-----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, T/5WySATzTE7sWb3qKKL1vzSVKOp8WG4roXRwMh+Tb9tyoZ1qbcqyUYfBfMdAaDz 2PMnV779Z97Q1L7z0PP+Zg== 0000950130-96-004387.txt : 19961115 0000950130-96-004387.hdr.sgml : 19961115 ACCESSION NUMBER: 0000950130-96-004387 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 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: 96662392 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 (FOR PERIOD ENDING 9/30/96) 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 September 30, 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 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 September 30, 1996: 2,031,042 Class A Shares and 675,414 Class B Shares. - --------- ------- PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- A. BALANCE SHEETS
ASSETS September 30, 1996 December 31, 1995 ------ ------------------ ----------------- (unaudited) (audited) CURRENT ASSETS: Cash and cash equivalents $ 1,516,000 $ 4,728,000 Short term investments 2,976,000 989,000 Accounts receivable, less allowances of $1,016,000 and $994,000 1,823,000 2,232,000 Inventories, at lower of cost or market: Raw materials 580,000 622,000 Work in process 138,000 162,000 Finished goods 2,675,000 3,117,000 ----------- ----------- 3,393,000 3,901,000 Other current assets 1,596,000 917,000 Deferred income taxes 824,000 824,000 ----------- ----------- TOTAL CURRENT ASSETS 12,128,000 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 5,436,000 5,282,000 ----------- ----------- 6,684,000 6,468,000 Less accumulated depreciation and amortization (5,728,000) (5,470,000) ----------- ----------- 956,000 998,000 Other assets 690,000 829,000 ----------- ----------- TOTALS $13,774,000 $15,418,000 =========== ===========
See Notes to Financial Statements 2 A. BALANCE SHEETS (continued)
LIABILITIES September 30, 1996 December 31, 1995 ----------- ------------------ ----------------- (unaudited) (audited) CURRENT LIABILITIES: Accounts payable and other current liabilities $3,847,000 $3,329,000 Note payable officer --- 1,043,000 ---------- ---------- TOTAL CURRENT LIABILITIES 3,847,000 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 6,545,000 7,660,000 Less treasury stock at cost: 756,276 shares & 756,276 shares of Class A Common stock & 253,692 and 252,092 shares of Class B Common stock (901,000) (897,000) --------- ---------- TOTAL STOCKHOLDERS' EQUITY 9,674,000 10,793,000 --------- ----------- TOTALS $13,774,000 $15,418,000 =========== ===========
See Notes to Financial Statements 3 B. STATEMENTS OF INCOME
For the Three-Month Period Ended For the Nine-Month Period Ended -------------------------------- ------------------------------- Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1996 Sept. 30, 1995 ------------------------------ ------------------------------ Net sales $5,088,000 $7,761,000 $14,667,000 $24,170,000 Cost of sales 3,394,000 4,933,000 10,910,000 14,951,000 ---------- ---------- ----------- ----------- Gross profit 1,694,000 2,828,000 3,757,000 9,219,000 Selling, general and administrative expenses 2,040,000 2,023,000 5,644,000 6,560,000 ---------- ---------- ----------- ----------- Operating profit (loss) (346,000) 805,000 (1,887,000) 2,659,000 Interest expense --- --- 25,000 --- Other income 53,000 101,000 222,000 302,000 ---------- ---------- ----------- ----------- Income (loss) before provision for income taxes (293,000) 906,000 (1,690,000) 2,961,000 Provision (credit) for income taxes (100,000) 335,000 (575,000) 1,017,000 ---------- ---------- ----------- ----------- Net income (loss) $ (193,000) $ 571,000 $(1,115,000) $ 1,944,000 ========== ========== =========== =========== Income (loss) per common share: $ (.07) $ .21 $ (.41) $ .72 ========== ========== =========== ===========
See Notes to Financial Statements 4
C. STATEMENTS OF CASH FLOW For the Nine-Month Period Ended ------------------------------- Sept. 30, 1996 Sept. 30, 1995 -------------- ----------- Operating activities: Net income (loss) $(1,115,000) $ 1,944,000 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation 258,000 223,000 Amortization of intangibles 197,000 173,000 Deferred income taxes --- 307,000 Deferred income --- 31,000 Provision for bad debts 22,000 60,000 Increase (decrease) in cash attributable to changes in assets and liabilities: Accounts receivable 387,000 75,000 Inventories 508,000 (338,000) Other current assets (679,000) (1,060,000) Other assets (217,000) (420,000) Accounts payable and other current liabilities (525,000) (1,607,000) Income taxes payable --- (2,844,000) Deferred income taxes --- --- ----------- ----------- Net cash provided by (used in) operating activities (1,164,000) (3,456,000) ----------- ----------- Cash flows from investing activities: Purchase of property and equipment (216,000) (431,000) Proceeds from maturities of short-term investments, net --- 717,000 Purchase of short-term investments (1,987,000) --- Proceeds from notes receivable 159,000 154,000 ----------- ----------- Net cash provided by (used in) investing activities (2,044,000) 440,000 ----------- ----------- Cash flows (used in) financing activities: Purchase of treasury stock (4,000) --- ----------- ----------- Net cash (used in) financing activities (4,000) --- ----------- ----------- Net increase (decrease) in cash and cash equivalents (3,212,000) (3,016,000) Cash and cash equivalents beginning of period 4,728,000 5,640,000 ----------- ----------- Cash and cash equivalents, end of period $ 1,516,000 $ 2,624,000 =========== ===========
See Notes to Financial Statements 5 C. STATEMENTS OF CASH FLOW (continued) For the Nine-Month Period Ended ------------------------------- Sept. 30, 1996 Sept. 30, 1995 ------------------------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Paid during the year for: Interest $25,000 $ --- Income taxes --- 3,807,000 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 September 30, 1996 and for the - ------- comparative three and nine month periods ended 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 September 30, 1996 there was no bank debt. Under the terms of a revolving credit agreement, as amended and extended to December 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 $2,500,000 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 September 30, 1996, due to losses in the last two quarters there is a restriction on the payment of dividends. The Company has reduced its revolving line of credit since it has not had any borrowings for several years and does not anticipate any borrowings in the immediate future. Note 4: Computation of income per common share for the comparative three and - ------- nine month periods ended September 30, 1996 and September 30, 1995, was based on 2,707,789 common shares and 2,707,966 common shares (1996)and 2,708,056 common shares and 2,708,056 common shares (1995) outstanding, being the average number of shares outstanding during the respective periods adjusted for the stock split effective in October 1994. See Note 2. See Notes to Financial Statements 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - ------- ----------------------------------------------------------------------- of Operations ------------- A. Results of Operations --------------------- Sales for the third quarter of 1996 were $5,088,000 compared to $7,761,000 in 1995, a 34% decrease. The Mechanical Equipment Group had total sales of $2,543,000, which was 29% greater than the prior year's $1,966,000. The Toy Segment reflected a sales decrease of 56% to $2,545,000 from $5,795,000 in 1995. Third quarter 1996 Toy Segment sales are substantially below the past year's period due to a continuing negative sales climate throughout the industry as well as the lack of any license(s) stimulating demand. Management continues to work on new product lines and new licenses, in order to increase sales and improve the bottom line. Management believes the trend of reduced sales and losses in the Toy Segment will continue through the fourth quarter and into the beginning of next year. The third quarter sales of the Mechanical Equipment Group reflect an improvement from the prior year's quarter. Sales and profits in the Howell Motors Division improved from the prior year's quarter, while there was a reduction in sales and the results for the telecommunication business. Management looks forward to positive results in the Mechanical Equipment Group for the full year. Operating losses were $346,000 compared to profits of $805,000 during the third quarter of 1995. The operating losses reflect the Toy Segment's decline during this period and the effect of a contigency charge regarding a past sale in the Mechanical Equipment Group. Interest expense was $ - 0 -, compared to $ - 0 - the same period last year. There was no bank debt in the third quarter of the current year. Net loss for the third quarter 1996 was $193,000 or 7 cents per share, compared to net income of $571,000 or 21 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 business 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 September 30, 1996 the Registrant had working capital of approximately $8,281,000 and a current ratio of 3.15 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 $2,500,000 at an interest rate of 3/4 of 1% above prime. At September 30, 1996, there was no outstanding debt under this facility. The Registrant considers it working capital, as described above, to be more than adequate to handle its current operating capital needs. The line of credit expires on December 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: November 13, 1996 9 EX-27 2 ARTICLE 5 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. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1,516,000 2,976,000 1,823,000 0 3,393,000 12,128,000 6,684,000 5,728,000 13,774,000 3,847,000 0 0 0 37,000 9,637,000 13,774,000 14,667,000 0 10,910,000 5,644,000 0 0 25,000 (1,690,000) (575,000) 0 0 0 0 (1,115,000) (.41) 0
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