UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997
[ ] Transition Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 (no fee required)
For the transition period from ________________ to ________________
Commission file number: 0-5370
GENERAL RESIDENTIAL CORPORATION
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(Exact name of small business issuer as specified in its charter)
Delaware 95-2679815
- ------------------------------ ----------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
17992 Darmel Place, Santa Ana, California 92705
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (714) 633-4275
Common Stock, $1.00 par value
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(Title of Class)
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 July 31, 1997, the Company had 71.0787 shares of common stock issued
and outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [ X ]
Total sequentially numbered pages in this document: 13
page 1 of 13
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENERAL RESIDENTIAL CORPORATION
CONDENSED BALANCE SHEETS (UNAUDITED)
June 30, December 31,
1997 1996
------------ ------------
ASSETS
CASH $ 11,111 $ 4,265
INCOME TAXES RECEIVABLE 8,655
PROPERTY AND EQUIPMENT,
net of accumulated depreciation 1,853,647 1,902,169
------------ ------------
$ 1,864,758 $ 1,915,089
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Note payable $ $ 31,236
Accounts payable and accrued expenses 14,195 14,195
Income taxes payable 5,090
Deferred income taxes 474,400 489,000
Due to related parties 156,500 150,000
Amounts due for fractional shares (Note 2) 109,243
------------ ------------
TOTAL LIABILITIES 759,428 684,931
------------ ------------
STOCKHOLDERS' EQUITY (Note 2)
Common stock, $1.00 par value;
authorized - 250 shares;
issued and outstanding -
71.0787 shares at June 30, 1997
and 81.7963 shares at December 31, 1996 71 82
Additional paid-in capital 1,359,791 1,488,391
Accumulated deficit (254,532) (258,315)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 1,105,330 1,230,158
------------ ------------
$ 1,864,758 $ 1,915,089
============ ============
See accompanying notes to condensed financial statements.
page 2 of 13
GENERAL RESIDENTIAL CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30, 1997 and 1996
1997 1996
------------ ------------
LEASING REVENUES $ 90,723 $ 90,681
------------ ------------
COSTS AND EXPENSES
Compensation to officers and directors 48,000 42,000
General and administrative expenses 15,782 9,720
Depreciation 24,261 24,261
Interest expense, including $4,084
in 1997 and $3,795 in 1996 to
related parties 4,084 5,804
------------ ------------
92,127 81,785
------------ ------------
Income (loss) before income taxes (1,404) 8,896
Income taxes (benefit) (300) 2,600
------------ ------------
Net income (loss) $ (1,104) $ 6,296
============ ============
Net income (loss) per common share $ (13.46) $ 75.85
============ ============
Weighted average number of
shares of common stock 82 83
============ ============
See accompanying notes to condensed financial statements.
page 3 of 13
GENERAL RESIDENTIAL CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1997 and 1996
1997 1996
------------ ------------
LEASING REVENUES $ 181,446 $ 181,376
------------ ------------
COSTS AND EXPENSES
Compensation to officers and directors 90,000 70,500
General and administrative expenses 28,399 21,802
Depreciation 48,522 48,522
Interest expense, including $8,168
in 1997 and $7,508 in 1996
to related parties 8,342 12,307
------------ ------------
175,263 153,131
------------ ------------
Income before income taxes 6,183 28,245
Income taxes 2,400 8,200
------------ ------------
Net income $ 3,783 $ 20,045
============ ============
Net income per common share $ 46.13 $ 241.51
============ ============
Weighted average number of
shares of common stock 82 83
============ ============
See accompanying notes to condensed financial statements.
page 4 of 13
GENERAL RESIDENTIAL CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30, 1997 and 1996
1997 1996
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from lessees $ 181,446 $ 181,376
Interest paid to related parties (8,168) (7,508)
Interest paid to others (174) (4,799)
Income taxes paid (3,255) (25,133)
Cash paid to officers and
directors for fees and expenses (90,000) (70,500)
General and administrative expenses (28,399) (21,802)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 51,450 51,634
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes payable,
secured by deeds of trust (31,236) (67,108)
Borrowings from related parties 6,000 9,000
Common stock repurchased and retired (19,368) (1,663)
------------ ------------
NET CASH USED IN FINANCING ACTIVITIES (44,604) (59,771)
------------ ------------
NET INCREASE (DECREASE) IN CASH 6,846 (8,137)
CASH BALANCE AT BEGINNING OF PERIOD 4,265 10,118
------------ ------------
CASH BALANCE AT END OF PERIOD $ 11,111 $ 1,981
============ ============
RECONCILIATION OF NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Net income $ 3,783 $ 20,045
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation of property and equipment 48,522 48,522
Decrease in income taxes receivable 8,655
(Decrease) in income taxes payable
and deferred taxes (9,510) (16,933)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 51,450 $ 51,634
============ ============
See accompanying notes to condensed financial statements.
page 5 of 13
GENERAL RESIDENTIAL CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements, which are for
interim periods, do not include all disclosures provided in the annual
financial statements. These unaudited condensed financial statements should be
read in conjunction with the financial statements and the footnotes thereto
contained in the Annual Report on Form 10-KSB for the year ended December
31, 1996 of General Residential Corporation (the "Company"), as filed
with the Securities and Exchange Commission. The December 31, 1996
balance sheet was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting
principles.
In the opinion of the Company, the accompanying unaudited condensed financial
statements contain all adjustments (which are of a normal recurring
nature) necessary for a fair presentation of the financial statements.
The results of operations for the three and six months ended June 30, 1997 are
not necessarily indicative of the results to be expected for the full
year.
2. PURCHASE AND RETIREMENT OF COMMON STOCK
During the six months ended June 30, 1997, the Company purchased and retired
322,802 (pre-split) shares of its common stock for an aggregate cash payment of
$19,368.
On July 16, 1997, the Company amended its Certificate of Incorporation to (i)
effect a one for 200,000 reverse stock split of the Company's currently issued
and outstanding common stock, and (ii) change the number of shares of common
stock the Company is authorized to issue to 250 shares with a par value per
share of $1.00. Prior to the amendment, the Company was authorized to issue
50,000,000 shares with a par value of $.01. As a result of the reverse split,
the Company will issue 71.0787 shares of common stock in exchange for 14,215,738
pre-split shares and will repurchase 1,820,720 pre-split shares for an aggregate
purchase price of $109,243. The effects of the reverse split have been reflected
in the accompanying unaudited condensed financial statements.
page 6 of 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
OR PLAN OF OPERATION
Financial Condition:
The Company expects to generate sufficient cash flow from operations to
fund operating expenses and scheduled debt service requirements during the
fiscal year ending December 31, 1997. The Company had amounts due for fractional
shares of $109,243 and will finance these by borrowings from the Company's
officers and directors.
Results of Operations:
The Company leases its three properties to an unrelated entity which
operates the properties as residential board and care facilities. The Company
has a fixed yearly lease income of approximately $360,000 through April 2005.
The Company has no other sources of operating revenues.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On July 16, 1997, the Company amended its Certificate of Incorporation
to (i) effect a one for 200,000 reverse stock split of the Company's currently
issued and outstanding common stock, and (ii) change the number of shares of
common stock the Company is authorized to issue to 250 shares with a par value
per share of $1.00. Prior to the amendment, the Company was authorized to issue
50,000,000 shares with a par value of $.01. As a result of the reverse split,
the Company will issue 71.0787 shares of common stock in exchange for 14,215,738
pre-split shares and will repurchase 1,820,720 pre-split shares for an aggregate
purchase price of $109,243.
ITEM 6. EXHIBITS
(a) 3. Certificate of Amendment of Certificate of Incorporation as filed
in the Office of Secretary of State of the State of Delaware on
July 16, 1997.
27. Financial Data Schedule (Electronic Filing Only)
(b) Reports on Form 8-K - Three Months Ended June 30, 1997. None.
page 7 of 13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GENERAL RESIDENTIAL CORPORATION
-------------------------------------
(Registrant)
/s/ Paul M. Kuefler
Date: August 11, 1997 By: __________________________________________
Paul M. Kuefler
President
(Principal Executive Officer)
/s/ Daniel Lezak
Date: August 11, 1997 By: __________________________________________
Daniel Lezak
Secretary - Treasurer and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
page 8 of 13
EXHIBIT INDEX
3. Certificate of Amendment of Certificate of Incorporation of
General Residential Corporation, as filed in the Office of the
Secretary of State of the State of Delaware on July 16, 1997.
27. Financial Data Schedule.
page 9 of 13
EXHIBIT 3
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "GENERAL RESIDENTIAL CORPORATION", FILED IN THIS OFFICE ON THE SIXTEENTH DAY
OF JULY, A.D. 1997, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
page 10 of 13
<PAGE>
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
GENERAL RESIDENTIAL CORPORATION
A Delaware Corporation
GENERAL RESIDENTIAL CORPORATION, a corporation organized and existing under
and by virtue of the Delaware General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY THAT:
FIRST: At a meeting of the Board of Directors of General Residential
Corporation, resolutions were duly adopted setting forth a proposed amendment in
the Certificate of Incorporation of this corporation, declaring such amendment
to be advisable, that the amendment proposed be approved by a majority of the
stockholders. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that ARTICLE FOURTH of this corporation's Certificate of
Incorporation be amended to read as follows:
"FOURTH. The Corporation is authorized to issue only one class of
stock, which shall be called Common Stock. The total number of shares of Common
Stock which the Corporation is authorized to issue is two hundred fifty (250)
shares, and the par value of each of such shares is $1.00 for an aggregate of
$250.00. No distinction shall exist between the shares of the Corporation or the
holders thereof.
"Such stock may be issued from time to time without action by the
stockholders for such consideration as may be fixed from time to time by the
Board of Directors, and the shares so issued, the full consideration for which
has been paid and delivered, shall be deemed fully paid stock and the owner of
such stock shall not be liable for any further payment thereon.
"Upon the filing with the Secretary of State of the State of
Delaware of the Certificate of Amendment to the Certificate of Incorporation of
the Corporation whereby this ARTICLE FOURTH is amended to read as herein set
forth, each share of the $0.01 par value Common Stock of this Corporation
outstanding immediately prior to the filing of this Amendment is (by reason of
the filing of this Amendment) reverse-split into one/two-hundred thousandth
(1/200,000) of a share of $1.00 par value Common Stock."
SECOND: In accordance with Section 238 of the General Corporation Law
of the State of Delaware, the necessary number of shares required by statute
were voted in favor of this amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the stated capital of said corporation will be reduced
or by reasons of said amendment, and the assets remaining after such reduction
are sufficient to pay any debts for which payment has not been otherwise
provided in accordance with Section 244 of the General Corporation Law of the
State of Delaware.
page 11 of 13
IN WITNESS WHEREOF, GENERAL RESIDENTIAL CORPORATION has caused this
Certificate of Amendment to be signed by PAUL KUEFLER, its President, and
attested by DANIEL LEZAK, its Secretary, this 1st day of June, 1997.
GENERAL RESIDENTIAL CORPORATION
A Delaware corporation
/s/ Paul M. Kuefler
By: __________________________
PAUL KUEFLER, President
ATTEST:
/s/ Daniel Lezak
_____________________________
DANIEL LEZAK, Secretary
page 12 of 13
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27
<ARTICLE> 5
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 11,111
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,446,608
<DEPRECIATION> 1,592,961
<TOTAL-ASSETS> 1,864,758
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 71
<OTHER-SE> 1,105,259
<TOTAL-LIABILITY-AND-EQUITY> 1,864,758
<SALES> 0
<TOTAL-REVENUES> 181,446
<CGS> 0
<TOTAL-COSTS> 166,921
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,342
<INCOME-PRETAX> 6,183
<INCOME-TAX> 2,400
<INCOME-CONTINUING> 3,783
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,783
<EPS-PRIMARY> 46.13
<EPS-DILUTED> 0
</TABLE>
