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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
AMENDMENT No. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ___________
Commission File No. 0-8027
EASTCO INDUSTRIAL SAFETY CORP.
(Name of small business issuer in its charter)
NEW YORK 11-1874010
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
130 West 10th Street, Huntington Station, New York 11746
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 427-1802
Securities registered pursuant to Section 12 (b) of the Act:
None
Securities registered pursuant to Section 12 (g) of the Act:
a) $.12 par value common stock ("Common Stock")
b) Class A Redeemable Common Stock Purchase Warrant ("Class A Warrant")
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act of 1934 during the past twelve (12)
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to the filing requirements for the
past ninety (90) days.
YES X NO
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB: [X]<PAGE>
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State registrant's revenues for its most recent fiscal year. $24,024,897
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of September 7, 1995 was approximately $6,471,304.
Non-affiliates include all shareholders other than officers, directors and
5% shareholders of the Company. Market value is based upon the price of the
Common Stock as of the close of business on September 7, 1995 which was $1
7/8 per share as reported by NASDAQ.
As of September 7, 1995, the number of shares outstanding of the Common
Stock was 3,597,383 shares.<PAGE>
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PART I
Item 1. Description of Business
(b) Business of Issuer.
Manufacturing Operations
(7) Puerto Rico Safety Equipment is engaged in manufacturing
in Puerto Rico and was granted an exemption for seventeen (17)
years under the Puerto Rico Industrial Tax Exemption Act of 1963
(the "Industrial Tax Act") with respect to Puerto Rico income taxes<PAGE>
on the production of such items as safety clothing, protective
sleeves, coats, pants, hoods and jackets for the period commencing
January 1, 1970. On July 1, 1989 Puerto Rico Safety Equipment was
granted an extension of its exemption and has a 90% exemption from
Puerto Rico income taxes for the ten-year period ending on June 30,
1999. During this period, Puerto Rico Safety Equipment has a 75%
exemption from Puerto Rico municipal taxes on its real and personal
property utilized in its operations.
Disposable has been granted a fifteen-year exemption under the
Industrial Tax Act with respect to Puerto Rico income taxes on its
operations covering the production of disposable clothing and with
respect to the property used in its operations for the period
commencing June 4, 1977, subject to the terms of the grant. The
Company was advised on September 14, 1995, that this exemption has
been extended until June 30, 2006 on the basis of a 90% exemption
on Puerto Rico income taxes and a 60% exemption on municipal taxes
on its real and personal property. A copy of the extension has not
yet been received.
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Puerto Rico Safety Equipment and Disposable have elected to
apply Section 936 of the Internal Revenue Code, effective July 1,
1979. The provisions of Section 936 are effective until revoked by
the Company. If the conditions of Section 936(a)(2) are satisfied,
the Section 936 credit equals the portion of the United States
income tax that is attributable to taxable income from sources
outside the United States derived from the active conduct of a
trade or business within a United States possession, or the sale or
exchange of substantially all of the qualified possession source
investment income. Dividends payable by each subsidiary to the
Company from operations are entitled to a 100% dividends received
deduction but are subject to a 10% withholding tax in Puerto Rico.
The Omnibus Budget Reconciliation Act of 1993 (the "Omnibus Act")
imposes new limitations on computing the Possession Tax Credit under
Section 936 for tax years beginning after 1993. There are two methods for
determining the credit under the new law. Under the first method, the
amount of the credit may be determined by using the so-called economic
activity limit. This attempts to limit the credit by applying various
percentages to possession-based compensation, depreciation and taxes paid
or accrued. Alternatively, the Company may make an irrevocable
election when it files its June 30, 1995 federal income tax return
to have present rules apply, but to phase out the credit to 60% of
the 1994 level, and further phase down by 5% per year to 40% in
1998 and years thereafter. Since the credit is a function of
future earnings, if any, the effect of such limitations cannot be
determined at the present time. In addition, the Omnibus Act
makes the 100% dividends received deduction subject to the Alternative
Minimum Tax Calculation. No dividends have been declared on the aggregate
undistributed earnings of Puerto Rico Safety Equipment and Disposable (which
through June 30, 1995, aggregates approximately $2,458,000) and none are
intended to be declared because it is management's intention to reinvest the
earnings, if any, from such subsidiaries indefinitely. The Company
believes that based upon current operations, the Omnibus Act
will not have a material effect on the Company for the foreseeable
future.
As Puerto Rico tax exemptions are reduced or expire the
Company may be required to pay taxes on income earned in Puerto
Rico. The Company is unable to predict the amount of such impact
after such exemptions are reduced or expire.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
(a) The principal market on which the Common Stock is traded is
the over-the-counter market. The Common Stock is traded on NASDAQ
on the Small-Cap Market and its symbol is ESTO. The following
chart sets forth the high and low sales prices as determined from
NASDAQ for the Common Stock for the last two fiscal years.
High Low
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Fiscal Year Ended
June 30, 1995
First Quarter $1.75 $0.88
Second Quarter 1.44 0.56
Third Quarter 1.63 0.75
Fourth Quarter 1.75 1.00
Fiscal Year Ended
June 30, 1994
First Quarter $11.00 $7.25
Second Quarter 10.75 3.13
Third Quarter 4.13 1.63
Fourth Quarter 1.81 1.75
(b) The approximate number of holders of record of the Common
Stock as of September 7, 1995 was 392. The Company believes there
are in excess of 800 beneficial holders of the Common Stock.
(1) No dividends have been paid during the past two years.
(2) The Company has no present intention of paying any cash
dividends in its foreseeable future and intends to use its net
income, if any, in its operations.
(3) The Company is prohibited from paying dividends under its
loan agreement with Congress Financial Corporation ("Congress").
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Huntington Station, New York
October 3, 1995
EASTCO INDUSTRIAL SAFETY CORP.
By: /s/ Anthony P. Towell Date: 9/19/95
ANTHONY P. TOWELL
Vice President of Finance, Treasurer and
Chief Financial Officer
