-----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, K05daiPjg9BVTvBCyFiqZ5kLmgh7zwEKUQKFhQYs8hUk9euPm2Is9OBZERrlV+55 D8CXit6vSA7k8CpMIAiLSQ== 0000950130-99-002979.txt : 19990517 0000950130-99-002979.hdr.sgml : 19990517 ACCESSION NUMBER: 0000950130-99-002979 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 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: 99622170 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, 1999 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, 1999: 1,931,159 Class A Shares and 629,453 Class B Shares. - --------- ------- PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- A. Balance Sheets ASSETS March 31, 1999 December 31, 1998 ------ -------------- ----------------- (unaudited) (audited) CURRENT ASSETS: Cash and cash equivalents $ 3,031,000 $ 3,383,000 Short term investments 3,244,000 3,510,000 Accounts receivable, less allowances of $217,000 and $208,000 3,076,000 2,315,000 Inventories, at lower of cost or market: Raw materials 519,000 1,089,000 Work in process 175,000 219,000 Finished goods 2,730,000 2,244,000 ----------- ----------- 3,424,000 3,552,000 Other current assets 594,000 276,000 Refundable income taxes - - Deferred income taxes 846,000 740,000 ----------- ----------- TOTAL CURRENT ASSETS 14,215,000 13,776,000 Property, plant and equipment, at cost: Land 47,000 41,000 Buildings and improvements 3,032,000 2,961,000 Machinery and equipment 6,354,000 6,358,000 ----------- ----------- 9,433,000 9,360,000 Less accumulated depreciation and amortization 7,037,000 6,974,000 ----------- ----------- 2,396,000 2,386,000 Other assets 202,000 278,000 ----------- ----------- TOTALS $16,813,000 $16,440,000 =========== =========== See Notes to Financial Statements 2 A. Balance Sheets (continued) LIABILITIES March 31, 1999 December 31, 1998 - ----------- --------------- ------------------ (unaudited) (audited) CURRENT LIABILITIES: Notes Payable - Current Portion $ 49,000 $ 49,000 Accounts payable and other current liabilities $4,331,000 $4,333,000 Income Taxes Payable 374,000 285,000 ---------- ---------- TOTAL CURRENT LIABILITIES 4,754,000 4,667,000 ---------- ---------- LONG-TERM LIABILITIES: Notes Payable, less Current Portion 1,733,000 1,745,000 Pension Liability 424,000 424,000 Deferred Tax Liability 323,000 323,000 ---------- ---------- 2,480,000 2,492,000 ---------- ---------- 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 Accumulated other comprehensive loss (414,000) (206,000) Retained earnings 7,145,000 6,574,000 Less treasury stock at cost: 856,159 and 836,859 shares of Class A Common stock & 299,653 and 285,553 shares of Class B Common stock, respectively (1,182,000) (1,117,000) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 9,579,000 9,281,000 ----------- ----------- TOTALS $16,813,000 $16,440,000 =========== =========== See Notes to Financial Statements 3 B. Statements of Income For the Three-Month Period Ended -------------------------------- March 31, 1999 March 31, 1998 -------------- -------------- Net sales $5,470,000 $5,655,000 Cost of sales 3,593,000 3,963,000 ---------- ---------- Gross profits 1,877,000 1,692,000 Selling, general and administrative expenses 1,126,000 1,693,000 ---------- ---------- Operating income (loss) 751,000 (1,000) Interest expense 42,000 33,000 Other income 156,000 238,000 ---------- ---------- Income before provision for income taxes 865,000 204,000 Provision for income taxes 294,000 69,000 ---------- ---------- Net income $571,000 $135,000 ========== ========== Basic and diluted Income per common share : $ .22 $ .05 ========== ========== See Notes to Financial Statements 4 C. Statements of Cash Flow
For the Three-Month Period Ended -------------------------------- March 31, 1999 March 31,1998 -------------- ------------- Operating activities: Net income $ 571,000 135,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and Amortization 63,000 93,000 Deferred income taxes - Provision for bad debts 9,000 22,000 Accrued interest income (48,000) Increase (decrease) in cash attributable to changes in assets and liabilities: Accounts receivable (770,000) (400,000) Inventories 128,000 (180,000) Other current assets (318,000) (86,000) Refundable income taxes - - Deferred income tax - - Other assets 76,000 205,000 Accounts payable and other current liabilities 87,000 187,000 Deferred income taxes - - ---------- ---------- Net cash provided by (used in) operating activities (202,000) (24,000) ---------- ---------- Cash flows from investing activities: Purchase of property and equipment (73,000) (19,000) ---------- ---------- Net cash provided by (used in) investing activities (73,000) (19,000) ---------- ---------- Cash flows (used in) financing activities: Payments on notes payable (12,000) (54,000) Purchases of Treasury Stock (65,000) - ---------- ---------- Net cash (used in) financing activities (77,000) (54,000) ---------- ---------- Net increase (decrease) in cash and cash equivalents (352,000) (97,000) Cash and cash equivalents beginning of period 3,383,000 3,654,000 ---------- ---------- Cash and cash equivalents, end of period $3,031,000 3,557,000 ========== ==========
See Notes to Financial Statements 5 a. Statements of Cash Flow (continued)
For the Three-Month Period Ended -------------------------------- March 31, 1999 March 31, 1998 -------------- -------------- Supplemental disclosure of cash flow information: Cash Paid during the year for: Interest $42,000 $26,000 Income taxes 203,000 ---
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 March 31, 1999 and 1998 - ------- 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, 1998. Note 2: Notes Payable - ---------------------- Notes Payable represents obligations of the Handi-Pac subsidiary as follows: March 31, 1999 -------------- Notes Payable - SBA Loans $ 926,000 Capital Lease payable 856,000 ---------- 1,782,000 Current Portion of Long-Term Debt 49,000 ---------- $1,733,000 ========== 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, 1999, there was no other bank debt for the other subsidiaries except as noted above. Note 3: Computation of income per common share for the comparative three month - ------- periods ended March 31, 1999 and March 31, 1998, was based on 2,574,705 common shares and 2,695,256 common shares outstanding, being the average number of shares outstanding during the respective periods. Note 4: 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 canceling 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. See Notes to Financial Statements 7 Note 5: The following information is reported as required for industry segment - ------- disclosure. Three Months Ended March 31, 1999 --------------------------------- Mechanical Toy Equipment Consolidated --- --------- ------------ Sales $2,342,000 $3,128,000 $5,470,000 ========== ========== ============ Operating income $ 248,000 $ 638,000 $ 886,000 ========== ========== General corporate expenses 136,000 Interest expense 42,000 Interest income 107,000 Other income 50,000 ------------ Income before income taxes $ 865,000 ============ See Notes to Financial Statements 8 ITEM 2. Management's Discussion and Analysis of Financial Condition and - ------- --------------------------------------------------------------- Results of Operations --------------------- A. Results of Operations --------------------- Sales for the first quarter of 1999 were $5,470,000 compared to $5,655,000 in 1998, a 3% decrease. The Mechanical Equipment Group had total sales of $3,128,000, which was 28% more than the prior year's $2,440,000. The Toy Segment reflected a sales decrease of 27% to $2,342,000 from $3,215,000 in 1998. Gross profits for the first quarter 1999 totaled $1,877,000 compared to $1,692,000 for the comparable period in 1998. While gross profits in the Toy division declined between the periods, the Mechanical Equipment Group accounted for the net increase. Gross profits as a percentage of sales increased to 34% compared to last year's 30% because of a higher gross profit percentage earned by the Mechanical Equipment Group. First quarter Toy Segment sales continue to reflect an industry decline. This information has been reported during the past several quarters. Management continues to make extra efforts to review the Segment's results in order to improve operations. In addition, management has been diligently looking at product mix and new designs to attempt to improve same. First quarter sales of the Mechanical Equipment Group reflects a surge in sales in the TX Group due mainly to customers' needs in resolving Y2K problems relating to their installed equipment base. While it is too early to tell, it is hoped that the remaining quarters will reflect positive results from these telecommunications sales as well as an improvement in the Motor operations market share. Operating income was $751,000 in the first quarter of 1999 compared to an operating loss of $1,000 during the first quarter of 1998. The increase in operating income was due primarily to improvements in operations of the Mechanical Equipment Group. Interest expense was $42,000, compared to $33,000 the same period last year. The net income for the first quarter of 1999 was $571,000 or 22 cents per share (basic and diluted) compared to a net income of $135,000 or 5 cents per share (basic and diluted) in the comparable period of 1998. See Notes to Financial Statements 9 B. Liquidity and Capital Resources ------------------------------- For the three months ended March 31, 1999, the Company used $202,000 from operating activities as compared to a use of $24,000 in the corresponding period of the preceding year. The principal reason for the increased cash flow in 1999 is the increased net income in the 1999 period. For the three months ended March 31, 1999, the Company used $73,000 for investing activities, principally for the purchase of equipment. In the corresponding period of the preceding year, the Company used $19,000 for investing activities, principally for the purchase of equipment. Cash flows used in financing activities during the three months ended March 31, 1999 of $77,000 relate mostly to the purchase of treasury stock. At March 31, 1999 the Company had working capital of approximately $9,461,000 and a current ratio of 3.0 to 1. In addition, as described in Notes to Financial Statements, the Registrant's Handi-Pac subsidiary has $926,000 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 14, 1999 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EXX INC AND BE QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 3,031,000 3,244,000 3,076,000 0 3,424,000 14,215,000 9,433,000 7,037,000 16,813,000 4,754,000 0 0 0 37,000 9,542,000 16,813,000 5,470,000 0 3,594,000 1,126,000 0 0 42,000 865,000 294,000 0 0 0 0 571,000 .22 .22
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