UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the Period ended SEPTEMBER 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____ Commission File No. 0-3689
NRG INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 23-1682488
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 EAST MONROE STREET, SUITE 1600, CHICAGO, IL 60603
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 849-2990
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed 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 the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT NOVEMBER 1, 1996
Common Stock, $.10 par value 255,311 shares
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NRG INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1996 1995
ASSETS
Cash $ 81 $ 81
Prepaid expenses - affiliate -0- 10,460
Other assets 2,406 2,408
----- ------
2,487 12,949
===== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses 2,474 2,549
Payable to affiliates 17,758 3,149
Estimated amount payable to stockholder 1,805 1,805
------ -----
TOTAL LIABILITIES 22,037 7,503
------ -----
STOCKHOLDERS' EQUITY
Common stock, par value $.10 per share-
authorized 15,000,000 shares; issued,
including shares held in treasury,
305,829 shares 30,583 30,583
Additional paid-in capital 4,541,845 4,541,845
Retained earnings (deficit) (2,509,678) (2,484,682)
Treasury stock, at cost-50,518 shares (102,980) (102,980)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 1,959,770 1,984,766
---------- ----------
Less receivable from majority
stockholder (1,979,320) (1,979,320)
---------- ----------
$ 2,487 $ 12,949
========== ==========
See Accompanying Notes
NRG INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
SEPTEMBER 30,
1996 1995
REVENUES $ -- $ --
------ ------
General and administrative expenses 8,271 7,692
------ ------
NET LOSS $ (8,271) $ (7,692)
====== ======
PER SHARE INFORMATION
Weighted average number of
common shares outstanding 255,311 255,311
======= =======
Net Loss $(.03) $(.03)
==== ====
See Accompanying Notes
NRG INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Nine Months Ended
SEPTEMBER 30,
1996 1995
REVENUES $ -- $ --
------- -------
General and administrative expenses 24,996 24,182
------- -------
NET LOSS $ (24,996) $ (24,182)
======= =======
PER SHARE INFORMATION
Weighted average number of
common shares outstanding 255,311 255,311
======= =======
Net Loss $(.10) $(.09)
==== ====
See Accompanying Notes
NRG INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
SEPTEMBER 30,
1996 1995
OPERATING ACTIVITIES:
Net loss $ (24,996) $ (24,182)
Adjustments to reconcile net income
to net cash provided by operating activities:
Decrease in prepaid expenses -
affiliate and other assets 10,462 24,332
Decrease in accounts payable and accrued
expenses (75) (150)
Increase in payable to affiliates 14,609 --
------- -------
Net cash utilized in operating activities -0- -0-
------- -------
Increase (decrease) in cash -0- -0-
Cash at beginning of period 81 81
------- -------
Cash at end of period $ 81 $ 81
======= =======
See Accompanying Notes
NRG INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements are unaudited and do not
include certain information and note disclosures required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included, which consist solely of adjustments of a
normal recurring nature. These statements should be read in conjunction with
the financial statements, and notes thereto, included in the Form 10-K of NRG
Incorporated ("NRG" or "Company") for the year ended December 31, 1995. The
results of operations for the nine months ended September 30, 1996, are not
necessarily indicative of the results that may be expected for the full fiscal
year.
2. REVERSE STOCK SPLIT
In December 1983, the Company's Board of Directors approved a reverse stock
split effective as of the close of business on December 19, 1983, pursuant to
which one new share of common stock, par value $.10 per share, would be issued
for every 20 shares of old common stock, par value $.005 per share, then
outstanding. No other change in the attributes of the common shares would be
made.
The Company undertook to repurchase fractional shares resulting from the
implementation of the reverse stock split at the rate of $.25 for each old
share. Through oversight, certain of the corporate actions necessary to
implement fully the reverse stock split have not yet been completed; however,
the Company intends to complete the actions as soon as practicable. All the
information relating to common shares has been adjusted to reflect the full
implementation of the reverse stock split.
3. PENDING MERGER
Telco Capital Corporation ("Telco"), NRG's majority stockholder, intends to
develop a proposal whereby NRG would merge with a newly formed subsidiary of
Telco and then all shares of NRG not owned by Telco would be acquired by Telco
as a result of the merger.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company has no cash generating activities. Substantially all of the
Company's cash surpluses were loaned in the 1980's to its major stockholder,
TELCO, in the form of a demand note carrying interest at the rate of 2% over
prime. This note had a balance of $1,523,441 as of September 30, 1996. Through
January, 1994, administrative expenses of NRG were paid for by Telco and
charged against the note and management service fees from Telco were also
charged against the note. Interest income was not received in cash during the
last three years. No schedule for payment of the amounts advanced has been
established and no significant collections on the amount due, including
interest, are anticipated within the next year. Because of the uncertainty as
to the period for recovery that exists due to the illiquidity of Telco, at
December 31, 1991 the Company classified the loan with stockholders' equity
and effective January 1, 1992 suspended recognition of interest in its
financial statements with respect to the loan. The receivable balance includes
accrued interest receivable of $455,879. At September 30, 1996, interest
earned but not accrued was an additional $900,000.
Effective February, 1994, the administrative expenses and management services
were paid for/provided by Hickory. Amounts paid by NRG to Hickory totalled
$75,000 during the year ended December 31, 1994. This represented
reimbursements to Hickory of $35,540 for 1994 expenses and a prepayment of
1995 expenses in the amount of $39,460. In 1995, the management service fees
of $29,000 reduced the prepaid balance to $10,460 at December 31, 1995. For
the nine months ended September 30, 1996 and 1995 the management service fees
charged was $21,750 and other administrative expenses charged was $3,246 and
$2,432, respectively.
The Company has current liabilities of $2,474, along with a liability to Telco
of $1,805, which is payable only from actual future cash receipts realized by
the Company from the sale of the vacant land.
NRG has no current business opportunities or other significant liquidity
requirements.
Telco intends to develop a proposal whereby NRG would merge with a newly
formed subsidiary of Telco and then all shares of NRG not owned by Telco would
be acquired by Telco as a result of the merger.
OPERATING RESULTS
The Company reported a net loss of $24,996 ($.10 per share) for the nine
months ended September 30, 1996. This compares to a net loss of $24,182 ($.09
per share) for the nine months ended September 30, 1995. As explained above,
the Company no longer recognizes interest income from Telco in its financial
statements and, therefore, has no revenues during either period. General and
administrative expenses were $24,996 and $24,182 for the nine months ended
September 30, 1996 and 1995, respectively. These amounts include fees of
$21,750 for both years charged by Hickory for management services (accounting,
shareholder services, legal, etc.) provided.
NRG INCORPORATED AND SUBSIDIARIES
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NRG INCORPORATED
/S/CLYDE WM. ENGLE
Clyde Wm. Engle
Chairman, Chief Executive
Officer and Director
/S/PHILLIP J. ROBINSON
Phillip J. Robinson
Chief Financial and Accounting Officer
Date:
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