SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
(Date of Report (Date of Earliest event reported) January
27, 1997
REALCO, INC.
(Exact name of registrant as specified in its charter)
New Mexico 0-27552 85-0316176
(State of other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1650 University Blvd., N.M. Suite 100
Albuquerque, New Mexico 87102
(Address of principal executive offices)
Registrant's telephone number including area code
505-242-4561
Item 2. Acquisition or Disposition of Assets.
(a) On January 13, 1997, the Registrant signed a letter
agreement expressing its intent to acquire all issued and
outstanding equity securities of Mull Realty Co., Inc.,
("Mull"), an Arizona corporation from two shareholders.
Mull's business is that of real estate brokerage firm
specializing in the sale of residential and commercial
properties in the Phoenix, Arizona area. Mull's assets
consist primarily of cash, accounts receivable, vehicle and
furniture and fixtures.
(b) The letter agreement contains the following significant
terms:
(1) The Mull shares will be purchased for an initial
cash payment of approximately $400,000 and additional
minimum payments of $800,000 and additional maximum
payments, which total sum the Registrant estimates may
approximate $2,000,000, the total cost of the acquisition.
The Registrant believes that a significant portion of the
future payment obligations will be generated by the cash
flow from this acquired business and, therefore, does not
anticipate any need to use borrowed funds to complete the
acquisition.
(2) The acquisition is subject to completion of
audited financial statements of Mull for the year ended
December 31, 1996, which audited financial statements are to
reflect certain balance sheet representations made by Mull's
shareholders.
(3) In addition to cash consideration, the Registrant
has agreed that one of the selling shareholders shall be
Mull's President pursuant to a four year employment
agreement between that individual and Mull. The employment
agreement provides that this individual shall be paid an
annual salary of $96,000 and will be paid a bonus of 20% of
all Mull pre-tax earnings in excess of $450,000 in each
year, with the maximum of any such bonus being $50,000 in
any one year.
(4) The selling shareholders may, at their option,
elect to receive notes from the Registrant in lieu of any
earned cash payment to them. Such notes may be issued in
whole or in part of such obligations. If such notes are
issued, they will include a provision to convert the
principle balance including any interest due to the common
shares of the Registrant at a rate of $8.40 per share.
Item 7. Financial Statements and Exhibits.
(a) Audited Financial Statements for the business which is
to be acquired are not readily available. Mull has
undertaken to retain independent auditors to examine and
provide an audit of the acquired business for the fiscal
year endedn December 31, 1996. The completed audit of the
business acquired is expected to be completed by January 31,
1997. Upon completion of the financial statements, the
registrant will amend this 8-K as to Item 7 herein.
SIGNATURES
Pursuant to the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed in its
behalf by the undersigned hereunto duly authorized.
REALCO, INC.
S/James A. Arias
________________________
James A. Arias, President
