<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended March 31, 1996
Commission File No. 0-7765
Crowell & Co., Inc.
-----------------------------------------------------------------
(Exact Name of small business issuer as specified in its charter)
GEORGIA 58-1021933
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
432 South Belair Road, Augusta, Georgia 30907
----------------------------------------------
(Address of principal executive offices)
Issuer's telephone number, including area code (706) 855-1099
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No
----- -----
The number of shares outstanding of issuer's common equity as of May 10, 1996 is
2,520,835.
1
<PAGE>
CROWELL & CO., INC.
INDEX
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements ........................ 4
ITEM 2 - Management's Discussion and Analysis ..... 8
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following condensed consolidated financial statements of Crowell & Co.,
Inc., and Subsidiaries are included in Item I:
Condensed Consolidated Balance Sheet
March 31, 1996
Condensed Consolidated Statements of Operations and Accumulated Deficit -
Three months ended March 31, 1996 and 1995
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1996 and 1995
Notes to Condensed Consolidated Financial Statements
3
<PAGE>
Crowell & Co., Inc., and Subsidiaries
Condensed Consolidated Balance Sheet
March 31, 1996
Assets
Properties held for resale & development
Homes under construction and for sale $3,085,972
Developed residential 840,376
Land held for future development and other 379,550
----------
4,305,898
----------
Cash, including escrow funds of $26,289 200,090
----------
Receivables 147,168
----------
Property and equipment, net of depreciation 341,093
----------
Other assets 59,977
----------
$ 5,054,226
===========
Liabilities and Stockholders' Equity
Notes payable to banks $ 4,200,680
-----------
Accounts payable and accrued expenses 194,406
-----------
Stockholders' equity
Preferred stock 1,011,899
Common stock 696,776
Paid-in capital 33,648
Accumulated deficit (1,083,183)
-----------
659,140
------------
$ 5,054,226
===========
See notes to condensed consolidated financial statements.
4
<PAGE>
Crowell & Co., Inc., and Subsidiaries
Condensed Consolidated Statements of Operations and Accumulated Deficit
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1996 1995
---- ----
<S> <C> <C>
Revenues
Home sales $ 1,090,300 $ 936,940
All other revenues 273,658 258,900
----------- ---------
1,363,958 1,195,840
----------- ---------
Cost of revenues
Homes 1,044,128 851,165
All other costs 57,273 39,996
----------- ---------
1,101,401 891,161
----------- ---------
Operating expenses 314,481 365,661
----------- ---------
Operating loss (51,924) (60,982)
----------- ---------
Net financial expense 72,809 95,263
----------- ---------
Loss before income taxes (124,733) (156,245)
----------- ---------
Income tax expense 0 (1,500)
----------- ---------
Net loss before Discontinued Operations (124,733) (157,745)
----------- ---------
Discontinued Operations 28,849 (65,260)
----------- ---------
Net loss (95,884) (223,005)
----------- ---------
Accumulated deficit
Beginning of period (987,299) (283,818)
End of period (1,083,183) ($ 506,823)
----------- ---------
Weighted average common shares
outstanding 2,520,835 2,520,835
Net loss per common share
Primary earnings per share
Loss from continuing operations ($ 0.06) ($ 0.07)
(Loss) Income from discontinued
operations .01 (.03)
----------- ---------
($ 0.05) ($ 0.10)
=========== =========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
Crowell & Co., Inc., and Subsidiaries
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities
Net loss ($ 95,884) ($ 223,005)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation and amortization 20,700 29,932
Net (increase) decrease in inventory,
receivables, prepaids, payables and accruals (407,177) 111,538
----------- ----------
Net cash used in operating activities (482,361) (81,535)
----------- ----------
Cash flows from investing activities
(Purchases)Sales of property and equipment 22,115 (12,638)
Receipts on notes 0 69,883
----------- ----------
Net cash provided by (used in) investing activities 22,115 57,245
----------- ----------
Cash flows from financing activities
Proceeds from borrowings 1,506,827 617,767
Payments of borrowings (1,115,055) (618,651)
----------- ----------
Net cash provided by (used in) financing activities 391,772 (884)
----------- ----------
Net decrease in cash (68,474) (25,174)
Cash at beginning of period 268,564 230,332
Cash at end of period $ 200,090 $ 205,158
=========== ==========
Supplemental disclosures
Income taxes paid $ 0 $ 1,500
Interest paid, net of amount capitalized 74,759 98,761
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
CROWELL & CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
Note 1 - Basis of Presentation
The accompanying financial statements are presented in accordance with the
requirements of Form 10-QSB and consequently do not include all of the
disclosures normally required by generally accepted accounting principles or
those normally made in the Company's annual Form 10-KSB filing. Accordingly,
the reader of this Form 10-QSB may wish to refer to the Company's Form 10-KSB
for the year ended December 31, 1995 for further information.
The financial information has been prepared in accordance with the Company's
customary accounting practices and has not been audited. In the opinion of
management, the information presented reflects all adjustments necessary for a
fair statement of interim results. All such adjustments are of a normal and
recurring nature.
Note 2 - Income (loss) per share
The income or loss per common share has been computed using the weighted average
of the number of shares outstanding during the three months ended March 31, 1996
and 1995. Because inclusion of convertible preferred stock would have an anti-
dilutive effect on the income or loss per common share, the convertible
preferred stock is excluded from the computation of the income or loss per
common share assuming full dilution for the quarters ended March 31, 1996 and
1995.
7
<PAGE>
Item 2. Management's Discussion and Analysis
Results of Operations for the Quarters ended March 31, 1996 and 1995
The primary sources of revenue of Crowell & Co., Inc., and Subsidiaries (the
"Company") are the development of residential properties for resale,
homebuilding and providing real estate brokerage services.
Other sources of revenue include sales of computer software and hardware,
operation of a pool and tennis facility, and various other real estate related
activities.
Total revenues for the quarter ended March 1996 are $168,118 more than revenues
for the quarter ended March 1995. This can be attributed to home sales which
were $153,360 greater in the March 1996 quarter.
Currently sales backlog on Company constructed homes is $1,640,800.
Construction on these homes is 63% complete. Backlog represents signed
contracts for the purchase of homes where the property has not been closed.
Therefore, the Company still holds legal title and has not recognized any
income.
The gross profit margin on home sales decreased in the 1996 quarter as compared
to 1995 from 9.2% to 4.2% because of competitive pressures caused by the
Savannah River Site layoffs. Management believes gross profit margin will
improve when sales activity increases.
Operating expenses decreased by $51,180 for the quarter ended March 31, 1996, as
compared to the same quarter last year. This is a result of general decreases
in several other operating expense categories. Management believes operating
expenses will remain at first quarter levels for the second quarter. Operating
expenses include salaries, office expenses, occupancy, depreciation, advertising
and promotion, taxes and licenses, legal and accounting, communications, and
other expenses. These expenses are fixed in nature and normally do not
fluctuate with different revenue levels.
The Company had a net loss for the 1996 quarter of $95,884 compared to a net
loss of $223,005 for the 1995 quarter. Management believes the company will
sustain another loss for the second quarter of 1996 based on sales activity in
new home sales.
Liquidity and Capital Resources
The Company has obtained financing historically by borrowing from conventional
lending sources using land acquired for development as security for loans.
Current and future liquidity needs are expected to be met by use of the proceeds
from home, lot, and land sales and the proceeds from loans, using lands
purchased for development as collateral. Existing development loans and
commitments available to the Company have been made by
8
<PAGE>
various financial institutions and are secured by raw land and the improved lots
held for resale. Payments of interest are due monthly or quarterly and a portion
of the principal is repaid as each lot is sold. The Company has approximately
$58,000 in unused development loan commitments available to use in the
development of residential properties as of March 31, 1996.
Residential home construction costs are expected to be met through the use of
existing commitments aggregating approximately $1,300,000 as of March 31, 1996,
and through the use of additional commitments also using the improved lots as
collateral. Lot acquisition costs and home construction costs are financed by
construction loans from a number of conventional lending sources, generally
lending 90-95% of the costs of the home, secured by the lot and improvements.
These loans are repaid upon the sale of the home. These loans are negotiated
and closed on a project-by-project and lot-by-lot basis.
In addition to the development loans, the Company has a loan agreement with an
Augusta, Georgia, savings and loan institution in the amount of approximately
$327,000 which is secured by real property.
The Company also has several other loans with various lenders which are secured
by various Company assets.
Financing arrangements for long-term needs have not been made. Such
arrangements in the land development business are generally made on a project-
by-project basis. Debt service on all existing loans (loan balances totaled
$4,200,680 as of March 31, 1996) and funds for operations are expected to be met
from the proceeds of home, lot and land sales, and brokerage commissions. Notes
maturing in the next twelve months total approximately $3,500,000. At March 31,
1996, available cash and proceeds from home, lot, and land sales were expected
to be sufficient to meet the Company's requirements for the following quarter.
The Company historically has renewed these notes as is common in the development
business. The notes will eventually be repaid from proceeds of land, lot, and
home sales.
The Company expects to, as it has done in the past, sell land it presently owns
to meet liquidity needs. Coupled with revenues from normal sources, such sales
would be expected to generate sufficient cash to meet liquidity requirements.
The Company has net operating loss carryforwards available of approximately
$2,050,000 to offset against future federal and state taxable income. The
current value of these carryforwards computed at maximum federal and state
income tax rates is approximately $800,000. This amount is not reflected in the
financial statements.
9
<PAGE>
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.
Crowell & Co., Inc.
May 10,1996 By: Mark L. Gilliam
------------------------------
Mark L. Gilliam
Vice President on Behalf of
the registrant and as Chief
Financial Officer
10
<TABLE> <S> <C>
<PAGE>
<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> 200,090
<SECURITIES> 0
<RECEIVABLES> 147,168
<ALLOWANCES> 0
<INVENTORY> 4,305,898
<CURRENT-ASSETS> 0
<PP&E> 341,093
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,054,226
<CURRENT-LIABILITIES> 0
<BONDS> 4,200,680
0
1,011,899
<COMMON> 696,776
<OTHER-SE> (1,049,535)
<TOTAL-LIABILITY-AND-EQUITY> 5,054,226
<SALES> 1,090,300
<TOTAL-REVENUES> 1,363,958
<CGS> 1,044,128
<TOTAL-COSTS> 1,101,401
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 72,809
<INCOME-PRETAX> (124,733)
<INCOME-TAX> 0
<INCOME-CONTINUING> (124,733)
<DISCONTINUED> 28,849
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (95,884)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
