-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, InNLpEy+xWdo4n99cczXIjV2nuhyGxPVt4vuD66WYI6nj4Wd0M/sddZbR07UdnOU 86+kSEvpOsxDvRhPR1+qfQ== 0000950131-98-003148.txt : 19980512 0000950131-98-003148.hdr.sgml : 19980512 ACCESSION NUMBER: 0000950131-98-003148 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980511 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: IFX CORP CENTRAL INDEX KEY: 0000792861 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES [6200] IRS NUMBER: 363399452 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15187 FILM NUMBER: 98614995 BUSINESS ADDRESS: STREET 1: 200 W ADAMS ST STREET 2: STE 1500 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124075700 MAIL ADDRESS: STREET 1: 200 WEST ADAMS ST STE 1500 STREET 2: 200 WEST ADAMS ST STE 1500 CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: CARL JACK 312 FUTURES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: 312 FUTURES INC DATE OF NAME CHANGE: 19860916 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (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, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to _________________ Commission File # 0-15187 IFX CORPORATION - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 36-3399452 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 200 West Adams Street, Suite 1500, Chicago, Illinois 60606 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (312) 419-9530 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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. X Yes ____ No ----- As of the date of this report, the issuer had outstanding 6,275,619 shares of common stock, $.02 par value per share. 1 IFX CORPORATION AND SUBSIDIARIES Part I - Financial Information Item 1. Financial Statements Immediately following this page, the following financial information of the Registrant is filed as part of this Report. Page ---- Consolidated statements of financial condition as of March 31, 1998 and June 30, 1997. 3 Consolidated statements of operations for the three months and nine months ended March 31, 1998 and 1997. 4 Consolidated statements of cash flows for the nine months ended March 31, 1998 and 1997. 6 Notes to consolidated financial statements. 8 2 IFX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS June 30, 1997 March 31, 1998 (restated) ------------------------------ (Unaudited) (Audited) Cash $ 546,700 $ 3,279,300 U.S. Government obligations 5,116,800 1,527,100 Other short term investments 32,731,000 44,875,100 Receivables: Brokers and dealers 6,523,100 2,911,600 March 31, June 30, 1998 1997 ---------- ----------- Customers & counterparties $ 714,600 $ 1,422,900 Other 1,091,800 1,503,300 Less - Allowance for doubtful accounts (422,400) (430,000) 1,384,000 2,496,200 ---------- ----------- Investments in and advances to affiliated partnerships 71,800 50,000 Notes receivable 813,400 618,900 Furniture, equipment, and leasehold improvements, net of accumulated depreciation and amortization of $258,600 and $140,300, respectively 174,000 269,000 Other assets 514,900 616,000 ----------- ----------- Total $47,875,700 $56,643,200 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Payables: Brokers and Dealers $ 130,800 $ 1,068,200 Customers & counterparties 33,570,600 41,284,600 Affiliates and employees 60,500 57,900 Accounts payable and accrued expenses 1,779,600 3,406,600 Notes payable -- 1,586,600 ----------- ----------- Total 35,541,500 47,403,900 ----------- ----------- Minority Interest 1,711,800 1,035,600 ----------- ----------- Stockholders' equity: Common stock, restated for reverse split, $.02 par value; 150,000,000 shares authorized, 6,275,619 and 6,279,130 shares issued and outstanding, respectively 125,500 125,600 Paid-in capital and retained earnings 10,542,600 8,123,800 Cumulative translation adjustment (45,700) (45,700) ----------- ----------- Total stockholders' equity 10,622,400 8,203,700 ----------- ----------- Total $47,875,700 $56,643,200 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 3 IFX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, -------------------------- 1998 1997 ---------- ----------- Revenues: Commissions $ 403,500 $ 28,700 Interest 681,300 1,251,100 Trading gains, net 1,700,500 2,474,500 Earn-out from Sale of Assets 995,800 509,000 Other 80,500 26,400 ---------- ---------- Total revenues 3,861,600 4,289,700 ---------- ---------- Expenses: Commission, floor brokerage and clearing costs 307,900 46,800 Compensation and related benefits 670,600 901,400 Communications 158,900 160,700 Interest 399,500 955,200 Rent and other occupancy costs 225,500 213,100 Business promotion 161,100 177,400 Professional and consulting fees 261,400 120,300 Depreciation 38,900 36,000 Other 115,800 156,000 ---------- ---------- Total expenses 2,339,600 2,766,900 ---------- ---------- Income before income taxes and minority interest 1,522,000 1,522,800 Income tax expense 515,400 513,600 ---------- ---------- Net income before minority interest 1,006,600 1,009,200 Minority interest 241,900 - ---------- ---------- Net income 764,700 1,009,200 Assumed cumulative dividend on Class A preferred stock - (3,300) ---------- ---------- Net income applicable to common stock $ 764,700 $1,005,900 ========== ========== Primary earnings per common share, restated for reverse split: Net income $ .12 $ .15 ========== ========== Weighted average number of common shares outstanding 6,278,584 6,696,251 ========== ========== Fully diluted earnings per common share, restated for reverse split: Net income $ .12 $ .15 ========== ========== Weighted average number of common shares outstanding 6,278,584 6,696,251 ========== ==========
The accompanying notes are an integral part of the consolidated financial statements. 4 IFX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Nine Months Ended March 31, ------------------------------ 1998 1997 ----------- ----------- Revenues: Commissions $ 835,600 $ 161,500 Interest 2,397,100 2,452,900 Trading gains, net 5,245,200 5,304,500 Earn-out from Sale of Assets 2,930,100 1,226,300 Other 90,900 957,600 ----------- ----------- Total revenues 11,498,900 10,102,800 ----------- ----------- Expenses: Commission, floor brokerage and clearing costs 671,600 254,800 Compensation and related benefits 1,771,900 2,933,600 Communications 537,600 514,200 Interest 1,511,300 2,025,800 Rent and other occupancy costs 618,800 446,000 Business promotion 379,500 359,500 Professional and consulting fees 763,900 432,700 Depreciation 136,000 83,200 Other 421,800 607,000 ----------- ----------- Total expenses 6,812,400 7,656,800 ----------- ----------- Income before income taxes and minority interest 4,686,500 2,446,000 Income tax expense 1,480,500 824,200 ----------- ----------- Net income before minority interest 3,206,000 1,621,800 Minority interest 780,200 - ----------- ----------- Net income 2,425,800 1,621,800 Assumed cumulative dividend on Class A preferred stock - (23,300) ----------- ----------- Net income applicable to common stock $ 2,425,800 $ 1,598,500 =========== =========== Primary earnings per common share, restated for reverse split: Net income $ .39 $ .24 =========== =========== Weighted average number of common shares outstanding 6,277,627 6,715,494 =========== =========== Fully diluted earnings per common share, restated for reverse split: Net income $ .39 $ .24 =========== =========== Weighted average number of common shares outstanding 6,277,627 6,715,494 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 5 IFX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended March 31, ---------------------------- 1998 1997 ------------ -------------- Cash Flows From Operating Activities: Net income (loss) $ 2,425,800 $ 1,621,800 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 136,000 83,200 Deferred taxes (6,000) 7,600 Doubtful accounts expense (benefit) (7,600) 46,400 Equity in net (gain) loss of affiliated partnerships (7,800) - Gain on sale of exchange memberships, net - (221,600) Writedown of exchange memberships - 180,100 Gain on sale of clearing corporation stock - (664,000) Changes in: Cash segregated or secured under Commodity Exchange Act, net - 2,009,500 U.S. Government obligations (3,589,700) 139,365,200 Other short term investments 12,144,100 (76,871,500) Deposits with clearing organizations - 42,456,300 Warehouse receipts - 959,500 Receivables (2,491,700) 7,336,700 Other assets 107,100 142,000 Payables (8,648,800) (105,360,000) Accounts payable and accrued expenses (1,627,000) (1,559,500) ----------- ------------- Cash provided by (used in) operating activities (1,565,600) 9,531,700 ----------- ------------- Cash Flows From Investing Activities: Investments in and advances to affiliated partnerships, net (14,000) - Increase in notes receivable (194,500) - Decrease in notes receivable - 1,500 Purchase of furniture, equipment and leasehold improvements (41,000) (185,900) Proceeds from the sale of exchange memberships - 773,000 Proceeds from the sale of clearing corporation stock - 1,024,000 Proceeds from the sale of furniture and equipment - 116,200 ----------- ------------- Cash provided by (used in) investing activities (249,500) 1,728,800 Cash Flows From Financing Activities: Repayment of notes payable (1,586,600) (1,840,000) Repayment of liabilities subordinated to claims of general creditors - (4,000,000) Minority interest 676,200 - Repurchase of common stock (7,100) (127,200) ----------- ------------- Cash provided by (used in) financing activities (917,500) (5,967,200) ----------- ------------- Effect of exchange rate changes on cash - (31,200) ----------- ------------- Increase (decrease) in cash (2,732,600) 5,262,100 Cash, beginning of period 3,279,300 1,587,300 ----------- ------------- Cash, end of period $ 546,700 $ 6,849,400 =========== =============
The accompanying notes are an integral part of the consolidated financial statements. 6 IFX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Supplemental Schedule of Non-Cash Investing and Financing Activities Nine Months Ended March 31, 1998 - -------------------------------- None. Nine Months Ended March 31, 1997 - -------------------------------- In January, 1997, notes payable aggregating $4,550,000 due January 31, 1997 were extended to January 31, 1998. $3,800,000 of these notes were repaid during fiscal 1997, and the remaining $750,000 was repaid during September, 1997. Also in January, 1997, a note payable for $836,600 was issued to the Company's principal stockholder as payment for the redemption of preferred stock and dividends accrued thereon. This note was repaid in February, 1998. 7 IFX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Basis of Presentation - --------------------- The consolidated financial statements include the accounts of IFX Corporation (formerly Jack Carl/312-Futures, Inc., "JC/312") and Subsidiaries, (collectively, the "Company"). All material intercompany accounts and transactions have been eliminated in consolidation. Until July 1, 1996, the Company engaged principally in the business of effecting transactions in futures and options on futures contracts for the accounts of customers and the operation of commodity pools. Index Futures Group, Inc. ("Index"), until July 1, 1996, was the principal operating subsidiary of JC/312. Effective July 1, 1996, Index sold, transferred and assigned substantially all of its brokerage accounts ("Sale of Assets") to E.D. & F. Man International Inc. ("MINC"). Index ceased being a registered futures commission merchant with the Commodity Futures Trading Commission ("CFTC") in December, 1996. As a condition of the Sale, Index changed its name to FX Chicago, Inc. IFX, Ltd. (formerly Index FX, Ltd.), a British corporation and a majority owned subsidiary of IFX Corporation, continues to conduct foreign exchange business as a registrant of the British Securities and Futures Authority. These consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these condensed consolidated financial statements. Operating results for the quarter are not necessarily indicative of the results that may be expected for the year ending June 30, 1998. Certain reclassifications have been made in the 1997 financial statements to conform to the 1998 presentation. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's financial statements on Form 10-K for the year ended June 30, 1997. Commitments and Contingencies - ----------------------------- Litigation- - ----------- The Company is a defendant in, and may be threatened with, various legal proceedings arising from its regular business activities. Management, after consultation with legal counsel, is of the opinion that the ultimate liability, if any, resulting from any pending action or proceedings will not have a material effect on the financial position or results of operations of the Company. 8 IFX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) On November 24, 1997, the trustee of a pension plan filed a Demand for Arbitration with the National Futures Association against Index and several other respondents, including an introducing broker guaranteed by Index. In the Demand, the trustee alleges breach of fiduciary duty, churning, misrepresentation, failure to supervise, breach of contract, aiding and abetting, and violation of ERISA. Claimant seeks actual damages of $141,000 and punitive damages of $460,000. The Company believes the claim is without merit and will defend vigorously. On May 16, 1996, Index filed suit in the Circuit Court of Cook County--Law Division against Doug Niemann, a former customer, for breach of contract, seeking to recover a debit balance of $88,200 (Index Futures Group, Inc. v. Doug Niemann, case no. 96L-5506). On January 14, 1997, Niemann filed a counterclaim for $688,200. The Company believes that the counterclaim is without merit and will defend vigorously. In April, 1994, Index without admitting or denying the allegations, paid $100,000 to the CFTC, settling an administrative action filed on September 29, 1992. In a related action, the equity receiver of an alleged commodity pool operator brought an action to recover losses of approximately $600,000, alleging various theories such as constructive trust, negligence, breach of fiduciary duty and conversion. On May 29, 1996, the district judge dismissed the complaint in its entirety. On December 4, 1997, the Court of Appeals affirmed the district judge's dismissal of all claims against Index. On January 13, 1998, the Court of Appeals denied the Supplemental Plaintiffs' request for a rehearing of its appeal. A former officer of Index whose employment was terminated as a result of the Sale of Assets rejected Index's severance payment offer. The officer had made a demand for $500,000. The Company settled this case in July, 1997 for $75,000. Other- ------ In connection with the Sale of Assets, if certain conditions occur over the next year, the Company may be subject to additional severance payments of up to $100,000. The Company has also entered into a consulting contract which expires during fiscal 1999, providing for aggregate minimum payments of $45,500 remaining as of March 31, 1998. The Company had guaranteed performance under the Commodity Exchange Act of certain introducing brokers with respect to their customer accounts. In connection with the Sale of Assets, these introducing broker guarantees were terminated or transferred to MINC effective July 1, 1996. Index issued a limited indemnification agreement to MINC related to the Sale of Assets. This agreement covers potential customer claims arising from activity prior to the sale. 9 IFX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Stockholders' Equity - -------------------- On January 8, 1998, the Company effected a one-for-five reverse split of its common stock, par value .004, effective on January 12, 1998 (the "Effective Date"). Each five shares of such common stock were reclassified and reflected as one share of common stock having a par value of $.02, as of January 12, 1998. Outstanding shares of the Company's common stock were reduced to 6,279,130 shares from 31,395,649 shares outstanding before the split. Any holder of fractional shares resulting from this reverse split will be paid an amount equal to the mean between the bid and the offer prices for the Company's Common Stock on the NASDAQ SmallCap market on the Effective Date multiplied by the amount of the fractional share. The one-for-five reverse split also resulted in certain shareholders owning "odd lots," that is, less than one hundred shares of Common Stock. In order to reduce the disproportionately high costs to the Company of servicing numbers of such shareholder accounts, and to enable those shareholders to dispose of their securities without incurring the brokerage fees that normally attend odd-lot transactions, the Company offered to purchase from its shareholders all odd lots (i.e., less one hundred shares). The purchase amount was based upon the number of odd-lot shares multiplied by the mean between the bid and offer prices on the date of purchase, without commissions. The Company maintained its offer to repurchase such odd lots until February 26, 1998, forty-five days immediately following the Effective Date. As of March 31, 1998, the Company had repurchased approximately 3,500 shares. Outstanding shares of common stock as of March 31, 1998 totaled 6,275,619. Sale of Assets - -------------- The purchase price payable by MINC in connection with the Sale of Assets is based on a percentage of the net income, as defined in the Sales Agreement, of the transferred activities during the sixty-six month period following the sale. During the nine months ended March 31, 1998 and 1997, the Company earned $2,930,100 and $1,226,300 respectively from the Sale of Assets. Capital Requirements - -------------------- IFX Ltd. became a registrant of the British Securities and Futures Authority ("SFA") during November, 1996. As such, IFX Ltd. is subject to the financial resources requirements adopted and administered by the SFA. As of March 31, 1998, IFX Ltd.'s financial resources, as defined by the SFA, were $6,972,000, which was $3,513,000, in excess of its requirements. 10 IFX CORPORATION AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Period Ended March 31, 1998. IFX Corporation (formerly Jack Carl/312-Futures, Inc.), (which when consolidated with its subsidiaries is henceforth referred to as the "Company") is a holding company which operates its business through its subsidiaries. Index Futures Group, Inc. ("Index"), until July 1, 1996, the Company's principal operating subsidiary, provided a full range of futures brokerage, clearing and back office services for institutional and public commodity traders. It was a clearing member of all major U.S. commodity exchanges. Effective July 1, 1996, Index sold, transferred and assigned substantially all of its brokerage accounts ("Sale of Assets") to E.D.& F. Man International, Inc. ("MINC"). As a result of the Sale of Assets, Index no longer acts as a futures commission merchant. It immediately withdrew as a clearing member from all commodity exchanges, and terminated its registration as a futures commission merchant in December, 1996. As a condition of the Sale, Index changed its name to FX Chicago Inc. Operations at FX Chicago Inc. are currently limited to activity relating to the net income derived from the Sale of Assets. IFX Ltd. (formerly Index FX, Ltd.), a British corporation and a subsidiary of IFX Corporation continues to conduct foreign exchange business as a registrant of the British Securities and Futures Authority ("SFA"). IFX Ltd. commenced trading operations in October, 1995 and became an SFA registrant in November, 1996. Financial Condition - ------------------- The Company's cash and short-term investment portfolio totaled $38,394,500 at March 31, 1998. Included in this amount is $29,568,000 of funds from IFX Ltd. customers, which have been invested by IFX Ltd. on the customers' behalf or are held in segregated cash accounts, pursuant to rules of the SFA. The Company's positions are generally liquid. The portfolio is invested primarily in U.S. dollar denominated securities, but also includes foreign currency positions deposited by IFX customers. As a registrant, IFX Ltd. is subject to the financial resources requirements adopted and administered by the SFA. As of March 31, 1998, IFX Ltd.'s financial resources, as defined by the SFA, were $6,972,000, which was $3,513,000 in excess of its requirements. During February, 1998, the Company repaid $836,600 of notes payable outstanding to its principal stockholder. Stockholders' equity at March 31, 1998 was $10,622,400. The Company effected a one-for-five reverse split of its common stock, par value .004, effective on January 12, 1998 (the "Effective Date"). Each five shares of such common stock were reclassified and reflected as one share of common stock having a par value of $.02, as of January 12, 1998. Outstanding shares of the Company's common stock were reduced to 6,279,130 shares from 31,395,649 shares outstanding before the split. Any holder of fractional shares resulting from this reverse split will be paid an amount equal to the mean between the bid and the offer prices for the Company's Common Stock on the NASDAQ SmallCap market on the Effective Date multiplied by the amount of the fractional share. The one-for-five reverse 11 IFX CORPORATION AND SUBSIDIARIES split also resulted in certain shareholders owning "odd lots," that is, less than one hundred shares of Common Stock. In order to reduce the disproportionately high costs to the Company of servicing numbers of such shareholder accounts, and to enable those shareholders to dispose of their securities without incurring the brokerage fees that normally attend odd-lot transactions, the Company offered to purchase from its shareholders all odd lots (i.e., less one hundred shares). The purchase amount was based upon the number of odd-lot shares multiplied by the mean between the bid and offer prices on the date of purchase, without commissions. The Company maintained its offer to repurchase such odd lots until February 26, 1998, forty-five days immediately following the Effective Date. As of March 31, 1998, the Company had repurchased approximately 3,500 shares. Outstanding shares of common stock as of March 31, 1998 totaled 6,275,619. For the nine months ended March 31, 1998, cash used in operations was $1,565,600 compared to cash provided by operations of $9,531,700 for the same period in fiscal 1997. The majority of cash used in operations is related to payments of customer funds made to customers of IFX Ltd. In addition, the Company invests cash not needed for operations at FX Chicago, Inc. in U.S. Government obligations. As of March 31, 1998, the Company held $5,116,800 in U.S. Government obligations. Management believes existing cash and short-term investments together with operating cash flows, access to equity capital, and borrowing capacity, provide adequate resources to fund ongoing operating requirements and future capital expenditures related to the expansion of existing businesses and development of new projects. 12 IFX CORPORATION AND SUBSIDIARIES Results of Operations - --------------------- IFX Ltd., the Company's London-based operation, continues to grow. IFX Ltd.'s target customer base is beginning to recognize it as an effective and efficient alternative to the larger money center banks. In addition, the Company's earnings from the Sale of Assets have continued to increase as MINC generates more and more business from the brokerage accounts it purchased from Index. As such, revenues of the Company are currently increasing at a much greater rate than are expenses. Pursuant to the Sale of Assets agreement, the Company's percentage of earnings from the brokerage accounts will decrease based upon a predetermined schedule as defined in the sales agreement, over the remainder of the original sixty-six month period following the sale. As such, earnings from the Sale of Assets may decrease accordingly. Revenues were $3,861,600 and $11,498,900 during the three and nine months ended March 31, 1998, respectively, a decrease of 10% and an increase of 14%, respectively, from the same periods a year ago. Commission revenues continue to increase as the IFX Ltd. business continues to expand. Trading revenues decreased by 31% for the three month period ended March 31, 1998, compared to the same period a year ago, largely as a result of the lack of volatility in the foreign currency market during the period. Revenues from the Sale of Assets increased by $486,800 and $1,703,800 during the three and nine months ended March 31, 1998, respectively, compared to the same periods a year ago. Reported revenues during previous quarters of fiscal 1997 were subsequently adjusted and increased by $237,100 by MINC. These adjustments are reflected in the earnings from the Sale of Assets for the quarter ended December 31, 1997. The Company's earnings from the Sale of Assets continue to increase as MINC generates more and more business from the brokerage accounts it purchased from Index. Other revenue increased by $54,100 and decreased by $866,700 during the three and nine months ended March 31, 1998, respectively, compared to the same periods a year ago. Included in other revenue during the nine months ended March 31, 1997 was a net gain of $885,600, respectively, on the sale of exchange memberships and clearing corporation stock. Total expenses were $2,339,600 and $6,812,400 in the three months and nine months ended March 31, 1998, respectively, representing a decrease of 15% and 11% from the same periods a year ago. The decrease in expenses as resulting from the Sale of Assets has been somewhat offset by the increasing expenses from the expanding operations of IFX Ltd. As a result of the aforementioned revenues and expenses, net income for the quarter ended March 31, 1998 is $764,700, or $.12 per share, compared to net income of $1,005,900, or $.15 per share (as restated for the one-for-five reverse split of common stock) for the same period a year ago. Net income for the nine months ended March 31, 1998 is $2,425,800, or $.39 per share, compared to net income of $1,598,500, or $.24 per share (as restated for the one-for-five reverse split of common stock) for the same period a year ago. The Board of Directors is exploring various business opportunities for the Company now that FX Chicago, Inc. no longer acts as a futures commission merchant, and as a result has capital available for investments. 13 Item 1. Legal Proceedings See Notes to Financial Statements. Item 6. Exhibits and Reports on Form 8-K (A) Exhibits 11.1 Computation of earnings per common Share 27 Financial Data Schedule (EDGAR only) (B) REPORTS ON FORM 8-K - On January 8, 1998, the Company filed a report on Form 8-K reporting the implementation of a one-for-five reverse split of the Company's stock, effective January 12, 1998. 14 SIGNATURES 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. IFX CORPORATION -------------------------- (Registrant) Dated: May 11, 1998 By: /S/ CHRISTINA S. DONKA -------------------------- Christina S. Donka Chief Financial Officer 15 EX-11 2 COMPUTATION OF EARNINGS PER COMMON SHARE Exhibit 11.1 IFX CORPORATION AND SUBSIDIARIES Computation of Earnings Per Common Share as Restated for the One-for-Five Reverse Split of Common Stock
Three Months Ended Three Months Ended March 31, March 31, ------------------------- ------------------------- 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Earnings: Net income $ 764,700 $1,009,200 $2,425,800 $1,621,800 Deduct assumed dividends on Class A preferred stock - (3,300) - (23,300) ---------- ---------- ---------- ---------- Net income applicable to common stock $ 764,700 $1,005,900 $2,425,800 $1,598,500 ========== ========== ========== ========== Shares: Weighted average number of common shares outstanding 6,278,584 6,696,251 6,277,627 6,715,494 ========== ========== ========== ========== Primary earnings per common share: Net income $ .12 $ .15 $ .39 $ .24 ========== ========== ========== ==========
Note: Fully diluted earnings per share have not been presented because the effects are not material. EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Form 10-Q as of March 31, 1998 and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1998 JUL-01-1997 MAR-31-1998 546,700 37,847,800 7,907,100 (422,400) 0 46,301,600 174,000 258,600 47,875,700 35,541,500 0 0 0 125,500 10,496,800 47,875,700 0 3,861,600 0 0 2,000,100 0 399,500 1,522,000 515,400 1,006,600 0 0 0 764,700 .12 .12
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