U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 31, 2000
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 number: 000-17468
-----------------
GREENSTONE ROBERTS ADVERTISING, INC,
(Exact name of the Registrant as specified in its charter)
NEW YORK 11-2250305
-------- ----------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
401 BROADHOLLOW ROAD, MELVILLE, NEW YORK 11747
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 249-2121
- -----------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed from 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 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: 918,277 SHARES OF COMMON STOCK, PAR
VALUE $0.01.
Transitional Small Business Disclosure Format (check one): Yes __ No X
<PAGE>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PART I - FINANCIAL INFORMATION
PAGE NUMBER
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of January 31, 2000
and October 31, 1999 3
Consolidated Statements of Operations for the three
months ended January 31, 2000 and the nine months 4
ended January 31, 1999
Consolidated Statements of Cash Flows for the three
months ended January 31, 2000 and the nine months 5
ended January 31, 1999
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 8
<PAGE>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
JANUARY 31, OCTOBER 31,
2000 1999
---- ----
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $1,259,975 $1,985,070
Accounts receivable, net of allowance for bad debts of
$1,001,723 in 2000 and $998,723 in 1999 4,621,366 4,035,734
Billable production orders in process, at cost 166,130 126,413
Other current assets 88,176 116,886
----------------- ----------------
TOTAL CURRENT ASSETS 6,135,647 6,264,103
Furniture, equipment and leasehold improvements, less
accumulated depreciation and amortization of
$1,537,969 in 2000 and $1,488,313 in 1999 583,016 632,141
Deferred income taxes 194,120 194,120
Cost in excess of net assets acquired and other assets, net of
accumulated amortization of $97,041 2,257 2,257
----------------- ----------------
TOTAL ASSETS $6,915,040 $7,092,621
================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $4,551,282 $4,684,146
Accrued liabilities 71,693 150,540
----------------- ----------------
TOTAL CURRENT LIABILITIES 4,622,975 4,834,686
Other liabilities 103,798 94,070
----------------- ----------------
TOTAL LIABILITIES 4,726,773 4,928,756
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock, $1.00 par value, 1,000,000 shares
Authorized, no shares issued or outstanding -
-
Common stock, $.10 par value, 3,000,000 shares
Authorized, 1,060,000 shares issued 106,000 106,000
Additional paid-in capital 3,343,793 3,343,793
Retained earnings (649,567) (673,969)
Less: treasury stock, 141,723 shares at cost (611,959) (611,959)
----------------- ----------------
TOTAL SHAREHOLDERS' EQUITY 2,188,267 2,163,865
----------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,915,040 $7,092,621
================= ================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED
JANUARY 31,
2000 1999
---- ----
<S> <C> <C>
COMMISSIONS AND FEES $891,399 $1,158,597
EXPENSES:
Salaries and employee related
expenses 559,563 783,117
Office and general expenses 335,057 341,748
---------------- ---------------
894,620 1,124,865
---------------- ---------------
Income (loss) from operations (3,221) 33,732
Interest income 27,623 14,895
---------------- ---------------
INCOME BEFORE INCOME TAXES 24,402 48,627
Provision for income taxes - -
---------------- ---------------
NET INCOME $24,402 $48,627
================ ===============
EARNINGS PER COMMON
SHARE; BASIC AND DILUTED $0.03 $0.07
================ ===============
SHARES USED IN COMPUTING EARNINGS
PER COMMON SHARE, BASIC 918,277 743,277
================ ===============
SHARES USED IN COMPUTING EARNINGS
PER COMMON SHARE, DILUTED 924,786 743,277
================ ===============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JANUARY 31,
2000 1999
---- ----
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 24,402 $ 48,627
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 49,656 55,403
Provision for bad debts 3,000 3,000
Changes in operating assets and liabilities:
Accounts receivable - -
Billable production orders in process, at cost (39,717) 135,458
Other current assets 28,710 53,633
Accounts payable - -
Accrued liabilities and other (69,119) (23,005)
-------------------- --------------------
Net cash used in operating activities (724,564) (373,842)
-------------------- --------------------
INVESTING ACTIVITIES:
Purchase of furniture, equipment and leasehold improvements (531) (31,322)
-------------------- --------------------
Net cash used in investing activities (531) (31,322)
-------------------- --------------------
Net decrease in cash and cash equivalents (725,095) (405,164)
Cash and cash equivalents at beginning of year 1,985,070 1,753,681
-------------------- --------------------
Cash and cash equivalents at end of period $1,259,975 $1,348,517
==================== ====================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated interim financial statements included herein
have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted. It is therefore suggested that
these consolidated financial statements be read in conjunction
with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended October 31, 1999.
2. These statements reflect all adjustments consisting of normal
recurring accruals, which, in the opinion of management, are
necessary for a fair presentation of the Company's financial
position and results of operations and cash flows for the
three month periods ended January 31, 2000 and 1999.
3. Results of operations for interim periods are not necessarily
indicative of annual results.
4. The consolidated financial statements include the accounts of
the Company and its subsidiary. All significant inter-company
balances and transactions have been eliminated.
5. Earnings Per Share.
A reconciliation of shares used in calculating basic and diluted
earnings per share follows:
FOR THE THREE MONTHS ENDED
JANUARY 31,
2000 1999
---- ----
Basic 918,277 743,277
Effect of assumed conversion of
employee stock options 6,509 -
----------- -----------
Diluted 924,786 743,277
=========== ===========
For fiscal 2000 and 1999, 75,241 and 68,550 options respectively were
anti-diluted.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS FOR THE FIRST QUARTER ENDED JANUARY 31, 2000 AS
COMPARED TO THE FIRST QUARTER ENDED JANUARY 31, 1999.
Commissions and fees decreased $267,198, or 23% from $1,158,597 for
the quarter ended January 31, 1999 to $891,399 for the quarter ended
January 31, 2000. This decrease is principally attributable to the
loss of accounts, which has been partially offset by the addition of
new accounts.
Salaries and employee related costs decreased $223,554 or 29% from
$783,117 for the quarter ended January 31, 1999 to $559,563 for the
quarter ended January 31, 2000. Salaries and employee related costs as
a percent of revenues was reduced from 68% for the quarter ending
January 31, 1999 to 63% for the quarter ending January 31, 2000 due
primarily to management efforts to control costs in various operating
areas.
Office and general expenses decreased $6,691 or 2%, due to the
stabilization of these expenses.
Interest income, net, increased $12,728 due to higher interest rates
and an increase in the amount of short-term investments.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was approximately $1,512,000 at January
31, 2000, primarily comprised of cash and cash equivalents of
$1,260,000, accounts receivable of $4,621,000, billable production
orders of $166,000, and other assets of $88,000 offset by accounts
payable and accrued liabilities of $4,623,000.
Net cash used in operating activities for the three months ended
January 31, 2000 was approximately $725,000. The principal factors
contributing to the decrease in cash flow were increases in accounts
receivable of $586,000, and decreases in accounts payable and accrued
expenses of $202,000.
Because the Company recognizes commissions as a percentage of
expenditures incurred, the accounts receivable balance relates not
only to the commissions and fees shown on the income statement, but
also to receivables for production costs and media purchased for
clients. Similarly, the accounts payable balance includes payables for
production costs and media incurred on behalf of clients.
The Company has available an unsecured $500,000 line of credit from a
bank which expires in April 2000. Loans against the credit line bear
interest equal to the "Prime Rate", as defined. The Prime Rate at
January 31, 2000 was 8.50%. The Company intends to renew its credit
line in April 2000. Management believes that its current working
capital levels will be sufficient to meet the Company's liquidity and
working capital requirements for the foreseeable future. The Company
does not anticipate any increases in capital expenditures or other
cash requirements which would have a material adverse effect on its
liquidity.
<PAGE>
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
None
Exhibit 27 - Financial Data Schedule
SIGNATURES
In accordance with 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.
Date: March 15, 2000 Greenstone Roberts Advertising, Inc.
By: /s/ Ronald M. Greenstone
---------------------------
Ronald M. Greenstone
Chairman of the Board, Chief Executive Officer
Date: March 15, 2000
By: /s/ Richard De Stefano
-------------------------------
Richard De Stefano
Acting Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-END> JAN-31-2000
<CASH> 1,259,975
<SECURITIES> 0
<RECEIVABLES> 5,623,089
<ALLOWANCES> (1,001,723)
<INVENTORY> 0
<CURRENT-ASSETS> 6,135,647
<PP&E> 2,120,985
<DEPRECIATION> (1,537,969
<TOTAL-ASSETS> 6,915,040
<CURRENT-LIABILITIES> 4,622,975
<BONDS> 0
0
0
<COMMON> 106,000
<OTHER-SE> 2,057,865
<TOTAL-LIABILITY-AND-EQUITY> 6,915,040
<SALES> 0
<TOTAL-REVENUES> 891,399
<CGS> 0
<TOTAL-COSTS> 559,563
<OTHER-EXPENSES> 335,057
<LOSS-PROVISION> 3,000
<INTEREST-EXPENSE> (27,623)
<INCOME-PRETAX> 24,402
<INCOME-TAX> 0
<INCOME-CONTINUING> 24,402
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,402
<EPS-BASIC> .03
<EPS-DILUTED> .03
</TABLE>
