094 used in operations for the same period   
in 1997. This change was due mainly to the decrease in inventory of             
$2,584,051, which was offset by the corresponding increase in accounts          
receivable of $1,755,533.                                                       

Cash used in investing activities was $29,174 during the first
quarter of 1998 compared with $38,316 in 1997. The change was primarily due to  
capital expenditures.                                                           

 Cash used in financing activities was $648,888 during the first
quarter of 1998 compared with $812,741 in 1997. The company repaid $606,286 of  
its credit line from the proceeds of the reduction in inventory.                

     At March 31, 1998, the Company had a total of $17,852,262 available
under its combined lines of credit of which $15,149,959 was outstanding. These  
funds are available for working capital purposes.                               

  During the three months ended March 31, 1998, the Company made a
concerted effort to reduce inventory while ensuring sufficient product          
availability. As a result, inventory decreased by $2,584,051, or 10.0% to       
$23,230,866 from $25,814,917. Accounts receivable increased by $1,755,533, or   
19.7%, from January 1, 1998 to March 31, 1998.                                  

1997 Compared To 1996                                                           

     The Company has continued to use funds generated from proceeds from
the sale of stock, exercise of warrants, and borrowings to finance working      
capital requirements.                                                           

       In November 1997, the Company entered into two credit agreements with
institutional lenders which provide for revolving credit and letter of credit   
facilities, in an aggregate amount of up to $24 million based on certain        
percentages of accounts receivable and inventory. Borrowings under these        
facilities currently bear interest at rates ranging from LIBOR plus 2.25% to    
prime plus 1% and both facilities expire in November 2000. The Company          
incurred approximately $7.9 million of bank indebtedness (total purchase price  
paid in cash was $8.4 million) in connection with its acquisition of WAWD       
which bears interest at prime plus 1%.                                          

POS AM
26th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 26th
     Cash provided by operations during 1997 was $389,926 as compared to
$2,658,581 used in operations for 1996. This change was due mainly to the       
decrease in accounts receivable of $2,285,846, partially offset by an increase  
in inventory of $839,388, for 1997. During 1996, inventory and accounts         
receivable grew by $4,638,213 and accounts payable and accrued expenses grew    
by $1,858,547.                                                                  

       Cash used in investing activities was $8,912,260 during 1997 compared
with $185,774 in 1996. The change was primarily due to increased capital        
expenditures of $279,410, and the acquisition of WAWD for $8,431,400 in 1997.   

  Cash provided by financing activities was $8,050,816 during 1997
compared with $3,337,607 in 1996. The Company established a line of credit      
with a new bank which provided funds of $9,508,322 to replace two existing      
credit facilities totaling $9,396,877 which were repaid in November 1997.       
Additional borrowings were obtained for the acquisition of WAWD in the amount   
of $7,632,000, of this amount, $1,000,000 is in the form of one year 5%         
debentures which are convertible into common stock and one year 8% $600,000     
promissory notes.                                                               

  Pursuant to the Company's Credit Agreement with National Bank of
Canada, under certain circumstances, certain of the Company's subsidiaries may  
not transfer monies to certain other subsidiaries or the Company in the form    
of dividends or other distributions.                                            

       At December 31, 1997 the Company had a total of $18,359,000 available
under its combined lines of credit of which $15,540,000 was outstanding. These  
funds are available for working capital purposes. The Company does not          
anticipate any material capital expenditures within the next year.              

19  

POS AM
27th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 27th
    The Company believes that many of its suppliers and customers have
year 2000 Issues ("Year 2000 Issue") which could affect the Company. Many       
older computer software programs recognize only the last two digits of the      
year in any date (e.g., "98" for "1998"). These programs were designed and      
developed without considering the impact of the upcoming change in the          
century. If the software is not reprogrammed or replaced, many computer         
applications could fail or create erroneous results by or at the Year 2000.     
The Company will commence a program to pursue compliance by those with whom it  
electronically interconnects. It is not possible, however, at present, to       
quantify the overall cost of resolving this issue for the Company's suppliers   
and customers. Sanyo Automotive has been advised that its own software has      
been designed and developed with a resolution to the Year 2000 Issue and as     
such Sanyo Automotive presently believes that the cost of fixing the Year 2000  
Issue will not have a material effect on the Company's current financial        
position, liquidity or results of operations. WAWD is not currently on the      
Sanyo Automotive computer system. WAWD will utilize both internal and external  
resources to reprogram or replace, and test the software for Year 2000          
modifications. WAWD anticipates completing the Year 2000 project in mid 1999.   
It is anticipated the cost to implement a new computer system which will be     
Year 2000 compliant will be approximately $600,000. WAWD expects to finance     
this program through a three to five year capital lease.                        
See "Results of Operations."                                                    

20  

POS AM
28th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 28th
 SELLING SECURITYHOLDERS

The following table sets forth, with respect to each Selling  
Securityholder, based upon information available to the Company as of the date  
hereof, the number of shares of Common Stock beneficially owned, the number of  
shares of Common Stock to be sold, and the number and percentage of             
outstanding shares of Common Stock beneficially owned before and after the      
sale of the shares offered hereby. None of the Selling Securityholders has      
been an affiliate of the Company during the preceding three years. Although     
there can be no assurance that the Selling Securityholders will sell any or     
all of the shares of Common Stock, the following table assumes that each of     
the Selling Securityholders will sell all of the shares of Common Stock         
offered by this Prospectus.                                                     

                                                        [Enlarge/Download Table]


                                        Amount and                                        
                                          Nature                  Securities     Percent  
                                        Beneficial               Beneficially      of     
                                       Ownership(1)                 Owned         Class   
                                        ----------   Shares to      After         After   
                                   Shares             be Sold     Offering     Offering(2)
                                  ---------          ---------   ---------     ---------- 
                                                                                          
The Endeavour Capital Fund S.A.   467,949(3)         467,949(3)      -0-           -0-    
Mabcrown, Inc.                    233,974(4)         233,974(4)      -0-           -0-    
                                ---------            -------                              
          Total                   701,923            701,923                              

POS AM
29th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 29th
------------                                                                    
(1)      Unless otherwise noted, the Company believes that all persons named in 
     the table have sole voting and investment power with respect to all
        shares of Common Stock beneficially owned by them.  A person is deemed
       to be the beneficial owner of securities that can be acquired by such
       person within 60 days from the effective date of this Prospectus upon
   the exercise of warrants or options. Unless otherwise noted, each
         Selling Securityholder's beneficial ownership is determined by assuming
      that options or warrants that are held by such person (but not those
         held by any other person) and which are exercisable within 60 days from
the date hereof have been exercised.                          

Beneficial ownership is based upon the conversion of all the  
       Convertible Securities based on current market prices for all of such
  Securities which are either currently convertible or convertible
      within the next 60 days. The actual number of shares of Common Stock
      issued or issuable upon the conversion of the Convertible Securities
    is subject to adjustment and could be materially less or more than
     such estimated amount depending on factors that cannot be predicted
  by the Company at this time, including, among others, the future
market price of the Common Stock. However, each holder of the 
    Convertible Securities has agreed contractually not to convert the
   Convertible Securities to the extent that such a conversion would
       result in such holder beneficially owning more than 9.99% of the then
    outstanding Common Stock. Such limitation, however, does not apply
    (i) with respect to any automatic conversion provision of the 1998
Debentures, (ii) to the extent otherwise specified in the 1998
      Debentures (such as, after the Company has given a redemption notice
     to the holder) or (iii) if the Company is in default under the 1998
      Debentures or any of the related agreements, between the Company and
the holders of such Convertible Securities.                   

(2)      Based on 4,563,321 shares of Common Stock outstanding as of June 12,   
1998.                                                         

21  

POS AM
30th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 30th
(3)      Includes (a)up to 457,949 shares issuable upon conversion (with        
     interest converted into Common Stock) of the 1998 Debentures in the
        principal amount of $1,000,000 at a conversion rate of $2.60 per share
      and at the current conversion rate of $2.00 per share, and (b) up to
        10,000 shares issuable upon exercise of a warrant issued in connection
         with the 1998 Debenture. Also includes an additional 2,948,718 issuable
upon conversion of the 1998 Debentures.                       

(4)      Includes (a) up to 228,974 shares issuable upon conversion (with       
     interest converted into Common Stock) of the 1998 Debentures in the
      principal amount of $500,000 at a conversion rate of $2.60 per share
   and at the current conversion rate of $2.00 per share, and (b) an
       additional 5,000 shares issuable upon exercise of a warrant issued in
 connection with the 1998 Debenture. Also includes an additional
   1,474,359 shares issuable upon conversion of the 1998 Debentures.

22

POS AM
31st Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 31st
PLAN OF DISTRIBUTION

    The shares of Common Stock offered hereby are being offered by the
Selling Securityholders and/or their transferees and assignees for their own    
account and not for the account of the Company. The Selling Securityholders     
may continue to sell the Common Stock directly to purchasers or,                
alternatively, may offer the Common Stock from time to time through other       
agents, brokers, dealers or underwriters, who may receive compensation in the   
form of concessions or commissions from the Selling Securityholders. Sales of   
the Common Stock may be made in one or more transactions on NASDAQ, in          
privately negotiated transactions or otherwise, and such sales may be made at   
the market price prevailing at the time of sale, a price related to such        
prevailing market price or a negotiated price. Sales of Common Stock are        
subject to the prospectus delivery and other requirements of the Securities     
Act.                                                                            

   Under the Exchange Act and the regulations thereunder, any person
engaged in a distribution of the Common Stock of the Company offered by this    
Prospectus may not simultaneously engage in market-making activities with       
respect to the Common Stock of the Company during the applicable "cooling off"  
period (nine business days) prior to the commencement of such distribution. In  
addition, and without limiting the foregoing, the Selling Securityholders will  
be subject to applicable provisions of the Exchange Act and the regulations     
thereunder, including, without limitation, Rule 102 of Regulation M, which      
provisions may limit the timing of purchases and sales of the Securities by     
the Selling Securityholders. To the extent required, the Company will use its   
best efforts to file, during any period in which offers or sales are being      
made, one or more amendments or supplements to this Prospectus or a new         
registration statement with respect to the Common Stock and Class A Warrants    
to describe any material information with respect to the plan of distribution   
not previously disclosed in this Prospectus, including the name or names of     
any additional underwriters, dealers or agents, if any, the purchase price      
paid by the underwriter for Securities purchased from a Selling                 
Securityholder, and any discounts, commissions or concessions allowed or        
reallowed or paid to dealers.                                                   

COMMISSION POSITION ON INDEMNIFICATION  
FOR SECURITIES ACT LIABILITIES  

Insofar as indemnification for liabilities arising under the  
Securities Act may be permitted to directors, officers and controlling persons  
of the Company, the Company has been advised that in the opinion of the         
Commission such indemnification is against public policy as expressed in the    
Securities Act and is, therefore, unenforceable.                                

LEGAL MATTERS 

       The legality of the Securities offered hereby will be passed upon for
the Company by Snow Becker Krauss P.C., 605 Third Avenue, New York, New York    
10158. Snow Becker Krauss P.C. holds an option to purchase 20,000 shares of     
Common Stock and Elliot H. Lutzker, a member of Snow Becker Krauss P.C.,        
serves on the Company's Board of Directors.                                     

EXPERTS 

     The consolidated financial statements of the Company as of December
31, 1997 and 1996 and for each of the three years in the period ended December  
31, 1997 appearing herein, have been included in reliance upon the report of    
Deloitte & Touche LLP, independent auditors, given upon the authority of such   
firm as experts in accounting and auditing.                                     

   The financial statements of WAWD-EAP Automotive Products, Inc. (a
wholly-owned subsidiary of Echlin, Inc.) as of August 31, 1997 and 1996 and for 
each of the three years in the period ended August 31, 1997, incorporated by    
reference herein, have been included in reliance upon the report of Deloitte &  
Touche LLP, independent auditors, given upon the authority of such firm as      
experts in accounting and auditing.                                             

23  

POS AM
32nd Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 32nd
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS  

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997  

Independent Auditors' Report ...............................           F-1      
Consolidated Financial Statements:                                              
Balance Sheets ............................................           F-2     
Statements of Operations ..................................           F-3     
Statements of Shareholders' Equity ........................           F-4     
Statements of Cash Flows ..................................           F-5     
Notes to Financial Statements .............................         F-6-F-14  

THREE MONTHS ENDED MARCH 31, 1998 AND 1997  

Balance Sheets ............................................           F-15    
Statements of Operations ..................................           F-16    
Statements of Cash Flows ..................................           F-17    
Notes to  Financial Statements ............................           F-18    

POS AM
33rd Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 33rd
INDEPENDENT AUDITORS' REPORT  

Board of Directors                                                              
Brake Headquarters U.S.A., Inc.                                                 

We have audited the accompanying consolidated balance sheets of Brake           
Headquarters U.S.A., Inc. and subsidiaries as of December 31, 1997 and 1996,    
and the related statements of operations, shareholders' equity, and cash flows  
for each of the three years in the period ended December 31, 1997. Our audits   
also included the financial statement schedule listed in the index to the       
consolidated financial statements. These consolidated financial statements and  
financial statement schedule are the responsibility of the Company's            
management. Our responsibility is to express an opinion on these financial      
statements and financial statement schedule 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 misstatement. An audit includes examining, on a test basis, evidence   
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant          
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

In our opinion, such consolidated financial statements present fairly, in all   
material respects, the financial position of Brake Headquarters U.S.A., Inc.    
and subsidiaries as of December 31, 1997 and 1996, and the results of their     
operations and their cash flows for each of the three years in the period ended 
December 31, 1997 in conformity with generally accepted accounting principles.  
Also, in our opinion, such financial statement schedule, when considered in     
relation to the basic consolidated financial statements taken as a whole,       
presents fairly in all material respects the information set forth therein.     

DELOITTE & TOUCHE LLP                                                           

Stamford, Connecticut                                                           
March 20, 1998                                                                  

F-1 

POS AM
34th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 34th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                                        December 31            
                                                                             ----------------------------------
                                                                                   1997               1996     
                                                                             ----------------   ---------------
                                                                                                               
                                   ASSETS                                                                      
Current Assets:                                                                                                
 Cash ......................................................................  $      65,410      $    536,928  
 Accounts receivable, less allowance for doubtful accounts of $1,179,000                                       
   and $372,000 ............................................................      8,910,085         7,252,018  
 Inventory .................................................................     25,814,917        10,636,820  
 Prepaid expenses and other current assets .................................        754,761           384,648  
 Deferred tax asset ........................................................             --           375,000  
                                                                              -------------      ------------  
    Total current assets ...................................................     35,545,173        19,185,414  
Property and Equipment -- net ..............................................      1,638,749         1,453,179  
Other Assets ...............................................................        674,571           227,189  
Due from President .........................................................         60,874            55,874  
Deferred Tax Asset .........................................................        261,000           101,988  
                                                                              -------------      ------------  
    Total Assets ...........................................................  $  38,180,367      $ 21,023,644  
                                                                              =============      ============  
                      LIABILITIES AND SHAREHOLDERS' EQUITY                                                     
Current Liabilities:                                                                                           
 Accounts payable ..........................................................  $   6,546,436      $  4,639,419  
 Accrued expenses and other current liabilities ............................      2,061,752           503,386  
 Current portion of long-term debt .........................................      1,673,324         4,708,574  
 Deferred tax liability ....................................................      1,526,000                --  
                                                                              -------------      ------------  
    Total current liabilities ..............................................     11,807,512         9,851,379  
                                                                              -------------      ------------  
Long-term Debt .............................................................     16,239,285         5,665,870  
Deferred Credit ............................................................      3,684,404                --  
                                                                              -------------      ------------  
    Total liabilities ......................................................     31,731,201        15,517,249  
                                                                              -------------      ------------  
Shareholders' Equity:                                                                                          
 Series B preferred stock -- $.001 par value; authorized, issued and                                           
   outstanding 1,000 shares ................................................              1                 1  
 Common stock -- $.001 par value; authorized 6,000,000 and 20,000,000                                          
   shares, issued and outstanding 4,563,321 and 4,209,384 shares ...........          4,563             4,209  
 Additional paid-in capital ................................................     17,022,258        15,130,511  
 Accumulated deficit .......................................................    (10,577,656)       (9,628,326) 
                                                                              -------------      ------------  
    Total shareholders' equity .............................................      6,449,166         5,506,395  
                                                                              -------------      ------------  
    Total Liabilities and Shareholders' Equity .............................  $  38,180,367      $ 21,023,644  
                                                                              =============      ============  

See Notes to Consolidated Financial Statements

F-2 

POS AM
35th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 35th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

CONSOLIDATED STATEMENTS OF OPERATIONS 

                                                        [Enlarge/Download Table]

                                                                      Year ended December 31,             
                                                          ------------------------------------------------
                                                               1997             1996             1995     
                                                          --------------   --------------   --------------
                                                                                                          
Sales ...................................................  $ 33,155,500     $ 35,948,479     $ 32,383,302 
 Less returns and allowances ............................     2,973,535        3,349,383        1,919,572 
                                                           ------------     ------------     ------------ 
Net sales ...............................................    30,181,965       32,599,096       30,463,730 
Cost of goods sold ......................................    21,237,021       24,275,020       22,407,116 
                                                           ------------     ------------     ------------ 
Gross profit ............................................     8,944,944        8,324,076        8,056,614 
Selling, general and administrative expenses ............    (9,627,498)      (8,083,225)      (7,486,924)
                                                           ------------     ------------     ------------ 
(Loss) income from operations ...........................      (682,554)         240,851          569,690 
                                                           ------------     ------------     ------------ 
Other income (expense):                                                                                   
 Interest expense .......................................      (991,962)        (875,305)        (774,762)
 Other income ...........................................       148,186               --               -- 
                                                           ------------     ------------     ------------ 
    Total other income (expense) ........................      (843,776)        (875,305)        (774,762)
                                                           ------------     ------------     ------------ 
Loss before benefit for income taxes ....................    (1,526,330)        (634,454)        (205,072)
Benefit for income taxes ................................       577,000          168,000           26,000 
                                                           ------------     ------------     ------------ 
Net loss ................................................  $   (949,330)    $   (466,454)    $   (179,072)
                                                           ------------     ------------     ------------ 
Net loss per basic and diluted common share .............  $       (.22)    $       (.13)    $       (.10)
                                                           ============     ============     ============ 
Weighted average number of common shares outstanding.....     4,379,941        3,616,311        3,058,968 
                                                           ============     ============     ============ 

See Notes to Consolidated Financial Statements

F-3 

POS AM
36th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 36th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 

                                                        [Enlarge/Download Table]


                                                 Preferred Stock                Common Stock       
                                               Shares          Amount         Shares       Amount  
                                          ---------------  -------------  -------------  ----------
                                                                                                   
Balance at January 1, 1995 ..............     2,000,000     $   500,000     2,621,467      $2,621  
Conversion of Series A preferred                                                                   
 stock ..................................    (2,000,000)       (500,000)    1,000,000       1,000  
Foreign currency translation                                                                       
 adjustment .............................            --              --            --          --  
Dividends declared ......................            --              --            --          --  
Issuance of common stock in                                                                        
 connection with exercise of                                                                       
 Class F warrants .......................            --              --        41,666          42  
Employee Stock Bonus Plan ...............            --              --         3,064           3  
Return of 1993 Escrow shares to                                                                    
 treasury and retirement of such                                                                   
 shares .................................            --              --      (250,000)       (250) 
Net loss ................................            --              --            --          --  
                                             ----------     -----------     ---------      ------  
Balance at December 31, 1995 ............            --              --     3,416,197       3,416  
                                             ==========     ===========     =========      ======  
Proceeds from private placement .........            --              --       490,000         490  
Exercise warrants .......................            --              --       200,000         200  
Issuance of Series B preferred stock              1,000               1            --          --  
Conversion of note payable ..............            --              --        91,300          91  
Employee Stock Bonus Plan ...............            --              --         5,637           6  
Acquisition of ABS ......................            --              --         6,250           6  
Net loss ................................            --              --            --          --  
                                             ----------     -----------     ---------      ------  
Balance at December 31, 1996 ............         1,000               1     4,209,384       4,209  
                                             ==========     ===========     =========      ======  
Exercise of warrants ....................            --              --       214,000         214  
Exercise of stock options ...............            --              --         8,000           8  
Employee Stock Bonus Plan ...............            --              --         1,937           2  
Acquisition of WAWD .....................            --              --       130,000         130  
Fair value of warrants issued in                                                                   
 connention with debt ...................            --              --            --          --  
Net loss ................................            --              --            --          --  
                                             ----------     -----------     ---------      ------  
Balance at December 31, 1997 ............         1,000     $         1     4,563,321      $4,563  
                                             ==========     ===========     =========      ======  

POS AM
37th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 37th
                                                        [Enlarge/Download Table]


                                                                              Cumulative                 
                                                                               Foreign                   
                                            Additional                         Currency         Total    
                                              Paid-in        Accumulated     Translation    Shareholders'
                                              Capital          Deficit        Adjustment       Equity    
                                          --------------  ----------------  -------------  --------------
                                                                                                         
Balance at January 1, 1995 ..............  $12,490,456     $  (8,870,070)     $   1,954      $4,124,961  
Conversion of Series A preferred                                                                         
 stock ..................................      499,000                --             --              --  
Foreign currency translation                                                                             
 adjustment .............................           --                --         (1,954)         (1,954) 
Dividends declared ......................           --          (112,730)            --        (112,730) 
Issuance of common stock in                                                                              
 connection with exercise of                                                                             
 Class F warrants .......................       16,625                --             --          16,667  
Employee Stock Bonus Plan ...............        7,929                --             --           7,932  
Return of 1993 Escrow shares to                                                                          
 treasury and retirement of such                                                                         
 shares .................................          250                --             --              --  
Net loss ................................           --          (179,072)            --        (179,072) 
                                           -----------     -------------      ---------      ----------  
Balance at December 31, 1995 ............   13,014,260        (9,161,872)            --       3,855,804  
                                           ===========     =============      =========      ==========  
Proceeds from private placement .........    1,011,904                --             --       1,012,394  
Exercise warrants .......................      759,800                --             --         760,000  
Issuance of Series B preferred stock            49,999                --             --          50,000  
Conversion of note payable ..............      257,909                --             --         258,000  
Employee Stock Bonus Plan ...............        8,520                --             --           8,526  
Acquisition of ABS ......................       28,119                --             --          28,125  
Net loss ................................           --          (466,454)            --        (466,454) 
                                           -----------     -------------      ---------      ----------  
Balance at December 31, 1996 ............   15,130,511        (9,628,326)            --       5,506,395  
                                           ===========     =============      =========      ==========  
Exercise of warrants ....................      812,986                --             --         813,200  
Exercise of stock options ...............       23,992                --             --          24,000  
Employee Stock Bonus Plan ...............       13,649                --             --          13,651  
Acquisition of WAWD .....................      961,120                --             --         961,250  
Fair value of warrants issued in                                                                         
 connention with debt ...................       80,000                --             --          80,000  
Net loss ................................           --          (949,330)            --        (949,330) 
                                           -----------     -------------      ---------      ----------  
Balance at December 31, 1997 ............  $17,022,258     $ (10,577,656)     $      --      $6,449,166  
                                           ===========     =============      =========      ==========  

See Notes to Consolidated Financial Statements

F-4 

POS AM
38th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 38th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                                                Year ended December 31,                
                                                                 ------------------------------------------------------
                                                                       1997               1996               1995      
                                                                 ----------------   ----------------   ----------------
                                                                                                                       
Cash flows from operating activities:                                                                                  
 Cash received from customers ..................................  $  28,759,780      $  31,267,820      $  28,526,134  
 Cash paid to suppliers and employees ..........................    (27,274,386)       (33,040,889)       (29,740,631) 
 Interest paid .................................................       (967,109)          (854,759)          (757,394) 
 Taxes paid ....................................................       (128,359)           (30,753)          (733,096) 
                                                                  -------------      -------------      -------------  
       Net cash provided by (used in) operating                                                                        
         activities ............................................        389,926         (2,658,581)        (2,704,987) 
                                                                  -------------      -------------      -------------  
Cash flows from investing activities:                                                                                  
 Capital expenditures ..........................................       (279,410)          (109,399)          (852,431) 
 Purchases of marketable securities ............................       (413,768)                --                 --  
 Proceeds from sales of marketable securities ..................        217,318                 --                 --  
 Acquisition of ABS ............................................             --             (9,375)                --  
 Acquisition of WAWD ...........................................     (8,431,400)                --                 --  
 Loans to President ............................................         (5,000)           (67,000)           (72,000) 
                                                                  -------------      -------------      -------------  
       Net cash used in investing activities ...................     (8,912,260)          (185,774)          (924,431) 
                                                                  -------------      -------------      -------------  
Cash flows from financing activities:                                                                                  
 Proceeds from sale of stock and warrants ......................        930,851          1,780,920              7,932  
 Borrowings ....................................................     17,071,054          4,919,974          3,650,376  
 Principal payments on long-term debt ..........................     (9,532,889)        (3,363,287)           (21,032) 
 Financing costs ...............................................       (418,200)                --                 --  
                                                                  -------------      -------------      -------------  
       Net cash provided by financing activities ...............      8,050,816          3,337,607          3,637,276  
                                                                  -------------      -------------      -------------  
Effect of exchange rate changes on cash ........................             --                 --             (1,954) 
Cash acquired from ABS aquisition ..............................             --             25,781                 --  
                                                                  -------------      -------------      -------------  
Net (decrease) increase in cash ................................       (471,518)           519,033              5,904  
Cash at beginning of year ......................................        536,928             17,895             11,991  
                                                                  -------------      -------------      -------------  
Cash at end of year ............................................  $      65,410      $     536,928      $      17,895  
                                                                  =============      =============      =============  
Reconciliation of net loss to net cash used in operating                                                               
 activities:                                                                                                           
 Net loss ......................................................  $    (949,330)     $    (466,454)     $    (179,072) 
 Adjustments to reconcile net loss to net cash provided by                                                             
   (used in) operating activities:                                                                                     
    Depreciation and amortization ..............................         93,840             73,584            186,675  
    Amortization of deferred credit ............................        (47,700)                --                 --  
    Amortization of financing costs ............................         37,390                 --                 --  
    Provision for doubtful accounts ............................        892,069            480,623            617,891  
   Gain on sale of marketable securities .......................        (49,426)                --                 --  
    Deferred income tax benefit ................................     (1,086,000)           (37,000)          (154,000) 
    Changes in assets and liabilities (net of business                                                                 
      acquisitions):                                                                                                   
      Accounts receivable ......................................      2,285,846         (1,989,524)        (1,937,596) 
      Inventory ................................................       (839,388)        (2,648,689)        (1,593,795) 
      Prepaid expenses and other current assets ................        149,887             21,206           (354,728) 
      Other assets .............................................        (66,572)            49,126            (51,766) 
      Accounts payable and accrued expenses ....................        (30,690)         1,858,547            761,404  
                                                                  -------------      -------------      -------------  
       Net cash provided by (used in) operating                                                                        
         activities ............................................  $     389,926      $  (2,658,581)     $  (2,704,987) 
                                                                  =============      =============      =============  
Supplemental cash flow information:                                                                                    
 Businesses acquired:                                                                                                  
   Fair value of assets acquired ...............................  $  19,448,815      $      37,500                     
                                                                  -------------      -------------                     
   Cash paid ...................................................      8,431,400              9,375                     
   Common stock issued .........................................        961,250             28,125                     
                                                                  -------------      -------------                     
       Total purchase price ....................................  $   9,392,650      $      37,500                     
                                                                  -------------      -------------                     
   Liabilities assumed .........................................  $   6,324,065      $          --                     
   Negative goodwill (classified as a deferred credit) .........  $   3,732,100      $          --                     

See Notes to Consolidated Financial Statements  

F-5 

POS AM
39th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 39th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES         

    Business activity -- Brake Headquarters U.S.A., Inc. and subsidiaries (the
"Company"). The Company is a publicly-owned holding company, substantially all  
of its current business operations are conducted through two of its             
wholly-owned subsidiaries, Sanyo Automotive Parts, Ltd. ("Sanyo") and WAWD,     
Inc. ("WAWD"). Sanyo is a New York corporation formed in 1976, which is         
currently doing business under the name Brake Headquarters. WAWD, a California  
corporation acquired by way of a merger on November 17, 1997, is an importer    
and distributor of high-line European and Asian automotive aftermarket parts.   
Other operating subsidiaries include Quality First Brakes, Inc., a wholly-owned 
Delaware subsidiary of the Company ("Quality First"), formed in August 1995,    
which owns Fifteen Inc., Thirty Three Inc. and Thirty Nine Inc., and are        
wholesale warehouses for "undercar" parts; ABS Brakes, Inc. ("ABS"), an         
assembler of domestic brake pads is a wholly-owned New York subsidiary acquired 
in August 1996.                                                                 

Principles of consolidation -- The consolidated financial statements  
include the accounts of Brake Headquarters U.S.A., Inc. and its wholly-owned    
subsidiaries. All intercompany balances and transactions have been eliminated   
in consolidation.                                                               

    Inventory -- Finished goods inventory, consisting of brake systems, engine
parts, and accessories, is stated at the lower of cost (first-in, first-out     
method) or market.                                                              

   Depreciation -- Depreciation of property and equipment is provided for by
the straight-line method over the estimated useful lives of the related assets  
(5 to 40 years). Leasehold improvements are amortized over the lesser of the    
term of the respective lease or the estimated useful lives of the improvements  
(10 to 40 years).                                                               

Income taxes -- The Company recognizes deferred income tax assets and 
liabilities for the expected future tax consequences of temporary differences   
between the financial reporting basis and the tax basis of assets and           
liabilities.                                                                    

Concentration of credit risk -- The Company's customer base consists  
primarily of retailers, wholesalers and installers of automotive replacement    
parts throughout North America. On a geographic basis, no area has a            
disproportionate concentration of credit risk. During the years ended December  
31, 1997, 1996 and 1995, less than 10% of the Company's sales were derived from 
foreign customers. Although the Company is directly affected by the well-being  
of the replacement parts industry, management does not believe significant      
credit risk exists at December 31, 1997. The Company performs ongoing credit    
evaluations of its customers' financial condition. When amounts on specific     
accounts receivable are judged to be uncollectable by management, those amounts 
are charged to the allowance for doubtful accounts. During the year ended       
December 31, 1997, no single customer accounted for more than 10% of net sales. 
During the years ended December 31, 1996 and 1995, the Company had sales to one 
customer that accounted for approximately 28% and 17%, respectively, of the     
Company's net sales. In the fourth quarter of 1996, this customer informed the  
Company it was consolidating vendors and therefore would no longer use the      
Company as a prime supplier. In the fourth quarter of 1996, the Company         
incurred costs of approximately $284,000 relating to the relabeling and freight 
costs associated with the loss of this customer.                                

 Financing Costs -- During the year ended December 31, 1997, the Company
incurred $418,000 of costs in connection with debt financings (see Note 3).     
These costs are being amortized over the terms of the respective financings.    

   Adoption of Statement of Financial Accounting Standards No. 128 -- During
1997, the Company adopted Statement of Financial Accounting Standards No. 128   
("SFAS 128"), "Earnings Per Share". SFAS 128 replaces the presentation of       
primary earnings per share with a presentation of basic earnings per share. It  
also requires dual presentation of basic and diluted earnings per share on the  
face of the income statement. Diluted earnings per share is computed by         
dividing net income by the weighted average number of common shares outstanding 
(including shares held in escrow, see Note 2 ) and dilutive common equivalent   
shares (common stock options) outstanding. The net loss used in the             
determination of the loss per share in 1995 has been adjusted for the $112,730  
preferred stock dividend.                                                       

F-6 

POS AM
40th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 40th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) 

Note 1. PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES         
-- (Continued)                                                                

Management estimates -- The preparation of financial statements in    
conformity with generally accepted accounting principles requires management to 
make estimates and assumptions that affect the reported amounts of assets and   
liabilities and disclosure of contingent assets and liabilities at the date of  
the financial statements and the reported amounts of revenues and expenses      
during the reported periods. Actual results could differ from those estimates.  

   Disclosure about Fair Value of Financial Instruments -- The fair value of
the Company's credit facilities approximate fair value and is estimated based   
on the quoted market prices for the same or similar issues or on the current    
rates offered to the Company for debt of the same remaining maturities.         

Supplemental cash flow information of non-cash activities --          

1997                                                                            

   Common stock was issued in connection with the acquisition of WAWD in the
amount of $961,250.                                                             

1996                                                                            

The President purchased 1,000 shares of Series B Preferred Stock for  
$50,000 in exchange for a reduction in the prior dividend payable to him from   
the Series A Preferred Stock. A note payable for $258,000 was converted into    
91,300 common shares. Common stock was issued for the acquisition of ABS in the 
amount of $28,125. The Company entered into capital leases for the purchase of  
computer equipment totaling $282,700.                                           

1995                                                                            

  Common stock was issued in connection with the exercise of Class F and D
warrants, respectively, by an increase in the amount due from President of      
$16,667.                                                                        

Reclassifications -- Certain reclassifications were made to the prior 
years' financial statements to conform with the current year presentation.      

Note 2. ACQUISITIONS                                                            

In November 1997, in a series of transactions, the Company acquired by
way of merger substantially all of the assets and certain liabilities of WAWD,  
a wholly-owned subsidiary of Echlin, Inc., for a total purchase price           
(including acquisition costs) of $8,431,400 in cash and 130,000 shares of the   
Company's common stock valued at $961,250. Fifty thousand of the shares issued  
are being held in escrow for up to 15 months as security for certain            
indemnification obligations. The shares held in escrow retain all voting and    
dividend rights and are included in common shares outstanding at December 31,   
1997. The Company has accounted for the acquisition of WAWD under the purchase  
method of accounting and the results of operations of WAWD have been included   
in the 1997 statement of operations since its date of acquisition. The excess   
of the estimated fair market value of the net assets acquired over the          
purchase price was first utilized to reduce long-term assets acquired with the  
remaining excess of $3,732,100 recorded as a deferred credit (negative          
goodwill), which is being amortized over a 10 year period. Amortization of the  
deferred credit was $47,700 during the year ended December 31, 1997, which is   
included in selling, general and administrative expenses.                       

The Company signed an agreement with a consultant providing for common
stock to be issued as a retainer, and a fee to be paid based upon the           
completion of a merger, acquisition or joint venture. A total of 30,000 shares  
of common stock were issued in March 1997. The Company has recorded the fair    
value of the common stock issued ($292,500) and the fee (which is in dispute)   
as costs of the WAWD acquisition.                                               

   Effective August 30, 1996, the Company acquired the net assets of ABS for
$37,500 consisting of 6,250 shares of common stock and $9,375 in cash. The fair 
value of the net assets acquired approximated the purchase price.               

F-7 

POS AM
41st Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 41st
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) 

Note 2. ACQUISITIONS  -- (Continued)                                            

    The following summarized, unaudited pro forma results of operations assume
the WAWD acquisition occurred at the beginning of the respective year.          

                                   1997             1996
                                   --------------   --------------
Net sales ......................    $67,921,337      $74,957,575  
Net loss .......................    $  (919,491)     $  (336,725) 
Net loss per basic and                                            
diluted common share ..........    $      (.21)     $      (.09)

Note 3. LONG-TERM DEBT                                                          

Long-term debt consists of the following:                             

                                                                [Download Table]

                                                         1997           1996    
                                                    -------------  -------------
                                                                                
Line of credit (a) ................................ $ 9,508,322    $4,546,556   
Note payable -- credit facility (b) ...............          --     4,850,321   
Line of credit -- WAWD (c) ........................   6,032,732            --   
Convertible subordinated debentures (d) ...........     930,000            --   
Promissory notes (e) ..............................     600,000            --   
Mortgages -- Fairfield, IL. facility (f) ..........     611,060       694,867   
Capital lease (g) .................................     230,495       282,700   
                                                    -----------    ----------   
                                                     17,912,609    10,374,444   
   Less current portion ...........................   1,673,324     4,708,574   
                                                    -----------    ----------   
                                                    $16,239,285    $5,665,870   
                                                    ===========    ==========   


(a) In November 1997, the Company entered into an agreement with a bank to
provide a three year line of credit of $12 million. The maximum   
     availability under this agreement at December 31, 1997 was $10,329,000.
      At the Company's option, the line of credit bears interest at prime or 2
      1/4% over LIBOR. The line of credit availability is based upon specified
levels of accounts receivable and inventory. The line of credit is
      collateralized by substantially all of the assets of the Company (except
    for the assets of WAWD). Proceeds from the line of credit were used to
repay the previous line of credit and the note payable -- credit  
facility.                                                         

           The agreement contains certain restrictive covenants with respect to,
    among others, (i) mergers and acquisitions, (ii) capital expenditures,
      (iii) dividends, and (iv) additional indebtedness. In addition, the line
     of credit agreement requires that the Company satisfy certain financial
     covenants. As a result of the Company's results of operations for 1997,
    the Company failed to satisfy certain financial covenants set forth in
      the credit agreement as of December 31, 1997. However, the bank provided
     the Company a waiver of these defaults and has amended the terms of the
agreement through the remaining term of the agreement. Based upon 
projected operating results for the year ended December 31, 1998, 
 management believes that the Company will be in compliance with all
 amended covenants. Therefore, the line of credit agreement has been
classified as long-term at December 31, 1997.                     

 (b) The credit facility had interest, payable monthly, at the prime rate or
the bank's money market rate plus 2 1/4%. The credit facility was 
      secured by substantially all the assets of the Company and was repaid in
1997.                                                             

        At December 31, 1996, the Company was in default of several of the
 covenants of the note-payable -- credit facility, however, the bank
provided the Company with a waiver through June 30,               

F-8 

POS AM
42nd Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 42nd
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) 

Note 3. LONG-TERM DEBT  -- (Continued)                                          

 1997 of these defaults and amended the terms of the agreement. Based upon
projected operating results for the year ended December 31, 1997, 
  management believed that the Company would be in compliance with all
amended covenants. Therefore, the note-payable-credit facility was
classified as long-term at December 31, 1996.                     

(c) In November 1997, WAWD entered into an agreement with a financial     
    institution to provide a three year line of credit of $12 million. The
maximum availability under this agreement at December 31, 1997 was
      $8,030,000. The line of credit bears interest at prime plus 1%. The line
of credit is based upon specific levels of accounts receivable and
      inventory and is collateralized by substantially all the assets of WAWD.

(d) In November 1997, the Company issued $1 million, 5% convertible       
subordinated debentures (the "Debentures"). The Debentures are due
      November 7, 1998. Interest is payable in either cash or common stock, at
    the Company's option. The Debentures are convertible into common stock
     equal to the lesser of $8.56 per share or a price determined based upon
     a market value formula. The Debentures are redeemable by the Company at
    120% of the principal amount, provided that a notice of conversion has
   not occurred. The Debentureholders also received warrants to purchase
   10,000 shares of common stock exercisable for five years at $9.88 per
     share. The fair value of the warrants ($80,000) at the date of issuance
   was recorded as paid-in capital with a corresponding reduction in the
 carrying value of the Debentures. The discount on the Debentures is
 being amortized as additional interest expense over the term of the
Debentures. Such amortization was $10,000 in 1997.                

(e) In November 1997, the Company issued one year, $600,000, 8%,          
subordinated promissory notes.                                    

(f) In a series of mortgages due through 2005, the Company financed its   
  Fairfield, Illinois facility. Interest rates range from 5% to prime.

 (g) The capital lease is for the purchase of the Company's computer system.
     Payments are approximately $7,000 per month through May 2001. The prime
    rate and LIBOR were 8.5% and 6.0%, respectively, at December 31, 1997.

Annual maturities of long-term debt are as follows:                             

Year ending December 31,                        
1998 .................   $ 1,673,324        
1999 .................       132,138        
2000 .................    15,684,605        
2001 .................       110,827        
2002 .................        69,040        
Thereafter ...........       242,675        
                 -----------
                 $17,912,609
                 ===========

Note 4. SHAREHOLDERS' EQUITY                                                    

   Escrow Agreement -- Pursuant to a July 1992 agreement between the Company
and the Company's President, in 1995, 250,000 shares held by the Company's      
President were returned to the treasury of the Company. Since the Company       
attained the 1994 pre-tax income levels, as defined, 125,000 shares were        
released from an escrow account to the President and 41,666 Class F warrants    
were exercised during 1995. The President disputed a prior forfeiture of        
shares, but waived any claims he had against the Company in exchange for the    
July 1995 grant of a non-qualified stock option to purchase 180,000 shares of   
Common Stock at $3.00 per share expiring on July 20, 2000 under the 1995 Plan.  

 F-9

POS AM
43rd Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 43rd
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) 

Note 4. SHAREHOLDERS' EQUITY  -- (Continued)                                    

  Preferred Stock -- In March 1996, the Company amended its Certificate of
Incorporation to authorize the issuance of 1,000 shares of Series B preferred   
stock to be held by the President. The amendment also eliminated all remaining  
authorized shares of Series A preferred stock. Dividends payable to the         
President from the Series A preferred stock were offset in part, by the         
purchase of the Series B preferred stock for $50,000. As the sole shareholder   
of the Series B preferred stock, which will vote as a separate class, the       
President has the exclusive right to elect a majority of the Company's Board of 
Directors until the earlier of the redemption date of March 31, 2001 or the     
reporting by the Company of at least $75,000,000 in revenue for any year        
through December 31, 2000. In the event of any liquidation, dissolution or      
winding-up, the holder of Series B preferred stock will be entitled to an       
aggregate preference of $50,000, his basis in the stock; any remaining proceeds 
of liquidation will be distributed pro rata to holders of the common stock.     

    In March 1998, the Board of Directors and the Shareholders of the Company,
authorized 1,000,000 shares of preferred stock, in one or more series as the    
Board of Directors determines without further shareholder approval.             

Common Stock -- In February 1998, the Company increased its authorized
shares of common stock to 12,000,000 from 6,000,000 which was previously        
changed from 20,000,000 in March 1996.                                          

   Private Placement -- In July 1996, the Company signed an agreement with a
consultant to raise an estimated $5 million through the issuance of common      
stock and warrants. In August 1996, the Company completed raising additional    
capital through a private placement by selling 490,000 units at a purchase      
price of $2.50 per unit. Each unit consists of one share of common stock and    
two Redeemable Common Stock Purchase Warrants each to purchase one share of     
common stock of the Company at $3.80 per share until the third anniversary of   
the initial closing. The Company has received net proceeds of approximately     
$2,586,000 as of December 31, 1997 from the sale of units and exercise of       
414,000 warrants.                                                               

Stock Options                                                                   

In connection with the WAWD line of credit, (see Note 3), the Company 
granted the bank a warrant to acquire 45,000 shares of the Company's common     
stock at an exercise price of $8.03 per share, which expires in November 2002.  
The bank has an option to require the Company to repurchase the warrant for up  
to $75,000, based upon a formula, if not previously exercised before the        
termination of the loan agreement. The $75,000 cost to repurchase the warrant   
has been capitalized as a deferred financing cost included in other assets and  
is being amortized as additional interest expense over the term of the line of  
credit.                                                                         

1994 Employee Stock Option Plan                                                 

  During 1994, the Company established the 1994 Employee Stock Option Plan
(the "1994 Plan"). The 1994 Plan provides for the grant of options to employees 
and other parties to purchase an aggregate of 300,000 shares of common stock.   
Options to purchase no more than 120,000 shares of common stock may be granted  
to any one person in any two-year period. The 1994 Plan is administered by the  
Board of Directors.                                                             

The 1994 Plan allows the Company to grant incentive stock options     
("ISOs"), non-qualified stock options ("NQSOs") and stock appreciation rights   
("SARs") at any time within 10 years from the date the 1994 Plan was adopted.   
The exercise price of ISOs may not be less than the fair market value of the    
common stock on the date of the grant, provided that the exercise price of ISOs 
granted to an optionee owning more than 10% of the outstanding common stock may 
not be less than 110% of the fair market value of the common stock on the date  
of grant. In addition, the aggregate fair market value of common stock with     
respect to which ISOs are exercisable for the first time by an optionee during  
any calendar year shall not exceed $100,000.                                    

   Options may not have a term exceeding ten years, except that ISOs granted
to an optionee owning more than 10% of the outstanding common stock may not     
have a term of more than five years and ISOs must be granted to and exercised   
by employees of the Company. Since the adoption of the 1994 Plan, an aggregate  
of 371,000 options to purchase shares have been granted (123,000 have expired   
or been canceled); no SARs have been granted.                                   

F-10

POS AM
44th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 44th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) 

Note 4. SHAREHOLDERS' EQUITY  -- (Continued)                                    

1995 Employee Stock Option Plan                                                 

   In July 1995, the Company established the 1995 Employee Stock Option Plan
(the "1995 Plan"). The 1995 Plan provides for the grant of options to employees 
and other parties of ISOs, NQSOs and SARs to purchase an aggregate of 1,500,000 
(increased in March 1998) shares of common stock. The provisions of the 1995    
Plan are identical to the above-stated terms of the 1994 Plan.                  

  During 1997 under the 1995 Plan, the Company granted to certain officers
of WAWD five-year options to purchase 80,000 shares of common stock at $6.6875  
per share and also granted seven-year options to purchase 180,000 shares of     
common stock at $6.6875 per share, which options vest after six and one-half    
years, subject to accelerated vesting upon the achievement of certain           
performance goals.                                                              

   Since the adoption of the 1995 Plan, through December 31, 1997 no ISOs or
SARs have been granted. In 1995, NQSOs to purchase 180,000 shares of common     
stock at $3.00 per share, the fair market value on the date of grant, were      
granted to the President. The options terminate in July 2000 and are            
exercisable on a cumulative basis in one-third increments on July 31, 1997,     
1998 and 1999. The option becomes immediately exercisable upon a change in      
control of the Company.                                                         

  A summary of stock option transactions under employee stock option plans
for each of the three years in the period ended December 31, 1997 are as        
follows:                                                                        

                                                  Weighted Average
                                    Options       Exercise Price
                                   -----------   -----------------
Outstanding January 1, 1995 ...........     132,000          $ 2.50             
Granted ..............................     186,000            2.98            
Canceled .............................      (3,000)           2.50            
               -------
Outstanding December 31, 1995 .........     315,000            2.78             
Granted ..............................      91,000            4.71            
               -------
Outstanding December 31, 1996 .........     406,000            3.21             
Granted ..............................     302,000            6.69            
Exercised ............................      (8,000)           3.00            
               -------
Outstanding December 31, 1997 .........     700,000            4.72             
               =======
Exercisable:                                                                    
December 31, 1996 ....................     175,000            3.24            
               =======
December 31, 1997 ....................     253,000            3.36            
               =======

Employee Stock Bonus Plan                                                       

In April 1995, the Company adopted the Employee Stock Bonus Plan which
enables all full-time employees to purchase shares of common stock at 85% of    
the then fair market value through payroll deductions. During 1997, 1996 and    
1995, 1,937, 5,637 and 3,064 shares, respectively, were issued from the 100,000 
shares available for sale under the plan.                                       

F-11

POS AM
45th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 45th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) 

Note 4. SHAREHOLDERS' EQUITY  -- (Continued)                                    

    The following tables summarize information about stock options outstanding
at December 31, 1997:                                                           

                                                        [Enlarge/Download Table]

                                   Options Granted                  Options Exercisable   
                       ----------------------------------------  -------------------------
                                         Weighted     Weighted                    Weighted
                                         Average       Average                    Average 
       Range of            Number       Remaining     Exercise       Number       Exercise
   Exercise Prices      Outstanding        Life         Price     Exercisable      Price  
---------------------  -------------   -----------   ----------  -------------   ---------
                                                                                          
    $2.25 - $3.00         331,000      2.4 years     $ 2.79         186,000      $ 2.66   
     3.75 - 5.63           67,000      3.9 years       5.32          67,000        5.32   
     6.69 - 6.75          302,000      6.0 years       6.69              --          --   
                          -------      -----------   ------         -------      ------   
                          700,000      4.1 years     $ 4.72         253,000      $ 3.36   
                          =======      ===========   ======         =======      ======   

    The estimated fair value of options granted during 1997 and 1996 was $5.42
and $4.13 per share, respectively. The Company applies Accounting Principles    
Board Opinion No. 25 and related interpretations in accounting for its stock    
option and purchase plans. No compensation cost has been recognized for the     
Company's stock option and stock purchase plan. Had compensation cost for the   
Company's stock option and stock purchase plans been determined based on the    
fair value at the option grant dates for awards in accordance with the          
accounting provisions of SFAS 123, the Company's net loss and loss per share    
for the years ended December 31, 1997 and 1996 would have been increased to the 
pro forma amounts indicated below:                                              

                                                        [Enlarge/Download Table]

                                                  1997            1996            1995     
                                             --------------  --------------  --------------
                                                                                           
Net loss applicable to common shareholders                                                 
 As reported ..............................   $   (949,330)    $ (466,454)     $ (291,802) 
 Pro forma ................................     (1,215,430)      (563,298)       (317,905) 
Net loss per basic and diluted common share                                                
 As reported ..............................   $       (.22)    $     (.13)     $     (.10) 
 Pro forma ................................           (.28)          (.16)           (.10) 

  The fair value of options granted under the Company's fixed stock option
plans during 1997 and 1996 was estimated on the dates of grant using the        
Black-Scholes options-pricing model with the following weighted-average         
assumptions used: expected volatility of approximately 92% for 1997 and 125%    
for 1996, risk free interest rate of approximately 6%, and expected lives of    
option grants of approximately five years. Pro forma compensation cost related  
to shares purchased under the Employee Stock Purchase Plan is measured based on 
the discount from market value. The effects of applying SFAS 123 in this pro    
forma disclosure are not indicative of future pro forma effects. SFAS 123 does  
not apply to awards prior to 1995, and additional awards in future years are    
anticipated.                                                                    

Note 5. INCOME TAXES                                                            

Provision (benefit) for income taxes consists of the following:       

           1997            1996             1995
          -------------   --------------   -------------
Federal:                                                                        
Current ..........    $  353,000       $ (176,000)     $   81,000             
Deferred .........      (849,000)         (34,000)       (123,000)            
         ----------       ----------      ----------
            (496,000)        (210,000)        (42,000)
         ----------       ----------      ----------
State and Local:                                                                
Current ..........       156,000           45,000          47,000             
Deferred .........      (237,000)          (3,000)        (31,000)            
         ----------       ----------      ----------
            (81,000)          42,000          16,000
         ----------       ----------      ----------
          $ (577,000)      $ (168,000)     $  (26,000)
         ==========       ==========      ==========

F-12

POS AM
46th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 46th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) 

Note 5. INCOME TAXES  -- (Continued)                                            

 The total provision (benefit) for income taxes differs from that amount
which would be computed by applying the U.S. federal tax rate to the loss       
before income taxes. The reasons for these differences are as follows:          

                                                        [Enlarge/Download Table]

                                                                 1997     1996     1995  
                                                                ------   -------  ------ 
                                                                                         
Statutory federal income tax rate ............................. (34.0)%  (34.0)%  (34.0)%
State and local income taxes, net of federal benefit .......... ( 4.2)     4.8      7.7  
Permanent and other differences ...............................    .4      2.8     13.6  
                                                                -----    -----    -----  
                                                                (37.8)%  (26.4)%  (12.7)%
                                                                =====    =====    =====  

The tax effects of temporary differences that give rise to significant
portions of deferred tax (liability) asset consist of the following:            

                                               1997             1996
                                            ------------      --------
Inventory ..................................     $ (1,463,000)     $272,000     
Accounts receivable ........................          (67,000)      103,000     
Depreciation ...............................          (13,000)       15,000     
Accruals not currently deductible ..........          203,000        58,000     
Other ......................................           75,000        29,000     
                                            ------------      --------
                                            $ (1,265,000)     $477,000
                                            ============      ========

    The Company has generated taxable income for each of the three years prior
to the year ended December 31, 1996. The loss for income tax purposes generated 
in 1996 was carried back in full to prior years resulting in a refund of taxes  
paid to such extent. As such, the Company believed that positive evidence       
existed and that it was more likely than not that the deferred tax asset at     
December 31, 1996 would be realized and therefore no valuation allowance was    
deemed necessary.                                                               

Note 6. OTHER INCOME                                                            

   During 1997, the Company received $100,000 from the sale of certain fully
amortized intangible assets. Additionally, the Company recorded a gain on the   
sale of marketable equity securities in the amount of $48,000. Such amounts are 
reported as other income in the year ended December 31, 1997. As of December    
31, 1997, the Company had marketable equity securities of $246,000 (cost        
approximates market value) which are included in other current assets.          

Note 7. COMMITMENTS AND CONTINGENCIES                                           

The Company leases warehouse and office space under noncancelable     
operating leases. Aggregate future minimum lease payments are as follows:       

Year ending December 31,                                                        
1998 ..............................................    $1,275,033       
1999 ..............................................       715,746       
2000 ..............................................       390,390       
2001 ..............................................       245,536       
2002 ..............................................       201,229       
Thereafter ..........................................         1,200         
                                                ----------
                                                $2,829,134
                                                ==========

    Rent expense for the years ended December 31, 1997, 1996 and 1995 amounted
to $495,000, $440,000 and $354,000, respectively, which includes $280,500,      
$312,000 and $312,000, respectively, which was paid to the Company's President. 

F-13

POS AM
47th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 47th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) 

Note 7. COMMITMENTS AND CONTINGENCIES  -- (Continued)                           

 In November 1997, in connection with the WAWD acquisition (see Note 3),
the Company entered into three-year employment agreements with two officers of  
WAWD providing for annual compensation of $110,000 for the first year and       
increasing to $120,000 for the second and third years plus incentive            
compensation based on the performance of WAWD for the years ending December 31, 
1999 and 2000.                                                                  

  In June 1996, the Company settled an action against a former customer to
collect $971,000 of accounts receivable. Inventory totaling approximately       
$459,000, was returned to the Company. As a result of the above settlement and  
available reserves, the Company recorded an expense of a $212,000 in 1996.      
Mutual releases were exchanged for all claims and counter claims.               

  In July 1995, the Company entered into a three-year employment agreement
with the President providing for a minimum annual salary of $156,000, with a    
bonus at the discretion of the Board of Directors, determined based upon the    
profitability of the Company. No bonus was paid for the years ended December    
31, 1997, 1996 and 1995.                                                        

Note 8. SAVINGS PLAN                                                            

The Company established in November 1996 a tax deferred saving plan   
("401(k) Plan") for all employees who meet certain eligibility requirements.    
The Company did not make any contributions to this plan in 1997 and 1996.       

Note 9. ADOPTION OF NEW ACCOUNTING STANDARDS                                    

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") 130, "Reporting            
Comprehensive Income", which requires a statement of comprehensive income to be 
included in the financial statements for fiscal years beginning after December  
15, 1997. The Company is presently designing such statement and accordingly,    
will include such statement beginning with the first quarter of 1998.           

 In addition, in June 1997, the FASB issued SFAS 131, "Disclosures About
Segments of an Enterprise and Related Information". SFAS 131 requires           
disclosures of certain information about operating segments and about products  
and services, the geographic areas in which a company operates and their major  
customers. The Company is presently in the process of evaluating the effect     
this new standard will have on disclosures in the Company's financial           
statements and the required information will be reflected in the year ended     
December 31, 1998 financial statements.                                         

Note 10. FOURTH QUARTER ADJUSTMENTS                                             

Excluding the results of WAWD, during the fourth quarter of 1997 the  
Company experienced a dramatic decrease in sales levels. In the fourth quarter  
of 1997, the Company had net sales of $4,009,821 as compared with $7,404,405    
during the fourth quarter of 1996. This decrease was caused by the loss of      
Autozone, Inc. The Company had sales to this customer of approximately $3.4     
million during the fourth quarter of 1996, as compared with no sales to this    
customer in the fourth quarter of 1997. Included within operating expenses for  
1997 was an increase in the provision for doubtful accounts of $867,000 during  
the fourth quarter. The increase in the provision for doubtful accounts was     
primarily a result of the adjustment in the carrying value in two large         
accounts receivable balances. The Company incurred additional borrowings during 
the fourth quarter of 1997 to support the increase in inventory levels. As a    
result, interest expense increased to $290,246 during the fourth quarter of     
1997 from $200,210 during the third quarter of 1997. These combined factors     
contributed to the pre tax loss of $1,526,330.                                  

F-14

POS AM
48th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 48th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                              March 31, 1998                   
                                                               (Unaudited)    December 31, 1997
                                                              --------------  -----------------
                                                                                               
ASSETS                                                                                         

Current Assets:                                                                                
     Cash                                                      $    258,353     $     65,410   
     Accounts receivable, less allowance for doubtful                                          
        accounts of $1,188,000 and $1,179,000                    10,609,533        8,910,085   
     Inventory                                                   23,230,866       25,814,917   
     Prepaid expenses and other current assets                      371,345          754,761   
                                                               ------------     ------------   
           Total current assets                                  34,470,097       35,545,173   

Property and Equipment - net                                      1,633,046        1,638,749   
Other Assets                                                        656,650          674,571   
Due from President                                                   60,874           60,874   
Deferred Tax Asset                                                  261,000          261,000   
                                                               ------------     ------------   
           Total Assets                                        $ 37,081,667     $ 38,180,367   
                                                               ============     ============   

LIABILITIES AND SHAREHOLDERS' EQUITY                                                           

Current Liabilities:                                                                           
     Accounts payable                                          $  6,509,370     $  6,546,436   
     Accrued expenses and other current liabilities               2,305,995        2,061,752   
     Current portion of long-term debt                            1,673,324        1,673,324   
     Deferred tax liability                                       1,145,000        1,526,000   
                                                               ------------     ------------   
           Total current liabilities                             11,633,689       11,807,512   
                                                               ------------     ------------   

Long-term Debt                                                   15,590,397       16,239,285   
Deferred Credit                                                   3,591,404        3,684,404   
                                                               ------------     ------------   
           Total liabilities                                     30,815,490       31,731,201   
                                                               ------------     ------------   

Shareholders' Equity:                                                                          
     Series B preferred stock - $.001 par value; authorized,                                   
         issued and outstanding 1,000 shares                              1                1   
     Common stock - $.001 par value; authorized 6,000,000                                      
        shares, issued and outstanding 4,563,321 shares               4,563            4,563   
     Additional paid-in capital                                  17,022,258       17,022,258   
     Accumulated deficit                                        (10,760,645)     (10,577,656)  
                                                               ------------     ------------   
           Total shareholders' equity                             6,266,177        6,449,166   
                                                               ------------     ------------   

           Total Liabilities and Shareholders' Equity          $ 37,081,667     $ 38,180,367   
                                                               ============     ============   

                              See Notes to Consolidated Financial Statements

F-15  

POS AM
49th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 49th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) 

                                                        [Enlarge/Download Table]

                                                                      Three Months Ended          
                                                           March 31, 1998           March 31, 1997
                                                           --------------           --------------
                                                                                                  
Sales                                                       $ 17,179,005            $  8,144,874  
   Less returns and allowances                                  (790,496)               (613,454) 
                                                            ------------            ------------  
Net sales                                                     16,388,509               7,531,420  
Cost of goods sold                                            11,679,601               5,620,325  
                                                            ------------            ------------  

Gross profit                                                   4,708,908               1,911,095  

 Selling, general and administrative expenses                  4,566,872               1,769,619  
                                                            ------------            ------------  

Income from operations                                           142,036                 141,476  
                                                            ------------            ------------  

Other income (expense):                                                                           
    Other income                                                  12,620                 114,846  
    Interest expense                                            (448,645)               (202,083) 
                                                            ------------            ------------  
                                                                (436,025)                (87,237) 
                                                            ------------            ------------  

(Loss) income before benefit (provision) for income taxes       (293,989)                 54,239  

Benefit (provision) for income taxes                             111,000                 (21,000) 
                                                            ------------            ------------  

Net (loss) income                                           $   (182,989)           $     33,239  
                                                            ============            ============  

Net (loss) income per basic and diluted share               $       (.04)           $        .01  
                                                            ============            ============  

Weighted average number of common shares outstanding           4,563,321               4,219,284  
                                                            ============            ============  

                                  See Notes to Consolidated Financial Statements

F-16  

POS AM
50th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 50th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASHFLOWS

(Unaudited) 

                                                        [Enlarge/Download Table]

                                                                                      Three Months Ended           
                                                                                March 31, 1998      March 31, 1997 
                                                                              ------------------  -----------------
                                                                                                                   
Cash flows from operating activities:                                                                              
    Cash received from customers                                                 $15,036,151          $ 7,822,715  
    Cash paid to suppliers and employees                                          13,306,664)          (6,932,216) 
    Interest paid                                                                   (462,310)            (202,083) 
    Taxes paid                                                                      (396,172)             (28,322) 
                                                                                  -----------         ------------ 
             Net cash provided by operating activities                               871,005              660,094  
                                                                                  -----------         ------------ 

Cash flows from investing activities:                                                                              
    Capital expenditures                                                             (29,174)             (33,818) 
    Loans to President                                                                     -               (5,000) 
                                                                                  -----------         ------------ 
             Net cash used in investing activities                                   (29,174)             (38,818) 
                                                                                  -----------         ------------ 

Cash flows from financing activities:                                                                              
    Proceeds from sale of stock and warrants                                              --               77,200  
    Repayments of notes payable and long term debt                                  (606,286)            (855,442) 
    Principal payments on long-term debt                                             (42,602)             (34,499) 
                                                                                  -----------         ------------ 
             Net cash used in financing activities                                  (648,888)            (812,741) 
                                                                                  -----------         ------------ 

Net increase (decrease) in cash                                                      192,943             (191,465) 
Cash at  beginning of period                                                          65,410              536,928  
                                                                                  -----------         ------------ 
Cash at end of period                                                              $ 258,353            $ 345,463  
                                                                                  ===========         ============ 
Reconciliation of net income to net cash used in operating activities:                                             
    Net (loss) income                                                             $ (182,989)            $ 33,239  
    Adjustments to reconcile net (loss) income to net cash provided by                                             
    (used in) operating activities:                                                                                
     Depreciation and amortization                                                    34,877               24,844  
     Amortization of deferred credit                                                 (93,000)                  --  
     Amortization of financing costs                                                  25,242                   --  
     Provision for doubtful accounts                                                  56,085                   --  
     Gain on sale of marketable securities                                           (12,620)                  --  
     Changes in assets and liabilities:                                                                            
           Accounts receivable                                                    (1,755,533)             309,208  
           Inventory                                                               2,584,051            1,748,893  
           Prepaid expenses and other current assets                                 370,794               21,908  
           Other assets                                                               17,921              (19,819) 
           Accounts payable and accrued expenses                                     207,177           (1,458,179) 
           Deferred tax Liability                                                   (381,000)                  --  
                                                                                  -----------         ------------ 

             Net cash provided by operating activities                             $ 871,005            $ 660,094  
                                                                                  ===========         ============ 

Supplemental information of non-cash financing activities:                                                         

    During the quarter ended March 31, 1997, thirty thousand shares of common stock were issued to a merger        
    and acquisition firm. The fair value of the common stock issued was $296,250.                                  

See Notes to Consolidated Financial Statements  

F-17  

POS AM
51st Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 51st
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1                                                                          

Basis of Presentation                                                           

           The accompanying unaudited consolidated financial statements of Brake
Headquarters U.S.A., Inc. and subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial  
information and with the instructions to Form 10-Q. Accordingly, they do not    
include all of the footnotes required by generally accepted accounting          
principles for complete financial statements. In the opinion of management, all 
adjustments (consisting of normal recurring adjustments) considered necessary   
for a fair presentation have been included. Operating results for the three     
months ended March 31, 1998 are not necessarily indicative of the results that  
may be expected for the year ending December 31, 1998. For further information, 
refer to the financial statements and footnotes thereto included in the         
Company's Annual Report on Form 10-K for the year ended December 31, 1997. There
has been no significant changes of accounting policies since December 31, 1997. 

Note 2                                                                          

Long-term Debt                                                                  

     The Company was in technical default under its credit facilities at
December 31, 1997 and March 31, 1998. The bank has issued a waiver of the       
default and amended the terms of the agreements through the remaining term of   
the agreement.                                                                  

Note 3                                                                          

Stockholders' Equity                                                            

 In April 1998, the Company increased the authorized shares from
6,000,000 to 12,000,000 shares. Additionally, the Board of Directors and the    
shareholders of the Company authorized 1,000,000 shares of preferred stock in   
one or more series at the discretion of the Board of Directors.                 

 On April 29, 1998, the Company completed a private financing of
$1,500,000 principal amount of 8% subordinated convertible debentures due April 
30, 2000 (the "Debentures"). The two foreign investors (the "Purchasers") also  
received five-year warrants to purchase an aggregate of 15,000 shares of Common 
Stock at $3.93 per share. The Debentures are convertible, commencing the earlier
of 60 days from the date of closing or the effective date of a Registration     
Statement covering the shares of Common Stock underlying the Debentures and     
Warrants, at a conversion rate equal to the greater of (a) the lower of (i) 80% 
of the Market Price on the Conversion Date, or (ii) $3.77; or (b) the Floor     
Price of $2.00 per share. The Debentures are redeemable, with the consent of the
Company's lender, at any time at 120% of their principal amount plus all accrued
Price falls below the Floor Price.                                              

  The Company and the Purchasers have agreed to sell and purchase,
respectively, up to an additional $4 million principal amount of Debentures     
during the next 12 months provided certain market conditions are met. The       
Company also granted the Purchasers a Right of First Refusal for a 120 day      
period ending after the later of the effective date of the Registration         
Statement or the latest closing date of the sale of additional Debentures.      

The Company agreed to repay $500,000 of the 5% Convertible    
Subordinated Debentures issued in November 1997, and the Company is waiting for 
approval from its senior lender.                                                

Note 4                                                                          

Commitments                                                                     

           In May 1998, the Company entered into a 5 year agreement to lease new
facilities in its San Francisco warehouse and offices. The monthly lease payment
is $22,204 plus annual increases.                                               

F-18  

POS AM
52nd Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 52nd
================================================================================

No dealer, salesman or any other person has been authorized to give any         
information or to make any representations other than those contained in this   
Prospectus, and, if given or made, such information or representations must     
not be relied upon as having been authorized by the Company. This Prospectus    
does not constitute an offer to sell or the solicitation of an offer to buy     
any security other than the shares offered by this Prospectus, or an offer to   
sell or a solicitation of an offer to buy any security by any person in any     
jurisdiction in which such offer or solicitation would be unlawful. Neither     
the delivery of this Prospectus nor any sale made hereunder shall, under any    
circumstances, imply that the information in this Prospectus is correct as of   
by any time subsequent to the date of this Prospectus.                          

--------------

 TABLE OF CONTENTS
                                                                      Page
                                                                      ----
AVAILABLE INFORMATION......................................................3    
INFORMATION INCORPORATED BY REFERENCE......................................3    
PROSPECTUS SUMMARY.........................................................4    
SUMMARY FINANCIAL DATA.....................................................7    
RECENT DEVELOPMENTS........................................................8    
RISK FACTORS...............................................................8    
USE OF PROCEEDS...........................................................15    
SELECTED FINANCIAL DATA...................................................16    
MANAGEMENT'S DISCUSSION AND ANALYSIS OF                                         
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................17
SELLING SECURITYHOLDERS...................................................21    
PLAN OF DISTRIBUTION......................................................24    
COMMISSION POSITION ON INDEMNIFICATION                                          
     FOR SECURITIES ACT LIABILITIES...................................24
LEGAL MATTERS.............................................................24    
EXPERTS  .................................................................24    
FINANCIAL STATEMENTS.....................................................F-1    

================================================================================

POS AM
53rd Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 53rd
701,923 SHARES OF 

COMMON STOCK

------------------

 BRAKE HEADQUARTERS U.S.A., INC.

------------------------------------

PROSPECTUS

------------------------------------

July __, 1998   

=============================================================================   

POS AM
54th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 54th
 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.                           

        Expenses payable in connection with the issuance and
distribution of the securities being registered (estimated, except in the case  
of the registration fee) are as follows:                                        

                              Amount
                            ----------
SEC Registration Fee                              $1,051.41                     
Printing                                             500.00                     
Legal Fees and Expenses                            5,000.00                     
Accounting Fees                                    2,000.00                     
Miscellaneous                                      1,448.59                     
                            ----------
TOTAL                                            $10,000.00                     
                            ==========

The above fees will be paid by the Company.                   

Item 15. Indemnification of Officers and Directors                              

  Except to the extent hereinafter set forth, there is no statute,
charter provision, by-law, contract or other arrangement under which any        
controlling person, director or officer of the registrant (the "Company") is    
insured or indemnified in an manner against liability which he may incur in     
his capacity as such.                                                           

      The Placement Agent Agreement dated July 10, 1996 by and between the
Company and G-V Capital Corp. (the "Placement Agent") contains provisions       
under which the Company has agreed to indemnify the Placement Agent (including  
officers and directors of the Company and the Placement Agent and any person    
who may be deemed to control the Placement Agent or the Company) against        
certain liabilities, including liabilities under the Securities Act of 1933,    
as amended (the "Securities Act").                                              

     Pursuant to the terms of a Private Placement Subscription Agreement
("PPSA") dated November 7, 1997, among the Company, Excalibur Limited           

II-1

POS AM
55th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 55th
Partnership ("Excalibur") and Gundyco in trust for RRSP550-98866-19             
("Gundyco," and together with Excalibur, "the Holders"), the Company issued 5%  
convertible subordinated debentures and warrants to the Holders. The PPSA       
provided the Holders with registration rights for the Common Stock underlying   
the Debentures and Warrants. Under the provisions of a registration rights      
agreement dated November 7, 1997, among the Company and the Holders, the        
Company has agreed to indemnify the Holders (including officers, directors,     
members, partners and each person deemed to control the Holders), against       
certain liabilities, including liabilities under the Securities Act.            

       The common stock purchase warrant ("Warrant") dated November 19, 1997
issued by the Company to The CIT Group/Credit Finance, Inc. ("CIT") contains    
provisions under which the Company has agreed to indemnify CIT (or other        
holders of the Creditor's Warrant) against certain liabilities, including       
liabilities under the Securities Act.                                           

   Article Seventh of the Company's certificate of incorporation and
Article VI of the Company's by-laws provide for the indemnification of          
officers and directors to the fullest extent allowed by Section 145 of the      
Delaware General Corporation Law (the "GCL").                                   

 The GCL provides, in part, that no director shall be personally
liable to a corporation or its stockholders for monetary damages for any        
breach of fiduciary duty by such director as a director, except:                

        (i) for breach of the director's duty of loyalty to the corporation or
its stockholders;                                                               

(ii) for acts or omissions not in good faith or which involve 
intentional misconduct or a knowing violation of law;                           

(iii) pursuant to Section 174 of the GCL; or                  

      (iv) for any transaction from which the director derived an improper
personal benefit.                                                               

       The Company will, to the full extent permitted by the GCL, as amended
from time to time, indemnify all persons indemnifiable pursuant thereto.        

Item 16.  Exhibits                                                              

(a) Exhibits                                                  

II-2

POS AM
56th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 56th
Exhibit No.                                                                     

5.1    Opinion of Snow Becker Krauss P.C. regarding legality of securities being
registered.*                                                      

23.1   Consent of Snow Becker Krauss P.C. (included in Exhibit 5.1).*           

23.2   Consent of Deloitte & Touche LLP.*                                       

23.3   Consent of Deloitte & Touche LLP.*                                       

------------                                                                    
*Filed Herewith                                                                 

Item 17.  Undertakings                                                          

The undersigned registrant hereby undertakes:                 

               (1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:          

              (i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;                                                  

         (ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most     
recent post-effective amendment thereof) which, individually or in the          
aggregate, represent a fundamental change in the information set forth in the   
registration statement. Notwithstanding the foregoing, any increase or          
decrease in volume of securities offered (if the total dollar value of          
securities offered would not exceed that which was registered) and any          
deviation from the low or high end of the estimated maximum offering range may  
be reflected in the form of prospectus filed with the Commission pursuant to    
Rule 424(b) if, in the aggregate, the changes in volume and price represent no  
more than 20 percent change in the maximum aggregate offering price set forth   
in the "Calculation of Registration Fee" table in the effective registration    
statement.                                                                      

II-3

POS AM
57th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 57th
             (iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration           
statement or any material change to such information in the registration        
statement.                                                                      

                      (2) For the purpose of determining any liability
           under the Securities Act of 1933, each post-effective amendment
        shall be deemed a new registration statement relating to the
           securities offered therein, and the offering of such securities
       at that time shall be deemed the initial bona fide offering
thereof.                                            

                   (3) To remove from registration by means of a
           post-effective amendment any of the securities being registered
    which remain unsold at the termination of this offering.

  For the purpose of determining any liability under the
Securities Act of 1933, each filing of registrant's annual report pursuant to   
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where       
applicable, each filing of an employee benefit plan's annual report pursuant    
to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated   
by reference in the registration statement shall be deemed to be a new          
registration statement relating to the securities offered therein, and the      
offering of such securities at that time shall be deemed to be the initial      
bona fide offering thereof.                                                     

Insofar as indemnification for liabilities arising under the  
Securities Act of 1933 may be permitted to directors, officers, and             
controlling persons of the registrant pursuant to the foregoing provisions, or  
otherwise, the registrant has been advised that in the opinion of the           
Securities and Exchange Commission such indemnification is against public       
policy as expressed in the Securities Act and is, therefore, unenforceable. In  
the event that a claim for indemnification against such liabilities (other      
than the payment by the registrant of expenses incurred or paid by a director,  
officer, or controlling person of the registrant in the successful defense of   
any action, suit, or proceeding) is asserted by such director, officer, or      
controlling persons in connection with the securities being registered, the     
registrant will, unless in the opinion of its counsel the matter has been       
settled by controlling precedent, submit to a court of appropriate              
jurisdiction the question whether such indemnification by it is against public  
policy as expressed in the Securities Act of 1933 and will be governed by the   
final adjudication of such issue.                                               

II-4

POS AM
58th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 58th
SIGNATURES

               Pursuant to the requirements of the Securities Act of 1933,
as amended, the registrant certifies that it has reasonable grounds to believe  
that it meets all of the requirements of filing on Form S-3 and has duly        
caused this Registration Statement to be signed on its behalf by the            
undersigned, in the City of New York, State of New York, on the 7th day of      
August 1998.                                                                    

                       BRAKE HEADQUARTERS U.S.A., INC.

           By: /s/ Joseph Ende
                                   -----------------------------------
                      Joseph Ende, President

POWER OF ATTORNEY   

                Each of the undersigned hereby constitutes and appoints Marc
J. Ruskin as their true and lawful attorney-in-fact, with full power of         
substitution and resubstitution for them in their name, place and stead, in     
any and all capacities, to sign any and all amendments (including               
post-effective amendments to this Registration Statement, and to file the       
same, with all exhibits thereto and other documents in connection therewith,    
with the Securities and Exchange Commission, hereby ratifying and confirming    
all that each such attorney-in-fact or agent or substitute lawfully does or     
causes to be done by virture hereof.                                            

               Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement on Form S-3 has been signed below by    
the following persons in the capacities and on the dates indicated:             

                                                        [Enlarge/Download Table]


           Name                               Title                          Date        
           ----                               -----                          ----        

                                                                                         

/s/ Joseph Ende                     Chairman of the Board of Directors,    August 7, 1998
-------------------------------     President and Chief Executive                        
    Joseph Ende                     Officer (Principal Executive Officer)                

/s/ Marc J. Ruskin                  Chief Financial Officer (Principal     August 7, 1998
-------------------------------     Financial and Accounting Officer)                    
    Marc J. Ruskin                  and Director                                         

/s/ *                               Secretary and Director                 August 7, 1998
-------------------------------                                                          
    Sandra Ende                                                                          

/s/ *                               Director                               August 7, 1998
-------------------------------                                                          
    Adam E. Budish                                                                       

/s/ Elliot H. Lutzker               Director                               August 7, 1998
-------------------------------                                                          
    Elliot H. Lutzker                                                                    

* /s/ Marc J. Ruskin                                                                     
  -----------------------------                                                          
      Marc J. Ruskin                                                                     
      as attorney-in-fact for each                                                       
      of the above named persons                                                         

II-5

POS AM
59th Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 59th
BRAKE HEADQUARTERS U.S.A., INC. AND SUBSIDIARIES

Schedule II - Valuation and Qualifying Accounts 

                                                                [Download Table]


          Column A                 Column B    Column C    Column D       Column E  

                                   Balance at  Charged to                 Balance at
                                   Beginning    Costs and                    End of 
         Description                of Period  Expenses    Deduction        Period  
-------------------------------   -----------  ----------  ---------      ----------

Allowance for Doubtful Accounts:                                                    
                                                                                    
Year ended December 31, 1997       $ 372,000   $ 893,000   $  86,000 (A)  $1,179,000

Year ended December 31, 1996       $ 288,000   $ 480,000   $ 396,000 (A)  $  372,000

Year ended December 31, 1995       $  75,000   $ 618,000   $ 405,000 (A)  $  288,000

(A) Represents amounts written off. Normal recurring credits and returns are    
charged against sales.                                                  

S-1 

POS AM
Last Page of 60
TOC
1st
Previous
Next
↓Bottom
Just 60th
EXHIBIT INDEX 

Exhibit No.                                                                     
-----------                                                                     

5.1    Opinion of Snow Becker Krauss P.C. regarding legality of securities being
registered. *                                                     

23.1   Consent of Snow Becker Krauss P.C. (included in Exhibit 5.1).*           

23.2   Consent of Deloitte & Touche LLP.*                                       

23.3   Consent of Deloitte & Touche LLP.*                                       

------------                                                                    
*Filed Herewith                                                                 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘POS AM’ Filing		Date		First		Last			Other Filings
		11/7/02		10
		3/31/01		15		43
		12/31/00		15		47
		7/20/00		42
		4/30/00		12		51
		12/31/99		47
		7/31/99		44
		12/31/98		41		51			DEF 14A,  NT 10-K,  PRES14A
		11/7/98		10		42
		9/23/98
Filed on:		9/22/98		1
		8/7/98		5		58			S-3/A
		7/31/98		44					4
		7/16/98		4					S-3/A
		7/15/98		7					10-Q/A,  8-K/A
		7/10/98		16
		6/30/98		7					10-K/A,  10-Q,  10-Q/A,  NT 10-Q
		6/26/98		4
		6/19/98		7					10-Q/A
		6/12/98		10		29
		5/22/98		7					8-K/A
		5/8/98		4					S-3/A
		4/29/98		10		51
		4/6/98		15					DEF 14C
		4/3/98		7
		3/31/98		7		51			10-Q,  10-Q/A,  NT 10-K,  NT 10-Q
		3/20/98		33					PRE 14C
		2/2/98		7					8-K/A
		1/1/98		25
		12/31/97		7		59			10-K,  10-K/A,  NT 10-K
		12/15/97		47
		11/19/97		55
		11/17/97		7		39			8-K,  8-K/A
		11/7/97		17		55
		8/31/97		31
		7/31/97		44
		3/31/97		20		50			10-Q,  10-Q/A,  NT 10-K
		12/31/96		12		59			10-K,  NT 10-K
		11/12/96		7					8-A12G
		8/31/96		31
		8/30/96		40
		7/10/96		54
		6/6/96		18					10-12G
		12/31/95		20		59
		8/8/95		9
		4/30/95		16
		1/1/95		36		44
		12/31/94		11		21
		12/31/93		20
									List all Filings