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Meet New York Regional Rail Corporation

August 8, 2005

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Clearly, the hot button issue of the day in Croton has been the swirling, rapidly-developing saga of the Metro-Enviro site down by the Croton-Harmon rail yard and station. To be topical, I have done a brief analysis of NYRR and provided some information herein. I am not overtly stating my opinion of the company; but I will safely say it is too small and appears to have deteriorating operating conditions for me to invest in professionally.

The latest news is that Northeast Interchange Railway (NIR) will be buying the assets and operating lease of the site from Greentree Realty LLC. As stated previously on this blog, NIR is effectively controlled by Mr. Gordon Reger; who also controls NYRR. In my research on the SEC website and other publicly available sources I was not able to clearly ascertain whether Mr. Reger has majority control of NYRR.

However, this is not the focus of my analysis of NYRR. It does however; look like NYRR’s two main subsidiaries are: New York Cross Harbor Railroad and JS Transportation. I will share publicly available info on NYRR as neither a buy nor sell recommendation of the stock. This is merely a “get acquainted” with a relative of a potential new neighbor (NIR).

From a trading perspective:

The stock is very very illiquid or as we say on the Street: “it trades by appointment”. NYRR has a market cap of about $14 Million with about 216 Million shares outstanding trading at about 6 cents per share currently. That price is down from a high of $3/share back on 1/31/95. Average daily trading volume has been about 200,000 shares over the last year. Even a small fund like the one I trade for could not buy this stock due to its lack of liquidity and size.

Some financial data:

2003 is the latest coherent data I could find for analytical purposes, I am assuming that 2004 did not look much better as the stock is down from about 13 cents on 12/31/04 to 6 cents now. Price action is usually a good indication of what’s going on fundamentally. The company has always had negative shareholder equity; there could be many reasons for this. In general it is not a good sign. For 2003, NYRR reported $5.6MM in sales and an operating loss of $890,000. SG&A expenses have been unusually high since 2000; but, for 2003 were very high nearly 40% of sales at $2.2MM. Union Pacific Railroad, one of the largest railroads in the world, had SG&A of only about 5% of sales.

NYRR reported a net loss of $840,000 for 2003. They also reported a net non-operating loss of $220,000 which seems high relative to their overall size and sales. They had total assets of $4.91MM and total liabilities of $7.87MM. NYRR has been paying out regular dividends to preferred shareholders every year since 2000 to the tune of about $40,000 in 2003, 50K in each of 02 and 01, and 30K in 00. Their debt looks like it is financed at relatively cheap levels according to filed data. I backed into a rate of about 3% on its outstanding liabilities. Don’t forget some of this is most likely collateralized as this is a very asset heavy industry.

Some recent news on NYRR:

  1. 7/11/05: the stock re-listed after suspension from OTC trading for delinquent filing of 2004 financial results.

  2. 7/6/05: CFO Joel Marcus resigns as a Director from the NYRR and has publicly cited “disagreements on annual report”.

  3. 5/31/05: in form 10-KSB filed 5/20/05, NYRR’s auditor’s Sherb & Co., LLP raised serious doubt about the entity’s ability to continue as a going concern.

  4. 4/25/05: NYRR’s stock is suspended from trading on the pink sheets (OTC market) for no less than 30 days due to delinquency of filing annual reports for 2004.

  5. 1/19/05: Transit Rail LLC announced an additional investment of $400,000 in NYRR to bring Transit Rail’s invested capital to $2,500,000.

There are many other bits of news and filings on the company such as numerous legal actions involving members of NYRR and its subsidiaries and others, numerous late filings of SEC reports, and small intermittent infusions of capital into NYRR.

The main shareholders:

Name, number shares held, date registered.

  • John Marsala, 20,835,000 shares, 02/2005.
  • Transit Rail LLC, 2,086,000 shares, 02/2005.
  • Klingenstein Fields, 275,000 shares, 03/2005.
  • Gordon Reger, 100,000 shares, 02/2005.
  • First Indemnity of America Insurance Company, 80,000 shares, 03/2005.
  • First Manhattan Company Asset Management, 20,000 shares, 06/2005.
  • Pinnacle Associates, 19,500 shares, 06/2005.

Addresses for all are available from public sources but not included here.

Management:

Gordon Kuhn-Chairman, Wayne A. Eastman-President, Ronald W. Bridges-CEO.

As of 3/31/04 the company had 16 employees. The company is incorporated in the state of Delaware.

Business Address: 4302 First Avenue, Brooklyn, NY 11232 | Telephone: 1-718-788-3690 | Fax: 1-718-788-4462

Corporate Headquarters: 5266 Seneca Street, West Seneca, NY 14224

* This is not an offer to buy or an endorsement of the investment merits of NYRR. All information is deemed accurate as recorded from publicly available sources.



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