Littlefield, Adams & Company Announces Financing Developments.

Business Editors

HUBER HEIGHTS, Ohio--(BUSINESS WIRE)--Jan. 5, 2000

Littlefield, Adams & Company ("Littlefield") (OTCBB:FUNW) announces that it has arranged $2,000,000 in financing with United Capital Funding Corp. ("UCF"), a factoring firm located in Saint Petersburg, Florida.

The term of the financing is one year renewable for another year upon the mutual consent of the parties. Nonetheless, the Company can terminate the financing upon 15 days prior notice without prepayment penalty.

The $2,000,000 is composed of funding availability of $1,750,000 against the sale of accounts receivable by the Company to UCF and a loan of $250,000 to the Company, both of which are secured by substantially all of the assets of the Company. The $250,000 loan is due April 26, 2000. Proceeds from the sale of inventory, net of commissions not to exceed 10%, are to be distributed 40% to the Company and 60% to UCF. However, due to tax judgments on the record against Sports Imprints, Inc., (at one time a wholly-owned subsidiary of the Company), such distribution formula for proceeds from inventory sales is 25% to the Company and 75% to UCF, until the judgments are cleared from the record to the satisfaction of UCF. In any event, if such judgments are not cleared within 45 days, the Company will be in default. While management believes that the record is in error, no assurances can be given that the record can be cleared in 45 days.

Coincident with the closing, the Company, under the terms of its agreement with UCF, paid down the $250,000 loan by about $49,000, leaving an outstanding balance of approximately $201,000. As the loan is paid down, the amount available in funding for the Company from the sale of receivables to UCF rises dollar for dollar from $1,750,000 to the limit of $2,000.000.

The Company is required to have sold to UCF and have outstanding a minimum of $200,000 in accounts receivable through the life of the financing.

In connection with the purchase of each account receivable, the Company will be advanced 80% of its face amount. UCF will charge the Company a factor fee based on a schedule as follows: if such receivable is paid by the customer within 30 days, a 2% charge; for each subsequent 5 days thereafter, through the 90th day of the purchase, such charge increases at the rate of approximately .33%; and, on any receivable that has not been paid by the customer after 90 days from the date of purchase by UCF, such charge increases by 1% for each 10-day period past 90 days.

The proceeds from the financing were applied, net of financing costs, to repayment in full of an outstanding $400,000 (of an original principal amount of $500,000) owing to Andrew E Trolio ("Trolio"), Broomall, Pennsylvania, on which accrued interest will be paid in full when the Company has been invoiced by Trolio. The Bank of Floyd was fully paid down with accrued interest in the amount of about $88,000.

On November 19, 1999, the Company entered into a financing purchase and security agreement with its outside imprint contractor, Next, Inc. ("Next"), to have Next purchase certain accounts receivable of the Company to finance production costs at Next at an interest rate of 15%, compounded monthly. Fees to Next for the financing totaled $30,000 and a five-year warrant to purchase 71,429 shares of common stock at an exercise price of $.70 per share. The due date for each purchase price paid by Next to the Company is 80 days from the date of shipment of the related produced goods. Production and other costs, financing costs, and accrued interest owed to Next totaled about $508,000 on December 28, 1999. Of that amount, approximately $364,000 was paid to Next on December 31, 1999, leaving an outstanding balance as of that date of about $144,000. That indebtedness is secured by certain accounts receivable of the Company of about $200,000.

In addition to the proceeds of the financing from UCF, the Company supplied internally generated funds from the sale of inventory of about $189,500 to repayment of the loans, along with fees related to the UCF financing, exclusive of the approximate $49,000 repaid to UCF coincident with its financing.

John J. Tsucalas, CFA, interim Chief Executive Officer and interim Chief Financial Officer, hailed the new financing arrangement: "We put together two short-term bridge financings within about 30 days to keep the Company alive. As a result of the relatively long-term nature of our financing package with UCF, I believe we are now better positioned to develop and expand our licenses, market and sell our unique art designs on apparel, and further cut our costs."

Littlefield, Adams & Company, headquartered in Huber Heights, Ohio, designs, prints, and sells T-shirts, sweatshirts, and other casual apparel which are screen printed with licensed or proprietary artwork. Littlefield markets its products primarily to retailers throughout the United States. The Company's principal licenses include World Championship Wrestling, "WCW" and "nWo", (a Time Warner Company); "Dilbert" (United Feature Syndicate, Inc.); "Garfield" (Paws, Incorporated); "The Simpsons" and "King of the Hill" (Twentieth Century Fox); "Pepsi" (PepsiCo, Inc.); "Hagar the Horrible" and "Zits" (Hearst Entertainment); "Wit Bit" (Daniel Williams, LTD.); "Lola" (Tribune Media Services, Inc.) and Kawasaki Motors Corp., USA. "Stix-n-Stones" is Littlefield's branded proprietary product. For additional information about Littlefield, Adams & Company, visit our web site at www.funwear.com.

Forward-looking statement caveat: The foregoing discussion includes projections and forward-looking statements that are based on management's beliefs as well as assumptions made by and information currently available to management. When used in this report, the words "anticipate," "estimate," "expect," "predict," "project," "believe," and similar expressions are intended to identify forward-looking statements. The forward-looking statements were prepared on the basis of assumptions which relate, among other things, to the market acceptance of the Company's products, including the Company's licensed and proprietary products; the cost of producing and marketing the Company's products; the prices at which the Company's products may be sold; and the Company's market share for its products. Such assumptions may prove not to be accurate or appropriate, and even if such assumptions do prove to be accurate and appropriate, the actual results of the Company's operations in the future may vary widely due to increased competition in the industry, an increase in interest rates, general economic conditions and other risks and uncertainties. Not all "bookings" constitute contractual commitments, and may therefore be subject to cancellation or modification by customers. Accordingly, the actual results of the Company's operations in the future may vary widely from the forward-looking statements included herein.