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 March 31, 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 March 31, 1996, the close of
the period covered by the report; 734,787 shares were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
PART I - Financial Information Pages - 1-6
PART II - Other Information Pages - 7-8
<PAGE>
ELECTRIC M & R INC.
TABLE OF CONTENTS
March 31, 1996
UNAUDITED
Part I - Financial Information
Balance Sheet -March 31, 1996 and December 31, 1995.
Statement of Operations -For the three months ended March 31, 1996
and 1995.
Statement of Cash Flows -For the three months ended March 31, 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 MAR. 31, 1996 DEC. 31, 1995
Current Assets
Cash and Cash Equivalents $713,449 $11,790
Accounts Receivable-Net Allowance
for Doubtful Accounts of $4,300 373,455 141,308
and $9,000 Respectively
Inventories-See Number 2 837,838 870,361
Note Receivable-Current -0- 3,671
Other Current Assets 21,866 36,747
$1,946,608 $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 (2,072,296) (2,059,538)
337,982 346,317
Other Assets
Assets Held For Resale 509,277 789,439
$2,793,867 $2,199,633
LIABILITIES & SHAREHOLDERS' EQUITY
Notes Payable Demand $136,000 $91,000
Current Portion of Long Term Debt 28,478 29,866
Notes Payable-Related Parties 1,071,276 1,107,890
Accounts Payable 253,788 183,247
Accrued Expenses:
Salaries, Wages, Vacations & Taxes 29,310 8,741
Interest-Related Parties 1,011,218 1,067,933
Other:
Land Deposits 12,000 12,000
Income Tax Payable 166,000 32,000
$2,708,070 $2,532.677
Long Term Debt 12,229 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 (2,147,659) (2,572,353)
73,568 (351,126)
$2,793,867 $2,199,633
<PAGE>
Part 1, Item 2
ELECTRIC M & R INC.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 & 1995
UNAUDITED
PROFIT AND LOSS INFORMATION FOR THE 3 MONTHS ENDED MARCH 31,
1996 1995
REVENUES
Net Sales-Manufacturing $590,921 $815,507
Sales of Real Estate 973,000 -0-
Other Income 4,171 (1,457)
$1,568,092 $814,050
COST AND EXPENSES
Cost of Products Sold Manufacturing $529,145 $662,699
Cost of Real Estate Sold 320,688 -0-
Selling, General and Administrative 130,264 128,504
Interest Expense 29,301 30,983
Total Cost and Expenses $1,009,398 $822,186
PROVISION FOR INCOME TAX
Income Tax $134,000 $-0-
NET INCOME (LOSS) $424,694 ($8,136)
NET INCOME PER SHARE OF COMMON STOCK
(Based on 734,787 and 734,787 shares of common
stock outstanding) $0.58 $(0.01)
PROFIT PER SHARE OF COMMON STOCK
Per Share data for the three months ended March 31, 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 MARCH 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received from Customers $375,647 $742,148
Cash Paid to Suppliers and Employees (517,168) (806,381)
Interest Received -0- -0-
Interest Paid (86,016) (15,143)
Income Tax Paid -0- -0-
Net Cash Provided (Used) by Operating
Activities $(227,537) $(79,376)
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) (7,220)
Net Cash Provided (Used) By Investing $928,051 $62,544
Activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Additional Borrowings $75,000 $120,000
Principal Payments on Notes Payable (73,855) (27,544)
Net Cash Provided (Used) by
Financing Activities $1,145 $92,456
Net Increase (Decrease) in Cash and
Cash Equivalents $701,659 $75,624
Cash and Cash Equivalents at Beginning
of Period 11,790 7,463
CASH AND CASH EQUIVALENTS AT END OF PERIOD $713,449 $83,087
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES
Net Income $424,694 $(8,136)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
(Increase) Decrease in:
Accounts Receivable (232,147) (74,715)
Inventory 32,523 44,532
Notes Receivable 3,671 -0-
Other Current Assets 14,881 31,762
Increase (Decrease) in:
Accounts Payable 70,541 (98,565)
Accrued Expenses 97,854 10,243
Depreciation Expenses 12,758 12,690
Gain / Loss on Sale of Real Estate (652,312) 2,813
Net Cash Provided (Used) by Operating
Activities $(227,537) $(79,376)
<PAGE>
Part 1, Item 4
ELECTRIC M & R INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED MARCH 31, 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 $428,410 $434,893
Work in Progress 186,630 183,191
Finished Goods 222,798 252,277
$837,838 $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 March 31, 1996 and December 31, 1995,
there had been $136,000 and $91,000 borrowed on the line of credit.
4. NOTES PAYABLE
Demand notes payable to related parties in the amounts of $1,071,276
and $1,107,890 at March 31, 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 March 31, 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 $1,011,218
and $1,067,933 at March 31,1996 and December 31, 1995 respectively.
<PAGE>
Part 1, Item 4
ELECTRIC M & R INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED MARCH 31, 1996 AND DECEMBER 31, 1995
5. LONG-TERM DEBT
Long-term debt consists of the following at March 31, 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. $21,146 $26,649
8.49% note payable to Dollar Bank with
final payment due September 18, 1998.
The note is secured by a vehicle. 19,561 21,299
$40,707 $47,948
Less: Current Portion 28,478 29,866
$12,229 $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 1995 and 1994 the Company charged an affiliated Company owned
by an officer approximately $46,700 and $9,800 respectively, for
administrative and management services. These amounts are included
in other income.
In addition, interest expense for the periods ended March 31, 1996,
and December 31, 1995 pertaining to notes payable to related parties,
amounted to approximately $26,000 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 March 31, 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 MARCH 31, 1996 AND DECEMBER 31, 1995
8. INCOME TAXES
Significant components of income tax expense from continuing
operations consist of the following at March 31, 1996 and 1996.
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 March 31, 1996 and December 31, 1995.
<PAGE>
Part 1, Item 5
ELECTRIC M & R INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE PERIODS ENDED MARCH 31, 1996 AND DECEMBER 31, 1995
MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues from manufacturing for the three months ended March 31, 1996,
were $590,921 compared to $815,507 for the same period in 1995.
This represents a decrease in Revenues of $224,586.
Selling, general and administrative expenses for the quarter ended
March 31, 1996 increased by approximately $1,760 from the previous
year. Gross margin has declined from 19% to 10%. Real estate sales
netted a $652,312 profit. This resulted in net income of $424,694
for the three months ended March 31, 1996, compared to a loss of
($8,136) for the 1995 period.
This is an increase of $432,830.
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 ($761,000). This is caused principally by amounts owed
to related parties in excess of $2.0 million. The related parties
continue to provide favorable financial assistance to the company.
<PAGE>
ELECTRIC M & R INC.
OTHER INFORMATION
FOR THE PERIODS ENDED MARCH 31, 1996 AND DECEMBER 31, 1995
LEGAL PROCEEDINGS
There have been no significant changes in the Company's legal
proceedings during the three months ended March 31, 1996.
EXHIBITS AND REPORT OF FORM 8-K
No event occurred that required the registrant to file form 8-K during
the three months ended March 31, 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
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 713,449
<SECURITIES> 0
<RECEIVABLES> 377,755
<ALLOWANCES> (4,300)
<INVENTORY> 837,838
<CURRENT-ASSETS> 1,946,608
<PP&E> 2,410,278
<DEPRECIATION> (2,072,296)
<TOTAL-ASSETS> 2,793,867
<CURRENT-LIABILITIES> 2,708,070
<BONDS> 12,229
<COMMON> 734,787
0
0
<OTHER-SE> (661,219)
<TOTAL-LIABILITY-AND-EQUITY> 2,793,867
<SALES> 590,921
<TOTAL-REVENUES> 1,568,092
<CGS> 529,145
<TOTAL-COSTS> 529,145
<OTHER-EXPENSES> 450,952
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,301
<INCOME-PRETAX> 558,694
<INCOME-TAX> 134,000
<INCOME-CONTINUING> 424,694
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 424,694
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.58
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