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 June 30, 1995
{ } TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to ________
Commission file number 0-21998
PORTER MCLEOD NATIONAL RETAIL, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 84-1195628
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5895 East Evans Avenue, Denver, Colorado 80222
(Address of principal executive offices) (Zip Code)
303-756-2227
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) has 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 corporate issuers:
As of August 17, 1995, the Registrant had outstanding 1,885,666
shares of its common stock, par value $.0001.
Item I. Financial Statements
PORTER MCLEOD NATIONAL RETAIL, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1994 1995
<S> <C> <C>
Assets
Current Assets
Cash $ 236,583 $ 346,501
Marketable securities 348,384 0
Accounts receivable 1,515,057 1,423,134
Prepaid expenses 23,411 57,836
Costs & Earnings in excess of costs 904,177 273,727
Other current assets 0 1,836
Total Current Assets 3,027,612 2,101,034
Property and Equipment
Furniture & fixtures 21,278 21,278
Leasehold improvements 34,634 34,634
55,912 55,912
Accumulated depreciation 14,843 18,101
Total Property and Equipment 41,069 37,811
Other Assets
Notes receivable from affiliates 677,126 688,973
Total Other Assets 677,126 688,973
Total Assets $3,745,807 $2,827,818
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued
expenses $2,044,057 $1,196,372
Billings in excess of costs and
earnings 4,245 94,942
Income taxes 0 (976)
Total Current Liabilities 2,048,302 1,290,338
Stockholders' Equity
Common stock 189 189
Additional paid-in capital 3,824,249 3,824,249
Unrealized holding loss (51,212) 0
Accumulated deficit in retained
earnings (744,002) (1,066,214)
International marketing contract (1,331,719) (1,220,744)
Total Stockholders' Equity 1,697,505 1,537,480
Total Liabilities and
Stockholders' Equity $3,745,807 $2,827,818
</TABLE>
Porter McLeod National Retail, Inc.
Income Statements
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
06/30/94 06/30/95 06/30/94 06/30/95
<S> <C> <C> <C> <C>
Contract revenues $1,626,149 $2,143,198 $3,167,617 $2,243,707
Cost of revenues 1,584,480 2,061,614 3,074,071 2,010,548
Gross Profit 41,669 81,584 93,546 233,159
General and administrative
expenses 226,481 268,898 409,971 541,772
Operating Income (Loss) (184,812) (187,314) (316,425) (308,613)
Other income (expense) 26,683 10,499 15,585 (13,599)
Net income (loss) before
income tax (158,129) (176,815) (300,840) (322,212)
Income tax benefit (expense) 53,764 0 102,286 0
Net income $ (104,365) $ (176,815) $(198,554) $(322,212)
</TABLE>
Porter McLeod National Retail, Inc.
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
06/30/94 06/30/95 06/30/94 06/30/95
<S> <C> <C> <C> <C>
Net profit after tax $(104,365) $(176,815) $(198,554) $(322,212)
Add: Depreciation &
Amortization 37,292 57,118 38,834 114,235
Income Statement Cash Flow (67,073) (119,697) (159,720) (207,977)
Change in assets and Liabilities:
Accounts receivable 403,640 (713,398) 73,410 399,366
Prepaids (236,633) 7,550 (260,624) (34,425)
Other receivables (147,906) (217,792) (167,655) (305,443)
Other current assets 528,643 18,135 54,683 628,614
Accounts payable (153,887) 736,885 442,398 (826,845)
Accrued expenses (12,278) (6,846) (5,143) (20,840)
Taxes payable (89,834) 506 (97,657) (976)
Other current liabilities 12,759 58,175 (26,204) 90,697
Operating Cash Flow 237,431 (236,482) (146,512) (277,829)
Investing activities:
Marketable securities (30,610) 0 (42,600) 348,384
Fixed assets 0 0 (1,765) 0
Intangible assets (35,750) (55,489) (35,750) (110,977)
Other non-current assets 5,700 10,829 (41,300) (11,847)
Investing Cash Flow (60,660) (44,660) (121,415) 225,560
Financing activities:
Capital stock 2,266,250 0 2,266,250 0
Adjustment to retained
earnings (1,824,579) 52,789 (1,799,215) 162,189
Financing Cash Flow 441,671 52,789 467,035 162,189
Beginning Cash $ 68,739 $ 574,853 $488,073 $236,583
Operating Cash Flow 237,431 (236,482) (146,512) (277,829)
Investing Cash Flow (60,660) (44,660) (121,415) 225,560
Financing Cash Flow 441,671 52,789 467,035 162,189
Ending Cash $ 687,181 $ 346,501 $687,181 $346,501
</TABLE>
PORTER MCLEOD NATIONAL RETAIL INC.
NOTE TO FINANCIAL STATEMENTS
June 30, 1995
The unaudited financial statements included herein were prepared
from the books of the Company in accordance with generally
accepted accounting principles and reflect all adjustments which
are, in the opinion of management, necessary to provide a fair
statement of the results of operations and financial position for
the interim periods. Such financial statements generally conform
to the presentation reflected in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1995, and reflect
adjustments which are solely of a normal, recurring nature. The
current interim periods reported herein are included in the
fiscal year subject to independent audit at the end of the year.
PORTER MCLEOD NATIONAL RETAIL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On June 30, 1995, the Company had current assets of $2,101,034
and current liabilities of $1,290,339 resulting in positive
working capital of $810,696
With the additional funds provided by an equity financing
completed during the second quarter of 1993, the Company has been
able to pursue larger construction projects, as well as multiple
project packages, that the Company believes will continue to
increase the Company's contracting volume and income. To date
the Company has been successful in obtaining some larger
projects, as reflected in the average size of the projects the
Company has in progress. While larger projects increase volume
and dollar profits, the profit margin percentage is generally
lower than on smaller jobs. This is especially true for the
initial larger contracts entered into in order for the Company to
establish itself in the market.
The Company has no major capital commitments for the purchase of
equipment or leasehold improvements. The nature of the Company's
business does not require large expenditures for tools and
equipment.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 COMPARED TO THE THREE MONTHS
ENDED JUNE 30, 1994
Contract income for the three months ended June 30, 1995 was
$2,143,198, an increase of $517,049 from the three months ended
June 30, 1994. The increase in revenue was primarily due to
larger construction contracts and more multiple project
contracts. It is difficult to predict what the project mix will
be between larger and smaller projects. However, the average
size construction project that the Company had under contract as
of June 30, 1995 was $877,680 as compared to $616,935 as of June
30, 1994.
The gross profit margin was 3.81% for the three months ended June
30, 1994. This difference is primarily due to increased
efficiency gained by bidding on multiple store projects.
Cash flow from operations for the three months ended June 30,
1995 was a negative $236,482 compared to a positive $237,431 for
the three months ended June 30, 1994. The primary reason for the
difference was due to A) the timing of the receipts and
disbursements which resulted in a negative cash flow for the
period of $116,785; B) interest income on cash accounts and other
income/expense of a negative $24,098; and C) the lack of any
recognition for income tax benefits due to net losses before
taxes.
Administrative costs for the three months ended June 30, 1995 was
a negative $26,482 compared to a positive $237,431 for the three
months ended June 30, 1994. This was primarily due to increased
amortization, increased costs associated with expanded marketing
efforts and estimating. While the lead/lag time from the bidding
process to the actual start of contraction is somewhat longer for
larger projects, the Company has not incurred any substantial
increases in administrative expenses due to the larger projects.
During the three months ended June 30, 1995, the Company had net
before tax loss of $176,815 compared to a net loss for the
comparable period ended June 30, 1994 of $142,711. The increase
in gross profit increases during the second quarter of 1995 are
due to significantly higher contract income and higher profit
martins. The resulting increase in gross profits was more than
off set by a reduction in other income (described below) and the
increase in administrative costs (described above). Operating
results can vary significantly on both quarterly and annual bases
because of the retail industry's emphasis on opening stores for
certain holidays, especially the Christmas season, and the wide
variety of contact terms and types of projects in the
construction industry.
As of June 30, 1995, the Company's backlog of contracts to be
performed was $5,497,400 as compared to a backlog of
approximately $3,104,414 as of June 30, 1994.
SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO SIX MONTHS ENDED JUNE
30, 1994.
Contract income for the six months ended June 30, 1995 was
$2,243,707, a decrease of $923,910 from the six months ended June
30, 1994. The decrease in revenue resulted primarily from delays
in starting projects caused by owners and architects due to the
complexity of multiple project packages, especially during the
first quarter of the year. Despite the decrease in volume the
Company experienced a significant increase of $139,613 in gross
profits, primarily as a result of higher profit margins on
multiple project packages and the realization of higher than
anticipated profits on projects completed in the first quarter of
the year.
In the future, it is anticipated that gross profit margin
percentages may be higher than current margins as the Company has
been successful in entering the market for larger projects, as
well as multiple project packages and has been able to obtain
somewhat higher margins on projects recently awarded as compared
to the initial projects obtained at entry into the market. It is
difficult to predict what the mix will be between larger and
smaller projects. However, the larger projects and multiple
project packages would be expected to generate higher gross
profit amounts without a substantial increase in administrative
costs as the Company gains more experience with larger projects
and completes more multiple project packages.
Cash flow for the six months ended June 30, 1995 was a positive
$109,918 compared to a positive $199,108 for the six months ended
June 30, 1994. The primary factors affecting cash flow for the
six months ending June 30, 1995 were a negative $277,829 from
operations and net proceeds of $225,560 from investing activities
and $162,189 from financing activities.
Administrative costs for the six months ended June 30, 1995 were
$131,801 higher than for the six months ended June 30, 1994. The
increase in administration costs were primarily due to the
increased costs associated with increased sales and marketing
efforts, and the amortization of international marketing
expenses.
The increase in gross profit was offset by the increase in
administrative expenses, resulting in a net loss from operations
for the six months ended June 30, 1995 of $308,613 compared to a
loss for the same period for 1994 of $316,425. This operating
loss was further aggravated by a reduction of other income of
approximately $29,200. The resulting loss before taxes was
$322,212 for the first six months of 1994. In addition, the
Company is not able to recognize any potential tax benefits from
this loss because of the prior net operating losses carried
forward from prior periods for tax purposes. Therefore, the net
loss for the six months ended June 30, 1995 was $322,212 compared
to a loss of $196,554 for the six months ended June 30, 1994
which realized a potential tax benefit of $102,286.
The Company's future results of operations will depend on its
ability to maintain its present client base and to generate
contracts with other major retailers, or other clients.
Currently, a significant percentage of the Company's total volume
is dependent upon a few large customers. The Company has
retained a public relations firm as part of the marketing effort
which is focusing on a broader mix of business and customer base.
The Company has also retained an individual to assist the Company
with the development of international business. Through June 30,
1995 the Company has amortized approximately $111,000 of the cost
associated with respect to this latter effort.
PART II - OTHER INFORMATION
Item 6. Exhibits And Reports On Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Registrant
during the quarter ended June 30, 1995.
SIGNATURES
In accordance with the requirements of the Securities
Exchange Act Of 1934, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
PORTER MCLEOD NATIONAL RETAIL, INC.
August 17, 1995 By: /s/ Joseph R. McLeod
Joseph R. McLeod, President
By: /s/ William T. Kyle
William T. Kyle, Chief Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-END> JUN-30-1995 JUN-30-1995
<CASH> 346,501 346,501
<SECURITIES> 0 0
<RECEIVABLES> 1,423,134 1,423,134
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 2,101,034 2,101,034
<PP&E> 55,912 55,912
<DEPRECIATION> 18,101 18,101
<TOTAL-ASSETS> 2,827,818 2,827,818
<CURRENT-LIABILITIES> 1,290,338 1,290,227
<BONDS> 0 0
0 0
0 0
<COMMON> 189 189
<OTHER-SE> 1,537,291 1,537,291
<TOTAL-LIABILITY-AND-EQUITY> 2,827,818 2,827,818
<SALES> 2,243,707 2,143,198
<TOTAL-REVENUES> 2,243,707 2,153,697
<CGS> 2,010,548 2,061,614
<TOTAL-COSTS> 2,552,320 2,330,512
<OTHER-EXPENSES> 13,599 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (322,212) (176,815)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (322,212) (176,815)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (322,212) (176,815)
<EPS-PRIMARY> (.17) (.09)
<EPS-DILUTED> (.17) (.09)
</TABLE>
