Einstein Bros 2003 Annual Report Download - page 17

http://www.sec.gov/Archives/edgar/data/949373/000104746904009609/a2132006z10-k.htm[9/11/2014 10:13:55 AM]
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purchased by the franchisee in the amount of $200,000. An arbitrator has been selected and document exchange is complete. No hearing date has
been scheduled.
On October 28, 2002, Sansim Patel, Inc., a subfranchisee of Manhattan, filed suit against Manhattan, the master franchisee, and others in
Orange County (Orlando, Florida). The plaintiff alleges claims of civil conspiracy and unjust enrichment against Manhattan and seeks rescission of
its franchise agreement with Manhattan. The plaintiff also seeks damages in an unspecified amount. In December 2002, we filed a motion to
dismiss all of the claims asserted against us by the plaintiff, based in part on a general release the plaintiff had previously executed in favor of
Manhattan. That motion remains pending with the Court.
In July 2002, the New Jersey Division of Taxation entered judgment in the amount of $5,744,902, plus costs, against Manhattan Bagel
Construction Company, a wholly owned subsidiary of Manhattan. This judgment represents amounts for corporate income taxes for the period
from 1996 to 2000, and sales and use taxes for the period from 1995 to 1997. At that same time, the Division of Taxation provided Manhattan
Bagel Construction Company with a Notice and Demand for Payment of Tax in the additional amount of $130,200, for corporate income taxes and
sales and use taxes for the period from October 2001 through June 2002. Manhattan Bagel Construction Company ceased operations in or about
early 1997 and has existed since that time only as a non-operating entity with no assets. With regard to taxes imposed for the period prior to early
1997, we believe that those amounts are barred from being asserted against Manhattan, because they were not asserted in Manhattan's
November 1997 bankruptcy proceeding.
We cannot predict the outcome of the matters discussed above. There can be no assurance that we will prevail in these litigation matters or
that we will not be subject to regulatory sanctions or that civil penalties or monetary damages or other relief will not be awarded against us.
The following proceedings were terminated in the fourth quarter of the period covered by this report.
On October 27, 2003, we were sued in the United States District Court for the Southern District of Florida under the Fair Labor Standards Act
of 1938, as amended, by a former employee on behalf of himself and others similarly situated. The complaint alleges that we should have paid
overtime wages to the former employee and that he was terminated in retaliation for requesting overtime pay. The lawsuit was settled for a
nominal amount.
On November 7, 2003, we were contacted by the Board of Equalization for the State of California, which claimed that approximately $221,000
was due from Manhattan for past sales and use taxes, interest, and penalties. We investigated the claim and determined that $28,000 remained due
which amount was paid in February 2004.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No items were submitted to a vote of security holders in the fourth quarter.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Prior to November 27, 2001, our common stock was quoted on the Nasdaq National Market under the symbol "NWCI." On November 27,
2001, our common stock was delisted from the Nasdaq National Market for failure to obtain stockholder approval for equity issuances. From
November 27, 2001 until May 22, 2002, our common stock was quoted on the OTC Bulletin Board under the symbol "NWCI.OB". On May 22,
2002, our common stock was removed from the eligible list on the OTC Bulletin Board for the failure to timely file our Form 10-K for the year
ended January 1, 2002, a violation of NASD Rule 6350. At that time it began trading on the "pink sheets" under the symbol "NWCI.PK".
Effective, October 20, 2003 pursuant to the Equity Recap, our stock began trading on the "pink sheets" under the symbol "NWRG.PK".
The following table sets forth the range of high and low closing sale prices or range of high and low bid information, as applicable, (as quoted