SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 02549
Form 10-KSB
ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 2, 1999 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: 853 Broadway, #2011, N.Y., N.Y. (646) 654-1464
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 $203,907.
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 October
2, 1999, by the number of shares held by non affiliates of the registrant, is
$658,256.
As of October 2, 1999, 598,307 shares of the registrant's Capital Stock were
outstanding (exclusive of 9,986 shares held in treasury).
CERTAIN EXHIBITS PREVIOUSLY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ARE INCORPORATED BY REFERENCE
<PAGE>
PART I
ITEM I-BUSINESS
(a) The major asset (other than cash and investment in U.S. Treasury
obligations) of the corporation was the first mortgage it held 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,
were 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. Such
balloon payment was paid October 13, 1998.
Registrant's prior history includes the design, production and
distribution of electronic instruments, and security devices.
(b)(1) For the year ended October 2, 1999, the registrant's main source of
income was receipt of interest on Treasury obligations.
(b)(2)-(10) Not applicable.
(b)(11) None.
(b)(12) The company had two employees for much of the year.
ITEM 2-PROPERTIES
Registrant's office occupies a space of approximately 70 square feet at
853 Broadway, Suite 2011, New York, N.Y. The monthly rental is $500.
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 4 and an "asked" of 6
on October 1, 1999, and a "bid" of 2.625 and an "asked" of 4.5 on October 2,
1998. These quotes do not reflect retail mark-ups, mark downs, or commissions,
and may not necessarily represent actual transactions.
There were 279 shareholders of record as of October 2, 1999.
ITEM 6-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The balance of the gain on the sale of the real property in Flushing, New
York was recorded as of the year ended October 3, 1998.
Interest on the mortgage in the current fiscal year is included only up to
the mortgage collection date in October 1998, while the prior year includes
interest for the entire year.
As a result of investing the proceeds from the mortgage receivable in the
current year, interest on investments increased to $174,085 from $50,336 in the
prior year.
<PAGE>
General and corporate expenses decreased by $33,232 in the current year
compared to the prior year as a result of decreased legal and professional fees,
compensation costs and general expenses.
At October 2, 1999, the Company has cash and investments of approximately
$3,900,000.
On May 28, 1999, the date of the most recent annual meeting of
shareholders of EICO Electronic Instrument Co., Inc., a New York Corporation
(the "Company"), the shareholders of the Company approved a plan of liquidation
of the Company. In furtherance of such plan of liquidation, on December 1, 1999,
the Company's Board of Directors authorized the declaration of a partial
liquidating distribution of $5.20 per share payable on or about January 12, 2000
to shareholders of record of the Company at the close of business on December
20, 1999. The Company will retain liquid assets in an amount deemed reasonable
by its Board of Directors for purposes of settling the affairs of the Company,
including the payment of any contingent claims, whether or not previously
asserted against the Company. It is expected that the Company will distribute
all remaining assets of the Company prior to December 31, 2002.
The Company has no material commitments for future capital expenditures.
<PAGE>
ITEM 7-FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Part II - Item 7
EICO ELECTRONIC INSTRUMENT CO., INC.
- INDEX -
INDEPENDENT AUDITORS' REPORT
BALANCE SHEET AS AT OCTOBER 2, 1999
AND OCTOBER 3, 1998
STATEMENT OF OPERATIONS AND RETAINED
EARNINGS FOR THE YEARS ENDED
OCTOBER 2, 1999 AND OCTOBER 3, 1998
STATEMENT OF CASH FLOWS FOR THE YEARS
ENDED OCTOBER 2, 1999 AND OCTOBER 3, 1998
NOTES TO FINANCIAL STATEMENTS
<PAGE>
[LETTERHEAD OF EISNER & LUBIN LLP]
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 October 2, 1999 and October 3, 1998, 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.
As described in Note D to the financial statements, the shareholders
of the Company approved a plan of liquidation on May 28, 1999; the Company
declared a partial liquidating distribution on December 1, 1999, payable January
2000.
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 October 2, 1999 and October 3, 1998, and the results of
its operations and cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Eisner & Lubin LLP
----------------------------
CERTIFIED PUBLIC ACCOUNTANTS
New York, New York
November 4, 1999
With respect to Note D,
December 1, 1999
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
BALANCE SHEET
(Attention is directed to Note D of the financial statements concerning the
Company's adoption of a plan of liquidation)
October 2, October 3,
ASSETS 1999 1998
---------- ----------
Cash $ 137,494 $ 139,234
Mortgage receivable 3,974,124
Mortgage interest and penalty
receivable - net of escrow balance 155,517
Accrued interest receivable 20,298 13,760
Investments in U.S. Treasury bills
(at amortized cost; approximate
market $3,750,000 in 1999 and
$1,039,000 in 1998) 3,752,507 1,038,590
Other assets 5,414
---------- ----------
TOTAL $3,910,299 $5,326,639
========== ==========
LIABILITIES
Accrued taxes and other expenses $ 38,086 $ 86,123
Income taxes payable 75,038 1,433,223
---------- ----------
Total liabilities 113,124 1,519,346
---------- ----------
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 2,598,915 2,609,033
---------- ----------
Total 3,824,421 3,834,539
Less cost of 9,986 shares of
capital stock in treasury 27,246 27,246
---------- ----------
Total stockholders' equity 3,797,175 3,807,293
---------- ----------
TOTAL $3,910,299 $5,326,639
========== ==========
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
October 2, October 3,
1999 1998
----------- -----------
Income:
Interest on mortgage $ 29,822 $ 326,912
Interest on investments 174,085 50,336
Gain on sale of property 4,045,452
Late payment penalty 200,030
----------- -----------
Total 203,907 4,622,730
General and corporate expenses 220,025 253,257
----------- -----------
Earnings (loss) before income taxes (16,118) 4,369,473
Income tax provision (credit) (6,000) 2,040,000
----------- -----------
NET EARNINGS (LOSS) (10,118) 2,329,473
Retained earnings - beginning of year 2,609,033 279,560
----------- -----------
RETAINED EARNINGS - END OF YEAR $ 2,598,915 $ 2,609,033
=========== ===========
Net earnings (loss) per share $ (.02) $ 3.88
=========== ===========
Dividends per share $ -- $ --
=========== ===========
AVERAGE NUMBER OF SHARES USED
IN COMPUTING NET EARNINGS (LOSS)
PER SHARE 598,307 600,274
=========== ===========
The notes to financial statements are made a part hereof.
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
STATEMENT OF CASH FLOWS
Year Ended Year Ended
October 2, October 3,
1999 1998
------------ ------------
Cash flows from operating activities:
Cash paid to suppliers and employees $ (262,648) $ (204,834)
Interest received 197,369 374,051
Income taxes paid (1,352,185) (89,930)
Late fee penalty collected 155,517 44,513
------------ ------------
Net cash provided by (used in)
operating activities (1,261,947) 123,800
------------ ------------
Cash flows from investing activities:
Proceeds from sale of property -
collection of mortgage principal 3,974,124 71,328
Proceeds from redemptions of U.S. 10,118,944
Treasury obligations (12,832,861) 1,027,170
Investments in U.S. Treasury
obligations (1,145,760)
Investment in U.S. Treasury
money market funds (2,705,437)
Proceeds from U.S. Treasury
money market funds 2,705,437
------------ ------------
Net cash provided by (used in)
investing activities 1,260,207 (47,262)
------------ ------------
Cash flows from financing activities:
Dividends paid (120,076)
Acquisition of treasury stock 7,255
------------
Net cash (used in)
financing activities (127,331)
------------
NET (DECREASE) IN CASH (1,740) (50,793)
Cash - beginning of year 139,234 190,027
------------ ------------
CASH - END OF YEAR $ 137,494 $ 139,234
============ ============
(Continued)
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
STATEMENT OF CASH FLOWS
- Sheet 2 -
Year Ended Year Ended
October 2, October 3,
1999 1998
----------- -----------
Reconciliation of net earnings to net
cash provided by operating activities:
Net earnings (loss) $ (10,118) $ 2,329,473
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Gain on sale of property (less
$3,974,124 of gain recognized
in 1998 and collected
subsequently to October 3, 1998) (71,328)
Deferred income taxes 567,000
Decrease (increase) in:
Accrued interest receivable (6,538) (3,197)
Other assets 5,414 3,259
Mortgage receivable (3,974,124)
Mortgage interest and penalty
receivable - net of escrow
balance 155,517 (155,517)
Increase (decrease) in:
Accrued taxes and
other expenses (48,037) 45,164
Income taxes payable (1,358,185) 1,383,070
----------- -----------
Net cash provided by (used in)
operating activities $(1,261,947) $ 123,800
=========== ===========
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) 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 has been reported on the installment sales method (profit is
prorated and recognized as collections of the total sales price are received). A
deferred tax asset was recognized on the difference between the income
recognized for tax purposes over the income recognized for financial accounting
purposes.
The mortgage balloon balance was due on September 25, 1998. The
closing took place and payment was received on October 13, 1998. The Company
determined that the full accrual method applied as of September 25, 1998 and
recorded a gain in the amount of the balloon balance and a late payment penalty
as of that date.
(2) 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.
(3) Income Taxes -- Deferred 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 has been reporting the sale of property on
the cost recovery method for financial accounting purposes and on the
installment method for income tax purposes.
(4) 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 October 2, 1999 and October 3,
1998 approximates amortized cost. The investments at October 2, 1999 mature in
November and December 1999.
(5) 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.
(6) Cash Equivalents -- For purposes of the statement of cash flows, the
Company considers all liquid short-term investments to be investing activities
and not cash equivalents.
(Continued)
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
- Sheet 2 -
(Note B) - Income Taxes:
(1) Income taxes on the statement of operations and retained earnings
comprises:
Year Ended Year Ended
October 3, October 3,
1999 1998
---------- ----------
Currently payable (refundable):
Federal $ (6,000) $ 874,000
State and local 599,000
Deferred:
Federal 396,000
State and local 171,000
---------- ----------
Total $ (6,000) $2,040,000
========== ==========
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 C) - Leases:
The Company rented office space for $10,080 a year under a lease which
expired January 31, 1999.
Rent expense approximated $11,000 for the years ended in 1999 and 1998.
(Note D) - Liquidation:
On May 28, 1999, the shareholders approved a plan to liquidate the
Company. In furtherance of such plan of liquidation, on December 1, 1999, the
Company's Board of Directors authorized the declaration of a partial liquidating
distribution of $5.20 per share (approximately $3,111,000) payable on or about
January 12, 2000 to shareholders of record of the Company at the close of
business on December 20, 1999. The Company will retain liquid assets in an
amount deemed reasonable by its Board of Directors for purposes of settling the
affairs of the Company, including the payment of any contingent claims, whether
or not previously asserted against the Company. It is expected that the Company
will distribute all remaining assets of the Company prior to December 31, 2002.
(continued)
<PAGE>
EICO ELECTRONIC INSTRUMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
- Sheet 3 -
(Note E) - Concentration of Credit Risk:
The Company maintains its cash at a large New York bank. The amounts held
at this bank may, at times, exceed federally insured limits. Such excess amount
at October 2, 1999 was $39,000.
(Note F) - Fair Value of Financial Investment:
Mortgage Receivable - Fair value of the mortgage receivable at October 3,
1998 was equal to its carrying value since such amount was collected subsequent
to October 3, 1998.
<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- Oct. 2, 1999
Name (age) (1) tor Since (% of Class)
- ---------- --- --------- ------------
Linda Ashley Director, President, 1984 64,547 (10.61%)
(55)(3) Attorney
Howard S. Kaplan Director 1972 -0-
(72) (2)
Gordon Katz Director, Secretary 1995 -0-
(33)(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 Trust A listed in the following chart of
Beneficial Owners and a Co-Trustee in Trust D. In such capacity, she shares
voting and dispositive power over 304,047 trust shares but disclaims beneficial
ownership of the 240,000 shares held in Trust A.
(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, son of Linda Ashley, has been an attorney since 1992.
<PAGE>
ITEM 10-EXECUTIVE COMPENSATION
Linda Ashley, President of the Company, received $105,600 in
compensation, including bonuses, for the fiscal year ended October 2, 1999.
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 Benefi-
cial Ownership
- --------------------------------------------------------------------------------
Common Sophie Ashley 240,000 (A) 39.45
c/o Linda Ashley, Esq.
853 Broadway, #2011
New York, N.Y. 10003
Common Harriet Ehren 64,548 (B) 10.61
c/o Lance Ehren
10301 E. Bay Harbor Dr. #5
Bay Harbor Isl., Fla. 33154
Common Beverly Evangelos 64,648 (C) 10.61
c/o Dr. Daniela Assail
Olympic College
Math & Sci. Bldg. Room 110
1600 Chester Ave.
Bremerton, Wa. 98337
Common James Tarsy 54,750 9.00
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) 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 reference, as number 11.1 to
Registrant's Form 10-K for the fiscal year ended September 30, 1989.
(b) No 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**
* 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.
<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.
December 20, 1999 /s/ Linda Ashley
------------------------------------
Linda Ashley, President
December 20, 1999 /s/ Gordon Katz
------------------------------------
Gordon Katz, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-02-1999
<PERIOD-START> OCT-04-1998
<PERIOD-END> OCT-02-1999
<CASH> 137,474
<SECURITIES> 3,752,507
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,910,299
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,910,299
<CURRENT-LIABILITIES> 113,124
<BONDS> 0
0
0
<COMMON> 608,293
<OTHER-SE> 3,188,882
<TOTAL-LIABILITY-AND-EQUITY> 3,910,299
<SALES> 0
<TOTAL-REVENUES> 203,907
<CGS> 0
<TOTAL-COSTS> 220,025
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (16,118)
<INCOME-TAX> (6,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,118)
<EPS-BASIC> (.02)
<EPS-DILUTED> 0
</TABLE>
