<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996
Commission File Number: 0-9969
CENTURY INDUSTRIES, INC.
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(Exact name of Registrant as specified in its charter)
District of Columbia 54-1100941
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
45034 Underwood Lane
Sterling, Va. 20166
(Mail) P.O. Box 319
Sterling, Va. 20167
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 471-7606.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 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.
(1) Yes X No
----- -----
(2) Yes X No
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At March 31, 1996, 1,326,000 shares of the Registrant's $.001 par value common
stock were issued and outstanding.
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INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 Financial Statements
Consolidated Balance Sheet:
At March 31, 1996 and December 31, 1995
Consolidated Statement of Income:
For the three months periods
ended March 31, 1996 and 1995
Consolidated Statement of Cash Flows:
For the three months periods
ended March 31, 1996 and 1995
ITEM 2 Management's Analysis of Financial Condition
and results of operations
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CENTURY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
3/31/96 3/31/95
------- --------
<S> <C> <C>
Current Assets
Cash $ 56,046 $ (1,526)
Accounts Receivable-Trade (Net of allowance for
doubtful accounts of $20,000 and $20,000) 487,565 423,445
Marketable Securities 9,900 -
Employee Advances 1,200 868
Stockholder Advances 76,937 -
Deferred Taxes-Current - 7,387
------------ ------------
Total Current Assets 631,648 430,174
------------ ------------
FIXED ASSETS
Software and Computer Equipment 17,641 4,088
Furniture and Fixtures 82,129 78,689
Machinery and Equipment 801,062 801,061
Transportation Equipment 89,139 89,139
Leasehold Improvements 84,835 84,839
------------ ------------
1,074,806 1,057,812
Less: Accumulated Depreciation (1,029,468) (997,835)
------------ ------------
Net Fixed Assets 45,338 59,977
------------ ------------
OTHER ASSETS
Investment 57,500 0
Goodwill 547,244 1,001,601
Deposits 3,530 800
Deferred Taxes - 0
------------ ------------
Total Other Assets 608,274 1,002,401
------------ ------------
$ 1,285,260 $ 1,492,552
============ ============
</TABLE>
3
<PAGE> 4
CENTURY INDUSTRIES, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
3/31/96 3/31/95
------- --------
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable-Trade $ 233,063 $ 403,837
Accounts Payable-Affiliate 100,000 0
Notes Payable 275,906 326,359
Income Taxes Payable - 0
Dividends Payable 4,450 0
Accrued Expenses 13,383 14,046
----------- -----------
Total Current Liabilities 626,802 744,242
NOTE PAYABLE, LESS CURRENT PORTION - -
----------- -----------
626,802 744,242
----------- -----------
MINORITY INTEREST, COMMON STOCK OF SUBSIDIARY 318,000 7,000
STOCKHOLDERS' EQUITY
Preferred Stock, convertible, $.001 par value,
1,000,000 shares authorized,
1,000,000 issued and outstanding 1,000 1,000
Common Stock, $.001 par value,
25,000,000 shares authorized,
1,326,000 issued and outstanding 1,326 1,326
Additional Paid in Capital 591,750 1,122,226
Retained Earnings (Deficit) (253,618) (428,142)
----------- -----------
Total Stockholders' Equity 340,458 748,310
----------- -----------
$1,285,260 $1,492,552
=========== ===========
</TABLE>
4
<PAGE> 5
CENTURY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<CAPTION>
3/31/96 3/31/95
------- -------
<S> <C> <C>
Sales $729,410 $617,247
Cost of Sales 463,133 479,429
---------- ----------
GROSS PROFIT ON SALES 266,277 137,818
---------- ----------
Operating Costs
Payroll Expenses 98,706 80,961
Professional Fees 142,765 3,976
Auto, Travel and Entertainment 10,906 6,831
Amortization and Depreciation 2,932 3,308
Office and Misc. Expense 37,991 29,412
---------- ----------
Total Operating Costs 293,300 124,488
---------- ----------
NET INCOME (LOSS) FROM OPERATIONS (27,023) 13,330
---------- ----------
Other Income (Expense)
Gain on Disposition of Assets - 14,519
Interest Expense (11,007) (15,262)
---------- ----------
Total Other Income (Expense) (11,007) (743)
---------- ----------
INCOME BEFORE INCOME TAXES (38,030) 12,587
Provision (Benefit) for Taxes (14,200) -
---------- ----------
NET INCOME (LOSS) $(23,830) $ 12,587
========== ==========
Preferred Stock Dividends of Subsidiary (4,450) (1,950)
---------- ----------
Net Income Available for Common Stockholders $(28,280) $ 10,637
========== ==========
EARNINGS PER SHARE $ (0.01) $ 0.00
========== ==========
</TABLE>
5
<PAGE> 6
CENTURY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE QUARTER ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
ADDITIONAL RETAINED TOTAL
PREFERRED COMMON PAID-IN EARNINGS STOCKHOLDERS'
STOCK STOCK CAPITAL (DEFICIT) EQUITY
----- ----- ------- --------- ------
<S> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1995 $1,000 $1,326 $591,750 $(227,032) $367,044
Net loss for three months ended March 31, 1996 - - - (23,830) (23,830)
Less: Minority interest - - - 2,000 2,000
Unrealized loss on marketable securities - - - (306) (306)
Preferred dividends, USIB - - - (2,500) (2,500)
Preferred dividends, CSP - - - (1,950) (1,950)
-------- -------- ---------- ----------- ----------
BALANCE MARCH 31, 1996 $1,000 $1,326 $591,750 $(253,618) $340,458
======== ======== ========== =========== ==========
</TABLE>
6
<PAGE> 7
CENTURY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<CAPTION>
3/31/96 3/31/95
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 709,979 $ 609,736
Cash paid to suppliers and employees (962,586) (584,275)
Interest paid (11,007) (15,262)
----------- ----------
Net cash provided (used) by operating activities (263,614) 10,199
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of fixed assets - 14,519
Purchase of marketable securities (10,206) -
----------- ----------
Net cash provided (used) by investing activities (10,206) 14,519
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of preferred stock 320,000 -
Preferred dividends paid (1,950) -
Payments on notes (12,655) (26,244)
----------- ----------
Net cash provided (used) by financing activities 305,395 (26,244)
----------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 31,575 (1,526)
Cash and Cash Equivalents - January 1 24,471 -
----------- ----------
CASH AND CASH EQUIVALENTS - MARCH 31 $ 56,046 $ (1,526)
=========== ==========
Reconciliation of net income (loss) to net cash used by
operating activities:
Net income (loss) $ (23,830) $ 12,587
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Amortization and depreciation 7,213 8,735
Gain on sale of assets - (14,519)
(Increase) decrease in accounts receivable (19,431) (7,994)
(Increase) decrease in deposits and prepaid expenses (7,287)
(Increase) decrease in stockholder advances (76,937) -
(Increase) decrease in deferred taxes 10,100 -
Increase (decrease) in accounts payable (154,386) 14,012
Increase (decrease) in accrued expenses 2,457 4,665
Increase (decrease) in income taxes payable (8,800) -
----------- ----------
Net cash provided (used) by operating activities $(263,614) $ 10,199
=========== ==========
</TABLE>
(continued)
7
<PAGE> 8
CENTURY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 1996 AND 1995
NONCASH INVESTING AND FINANCING TRANSACTIONS:
During the quarter ended March 31, 1996, the Company exchanged a trade
receivable recorded at $9,703 for software. Accordingly, trade receivables were
reduced and software and computer equipment were increased by $9,703.
During the quarter ended March 31, 1996, the Company incurred an unrealized loss
of $306 on marketable securities available for sale. In accordance with
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities, the investment and retained earnings
were reduced by $306.
Minority interest was decreased and retained earnings increased by $2,000, the
minority interest in the Company's net loss for the quarter ended March 31,
1996.
Dividends payable of $4,450 were accrued and retained earnings charged for the
quarter ended March 31, 1996.
8
<PAGE> 9
ITEM 2. Management's Discussion and Analysis
Century Steel Products, Inc.
Century's first quarter manufacturing revenues reflected the nation's winter
weather in the steel subsidiary's marketing area, and manufacturing revenues
reflect winter conditions in general. In spite of the weather, Century's
warehouse sales were substantially greater than first quarter 1995, even though
commercial and residential construction volume were consistent with 1995 in the
region.
U.S. Insurance Brokers, Inc.
The Company acquired U.S. Insurance Brokers, Inc. (USIB) in Washington, DC on
December 18, 1996, from Ted L. Schwartzbeck, the Executive V.P. of Century.
USIB has been in its development stage since September, 1994, when it began
insurance sales in December, 1995.
USIB was formed to service the members of major national associations in the
D.C. area, which is home to over 4200 such associations. The laws in DC permit
insurance agencies to share after expense profits with non licensed entities,
whereas all other state laws prohibit commission sharing with non licensed
entities, such as associations, and do not provide a clear cut path to share
profits.
This business plan allows USIB to share profits with the major associations
through Limited Partnership arrangements, in exchange for marketing rights, and
national association news letter and magazine advertising to their members.
The insurance brokerage subsidiary, U.S. Insurance Brokers, Inc.(USIB), entered
into its first major national association Limited Partnership agreements on
March 8, 1996, with the National Lumber and Building Material Dealers
Association (NLBMDA) in Washington, DC, an association formed in 1910 with
11,000 lumber dealer members and 270,000 employees in all 50 states. The
agreements provide for USIB to market group health, commercial lines and
personal lines auto insurance to the NLBMDA members and their employees on a
national basis.
The NLBMDA advises that the potential annual gross group health premium for its
members approximates $540,000,000, and the annual gross premium for personal
lines auto approximates $400,000,000. The amount of premium actually written by
USIB will depend on the competitive rates and benefits offered by the insurance
carriers which have appointed USIB.
USIB has been appointed by Golden Rule Insurance Co., an Indianapolis based
carrier admitted in 30 states. Golden Rule's group health plans are amongst the
most competitive plans in the nation with respect to rates and benefits. They
have developed plans which are especially designed for national associations
with business trade groups within the associations, which exclude pre existing
medical conditions, and do not require medical
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<PAGE> 10
exams. Lower national association rates have been filed by Golden Rule with the
various state insurance departments, permitting better benefits with lower
rates. USIB's Commissions are established at 10%, with USIB retaining 4% of
annual gross premium after commissions and Limited Partnership profit sharing
plans, as its revenue stream.
USIB also has the authority to market group term life and disability plans to
the NLBMDA members and employees, and has been appointed by CIGNA, Phoenix Home
Life Mutual and U.S. Life Insurance Co's. as their agent to market their
products to the NLBMDA members.
The NLBMDA has also granted the authority to USIB to offer commercial lines
liability coverages to its members. To this effect, USIB is in active
negotiations with the Howard W. Phillips Agency in Washington, DC, an agency
established in 1916.
This Joint Venture will provide for USIB to be the originating broker and
Phillips to be the Managing General Agent for the Lumbermens' liability
coverages. The approximate annual gross premium for the NLBMDA commercial lines
coverages is in excess of $500,000,000. USIB projects that a minimum of
$50,000,000 of that annual gross premium will be written by USIB, with USIB
projected to retain 4% of that gross premium as its annual revenue stream.
Phillips advises that it is negotiating with Firemen's Fund to provide an
exclusive on the NLBMDA business in exchange for the lowest competitive rates
available in the insurance marketplace.
USIB has begun to quote its rates on health coverages to the NLBMDA members in
North and South Carolina, Louisiana and Tennessee at this date. USIB is
expected to begin accepting premium and earning commissions from NLBMDA members
and their employees during the second quarter. Commercial coverages and
personal lines auto quotes will also begin income generation in the second
quarter.
USIB was appointed as Insurance Broker of Record by the Association of
Metropolitan Sewerage Agencies (AMSA) on April 3, 1996, as the prelude to the
completion of a Limited Partnership agreement between USIB and AMSA. AMSA has
165 municipal members, and its members include the sewerage agencies in New
York, Chicago and Los Angeles.
AMSA's gross insurance premium currently being paid by the municipalities to
various insurance carriers is approximately $250,000,000. USIB projects a 20%
minimum premium penetration level, or $50,000,000 of sales. USIB would retain
approximately 4% of that amount as pre tax profits, after Limited Partnership
profits and placement costs.
USIB and AMSA have agreed that the pilot placement of all lines coverage will
be the AMSA Northern Ohio members, including the Cleveland municipality. The
gross premium will be approximately $20,000,000.
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<PAGE> 11
The AMSA members have not put their insurance out for bid in over 15 years. At
the time the coverage was originally placed, the insurance markets had a much
smaller capacity, and coverage was therefore more difficult and more expensive.
The low claims history of the past 15 years has been minimal, due to risk
management, and that factor alone should help USIB to reduce the AMSA members'
insurance premium costs.
USIB is in active negotiations with The National Career Colleges Association
(1,000,000 members), and STPP, an association which includes many
environmentally conscious municipalities and national associations. STPP has
authorized USIB to develop a "green" auto insurance program for its 300 member
association and municipalities, covering 7-8,000,000 members and their
employees. This "green" program would reduce insurance premium rates for
members through less miles traveled, the use of alternative fuels, and other
methods characterized as "the transportation reform movement".
In order to obtain sufficient capital to continue operations beyond the start
up development phase, USIB began a private placement of its Series A 12.5%
cumulative coupon convertible preferred shares, during the first quarter.
Management believes that it will complete the raise of the capital required to
completely fund operations by the end of the second quarter.
USIB raised $320,000 from the private placement of 8,000 USIB convertible
preferred shares during the first quarter at $40.00 per share. The proceeds
from the convertible preferred share sales were more than sufficient to defray
USIB's additional development costs. USIB expects to complete the hiring of all
permanent personnel on a salaried basis during the second quarter 1996.
USIB has utilized the services of Association Assistance Corporation, an
affiliate of Government Relations, Inc., a transportation public relations and
lobbying firm on Capitol Hill, to assist USIB with its association
negotiations. Government Relations, Inc. lists among its clients such entities
as the San Francisco Transit Authority, and the Michigan Transit Authority.
Results of Operations
Century Steel Products, Inc.'s (CSP's) sales of $729,000 for the 1996 first
quarter were $111,752 or 15% greater than the first quarter of 1995 sales of
$617,247.
CSP's Trade debt was $233,063 as compared to $403,837 in the first quarter of
1995.
CSP's first quarter 1996 operating profits of $118,500 were 1000% greater than
the 1995 first quarter's operating profits of $12,587, and contributed $.09 per
share to the Company's consolidated earnings.
This earnings increase is attributed to CSP's overall 1996 increased sales over
1995.
USIB's first quarter 1996 operating loss was ($94,670). This loss contributed
($.07) per share to the Company's consolidated earnings. This (loss) resulted
from continued development costs with respect to USIB's national association
marketing agreements.
The Company's consolidated earnings per share were ($.01) for the first
quarter.
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<PAGE> 12
PART II - Other Information
ITEM 1. Legal Proceedings
None. The Company's subsidiary, CSP, continues to reduce prior quarters'
settled claims incurred, for an aggregate amount of $20,000. This amount is
normal for the course of the CSP's business.
ITEM 2. Changes in Securities
None.
ITEM 3. Defaults
NONE
ITEM 4. Submission of Matters to a Vote of Security Holders
NONE
ITEM 5. Other Information
NONE
ITEM 6. Exhibits and Reports on Form 8-K.
The Registrant filed 2 8-K's during the 1st Quarter:
1. An 8-K regarding the Company's acquisition of USIB, with USIB's audited
financial statements at 12-31-96.
2. An 8-K attaching USIB's Limited Partnership agreement with the NLBMDA.
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<PAGE> 13
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
May 20, 1996
Century Industries, Inc.
\S\Ted L. Schwartzbeck
--------------------------------------------
Ted L. Schwartzbeck, Executive Vice President
and CEO
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<PAGE> 14
NDEX TO EXHIBITS
(l) Underwriting Agreement. Not applicable.
(2) Plan of acquisition. reorganization. arrangement, liquidation or
succession. Not applicable.
(3) Articles of Incorporation and Bylaws. Not applicable.
(4) Instruments defining the rights of security holders, including
indentures. Not applicable.
(5) Opinion: re: Legality. Not Applicable.
(6) Opinion: re: Liquidation Preference. Not Applicable.
(7) Opinion: re: Liquidation Preference. Not Applicable.
(8) Opinion: re: Tax Matters. Not Applicable.
(9) Voting Trust Agreement. Not Applicable.
(10) Material Contracts. Not Applicable.
(11) Statement re: Computation of Per Share Earnings. Not Applicable.
(12) Statement re: Computation of Ratios. Not Applicable.
(13) Annual Report to Securities Holders. etc. Not Applicable.
(14) Material Foreign Contracts. Not Applicable.
(15) Letter re: unaudited Interim, Financial Information. Not Applicable.
(16) A Letter regarding change in certified accountant. Not applicable.
(17) Letter re director resignation. Not applicable.
(18) Letter re: Change in Accounting principles. Not Applicable.
(l9) Previously Unfiled Documents. Not Applicable.
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<PAGE> 15
INDEX TO EXHIBITS - CONT'D
(20) Report Furnished to Security Holders. Not Applicable.
(21) Other documents or statements to security holders. Not applicable.
(22) Subsidiaries of the Registrant. Not Applicable.
(23) Published Report Regarding Matters Submitted to Securities Holders. Not
Applicable.
(24) Consents of experts and counsel. Not applicable
(25) Power of Attorney. Not applicable.
(26) Statement of Eligibility of Trustee. Not Applicable.
(27) Invitations far Competitive Bids. Not Applicable.
(28) Additional Exhibits. Not applicable.
(29) lnformation from Reports Furnished to State Insurance Regulatory
Authorities. Not Applicable.
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 56,046
<SECURITIES> 9,900
<RECEIVABLES> 487,565
<ALLOWANCES> 20,000
<INVENTORY> 0
<CURRENT-ASSETS> 631,648
<PP&E> 1,074,806
<DEPRECIATION> 1,029,468
<TOTAL-ASSETS> 1,285,260
<CURRENT-LIABILITIES> 626,802
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,285,260
<SALES> 729,410
<TOTAL-REVENUES> 729,410
<CGS> 463,133
<TOTAL-COSTS> 293,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 20,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (38,030)
<INCOME-TAX> 0
<INCOME-CONTINUING> (27,023)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,830)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
