-----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, D8VSRSUMnEIBazRYoU5NJmd6YCEwJmq46Z6ZI+7Slr7Q1/qy8foyQpUELVggpM// rG+aqsWFCIFTga1nc/LSXA== 0000950130-99-004776.txt : 19990813 0000950130-99-004776.hdr.sgml : 19990813 ACCESSION NUMBER: 0000950130-99-004776 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990812 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: 99686205 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 June 30, 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 June 30, 1999: 1,912,359 Class A Shares and 624,953 Class B Shares. - --------- ------- PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------ --------------------
A. Balance Sheets ASSETS June 30, 1999 December 31, 1998 ------ ------------- ----------------- (unaudited) (audited) CURRENT ASSETS: Cash and cash equivalents $ 4,466,000 $ 3,383,000 Short term investments 3,105,000 3,510,000 Accounts receivable, less allowances of $183,000 and $208,000 2,523,000 2,315,000 Inventories, at lower of cost or market: Raw materials 381,000 1,089,000 Work in process 63,000 219,000 Finished goods 2,868,000 2,244,000 ------------------- ------------------ 3,312,000 3,552,000 Other current assets 519,000 276,000 Refundable income taxes - - Deferred income taxes 911,000 740,000 ------------------- ------------------ TOTAL CURRENT ASSETS 14,836,000 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 6,408,000 6,358,000 ------------------- ------------------ 9,487,000 9,360,000 Less accumulated depreciation and amortization 7,095,000 6,974,000 ------------------- ------------------ 2,392,000 2,386,000 Other assets 245,000 278,000 ------------------- ------------------ TOTALS $ 17,473,000 $ 16,440,000 =================== ==================
See Notes to Financial Statements 2
A. Balance Sheets (continued) LIABILITIES June 30, 1999 December 31, 1998 ----------- ------------- ----------------- (unaudited) (audited) CURRENT LIABILITIES: Notes Payable - Current Portion $ 49,000 $ 49,000 Accounts payable and other current liabilities 4,128,000 4,333,000 Income Taxes Payable 537,000 285,000 ------------------- ------------------ TOTAL CURRENT LIABILITIES 4,714,000 4,667,000 ------------------- ------------------ LONG-TERM LIABILITIES: Notes Payable, less Current Portion 1,721,000 1,745,000 Pension Liability 424,000 424,000 Deferred Tax Liability 323,000 323,000 ------------------- ------------------ 2,468,000 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 (538,000) (206,000) Retained earnings 8,032,000 6,574,000 Less treasury stock at cost: 874,959 and 836,859 shares of Class A Common stock & 304,153 and 285,553 shares of Class B Common stock, respectively (1,233,000) (1,117,000) ------------------- ------------------ TOTAL STOCKHOLDERS' EQUITY 10,291,000 9,281,000 ------------------- ------------------ TOTALS $ 17,473,000 $ 16,440,000 =================== ==================
See Notes to Financial Statements 3 B. Statements of Income
For the Three-Month Period Ended For the Six-Month Period Ended ----------------------------------- ----------------------------------- June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998 ----------------------------------- ----------------------------------- Net sales $ 6,063,000 $ 5,197,000 $ 11,533,000 $ 10,852,000 Cost of sales 3,332,000 3,663,000 6,925,000 7,626,000 ------------------ ------------------ -------------- --------------- Gross profit 2,731,000 1,534,000 4,608,000 3,226,000 Selling, general and administrative expenses 1,512,000 1,279,000 2,638,000 2,972,000 ------------------ ------------------ -------------- --------------- Operating income 1,219,000 255,000 1,970,000 254,000 Interest expense 24,000 36,000 66,000 69,000 Other income 149,000 (16,000) 305,000 222,000 ------------------ ------------------- -------------- --------------- Income before provision for income taxes 1,344,000 203,000 2,209,000 407,000 Provision for income taxes 457,000 69,000 751,000 138,000 ------------------ ------------------ -------------- -------------- Net income $ 887,000 $ 134,000 $ 1,458,000 $ 269,000 ================== ================== =============== ============== Basic and diluted Income per common share: $ .35 $ .05 $ .57 $ .10 ================== ================== ============== ==============
See Notes to Financial Statements 4 C. Statements of Cash Flow
For the Six-Month Period Ended ------------------------------ June 30, 1999 June 30, 1998 ------------- ------------- Operating activities: Net income $ 1,458,000 $ 269,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and Amortization 132,000 205,000 Provision for bad debts (25,000) 23,000 Accrued Interest Income (98,000) - Increase (decrease) in cash attributable to changes in assets and liabilities: Accounts receivable (183,000) 237,000 Inventories 240,000 (400,000) Other current assets (243,000) 182,000 Other assets 33,000 249,000 Accounts payable and other current liabilities 47,000 (136,000) ------------------- ------------------ Net cash provided by operating activities 1,361,000 629,000 ------------------- ----------------- Cash flows from investing activities: Purchase of property and equipment (138,000) (41,000) -------------------- ------------------ Net cash provided by (used in) investing activities (138,000) (41,000) -------------------- ------------------ Cash flows (from) financing activities: Payments on notes payable (24,000) (68,000) Purchases of Treasury Stock (116,000) - -------------------- ----------------- Net cash (from) financing activities (140,000) (68,000) -------------------- ----------------- Net increase (decrease) in cash and cash equivalents 1,083,000 520,000 Cash and cash equivalents beginning of period 3,383,000 3,654,000 ------------------- ----------------- Cash and cash equivalents, end of period $ 4,466,000 $ 4,174,000 =================== =================
See Notes to Financial Statements 5 C. Statements of Cash Flow (continued)
For the Six-Month Period Ended ------------------------------ June 30, 1999 June 30, 1998 ------------- ------------- Supplemental disclosure of cash flow information: Cash Paid during the year for: Interest $ 66,000 $ 53,000 Income taxes 792,000 ---
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 June 30, 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: June 30, 1999 ------------- Notes Payable - SBA Loans $ 916,000 Capital Lease payable 854,000 ------------ 1,770,000 Current Portion of Long-Term Debt 49,000 ------------ $ 1,721,000 ============ 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 June 30, 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 - ------- and six month periods ended June 30, 1999 and June 30, 1998, was based on 2,548,395 and 2,695,256 common shares and 2,561,550 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: Comprehensive Income - ------- -------------------- Comprehensive Income is as follows:
For the Three-Month Period Ended For the Six-Month Period Ended ----------------------------------- ------------------------------ June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998 ----------------------------------- --------------------------------- Net income $ 887,000 $ 134,000 $ 1,458,000 $ 269,000 Unrealized losses on debt securities net of taxes: (124,000) - (332,000) - ---------------- ------------ -------------- ---------- Comprehensive Income $ 763,000 $ 134,000 $ 1,126,000 $ 269,000 ================= ============ ============== ==========
Note 6: The following information is reported as required for industry - ------- segment disclosure.
Three Months Ended June 30, 1999 -------------------------------- Mechanical Toys Equipment Consolidated ---- --------- ------------ Sales $ 1,591,000 $ 4,472,000 $ 6,063,000 ================== ================== ================= Operating income $ 91,000 $ 1,464,000 $ 1,555,000 ================== ================== General corporate expenses 335,000 Interest expense 24,000 Interest income 111,000 Other income 37,000 ----------------- Income before income taxes $ 1,344,000 ================= Six Months Ended June 30, 1999 ------------------------------ Mechanical Toys Equipment Consolidated ---- --------- ------------ Sales $ 3,933,000 $ 7,600,000 $ 11,533,000 ================== ================== ================= Operating income $ 339,000 $ 2,102,000 $ 2,441,000 ================== ================== General corporate expenses 471,000 Interest expense 66,000 Interest income 218,000 Other income 87,000 ----------------- Income before income taxes $ 2,209,000 =================
See Notes to Financial Statements 8 Note 6 - Con't - --------------
Three Months Ended June 30, 1998 -------------------------------- Mechanical Toys Equipment Consolidated ---- --------- ------------ Sales $ 2,373,000 $ 2,680,000 $ 5,053,000 ================== ================== ================= Operating income $ 116,000 $ 559,000 $ 675,000 ================== ================== General corporate expenses 384,000 Interest expense 36,000 Interest income 61,000 Other income (113,000) ----------------- Income before income taxes $ 203,000 ================= Six Months Ended June 30, 1998 ------------------------------ Mechanical Toys Equipment Consolidated ---- --------- ------------ Sales $ 5,588,000 $ 5,265,000 $ 10,853,000 ================== ================== ================= Operating income $ 229,000 $ 552,000 $ 781,000 ================== ================== General corporate expenses 527,000 Interest expense 69,000 Interest income 160,000 Other income 62,000 ----------------- Income before income taxes $ 407,000 =================
See Notes to Financial Statements 9 ITEM 2. Management's Discussion and Analysis of Financial Condition and - ------- --------------------------------------------------------------- Results of Operations --------------------- A. Results of Operations --------------------- Sales for the second quarter of 1999 were $6,063,000 compared to $5,197,000 in 1998. For the six month period, 1999 sales were $11,533,000 compared to $10,852,000 in 1998, a 6% increase. The Toy segment's second quarter sales totaled $1,591,000 compared to $2,373,000 in 1998, while the six month 1999 sales totaled $3,933,000 compared to $5,588,000 in 1998. The Mechanical equipment group's second quarter sales totaled $4,472,000 compared to $3,128,000 in 1998, while the six month sales totaled $7,600,000 compared to $5,265,000 in 1998. Gross profit for the second quarter 1999 totaled $2,731,000 compared to $1,534,000 in 1998. For the six month period, 1999 gross profit was $4,608,000 compared to $3,226,000 in 1998. While gross profit in the toy division continued to decline for the three and six month periods, the Mechanical Equipment Group, primarily the TX Group, accounted for the overall increase in gross profit. Second quarter toy division sales reflect the lackluster market and lack of productive licenses. The industry remains in a slump continuing to challenge management to find new answers and approaches in the current environment. Second quarter Mechanical Equipment sales continue to reflect a surge in sales in the TX Group which was due primarily to meeting customer needs in resolving Y2K problems relating to their installed equipment base. While these sales are a welcome addition, no prediction can be made at this time as to the continuation of such sales in future periods. Operating income was $1,219,000 for the second quarter 1999 compared to operating income of $255,000 in 1998. For the six months, operating income was $1,970,000 compared to operating income of $254,000 in 1998. Interest expense was $24,000 for the second quarter 1999 compared to $36,000 in the same period last year. For the six months, interest expense was $66,000 compared to $69,000 for 1998. The net income for the second quarter of 1999 was $887,000 or 35 cents per share compared to net income of $134,000 or 5 cents per share (basic and diluted) in the comparable period of 1998. On a six months basis, the net income was $1,458,000 or 57 cents per share compared to net income of $269,000 or 10 cents per share (basic and diluted) for the 1998 period. See Notes to Financial Statements 10 B. Liquidity and Capital Resources ------------------------------- For the six months ended June 30, 1999, the Company was provided with $1,361,000 from operating activities as compared to $629,000 in the corresponding period of the preceding year. For the six months ended June 30, 1999, the Company used $138,000 for investing activities, principally for the purchase of equipment. In the corresponding period of the preceding year, the Company used $41,000 for investing activities, principally for the purchase of equipment. Cash flows from financing activities during the six months ended June 30, 1999 of $140,000 relate principally to the purchase of Treasury Stock as compared to $68,000 in the prior period ended June 30, 1998 which related to note repayments. At June 30, 1999, the Company had working capital of approximately $10,122,000 and a current ratio of 3.1 to 1. In addition, as described in Notes to Financial Statements, the Registrant's Handi-Pac subsidiary has $916,000 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 ITEM 4. Submission of Matters to a Vote of Security Holders. - ------- ---------------------------------------------------- (a) The Annual Meeting of Shareholders was held on May 26, 1999. (b) (1) The proposal to re-elect the one Class A director was passed by a vote of 1,872,159 shares in favor and 13,106 shares abstaining. (2) The proposal to re-elect the three Class B directors was passed by a vote of 592,894 shares in favor and 5,294 shares abstaining. (3) There were no other proposals brought up 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 12, 1999 See Notes to Financial Statements 11 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. 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 4,466,000 3,105,000 2,523,000 0 3,312,000 14,836,000 9,487,000 7,095,000 17,473,000 4,714,000 0 0 0 37,000 10,254,000 17,473,000 11,533,000 0 6,925,000 2,638,000 0 0 66,000 2,209,000 751,000 0 0 0 0 1,458,000 .57 .57
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