-----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, V9dC1ANlChGWWAx3BOhEs9y+vNF0xblTtD/CRTj7k3n7uhUf1m54CczdqBmokLeW qWuaVPtvwpwSnvgWKEk8rA== 0000950130-02-005790.txt : 20020813 0000950130-02-005790.hdr.sgml : 20020813 20020813172833 ACCESSION NUMBER: 0000950130-02-005790 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXX INC/NV/ CENTRAL INDEX KEY: 0000089261 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 880325271 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05654 FILM NUMBER: 02730901 BUSINESS ADDRESS: STREET 1: 1350 EAST FLAMINGO SUITE 689 CITY: LAS VEGAS STATE: NV ZIP: 89119 BUSINESS PHONE: 7025983223 MAIL ADDRESS: STREET 1: 1350 EAST FLAMINGO SUITE 689 CITY: LAS VEGAS STATE: NV ZIP: 89119 FORMER COMPANY: FORMER CONFORMED NAME: SFM CORP DATE OF NAME CHANGE: 19920703 10-Q 1 d10q.txt FORM 10-Q 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 June 30, 2002 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 1-5654 --------------------------------------------------- EXX INC - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Nevada 88-0325271 - ------------------------------- ------------------------------- (State or Other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.) 1350 East Flamingo Road, Suite 689, Las Vegas, Nevada 89119-5263 - -------------------------------------------------------------------------------- (Address or Principal Executive Offices) (Zip Code) (702) 598-3223 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) NONE - -------------------------------------------------------------------------------- (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. Yes X NO ----- ----- Number of shares of common stock outstanding as of June 30, 2002: 10,624,207 Class A Shares and 617,853 Class B Shares. - ---------- ------- PART 1. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS A. Consolidated Balance Sheets
ASSETS June 30, 2002 December 31, 2001 - ------ ------------- ----------------- (unaudited) CURRENT ASSETS: Cash and cash equivalents ........................ $ 8,964,000 $ 9,622,000 Accounts receivable, less allowances of $91,000 and $91,000 .................................. 2,626,000 2,152,000 Inventories, at lower of cost or market: Raw materials .................................... 359,000 838,000 Work in process .................................. 41,000 164,000 Finished goods ................................... 2,320,000 1,618,000 ----------- ----------- 2,720,000 2,620,000 Other current assets ............................. 310,000 267,000 Deferred income taxes ............................ 520,000 520,000 ----------- ----------- TOTAL CURRENT ASSETS 15,140,000 15,181,000 Property, plant and equipment, at cost: Land ............................................. 41,000 41,000 Buildings and improvements ....................... 2,993,000 2,993,000 Machinery and equipment .......................... 6,487,000 6,462,000 ----------- ----------- 9,521,000 9,496,000 Less accumulated depreciation and amortization ............................. 7,805,000 7,695,000 ----------- ----------- 1,716,000 1,801,000 Other assets ..................................... 245,000 482,000 ----------- ----------- TOTALS ........................................... $17,101,000 $17,464,000 =========== ===========
See Notes to Consolidated Financial Statements 2 A. Consolidated Balance Sheets (continued)
LIABILITIES June 30, 2002 December 31, 2001 ----------- ------------- ----------------- (unaudited) CURRENT LIABILITIES: Long-term debt, current portion .................. $ 64,000 $ 66,000 Accounts payable and other current liabilities .......................... 3,290,000 3,815,000 ----------- ----------- TOTAL CURRENT LIABILITIES ........................ 3,354,000 3,881,000 ----------- ----------- LONG-TERM LIABILITIES: Long-term debt, less current portion ............. 1,524,000 1,555,000 Pension Liability ................................ 416,000 416,000 Deferred tax liability ........................... 562,000 562,000 ----------- ----------- 2,502,000 2,533,000 ----------- ----------- STOCKHOLDERS' EQUITY Preferred stock, $.01 par value; authorized 5,000,000 shares, none issued Common stock, Class A $.01 par value authorized 25,000,000 shares, issued 12,061,607 shares ..................... 121,000 121,000 Common stock, Class B $.01 par value authorized 1,000,000 shares, 624,953 shares issued ....................... 6,000 6,000 Capital in excess of par value ............... 2,670,000 2,670,000 Accumulated other comprehensive loss ......... (275,000) (275,000) Retained earnings ............................ 9,609,000 9,311,000 Less Treasury Stock 1,437,400 and 1,229,600 shares of Class A Common Stock and 7,100 and 7,100 shares of Class B Common Stock, at cost, respectively ........................ (886,000) (783,000) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY ....................... 11,245,000 11,050,000 ----------- ----------- TOTALS ........................................... $17,101,000 $17,464,000 =========== ===========
See Notes to Consolidated Financial Statements 3 B. Consolidated Statements of Operations (Unaudited)
For the Three-Month Period Ended For the Six-Month Period Ended --------------------------------- ------------------------------ June 30, 2002 June 30, 2001 June 30, 2002 June 30, 2001 ------------- ------------- ------------- ------------- Net sales ............................ $ 4,206,000 $ 4,927,000 $ 7,995,000 $ 9,905,000 Cost of sales ........................ 2,788,000 3,071,000 5,395,000 6,535,000 ---------- ----------- ----------- ----------- Gross profit ......................... 1,418,000 1,856,000 2,600,000 3,370,000 Selling, general and administrative expenses .............. 1,105,000 1,220,000 2,182,000 2,209,000 ---------- ----------- ----------- ----------- Operating income ..................... 313,000 636,000 418,000 1,161,000 Interest expense ..................... (22,000) (23,000) (66,000) (71,000) Other income ......................... 39,000 122,000 100,000 237,000 ---------- ----------- ----------- ----------- Income before provision for income taxes ................. 330,000 735,000 452,000 1,327,000 Provision for income taxes ........... 113,000 250,000 154,000 451,000 ----------- ----------- ----------- ----------- Net income ........................... $ 217,000 $ 485,000 $ 298,000 $ 876,000 =========== =========== =========== =========== Net income per common share Basic ................................ $ .02 $ .04 $ .03 $ .07 =========== =========== =========== =========== Diluted .............................. $ .02 $ .04 $ .03 $ .07 =========== =========== =========== =========== Weighted average shares outstanding Basic ................................ 11,340,056 12,114,874 11,382,043 12,184,391 =========== =========== =========== =========== Diluted .............................. 11,389,863 12,173,993 11,439,027 12,241,907 =========== =========== =========== ===========
See Notes to Consolidated Financial Statements 4 C. Consolidated Statements of Cash Flow (Unaudited)
For the Six-Month Period Ended -------------------------------- June 30, 2002 June 30, 2001 ------------- ------------- Operating activities: Net income ..................................................... $ 298,000 $ 876,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization .............................. 110,000 121,000 Provision for bad debts .................................... - 2,000 Deferred tax liability ..................................... - (32,000) Increase (decrease) in cash attributable to changes in operating assets and liabilities: Accounts receivable ...................................... (474,000) 110,000 Inventories .............................................. (100,000) 126,000 Other current assets ..................................... (43,000) 97,000 Other assets ............................................. 237,000 (20,000) Refundable income taxes .................................. - 152,000 Deferred income taxes .................................... - 34,000 Accounts payable and other current liabilities ................................... (525,000) 44,000 ---------- ---------- Net cash provided by (used in) operating activities ............ (497,000) 1,510,000 ---------- ---------- Cash flows from investing activities Purchase and sale of property and equipment (net) .......... (25,000) (4,000) Proceeds from sale of Short-Term investments ............... - 298,000 ---------- ---------- Net cash provided by (used in) investing activities ............ (25,000) 294,000 ---------- ---------- Cash flows from financing activities Payments on notes payable .................................. (33,000) (36,000) Purchases of treasury stock ................................ (103,000) (235,000) ----------- ---------- Net cash used in financing activities .......................... (136,000) (271,000) ----------- ---------- Net increase (decrease) in cash and cash equivalents ........... (658,000) 1,533,000 Cash and cash equivalents, beginning of period ........................................ 9,622,000 7,772,000 ---------- ---------- Cash and cash equivalents, end of period .............................................. $8,964,000 $9,305,000 ========== ==========
See Notes to Consolidated Financial Statements 5 C. Consolidated Statements of Cash Flow (Unaudited) (continued)
For the Six-Month Period Ended ------------------------------ June 30, 2002 June 30, 2001 ------------- ------------- Supplemental disclosure of cash flow information: Cash paid during the period for: Interest ............................................... $66,000 $ 71,000 ------- -------- Income taxes ........................................... $82,000 $104,000 ------- --------
See Notes to Consolidated Financial Statements 6 D. Notes to Consolidated Financial Statements Note 1: The unaudited financial statements as of June 30, 2002 and 2001 reflect - ------- all adjustments which are necessary in the opinion of management for a fair presentation of the results for the periods stated. All adjustments so made are of a normal recurring nature. Certain financial information and footnote disclosures normally included in financial statements in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The reader is referred to the audited consolidated financial statements and notes thereto included in the Registrant's Annual Report on Form 10-K for the year ended December 31, 2001. Note 2: Investment in Newcor, Inc. - ------- -------------------------- In July 2001, the company purchased an additional 679,994 shares of Newcor, Inc. ("Newcor") common stock and $500,000 principal amount of Newcor's 9.875% Senior Subordinated Notes due 2008, from five of the former directors of Newcor and 24,000 shares from David A. Segal (the Company's Chairman). In connection with such purchases, the Company paid an aggregate of $1,679,000 in cash. Prior to the Company's acquisition of these additional shares, the Company accounted for its investment in Newcor as an available for sale marketable security. The changes in the market value of the Newcor shares were recorded as comprehensive income in each applicable period. The additional acquisition increased the Company's ownership percentage in Newcor to approximately 31%, thereby requiring the Company to use the equity method of accounting for this investment in accordance with Accounting Principles Board Opinion No. 18. "The Equity Method of Accounting for Investments in Common Stock". The change to the equity method is considered a change in reporting entity, requiring the Company to give retroactive effect to this change in all prior periods that Newcor stock was held. The consolidated financial statements for all periods prior to December 31, 2001 have been restated to give effect to this change. As of June 30, 2002, the Company owned approximately 1,546,000 shares of the outstanding common stock of Newcor and based on its equity in the losses of Newcor, the Company at December 31, 2001, reduced its prior investment (including subordinated notes) in Newcor to zero. On February 25, 2002, Newcor, Inc., filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Act. Note 3: Earnings per share - ------- ------------------ The difference between the number of shares used to compute basic net income per share and diluted net income per share relates to additional shares to be issued upon the assumed exercise of stock options, net of shares hypothetically repurchased at the average price with the proceeds of exercise. For the three months and six months ended June 30, 2002, these additional shares amounted to 49,807 and 56,984 respectively. For the three months and six months ended June 30, 2001, these additional shares amounted to 59,119 and 57,516 respectively. 7 Note 4: Long-Term Debt - ------- -------------- Long-Term debt represents obligations of the Handi-Pac subsidiary as follows:
June 30, 2002 ------------- Notes payable - SBA Loans ............ $ 793,000 Capital lease payable ................ 795,000 ---------- 1,588,000 Current Portion of Long-Term debt .... (64,000) ---------- $1,524,000 ==========
As of June 30, 2002, there was no other bank debt for the other subsidiaries except as noted above. Note 5: The following information is reported as required for industry segment - ------- ---------------------------------------------------------------------- disclosure. -----------
Three Months Ended June 30, 2002 ------------------------------------------------------------ Mechanical Equipment Toy Corporate Consolidated ---------- ---------- --------- ------------ Sales ......................... $2,129,000 $2,077,000 $ - $4,206,000 ========== ========== ========= ========== Operating income (loss) ....... $ 142,000 $ 291,000 $(120,000) $ 313,000 Interest expense .............. - (22,000) - (22,000) Interest income ............... 3,000 - 24,000 27,000 Other income .................. 7,000 2,000 3,000 12,000 ---------- ---------- --------- ---------- Income (loss) before Income taxes (benefit) ........ $ 152,000 $ 271,000 $ (93,000) $ 330,000 ========== ========== ========= ========== Six Months Ended June 30, 2002 ------------------------------------------------------------ Mechanical Equipment Toy Corporate Consolidated ---------- ---------- --------- ------------ Sales ......................... $3,920,000 $4,075,000 $ - $7,995,000 ========== ========== ========= ========== Operating income (loss) ....... $ 74,000 $ 663,000 $(319,000) $ 418,000 Interest expense .............. - (44,000) (22,000) (66,000) Interest income ............... 8,000 - 63,000 71,000 Other income .................. 22,000 4,000 3,000 29,000 ---------- ---------- --------- ---------- Income (loss) before Income taxes (benefit) ........ $ 104,000 $ 623,000 $(275,000) $ 452,000 ========== ========== ========= ==========
8 Note 5: Cont'd.
Three Months Ended June 30, 2001 ------------------------------------------------------------ Mechanical Equipment Toy Corporate Consolidated ---------- ---------- --------- ------------ Sales ......................... $3,239,000 $1,688,000 $ - $4,927,000 ========== ========== ========= ========== Operating income (loss) ....... $ 642,000 $ 130,000 $(136,000) $ 636,000 Interest expense .............. - (23,000) - (23,000) Interest income ............... 5,000 - 80,000 85,000 Other income .................. 21,000 16,000 - 37,000 ---------- ---------- --------- ---------- Income (loss) before Income taxes (benefit) ........ $ 668,000 $ 123,000 $ (56,000) $ 735,000 ========== ========== ========= ========== Six Months Ended June 30, 2001 ------------------------------------------------------------ Mechanical Equipment Toy Corporate Consolidated ---------- ---------- --------- ------------ Sales ......................... $6,079,000 $3,826,000 $ - $9,905,000 ========== ========== ========== ========== Operating income (loss) ....... $ 988,000 $ 450,000 $(277,000) $1,161,000 Interest expense .............. - (46,000) (25,000) (71,000) Interest income ............... 11,000 - 173,000 184,000 Other income .................. 32,000 21,000 - 53,000 ---------- ---------- ---------- ---------- Income (loss) before income taxes (benefit) ........ $1,031,000 $ 425,000 $(129,000) $1,327,000 ========== ========== =========== ==========
9 ITEM 2. Management's Discussion and Analysis of Financial Condition and - ------- --------------------------------------------------------------- Results of Operations --------------------- The following management's discussion and analysis of results of operations and financial condition contains certain forward-looking statements which are covered under the safe harbor provisions of the Private Securities Legislation Reform Act of 1995 with respect to the Company's future financial performance. Although EXX INC believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be realized. Forward-looking statements involve known and unknown risks which may cause EXX INC's actual results and corporate developments to differ materially from those expected. Factors that could cause results and developments to differ materially from EXX INC's expectations include, without limitation, changes in manufacturing and shipment schedules, delays in completing plant construction and acquisitions, new product and technology developments, competition within each business segment, cyclicality of the markets for the products of a major segment, litigation, significant cost variances, the effects of acquisitions and divestitures, and other risks. A. Results of Operations --------------------- Sales for the second quarter of 2002 were $4,206,000 compared to $4,927,000 in 2001. For the six month period, 2002 sales were $7,995,000 compared to $9,905,000 in 2001, a 19% decrease. The Mechanical equipment group's second quarter sales totaled $2,129,000 compared to $3,239,000 in 2001, while the six month sales totaled $3,920,000 compared to $6,079,000 in 2001, a 35% decrease. The Toy segment's second quarter sales totaled $2,077,000 compared to $1,688,000 in 2001, while the six month 2002 sales totaled $4,075,000 compared to $3,826,000 in 2001. Gross profit for the second quarter 2002 totaled $1,418,000 compared to $1,856,000 in 2001. For the six month period, 2002 gross profit was $2,600,000 compared to $3,370,000 in 2001. The Mechanical Equipment Group's gross profits declined for the comparable three month and six month periods while the Toy Division increased its gross profits for both the three and six month comparable periods. Second quarter Mechanical Equipment Group sales continue to reflect noticeably reduced demand for its products with the Telecommunications area experiencing the brunt of these reductions. Management continues to explore the marketplace seeking all available opportunities and working with existing and potential customers to obtain additional business. While second quarter 2002 Toy sales have increased from the prior year and the six months totals also reflect an increase from the prior year, management continues to believe the numbers represent repositioning and build-up of customers' inventories at the present time. The economy and toy industry statistics provide no other explanation. Operating income was $313,000 for the second quarter 2002 compared to operating income of $636,000 in 2001. For the six months, operating income was $418,000 compared to operating income of $1,161,000 in 2001. Interest expense was $22,000 for the second quarter 2002 compared to $23,000 in the same period last year. For the six months, interest expense was $66,000 compared to $71,000 for 2001. The net income for the second quarter of 2002 was $217,000 or 2 cents per share (basic and diluted) compared to net income of $485,000 or 4 cents per share (basic and diluted) in the comparable period of 2001. On a six months basis, the net income was $298,000 or 3 cents per share (basic and diluted) compared to net income of $876,000 or 7 cents per share (basic and diluted) for the 2001 period. 10 B. Liquidity and Capital Resources ------------------------------- For the six months ended June 30, 2002, the Company used $497,000 in operating activities and was provided with $1,510,000 in the corresponding period of the preceding year. For the six months ended June 30, 2002, the Company utilized $25,000 in its investment activities, principally for the purchase of equipment. In the corresponding period of the preceding year, the Company was provided with $294,000 for investing activities, principally from the sale of short term investments. Cash used in financing activities during the six months ended June 30, 2002 totaling $136,000 relates, to note repayments and purchase of Treasury Stock as compared to $271,000 in the prior period ended June 30, 2001 which related to note repayments and purchase of Treasury stock. At June 30, 2002, the Company had working capital of approximately $11,786,000 and a current ratio of 4.5 to 1. In addition, as described in Notes to Financial Statements, the Registrant's Handi-Pac subsidiary has $793,000 of long-term debt outstanding with the SBA. The Registrant considers its working capital, as described above, to be more than adequate to handle its current operating capital needs. PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders - ------- --------------------------------------------------- (a) The Annual Meeting of Shareholders was held on May 28, 2002. (b)(c) (1) The proposal to re-elect the one Class A director was passed by a vote of 10,096,151 shares in favor and 115,558 shares abstaining. (2) The proposal to re-elect the three Class B directors was passed by a vote of 582,261 shares in favor and 11,417 shares abstaining. (3) There were no other proposals made at this meeting. 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. EXX INC By: /s/ David A. Segal ------------------------------------- David A. Segal Chairman of the Board Chief Executive Officer Chief Financial Officer Date: August 13, 2002 11 EX-99.1 3 dex991.txt CERTIFICATION Page 1 of 1 EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of EXX INC, (the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David A. Segal, Chairman of the Board, Chief Executive Officer and Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report. /s/ David A. Segal -------------------------- David A. Segal Chairman of the Board Chief Executive Officer Chief Financial Officer August 13, 2002 -----END PRIVACY-ENHANCED MESSAGE-----