SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996, Commission file number 0-4939
ELECTRIC M & R INC
(Name of small business issuer in its charter)
Delaware 25-1197808
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
2025 Milford Drive, Bethel Park,
Allegheny County, Pennsylvania 15102
(address of principal executive offices)
Issuer's Telephone Number: 412-831-6101
Securities registered under section 12 (b) of the Exchange Act:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
Common Stock, $1.00 Par Value
(Title Of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act of 1934 during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirement for the past
90 days.
Yes_____X_____ No___________
Registrant has one class of common stock as of June 30, 1996, the close of
the period covered by the report; 734,787 shares were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
PART I - Financial Information Pages - 1-10
PART II - Other Information Page - 11
<PAGE>
ELECTRIC M & R INC.
TABLE OF CONTENTS
June 30, 1996
UNAUDITED
Part I - Financial Information
Balance Sheet -June 30, 1996 and December 31, 1995.
Statement of Operations -For the three months ended June 30, 1996
and 1995.
For the six months ended June 30, 1996 and 1995.
Statement of Cash Flows -For the three months ended June 30, 1996 and
1995.
For the six months ended June 30, 1996 and
1995.
Notes to Financial Statements
Management's Discussion and Analysis
Part II - Other Information
Item 1 - Legal Proceedings
Item 2 - Not Applicable
Item 3 - Not Applicable
Item 4 - Not Applicable
Item 5 - Not Applicable
Item 6 - Exhibits and Report of Form 8-K
<PAGE>
Part 1, Item l
ELECTRIC M & R INC.
BALANCE SHEET
Unaudited
ASSETS JUNE 30, 1996 DEC. 31, 1995
Current Assets
Cash and Cash Equivalents $127,075 $11,790
Accounts Receivable-Net Allowance
for Doubtful Accounts of $4,300 281,881 141,308
Inventories-See Number 2 798,703 870,361
Note Receivable-Current -0- 3,671
Other Current Assets 43,858 36,747
$1,251,517 $1,063,877
Property, Plant and Equipment
Land 22,484 22,484
Buildings 787,936 787,936
Machinery and Equipment 1,402,388 1,402,388
Furniture and Fixtures 197,470 193,047
$2,410,278 $2,405,855
Less: Accumulated Depreciation (2,085,164) (2,059,538)
325,114 346,317
Other Assets
Assets Held For Resale 509,277 789,439
$2,085,908 $2,199,633
LIABILITIES & SHAREHOLDERS' EQUITY
Notes Payable Demand $ -0- $91,000
Current Portion of Long Term Debt 23,746 29,866
Notes Payable-Related Parties 842,429 1,107,890
Accounts Payable 219,236 183,247
Accrued Expenses:
Salaries, Wages, Vacations & Taxes 27,662 8,741
Interest-Related Parties 778,587 1,067,933
Other:
Land Deposits 12,000 12,000
Income Tax Payable 159,630 32,000
$2,063,290 $2,532.677
Long Term Debt 10,297 18,082
SHAREHOLDERS' EQUITY (DEFICIT)
Common Stock, $1.00 Par Value;
2,000,000 Shares Authorized;
734,783 Shares Issued & Outstanding 734,787 734,787
Additional Paid in Capital 1,486,440 1,486,440
Accumulated Deficit (2,208,906) (2,572,353)
12,321 (351,126)
$2,085,908 $2,199,633
<PAGE>
Part 1, Item 2
ELECTRIC M & R INC.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 & 1995
UNAUDITED
PROFIT AND LOSS INFORMATION FOR THE 3 MONTHS ENDED JUNE 30,
1996 1995
REVENUES
Net Sales-Manufacturing $620,245 $510,879
Sales of Real Estate -0- 6,000
Other Income 6,186 5,774
$ 626,431 $522,653
COST AND EXPENSES
Cost of Products Sold Manufacturing $532,919 $503,760
Cost of Real Estate Sold -0- 3,780
Selling, General and Administrative 131,148 116,090
Interest Expense 23,611 36,981
Total Cost and Expenses $ 687,678 $660,611
PROVISION FOR INCOME TAX
Income Tax $ -0- $-0-
NET INCOME (LOSS) $(61,247) $(137,958)
NET INCOME PER SHARE OF COMMON STOCK
(Based on 734,787 and 734,787 shares of common
stock outstanding) $(.08) $( .19)
PROFIT PER SHARE OF COMMON STOCK
Per Share data for the three months ended June 30, 1996 and 1995, are based
upon the weighted average number of shares which were 734,787 and 734,787,
respectively.
<PAGE>
Part 1, Item 2
ELECTRIC M & R INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 & 1995
UNAUDITED
PROFIT AND LOSS INFORMATION FOR THE 6 MONTHS ENDED JUNE 30,
1996 1995
REVENUES
Net Sales-Manufacturing $1,211,166 $1,326,386
Sales of Real Estate 973,000 6,000
Other Income 10,357 4,317
$2,194,523 $1,336,703
COST AND EXPENSES
Cost of Products Sold Manufacturing $1,062,064 $1,166,459
Cost of Real Estate Sold 320,688 3,780
Selling, General and Administrative 261,412 244,594
Interest Expense 52,912 67,964
Total Cost and Expenses $1,697,076 $1,482,797
PROVISION FOR INCOME TAX
Income Tax $134,000 $-0-
NET INCOME (LOSS) $363,447 $(146,094)
NET INCOME PER SHARE OF COMMON STOCK
(Based on 734,787 and 734,787 shares of common
stock outstanding) $ .49 $( .20)
PROFIT PER SHARE OF COMMON STOCK
Per Share data for the six months ended June 30, 1996 and 1995, are based
upon the weighted average number of shares which were 734,787 and 734,787,
respectively.
<PAGE>
Part 1, Item 3 ELECTRIC M & R INC.
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
UNAUDITED
FOR THE THREE MONTHS ENDED JUNE 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received from Customers $718,167 $809,465
Cash Paid to Suppliers and Employees (670,418) (788,421)
Interest Received -0- -0-
Interest Paid (256,242) (46,720)
Income Tax Paid (6,370) -0-
Net Cash Provided (Used) by Operating
Activities $(214,863) $(25,676)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Sale of Real Estate $-0- $ -0-
Closing Costs Paid On Real Estate Sales -0- -0-
Payments for Capital Expenditures -0- (6,348)
Net Cash Provided (Used) By Investing $-0- $(6,348)
Activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Additional Borrowings $ -0- $ -0-
Principal Payments on Notes Payable (371,511) (45,262)
Net Cash Provided (Used) by
Financing Activities $(371,511) $(45,262)
Net Increase (Decrease) in Cash and
Cash Equivalents $(586,374) $(77,286)
Cash and Cash Equivalents at Beginning
of Period 713,449 83,087
CASH AND CASH EQUIVALENTS AT END OF PERIOD $127,075 $ 5,801
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES
Net Income $(61,247) $(137,958)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
(Increase) Decrease in:
Accounts Receivable 91,574 271,812
Inventory 39,135 49,405
Notes Receivable -0- 15,000
Other Current Assets (21,992) (10,507)
Increase (Decrease) in:
Accounts Payable (34,552) (223,837)
Accrued Expenses (240,649) (2,780)
Depreciation Expenses 12,868 13,189
(Gain) / Loss on Sale of Real Estate -0- -0-
Net Cash Provided (Used) by Operating
Activities $(214,863) $ (25,676)
<PAGE>
Part 1, Item 3 ELECTRIC M & R INC.
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
UNAUDITED
FOR THE SIX MONTHS ENDED JUNE 30,
1996
1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received from Customers $1,093,814 $1,551,613
Cash Paid to Suppliers and Employees (1,187,586) (1,594,802)
Interest Received -0- -0-
Interest Paid (342,258) (61,863)
Income Tax Paid (6,370) -0-
Net Cash Provided (Used) by Operating
Activities $(442,400) $(105,052)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Sale of Real Estate $973,000 $69,764
Closing Costs Paid On Real Estate Sales (40,526) -0-
Payments for Capital Expenditures (4,423) (13,568)
Net Cash Provided (Used) By Investing $928,051 $56,196
Activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Additional Borrowings $ 75,000 $120,000
Principal Payments on Notes Payable (445,366) (72,806)
Net Cash Provided (Used) by
Financing Activities $(370,366) $ 47,194
Net Increase (Decrease) in Cash and
Cash Equivalents $ 115,285 $ (1,662)
Cash and Cash Equivalents at Beginning
of Period 11,790 $7,463
CASH AND CASH EQUIVALENTS AT END OF PERIOD $127,075 $ 5,801
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES
Net Income $363,447 $(146,094)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
(Increase) Decrease in:
Accounts Receivable (140,573) 197,097
Inventory 71,658 96,937
Notes Receivable 3,671 15,000
Other Current Assets (7,111) 18,255
Increase (Decrease) in:
Accounts Payable 35,989 (322,402)
Accrued Expenses (142,795) 7,463
Depreciation Expenses 25,626 25,879
(Gain) / Loss on Sale of Real Estate (652,312) 2,813
Net Cash Provided (Used) by Operating
Activities $(442,400) $(105,052)
<PAGE>
Part 1, Item 4
ELECTRIC M & R INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 1996 AND DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents-The Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to
be cash equivalents.
Inventories - Inventories are stated at the lower of cost
(first-in, first-out method) or market.
Property, Plant and Equipment - The cost of the assets is
depreciated using the straight-line and accelerated methods over
their estimated useful lives for financial statement and tax
return purposes.
Use of 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 reporting
period. Actual results could differ from those estimates.
2. INVENTORIES
Inventories consist of the following for 1996 and 1995:
Raw Materials $403,306 $434,893
Work in Progress 186,770 183,191
Finished Goods 208,627 252,277
$798,703 $870,361
3. LINE OF CREDIT
In 1994, the Company established a $150,000 line of credit with
Dollar Bank. Borrowings bear interest at the bank's prime rate plus
1 1/2%. The line of credit is personally guaranteed by the principal
shareholder of the Company. At December 31, 1995, there had been
$91,000 borrowed on the line of credit. As of June 30, 1996, there is
nothing due on the credit line.
4. NOTES PAYABLE
Demand notes payable to related parties in the amounts of $ 842,429
and $1,107,890 at June 30, 1996 and December 31, 1995, respectively,
consist of amounts due officer-shareholders of the Company, and
entities under their control. These notes and amounts bear interest
at prime (8.25% at June 30, 1996 and 8.50% at December 31, 1995)
plus 1% with the exception of a $60,000 note payable to an officer-
shareholder at 10%, and a $20,000 notes payable to an officer-
shareholder at 8%. Accrued interest on these notes was $ 778,587
and $1,067,933 at June 30, 1996 and December 31, 1995 respectively.
<PAGE>
Part 1, Item 4
ELECTRIC M & R INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 1996 AND DECEMBER 31, 1995
5. LONG-TERM DEBT
Long-term debt consists of the following at June 30, 1996 and
December 31, 1995.
1996 1995
8% mortgage payable to an individual
with final payment due March 15,1997.
The note is secured by a building. $15,532 $26,649
8.49% note payable to Dollar Bank with
final payment due September 18, 1998.
The note is secured by a vehicle. 18,511 21,299
$34,043 $47,948
Less: Current Portion 23,746 29,866
$10,297 $18,082
Aggregate maturities of long-term debt subsequent to December 31,
1995 are as follows:
By: December 31, 1996 $29,866
December 31, 1997 11,774
December 31, 1998 6,308
$47,948
6. RELATED PARTY TRANSACTIONS
During 1996 and 1995 the Company charged an affiliated Company owned
by an officer approximately $7,600 and $46,700 respectively, for
administrative and management services. These amounts are included
in other income.
In addition, interest expense for the periods ended June 30, 1996,
and December 31, 1995 pertaining to notes payable to related parties,
amounted to approximately $45,000 and $120,674, respectively.
7. ASSETS HELD FOR SALE
The Company owns land in Puerto Rico that is being actively offered
for sale. This land is recorded at the Company's cost, $509,277 and
$557,439 at June 30, 1996 and December 31, 1995, respectively, which
is estimated to be less than net realizable value.
The Company owned rental property in Irwin, Pennsylvania which was
being actively offered for sale. During 1996, management of the
Company sold this property for $232,000.
<PAGE>
Part 1, Item 4
ELECTRIC M & R INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 1996 AND DECEMBER 31, 1995
8. INCOME TAXES
Significant components of income tax expense from continuing
operations consist of the following at June 30, 1996 and 1995.
1996 1995
Current - State $ -0- $ -0-
- Puerto Rico $134,000 $ -0-
$134,000 $ -0-
For Federal income tax reporting purpose, the Company has available
approximately $2,400,000 of net operating loss carry forwards as of
December 31, 1995. If unused, these will expire in varying amounts
beginning in 1997 through 2010.
For State income tax reporting purposes, the Company has $820,000 of
net operating loss carryforwards as of December 31, 1995. If unused,
these amounts will expire in varying amounts beginning in 1996 and
1997.
These losses result in a deferred tax asset which has been reduced to
zero by a valuation allowance due to a trend of minimal taxable
income in prior years.
9. LITIGATION
On June 21, 1990, the Company was awarded damages of $1,009,000 from
a former employee of the Company and his related entities. The
judgement was the result of a long-standing suit by the Company
against the former employee and his related entities. The
Company is currently involved in several related lawsuits in order to
collect the judgement. In 1992, the Company received $171,000 as
settlement in a lawsuit with a financial institution related to the
lawsuit against the former employee. The net proceeds were used to
reduce a receivable in the amount of $44,016 with the remaining
$126,984 recorded as income in 1992. The Company used the proceeds
to purchase three first mortgages from the financial institution
secured by three rental properties. The mortgagee of each of these
properties was the former employee. The mortgagee defaulted payments
on all the mortgages. The Company took possession of these
properties during 1994. The properties were sold in 1995 and in
1996.
10. COMMON STOCK
Common stock has a stated value of $l per share. There are
2,000,000 shares authorized, and 734,787 shares issued and
outstanding at June 30, 1996 and December 31, 1995.
<PAGE>
Part 1, Item 5
ELECTRIC M & R INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE PERIODS ENDED JUNE 30, 1996 AND DECEMBER 31, 1995
MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues from manufacturing for the six months ended June 30, 1996,
were $1,211,166 compared to $1,326,386 for the same period in 1995.
This represents a decrease in Revenues of $115,220.
Selling, general and administrative expenses for the six months ended
June 30, 1996 increased by approximately $16,800 from the previous
year. Gross margin has remained the same at approximately 12%. Real
estate sales netted a $652,312 profit. This resulted in net income of
$363,447 for the six months ended June 30, 1996, compared to a loss of
($146,094) for the 1995 period.
This is an increase of $509,541.
Management expects operating results of the Company will improve
during 1996, principally through increased sales volume.
At March 31, 1996,the Company had negative working capital of
approximately ($812,000). This is caused principally by amounts owed
to related parties in excess of $1.6 million. The related parties
continue to provide favorable financial assistance to the company.
<PAGE>
Part 2, Item 1 & 6
ELECTRIC M & R INC.
OTHER INFORMATION
FOR THE PERIODS ENDED JUNE 30, 1996 AND DECEMBER 31, 1995
LEGAL PROCEEDINGS
There have been no significant changes in the Company's legal
proceedings during the six months ended June 30, 1996.
EXHIBITS AND REPORT OF FORM 8-K
No event occurred that required the registrant to file form 8-K during
the six months ended June 30, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Electric M & R Inc.
Registrant
DATE
GRETCHEN OSWALD
PRESIDENT
DATE
RAYMOND F. CROUSHORE
TREASURER
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996
<CASH> 713,449 127,075
<SECURITIES> 0 0
<RECEIVABLES> 377,755 286,181
<ALLOWANCES> 4,300 4,300
<INVENTORY> 837,838 798,703
<CURRENT-ASSETS> 1,946,608 1,251,517
<PP&E> 2,410,278 2,410,278
<DEPRECIATION> (2,072,296) (2,085,164)
<TOTAL-ASSETS> 2,793,867 2,085,908
<CURRENT-LIABILITIES> 2,708,070 2,063,290
<BONDS> 0 0
0 0
0 0
<COMMON> 734,787 734,787
<OTHER-SE> (661,219) (722,466)
<TOTAL-LIABILITY-AND-EQUITY> 2,793,867 2,085,908
<SALES> 590,921 1,211,166
<TOTAL-REVENUES> 1,568,092 2,194,523
<CGS> 529,145 1,062,064
<TOTAL-COSTS> 529,145 1,062,064
<OTHER-EXPENSES> 450,952 582,100
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 29,301 52,912
<INCOME-PRETAX> 558,694 497,447
<INCOME-TAX> 134,000 134,000
<INCOME-CONTINUING> 424,694 363,447
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 424,694 363,447
<EPS-PRIMARY> 0.58 0.49
<EPS-DILUTED> 0.58 0.49
</TABLE>
