UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (C) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the transition period ___________________ to _________________
Commission File Number 0-24282
Monmouth Capital Corporation
(Exact name of registrant as specified in its charter)
New Jersey 21-0740878
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
125 Wyckoff Road, Eatontown, New Jersey 07724
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (732) 542-4927
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $1.00 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required 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
Indicate by check if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
The aggregate market value of voting stock held by non-affiliates
of the Registrant was $3,397,364 (based on 988,324 shares of
common stock at $3.4375 per share, the average of the bid and
asked price on June 16, 1997).
The number of shares outstanding of issuer's common stock as of
June 16, 1997 was 1,446,006 shares.
<PAGE>
PART I
ITEM 1. BUSINESS
General Development of Business
Monmouth Capital Corporation (the Company) operates as a
real estate company which owns real estate investments and sells
and finances manufactured homes. The Company is a corporation
organized in the State of New Jersey. The Company commenced
operations in 1961.
Prior to fiscal 1994, the Company operated as a small
business investment company under the Small Business Investment
Company Act of 1958 and as an investment company under the
Investment Company Act of 1940. As such, the Company was able to
distribute its income prior to income taxes as dividends to
shareholders. The Company was allowed a deduction from taxable
income for these distributions.
With shareholder approval, the Company surrendered its
license to operate as a small business investment company and
deregistered as an investment company. On January 15, 1993, the
Small Business Administration approved the surrender of the
Company's license. On July 20, 1993, the Securities and Exchange
Commission entered an Order that the Company had ceased to be an
investment company. Since the Company is no longer an investment
company, earnings are now fully taxable.
Certain members of the Company's Board of Directors manage
two real estate investment trusts. In 1995, the Company success-
fully completed a Rights Offering to its shareholders. The
Company raised approximately $1,600,000 after expenses bringing
total equity to approximately $4,500,000. The Company intends
to raise additional capital through rights offerings and other
placements and use the proceeds to acquire additional real
estate properties.
Narrative Description of the Business
Prior to fiscal 1994, the Company made loans to small
business concerns located throughout the northeast region of the
United States. Generally, these loans were collateralized by
commercial or residential real property.
A description of the Company's existing loan portfolio of
$2,505,652 is incorporated herein by reference to Note 3 of the
Notes to Consolidated Financial Statements - Loans Receivable.
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<PAGE>
On March 31, 1994, the Company purchased its first real
estate investment, a net leased industrial building in Bethlehem,
Pennsylvania. This building is net leased to three tenants with
leases expiring from 1998 to 2001. The gross rent on these
leases total approximately $177,000 for fiscal 1997. The tenants
reimburse the Company for taxes, insurance, maintenance (other
than roof and structural repairs), etc. The Company purchased
this building for cash.
The Company has no limitation on leverage and intends to use
leverage when available. As a practical matter, real estate with
short-term leases or non-rated tenants cannot generally be
leveraged.
During fiscal 1994, the Company formed a wholly-owned
subsidiary, The Mobile Home Store, Inc., to finance and sell
manufactured homes. At March 31, 1997, loans receivable relating
to the financing of manufactured home sales amounted to
$1,725,357.
Management
The management of the Company currently operates Monmouth
Real Estate Investment Corporation (MREIC) and United Mobile
Homes, Inc. (UMH), two real estate investment trusts (REITs).
MREIC is now specializing in net leased industrial properties to
rated tenants on medium term leases. UMH specializes in
investments in manufactured home communities. It is intended that
the Company will invest in real estate ventures that do not qualify
under the investment objectives of MREIC and UMH. To the extent
that there may be conflicts of interest as to prospective
investments, the Company may be deprived of investment
opportunities.
General Risks of Real Estate Ownership
The Company's investments will be subject to the risks
generally associated with the ownership of real property,
including the uncertainty of cash flow to meet fixed obligations,
adverse changes in national economic conditions, changes in the
relative popularity (and thus the relative price) of the
Company's real estate investments when compared to other
investments, adverse local market conditions due to changes in
general or local economic conditions or neighborhood values,
changes in interest rates and in the availability of mortgage
funds, costs and terms of mortgage funds, the financial
conditions of tenants and sellers of properties, changes in real
estate tax rates and other operating expenses (including
corrections of potential environmental issues as well as more
stringent governmental regulations regarding the environment),
governmental rules and fiscal policies as well as expenses
resulting from acts of God, uninsured losses and other factors
which are beyond the control of the Company.
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<PAGE>
Competition
The Company will be competing for real estate investments
with numerous other real estate entities, such as individuals,
corporations, real estate investment trusts and other enterprises
engaged in real estate activities, possibly including certain
affiliates of the Company. In many cases, the competing concerns
may be larger and better financed than the Company, making it
difficult for the Company to secure new real estate investments.
Environmental, Regulatory and Energy Problems
The Company must comply with certain Federal Environmental
Protection Agency Regulations as well as state and local
governmental regulations.
In conjunction with the purchase of the Bethlehem building,
a Phase I environmental assessment was performed. This
assessment consisted of searches of Federal and State databases
to determine potential sources of contamination, investigation of
the site history, and visual inspection. The assessment
concluded that there was no evidence to suggest that the site has
ever experienced a significant spill or environmental incident.
Additionally, inspections of properties are usually made and
certificates of compliance are usually obtained upon the sale of
property or upon a change of tenancy. Therefore, there is no
assurance that, in connection with compliance with environmental
regulations, substantial capital expenditure would not be
incurred at the time the Company desired to sell its properties
or at the time of a change of tenancy. Management is not aware
of any material environmental problems affecting the Company's
newly acquired property.
Number of Employees
At March 31, 1997, the Company had six full-time employees.
A Board of Directors consisting of ten directors is responsible
for the general policies of the Company. The Company utilizes
the services of a management company to manage its property.
ITEM 2. PROPERTIES
The Company has one property, located in Bethlehem,
Pennsylvania. See Item 1 - Narrative Description of the
Business for further information.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Prior to October 19, 1995, the shares of the Company were
traded on the over-the-counter market. As of October 19, 1995,
the Company's shares are traded on the National Association of
Securities Dealers Automatic Quotations (NASDAQ) Small Capitalization
market under the symbol "MONM". The per share range of high and low
market prices and distributions paid to shareholders during each
quarter of the last two fiscal years were as follows:
1996-97 1995-96
Fiscal Market Price Distri- Fiscal Market Price Distri-
Qtr. High Low bution Qtr, High Low bution
First 3-3/4 3-3/8 -- First 3-5/8 3-1/8 --
Second 3-3/4 2-3/4 -- Second 3-5/8 3-1/8 --
Third 3 2-1/8 $ .05 (1) Third 3-5/8 3-1/8 $ .05 (1)
Fourth 3-3/4 2-1/2 -- Fourth 3-5/8 3-1/8 --
(1) Total distributions to shareholders for the years ended
March 31, 1997 and 1996 amounted to $57,787 ($.05 per share)
and $55,371 ($.05 per share), respectively, all of which was
taxed as ordinary income.
The over-the-counter market quotations reflect the inter-
dealer prices, without retail mark-up, mark-down or commission, and
may not necessarily represent actual transactions.
As of March 31, 1997, there were approximately 510 holders
of the Company's common stock based on the number of record
owners.
Future dividend policy will depend on the Company's
earnings, capital requirements, financial condition, availability
and cost of bank financing and other factors considered relevant
by the Board of Directors.
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<PAGE>
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA
FOR THE YEARS ENDED MARCH 31,
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994* 1993
Income Statement Data:
Total
Income $2,788,741 $2,644,137 $1,338,719 $ 344,840 $471,106
Total
Expenses 2,769,531 2,267,250 1,149,667 336,733 354,977
Income
Taxes 6,700 171,308 87,200 5,286 788
Net
Income 12,510 205,579 101,852 2,821 115,341
Net Income
Per Share 0.01 0.18 0.16 0.01 0.23
=====================================================================
Balance Sheet Data:
Total
Assets $5,994,684 $5,752,047 $5,068,042 $3,216,262 $3,962,997
Notes & Deben-
tures Payable -0- -0- -0- -0- 1,000,000
Shareholders'
Equity $5,342,174 4,706,755 4,477,290 2,778,911 2,893,547
=====================================================================
Cash Dividends
Per Share $.05 $.05 $.05 $0.23 $ 0.16
Average Number
of Shares Out-
standing 1,217,129 1,111,624 646,693 510,680 510,680
* Prior to fiscal 1994, the Company operated as a Small Bus-
iness Investment Company (SBIC). Revenues consisted primarily of
interest income on loans receivable. The Company distributed
taxable earnings in accordance with Internal Revenue Code regula-
tions. No provision was made for Federal and State income taxes.
Effective with the year ended March 31, 1994, revenues consist of
rental income, sales of manufactured homes, and interest income on
loans. Dividends are based on the Company's operations and are at
the discretion of the Board of Directors. Since the Company is no
longer an SBIC, income taxes have been accrued.
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</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Liquidity and Capital Resources
Net cash used by operating activities for the year ended March 31,
1997 amounted to $701,318 as compared to $477,613 for the year ended
March 31, 1996 and $29,529 for the year ended March 31, 1995. These
increases in net cash used by operating activities are due primarily
to increases in inventory of manufactured homes.
Loans receivable increased by $137,404 during 1996. This
increase is the result of $726,665 in new loans made offset by $589,261
in principal repayments.
Securities available for sale decreased by $545,628 as a result of
sales and other decreases of $716,648 offset by purchases of $171,020.
The Company's ability to generate adequate cash to meet its
needs is dependent primarily on the success of the sale and
financing of manufactured homes, its real estate investment,
leveraging of its real estate investment, collection of loans
receivable, availability of bank borrowings and access to the
capital markets.
Results of Operations
Income is primarily comprised of the sale of manufactured homes,
by the Mobile Home Store, Inc. (MHS), the Company's wholly owned
subsidiary, interest and rent. Sales of manufactured homes increased
from $968,990 in 1995 to $1,724,021 in 1996 to $2,182,016 in 1997.
The MHS was formed in 1994 to sell and finance manufactured homes.
Income increases were due to increased sales volume. Interest income
decreased from $360,076 in 1996 to $322,080 in 1997. This decrease was
primarily due to principal reductions. Interest income increased from
$198,743 in 1995 to $360,076 in 1996 as a result of new loans made by
MHS. At March 31, 1995 and 1996, the Company had one loan which was
considered non-performing. The borrower had resumed making payments.
However, the Company believes that there is adequate collateral for
this loan. At March 31, 1997, an additional loan was considered
non-performing. This borrower has also resumed making payments .
Rental income relating to the Bethlehem, Pennsylvania industrial
building remained relatively stable during 1995, 1996 and 1997.
Other income increased during 1996 by $377,173 and decreased by
$277,996 during 1997 due primarily to the gain of $346,291 on the
sale of the ICS convertible debenture in 1996.
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<PAGE>
Cost of manufactured home sales increased from $648,836 in 1995 to
$1,397,389 in 1996 to $1,689,915 in 1997. These increases were
directly related to the increases in sales. Selling expense increased
to $191,161 in 1997 as compared to $132,707 in 1996 and $79,037 in
1995. These increases were directly related to the increases in sales.
Salaries and Employee Benefits increased from $125,453 in 1995 to
$174,525 in 1996. Salaries and employee benefits decreased in 1997
to $120,997. Outside personnel was used during 1997. There is a
corresponding increase in professional fees during 1997. Professional
fees also increased in 1996 and 1995 as a result of the expansion of
MHS. Interest expense increased to $103,896 in 1997 from $68,248 in
1996 and $31,746 in 1995 due to the expansion of the MHS and additional
borrowings. Other expenses increased by $94,755 in 1997 as compared
to $188,304 in 1996 due to the continued growth and expansion of
the MHS.
Income taxes rose from $87,200 in 1995 to $171,308 in 1996.
These increases in income taxes are directly related to the increases
in income. Income taxes decreased during 1997 due to the decrease in
income.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data listed in
Part IV, Item 14 (a)(1) are incorporated herein by reference and
filed as a part of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
-8-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Several of the Directors and Officers of the Company also serve
as directors of Monmouth Real Estate Investment Corporation (MREIC)
and United Mobile Homes, Inc. (UMH), both publicly-owned real estate
investment trusts.
Director Since/
Principal Occupation Shares Owned and
Name, Age and Title Past Five Years % of Total
Ernest V. Bencivenga Treasurer(1961 to present) 1961
(79) Secretary(1967 to present). Owns 6,102 shs
Secretary/Treasurer Treasurer and Director of .43% (1)
and Director MREIC; Secretary/Treasurer
and Director of UMH.
Anna T. Chew Controller(1991 to present). 1994
(39) Certified Public Accountant; Owns 7,321 shs
Controller and Vice President, Chief .51%(2)
Director Financial Officer and Director
of UMH; Controller/Director
of MREIC; Prior to 1991,
Senior manager KPMG Peat
Marwick.
Boniface DeBlasio Chairman of the Board(1968 1961
(76) to Present). Director of Owns 30,026 shs
Board Chairman and MREIC. 2.13% (3)
Director
Charles P.Kaempffer Self-employed investor. 1970
(59) Director of MREIC, UMH and Owns 15,331 shs
Director Sovereign Community Bank. 1.08% (4)
Eugene W. Landy Attorney. President (1961 to 1961
(63) Present); President of MREIC; Owns 174,774 shs
President and Chairman of the Board of UMH. 12.41% (5)
Director
Samuel A. Landy Attorney. President and 1994
(36) Director of UMH; Director Owns 47,555 shs
Director of MREIC. 3.38%(6)
James E. Mitchell General Partner of Mitchell 1994
(56) Partners,L.P. Chairman of Owns 65,200 shs
Director the Board of Balboa 4.62% (7)
Securities Corporation.
W. Dunham Morey Certified Public Accountant. 1961
(76) Director of MREIC. Owns 50,590 shs
Director 3.59%
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<PAGE>
Director Since/
Principal Occupation Shares Owned and
Name, Age and Title Past Five Years % of Total
Robert G. Sampson Self-employed investor. 1963
(71) Director of MREIC and UMH; Owns 16,986 shs
Director General Partner for Sampco, 1.20%
Ltd.
Peter J. Weidhorn President of WNY Management 1994
(50) Corp.; Vice Chairman, Owns 36,000 shs
Director CentraState Healthcare Systems, 2.55%
(1) Includes 4,821 shares held by Mr. Bencivenga's wife.
(2) Held jointly with Ms. Chew's husband.
(3) Includes (a) 3,621 shares held by Mr. DeBlasio's wife;
and (b) 9,574 shares in custodial accounts for Mr. DeBlasio's
children under the Uniform Gift to Minor's Act in which he
disclaims any beneficial interest, but has power to vote.
(4) Includes (a) 726 shares in joint name with Mrs. Kaempffer;
(b) 270 shares held by Mr. Kaempffer's wife; and (c) 7,000
shares held as Trustee for Defined Benefit Pension Plan for
which Mr. Kaempffer has power to vote.
(5) Includes (a) 6,838 shares held by Mr. Landy's wife;
(b) 30,670 shares held in the Landy & Landy Employees' Pension
Plan, of which Mr. Landy is a Trustee with power to vote; (c)
43,212 shares held in the Landy & Landy Employees'Profit Sharing
Plan of which Mr. Landy is Trustee with power to vote.
(6) Includes (a) 11,635 shares held by Mr. Landy's wife; (b) 12,660
shares in custodial accounts for Mr. Landy's children under the
Uniform Gift to Minor's Act in which he disclaims any
beneficial interest, but has power to vote; and (c) 13,169 shares
in the Samuel Landy Family Limited Partnership.
(7) Includes 60,510 shares held by Mitchell Partners, L.P. over
which Mr. Mitchell exercises voting power.
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<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table shows compensation paid
by the Company to its chief executive officer for services rendered
during the fiscal years ending March 31, 1997, 1996 and 1995. Because
no executive officers received total annual salary and bonus exceeding
$100,000, only the compensation paid to the chief executive officer is
to be disclosed under the Securities and Exchange Commission disclosure
requirements.
Annual Compensation
Name and Principal
Position Year Salary Bonus Other(1)
Eugene W. Landy 1997 None None $71,700
Chief Executive Officer 1996 None None $63,530
1995 None None $55,545
(1) Represents directors' fees as well as legal and other fees to the
firm of Landy & Landy.
Overview and Philosophy
The Company has a Compensation Committee consisting of two
independent outside Directors. This Committee is responsible for
making recommendations to the Board of Directors concerning executive
compensation. The Compensation Committee takes into consideration
three major factors in setting compensation.
The first consideration is the overall performance of the Company.
The Committee believes that the financial interests of the executive
officers should be aligned with the success of the Company and the
financial interests of its shareholders.
The second consideration is the individual achievements made by
each officer. The Company is relatively small. The Committee is
aware of the contributions made by each officer and makes an
evaluation of individual performance based on their own familiarity
with the officer.
The final criteria in setting compensation is comparable wages
in the industry.
Evaluation
The Committee reviewed the progress made by Eugene W. Landy,
Chief Executive Officer, in locating alternative business and investment
opportunities. The Committee decided to continue Mr. Landy's annual
compensation of $50,000. The Summary Compensation Table shows an
annual compensation to Mr.Landy of $50,000 plus $21,700 in directors'
and legal fees for a total of $71,700 for the year ended March 31, 1997.
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<PAGE>
Other Information
Except for specific agreements, the Company has no retirement plan
in effect for officers, directors or employees and, at present, has no
intention of instituting such a plan.
Comparative Performance by the Company
The following line graph compares the total return of the
Company's Common Stock for the last five fiscal years to the
NASDAQ Total Return Index and the NASDAQ Financial Stocks Total
Return Index. The total return reflects stock price appreciation
and dividend reinvestment for all three comparative indices. The
information herein has been obtained from sources believed to be
reliable, but neither its accuracy nor its completeness is
guaranteed.
Year Ended Monmouth Capital NASDAQ NASDAQ
March 31, Corporation Total Financial
1992 100 100 100
1993 87 115 142
1994 113 124 148
1995 102 138 166
1996 120 187 229
1997 114 208 294
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<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of March 31, 1997, no person owned of record or was known
by the Company to beneficially own more than 5% of the shares,
except as follows:
Name and Address Shares Owned Percent
of Beneficial Owner Beneficially of Class
Eugene W. Landy
20 Tuxedo Road 174,774 12.41%
Rumson, NJ 07760
Walter Carucci 123,110 9.3%
c/o Carr Securities
1 Penn Plaza
New York, NY 10114
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since the beginning of the Company's last fiscal year, there have
been no transactions or proposed transactions in which any of the
officers and directors have a material interest.
The only family relationship between any of the directors or
executive officers of the Company is that of Samuel A. Landy, director,
who is the son of Eugene W. Landy, president and a director of the
Company.
Eugene W. Landy and Samuel A. Landy are partners in the law firm
of Landy & Landy, which firm, or its predecessor firms, have been
retained by the Company as legal counsel since the formation of the
Company, and which firm the Company proposes to retain as legal
counsel for the current fiscal year.
The New Jersey Supreme Court has ruled that the relationship of
directors also serving as outside counsel is not per se improper,
but the attorney should fully discuss the issue of conflict with the
other directors and disclose it as part of the proxy statement so
that shareholders can consider the conflict issue when voting for or
against the attorney/director nominee.
Additional related party transactions are incorporated herein
by reference to Part IV, Item 14(a)(1)(vi), Note 10 of the Notes
to Consolidated Financial Statements - Payments to Affiliated
Persons and Related Party Transactions.
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<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
ON FORM 8-K
(a) (1) The following Financial Statements are filed as part of
this report:
Page
(i) Independent Auditors' Report 17
(ii) Consolidated Balance Sheets as of
March 31, 1997 and 1996 18-19
(iii) Consolidated Statements of Income
for the years ended March 31, 1997,
1996 and 1995 20
(iv) Consolidated Statements of Shareholders'
Equity for the years ended March 31, 1997,
1996 and 1995 21
(v) Consolidated Statements of Cash Flows
for the years ended March 31, 1997, 1996
and 1995 22
(vi) Notes to Consolidated Financial Statements 23-32
(a) (2) Financial Statement schedules are omitted
for the reason that they are not required,
are not applicable, or the required
information is set forth in the financial
statements or notes thereto.
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<PAGE>
PART IV
(a) (3) The Exhibits set forth in the following index of Exhibits
are filed as a part of this Report.
Exhibit No. Description
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation, or Succession - Not Applicable
(3) Articles of Incorporation and By-Laws - Reference
is hereby made to that filed with the Securities
and Exchange Commission with the Company's
Form 10-K/A No. 2 for the year ended March 31, 1994.
(4) Instruments Defining the Rights of Security
Holders, including Indentures - 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 Security Holders, Form 10-Q or
Quarterly Report to Shareholders - Not Applicable
(16) Letter re: Change in Certifying Accountant -
Not Applicable
(18) Letter re: Change in Accounting Principles -
Not Applicable
(19) Previously Unfiled Documents - Not Applicable
(21) Subsidiaries of the Registrant - During fiscal
1994, the Registrant formed a wholly-owned
subsidiary, The Mobile Home Store, Inc. to
finance and sell manufactured homes. This
subsidiary was incorporated in the State of
New Jersey.
(22) Published Report re: Matters Submitted to Vote of
Security Holders - Not Applicable
(23) Consents of Experts and Counsel - Not Applicable
(24) Power of Attorney - Not Applicable
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<PAGE>
Exhibit No. Description
(27) Financial Data Schedule
(28) Information from Reports Furnished to State
Insurance Regulatory Authorities - Not Applicable
(29) Additional Exhibits - None
Reports on Form 8-K - None
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<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Monmouth Capital Corporation
Eatontown, New Jersey
We have audited the accompanying consolidated balance sheets of
Monmouth Capital Corporation and subsidiaries as of March 31, 1997 and
1996 and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period
ended March 31, 1997. 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.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Monmouth Capital Corporation and subsidiaries at March 31, 1997 and
1996 and the consolidated results of their operations and their cash
flows for each of the three years in the period ended March 31, 1997
in conformity with generally accepted accounting principles.
/s/ Cowan, Gunteski & Co., P.A.
Cowan, Gunteski & Co., P.A.
Certified Public Accountants
May 27, 1997
Toms River, New Jersey
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<PAGE>
<TABLE>
<CAPTION>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31,
ASSETS 1997 1996
<S> <C> <C>
Current Assets:
Cash $ 228,928 $ 94,625
Accounts Receivable 20,124 75,752
Interest Receivable 42,153 32,842
Securities Available for Sale at
Fair Value 420,986 966,614
Inventory 1,609,906 1,168,216
Prepaid Expenses and Other Current Assets 195,076 56,290
Current Portion of Loans Receivable 517,202 523,021
__________ __________
Total Current Assets 3,034,375 2,917,360
__________ __________
Long Term Assets:
Real Estate Investments:
Land 172,000 172,000
Building and Improvements net of
accumulated depreciation of $62,603
and $37,487, respectively 919,612 937,213
__________ __________
Total Real Estate Investments 1,091,612 1,109,213
__________ __________
Loans Receivable:
Performing 1,208,155 1,436,625
Non-Performing(less allowance for
losses of $119,753 in 1997 and
1996) 660,542 288,849
__________ __________
Total Loans Receivable 1,868,697 1,725,474
__________ __________
Total Long-Term Assets 2,960,309 2,834,687
__________ __________
TOTAL ASSETS $5,994,684 $5,752,047
========== ==========
See Accompanying Independent Auditors' Report and
Notes to Consolidated Financial Statements
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS (CONT.)
AS OF MARCH 31,
LIABILITIES AND SHAREHOLDERS' EQUITY
1997 1996
<S> <C> <C>
Current Liabilities:
Accounts Payable and Accrued Expenses $ 116,699 $ 240,801
Loans Payable 474,244 726,587
__________ __________
Total Current Liabilities 590,943 967,388
Other Liabilities 61,567 77,904
__________ __________
TOTAL LIABILITIES 652,510 1,045,292
__________ __________
Shareholders' Equity:
Common Stock (par value $1.00 per
share; authorized 10,000,000 shares;
issued and outstanding 1,408,464 and
1,139,184 shares respectively in 1997
and 1996) 1,408,464 1,139,184
Additional Paid-In Capital 3,086,470 2,662,555
Unrealized Investment Gain (Loss) (29,673) (17,174)
Retained Earnings 876,913 922,190
__________ __________
Total Shareholders' Equity 5,342,174 4,706,755
__________ __________
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $5,994,684 $5,752,047
========== ==========
See Accompanying Independent Auditors' Report and
Notes to Consolidated Financial Statements
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED MARCH 31,
1997 1996 1995
<S> <C> <C> <C>
INCOME:
Sales of Manufactured Homes $2,182,016 $1,724,021 $ 968,990
Interest Income 322,080 360,076 198,743
Rental Income 177,480 174,879 162,998
Other Income 107,165 385,161 7,988
__________ __________ __________
Total Income 2,788,741 2,644,137 1,338,719
__________ __________ __________
EXPENSES:
Cost of Manufactured
Home Sales 1,689,915 1,397,389 648,836
Selling Expense 191,161 132,707 79,037
Salaries and Employee
Benefits 120,997 174,525 125,453
Professional Fees 211,334 136,908 95,426
Interest Expense 103,896 68,248 31,746
Other 452,228 357,473 169,169
__________ __________ __________
Total Expenses 2,769,531 2,267,250 1,149,667
__________ __________ __________
Income Before
Income Taxes 19,210 376,887 189,052
Income Taxes 6,700 171,308 87,200
__________ __________ __________
NET INCOME $ 12,510 $ 205,579 $ 101,852
========== ========== ==========
NET INCOME PER SHARE $ .01 $ .18 $ .16
========== ========== ==========
WEIGHTED AVERAGE
SHARES OUTSTANDING 1,217,129 1,111,624 646,693
========== ========== ==========
See Accompanying Independent Auditors' Report and
Notes to Consolidated Financial Statements
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Additional Unrealized
Common Stock Paid-In Investment Retained
Number Amount Capital Gain (Loss) Earnings
<S> <C> <C> <C> <C> <C>
Balance
March 31, 1994 510,680 $510,680 $1,572,567 $ -0- $695,664
Common Stock
Issued with
the Rights
Offering 589,391 589,391 1,023,605 -0- -0-
Net Income -0- -0- -0- -0- 101,852
Distributions -0- -0- -0- -0- (25,534)
Unrealized
Investment
Gain -0- -0- -0- 9,065 -0-
_________ _________ _________ _____ _______
Balance
March 31,1995 1,100,071 1,100,071 2,596,172 9,065 771,982
Common Stock
Issued with
the DRIP* 39,113 39,113 66,383 -0- -0-
Net Income -0- -0- -0- -0- 205,579
Distributions -0- -0- -0- -0- (55,371)
Unrealized
Investment
Loss -0- -0- -0- (26,239) -0-
_________ _________ _________ ________ _______
Balance
March 31,1996 1,139,184 1,139,184 2,662,555 (17,174) 922,190
Common Stock
Issued with
the DRIP* 269,280 269,280 423,915 -0- -0-
Net Income -0- -0- -0- -0- 12,510
Distributions -0- -0- -0- -0- (57,787)
Unrealized
Investment
Loss -0- -0- -0- (12,499) -0-
_________ __________ __________ _________ ________
Balance
March 31,1997 1,408,464 $1,408,464 $3,086,470 $(29,673) $876,913
========= ========== ========== ========= ========
See Accompanying Independent Auditors' Report and
Notes to Consolidated Financial Statements
*Dividend Reinvestment and Stock Purchase Plan.
-21-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31,
1997 1996 1995
<C> <S> <S> <S>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 12,510 $ 205,579 $ 101,852
Depreciation & Amortization 25,116 24,995 12,492
Gain on Sales of Securities
Available for Sale (64,346) -0- -0-
Changes in Operating Assets
and Liabilities:
Accounts Receivable 55,628 (57,048) 2,282
Interest Receivable (9,311) 15,531 (10,543)
Inventory (441,690) (720,100) (282,603)
Prepaid Expenses and Other
Current Assets (138,786) 6,437 34,761
Accounts Payable and
Accrued Expenses (124,102) 38,430 72,497
Other (16,337) 8,563 39,733
Net Cash Used by __________ __________ ___________
Operating Activities (701,318) (477,613) (29,529)
__________ __________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES
New Loans (726,665) (1,405,605) (644,634)
Collections and Other
Decreases in Loans
Receivable 589,261 790,168 111,876
Purchase of Securities
Available for Sale (171,020) -0- (1,003,125)
Sales and Other Decreases
in Securities Available
for Sale 768,495 524,199 11,161
Additions to Building and
Improvements (7,515) -0- -0-
Net Cash Provided (Used) __________ __________ ___________
by Investing Activities 452,556 (91,238) (1,524,722)
__________ __________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES
Net Decrease in Loans
Payable (252,343) 407,547 41,171
Dividends Paid (43,808) (55,371) (25,534)
Proceeds from Issuance of
Class A Common Stock 679,216 105,496 1,612,996
Net Cash Provided by __________ __________ ___________
Financing Activities 383,065 457,672 1,628,633
Net Increase (Decrease) __________ __________ ___________
in Cash 134,303 (111,179) 74,382
Cash at Beginning of Year 94,625 205,804 131,422
__________ __________ ___________
Cash at End of Year $ 228,928 $ 94,625 $ 205,804
========== ========== ===========
</TABLE>
See Accompanying Independent Auditors' Report and
Notes to Consolidated Financial Statements
-22-
<PAGE>
MONMOUTH CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of the Business
Monmouth Capital Corporation (the Company) is a corporation
organized in New Jersey which commenced operations in 1961. Until
1993, the Company was an investment company under the Investment
Company Act of 1940 and a small business investment company licensed
under the Small Business Investment Company Act of 1958. The Company
currently receives rental income from one real estate investment.
The Company also sells and finances manufactured homes.
Revenue Recognition
Sale of mobile homes is recognized on the full accrual basis
when certain criteria are met. These criteria include the following:
(a) initial and continuing payment by the buyer must be adequate;
(b) the receivable, if any, is not subject to future subordination;
(c) the benefits and risks of ownership are substantially transferred
to the buyer; and (d) the Company does not have a substantial continued
involvement with the home after the sale. Alternatively, when the
foregoing criteria are not met, the Company recognizes gains by the
installment method. Interest income on loans receivable is not
accrued when, in the opinion of management, the collection of such
interest appears doubtful. Rental income is recognized on the
straight-line basis over the term of the lease.
Use of Estimates
The preparation of the 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.
Building and Improvements
Building and Improvements are stated at the lower of depreciated
cost or net realizable value. Depreciation is computed based on the
straight-line method over the estimated useful life of the assets
(39 years).If there is an event or change in circumstances that
indicates that the basis of an investment property may not be
recoverable, management assesses the possible impairment of value
through evaluation of the estimated future cash flows of the property,
on an undiscounted basis, as compared to the property's current
carrying value. A property's carrying value would be adjusted, if
necessary, to reflect an impairment in the value of the property.
-23-
<PAGE>
Investments in Debt and Equity Securities
The Company's securities are classified as Available-for-Sale,
and are carried at fair value. Unrealized holding gains and losses
are excluded from earnings and reported as a separate component of
Shareholders' Equity until realized.
Inventories
Inventories, consisting of manufactured homes for sale, are valued
at the lower of cost or market value and are determined by the specific
identification method. All inventories are considered finished goods.
Income Taxes
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes". Income taxes are accounted for by the asset/liability method.
Earnings Per Share
Net income per share is computed using the weighted average number
of shares outstanding, adjusted for the exercise, or potential exercise,
of any dilutive outstanding stock options (See Note 6).
Stock Option Plan
Prior to April 1, 1996, the Company accounted for its stock option
plan in accordance with the provisions of Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations. As such, compensation expense was recorded
on the date of grant only if the current market price of the underlying
stock exceeded the exercise price. On April 1, 1996, the Company
adopted SFAS No. 123, "Accounting for Stock-Based Compensation", which
permits entities to recognize as expense over the vesting period the
fair value of all stock-based awards on the date of grant.Alternatively
SFAS No. 123 also allows entities to continue to apply the provisions
of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made
in 1995 and future years as if the fair-value-based method defined in
SFAS No. 123 had been applied. The Company has elected to continue to
apply the provisions of APB Opinion No. 25 and provide the pro forma
disclosure provisions of SFAS No. 123. During the initial phase-in
period, the effects of applying SFAS 123 in providing pro forma
disclosures may not be representative of the effects on the reported
pro forma amounts in future years.
NOTE 2 - INVESTMENT IN SUBSIDIARY
The Company formed a wholly-owned subsidiary, The Mobile Home
Store, Inc. (MHS), to finance and sell manufactured homes. MHS
was incorporated in the State of New Jersey on July 28, 1993. The
consolidated financial statements of the Company include the
accounts of MHS. All intercompany transactions and balances have
been eliminated in consolidation.
-24-
<PAGE>
NOTE 3 - LOANS RECEIVABLE
The following is a summary of the loans held by the Company
at March 31, 1997 and 1996:
Maturity Balance
Rate Date 3/31/97 3/31/96
J. Trombe Flooring Co.* 12% 1994 $ 408,602 $ 408,602
Motel Associates of
Columbus* 13% 1994 371,693 381,320
Financed Manufactured
Home Units 10%-12% various 1,725,357 1,578,326
__________ __________
Total Loans Receivable 2,505,652 2,368,248
Allowance for Losses 119,753 119,753
__________ __________
Net Loans Receivable 2,385,899 2,248,495
Current Portion 517,202 523,021
__________ __________
Long-Term Portion $1,868,697 $1,725,474
========== ==========
* Non-performing loans
During 1994, MHS began selling manufactured home units and financing
these sales. At March 31, 1997 and 1996, financed manufactured home
units consist of sixty-nine and fifty-six loans, respectively. These
loans range from approximately $5,000 to approximately $60,000 and are
collateralized by manufactured homes.
At March 31, 1997, the Company had two loans which were considered
non-performing. The borrowers have resumed making payments. However,
the Company has initiated foreclosure proceedings on one. Foregone
interest on non-performing loans amounted to $11,847, $-0- and $19,930
for the years ended March 31, 1997, 1996 and 1995, respectively.
On April 25, 1995, ICS Acquisitions, Inc. repurchased its $50,000
subordinated convertible debenture for a purchase price of $396,291, a
gain of $346,291. This gain is included in Other Income. The purchase
price was to have been paid in quarterly installments over a five-year
period together with interest at prime plus two percent with a minimum
rate of 8% and a maximum rate of 13%. On January 4, 1996, ICS fully
repaid all of its debt obligations.
During April and May of 1995, an additional $19,000 was advanced to
Trombe Flooring, Inc. for improvements to the property.
-25-
<PAGE>
NOTE 4 - INVESTMENTS IN DEBT AND EQUITY SECURITIES
The following is a summary of investments in debt and equity
securities at March 31, 1997 and 1996:
Cost Fair Value
Description 3/31/97 3/31/96 3/31/97 3/31/96
U.S.Treasury Notes,
$500,000 CPJJ,7.5%,
1/31/97 $ -0- $501,562 $ -0- $ 508,125
Government National
Mortgage Association
6.5%, 2/20/2014 440,534 472,101 403,548 441,794
Tork Time Control, Inc.
1,500 shares 10,125 10,125 17,438 16,695
________ ________ ________ _________
$450,659 $983,788 $420,986 $ 966,614
======== ======== ======== =========
During 1997, the Company redeemed a $500,000 investment in U.S.
Treasury Notes.
During 1997 and 1996, the Company purchased securities on margin.
This margin loan is due on demand. Interest is calculated based on the
Brokers Loan Rate plus 3/4%. At March 31, 1997 and 1996, the margin
loans amounted to $-0- and $243,315, respectively. The Interest rate on
the margin loan was 8.50% as of March 31, 1996.
NOTE 5 - INVENTORY FINANCING
On October 6, 1994, the Company entered into an agreement with
Deutsche Financial Services (formerly ITT Commercial Finance Corp.)
whereby MHS finances its inventory purchases under a $350,000 line of
credit. This amount was increased to $1,400,000 during fiscal 1997.
The interest rate ranges from prime to prime + 1.5% for each advance
and prime plus 3% after one year. At March 31, 1997, the Company had
$474,244 outstanding and $925,756 available on this line of credit.
Advances under this line of credit are secured by the manufactured home
units for which the advances were made.
-26-
<PAGE>
NOTE 6 - EMPLOYEE STOCK OPTION PLAN
On July 14, 1994, the shareholders approved and ratified the
Company's 1994 Stock Option Plan authorizing the grant to officers and
key employees of options to purchase up to 300,000 shares of common stock.
Options may be granted any time up to December 31, 2003. No option shall
be available for exercise beyond ten years. All options are exercisable
after one year from the date of grant. The option price shall not be
below the fair market value at date of grant. Cancelled or expired
options are added back to the "pool" of shares available under the plan.
The Company elected to continue following APB Opinion No. 25 in
accounting for its stock option plans and, accordingly, no compensation
cost has been recognized. Had compensation cost been determined
consistent with SFAS No. 123, the Company's net income and earnings per
share would have been reduced to the pro forma amounts as follows:
1997 1996
Net Income As reported $12,510 $205,579
Pro forma (15,840) 186,179
Net Income Per Share As reported .01 .18
Pro forma (.01) .17
The fair value of each option grant is estimated on the date of the
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1996 and 1997: dividend
yield of .3 percent; expected volatility of 25 percent; risk-free
interest rates of 6.5 percent; and expected lives of five years.
-27-
<PAGE>
A summary of the status of the Company's stock option plans as of
March 31, 1997, 1996, and 1995 and changes during the years then ended
are as follows:
1997 1996 1995
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Outstanding at
beginning of year 35,000 $3.21 20,000 $3.00 -0- $ -0-
Granted -0- -0- 15,000 3.50 20,000 3.00
Exercised -0- -0- -0- -0- -0- -0-
______ ______ ______
35,000 35,000 3.21 20,000 3.00
====== ====== ======
Options exercisable
at end of year 35,000 20,000 -0-
====== ====== ======
Weighted-average fair
value of options
granted during the
year 0.81 0.97 1.04
====== ====== ======
The following is a summary of stock options outstanding as of
March 31, 1997:
Date of Number of Number of Option Expiration
Grant Employees Shares Price Date
1/4/95 2 20,000 $3.00 1/4/2000
3/4/96 3 15,000 3.50 3/4/2001
______
35,000
======
As of March 31, 1997, there were 265,000 shares available for grant
under the Plan.
NOTE 7 - RIGHTS OFFERING
During 1995, the Company completed a Rights Offering in which
the Company offered to sell to its shareholders two shares of common
stock for each share owned. The rights were exercisable at $3.00 per
share. The Company issued 589,173 shares of common stock resulting
in gross proceeds of $1,768,173. Net proceeds after expenses,
including solicitation fees and legal and other expenses, amounted
to $1,612,996.
-28-
<PAGE>
NOTE 8 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Effective August 28, 1995, the Company implemented a Dividend
Reinvestment and Stock Purchase Plan (DRIP). Under the terms of the DRIP,
shareholders who participate may reinvest all or part of their dividends
in additional shares of the Company at approximately 95% of the market
price.
Shareholders may also purchase additional shares at approximately 95%
of its market price by making optional cash payments. For the year ended
March 31, 1997, the Company received $708,189 from the DRIP. There were
269,280 new shares issued, resulting in 1,408,464 shares outstanding.
On December 16, 1996, the Company paid $57,787 as a dividend of $.05
per share to shareholders of record November 15, 1996.
NOTE 9 - INCOME TAXES
For the years ended March 31, 1997, 1996 and 1995, total income tax
expense amounted to $6,700, $171,308 and $87,200, respectively.
The following is a reconciliation of income tax expense at
the statutory rate to income tax expense at the Company's effective
rate for the years ended March 31, 1997, 1996 and 1995, respectively:
1997 1996 1995
Computed tax at the expected
statutory rate $ 6,531 $128,142 $64,278
Surtax Exemption (3,650) (11,750) (11,750)
Deferred income/expenses (1,614) 9,787 2,833
State income taxes-net of
federal tax benefits 5,695 30,563 27,687
Other (262) 14,566 4,152
_______ ________ _______
Income tax expense $ 6,700 $171,308 $87,200
======= ======== =======
There were no deferred tax assets or liabilities recognized as of
March 31, 1997, 1996 and 1995.
-29-
<PAGE>
NOTE 10 - PAYMENTS TO AFFILIATED PERSONS AND RELATED PARTY
TRANSACTIONS
Payments to Affiliated Persons
Total payments to all officers, directors and affiliated
persons during the fiscal years ended March 31, 1997, 1996
and 1995 amounted to $125,000, $103,816 and $101,173, respectively.
Eugene W.Landy, President of the Company, received $53,200
$45,030, and $43,450 in management and director fees during the
years ended March 31, 1997, 1996 and 1995, respectively. In
addition, the firm of Landy & Landy received $18,500, $18,500 and
$12,095 in legal fees, respectively.
Peter J. Weidhorn, a director of the Company, was the chairman,
director and major shareholder of ICS Acquisitions, Inc. (ICS), in
which the Company had an investment since 1989. On April 28, 1995,
ICS repurchased its $50,000 convertible debenture for $396,291. On
January 4, 1996, ICS fully repaid its debt obligations to the
Company.(See Note 3 of the Notes to Consolidated Financial
Statements).
Transactions with United Mobile Homes, Inc.
MHS has rental expenses to United Mobile Homes, Inc. (United).
United owns and operates manufactured home communities. Six
Directors of the Company are also Directors and shareholders of
United. MHS pays United market rent on sites where MHS has a home
for sale. Total site rental expense to United amounted to $113,182,
$54,321 and $8,066, respectively, for the years ended March 31, 1997,
1996 and 1995. Effective April 1, 1995, MHS and United entered into
an agreement whereby MHS leases space from United to be used as sales
lots, at market rates, at most of United's communities. Total
rental expense relating to these sales lots amounted to $90,000 and
$89,950 for the years ended March 31, 1997 and 1996.
During fiscal 1997 and 1996, MHS sold to United fifteen and
twelve homes, respectively, for a total sales price of $381,501 and
$240,109, respectively, at MHS's cost. These sales represented 17%
and 12%, respectively, of total sales made by MHS. These
manufactured homes were available through MHS, but could have been
acquired by United from a third party at approximately the same
price.
During the years ended March 31, 1997 and 1996, MHS acquired
certain inventory from United. These purchases amounted to
$30,905 and $143,983 representing 1% and 7%, respectively, of
total purchases made by MHS during fiscal 1997 and 1996. This
inventory was available through United, but could have been acquired
from a third-party at approximately the same cost.
-30-
<PAGE>
NOTE 11 - GROUP CONCENTRATIONS OF CREDIT RISK
The Company has made loans to small business concerns and to
individuals located throughout the Northeast region of the United
States. The loan portfolio is diversified. Generally, loans are
collateralized by commercial or residential real property,
including manufactured homes. At March 31, 1997 and 1996, all
loans were secured.
NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company is required to disclose certain information about fair
values of financial instruments, as defined in Statement of Financial
Accounting Standards No. 107, "Disclosures About Fair Value of
Financial Instruments."
NOTE 13 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the years ended March 31, 1997, 1996 and
1995 for interest and taxes are as follows:
3/31/97 3/31/97 3/31/97
Interest $103,896 $ 68,248 $ 31,746
Taxes (5,729) 142,135 (3,259)
During the year ended March 31, 1997, the Company had dividend
reinvestments of $13,979 which required no cash transfers.
-31-
<PAGE>
LIMITATIONS
Estimates of fair value are made at a specific point in time based
upon where available, relevant market prices and information about the
financial instrument. Such estimates do not include any premium or
discount that could result from offering for sale at one time the
Company's entire holdings of a particular financial instrument. For a
portion of the Company's financial instruments, no quoted market value
exists. Therefore, estimates of fair value are necessarily based on a
number of significant assumptions (many of which involve events outside
the control of management). Such assumptions include assessments of
current economic conditions, perceived risks associated with these
financial instruments and their counterparties, future expected loss
experience and other factors. Given the uncertainties surrounding
these assumptions, the reported fair values represent estimates only,
and, therefore, cannot be compared to the historical accounting model.
Use of different assumptions or methodologies is likely to result in
significantly different fair value estimates.
The fair value of cash and cash equivalents and loans receivable
approximates their current carrying amounts since all such items are
short-term in nature. The fair value of loans payable approximates
their current carrying amounts since such amounts payable are at a
current market rate of interest.
-32-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MONMOUTH CAPITAL CORPORATION
BY:/s/Eugene W. Landy
EUGENE W. LANDY
President
Dated: 6/20/97
Pursuant to the requirements of the Securities and Exchange Act
of 1934, this report has been duly signed below by the following
persons on behalf of the registrant and in the capacities and on
the date indicated.
Title Date
/s/Boniface DeBlasio 6/20/97
BONIFACE DEBLASIO Chairman of the Board
and Director
/s/Eugene W. Landy 6/20/97
EUGENE W. LANDY President and Director
/s/Ernest V. Bencivenga 6/20/97
ERNEST V. BENCIVENGA Secretary/Treasurer
and Director
/s/Anna T. Chew 6/20/97
ANNA T. CHEW Controller and Director
/s/Charles P. Kaempffer 6/20/97
CHARLES P. KAEMPFFER Director
-33-
<PAGE>
Title Date
/s/Samuel A. Landy 6/20/97
SAMUEL A. LANDY Director
/s/James E. Mitchell 6/20/97
JAMES E. MITCHELL Director
/s/W. Dunham Morey 6/20/97
W. DUNHAM MOREY Director
/s/Robert G. Sampson 6/26/97
ROBERT G. SAMPSON Director
/s/Peter J. Weidhorn 6/20/97
PETER J. WEIDHORN Director
-34-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MONMOUTH CAPITAL CORPORATION AS OF AND FOR THE
YEAR ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 228,928
<SECURITIES> 420,986
<RECEIVABLES> 2,567,929
<ALLOWANCES> 119,753
<INVENTORY> 1,609,906
<CURRENT-ASSETS> 3,034,375
<PP&E> 1,154,215
<DEPRECIATION> 62,603
<TOTAL-ASSETS> 5,994,684
<CURRENT-LIABILITIES> 590,943
<BONDS> 0
0
0
<COMMON> 1,408,464
<OTHER-SE> 3,933,710
<TOTAL-LIABILITY-AND-EQUITY> 5,994,684
<SALES> 2,182,016
<TOTAL-REVENUES> 2,788,741
<CGS> 1,689,915
<TOTAL-COSTS> 523,492
<OTHER-EXPENSES> 452,228
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 103,896
<INCOME-PRETAX> 19,210
<INCOME-TAX> 6,700
<INCOME-CONTINUING> 12,510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,510
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
