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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1999 Commission File Number 0-5613
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REXX ENVIRONMENTAL CORPORATION
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(Exact name of registrant as specified in its charter)
NEW YORK 13-2625545
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(State or other jurisdiction (I.R.S Employer
of incorporation) Identification Number)
350 PARK AVENUE, NEW YORK, NEW YORK 10022
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(Address of principal executive offices) (Zip Code)
(212) 750-7755
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(Registrant's telephone number, including area code)
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(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by checkmark 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
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As of August 12, 1999, the registrant had 2,467,576 shares of common stock
outstanding.
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REXX ENVIRONMENTAL CORPORATION
INDEX
PART I - Financial Information PAGE
Unaudited financial statements:
Consolidated balance sheets -
June 30, 1999 and December 31, 1998 3
Consolidated statements of operations -
three months ended June 30, 1999 and 1998 4
Consolidated statements of operations -
six months ended June 30, 1999 and 1998 5
Consolidated statements of cash flows -
six months ended June 30, 1999 and 1998 6
Notes to consolidated financial statements 7-9
Management's discussion and analysis of
financial condition and results of operations 9-14
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
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REXX ENVIRONMENTAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts)
(Unaudited)
June 30, December 31,
1999 1998
Assets
Current assets:
Cash and cash equivalents $ 21 $ 68
Accounts receivable - net 4,523 4,749
Costs in excess of billings 235 223
Assets held for sale 780 780
Other current assets 234 164
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Total current assets 5,793 5,984
Property and equipment, net 1,479 1,487
Goodwill 2,808 2,914
Other assets 27 37
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$10,107 $10,422
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Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt $ 663 $ 668
Notes payable-bank 1,581 1,681
Accounts payable 1,965 1,872
Billings in excess of costs 253 409
Accrued expenses 534 311
Income taxes payable 98 100
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Total current liabilities 5,094 5,041
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Long-term debt, net of current portion 714 738
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Stockholders' equity:
Preferred stock, $1.00 par value, authorized
1,000,000 shares; -0- shares issued
Common stock, $.02 par value, authorized
12,000,000 shares; 5,279,828 shares issued 105 105
Capital in excess of par value 27,925 27,925
Accumulated deficit (6,723) (6,379)
Common stock held in treasury, at cost
(2,812,252 shares) (17,008) (17,008)
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Total stockholders' equity 4,299 4,643
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$10,107 $10,422
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See notes to consolidated financial statements.
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REXX ENVIRONMENTAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
Three months ended
June 30,
1999 1998
Revenues $ 4,652 $ 3,371
Cost of services 3,453 2,211
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Gross profit 1,199 1,160
General and administrative expenses 816 926
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Income from operations 383 234
Other income:
Interest expense, net 75 23
Other expense (income) 30 ( 16)
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Income before provision
for taxes 278 227
Provision for taxes 6 21
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Net income $ 272 $ 206
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Per share data:
Basic $.11 $.08
Diluted $.11 $.08
Weighted average shares outstanding:
Basic 2,468 2,468
Diluted 2,468 2,525
See notes to consolidated financial statements.
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REXX ENVIRONMENTAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
Six months ended
June 30,
1999 1998
Revenues $ 8,152 $ 7,574
Cost of services 6,539 5,164
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Gross profit 1,613 2,410
General and administrative expenses 1,776 1,952
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(Loss) income from operations ( 163) 458
Other income:
Interest expense, net 129 31
Other expense (income) 43 ( 25)
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(Loss) income before provision
for taxes ( 335) 452
Provision for taxes 9 43
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Net (loss) income ($ 344) $ 409
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Per share data:
Basic ($.14) $.17
Diluted ($.14) $.16
Weighted average shares outstanding:
Basic 2,468 2,468
Diluted 2,468 2,529
See notes to consolidated financial statements.
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REXX ENVIRONMENTAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
1999 1998
Cash flows used in operating activities:
Net (loss) income ($ 344) $ 409
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Depreciation and amortization 239 182
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( 105) 591
Changes in assets and liabilities 312 ( 968)
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Net cash provided by (used in)
operating activities 207 ( 377)
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Cash flows from investing activities:
Capital expenditures ( 156) ( 531)
Net proceeds on disposal of assets 31 0
Decrease in assets held for sale 0 570
Deposit on asset held for sale 0 ( 152)
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Net cash (used in) provided by
investing activities ( 125) ( 113)
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Cash flows from financing activities:
Net short-term borrowings ( 100) 0
Principal payment of long-term debt ( 29) ( 41)
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Net cash used in financing activities ( 129) ( 41)
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Net decrease in cash ( 47) ( 531)
Cash at beginning of period 68 710
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Cash at end of period $ 21 $ 179
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Supplemental disclosures of cash flow information:
Changes in assets and liabilities:
Accounts receivable $ 226 ($1,420)
Costs in excess of billings ( 12) 22
Other current assets ( 70) 66
Other assets 10 10
Billings in excess of costs ( 156) ( 145)
Accounts payable and accrued expenses 316 509
Income taxes payable ( 2) 20
Other liabilities 0 ( 30)
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$ 312 ($ 968)
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Cash paid - net during the period for:
Interest $ 127 $ 40
Income taxes (including interest thereon) $ 18 $ 23
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REXX ENVIRONMENTAL CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - Consolidation and General
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, Watkins Contracting, Inc. ("WCI") (since its
acquisition by the Company on October 21, 1997) and Oak Hill Sportswear Holding
Corporation, which was inactive. The accompanying financial statements have been
prepared without audit and do not include all footnotes and disclosures required
under generally accepted accounting principles. Management believes that the
results herein reflect all adjustments which are, in the opinion of management,
necessary to fairly state the results and current financial condition of the
Company for the respective periods. All such adjustments reflected herein are of
a normal, recurring nature. These financial statements should be read in
conjunction with the Company's financial statements contained in its Annual
Report on Form 10-K for its year ended December 31, 1998.
Note 2 - Net income (loss) per share:
In 1997, The Company adopted Statement of Financial Accounting Standards
No. 128 ("FAS 128"), Earnings per Share. FAS 128 prescribes that companies
present basic and diluted earnings per share amounts, as defined, on the face of
the statement of operations. Net income (loss) per share is based on the
weighted average number of shares outstanding. The number of shares used in the
computations for basic and diluted net income per share for the second quarter
and first half ended June 30, 1999 were 2,467,576 for both computations, for the
second quarter ended June 30, 1998 were 2,467,576 and 2,524,516, respectively,
and for the six months ended June 30, 1999 were 2,467,576 and 2,528,977,
respectively.
Net income (loss) used in the computation of basic and diluted net income
(loss) per share is not affected by the assumed issuance of stock under the
Company's stock option plan and is therefore the same for both calculations.
Options to purchase 304,000 shares at prices ranging from $2.00 to $5.00
per share were outstanding at June 30, 1999, but were not included in the
computation of diluted net loss per share because during the second quarter, the
Company's stock price was below the lowest option exercise price and during the
first half the effect of their inclusion would have been antidilutive. Options
to purchase 254,000 shares at prices ranging from $2.00 to $5.00 per share were
outstanding at June 30, 1998. The dilutive impact of such options is the
addition of 56,940 shares to weighted average diluted shares outstanding for the
second quarter of 1998 and less than $0.01 decrease in earnings per share. For
the six months ended June 30, 1998, the dilutive impact of such options is the
addition of 61,401 shares outstanding and less than $.01 decrease in earnings
per share.
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Note 3: Potential Sale of Watkins Contracting, Inc.:
The Company previously disclosed that on June 10, 1999 it signed a definitive
agreement to sell WCI to Greg Watkins and Daren Barone for $1,300,000 in cash
and 125,000 shares of REXX Environmental Corporation common stock. Messrs.
Watkins and Barone sold WCI to REXX Environmental Corporation in October 1997.
The Company plans to prepare a proxy statement, to be filed with the Securities
and Exchange Commission for a shareholder vote to act on the Board's
recommendation to approve the sale of WCI under the definitive agreement to
Messrs. Watkins and Barone. Based on preliminary estimates, if the shareholders
approve the transaction, and it closes, the Company will record a loss on the
sale of Watkins Contracting, Inc. of approximately $2,800,000 which represents
the difference between the price that it will receive and the combined value of
WCI's net book value and goodwill that is recorded on REXX Environmental
Corporation's books. This preliminary estimate is subject to further review and
valuations at the time the transaction closes.
Note 4 - Bank financing:
WCI executed, effective November 10, 1998, a revolving credit agreement
with Wells Fargo Bank, N.A. The credit agreement, which expires November 9,
1999, calls for interest payable at Wells Fargo's prime rate, as in effect from
time to time, and borrowings up to 75% of eligible accounts receivable subject
to a maximum of $2,000,000 (reduced by approximately $100,000 of equipment loans
made to WCI by Wells Fargo). At June 30, 1999, WCI had $1,581,000 borrowed under
the credit agreement, in addition to approximately $90,000 of equipment loans
made by Wells Fargo to WCI. The Company has guaranteed WCI's borrowings under
the credit agreement, which is also secured by WCI's accounts receivable and all
other assets (with the exception of vehicles and equipment subject to purchase
contract lending agreements with third party lenders). In addition, the credit
agreement provides for certain financial covenants based upon the Company's
consolidated financial condition, including its current ratio and tangible net
worth. WCI's defaults under its secured credit agreement as of December 31, 1998
and March 31, 1999 were waived by Wells Fargo. Watkins Contracting, Inc. has
signed an amendment to its secured credit agreement with its bank which adjusts
the financial covenants and increases the interest rate to 2% over the prime
rate. The bank had orally notified the Company that additional borrowing above
the current level would be subject to receipt and review by the bank of the
definitive agreement to sell Watkins Contracting, Inc. to Messrs. Watkins and
Barone. After the definitive agreement was signed, Wells Fargo Bank notified the
Company that it may borrow again up to the maximum of its line of credit,
subject to the formulas contained in the line of credit agreement.
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Note 5 - Subsequent event:
Effective March 1, 1999, and as a condition to the continued lending by
Wells Fargo Bank to WCI under the credit agreement, WCI and the Company agreed
that no funds would be transferred from WCI to the Company until further
agreement with Wells Fargo Bank. As a result, in order to meet its working
capital needs at the corporate level, the Company executed a line of credit
borrowing agreement with Republic National Bank of New York ("RNB") on July 29,
1999. The line of credit agreement provides for up to $150,000 in borrowings,
secured by the Company's assets, through November 30, 1999. The Company's
borrowings under the line of credit have been guaranteed by the Company's
Chairman of the Board, Arthur L. Asch. Mr. Asch is not being compensated by the
Company for providing the guaranty. Management believes that, if the
shareholders approve the sale of WCI to Messrs. Watkins and Barone, and the sale
closes, the line of credit will be sufficient to provide the Company the
necessary working capital to meet its needs through the planned sale of WCI.
There is no assurance that the line of credit will, in fact, be sufficient to
provide for the Company's corporate level working capital needs until the
consummation of the sale of WCI (if such sale occurs), or that, upon the
maturity date of the line of credit, RNB will continue to lend to the Company or
that Arthur L. Asch will continue to provide his guaranty. The loss of the line
of credit, by any action of RNB or as a result of Mr. Asch's failure to continue
his guaranty beyond November 30, 1999, might materially and adversely affect the
Company.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and capital resources:
Working capital at June 30, 1999 was $699,000 as compared to $943,000 at
December 31, 1998. The decrease of $244,000 was primarily due to the net loss
for the period.
Net accounts receivable were $4,523,000 at June 30, 1999 as compared to
$4,749,000 at December 31, 1998, a decrease of $226,000. The reduction in
accounts receivable was due to aggressive collection efforts in the first half
of 1999, including enlisting additional staff personnel in the collection
process and granting discounts in certain circumstances to accelerate the timing
of the actual receipt of cash from customers.
WCI executed, effective November 10, 1998, a revolving credit agreement with
Wells Fargo Bank, N.A. The credit agreement, which expires November 9, 1999,
calls for interest payable at Wells Fargo's prime rate, as in effect from time
to time, and borrowings up to 75% of eligible accounts receivable subject to a
maximum of $2,000,000 (reduced by approximately $100,000 of equipment loans made
to WCI by Wells Fargo). At June 30, 1999, WCI had $1,581,000 borrowed under the
credit agreement, in addition to approximately $90,000 of equipment loans made
by Wells Fargo to WCI. The Company has guaranteed WCI's borrowings under the
credit agreement, which is also secured by WCI's accounts receivable and all
other assets (with the exception of vehicles and equipment subject to purchase
contract lending agreements with third party lenders). In addition, the credit
agreement provides for certain financial covenants based upon the Company's
consolidated financial condition, including its current ratio and tangible net
worth. WCI's defaults under its secured credit agreement as of December 31, 1998
and March 31, 1999 were waived by Wells Fargo. Watkins Contracting, Inc. has
signed an amendment to its secured credit agreement with its bank which adjusts
the financial covenants and increases the interest rate to 2% over the prime
rate. The bank had orally notified the Company that additional borrowing above
the current level would be subject to receipt and review by the bank of the
definitive agreement to sell Watkins Contracting, Inc. to Messrs. Watkins and
Barone. After the definitive agreement was signed, Wells Fargo Bank notified the
Company that it may borrow again up to the maximum of its line of credit,
subject to the formulas contained in the line of credit agreement.
The Company previously disclosed that on June 10, 1999, it signed a
definitive agreement to sell WCI to Greg Watkins and Daren Barone for $1,300,000
in cash and 125,000 shares of REXX Environmental Corporation common stock.
Messrs. Watkins and Barone sold WCI to REXX Environmental Corporation in October
1997. The Company plans to prepare a proxy statement, to be filed with the
Securities and Exchange Commission for a shareholder vote to act on the Board's
recommendation to approve the sale of WCI under the definitive agreement to
Messrs. Watkins and Barone. Based on preliminary estimates, if the shareholders
approve the transaction and it closes, the Company will record a loss on the
sale of Watkins Contracting, Inc. of approximately $2,800,000 which represents
the difference between the price that it will receive and the combined value of
WCI's net book value and goodwill that is recorded on REXX Environmental
Corporation's books. This preliminary estimate is subject to further review and
valuations at the time the transaction closes.
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The Company previously announced that it reached a preliminary understanding
to acquire a company ("HC") which will operate a health, fitness, and
nutritional products and services discount card membership program and several
health, fitness, and nutrition related e-commerce sites. That company has
recently been undergoing various changes in its business plan, personnel,
corporate structure and financing. While the Company continued its discussions
and negotiations with this entity, final decisions relating to structure,
pricing and documentation were proceeding slower than anticipated. As a result,
REXX Environmental Corporation's management began discussions with other
entities regarding business combinations and recently determined that another
business combination was more attractive to the Company and therefore
discontinued further discussions and negotiations with HC.
The Company is in the late stages of negotiating and documenting a
transaction with a financial services firm. The transaction would result in a
merger of the Company and this entity. If the merger is approved by the
Company's directors and shareholders and it closes, the Company's shareholders
will incur substantial dilution of their equity position in the Company.
There is no assurance that profitable operations in the future will
materialize or that the sale of Watkins Contracting, Inc. will take place.
Further, there is no assurance that the Company and the financial services firm
will agree to or will consummate a business combination.
In the event the Company does not sell WCI, it will face certain constraints
based upon its working capital requirements and WCI's credit agreement with
Wells Fargo. These constraints will result in continuing the suspension of the
Company's external growth efforts in its environmental and demolition business,
as well as a further reevaluation of the mix of projects WCI bids, contracts for
and performs in the future. In order to exercise greater control over field
expenses and projects, particularly those involving demolition, management
anticipates that WCI will continue to seek less work outside of its primary San
Diego County geographic area. In addition, projects which utilize equipment
owned by WCI rather than third party rentals will be more attractive to WCI in
the bidding process. However, based upon the resetting of the financial
covenants in the credit agreement, it is likely that WCI will not be able to
increase its revenues significantly in 1999 as a result of working capital
constraints.
Effective March 1, 1999, and as a condition to the continued lending by
Wells Fargo Bank to WCI under the credit agreement, WCI and the Company agreed
that no funds would be transferred from WCI to the Company until further
agreement with Wells Fargo Bank. As a result, in order to meet its working
capital needs at the corporate level, the Company executed a line of credit
borrowing agreement with Republic National Bank of New York ("RNB") on July 29,
1999. The line of credit agreement provides for up to $150,000 in borrowings,
secured by the Company's assets, through November 30, 1999. The Company's
borrowings under the line of credit have been guaranteed by the Company's
Chairman of the Board, Arthur L. Asch. Mr. Asch is not being compensated by the
Company for providing the guaranty. Management believes that, if the
shareholders approve the sale of WCI to Messrs. Watkins and Barone, and the sale
closes, the line of credit will be sufficient to provide the Company the
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necessary working capital to meet its corporate level needs through the planned
sale of WCI. There is no assurance that the line of credit will, in fact, be
sufficient to provide for the Company's working capital needs until the
consummation of the sale of WCI (if such sale occurs), or that, upon the
maturity date of the line of credit, RNB will continue to lend to the Company or
that Arthur L. Asch will continue to provide his guaranty. The loss of the line
of credit, by any action of RNB or as a result of Mr. Asch's failure to continue
his guaranty beyond November 30, 1999, might materially and adversely affect the
Company.
Year 2000 Compliance:
Internal
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The Company uses a number of computer software programs, operating systems
and equipment with computer processing chips in its internal operations,
including in its financial business systems and administrative functions. To the
extent that the programs, operating systems and equipment contain source code or
computer chips that are unable to interpret appropriately the upcoming calendar
year 2000, some level of modifications or replacement will be necessary.
The Company is in the process of evaluating critical software, operating
systems and equipment for year 2000 compliance. Currently, the Company is
continuing the inventory/assessment phase of its evaluation, which is expected
to continue into the third quarter of 1999, with some remediation taking place.
The cost of such remediation has not been materially different from expenses the
Company would have incurred in the ordinary course of computer and software
upkeep and replacement for obsolescence. The Company has been notified by the
vendor of its financial and payroll software that such software is year 2000
compliant. Nevertheless, this software will be analyzed and tested for
compliance.
From fiscal 1995 through the present, the Company, in its normal course of
business, replaced substantially all of its business systems hardware and
software. To date, expenses associated with year 2000 compliance have been
minimal. The Company believes that periodic, scheduled upgrades of hardware and
software will satisfy its needs for year 2000 compliance and that the related
costs will differ nominally from expenditures which would have been made in its
normal course of business. The costs necessary to modify or replace the items
mentioned above, or the interruption of administrative or service processes
relating from compliance failure, are not expected to have a material adverse
effect on the Company's business and financial condition or its results of
operations.
External
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There can be no assurance that the Company's customers and suppliers are,
or will be, year 2000 compliant. The Company believes the most reasonably likely
result of the failure of key customers to achieve year 2000 compliance would be
the delay of projects and the delay in the collection of accounts receivable
from such customers for an indeterminate period of time. Currently, the Company
is not aware of any customers that are not year 2000 compliant. In order to
address the potential non-compliance with the year 2000 by the Company's
customers and suppliers, the Company is in the process of preparing
questionnaires to be sent to its customers and vendors asking them to respond
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with their year 2000 plans. Until this process is substantially complete, the
Company will not be in a position to fully assess its year 2000 risks. The
Company expects to complete this process in the third quarter of 1999 and is
developing a response program for the possible worst-case scenario, which may
include the possible replacement of non-compliant customers or vendors.
Results of operations:
Revenues, which consisted of WCI's contract revenues, were $4,652,000 and
$8,152,000 in the second quarter and six months ended June 30, 1999,
respectively, compared to $3,371,000 and $7,574,000 in the comparable periods of
1998. The increase in both periods was mainly due to the achievement of an
unusually high level of revenues in the second quarter of 1999 compared to 1998,
when revenues were high in the first quarter (but below the 1999 second quarter
level) and lower in the second quarter.
Gross profit in the six months ended June 30, 1999 amounted to $1,613,000
compared to $2,410,000 in the same period of 1998. Gross profit in the second
quarter amounted to $1,199,000 compared to $1,160,000 in the second quarter of
1998. The modest increase in the second quarter of 1999 was the result of
significantly higher revenues in the quarter with lower gross margins. The
decrease of $797,000 for the six month period is due to substantially lower
margins, caused primarily by (i) a larger percentage of revenues being generated
from lower margin demolition activities compared to revenues from abatement
activities and (ii) the continued work on several low margin demolition
projects.
General and administrative expenses declined in the second quarter and six
months ended June 30, 1999 to $816,000 and $1,776,000, respectively, from
$926,000 and $1,952,000, respectively, in the comparable periods in 1998. The
decrease was achieved primarily at the corporate level as a result of lower
compensation expense.
Interest expense-net increased to $75,000 and $129,000 in the second
quarter and six months ended June 30, 1999 from $23,000 and $31,000 in the
comparable periods of 1998. The increases were due to WCI's significantly higher
borrowing levels from its bank and equipment finance companies during the second
quarter and first half of 1999 compared to the comparable periods of 1998.
Amortization of goodwill remained constant in the second quarter and first
half of 1999 compared to 1998 as the Company is utilizing straight line
amortization.
Provision for income taxes fell to $6,000 and $9,000 in the second quarter
and six months ended June 30, 1999 from $21,000 and $43,000 in the prior year
periods. The 1999 and 1998 provisions represent state and local franchise taxes.
The 1998 provisions also include California state taxes with respect to income
in the second quarter and first half of 1998. In both periods, the Company
recorded no provision for federal income taxes as the Company utilized a net
operating loss carryforward in 1998 and recorded an operating loss in the first
half of 1999.
Forward looking information:
From time to time, the Company or its representatives may have made or may
make forward-looking statements, orally or in writing. Such forward-looking
statements may be included in, but not limited to, press releases, oral
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statements made by or with the approval of an authorized executive officer, or
in this report or other filings made by the Company with the Securities and
Exchange Commission. The words or phrases "trend," "expectation," "plans to,"
"preparing to," "will be," "will require," "may," "likely result," "expected,"
"anticipated," "estimated," "projected," "potential," "opportunity," "planned,"
or similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. The
Company wishes to ensure that such statements are accompanied by meaningful
cautionary statements, so as to maximize to the fullest extent possible the
protections of the safe harbor established in the said Act. Accordingly, such
statements are qualified in their entirety by reference to and are accompanied
by the following discussion of certain important factors that could cause actual
results to differ materially from such forward-looking statements.
Investors should also be aware of factors that could have an impact on the
Company's business or financial position or performance. These include
intensified competition and its impact on revenues and profit margins, changes
in competitors business strategies, availability of qualified labor to meet the
Company's needs, ability to retain current labor, adverse changes in national
and local economic conditions, adjustments in fiscal funding levels for
government entities, timing of large contracts, increasingly stringent
requirements for compliance with government regulations, the availability of
capital under WCI's credit agreement, future borrowing limits and interest rates
under the credit agreement, WCI and the Company's potential continued reliance
upon waivers of noncompliance from Wells Fargo, risks associated with the
potential unavailability of working capital after November 9, 1999, when WCI's
credit agreement expires, success of actions taken to improve gross margins and
reduce operating expenses, risks associated with the potential sale of WCI,
including the failure to obtain shareholder approval before November 30, 1999
for the Board approved sale, the Company's potential inability to sell WCI,
risks associated with potential business combinations, the Company's potential
inability to complete a business combination, the impact of shareholder
dilution, potentially lower revenues in 1999, failure of the Company to become
fully year 2000 compliant, failure of key customers to become fully year 2000
compliant and the effect it might have on the Company's ability to collect its
accounts receivable in a timely fashion or obtain supplies from its vendors, and
other factors detailed from time to time in the Company's Securities and
Exchange Commission filings or other readily available or generally disseminated
writings. The risks identified here are not all inclusive. Reference is also
made to other parts of this report and to the Company's Form 10-K for its year
ended December 31, 1998 that include additional information concerning factors
that could adversely impact the Company's business or financial position or
performance. Moreover, the Company operates in a changing and very competitive
business environment. New risks may emerge from time to time, and it is not
possible for management to predict all risk factors, nor can it necessarily
identify or assess the impact of all such factors on the Company or the extent
to which any factor or combination of factors may cause actual results to differ
materially from those contained in any forward-looking statement. Accordingly,
forward-looking statements should not be relied upon as a prediction of actual
results.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
The Company filed a report on Form 8-K dated June 23, 1999 reporting
that it had signed an agreement to sell its wholly owned subsidiary,
Watkins Contracting, Inc. The Company's press release, reporting the
event dated June 15, 1999, was filed as an exhibit to the Form 8-K.
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SIGNATURES
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.
REXX ENVIRONMENTAL CORPORATION
(Registrant)
Date: August 12, 1999 By: /s/ Arthur L. Asch
-----------------------------------------------
Arthur L. Asch, Chairman of the Board
Date: August 12, 1999 By: /s/ Michael A. Asch
-----------------------------------------------
Michael A. Asch, President and Treasurer
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