SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 September 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
September 30, 1996
UNAUDITED
Part I - Financial Information
Balance Sheet -September 30, 1996 and December 31, 1995.
Statement of Operations -For the three months ended September 30, 1996
and 1995.
For the nine months ended September 30, 1996 and
1995.
Statement of Cash Flows -For the three months ended September 30, 1996
and 1995.
For the nine months ended September 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 SEPT.30, 1996 DEC. 31, 1995
Current Assets
Cash and Cash Equivalents $74,138 $11,790
Accounts Receivable-Net Allowance
for Doubtful Accounts of $4,300 272,658 141,308
Inventories-See Number 2 837,570 870,361
Note Receivable-Current -0- 3,671
Other Current Assets 36,778 36,747
$1,221,144 $1,063,877
Property, Plant and Equipment
Land 22,484 22,484
Buildings 787,936 787,936
Machinery and Equipment 1,404,138 1,402,388
Furniture and Fixtures 199,874 193,047
$2,414,432 $2,405,855
Less: Accumulated Depreciation (2,098,232) (2,059,538)
316,200 346,317
Other Assets
Assets Held For Resale 509,277 789,439
$2,046,621 $2,199,633
LIABILITIES & SHAREHOLDERS' EQUITY
Notes Payable Demand $ -0- $91,000
Current Portion of Long Term Debt 18,128 29,866
Notes Payable-Related Parties 836,581 1,107,890
Accounts Payable 252,491 183,247
Accrued Expenses:
Salaries, Wages, Vacations & Taxes 24,160 8,741
Interest-Related Parties 781,998 1,067,933
Other:
Land Deposits 18,000 12,000
Income Tax Payable -0- 32,000
$1,931,358 $2,532.677
Long Term Debt 7,648 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 (2,113,612) (2,572,353)
107,615 (351,126)
$2,046,621 $2,199,633
<PAGE>
Part 1, Item 2
ELECTRIC M & R INC.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPT.30, 1996 & 1995
UNAUDITED
PROFIT AND LOSS INFORMATION FOR THE 3 MONTHS ENDED SEPT. 30,
1996 1995
REVENUES
Net Sales-Manufacturing $529,971 $883,889
Sales of Real Estate -0- -0-
Other Income 5,746 31,481
$ 535,717 $915,370
COST AND EXPENSES
Cost of Products Sold Manufacturing $453,994 $713,668
Cost of Real Estate Sold -0- -0-
Selling, General and Administrative 132,077 112,095
Interest Expense 20,352 25,078
Total Cost and Expenses $ 606,423 $850,841
PROVISION FOR INCOME TAX
Income Tax $(166,000) $-0-
NET INCOME (LOSS) $ 95,294 $ 64,529
NET INCOME PER SHARE OF COMMON STOCK
(Based on 734,787 and 734,787 shares of common
stock outstanding) $.13 $.09
PROFIT PER SHARE OF COMMON STOCK
Per Share data for the three months ended September 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 NINE MONTHS ENDED SEPTEMBER 30, 1996 & 1995
UNAUDITED
PROFIT AND LOSS INFORMATION FOR THE 9 MONTHS ENDED SEPTEMBER 30,
1996 1995
REVENUES
Net Sales-Manufacturing $1,741,137 $1,994,674
Sales of Real Estate 973,000 -0-
Other Income 16,103 (3,632)
$2,730,240 $1,991,042
COST AND EXPENSES
Cost of Products Sold Manufacturing $1,516,058 $1,672,019
Cost of Real Estate Sold 320,688 5,040
Selling, General and Administrative 393,489 361,653
Interest Expense 73,264 101,816
Total Cost and Expenses $2,303,499 $2,140,528
PROVISION FOR INCOME TAX
Income Tax $(32,000) $-0-
NET INCOME (LOSS) $458,741 $(149,486)
NET INCOME PER SHARE OF COMMON STOCK
(Based on 734,787 and 734,787 shares of common
stock outstanding) $ .62 $( .20)
PROFIT PER SHARE OF COMMON STOCK
Per Share data for the six months ended September 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 SEPTEMBER 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received from Customers $544,940 $700,860
Cash Paid to Suppliers and Employees (575,037) (550,162)
Interest Paid (16,941) (59,622)
Income Tax Paid 6,370 -0-
Net Cash Provided (Used) by Operating
Activities $(40,668) $91,076
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Sale of Real Estate $-0- $ 2,000
Closing Costs Paid On Real Estate Sales -0- -0-
Deposits Received On Read Estate Sales 6,000 -0-
Payments for Capital Expenditures (4,154) (27,588)
Net Cash Provided (Used) By Investing $1,846 $(25,588)
Activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Additional Borrowings $ -0- $23,000
Principal Payments on Notes Payable (14,115) (85,025)
Net Cash Provided (Used) by
Financing Activities $(14,115) $(62,025)
Net Increase (Decrease) in Cash and
Cash Equivalents $(52,937) $3,463
Cash and Cash Equivalents at Beginning
of Period 127,075 5,801
CASH AND CASH EQUIVALENTS AT END OF PERIOD $74,138 $ 9,264
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES
Net Income $95,294 $(3,392)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
(Increase) Decrease in:
Accounts Receivable 9,223 11,872
Inventory (38,867) (52,076)
Notes Receivable -0- 34,649
Other Current Assets 7,080 (12,632)
Increase (Decrease) in:
Accounts Payable 33,255 111,273
Accrued Expenses (159,721) (15,726)
Depreciation Expenses 13,068 17,108
(Gain) / Loss on Sale of Real Estate -0- -0-
Net Cash Provided (Used) by Operating
Activities $(40,668) $ 91,076
<PAGE>
Part 1, Item 3 ELECTRIC M & R INC.
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
UNAUDITED
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received from Customers $1,638,754 $2,252,473
Cash Paid to Suppliers and Employees (1,762,623) (2,144,964)
Interest Paid (359,199) (121,485)
Income Tax Paid -0- -0-
Net Cash Provided (Used) by Operating
Activities $(483,068) $(13,976)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Sale of Real Estate $973,000 $71,764
Closing Costs Paid On Real Estate Sales (40,526) (41,156)
Deposits Received On Real Estate Sales 6,000 -0-
Payments for Capital Expenditures (8,577) -0-
Net Cash Provided (Used) By Investing $929,897 $30,608
Activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Additional Borrowings $ 75,000 $143,000
Principal Payments on Notes Payable (459,481) (157,831)
Net Cash Provided (Used) by
Financing Activities $(384,481) $ (14,831)
Net Increase (Decrease) in Cash and
Cash Equivalents $ 62,348 $ 1,801
Cash and Cash Equivalents at Beginning
of Period 11,790 $7,463
CASH AND CASH EQUIVALENTS AT END OF PERIOD $74,138 $ 9,264
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES
Net Income $458,741 $(149,486)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
(Increase) Decrease in:
Accounts Receivable (131,350) 208,969
Inventory 32,791 (2,671)
Notes Receivable 3,671 49,649
Other Current Assets ( 31) 53,155
Increase (Decrease) in:
Accounts Payable 69,244 (211,129)
Accrued Expenses (302,516) (8,263)
Depreciation Expenses 38,694 42,987
(Gain) / Loss on Sale of Real Estate (652,312) 2,813
Net Cash Provided (Used) by Operating
Activities $(483,068) $(13,976)
<PAGE>
Part 1, Item 4
ELECTRIC M & R INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED SEPTEMBER 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 $403,385 $434,893
Work in Progress 192,390 183,191
Finished Goods 241,795 252,277
$837,570 $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 September 30, 1996,
there is nothing due on the credit line.
4. NOTES PAYABLE
Demand notes payable to related parties in the amounts of $ 836,581
and $1,107,890 at September 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 September 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
$781,998 and $1,067,933 at September 30, 1996 and December 31, 1995
respectively.
<PAGE>
Part 1, Item 4
ELECTRIC M & R INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
5. LONG-TERM DEBT
Long-term debt consists of the following at September 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. $ 9,804 $26,649
8.49% note payable to Dollar Bank with
final payment due September 18, 1998.
The note is secured by a vehicle. 15,972 21,299
$25,776 $47,948
Less: Current Portion 18,128 29,866
$ 7,648 $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 $11,472 and $46,700 respectively, for
administrative and management services. These amounts are included
in other income.
In addition, interest expense for the periods ended September 30,
1996, and December 31, 1995 pertaining to notes payable to related
parties, amounted to approximately $63,970 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 September 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 SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
8. INCOME TAXES
Significant components of income tax expense (income) from continuing
operations consist of the following at September 30, 1996 and 1995.
1996 1995
Current - State $ -0- $ -0-
- Puerto Rico $(32,000) $ -0-
$(32,000) $ -0-
The income in 1996 is the result of reversing the accrued liability
for the prior year.
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 carry forwards as of December 31, 1995. If
unused, these amounts will expire in varying amounts beginning in
1996 and 1997.
For Puerto Rico income tax reporting purposes, the Company has
$1,264,000 of net operating loss carry forwards as of December 31,
1995. If unused, these amounts will expire in varying amounts
beginning in 1996 through 2002.
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.
<PAGE>
Part 1, Item 4
ELECTRIC M & R INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
9. LITIGATION (Continued)
The Company is in the process of attempting to recover the
outstanding award against the Company's former employee. Remaining
assets of the employee have an estimated value of $200,000. The IRS
has a claim against the employee for $400,000. The Company has
reached an agreement with the IRS to split the proceeds of
approximately $200,000. The spouse of the debtor has filed
bankruptcy as an attempt to discharge the Company's claim which is
being processed through a lis pendens lawsuit.
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 September 30, 1996 and December 31, 1995.
<PAGE>
Part 1, Item 5
ELECTRIC M & R INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE PERIODS ENDED SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues from manufacturing for the nine months ended September 30,
1996, were $1,741,137 compared to $1,994,674 for the same period in
1995. This represents a decrease in Revenues of $253,537. The
declines in revenue are principally in the lighting division and
approximately $100,000 is due to a decrease in orders from a major
customer whose retail store renovations have been cut back. The
remaining decline is attributed, in management's belief, to improvements
in competitors products and pricing and, in management's belief, a lack
of aggressiveness on the part of the Company's sales force. In an effort
to bolster its marketing efforts, the Company replaced three salespersons
with new employees that it believes more fully embrace the Company's
marketing philosophy.
Selling, general and administrative expenses for the nine months ended
September 30, 1996, increased by approximately $31,800 for the
previous year. This is the result of increased selling expenses in
the third quarter and an increase in legal fees pertaining to the
actions against the former employee mentioned in Note 9.
Gross margin for the nine months ended September 30, 1996 was 13%
compared to 16% for the first nine months of 1995. This is due to the
decline in sales for 1996, without the ability to further reduce the
fixed manufacturing overhead.
Real estate sales netted a $652,312 profit. These proceeds have been
used to reduce related party debt. Management believes both the terms
and repayment schedule of the related party debt to be favorable to
the company.
This resulted in net income of $458,741 for the nine months ended
September 30, 1996, compared to a loss of ($149,486) for the 1995
period.This is an increase of $608,227.
At September 30, 1996, the Company had negative working capital of
approximately ($710,214). 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.
Management hereby affirms that the financial statements include all
adjustments which, in the opinion of management, are necessary to make
the financial statements not misleading.
Part 2, Item 1 & 6
ELECTRIC M & R INC.
OTHER INFORMATION
FOR THE PERIODS ENDED SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
LEGAL PROCEEDINGS
There have been no significant changes in the Company's legal
proceedings during the nine months ended September 30, 1996.
EXHIBITS AND REPORT OF FORM 8-K
No event occurred that required the registrant to file form 8-K during
the nine months ended September 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 11/27/96 /S/ GRETCHEN OSWALD
GRETCHEN OSWALD
PRESIDENT
DATE 11/27/96 /S/ RAYMOND F. CROUSHORE
RAYMOND F. CROUSHORE
TREASURER
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 74,138
<SECURITIES> 0
<RECEIVABLES> 276,958
<ALLOWANCES> (4,300)
<INVENTORY> 837,570
<CURRENT-ASSETS> 1,221,144
<PP&E> 2,414,432
<DEPRECIATION> (2,098,232)
<TOTAL-ASSETS> 2,046,621
<CURRENT-LIABILITIES> 1,931,358
<BONDS> 0
<COMMON> 734,787
0
0
<OTHER-SE> (627,175)
<TOTAL-LIABILITY-AND-EQUITY> 2,046,621
<SALES> 1,741,137
<TOTAL-REVENUES> 2,730,240
<CGS> 1,516,058
<TOTAL-COSTS> 1,516,058
<OTHER-EXPENSES> 714,177
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73,264
<INCOME-PRETAX> 490,741
<INCOME-TAX> (32,000)
<INCOME-CONTINUING> 458,741
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 458,741
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.62
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