<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Sept. 28, 1996 Commission File Number 0-122
EICO ELECTRONIC INSTRUMENT CO., INC.
State of Incorporation: New York I.R.S. Employer I.D. No.: 11-524626
Office: 233 Broadway, #1085, N.Y., N.Y. (212) 566-4995
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $1 per share.
The registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for the past 90 days.
Revenues for the most recent fiscal year are $455,224.
There is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B and no disclosure will be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this form or any amendment to this form.
There are no documents required to be filed by Sec. 12, 13 or 15(d) of the
Exchange Act after the distribution of a plan confirmed by a court.
The aggregate market value, determined by multiplying the bid price at September
27, 1996, by the number of shares held by non affiliates of the registrant, is
$535,833.
As of September 28, 1996, 600,380 shares of the registrant's Capital Stock were
outstanding (exclusive of 7,913 shares held in treasury).
CERTAIN EXHIBITS PREVIOUSLY FILED WITH THE SECURIITES AND EXCHANGE COMMISSION
ARE INCORPORATED BY REFERENCE
<PAGE>
PART I
ITEM 1-BUSINESS
(a) The major asset (other than cash and investment in U.S. Treasury
obligations) of the corporation is the first mortgage it holds on the property
it formerly owned, located at 131-01 39th Avenue, Flushing, N.Y. On June 25,
1993, the Company sold its real property in Flushing for $5,000,000. Pursuant to
the purchase money mortgage, the purchasers, Syng Man Rhee and Choon Ok Rhee,
are required to pay the mortgage principal of $4,250,000, with interest at 8%
per year, at the rate of $33,241 per month for 60 monthly payments that began in
September 1993, with a balloon payment of $4,000,617 due September 1998.
Registrant's prior history includes the design, production and distribution
of electronic test instruments, and security devices.
(b)(1) For the year ended September 28, 1996, the registrant's main source
of income was payments received from the mortgage described above.
(b)(2)-(10) Not applicable.
(b)(11) None.
(b)(12) The company has three employees.
ITEM 2-PROPERTIES
Registrant's office occupied a space of approximately 150 square feet at
233 Broadway, Suite 1085, New York, N.Y. The lease terminates January 31, 1997.
The monthly rental is $800.
ITEM 3-LEGAL PROCEEDINGS
None.
<PAGE>
ITEM 4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company has not submitted any matter to a vote of security holders
during the fourth quarter of the fiscal year covered by this report, through the
solicitation of proxies or otherwise.
PART II
ITEM 5-MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The common stock of the Registrant is traded in the over the counter
market. The National Quotation Bureau reported a "bid" of 1 and an "asked" of 4
on September 27, 1996 and September 29, 1995. These quotes do not reflect retail
mark-ups, mark downs, or commissions, and may not necessarily represent actual
transactions.
On September 27, 1996, the company declared a $.20 per share dividend,
payable on January 6, 1997 to shareholders of record on December 16, 1996.
On September 29, 1995, the Company declared a $.30 per share dividend,
payable on January 9, 1996 to shareholders of record on December 15, 1995.
There were 491 shareholders of record as of September 28, 1996.
ITEM 6-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
On June 25, 1993, the Company sold its real property in Flushing, New York
for $5,000,000. The contract of sale required the purchasers, Syng Man Rhee and
Choon Ok Rhee, to pay $750,000 at the closing. In addition, a first mortgage of
$4,250,000 is held by the Company. The mortgage principal, with interest at 8%
per year, is payable in 60 monthly payments of $33,241 beginning September
1993, with a balloon payment of $4,000,617 due September 1998. For financial
accounting purposes, the Company has recorded the sale on the cost recovery
method. Using this method, no profit was
<PAGE>
recognized until cash payments by the buyers exceeded the Company's cost basis
of the property plus selling expenses. Cash payments by the buyers exceeded this
level in February 1995. For the years ended September 28, 1996 and September 30,
1995, the financial statements include interest income on the mortgage of
$332,323 and $220,483 respectively, and gain on the sale of the real property of
$66,566 and $36,447 respectively.
Mortgage interest income and gain on sale of property in the year 1996 is
approximately the same amount as in the prior comparative year but was
previously partially reflected as a recovery of cost.
General and corporate expenses increased in the current year primarily as a
result of increased compensation, shareholders and occupancy costs in excess of
reduction of insurance and fee expenses.
Investment interest income for this year was marginally lower due to the
use of company funds for the payment of dividends during this period.
The Company continues its operations, collecting and managing the mortgage
receivable as due. The statement of operations for the year ended September 27,
1997 should basically reflect interest income from U.S. Treasury obligations and
mortgage interest income, and gain on the sale of real property, and expenses at
approximately the same level as for the year ended September 28, 1996. Future
dividend payments are currently contemplated. The Company has cash and
investments in U.S. Treasury obligations at September 28, 1996 of approximately
$1,060,000.
The Company has no formal material commitment for future capital
expenditures.
ITEM 7-FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<PAGE>
Part II - Item 7
EICO ELECTRONIC INSTRUMENT CO., INC.
- INDEX -
INDEPENDENT AUDITORS' REPORT
BALANCE SHEET AS AT SEPTEMBER 28, 1996
AND SEPTEMBER 30, 1995
STATEMENT OF OPERATIONS AND RETAINED
EARNINGS FOR THE YEARS ENDED
SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995
STATEMENT OF CASH FLOWS FOR THE YEARS
ENDED SEPTEMBER 28, 1996 AND
SEPTEMBER 30, 1995
NOTES TO FINANCIAL STATEMENTS
<PAGE>
Independent Auditors' Report
To the Board of Directors
and Stockholders
EICO Electronic Instrument Co., Inc.
We have audited the accompanying balance sheets of EICO Electronic
Instrument Co., Inc. as at September 28, 1996 and September 30, 1995, and the
related statements of operations and retained earnings and cash flows for the
years then ended. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of EICO Electronic Instrument
Co., Inc. at September 28, 1996 and September 30, 1995, and the results of its
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.
Eisner & Lubin LLP
----------------------------
CERTIFIED PUBLIC ACCOUNTANTS
New York, New York
November 22, 1996
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
BALANCE SHEET
September 28, September 28,
1996 1995
------------- -------------
ASSETS
------
Cash $ 189,957 $ 162,450
Mortgage receivable (less unrecognized
gain on sale of property of $4,117,543 in
1996 and $4,117,109 in 1995) -- --
Prepaid expenses 16,281 12,645
Deferred income taxes 576,000 585,000
Investment in U.S. Treasury obligations
(at amortized cost; approximate market
$864,000 in 1996 and $923,000 in 1995) 870,000 930,000
Other assets 11,932 15,736
---------- ----------
TOTAL $1,664,170 $1,705,831
========== ==========
LIABILITIES
-----------
Accrued wages, taxes and other expenses $ 40,959 $ 44,359
Income taxes payable 51,305 54,481
Dividends payable 120,076 180,123
Escrow deposit payable (less cash in bank
account of $83,651 in 1996 and
$88,412 in 1995) -- --
---------- ----------
Total liabilities 212,340 278,963
---------- ----------
STOCKHOLDERS' EQUITY
--------------------
Capital stock - $1 par value - authorized
1,000,000 shares; issued 608,293 shares
(including treasury shares) 608,293 608,293
Additional paid-in capital 617,213 617,213
Retained earnings (Statement attached) 246,315 221,293
---------- ----------
Total 1,471,821 1,446,799
Less cost of 7,913 in 1996 and 7,883
in 1995 shares of capital stock
in treasury 19,991 19,931
---------- ----------
Total stockholders' equity 1,451,830 1,426,868
---------- ----------
TOTAL $1,664,170 $1,705,831
========== ==========
The notes to financial statements are made a part hereof.
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
Year Ended Year Ended
September 28, September 28,
1996 1995
------------- -------------
Income:
Interest on mortgage $ 332,323 $ 220,483
Interest on investments 56,335 58,981
Gain on sale (less unrecognized
gain in 1995) 66,566 36,447
--------- ---------
Total 455,224 315,911
General and corporate expenses 206,126 194,911
--------- ---------
Earnings before income taxes 249,098 121,194
--------- ---------
Income taxes 104,000 45,000
--------- ---------
NET EARNINGS 145,098 76,194
Retained earnings - beginning of year 221,293 325,222
Dividends (120,076) (180,123)
--------- ---------
RETAINED EARNINGS - END OF YEAR
(TO BALANCE SHEET) $ 246,315 $ 221,293
========= =========
Net earnings per share $ .24 $ .13
===== =====
Dividends per share $ .20 $ .30
===== =====
AVERAGE NUMBER OF SHARES USED
IN COMPUTING NET EARNINGS
PER SHARE 600,388 600,410
======= =======
The notes to financial statements are made a part hereof.
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
STATEMENT OF CASH FLOWS
Year Ended Year Ended
September 28, September 28,
1996 1995
------------- ------------
Cash flows from operating activities:
Cash paid to suppliers and employees $(200,754) $(207,011)
Interest received 380,050 279,464
Income taxes paid (98,172) (136,540)
------------ ------------
Net cash provided by (used in)
operating activities 81,124 (64,087)
------------ ------------
Cash flows from investing activities:
Proceeds from sale of property -
collection of mortgage interest
(through date of cost recovery)
and principal 66,566 178,409
Proceeds from redemptions of U.S.
Treasury obligations 110,000
Investments in U.S. Treasury
obligations (50,000)
------------ ------------
Net cash provided by
investing activities 126,566 178,409
------------ ------------
Cash flows from financing activities:
Dividends paid (180,123) (180,135)
Acquisition of treasury stock (60)
------------ ------------
Net cash (used in)
financing activities (180,123) (180,135)
------------ ------------
NET INCREASE (DECREASE) IN CASH 27,507 (65,813)
Cash - beginning of year 162,450 228,263
------------ ------------
CASH - END OF YEAR $ 189,957 $ 162,450
============ ============
(Continued)
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
STATEMENT OF CASH FLOWS
-Sheet 2-
Year Ended Year Ended
September 28, September 28,
1996 1995
------------- ------------
Reconciliation of net earnings
to net cash provided by (used in)
operating activities:
Net earnings $ 145,098 $ 76,194
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Gain on sale of property (66,566) (36,447)
Deferred income taxes 9,000 (57,000)
Decrease (increase) in:
Prepaid expenses (3,636) 225
Other assets 3,804 (12,223)
(Decrease) in:
Accrued wages, taxes and other
expenses (3,400) (296)
Income taxes payable (3,178) (34,540)
------------- ------------
Net cash provided by (used in)
operating activities $ 81,124 $ (64,087)
============= ============
The notes to financial statements are made a part hereof.
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(Note A) - Summary of Significant Accounting Policies:
(1) For financial statement purposes, EICO Electronic Instrument Co., Inc.
(the Company) has recorded the sale of property in 1993 on the cost recovery
method (no profit was recognized until cash payments by the buyer exceeded the
Company's cost basis of the property plus selling expenses). For income tax
purposes, such sale is reported on the installment sales method (profit is
prorated and recognized as collections of the total sales price are received). A
deferred tax asset is recognized on the difference between the income recognized
for tax purposes over the income recognized for financial accounting purposes.
(2) Organization - The Company continues its operation, collecting and
managing the mortgage receivable as due.
(3) Earnings Per Share - Earnings or loss per share is based on the average
number of shares of capital stock outstanding during each year, exclusive of
treasury shares.
(4) Income Taxes - Defered taxes are recorded in the accounts to reflect
the interperiod allocation of income taxes resulting from differences in
reporting revenue and expenses for financial accounting and income tax purposes.
The principal temporary difference is reporting the sale of property on the cost
recovery method for financial accounting purposes and on the installment method
for income tax purposes.
(5) Investments in U.S. Treasury obligations are classified as being held
to maturity and measured at amortized cost.
The fair market of the investments at September 28, 1996 and September
30, 1995 approximates amortized cost. The investments mature between March 1997
and May 1999.
(6) 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 amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
- Sheet 2 -
(Note B) - Mortgage Receivable:
On June 25, 1993, the Company sold its property for $5,000,000. The
contract of sale required the payment of $750,000 at the closing and a first
mortgage of $4,250,000 to be held by the Company. The mortgage, with interest
at 8% a year, is due in 60 monthly payments of $33,241 beginning September
1993, with a balloon payment of $4,000,617 due September 1998. For financial
accounting purposes, the Company has recorded the sale on the cost recovery
method.
The sale comprises:
Sales price $5,000,000
Less real estate transfer taxes
and other closing costs 788,876
----------
Balance 4,211,124
Cost basis 535,219
----------
Gain on sale of property 3,675,905
Interest collected (unrecognized) to
September 30, 1995 544,651
Recognized gain for year ended
September 30, 1995 (36,447)
----------
Unrecognized gain on sale of property
at September 30, 1995 4,184,109
Recognized gain for year ended
September 28, 1996 (66,566)
----------
Unrecognized gain on sale of property
at September 28, 1996 $4,117,543
==========
(Continued)
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
- Sheet 3 -
(Note C) - Income Taxes:
(1) Income taxes on the statement of operations and retained earnings
comprises:
Year Ended Year Ended
September 28, September 30,
1996 1995
------------- ------------
Currently payable
Federal $60,000 $65,000
State and local 35,000 37,000
Deferred:
Federal 5,000 (36,000)
State and local 4,000 (21,000)
------- --------
Total $104,000 $45,000
======== ========
Federal income taxes are computed at statutory rates, including the effect
of surtax exemptions.
(2) The federal income tax returns of the Company have not been examined by
the Treasury Department in recent years.
(Note D) - Leases:
The Company rents office space for $9,600 a year under a lease which
expires January 31, 1997.
Rent expense was $10,700 and $8,700 for the years ended in 1996 and 1995,
respectively.
(Note E) - Dividends:
On September 27, 1996, the Company declared a $.20 per share dividend
payable on January 6, 1977 to shareholders of record on December 16, 1996.
On September 29, 1995, the Company declared a $.30 per share dividend
payable on January 9, 1996 to sharehodlers of record on December 15, 1995.
(Continued)
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
- Sheet 4 -
(Note F) - Concentration of Credit Risk:
Cash is maintained at two large New York banks. The uninsured amounts held
in demand deposits at these banks in excess of the Federal Deposit Insurance
Corporation limit at September 28, 1996 and September 30, 1995 were $87,000 and
$42,000, respectively.
(Note G) - Fair Value of Financial Investment:
Mortgage Receivable - Fair value of the mortgage receivable is estimated to
approximate carrying value based on estimates of market rates for similar
mortgage terms and remaining maturity.
<PAGE>
ITEM 8-DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 9-DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND
ITEM 11-SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Company Position; and Has Shares Beneficially
Principal Occupation Served as Owned as of
During Past 5 Years a Direc- Sept. 28, 1996
Name (age) [1] tor Since (% of Class)
- ------------- ---------------------- ---------- -------------------
Linda Ashley Director, President 1984 64,547 (10.61%)
(52)[3] Attorney
Howard S. Kaplan Director 1972 -0-
(69)[2]
Gordon Katz Director, Secretary 1995 -0-
(30)[5] Attorney
All Directors[4]
and Officers as a Group (Three in Group). 64,547 (10.61%)
- -----------------------------------------
[1] The information indicated above concerning occupations, age and
beneficial ownership of stock has been furnished to the Company by the
respective nominees. None of the nominees is a director of any other
publicly-held company.
[2] Howard Kaplan practiced law for over 35 years.
[3] The number of shares beneficially owned by Linda Ashley, an attorney
since 1982, includes 64,047 shares held of record by Trust f/b/o Linda Ashley
("Trust D"). Linda Ashley is a Co-trustee of Trusts A and B listed in the
following chart of Beneficial Owners and in this chart, and a Co-Trustee in
Trust D. In such capacity, she shares voting and dispositive power over 368,095
trust shares but disclaims beneficial ownership of the 304,048 shares held in
Trusts A and B.
[4] Each executive officer is elected or appointed by the Board of
Directors to hold office until a successor is elected and qualified.
[5] Gordon Katz, Linda Ashley's son, has been an attorney since 1992.
<PAGE>
ITEM 10-EXECUTIVE COMPENSATION
No officer or director received more than $100,000.00 during this fiscal
year.
ITEM 11-SECURITY OWNERSHIP OF CERTAIN OTHER BENEFICIAL OWNERS
(1) Title of (2) Name and Address (3) Amount and (4) % of Class
Class of Beneficial Owner Nature of Bene-
ficial Ownership
- ------------------------------------------------------------------------------
Common Sophie Ashley 240,000 (A) 39.45
c/o Linda Ashley, Esq.
233 Broadway, #1085
New York, N.Y. 10279
Common Harriet Ehren 64,548 (B) 10.51
c/o Linda Ashley, Esq.
233 Broadway, #1085
New York, N.Y. 10279
Common Beverley Evangelos 64,648 (C) 10.61
c/o Daniela Assail
201. W. Olympic Pl., #204
Seattle, Wash. 98119
Common James Tarsy 53,750 8.84
151 Harbor Rd.
Harbor Acres
Sands Point, N.Y. 11050
- ----------------------------------------------------------------------------
(A) Shares held of record by Trust u/w/o Harry Ashley f/b/o Sophie Ashley
("Trust A").
(B) Includes 64,048 shares held of record by Trust f/b/o Harriet Ashley
("Trust B").
(C) Includes 64,048 shares held of record by Trust f/b/o Beverly Evangelos
("Trust C").
<PAGE>
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NONE.
PART IV
ITEM 13 EXHIBITS AND REPORTS ON FORM 10KSB
(a)(1) and (2) The following financial statements are filed as part of this
Report. See Index - Financial Statements - Item 7 herein.
(3) List of Exhibits
3.1 Certificate of Incorporation of EICO Electronic Instrument Co., Inc.,
as currently in effect, incorporated by reference, as Exhibit 3.1 to
Registrant's form 10K for the fiscal year ended October 3, 1981.
3.2 By-laws of EICO Electronic Instrument Co., Inc., as currently in
effect, incorporated by reference, as Exhibit 3.2 to Registrant's Form 10-K for
the fiscal year ended October 3, 1981.
3.3 Amendment to Certificate of Incorporation of EICO Electronic Instrument
Co., Inc., incorporated by referenced, as Registrant's Form 10-K for the fiscal
year ended September 30, 1989, as number 11.1.
10.8 Mortgage held by Company on 131-01 39th Avenue, Queens, N.Y.
incorporated by reference, as Exhibit 10.8 to Registrant's Form 10-KSB for the
fiscal year ended October 2, 1993.
12 Lease for office incorporated by reference to Registrant's Form 10KSB
for the fiscal year ended September 30, 1995.
(b) No report on Form 8-K was filed by Registrant during the last quarter
of the period covered by this Report.
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
NUMBER
- ------- -----------
3.1 Certificate of Incorporation of EICO Electronic Instrument Co.,
Inc., as currently in effect.*
3.2 By Laws of EICO Electronic Instrument Co., Inc., as currently in
effect.*
3.3 Amendment to Certificate of Incorporation previously numbered
11.1**
10.8 Mortgage held by Company for 131-01 39th Ave., Queens, N.Y.
12 Lease for Office at 233 Broadway, #1085, N.Y., N.Y.***
* Incorporated by reference to Registrant's form 10-K for the year ended
October 3, 1981.
** Incorporated by reference and annexed to Registrant's form 10-K for the year
ended September 30, 1989.
*** Incorporated by reference and annexed to Registrant's Form 10-KSB for the
fiscal year ended October 2, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EICO ELECTRONIC INSTRUMENT CO., INC.
(Registrant)
Dated: 12/24/96 By /s/ Linda Ashley
--------------------------------------------
Principal Financial Officer - Linda Ashley
Dated: 12/23/96 /s/ Gordon Katz
--------------------------------------------
Secretary - Gordon Katz
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-28-1996
<CASH> 189,957
<SECURITIES> 870,000<F1>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 206,238
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,664,170
<CURRENT-LIABILITIES> 212,340
<BONDS> 0
0
0
<COMMON> 608,293
<OTHER-SE> 843,537
<TOTAL-LIABILITY-AND-EQUITY> 1,664,170
<SALES> 0
<TOTAL-REVENUES> 455,224
<CGS> 0
<TOTAL-COSTS> 206,126
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 249,098
<INCOME-TAX> 104,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 145,098
<EPS-PRIMARY> .24
<EPS-DILUTED> 0
<FN>
<F1>
United States Treasury Obligations.
</TABLE>
