U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-1008
M Corp
(Exact name of small business issuer as specified in its charter)
Montana 81-0268769
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
128 Second Street South, Great Falls, Montana 59405
(Address of principal executive offices)
(406) 727-2600
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed sinc last
report)
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 (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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Outstanding at March 31, 1999
$1.00 Par Value Common Stock 1,567,259 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
<PAGE>
M CORP
INDEX
MARCH 31, 1999
Page Number
PART I
Condensed Consolidated Financial Statements:
Balance Sheet -
March 31, 1999 2
Statements of Income and Comprehensive Income -
Three Months Ended March 31, 1999 and 1998 3
Statements of Cash Flows -
Three Months Ended March 31, 1999 and 1998 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of the
Consolidated Statements of Income 6
PART II
Other Information 7
Signatures 8
1
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M CORP
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
ASSETS
Current Assets
Cash $ 17,976,423
Marketable Securities, at Fair Value 1,785,262
Receivables - Net 110,516
Prepaid Expenses 19,300
Total Current Assets 19,891,501
Noncurrent Investments, at Fair Value 5,259,066
Property, Plant and Equipment, Net 954,664
TOTAL ASSETS $ 26,105,231
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Liabilities $ 318,616
Income Taxes Payable 233,858
Deferred Income Taxes 194,900
Total Current Liabilities 747,374
Provision for Estimated Title and
Escrow Losses 958,181
Minority Interests 2,277,778
Deferred Income Taxes 522,900
Excess of Fair Value of Net Assets
Acquired Over Cost 46,580
STOCKHOLDERS' EQUITY
Common Stock - $1.00 Par Value,
5,000,000 shares authorized,
3,750,905 shares issued 3,750,905
Capital Surplus 16,267,463
Retained Earnings 2,610,509
Accumulated Other Comprehensive Income 1,289,885
Treasury Stock, at Cost (2,366,344)
Total Stockholders' Equity 21,552,418
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 26,105,231
See Notes to Consolidated Financial Statements
2
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M CORP
CONSOLIDATED STATEMENTS OF INCOME
For The Three Months Ended
March 31,
1999 1998
Operating Revenues $ 955,646 $ 935,074
Operating Expenses
Salaries & Payroll Costs 269,732 213,168
Other Expenses 188,078 181,981
457,810 395,149
Operating Income 497,836 539,925
Minority Portion of Income (26,973) (33,198)
Income Before Income Taxes 470,863 506,727
Income Tax Expense (190,000) (200,000)
Net Income 280,863 306,727
Other Comprehensive Income
Increase (Decrease) in
Unrealized Holding Gains
Net of Income Taxes (139,571) 274,830
Comprehensive Income $ 141,292 $ 581,557
See Notes to Consolidated Financial Statements
3
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M CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Three Months Ended
March 31,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 456,914 $ 205,104
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Purchases of Furniture and Equipment (5,923) (7,896)
Cash Received on Principal of
Notes Receivable - 5,599
Cash Purchases of Minority Interests (1,677) (3,234)
Cash Used for Purchases of Marketable
Securities Available For Sale (16,932) (16,047)
Cash Received on Disposition of Marketable
Securities Available For Sale - 44,728
Net Cash Provided (Used) By
Investing Activities (18,609) 31,046
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends Paid In Cash (393,254) -
Net Cash Provided (Used) By
Financing Activities (393,254) -
NET INCREASE IN CASH 45,051 236,150
CASH - BEGINNING OF PERIOD 17,931,372 15,186,576
CASH - END OF PERIOD $17,976,423 $15,422,726
See Notes to Consolidated Financial Statements
4
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M CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
In the opinion of management, all adjustments necessary (consisting of only
normal recurring accruals) have been made to the unaudited financial
statements to present fairly the Company's financial position as of
March 31, 1999 and the results of the Company's operations and cash flows
for the three months ended March 31, 1999 and 1998.
The results of operations for the three months ended March 31, 1999 and 1998
are not indicative of the results to be expected for the full year.
The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiaries and its majority owned subsidiaries. All
significant intercompany transactions and balances have been eliminated in
consolidation.
M Corp is engaged in the title insurance agency business and in the ownership
and rental of properties.
GNI, Inc. owns approximately 45% of the Company's issued and outstanding
common stock.
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 115, (SFAS No. 115) effective January 1, 1994. The Company has
classified its investments, both current and noncurrent, in debt and equity
securities as Available-For-Sale, in accordance with the various
classifications of securities contained in SFAS No. 115.
In accordance with SFAS No. 115, the Company's portfolios, current and
noncurrent, of Available-For-Sale investments are carried at fair value in
the Company's balance sheet at March 31, 1999.
The net unrealized holding gain at March 31, 1999, net of the estimated
income tax effects and minority interests in the unrealized holding gains,
is included in Accumulated Other Comprehensive Income at March 31, 1999 in
accordance with the provisions of Financial Accounting Standards No. 130.
5
<PAGE>
M CORP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE STATEMENTS OF INCOME
MARCH 31, 1999
A summary of the period to period changes in items included in the statements
of income is shown below.
COMPARISON OF
Three Months
Ended
March 31,
1999 and 1998
Increases
(Decreases)
Operating Revenues $ 20,260 2.2%
Operating Expenses $ 62,661 15.9%
Net Income $ (25,864) (8.4%)
Revenues increased $20,572, 2.2%, in the first quarter of 1999 as compared
with the first quarter of 1998 due primarily to increases in rent, interest
revenues and other revenues partially offset by a decrease in title insurance
revenues. Operating expenses increased $62,661, 15.9%, in the first quarter
of 1999 as compared with the first quarter of 1998. Salaries and related
payroll costs increased $56,564, 26.5%, in the first quarter of 1999 as
compared with the first quarter of 1998 due primarily to increases in the
number of employees and in salary rates paid by the Company in its
title insurance operations. The provision for income tax expense decreased
$10,000 (5.0%) in the first quarter of 1999 as compared with the first
quarter of 1998 due to the decrease in pretax income.
6
<PAGE>
M CORP
PART II
OTHER INFORMATION
MARCH 31, 1999
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES NAD USE OF PROCEEDS
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
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
None
7
<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.
M CORP
Registrant
Date: April 30, 1999 s/P. Cunningham
P. Cunningham,
Assistant
Secretary-Treasurer
Date: April 30, 1999 s/Jerry K. Mohland
Jerry K. Mohland,
Accountant
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements contained in the Company's Form 10-QSB and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 17976423
<SECURITIES> 1785262
<RECEIVABLES> 110516
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19891501
<PP&E> 954664
<DEPRECIATION> 0
<TOTAL-ASSETS> 26105231
<CURRENT-LIABILITIES> 747374
<BONDS> 0
<COMMON> 3750905
0
0
<OTHER-SE> 17801513
<TOTAL-LIABILITY-AND-EQUITY> 26105231
<SALES> 0
<TOTAL-REVENUES> 955646
<CGS> 0
<TOTAL-COSTS> 457810
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 470863
<INCOME-TAX> 190000
<INCOME-CONTINUING> 280863
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 280863
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
