-----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, PYTiYL5bmaTDIKl61KZQRomK8hgdjNgQb54VUl0It9Uvm4s616VqXHw9bXM8b+gQ 6FbRNiP0+JJWOjbBDTfhSQ== 0000950130-96-001705.txt : 19960515 0000950130-96-001705.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950130-96-001705 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: AMEX 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: 96564342 BUSINESS ADDRESS: STREET 1: 3900 PARADISE ROAD SUITE 109 CITY: LAS VEGAS STATE: NV ZIP: 89109 BUSINESS PHONE: 7027378811 MAIL ADDRESS: STREET 1: 3900 PARADISE RD STREET 2: SUITE 109 CITY: LAS VEGAS STATE: NV ZIP: 89109 FORMER COMPANY: FORMER CONFORMED NAME: SFM CORP DATE OF NAME CHANGE: 19920703 10-Q 1 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 March 31, 1996 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 of 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 March 31, 1996: 2,031,042 Class A Shares and 677,014 Class B Shares. - --------- -------- PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- A. Balance Sheets
ASSETS March 31, 1996 December 31, 1995 - ---------------------------------- --------------- ------------------ (unaudited) (audited) CURRENT ASSETS: - --------------- Cash and cash equivalents $3,146,000 $ 4,728,000 Short term investments 1,449,000 989,000 Accounts receivable, less allowances of 1,130,000 and $994,000 1,755,000 2,232,000 Inventories, at lower of cost or market: Raw materials 649,000 622,000 Work in process 174,000 162,000 Finished goods 2,833,000 3,117,000 ----------- ----------- 3,656,000 3,901,000 Other current assets 1,255,000 917,000 Deferred income taxes 824,000 824,000 ----------- ----------- TOTAL CURRENT ASSETS 12,085,000 13,591,000 Property, plant and equipment, at cost: Land 35,000 35,000 Buildings and improvements 1,213,000 1,151,000 Machinery and equipment 5,362,000 5,282,000 ----------- ----------- 6,610,000 6,468,000 Less accumulated depreciation and amortization (5,541,000) (5,470,000) ----------- ----------- 1,069,000 998,000 Other assets 876,000 829,000 ----------- ----------- TOTALS $14,030,000 $15,418,000 =========== ===========
See Notes to Financial Statements 2 A. Balance Sheets (continued)
LIABILITIES March 31, 1996 December 31, 1995 - --------------------------------- --------------- ------------------ (unaudited) (audited) CURRENT LIABILITIES: -------------------- Accounts payable and other current liabilities $ 3,569,000 $ 3,329,000 Note payable officer --- 1,043,000 ----------- ------------ TOTAL CURRENT LIABILITIES 3,569,000 4,372,000 ----------- ------------ Deferred income taxes 253,000 253,000 ----------- ------------ STOCKHOLDERS' EQUITY - -------------------- Preferred stock, $.01 par value; Authorized 5,000,000 shares; Common stock, Class A $.01 par value, Authorized 25,000,000 shares; 2,787,318 shares issued 28,000 28,000 Common stock, Class B $.01 par value, Authorized 1,000,000 shares; 929,106 shares issued 9,000 9,000 Capital in excess of par value 3,993,000 3,993,000 Retained earnings 7,075,000 7,660,000 Less treasury stock at cost: 756,276 shares of Class A Common stock & 252,092 shares of Class B Common stock (897,000) (897,000) ----------- ----------- TOTAL STOCKHOLDERS'S EQUITY 10,208,000 10,793,000 ----------- ----------- TOTALS $14,030,000 $15,418,000 =========== ===========
See Notes to Financial Statements 3 B. Statements of Income For the Three-Month Period Ended --------------------------------
March 31, 1996 March 31, 1995 -------------- -------------- Net sales $4,735,000 $7,507,000 Cost of sales 3,688,000 4,326,000 ---------- ---------- Gross profit 1,047,000 3,181,000 Selling, general and administrative expenses 1,996,000 2,475,000 ---------- ---------- Operating profit (loss) (949,000) 706,000 Interest expense 25,000 --- Other income 87,000 119,000 ---------- ---------- Income (loss) before provision for income taxes (887,000) 825,000 Provision (credit) for income taxes (302,000) 310,000 ---------- ---------- Net income (loss) $ (585,000) $ 515,000 =========== =========== Income (loss) per common share: $ (.22) $ .19 ========= =========
See Notes to Financial Statements 4 C. Statements of Cash Flow
For the Three-Month Period Ended --------------------------------- March 31, 1996 March 31, 1995 --------------- ---------------- Operating activities: Net income (loss) $ (585,000) $ 515,000 Adjustments to reconcile net income (loss) to net cash provided by (used in)operating activities: Depreciation 71,000 49,000 Amortization of intangibles 58,000 69,000 Deferred income taxes --- --- Provision for bad debts 136,000 --- Increase (decrease) in cash attributable to changes in assets and liabilities: Accounts receivable 341,000 680,000 Inventories 245,000 (971,000) Other current assets (338,000) (1,577,000) Other assets ( 79,000) (286,000) Accounts payable and other current liabilities (803,000) 113,000 Income taxes payable --- (2,673,000) ---------- ----------- Net cash provided by (used in) operating activities (954,000) (4,081,000) ---------- ----------- Cash flows from investing activities: Purchase of property and equipment (142,000) --- Proceeds from maturities of short-term investments, net --- 627,000 Purchase of short-term investments (460,000) --- Proceeds from notes receivable (26,000) 74,000 ---------- ----------- Net cash provided by (used in) investing activities (628,000) 701,000 ---------- ----------- Net cash used in financing activities, --- --- ---------- ----------- Net increase (decrease) in cash and cash equivalents (1,582,000) (3,380,000) Cash and cash equivalents, beginning of period 4,728,000 5,640,000 ---------- ----------- Cash and cash equivalents, end of period $3,146,000 $ 2,260,000 ---------- -----------
See Notes to Financial Statements 5 C. Statements of Cash Flow (continued) For the Three-Month Period Ended -------------------------------- March 31, 1996 March 31. 1995 -------------- -------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Paid during the year for: Interest 25,000 --- Income taxes --- 3,199,747 SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: NONE See Notes to Financial Statements 6 D. Notes to Financial Statements Note 1: The unaudited financial statements as of March 31, 1996 and for the - ------ comparative three months ending 1996 and 1995 reflect all adjustments which are in the opinion of management necessary 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 disclosure normally included in financial statements in accordance with generally accepted accounting principles 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, 1995. Note 2: In October 1994, the stockholders of SFM Corporation (SFM) approved a - ------ plan of reorganization whereby SFM was merged on a tax-free basis into a subsidiary of EXX INC. Simultaneous with this merger, each share of common stock of SFM was converted into three shares of EXX INC Class A common stock and one share of EXX INC Class B common stock. The EXX INC stock is substantially identical to the former SFM stock in rights and privileges, except that the stockholders of the outstanding shares of Class B common stock have the right to elect two-thirds or the next rounded number of Directors in excess of two-thirds if the number of Directors is not divisible by three and the stockholders of the outstanding shares of the Class A common stock have the right to elect the remaining Directors of the Company. This merger has been accounted for in a manner similar to a pooling of interests. Note 3: Note Payable - ------ ------------ As of March 31, 1996 there was no bank debt. Under the terms of a revolving credit agreement, as amended and extended to August 31, 1996, a bank provides the Company with a line of credit and a letter of credit facility for loans and/or letters of credit aggregating up to $5,000,000 at a rate of 3/4 of 1% over prime. The line of credit is collateralized by substantially all of the Company's trade accounts receivable, inventories and property and equipment. The loan agreement imposes various restrictions on the Company including the maintenance of minimum net worth of $4,000,000 at the end of any quarter, and limitations on: capital expenditures, loans and advances, future borrowings, payment of dividends, and a limit on the purchase of common stock for the treasury. In addition to any other limitations imposed by the loan agreement covenants, no cash dividend may be paid unless the Company has had net income aggregating at least $400,000 during the four calendar quarters immediately preceding the date of payment, and the aggregate dividends paid over any four calendar quarters may not exceed 40% of the net income for that period. At March 31, 1996, there were no financial or ratio restrictions on the Company's capital. The company expects the current revolving credit agreement to be renewed on substantially the same terms and conditions. Note 4: Computation of income per common share for the comparative three months - ------ period ended March 31, 1996 and March 31, 1995, was based on 2,708,056 common shares and 2,708,056 common shares outstanding, being the average number of shares outstanding during the respective periods adjusted for the stock split effective in October 1994. See Note 2. 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and - ------ --------------------------------------------------------------- Results of Operations --------------------- A. Results of Operations --------------------- Sales for the first quarter of 1996 were $4,735,000 compared to $7,507,000 in 1995, a 37% decrease. The Mechanical Equipment Group had total sales of $2,609,000, which was 1% less than the prior year's $2,633,000. The Toy Segment reflected a sales decrease of 56% to $2,126,000 from $4,874,000 in 1995. First quarter 1996 Toy Segment sales decreased as a result of the small contribution of the Mighty Morphin Power Rangers products this quarter, which had been reported previously. Management continues to work on new product lines and new licenses, in order to increase sales and hopefully increase the bottom line. Management believes the trend of reduced sales and losses in the Toy Segment will continue into the second quarter and possibly beyond. The first quarter results of the Mechanical Equipment Group are comparable to the prior year's quarter. Small increases in the Howell Motors Division were counterbalanced by comparable reductions in the telecommunication business. Management expects the results to be consistent for the year. Operating losses were $949,000 compared to profits of $706,000 during the first quarter of 1995. The operating losses reflect the Toy Segment's decline during this period. Interest expense was $25,000 compared to $ - 0 - the same period last year. There was no bank debt in the first quarter of the current year. Net loss for the first quarter was $585,000 or 22 cents per share, compared to net income of $515,000 or 19 cents per share in the comparable period of 1995. On October 21, 1994, after stockholder and Board of Directors approval, SFM was merged and became a wholly owned subsidiary of EXX INC a holding company organized to acquire all the outstanding stock of SFM and each of its Subsidiaries. The quarterly per share results are adjusted for the stock split which is explained and referenced in Note 2 to the financial statements. In April, 1994, TX Systems Inc., a newly formed subsidiary of SFM, acquired the operating assets and businesses of TX Technologies, Inc. and TX Software, Inc. These companies were engaged in the Cable Pressurization and Monitoring Systems business. In February, 1994 Hi-Flier Inc., a newly formed subsidiary of SFM, purchased the assets of Hi-Flier Manufacturing Co., a leader in the kite business for more than seventy years. 8 B. Liquidity and Capital Resources ------------------------------- At March 31, 1996 the Registrant had working capital of approximately $8,516,000 and a current ratio of 3.4 to 1. In addition, as described in Notes to Financial Statements, the Registrant has a credit agreement with a Bank pursuant to which the bank will provide a line of credit and letters of credit aggregating $5,000,000 at an interest rate of 3/4 of 1% above prime. At March 31, 1996, there was no outstanding debit under this facility. The Registrant considers its working capital, as described above, to be more than adequate to handle its current operating capital needs. The line of credit expires on August 31, 1996. PART II. OTHER INFORMATION Not applicable. 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 and Chief Executive Officer Date: May 14, 1996 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 3,146,000 1,449,000 1,755,000 0 3,656,000 12,085,000 6,610,000 5,541,000 14,030,000 3,569,000 0 0 0 37,000 10,171,000 14,030,000 4,735,000 0 3,688,000 1,996,000 0 0 25,000 (887,000) (302,000) 0 0 0 0 (585,000) (.22) 0
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