FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the quarterly period ended March 31, 1995
or
_____ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the transition period from __________ to __________
Commission File Number 1-9450
METROPOLITAN REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-2724893
(State of incorporation) (I.R.S. Employer Identification No.)
535 Griswold, Suite 748
Detroit, Michigan 48226
(Address of principal executive offices)
(313) 961-5552
(Registrant's telephone number, including area code)
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 ____
The number of shares outstanding of the registrant's common stock as of March
31, 1995 was 4,532,169.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
METROPOLITAN REALTY CORPORATION
BALANCE SHEET
MARCH 31, 1995 AND DECEMBER 31, 1994
================================================================================================
March 31, December 31,
1995 1994
- - ------------------------------------------------------------------------------------------------
ASSETS:
Cash and cash equivalents .................................. $ 3,945,231 $ 3,529,334
Marketable securities ...................................... 10,841,084 10,783,048
Mortgage notes receivable:
Notes, earning .......................................... 26,336,672 26,393,979
Allowance for loan losses ............................... (1,000,000) (1,000,000)
-------------- --------------
25,336,672 25,393,979
Real estate owned:
Foreclosed property held for sale, net of
accumulated depreciation of $82,333 and $65,866 at
March 31, 1995 and December 31, 1994, respectively ..... 2,017,667 2,034,134
Valuation allowance ..................................... (1,134,134) (1,134,134)
-------------- --------------
883,533 900,000
Accrued interest and other receivables ..................... 281,408 255,724
Other assets ............................................... 264,251 163,083
-------------- --------------
Total assets ....................................... $ 41,552,179 $ 41,025,168
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Accounts payable:
Shareholder ............................................ $ 5,550 $ 9,036
Trade .................................................. 207,945 175,869
Deferred income .......................................... 139,552 129,552
Deposits from borrowers for property taxes ............... 218,775 163,452
Security deposits ........................................ 67,321 66,087
Other .................................................... 913 1,748
-------------- --------------
Total liabilities .................................. 640,056 545,744
-------------- --------------
Shareholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares
authorized; no shares issued and outstanding ........... -- --
Common stock, $.01 par value; 25,000,000 shares
authorized; 4,532,169 shares issued and
outstanding ............................................ 45,322 45,322
Additional paid-in-capital ............................... 43,355,529 43,355,529
Unrealized holding losses on marketable securities
available for sale ..................................... (97,589) (356,949)
Distributions in excess of net investment income ......... (2,391,139) (2,564,478)
-------------- --------------
Total shareholders' equity ......................... 40,912,123 40,479,424
-------------- --------------
Total liabilities and shareholders' equity .. $ 41,552,179 $ 41,025,168
============== ==============
<FN>
================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THE FINANCIAL STATEMENTS.
1
METROPOLITAN REALTY CORPORATION
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
AND THE YEAR ENDED DECEMBER 31, 1994
=====================================================================================================
Three months ended Year ended
March 31, 1995 March 31, 1994 Dec. 31, 1994
- - -----------------------------------------------------------------------------------------------------
Income:
Interest income from mortgage notes .... $ 676,630 $ 825,409 $ 3,073,230
Investment income ...................... 199,668 110,850 555,849
Miscellaneous income ................... 74,215 2,003 228,949
-------------- -------------- --------------
Total income .................... 950,513 938,262 3,858,028
-------------- -------------- --------------
Operating expenses:
Allowance for loan losses (recovery)... -- -- (461,500)
General and administrative ............ 177,288 147,258 436,562
Net loss from foreclosed property
held for sale ....................... 10,704 78,732 1,295,416
-------------- -------------- --------------
Total operating expenses ........ 187,992 225,990 1,270,478
-------------- -------------- --------------
Net investment income ........... $ 762,521 $ 712,272 $ 2,587,550
============== ============== ==============
Net investment income per share ......... $ .17 $ .16 $ .57
============== ============== ==============
Weighted average shares of common
stock outstanding ..................... 4,532,169 4,532,169 4,532,169
============== ============== ==============
<FN>
=====================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
2
METROPOLITAN REALTY CORPORATION
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
========================================================================================================
Three months ended
March 31, 1995 March 31, 1994
- - --------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net investment income ....................................... $ 762,521 $ 712,272
-------------- --------------
Adjustments to reconcile net investment income to
net cash provided by operating activities:
Amortization of net loan origination fees ................. (11,454) (27,386)
Depreciation expense ...................................... 17,764 17,751
Other ..................................................... 3,714 4,281
Decrease (increase) in assets:
Accounts receivable ..................................... (25,684) (17,362)
Other assets ............................................ (102,465) 2,513
Increase in liabilities:
Accounts payable ........................................ 28,590 49,308
Deferred income and other liabilities ................... 50,722 50,102
-------------- --------------
Total adjustments ........................... (38,813) 79,207
-------------- --------------
Net cash provided by operating activities ... 723,708 791,479
-------------- --------------
Cash flows from investing activities:
Collections of principal from marketable securities ......... 197,610 318,915
Loan repayments ............................................. 68,761 66,769
Commitment and loan extension fees received ................. 15,000 33,000
-------------- --------------
Net cash provided by investing
activities ................................ 281,371 418,684
-------------- --------------
Cash flows used in financing activities,
dividends paid .............................................. (589,182) (997,077)
-------------- --------------
Net increase in cash and cash equivalents ..................... 415,897 213,086
Cash and cash equivalents, beginning of period ................ 3,529,334 2,336,939
-------------- --------------
Cash and cash equivalents, end of period ...................... $ 3,945,231 $ 2,550,025
============== ==============
<FN>
========================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
3
METROPOLITAN REALTY CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments, consisting of normal recurring
adjustments, considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 1995
are not necessarily indicative of the results that may be expected for
the year ending December 31, 1995. For further information, refer to
the financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended December
31, 1994.
The accompanying financial statements for the three months ended March
31, 1994 reflect certain reclassifications to be consistent with the
presentation adopted for the three months ended March 31, 1995.
2. EARNINGS PER SHARE
The earnings per share for the three months ended March 31, 1995 and
1994 and the year ended December 31, 1994 are based on the weighted
average number of shares of common stock outstanding during the period.
3. MARKETABLE SECURITIES
Marketable securities available for sale are carried at market value
and unrealized gains and losses are included in a separate component of
shareholders' equity. Shareholders' equity at March 31, 1995 includes
net unrealized holding losses on marketable securities of $97,589.
Marketable securities at March 31, 1995 and December 31, 1994 consist
of Federal National Mortgage Association and Federal Home Loan Mortgage
Corporation mortgage-backed securities. Realized gains and losses on
sales of securities are determined based upon specific identification.
The net loss on the sales of marketable securities included in
investment income in the accompanying statement of operations
aggregated $3,714 for the three months ended March 31, 1995 and $4,281
for the three months ended March 31, 1994. At March 31, 1995 all
marketable securities are considered available for sale.
4
4. MORTGAGE NOTES RECEIVABLE
Mortgage notes receivable as of the dates indicated are summarized as
follows:
=============================================================================================================
March 31, 1995 December 31, 1994
- - -------------------------------------------------------------------------------------------------------------
9.09% Mortgage note receivable, net of loan origination fees of $4,229,701 $4,238,157
$30,952 at March 31, 1995 and $31,985 at December 31, 1994,
due monthly in installments of principal and interest of $35,494
through December 2000
10.0% and 10.5% Mortgage note receivable, net of loan origination 969,462 971,030
fees of $7,462 at March 31, 1995 and $7,760 at December 31,
1994, due monthly in varying installments of principal and interest
through December 1999
9.3752% Mortgage note receivable, net of loan origination fees of 2,123,056 2,127,504
$7,802 at March 31, 1995 and $8,216 at December 31, 1994,
due monthly in installments of principal and interest of $18,298
through January 2000
10.25% Mortgage note receivable, net of loan origination fees of 1,831,648 1,836,190
$20,009 at March 31, 1995 and $21,407 at December 31, 1994,
due monthly in varying installments of principal and interest through
April 2000
8.0% and 9.5% Mortgage note receivable, net of loan origination 1,367,684 1,369,349
fees of $6,793 at March 31, 1995 and $7,045 at December 31,
1994, due monthly in varying installments of principal and interest
through August 2000
9.25% Mortgage note receivable, net of loan origination fees of 620,889 622,842
$10,036 at March 31, 1995 and $10,408 at December 31, 1994,
due monthly in installments of principal and interest of $5,800
through September 2000
9.875% Mortgage note receivable, net of loan origination fees of 672,508 673,579
$6,875 at March 31, 1995 and $7,109 at December 31, 1994,
due monthly in varying installments of principal and interest through
October 2000
10.5% Mortgage note receivable, net of loan origination fees of 944,080 945,613
$4,677 at March 31, 1995 and $4,828 at December 31, 1994,
due monthly in varying installments of principal and interest through
December 2000
11.25% Mortgage note receivable, net of loan origination fees of 2,114,561 2,119,938
$14,834 at March 31, 1995 and $15,321 at December 31, 1994,
due monthly in installments of principal and interest of $21,961
through October 2000
10.25% Mortgage note receivable, net of loan origination fees of 260,461 261,166
$4,142 at March 31, 1995 and $4,282 at December 31, 1994,
due monthly in varying installments of principal and interest through
January 2001
11.25% Mortgage note receivable, net of loan origination fees of 1,585,920 1,589,953
$11,125 at March 31, 1995 and $11,491 at December 31, 1994,
due monthly in installments of principal and interest of $16,471
through October 2000
5
4. MORTGAGE NOTES RECEIVABLE, CONTINUED
=============================================================================================================
March 31, 1995 December 31, 1994
- - -------------------------------------------------------------------------------------------------------------
9.5% Mortgage note receivable, net of loan origination fees of $ 722,262 $ 723,425
$10,284 at March 31, 1995 and $10,613 at December 31, 1994,
due monthly in varying installments of principal and interest through
February 2001
9.875% Mortgage note receivable, net of loan origination fees of 2,454,684 2,458,787
$17,400 at March 31, 1995 and $17,951 at December 31, 1994,
due monthly in varying installments of principal and interest through
January 1999
10.25% and 9.75% Mortgage notes receivable, net of loan 2,353,552 2,362,444
origination fees of $30,919 at March 31, 1995 and $34,370 at
December 31, 1994, due monthly in varying installments of
principal and interest through April 1997
10.25% and 12.25% Mortgage notes receivable, net of loan 2,342,381 2,350,670
origination fees of $18,631 at March 31, 1995 and $20,715 at
December 31, 1994, due monthly in varying installments of
principal and interest through April 1997
10.25% Mortgage note receivable, net of loan origination fees of 1,743,823 1,743,332
$56,177 at March 31, 1995 and $56,668 at December 31, 1994,
due monthly in installments of interest only through April 1995 at
which time varying installments of principal and interest will be due
monthly through April 2003
---------- ----------
26,336,672 26,393,979
Allowance for loan losses (1,000,000) (1,000,000)
---------- ----------
Mortgage notes receivable, net of allowance for loan losses $25,336,672 $25,393,979
=========== ===========
===========================================================================
The Company's portfolio of mortgage notes receivable are reported at
their principal outstanding balance net of charge-offs and deferred loan
fees and costs on originated loans. Interest income is generally
recognized when income is earned using the interest method. Loan
origination fees and certain direct loan origination costs are deferred
and the net amounts are amortized as adjustments of the loans' yields.
The Company adopted Statement of Financial Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan" (SFAS 114), as
amended by SFAS 118, on January 1, 1995. Under the new standard,
a loan is considered impaired, based on current information
and events, if it is probable that the Company will be unable to
collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. The
measurement of impaired loans is based on the fair value of the
underlying collateral. The cumulative effect of adopting the provisions
of SFAS No. 114 was not significant.
6
4. MORTGAGE NOTES RECEIVABLE, CONTINUED
The adequacy of the allowance for loan losses (substantially all of
the allowance is related to the provision for impaired loans as
discussed above) is periodically evaluated by the Company in order
to maintain the allowance at a level that is sufficient to
absorb probable credit losses. Management's evaluation of
the adequacy of the allowance is based on a review of known and
inherent risks in the loan portfolio, including adverse circumstances
that may affect the ability of the borrower to repay interest and/or
principal and the estimated value of collateral. In determining the
allowance for possible losses, the Company has considered many
indicators of value, including market evaluations of the underlying
collateral, the cost of money, operating cash flow from the property
during the projected holding period and expected capitalization rates
applied to the stabilized net operating income of the specified
property.
The allowance for credit losses is established through charges to
earnings in the form of a provision for loan losses. Increases and
decreases in the allowance due to changes in the measurement of
impaired loans are included in the provision for credit losses. Loans
continue to be classified as impaired unless they are brought fully
current and the collection of scheduled interest and principal is
considered probable. When a loan or portion of a loan is determined
to be uncollectible, the portion deemed uncollectible is charged
against the allowance and subsequent recoveries, if any, are credited
to the allowance.
7
4. MORTGAGE NOTES RECEIVABLE, CONTINUED
At March 31, 1995, the total recorded investment in impaired loans, as
defined by SFAS 114, was $3,751,000. At March 31, 1995, all impaired
loans are in accrual status. The Company believes that the allowance
for loan losses of $1,000,000 at March 31, 1995 is at a level that is
sufficient to absorb probable credit losses in the mortgage loan
portfolio.
5. REAL ESTATE OWNED
At December 23, 1992, the Company obtained an apartment building
located in Detroit, Michigan through a foreclosure sale. This property
was the collateral for a construction loan under which the borrower
defaulted during 1992. Under Michigan law, the title passed to the
Company on June 23, 1993, at the expiration of a six month redemption
period. The carrying value of the property was written down to its
estimated fair value at the time of foreclosure of $2,100,000 which
resulted in a $639,000 writeoff against the allowance for loan losses.
The fair value was determined based upon a July 1992 independent
appraisal of the property. A valuation allowance of $140,000 was also
established at the time of foreclosure for the estimated costs to sell
the property. At December 31, 1994, the carrying value of the property
was reduced to $900,000 to reflect an updated property valuation based
on the results of the Company's marketing efforts to locate a buyer for
the property.
During 1994, the Company reached settlements with the guarantors of the
foreclosed loan aggregating $320,000. These settlements are payable
over four to eight years, with interest rates ranging from non-interest
bearing to 7.5%. Income from the settlements is recognized by the
Company when received and is recorded as miscellaneous income in the
statement of operations. Settlement income totalled $34,000 for the
three months ended March 31, 1995.
The property's operating income and expenses are reflected in the
statement of operations. The net loss from foreclosed property held for
sale totalled $10,704 for the three months ended March 31, 1995 and
$78,732 for the three months ended March 31, 1994 and consisted of the
following:
Three Months Ended
March 31, 1995 March 31, 1994
Rental Income $184,749 $180,139
-------- --------
Expenses:
Operating expenses 183,677 243,894
Management fees 10,223 11,338
Professional fees 1,553 3,639
-------- --------
Total expenses 195,453 258,871
-------- --------
Net loss from foreclosed
property held for sale $ 10,704 $ 78,732
======== ========
6. DIVIDENDS
Under pertinent provisions of the Internal Revenue Code (the "Code"), a
real estate investment trust may consider a dividend declared in a
subsequent year to be a distribution of income of the immediately prior
year and thus reduce income subject to income tax. On March 10, 1995,
the Board of Directors of the Company declared a cash dividend of $.13
per share of common stock,
8
6. DIVIDENDS, CONTINUED
to its shareholders of record on March 21, 1995, payable on March 31,
1995. Of this dividend, $.06 was payable from income earned by the
Company in 1994 and $.07 was payable from 1995 income. These dividends
are taxable to shareholders as ordinary income.
7. INCOME TAXES
The Company intends to operate at all times to qualify as a real estate
investment trust under the Code. In general, each year qualification is
met, income is not subject to federal income tax at the Company level
to the extent distributed to shareholders. The Company thus intends to
distribute at least 95% of its net investment income to its
shareholders. Accordingly, no provision for income taxes has been made
for the three months ended March 31, 1995.
8. RELATED PARTY TRANSACTIONS
The Company was involved in various transactions with affiliates as
follows:
Consulting fees under a contractual agreement aggregating $11,130 and
$10,600 were earned by an officer of the Company during the three
months ended March 31, 1995 and 1994, respectively.
Fees aggregating $7,040 and $4,858 during the three months ended March
31, 1995 and 1994, respectively were earned by a shareholder of the
Company for providing various investment and other services to the
Company.
During the quarter ended March 31, 1995 and 1994, one of the Company's
directors was a member of a law firm which provides legal services to
the Company. Fees for legal services provided by the law firm amounted
to $79,251, of which $52,645 are deferred by the Company (see Note 9),
for the three months ended March 31, 1995.
9. OTHER
On March 14, 1995, the Company's Board of Directors announced its
preliminary approval for a private placement of securities. The
Company expects to generate proceeds of approximately $50 million.
At March 31, 1995, $238,000 of professional fees have been incurred
and deferred in connection with this transaction.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Results of Operations
The Company's investment in mortgage loans represented 61% and 62% of
its assets at March 31, 1995 and December 31, 1994 or $25,336,672 and
$25,393,979, respectively. The range of yields on earning mortgage loans
closed from the Company's inception through March 31, 1995 ranges from 8% to
12.25%. At March 31, 1995, the Company had no outstanding loan commitments.
The overall average yield on interest earning assets was 8.7% for the
three months ended March 31, 1995 and 9.1% for the year ended December 31,
1994. The average amount held in marketable mortgage-backed securities net of
unrealized holding gains and losses for the three months ended March 31, 1995
was $11 million. The average yield (based on total yield divided by
average amount of
9
investments) was 5.3% for the three months ended March 31, 1995 and 4.6% for
the year ended December 31, 1994.
Investment income from marketable mortgage-backed securities increased
$57,338 to $145,016 for the first quarter of 1995 from $87,678 for the first
quarter of 1994. Of the increase, $45,464 was the result of an increase in
average amount invested in marketable mortgage-backed securities and $11,874
was the result of an increase in the average yield.
Interest income from mortgage notes decreased $148,779 to $676,630 for
the first quarter of 1995 from $825,409 for the first quarter of 1994. Of the
decrease, $124,446 was the result of a decrease in average earning loans and
$24,333 was the result of a decrease in average yield.
Operating expenses decreased $37,998, or 17%, to $187,992 for the first
quarter of 1995 from $225,990 for the first quarter of 1994. This decrease
resulted primarily from a $68,028 decrease in the net loss from foreclosed
property held for sale to $10,704 for the first quarter of 1995 from $78,732
for the first quarter of 1994. Other operating expenses, consisting primarily
of general and administrative expenses, increased $30,030 to $177,288 for the
first quarter of 1995 from $147,258 for the first quarter of 1994 primarily
due to increased loan advisory fees.
Net investment income increased 7.1% to $762,521 for the first three
months of 1995 from $712,272 for the first three months of 1994.
Management reviews, on a regular basis, factors which adversely affect
its mortgage loans, including occupancy levels, rental rates and property
values. It is possible that economic conditions in
10
Southeast Michigan and the nation in general may adversely affect certain of
the Company's other loans. The Company believes that the allowance for loan
losses of $1,000,000 at March 31, 1995 is at a level that is sufficient to
absorb probable credit losses in the mortgage loan portfolio.
At December 23, 1992, the Company obtained an apartment building
located in Detroit, Michigan through a foreclosure sale. This property was the
collateral for a construction loan under which the borrower defaulted during
1992. Under Michigan law, title passed to the Company on June 23, 1993 at the
expiration of a six month redemption period. The carrying value of the
property was written down to its estimated fair value at the time of
foreclosure of $2,100,000 which resulted in a $639,000 writeoff against the
allowance for loan losses. The fair value was determined based on a July 1992
independent appraisal of the property. A valuation allowance of $140,000 was
also established at the time of foreclosure for the estimated costs to sell
the property. At December 31, 1994, the carrying value of the property was
reduced to $900,000 to reflect an updated property valuation based on the
results of the Company's marketing efforts to locate a buyer for the property.
The Company intends to continue to actively market this property for sale
during 1995.
During 1994, the Company reached settlements with the guarantors of the
foreclosed loan aggregating $320,000. These settlements are payable over four
to eight years, with interest rates ranging from non-interest bearing to 7.5%.
Income from settlements is recorded as miscellaneous income when received and
totalled $34,000 for the three months ended March 31, 1995. The property's
operating income and expenses are reflected in the statement of operations as
net loss on operations of foreclosed property held for sale and totalled
$10,704 for the three months ended March 31, 1995 and $78,732 for the three
months ended March 31, 1994.
The Company expects to have the balance of its available assets
invested in mortgage loans to real estate projects by the end of 1995.
Liquidity and Capital Resources
Funds that have not yet been invested in mortgage loans are primarily
invested in marketable mortgage-backed securities until needed for the
Company's operations or investments in mortgage loans. Income and principal
received with respect to the Company's investment in mortgage loans are also
invested in marketable securities pending distribution to shareholders in the
form of dividends or reinvestment in mortgage loans. At March 31, 1995, the
Company had $25,336,672 invested in net mortgage loans, $883,533 invested in
net real estate owned, $10,841,084 invested in marketable mortgage backed
securities and $3,714,500 invested in money market funds.
The Company adopted Statement of Financial Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan" (SFAS 114), as
amended by SFAS 118, on January 1, 1995. Under the new standard, a loan is
considered impaired, based on current information and events, if it is
probable that the Company will be unable to collect the scheduled payments
of principal or interest when due according to the contractual terms of
the loan agreement. The measurement of impaired loans is based on the
fair value of the underlying collateral. The cumulative effect of adopting
the provisions of SFAS No. 114 was not significant.
On March 14, 1995, the Company's Board of Directors announced its
preliminary approval for a private placement of securities. The Company
expects to generate proceeds of approximately $50 million. At March 31,
1995, $238,000 of professional fees have been incurred and deferred in
connection with this transaction.
The Company's policy is to declare and pay cash dividends on a
quarterly basis. The Company paid dividends totalling $.13 per share during
the first three months of 1995, all of which was ordinary income to
shareholders. The Company paid dividends totalling $.22 per share during the
first three months of 1994.
11
SIGNATURE
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.
METROPOLITAN REALTY CORPORATION
Dated: May 11, 1995 By: /s/ Jay B. Rising
--------------------------------------
Jay B. Rising, President
(Chief Executive Officer and
Chief Financial Officer)
12