FORM 10-QSB
________________________________________________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996.
Commission File No. 1-8129.
US 1 INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana 95-3585609
(State of Incorporation) (IRS Employer Identification No.)
1000 Colfax, Gary, Indiana 46406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (219) 944-6116
Indicate by check mark whether 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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes _X_ No ___
As of April 26, 1996, 9,829,336 shares of common stock were outstanding.
TOTAL OF SEQUENTIALLY
NUMBERED PAGES: 15
<PAGE>
Part I
Item 1. FINANCIAL STATEMENTS.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995
ASSETS
March 31, December 31,
1996 1995
(Unaudited)
CURRENT ASSETS:
Cash $ 144,775 $ 53,602
Restricted cash - former officer defense fund 43,501 43,315
Account receivable--trade less allowance for
doubtful accounts of $50,000 and $150,139 1,605,422 1,525,626
Other receivables less valuation allowance
of $200,000 237,731 144,561
Deposits 172,058 172,180
Prepaid expenses 115,046 133,437
------------ ------------
Total current assets 2,318,533 2,072,721
------------ ------------
FIXED ASSETS:
Equipment 15,828 15,828
Less accumulated depreciation and amortization (6,202) (5,730)
------------ ------------
Net fixed assets 9,626 10,098
------------ ------------
ASSETS HELD FOR SALE:
Land 1,215,000 1,215,000
Valuation allowance (1,011,000) (1,011,000)
------------ ------------
Net assets held for sale 204,000 204,000
------------ ------------
TOTAL ASSETS $ 2,532,159 $ 2,286,819
============ ============
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
March 31, December 31,
1996 1995
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 3,022,414 $ 2,929,321
Accrued expenses 237,962 252,269
Short-term debt 2,021,315 1,822,519
Insurance and claims 218,929 209,678
Accrued interest 35,206 43,529
Accrued compensation 36,712 41,291
Estimated fuel and other taxes 129,690 163,027
----------- -----------
Total current liabilities 5,702,228 5,461,634
----------- -----------
LONG-TERM DEBT 472,294 515,767
NEGATIVE EQUITY IN PARTNERSHIP INVESTMENT 458,968 458,968
REDEEMABLE PREFERRED STOCK,
authorized 5,000,000 shares; no par value,
Series A shares outstanding: 1,094,224
Liquidation preference $0.3125 per share. 547,112 547,112
SHAREHOLDERS' EQUITY (DEFICIENCY):
Common stock authorized 20,000,000 shares;
no par value; shares outstanding 9,829,336. 40,489,296 40,489,296
Accumulated deficit (45,137,739) (45,185,958)
------------ ----------
Total shareholders' equity (deficiency) (4,648,443) (4,696,662)
------------ ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,532,159 $ 2,286,819
============ ===========
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED)
1996 1995
OPERATING REVENUES $ 3,646,991 $ 4,035,773
----------- -----------
OPERATING EXPENSES:
Purchased transportation 2,735,985 3,132,109
Insurance and claims 125,048 120,158
Salaries, wages, and other 121,461 119,534
Commissions 328,912 342,818
Operating supplies and expense 185,200 157,629
Operating taxes and licenses 35,267 56,474
Communications and utilities 16,843 18,326
Rents 13,000 11,500
Depreciation and amortization 471 360
------------ ------------
Total operating expenses 3,562,187 3,958,908
------------ ------------
OPERATING INCOME 84,804 133,124
------------ ------------
NON-OPERATING INCOME (EXPENSE):
Interest income 445 9,155
Interest expense (67,480) (45,113)
Other income 30,450 27,099
------------ ------------
Total non-operating (expense) (36,585) (8,859)
------------ ------------
INCOME FROM CONTINUING OPERATIONS 48,219 124,265
DICONTINUED OPERATIONS:
Net loss from LRS Transportation (228,311)
------------ ------------
NET INCOME (LOSS) $ 48,219 $ (104,046)
============ ============
EARNINGS (LOSS) PER COMMON SHARE:
Earnings (loss) from continued operations $ 0.00 $ .01
Discontinued operations (.02)
------------ ------------
Earnings (loss) $ 0.00 $ (.01)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 9,829,336 9,829,336
============ ============
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
Three Months Ended March 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 48,219 $(104,046)
Adjustments to reconcile net income (loss) to net
cash provided from (used for) operations:
Depreciation and amortization 472 13,435
Changes in operating assets and liabilities:
Accounts receivable - trade (79,796) (313,105)
Other receivables (93,170) 3,699
Prepaid assets 18,391 (79,222)
Deposits 122 66,394
Accounts payable 93,093 298,975
Accrued expenses (14,307)
Accrued interest (8,323)
Insurance and claims 9,251 (84,244)
Other accrued compensation (4,579) 16,716
Fuel and other taxes (33,337) (181,186)
Other (186)
---------- ----------
Net Cash used for operating activities (64,150) (362,584)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of L.R.S. Transportation (50,000)
Additions to property and equipment (16,127)
Distributions in excess of investment in joint venture 11,500
---------- ----------
Net cash used for investing activities (54,627)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 27,866 157,639
Proceed from other loans 200,000
Proceeds from other related party loans 127,457 (587)
Proceeds from issuance of preferred stock 4,425
---------- ----------
Net cash provided from financing activities 155,323 361,477
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 91,173 (55,734)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 53,602 124,250
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 144,775 $ 68,516
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION-
Cash paid during period for interest $ 75,803 $ 43,471
========== ==========
See accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1. BASIS OF PRESENTATION
The accompanying consolidated condensed balance sheet as of March 31, 1996 and
the consolidated condensed statements of operations and cash flows for the
three month periods ended March 31, 1996 and 1995 are unaudited, but in the
opinion of management, include all adjustments (consisting of normal, recurring
accruals) necessary for a fair presentation of the financial position and the
results of operations for such periods. These statements should be read in
conjunction with the Company's audited consolidated financial statements for
the year ended December 31, 1995 and the notes thereto included in the
Company's annual report on Form 10-K. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted, as permitted
by the requirements of the Securities and Exchange Commission, although the
Company believes that the disclosures included in these financial statements
are adequate to make the information not misleading. The results of operations
for the three months ended March 31, 1996 and 1995 are not necessarily
indicative of the results for a full year.
2. GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company experienced
significant revenue declines since 1992, cumulative losses, and negative cash
flows during the three-year period ended December 31, 1995. At March 31, 1996
and 1995, the Company's current liabilities exceeded its current assets by $3.4
million and $3.3 million, respectively. At March 31, 1996 the shareholder
deficit was $4.6 million. While there have been improved results from
continuing operations and a significant decrease in operating costs, the
Company's recurring shareholders' deficiency, pending litigation, and negative
cash flows, and inability to remain in compliance with financial covenants with
its lenders, continue to raise substantial doubt about its ability to continue
as a going concern.
The new management of the Company evaluated the Company's current financial
condition and determined that, in order for the Company to continue as a going
concern, the Company should take certain actions, including the reduction of
operating expenses, improvement or replacement of its current management
information systems, obtaining concessions from the Company's creditors, and
reestablishing good relations with its agents, owner/operators and other
vendors. To accomplish this, new management immediately implemented stringent
cost controls, made significant reductions in the Company's work force, and
commenced discussions with lessors of real estate and equipment and other trade
creditors, to terminate their leases and/or compromise the Company's
obligations. These measures allowed the Company to generate sufficient cash
flows to meet its obligations on a timely basis and return the Company to
profitable operations. Management has refinanced its line of credit through
May 1997 (see Note 5), however, the Company remains in violation of certain
financial covenants. It is management's expectation that continuation of these
efforts during 1996 and into the future will restore the Company to a solid
financial standing. However, there is no assurance that this can be
accomplished.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)
3. RESTATEMENT OF OLD TRADE PAYABLES
During 1995, the Company had taken into income certain old trade payables that
the Company believed it would never have to pay. However, under Generally
Accepted Accounting Principles such payables cannot be taken into income until
legally released either judicially or by the creditor. Accordingly, these
amounts were reinstated as accounts payable during the fourth quarter of 1995.
To reflect this restatement for the three months ended March 31, 1995, income
from continuing operations has been reduced by approximately $227,000 ($0.02
per share) from those amounts which were previously.
4. RELATED PARTY TRANSACTIONS
During 1995, the Company leased a portion of their staff and management from
K&A, Inc., an employee leasing company owned by the Company's President and a
general partner of August Investment Partnership ("AIP"). Total charges from
K&A during the three months ended March 31, 1995 were $42,000. Fees for
certain other leased employees were charged by AIP and by the Company's primary
insurance provider for $3,365 for the three months ended March 31, 1995. These
amounts have been classified as salaries, wages, and other in the accompanying
consolidated statements of operations. These employees are now employed by the
Company. Services provided to related party companies amounting to
approximately $87,000 are included in revenue for the three months ended March
31, 1996.
The Company's primary insurance provider ("AIFE") is managed by a Gener
Partner of AIP. These policies were in place before AIP provided management to
the Company. The terms and conditions of the policies have not changed. AIFE
converted outstanding accounts payable at December 31, 1994 and premium and
deductibles from LRS into a note payable during 1995. The balance of these
notes was $269,027 and $280,070 at March 31, 1996 and December 31,
1995,respectively, as disclosed in Note 6.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)
5. SHORT-TERM DEBT
Short-term debt at March 31, 1996 and December 31, 1995 consists of:
March 31, December 31,
1996 1995
---------- ----------
Line of credit $1,121,082 $1,093,216
Current portion of long-term debt 46,733 14,303
Due to Landair 200,000 200,000
Due to August Investment Partnership 100,000 100,000
Due to Antonson/Kibler 553,500 415,000
---------- ----------
Total $2,021,315 $1,822,519
========== ==========
In May 1995, the Company replaced its previously existing revolving line of
credit with a new revolving line of credit agreement under which the Company
may borrow up to a maximum of $3,000,000. Borrowings are limited to 80% of
eligible accounts receivable and bear interest at the prime rate (8.50% at
March 31, 1996 and December 31, 1995) plus 3.25%. Advances under the line of
credit agreement are collateralized by the Company's accounts receivable,
property and other assets. The agreement expires in May 1997.
The line of credit is subject to termination upon various events of default,
including failure to remit timely payments of interest, fees and principal, any
adverse change in the business of the Company or the insecurity of the lender
concerning the ability of the Company to repay its obligations as and when due
or failure to meet certain financial covenants. Financial covenants include:
minimum net worth requirements, total debt service coverage ratio, capital
expenditure limitations, restrictions on compensation levels of key officers,
and prohibition of additional indebtedness without prior authorization. As of
March 31, 1996 and December 31, 1995, the Company continues to be in violation
of the minimum net worth, additional indebtedness, and debt service coverage
ratio covenants. As a result, the lender may declare the commitment terminated
and demand payment. Management does not expect the lender to terminate the
agreement and expects the violations to be waived during 1996.
Due to Landair--Mortgage note payable to seller of L.R.S. Transportation, Inc.,
interest at 8.5% until January 10, 1996 and at the prime rate published on
January 10, 1996 thereafter, due in two installments of $100,000 each on
January 10, 1996 and 1997. The Company has not made the January 1996 payment
and intends to dispute liability based on misrepresentations by the sellers
(see Note 8).
Other--Three additional loans were extended to the Company during 1995 and
1994. The President and the General Partner of AIP also extended a loan to the
Company in the amount of $553,500. The interest rate on this loan approximates
the prime rate (8.50%) at March 31, 1996 and December 31, 1995. AIP loaned the
Company $100,000 during the quarter ended September 30, 1995. The interest
rate on this loan is the prime rate plus .75% (9.25%) at March 31, 1996 and
December 31, 1995.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)
6. LONG-TERM DEBT
Long-term debt at March 31, 1996 and December 31, 1995 consists of:
March 31, December 31,
1996 1995
--------- ------------
Mortgage note payable to August Investment
Partnership collateralized by land,
interest at prime + .75%, interest only
payments required, principal balance due
July 31, 1999 $250,000 $250,000
Mortgage note payable to AIFE,
collateralized by land, interest at 9%,
monthly repayments of $5,000, including
interest, remaining principal balance
due July 31, 1999 $269,027 280,070
-------- --------
Total debt 519,027 530,070
Less current portion 46,733 14,303
-------- --------
Total long-term debt $472,294 $515,767
======== ========
7. DISCONTINUED OPERATIONS
On January 11, 1995, the Company purchased certain assets of the less-than-
truckload (LTL) refrigerated operations of Landair Services, Inc. The Company
formed the wholly owned subsidiary, L.R.S. Transportation, Inc. (LRS), which
included these operations. The acquisition was made for $50,000 in cash and a
$200,000 promissory note payable in two installments of $100,000 each on
January 10, 1996 and 1997 to Landair Services, Inc. Interest on the
installment note will be 8.5% until January 10, 1996 and at the prime rate
published on January 10, 1996 thereafter. Collateral for the note consists of
unimproved land owned by the Company located in Texas.
The acquisition was accounted for using the purchase method of accounting.
Identifiable intangible assets of $100,000, consisting of contracts, documents,
and proprietary rights, and goodwill of $150,000 arising from the transaction
each were recorded and scheduled to be amortized over five years using the
straight line method. Results of operations of LRS have been consolidated into
US1 from the date of acquisition, January 11, 1995.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)
After sustaining substantial losses through July 1995, the Board of Directors
approved shutting down the operations of LRS effective August 15, 1995. For
the time LRS was operating, the Company considered it a separate segment. This
business was distinguished from the Company's other businesses in that LRS was
under separate management in a separate location with separate accounting,
leased its own terminals and trucks necessary to operate the business and hired
drivers as employees. The LRS freight consisted of refrigerated partial loads.
Trucks were assigned routes to make intermittent deliveries. The Company's
other remaining operations involve the use of independent sales agents who in
turn contract with independent owner operators to haul freight to the desired
destination. This business does not own any trucks or terminals and does not
have any drivers on the payroll. Further, this business generally hauls non-
refrigerated full loads that are arranged by independent sales agents. The
Company's primary role is to provide administrative services to billing,
collection, safety, permits, licensing and disbursement.
After evaluating the criteria contained in Accounting Principles Board Opinion
No. 30 "Reporting the Results of Operations - Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions" the loss on disposal and results of
operations related to LRS have been classified on the accompanying 1995
consolidated statements of operations under the caption of "Discontinued
operations." No separate segment disclosure is made in 1995 due to the
purchase and discontinuation of LRS during the year.
As of December 31, 1995, LRS remaining liabilities were approximately $1.5
million. Of this amount $520,000 are loans payable to related parties as
discussed in footnotes 5 and 6. Also included in this amount is approximately
$530,000 due to the seller of LRS for the financing of the purchase price, back
rent, and early termination fees on leased assets used by LRS prior to its
closure. Reference is made to footnote 8 for disclosure of related litigation.
8. COMMITMENTS AND CONTINGENCIES
Over the past few years, the Company has had a significant number of lawsuits
instituted or threatened against it as a result of its poor financial condition
and its inability to meet certain financial obligations. For the most part,
these suits have been settled through cash payments of a reduced amount or
through the institution of payment plans. The undisputed claims that have not
been settled are reflected as liabilities in the Company's financial statements
and are included in accrued expenses in the accompanying consolidated balance
sheets. The litigation that is currently pending (for which the Company
believes it has accrued adequate reserves) includes:
Farrell v. Transcon Incorporated. This matter is a wrongful termination and
misrepresentation claim brought by Mr. Farrell in Los Angeles Superior Court on
July 8, 1993 alleging damages of $1.0 million. In addition to the wrongful
termination action, Mr. Farrell has filed a workers' compensation claim, which
is pending before the California Workers' Compensation Appeals Board. The
Company's workers' compensation insurance carrier has settled with Mr. Farrell
on the workers' compensation portion of the suit. The action in the Superior
Court has been scheduled for 1996.
<PAGE>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)
Landair Transport, Inc. v. US 1 Industries, Inc. and LRS Transportation. On
March 15, 1996, Landair Transportation filed suit in U.S. District Court for
$623,414 against the Company for breach of contract arising out of an asset
purchase agreement, related promissory note, and leases. The Company disputes
this claim based on misrepresentations made by the plaintiffs.
Paltrans. On March 27, 1996, the mortgage holder on the property owned by the
Paltrans partnership filed to put the property into receivership effective
immediately. It is the Company's position that it is liable on the $3.0
million dollar mortgage only to the extent of the value of the property. The
mortgage holder feels the Company is liable for the entirety of the short fall
which could approximate $1.0 million.
The Company believes it has adequately reserved for the above claims, however,
additional liability is possible and the ultimate disposition of these claims
may have a material adverse effect to the Company's results of operations, cash
flows and financial position.
The Company carries insurance for public liability and property damage, and
cargo loss and damage through various programs. The Company's insurance
liabilities are based upon the best information currently available and are
subject to revision in future periods as additional information becomes
available. Management believes it has adequately provided for insurance
claims.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
Results of Operations
The financial statements and related notes contained elsewhere in this Form
10-Q and in the Company's Form 10-K for its fiscal year ended December 31, 1995
are essential to an understanding of the comparisons and are incorporated by
reference into the discussion that follows.
Period 1996 Compared to 1995
The Company's operating revenues decreased from $4.04 million for the first
quarter of 1995 to $3.65 million for the same period in 1996. The Company's
operating revenues are generated principally from its truckload carrier,
Keystone, which generates sales through independent agents who originate
shipments that then are transported by independent contractors who own their
own equipment. The decrease in operating revenues resulted from the general
decline in available freight and the transition in replacing an agent in the
Detroit area during the first quarter of 1996.
<PAGE>
Total operating expenses decreased from $3.96 million for the first quarter of
1995 to $3.56 million for the same period in 1996. The largest component of
operating expenses is purchased transportation, which generally varies in
proportion to operating revenues at approximately 77% . Purchased
transportation decreased from $3.13 million in 1995 to $2.74 million in 1996.
Commissions, decreased slightly from $.34 million for 1995 to $.32 in 1996.
Commissions generally vary in proportion to operating revenues. Insurance and
claims did not change between the periods, remaining at $.1 million for 1995
and 1996. Insurance and claims also generally vary in proportion to operating
revenues, although they also depend on claims experience. The remaining
operating expenses remained substantially constant between 1995 and 1996 at
$0.2 million.
Non-operating expense increased from $9 thousand for the first quarter of 1995
to $36 thousand for the first quarter of 1996 and consists primarily of
interest expense. Interest expense varies in proportion to the Company's
outstanding interest-bearing indebtedness which increased during 1995 as the
result of the LRS losses.
The LRS discontinued operations resulted in a loss of $.2 million which
affected the overall operating results for the first quarter of 1995. Overall
operating results for the first quarter of 1996 increased to $48 thousand from
a loss of $.1 million. The remaining difference in overall operating results
of approximately $80 thousand was do to the overall reduction in revenue.
Future Prospects
The Company's management remains optimistic about its future prospects.
Revenue in the first quarter of 1996 increased over revenue in the fourth
quarter of 1995. Management expects second quarter 1996 sales to exceed those
from the second quarter of 1995. The addition of an agent recruiter has aided
the Company. The current business plan calls for the addition of agent
recruiters over the next year. These additions should increase the Company's
revenue to more profitable levels. The Company's future depends on its ability
to resolve many remaining situations including cash flow problems, declining
sales, and numerous lawsuits.
Liquidity and Capital Resources
As of March 31, 1996, the Company's financial position remains precarious. The
Company had a deficit in shareholders' equity of $4.6 million and its current
liabilities of $5.7 million exceeded its current assets by $3.4 million. As
described above, the Company has experienced significant revenue declines,
operating losses in prior years and losses from discontinued operations leaving
the Company in its current position. The Company's borrowing from the partners
of AIP and the Company's president to alleviate the current cash shortages has
enabled the Company to continue in operation. While the Company's current
situation is not good, current growth plans are designed to grow the Company
while remaining profitable which should enable it to improve its liquidity
position.
The Company continues to suffer from a negative cash flow from operations
although the negative cash flow improved from a negative of $.4 million during
the first quarter of 1995 to only $.06 million during the same period of 1996.
A positive cash flow for the quarter ended March 31, 1996 was provided by
borrowing from the Company's president and a partner of AIP.
<PAGE>
The Company's principal source of outside liquidity is its $3 million line of
credit with FINOVA. The availability of the line of credit is based on 80% of
Keystone's eligible accounts receivable. At March 31, 1996, the outstanding
borrowings were $2.0 million, which essentially was the entire amount that the
Company was eligible to borrow. The line of credit expires on May 31, 1997.
The Company is currently in violation of several covenants of the lender.
Relief from these covenants is expected from the lender. Additional liquidity
has been provided by loans from AIP and the Company's president.
Shareholders and potential investors in the Company are cautioned that the
Company's financial condition remains precarious and that the favorable
compromise of the Company's various lawsuits and an increase in operating
performance remain essential to its long-term survival. Unfortunately, there
can be no assurance that these goals will be achieved.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See footnote 8 to the unaudited financial statements included herein.
Item 6(b). Reports on Form 8-K
No Reports on Form 8-K have been filed during the quarter.
<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 there unto duly authorized.
US 1 Industries, Inc.
Michael E. Kibler
President
James C. Day
Chief Financial Officer
May 14, 1996
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