-----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, Pi3fYAtQs66LiCr8SO7nki+PMCtEzdVlO1ALrOaDNuGKya3jNJHSTQLp2+2Auux1 rpGV/2cN9N+dLgusV/XC5w== 0000950130-98-002689.txt : 19980518 0000950130-98-002689.hdr.sgml : 19980518 ACCESSION NUMBER: 0000950130-98-002689 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 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: SEC FILE NUMBER: 001-05654 FILM NUMBER: 98625150 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, 1998 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 March 31, 1998: 2,027,942 --------- Class A Shares and 667,314 Class B Shares. ------- PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- A. Balance Sheets
ASSETS March 31, 1998 December 31, 1997 ------ --------------- ----------------- (unaudited) (audited) CURRENT ASSETS: Cash and cash equivalents $ 3,557,000 $ 3,654,000 Short term investments 1,800,000 1,800,000 Accounts receivable, less allowances of $503,000 and $481,000 2,998,000 2,620,000 Inventories, at lower of cost or market: Raw materials 723,000 883,000 Work in process 269,000 179,000 Finished goods 2,460,000 2,210,000 --------------- --------------- 3,452,000 3,272,000 Other current assets 827,000 741,000 Refundable income taxes 330,000 330,000 Deferred income taxes 544,000 544,000 --------------- --------------- TOTAL CURRENT ASSETS 13,508,000 12,961,000 Property, plant and equipment, at cost: Land 47,000 47,000 Buildings and improvements 3,009,000 3,009,000 Machinery and equipment 6,735,000 6,716,000 --------------- --------------- 9,791,000 9,772,000 Less accumulated depreciation and amortization 7,279,000 7,186,000 --------------- --------------- 2,512,000 2,586,000 Other assets 99,000 304,000 --------------- --------------- TOTALS $ 16,119,000 $ 15,851,000 =============== ===============
See Notes to Financial Statements 2 A. Balance Sheets (continued)
LIABILITIES March 31, 1998 December 31, 1997 ----------- -------------- ----------------- (unaudited) (audited) CURRENT LIABILITIES: Accounts payable and other current liabilities $ 4,916,000 $ 4,729,000 Current portion - Long-Term debt 93,000 93,000 --------------- --------------- TOTAL CURRENT LIABILITIES 5,009,000 4,822,000 --------------- --------------- LONG-TERM LIABILITIES: Deferred income taxes 318,000 318,000 Long term debt, less current portion 1,739,000 1,793,000 --------------- --------------- 2,057,000 2,111,000 --------------- --------------- 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 5,948,000 5,813,000 Less treasury stock at cost: 759,376 shares of Class A Common stock & 261,792 shares of Class B Common stock (925,000) (925,000) --------------- --------------- TOTAL STOCKHOLDERS' EQUITY 9,053,000 8,918,000 --------------- --------------- TOTALS $ 16,119,000 $ 15,851,000 =============== ===============
See Notes to Financial Statements 3 B. Statements of Income For the Three-Month Period Ended -------------------------------- March 31, 1998 March 31, 1997 -------------- -------------- Net sales $ 5,655,000 $ 6,131,000 Cost of sales 3,963,000 4,607,000 --------------- --------------- Gross profits 1,692,000 1,524,000 Selling, general and administrative expenses 1,693,000 1,859,000 --------------- --------------- Operating profit (loss) (1,000) (335,000) Interest expense 33,000 36,000 Other income 238,000 80,000 --------------- --------------- Income (loss) before provision for income taxes 204,000 (291,000) Provision (credit) for income taxes 69,000 (101,000) --------------- --------------- Net income (loss) $ 135,000 $ (190,000) =============== =============== Income (loss) per common share (basic and diluted): $ .05 $ (.07) =============== ===============
See Notes to Financial Statements 4 C. Statements of Cash Flow
For the Three-Month Period Ended -------------------------------- March 31, 1998 March 31, 1997 -------------- -------------- Operating activities: Net income (loss) $ 135,000 $ (190,000) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation 93,000 145,000 Amortization of intangibles - 61,000 Deferred income taxes - - Provision for bad debts 22,000 2,000 Increase (decrease) in cash attributable to changes in assets and liabilities: Accounts receivable (400,000) (94,000) Inventories (180,000) 1,041,000 Other current assets (86,000) (321,000) Refundable income taxes - (101,000) Deferred income tax - - Other assets 205,000 76,000 Accounts payable and other current liabilities 187,000 (727,000) Deferred income taxes - - ---------------- --------------- Net cash provided by (used in) operating activities (24,000) (108,000) ---------------- --------------- Cash flows from investing activities: Purchase of property and equipment (19,000) (52,000) Purchase of notes (net) - (324,000) ---------------- --------------- Net cash provided by (used in) investing activities (19,000) (376,000) ---------------- --------------- Cash flows (used in) financing activities: Long term debt (54,000) (9,000) ---------------- --------------- Net cash (used in) financing activities (54,000) (9,000) ---------------- --------------- Net increase (decrease) in cash and cash equivalents (97,000) (493,000) Cash and cash equivalents beginning of period 3,654,000 3,092,000 ---------------- --------------- Cash and cash equivalents, end of period $ 3,557,000 $ 2,599,000 ================ ===============
See Notes to Financial Statements 5 C. Statements of Cash Flow (continued)
For the Three-Month Period Ended -------------------------------- March 31, 1998 March 31, 1997 -------------- -------------- Supplemental disclosure of cash flow information: Cash Paid during the year for: Interest $ 26,000 $ 28,000 Income taxes --- ---
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, 1998 and 1997 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 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, 1997. Note 2: On February 3, 1997, Steven Toy Inc., a newly formed subsidiary, - ------- acquired all of the outstanding capital stock of Handi-Pac, Inc., d/b/a Steven Manufacturing Co. (Handi-Pac). Handi-Pac manufactures and sells several types of toys, including pre-school, ride-on, classic and other educational toys. The purchase price for all of the outstanding stock of Handi-Pac was $50,000 in cash and the issuance of five year options to purchase 50,000 shares of the Company's Class A common stock, at an exercise price of $5.00 per share. In addition, Hi-Flier Inc., a subsidiary of the Company, paid $350,000 to a trust established for the benefit of the seller to acquire all of its right, title and interest in certain secured promissory notes made by Handi-Pac with a principal balance of $350,000. The acquisition is being accounted for using the purchase method of accounting. The financial statements reflect the operations of Handi-Pac from the date of acquisition. Refer to Form 8-K filed February 18, 1997 and Form 8-K/A filed April 18, 1997 for a further explanation of the acquisition. Note 3: Long-Term Debt - ------- -------------- Long-Term Debt represents obligations of the Handi-Pac subsidiary as follows: March 31, 1998 -------------- Notes Payable - SBA Loans $ 964,000 Other Long-Term payables 4,000 Capital Lease payable 864,000 -------------- 1,832,000 Current Portion of Long-Term Debt 93,000 -------------- $ 1,739,000 ============== During the first quarter 1998, the Company opened a limited credit facility with a bank for two subsidiaries which includes a $300,000 sub-limit for direct borrowings and a $150,000 sub-limit for documentary letters of credit all secured by certain of the Company's money market funds. As of March 31, 1998, there was no other bank debt for the other subsidiaries except as noted above. 7 Note 4: Computation of income per common share for the comparative three month - ------- periods ended March 31, 1998 and March 31, 1997, was based on 2,695,256 common shares and 2,695,256 common shares outstanding, being the average number of shares outstanding during the respective periods. Note 5: Effective March 30, 1998, options to purchase 300,000 shares of Class A - ------- and 100,000 shares of Class B stock were issued to the Chief Executive Officer in accordance with an agreement between the Company and the Chief Executive Officer cancelling the officer's right to have the Company purchase all or any part of the shares of the Company owned by the Chief Executive Officer and/or members of his family. Please refer to footnote 12 in the 10K report for the year ended December 31, 1997. Note 6: The following information is reported as required for industry segment - ------- disclosure.
Three Months Ended March 31, 1998 --------------------------------- Mechanical Toy Equipment Consolidated --- --------- ------------ Sales $ 3,215,000 $ 2,440,000 $ 5,655,000 ============== ============== =============== Operating income (loss) $ 113,000 $ (7,000) $ 106,000 ============== ============== General corporate expenses 94,000 Interest expense 33,000 Interest income 99,000 Other income 126,000 -------------- Income before income taxes $ 204,000 ===============
8 ITEM 2. Management's Discussion and Analysis of Financial Condition and - ------- --------------------------------------------------------------- Results of Operations --------------------- A. Results of Operations --------------------- Results for 1997 include the Handi-Pac operations acquired February 3, 1997. Sales for the first quarter of 1998 were $5,655,000 compared to $6,131,000 in 1997, an 8% decrease. The Mechanical Equipment Group had total sales of $2,440,000, which was 2% more than the prior year's $2,399,000. The Toy Segment reflected a sales decrease of 14% to $3,215,000 from $3,732,000 in 1997. Gross profits for the first quarter 1998 totaled $1,692,000 compared to $1,524,000 for the comparable period in 1997. The Toy division accounted for $116,000 of the increase while the Mechanical Equipment Group accounted for the remainder. Gross profits as a percentage of sales increased to 30% compared to last year's 25% because of a higher gross profit percentage earned by the Toy Segment. First quarter Toy Segment sales continue to reflect an industry decline. This information has been reported during the past several quarters. Management has been making extra efforts to review the Segment's results in order to streamline operations. In addition, management has been diligently looking at product mix and designs to attempt to improve same. First quarter sales of the Mechanical Equipment Group shows a small increase from the prior year. While it is too early to tell, it is hoped that the remaining quarters will reflect some positive results from the enhanced telecommunications product line as well as an improvement in the Motor operations market share. Operating losses were $1,000 compared to losses of $335,000 during the first quarter of 1997. The reduction in the loss was due primarily to cost reductions in the toy segment. Interest expense was $33,000, compared to $36,000 the same period last year. There was a small bank debt in the first quarter at one of the subsidiaries. The net income for the first quarter of 1998 was $135,000 or 5 cents per share (basic and diluted) compared to a net loss of $190,000 or 7 cents per share (basic and diluted) in the comparable period of 1997. Please refer to Note 2 for a further explanation of the Handi- Pac acquisition which occurred February 3, 1997. 9 B. Liquidity and Capital Resources ------------------------------- For the three months ended March 31, 1998, the Company used $24,000 from operating activities as compared to a use of $108,000 in the corresponding period of the preceding year. The principal reason for the increased cash flow in 1998 is the increased net income in the 1998 period. For the three months ended March 31, 1998, the Company used $19,000 for investing activities, principally for the purchase of equipment. In the corresponding period of the preceding year, the Company used $350,000 for investing activities, principally for the purchase of notes. Cash flows used in financing activities during the three months ended March 31, 1998 of $54,000 relate to the payment of long-term debt . At March 31, 1998 the Company had working capital of approximately $8,499,000 and a current ratio of 2.7 to 1. In addition, as described in Notes to Financial Statements, the Registrant's Handi-Pac subsidiary has $964,000 of long-term debt outstanding with the SBA. During the first quarter 1998, the Company opened a limited credit facility with a bank for two subsidiaries which includes a $300,000 sub-limit for direct borrowings and a $150,000 sub-limit for documentary letters of credit all secured by certain of the Company's money market funds. 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 Not applicable. 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: May 15, 1998 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EXX INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 3,557,000 1,800,000 2,998,000 0 3,452,000 13,508,000 9,791,000 7,279,000 16,119,000 5,009,000 0 0 0 37,000 9,016,000 16,119,000 5,655,000 0 3,963,000 1,693,000 0 0 33,000 204,000 69,000 0 0 0 0 135,000 .05 .05
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