May 13, 1996
Securities and Exchange Commission
450 Fifth Street , N.W.
Washington, D. C. 20549
RE: EXCAL ENTERPRISES, INC.
File No. 0-17069
Dear Sir or Madam:
Enclosed for filing is the Company's Form 10-QSB/A1 for the period ended March
31, 1995. During fiscal 1995, the Company realized sales proceeds from
salvage of personal property removed from the commercial real estate in
Jacksonville, Florida. During the audit for the fiscal year ended June 30,
1995, it was determined that the proceeds realized from the salvage value of
the personal property should be offset against the cost of preparing the
property for rent. Therefore, this Form 10-QSB is being amended to reflect
this change. Gain on sale of property has been reduced by $136,874 and
$301,730 for the three months and nine months ended March 31, 1995,
respectively. The gain was offset against the $476,272 of costs incurred to
prepare the property for rental. The balance of $174,542 is included in the
balance sheet under the caption "Capitalized rental clearing costs".
Amortization expense was reduced by $107,342 and $140,727 for the three-month
and nine-month periods ended March 31, 1995.
The footnotes and management's discussion and analysis have been updated to
reflect these changes.
Sincerely,
/s/TIMOTHY R. BARNES
Timothy R. Barnes
Vice President/CFO
Enclosures
TRB/cas
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB/A1
[X] Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
[ ] Transition Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995
Commission File No. 0-17068
Excal Enterprises, Inc.
(Exact name of registrant as specified in its charter)
Delaware 59-2855398
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 North Tampa Street, Suite 3575 Tampa, Florida 33602
(Address of principal executive offices)
(813) 224-0228
Registrant's telephone number, including area code
Assix International, Inc.
(Former Name, former address and former fiscal year, if changed since last
year)
Check whether the issuer (1) filed all reports required to be filed by
Section 12, 13 or 15 (d) of the Securities Exchange Act of 1934 during the
past 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
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Common Stock $0.001 par value 4,666,866
Class Outstanding at May 16, 1995
ASSIX INTERNATIONAL, INC.
INDEX
Page No.
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet--March 31, 1995 3-4
Consolidated Statement of Income--Three And Nine Months Ended
March 31, 1995 and 1994 5
Consolidated Statement of Cash Flows--Nine Months Ended
March 31, 1995 and 1994 6
Notes to Consolidated Financial Statements 7- 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
PART II. Other Information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibits 15
ASSIX INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
(Unaudited)
Current assets
Cash and cash equivalents $ 47,847
Marketable securities 3,038,622
Notes and accounts receivables
Accounts receivable - trade $ 241,022
Accounts receivable - related parties 2,517
Officer & employee advances 80,995
Less allowance for doubtful accounts ( 952)
--------- 323,582
Income tax receivable 383,403
Prepaid expenses & deposits 195,580
Inventories - at the lower of cost (determined
by the first-in, first-out method) or market 351,053
----------
Total current assets 4,340,087
----------
Property & Equipment
Land 1,740,000
Licensed Dealer Programs 2,682,005
Building & improvements 4,862,982
Other Property and equipment, net 648,832
---------
8,193,819
Less accumulated depreciation and amortization 1,572,609
--------- 6,621,210
Licensed dealer demonstration programs 65,000
Construction in process of Licensed dealer programs 396,000
----------
Total property and equipment 8,822,210
----------
Other Assets
Intangible Assets
Manufacturing technology, less accumulated
amortization of $57,599 170,358
Capitalized rental clearing costs, less
accumulated amortization of $5,818 168,724
Patents, less no accumulated amortization 67,267
Deferred charges, less accumulated amortization of $61,824 18,793
Organization costs, less accumulated amortization of $65,527 403
Other, less accumulated amortization of $166,520 224,624
----------
Total other assets 650,169
----------
Total Assets $13,812,466
==========
See accompanying notes to the consolidated financial statements
ASSIX INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET (continued)
MARCH 31, 1995
(Unaudited)
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable - trade $ 129,593
Sales and payroll taxes payable 6,341
Other accrued liabilities 946,302
Current maturities on long-term debt 142,141
Deferred revenue 36,725
----------
Total current liabilities $ 1,261,102
Long-term debt 73,928
Deferred income taxes 2,593,799
Stockholders' equity
Preferred stock - authorized, 7,500,000 of
shares of $.01 par value, non-cumulative;
no shares issued and outstanding $ --
Common stock - authorized, 7,500,000 shares
of $.001 par value; shares issued,
4,713,866, shares outstanding 4,666,866 4,713
Additional paid-in capital 5,820,533
Retained earnings 4,264,515
Less common stock held in treasury, 47,000
shares at cost ( 206,124)
---------
Total stockholders' equity 9,883,637
----------
Total Liabilities and Stockholders' Equity $13,812,466
==========
See accompanying notes to the consolidated financial statements
ASSIX INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31, Nine Months Ended March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Licensed dealer program revenues $ 271,686 $ 253,600 $ 828,920 $ 3,672,704
Real property revenues 416,531 -- 635,586 --
Dividend & interest income 70,251 -- 164,634 --
Realized gain on trading securities -- -- 249,376 --
Other income 3,004 12,316 4,836 25,996
--------- ---------- --------- ----------
761,472 265,916 1,883,352 3,698,700
--------- ---------- --------- ----------
Costs and expenses:
Service 107,661 94,554 296,222 939,135
General and administrative 435,861 1,938,027 2,466,811 3,484,985
Depreciation and amortization 205,104 456,140 581,206 1,795,307
Interest 3,416 94,418 10,030 551,795
Loss/(gain) on asset write-down -- 839 8,062 816
(Gain)/Loss on sale of assets ( 19,973) 4,032 ( 14,343) 11,846
--------- ---------- --------- ----------
Total Expenses 732,069 2,588,010 3,347,988 6,783,884
--------- ---------- --------- ----------
29,403 ( 2,322,094) (1,464,636) ( 3,085,184)
Gain on Sears settlement -- 13,136,146 -- 13,136,146
--------- ---------- --------- ----------
Income before income taxes
and extra-ordinary item 29,403 10,814,052 (1,464,636) 10,050,962
Provision for income taxes
Current -- ( 154,713) -- ( 154,713)
Deferred -- -- -- --
--------- ---------- --------- ----------
Income (loss) before
extraordinary item 29,403 10,968,765 (1,464,636) 10,205,675
Extraordinary item, net of taxes -- 2,127,528 -- 8,440,028
--------- ---------- --------- ----------
Net income (loss) $ 29,403 $13,096,293 $(1,464,636) $18,645,703
========= ========== ========= ==========
Earnings (loss) per common and
common equivalent share
Income from continuing operations
(after related taxes) $ .01 $ 2.35 $( .31) $ 2.19
Extraordinary item -- .46 -- 1.81
---- ---- ---- ----
Net income (loss) $ .01 $ 2.81 $( .31) $ 4.00
==== ==== ==== ====
Weighted average common and
common equivalent shares
used in calculation: 4,666,866 4,666,866 4,666,866 4,666,866
========= ========= ========= =========
</TABLE>
See accompanying notes to the consolidated financial statements
ASSIX INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended March 31,
1995 1994
Cash flows provided by operating activities:
Net income $(1,464,636) $18,645,703
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 593,302 1,795,307
Provision for uncollectable accounts receivable ( 23,980) --
Loss on sale of property and equipment 23,287 11,846
Gain on Sears settlement -- 195,254
Deferred revenue 543 ( 380,268)
Loss on asset write-downs ( 4,033) 816
Proceeds from sale of trading securities 8,130,437 --
Purchase of trading securities ( 924,995) --
Gain on sale of trading securities ( 249,376) --
Gain on debt restructuring -- (13,824,028)
Changes in operating assets (increase)/decrease
and liabilities increase/(decrease):
Accounts and notes receivable ( 77,287) 69,313
Prepaid expenses and advances 24,017 6,223
Income tax receivable ( 383,403) --
Investments -- ( 9,166,595)
Other assets ( 378,935) ( 5,913)
Accounts payable, accrued interest
and accrued liabilities (1,178,123) 677,590
Accrued liabilities - related parties -- 337,057
Income taxes payable ( 44,524) 1,497,000
Deferred Income taxes ( 33,202) 2,458,000
Accrued interest -- 481,184
Sales and payroll taxes payable ( 23,559) ( 59,720)
--------- ----------
Net cash provided by operating activities 3,985,533 2,738,769
--------- ----------
Cash flows used in investing activities:
Purchase of holding securities (3,390,116) --
Capital expenditures (1,284,375) ( 440,265)
--------- ----------
Net cash used in investing activities (4,674,491) ( 440,265)
--------- ----------
Cash flows provided by (used in) financing activities:
Proceeds from debt 234,397 --
Principal payments on debt ( 74,646) ( 2,474,493)
Accounts receivable - related parties 152,146 --
--------- ----------
Net cash provided (used) by financing activities 311,897 ( 2,474,493)
--------- ----------
Increase in cash and cash equivalents ( 377,061) ( 175,989)
Cash and cash equivalents, beginning of period 424,908 582,010
--------- ----------
Cash and cash equivalents, end of period $ 47,847 $ 406,021
========= ==========
See accompanying notes to the consolidated financial statements
ASSIX INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The Company's interim financial statements are unaudited and should be
read in conjunction with the consolidated financial statements and notes
thereto for the year ended June 30, 1994. The results of operations for the
interim periods shown in this report are not necessarily indicative of results
to be expected for the fiscal year. The balance sheet has been reclassified
from an unclassified balance sheet to a classified balance sheet.
In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary to make the results of operations
for the interim periods a fair statement of such operations. All such
adjustments are of a normal, recurring nature. Due to the small dollar amount
associated with marketing expenses, these amounts have been reported in the
general and administrative category for the periods ended March 31, 1995 and
1994.
NOTE 2 - MARKETABLE SECURITIES.
During the year ended June 30, 1994, the Company adopted Statement 115 of
the Financial Accounting Standards Board "Accounting for Certain Investments
in Debt and Equity Securities." Under this new pronouncement, securities that
have readily determinable fair value should be classified into trading, held
to maturity, and available for sale. Equity securities are recorded at their
fair value, and gross unrealized holding gains and losses are disclosed. For
the purpose of determining the gain or loss on a sale, the cost of securities
sold is based on the average cost of all shares of each such security held at
the date of sale. During the three month period ended September 30,1994, the
Company sold all of its trading securities and invested the proceeds into
Treasury Bills and notes that are to be held to maturity. Those sales of
marketable securities resulted in a net realized gain of $249,376 during the
three month period ending September 30, 1994.
At March 31, 1995, the aggregate cost of the current marketable securities
and certificate of deposits held for maturity was $3,038,622, while their
market value was $3,035,133. As of March 31, 1995, the Company had $2,994,030
invested in Treasury bills and notes, money markets and $44,592 invested in
certificates of deposits. The Treasury Bills and Treasury Notes have maturity
periods ranging from 30 days to nine months with rates of return of 4.345% to
5.78%.
NOTE 3 - PROPERTY AND EQUIPMENT
Depreciation and amortization are calculated by straight-line methods over
the estimated useful lives of the assets, ranging generally from three to
seven years for tangible personal property and 40 years for real property and
improvements. For income tax purposes, the Company uses accelerated methods
of depreciation for certain assets.
Other property and equipment consist of:
Office furniture and equipment $ 314,588
Leasehold improvements 53,393
Automobiles 136,072
Machinery and equipment 144,779
-------
$ 648,832
=======
Under Financial Accounting Standards Board 67, the Company capitalized
certain costs incurred to rent real estate. These capitalized costs, net of
salvage proceeds, totalled $174,542 and are being amortized over 10 years.
NOTE 4 - OTHER ASSETS
The Company capitalized $146,217 of costs associated with the improvement
of the T7000 Combi-Matcher under Financial Accounting Standards Board 2 and
86.
NOTE 5 - GAIN ON SEARS SETTLEMENT
On February 24, 1994, the Company entered into a Settlement Agreement with
Sears under which Sears and the Company mutually released each other from any
and all claims arising from the May 1989 Sears Licensed Tire Matching
Agreement. As part of the Settlement Agreement, Sears paid the Company
$16,168,000 in cash (of which $2 million was paid prior to the date of the
settlement ) and transferred to the Company approximately 74 acres of Duval
County, Florida real property (improved by a vacant building containing
approximately 1,715,000 square feet) and personal property formerly
constituting the Sears Jacksonville Catalogue Merchandise Distribution Center
(the "Property"), which has been appraised at $6,000,000. In turn, the
Company transferred 1,226 Tire Matching machines and patents pertaining to the
Tire-Matching technology to Sears.
NOTE 6 - EXTRAORDINARY GAIN
The Company generated an $8,440,028 extraordinary gain from settling its
debt with its senior and subordinated lenders. The gain was determined by
taking the outstanding debt and accrued interest at the time of the
settlements ($5,000,000 principal and $1,562,500 of accrued interest for Mass
Mutual and $7,905,600 principal and $1,155,928 of accrued interest for PNC
Bank of Kentucky) and reducing it by the payments that were made to the senior
and subordinated lenders ($250,000 from Mass Mutual and $1,550,000 for PNC).
Accordingly, the extraordinary gain is $8,440,028, which is the total gain of
$13,824,028 less deferred taxes of $2,458,000 for the Mass Mutual settlement
and $2,926,000 of income taxes for the PNC settlement. The deferred taxes for
the Mass Mutual settlement were not previously recorded and are being recorded
in the present quarter ended March 31, 1994. See Note 6 - Debt for further
details.
NOTE 7 - LONG-TERM DEBT
Long-term debt consists of the following:
March 31,
1995
(Unaudited)
Automobile notes $ 46,140
Insurance Financing 99,859
Equipment notes 38,228
Capitalized equipment leases 31,842
-------
216,069
Current maturities on long-term debt 142,141
-------
Total long-term debt $ 73,928
=======
The following are the aggregate maturities of the Company's existing long-
term debt for years subsequent to June 30, 1995:
1996 36,715
1997 12,182
1998 10,618
1999 11,014
Thereafter 3,399
$ 73,928
NOTE 8 - EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per common share for the three months and nine months
ended March 31, 1995 and 1994 has been computed based upon the weighted
average number of common shares outstanding during the period. Common stock
warrants and options are not considered in the computation because they are
anti-dilutive in the aggregate.
NOTE 9 - INCOME TAXES
During the year ended June 30, 1994, the Company adopted Statement No. 109
of the Financial Accounting Standards Board, "Accounting for Income Taxes."
This new pronouncement requires that deferred tax assets and liabilities be
recognized for the estimated future consequences attributable to differences
between the financial statements carrying amounts of existing assets and
liabilities and their respective income tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under Statement No. 109, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized during the
period that includes the enactment date.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
A. General Overview:
The Company's operations are comprised of two independent and separate
operating groups. First, the Company owns commercial real property in
Jacksonville, Florida (known as the "Imeson Center") that includes 1,640,134
square feet of rentable warehouse/distribution (1,548,728 sq. ft.) and office
(91,846 sq. ft.) space. The Imeson Center property also includes an
additional 131,000 square feet of core mezzanine space consisting of
mechanical, electrical, office and service areas that sit above and are
designed to service the main floor level. The utility of this area as
rentable space is limited. This commercial real estate asset represents the
Company's largest single asset and growth opportunity for the future.
Secondly, the Company continues to market its proprietary wheel balancing
service under the trademark AccuBalance, which represents the Company's
historic business operations.
During the Company's first fiscal 1995 quarter ended September 30,1994,
the Board of Directors elected W. Carey Webb as the Company's new President
and CEO with the directive of installing a new management team and redirecting
the Company's business operations and investments. To that end, Mr. Webb has
focused upon the following objectives: 1) to secure the company's existing
business operations and install a new management team, 2) to maximize the
operations of the Company's two primary businesses, and 3) to identify and
invest the Company's financial assets in one or more basic operating
businesses.
Over the past two fiscal quarters, Mr. Webb has concentrated on developing
tenants for the Imeson Center, restructuring management and improving
manufacturing operations, as well as securing new Licensed Servicing Agents
for the Company's proprietary Combi/Corvi improved wheel balancing program.
During the balance of calendar 1995, management expects to focus on improving
it's existing business operations while initiating the process of identifying
the Company's future long term business opportunities.
B. Imeson Center:
The Imeson Center property was conveyed to the Company by Sears Roebuck
and Co. in early 1994 as part of its settlement with the Company relating to
certain disputes that arose in connection with the Company's automotive
business relationship with Sears. The Imeson Center property was built by
Sears in 1974 to handle its catalog merchandising and distribution operations
for the Southeastern portion of the United States. Because the building was
constructed for the specialized purpose of serving as a Sears distribution
center, the Company is presently determining the portion of the Imeson Center
property that may be rented as commercial property and what tenant
improvements may be required to maximize the rental value of such property.
The Company entered into two leases with the same tenant on December 1,
1994 to lease a portion of Imeson Center's warehouse space. The first lease
is for approximately 600,000 square feet of the first floor space and the
second lease is for approximately 200,000 square feet of the second floor.
Both leases contemplate terms of 13 months commencing December 1, 1994, with
an option to extend the lease period for 3 months. The tenant will pay its
pro-rated share of agreed upon operating expenses (which includes taxes,
insurance and maintenance) and will reimburse the Company for any utility
expenses. Pursuant to the second lease, the tenant was granted the option to
lease an additional 300,000 square feet of second floor space as overflow
space in consideration of its payment of all operating expenses attributable
to that space and has since exercised that option. The tenant also increased,
by approximately 50,000 square feet, the space utilized on the first floor.
The tenant will not pay any additional base rent on the second floor overflow
space. The Company paid its local leasing agent a 4% fee on base rent
generated by the Property for these leases. Base rent from these leases could
generate pre-tax revenues of approximately $1.56 million over the 13 month
lease term.
The Company is currently negotiating to lease approximately 92,000 square
feet of first floor space to a prospective tenant in the Imeson Center
property for a period of seven years, with an option to extend for an
additional three year term. Although the terms of the proposed lease continue
to be negotiated and no assurances can be given that a definitive lease
agreement will be entered into, Company management believes that the proposed
lease could generate in the form of annual base rent a minimum of $507,000 in
the first year of the lease. Under its proposed terms, the tenant will pay
its pro rata share of agreed upon operating expenses, including taxes,
insurance, maintenance and utility expenses. In addition to base rent, the
tenant will be required to pay as additional rent an amount sufficient to
amortize approximately $1,000,000 advanced by the Company toward tenant
improvement costs over the seven year term of the lease, together with
interest at the rate of 11.5% per anum. The Company anticipates that the cost
of the tenant improvements will total approximately $2,000,000 and will be
shared by the Company and tenant on a 50/50 basis; provided, however that the
tenant reimburses the Company for its share of such improvements over the
initial term of the lease, together with interest, as additional rental
payments. If the proposed lease for the Imeson Center property is entered
into, the lease term will commence when tenant improvements are completed,
which the Company expects to be finished in July 1995 for phase I and August
for Phase II. The Company will pay its local leasing agent a 6% fee of the
base rent generated by this lease, which represents an approximate aggregate
amount of $200,000 payable out of the first five months of rental payments
under the lease.
C. Assix Automotive:
Management of the Company intends to increase the automotive operation's
network of licensed agents by marketing the AccuBalance/Corvi service program,
which utilizes the Company's Corvi/Combi technology, to local and regional
tire dealer retail service outlets. This expansion effort will concentrate in
the geographic areas within which the Company currently operates (California,
Texas, Ohio, Indiana, Kentucky, Tennessee, Florida, Georgia and Alabama). If
the number of licensed agents utilizing the Corvi/Combi technology at their
retail locations does in fact increase, if expenses are controlled and Combi-
Matchers are produced continuously, management believes the automotive
operation will continue to reduce its operational loss for the year.
In the past, the Company's Automotive division had operated with its
licensed agents on a contractual basis which included a 30 day termination
provision. Currently, all new licensed agent agreements utilizing the
Company's exclusive Corvi/Combi technology require a twelve month written
cancellation notice. In many cases (especially with smaller accounts), the
business relationship with a proposed agent is initiated upon the execution of
a comprehensive letter of intent with the understanding that the final
licensed agent agreement will be executed shortly thereafter. The Company's
business relationship with Big 10 Tire Co. of Mobile Alabama is controlled by
such a letter of intent, dated March 26, 1992, which the Company attempted to
convert into a signed 12 month agreement in 1993 and 1994. However, in
December 1994, Big 10 Tires initiated discussions regarding its desire to
alter the letter of intent/Agency arrangement, which among other issues
included the purchase of the Combi-Matcher equipment from the Company. After
months of discussions, Big 10 Tires notified the Company pursuant to a letter
dated April 28, 1995 that it intended to terminate its agreement with the
Company effective as of May 28, 1995.
However, the agreement first requires the Company and Big 10 Tires to take
steps to "cure" under the Agreement (within a 60 day period) before
termination will be effective. If no agreement is reached, the loss of Big 10
Tires would have a material negative impact upon the Company's Automotive
division since the revenues from Big 10 Tires represent approximately 25% of
total Automotive revenues for the current fiscal year. However, new agents
have recently signed agency agreements which will reduce the net reduction in
revenues from a 25% loss to a 19% loss. Company management has been in
discussions with Big 10 Tire Company since December 1994 regarding this
licensing arrangement and will continue to seek an amicable resolution to
these contract negotiations. No assurance can be given, however, that these
negotiations will be successfully consummated.
Any additional expansion of the Company's network of regional tire retail
dealers is anticipated to be financed through operating cash flows provided by
the Company's automotive services operations (which includes the money
received from the Sears settlement). Management has spent approximately
$146,217 (during the nine month period ended March 31, 1995) for the redesign
of the Combi System TM7000, which should increase the effectiveness and
decrease the total cost of the machine.
D. RESULTS OF OPERATIONS:
For the Three and Nine Months Ended March 31, 1995
Revenues and other income for the three months ended March 31, 1995 ("Jan.
- - March 1995") increased $495,556 (186%) to $761,472 from $265,916 for the
three months ended March 31, 1994 ("Jan. - March 1994"). This increase is
primarily due to additional real property revenues from the Imeson Center.
Revenues and other income for the nine months ended March 31, 1995 ("July -
March 1995") decreased $1,815,348 (49%) to $1,883,352 from $3,698,700 for the
nine months ended March 31, 1994 ("July - March 1994"). The primary reason
for this decrease is due to the fact that the Company and Sears (who generated
approximately $1.4 million in revenue for the Company in the Oct. - Dec. 1993
period and $4.2 million in the Jan. - March 1995 period) terminated their
relationship in February 1994. Additional revenue from the Imeson Center and
the installation of new licensed dealer programs partially offset the decrease
in Sears revenues. A licensed dealer program is an installed machine capable
of performing the Company's proprietary AccuBalance/Corvi wheel-balancing
service. As of March 31, 1995, the Company had 170 revenue producing programs
utilizing the Combi-Matcher, compared with 159 programs utilizing the Combi-
Matcher at March 31, 1994.
Service expenses for licensed dealer programs for Jan. - March 1995
increased $13,107 (14%) to $107,661 from $94,554 for Jan. - March 1994.
Service expenses for the nine month period, July - March 1995, decreased
$642,913 (69%) to $296,222 from $939,135 for July - March 1994. Service
expenses for Jan. - March 1995, as a percentage of Licensed dealer program
revenues, increased to 40% from 37% during the Jan. - March 1994 period.
Service expenses for July - March 1995, as a percentage of Licensed dealer
program revenues, increased to 36% from 26% during the July - March 1994
period. The slight increase for service expenses for the three month period
Jan. - March 1995 reflects an increase in bonuses and costs for field
personnel associated with increased Licensed dealer program revenues and
installations. The increase for service expenses as a percentage of Licensed
dealer program revenues for both the three month period and the nine month
period is due to slightly higher expenses, and for the nine month period,
substantially lower revenue than the prior year.
General and administrative expenses for Jan. - March 1995 decreased
$1,502,166 (77%) to $435,861 from $1,938,027 for Jan. - March 1994. General
and administrative expenses for the nine month period, July - March 1995,
decreased $1,018,174 (29%) to $2,466,811 from $3,494,985 for July - March
1994. General and administrative expenses as a percentage of revenue for Jan.
- - March 1995 decreased to 57% from 729%. General and administrative expenses
for July - March 1995, as a percentage of revenue, increased to 131% from 94%.
The decrease in expenses from the prior year for the three month and nine
month periods are due to among other things, 1) a decrease in professional
fees that arose from various litigation matters 2) a decrease in technology
expense, and 3) the capitalization of additional costs above the prior year
associated with an increase in the production of the Combi-Matcher from the
prior year.
Depreciation and amortization expense for Jan. - March 1995 decreased
$251,036 (55%) to $205,104 from $456,140 for Jan. - March 1994. Depreciation
and amortization expense for the nine month period, July - March 1995,
decreased $1,214,101 (68%) to $581,206 from $1,795,307 for July - March 1994.
This decrease is a result of the discontinuance of depreciation for Dealer
Licensed machines previously installed at Sears (such machines were sold to
Sears on February 24, 1994) and the discontinuance of amortization of deferred
borrowing costs (which were written off in December 1993), which decrease has
been partially offset by depreciation expense for the warehouse facility
located at the Imeson Center and the amortization of clearing costs of the
warehouse facility.
Interest expense for Jan. - March 1995 decreased $91,002 (96%) to $3,416
from $94,418 for Jan. - March 1994. Interest expense for the nine month
period, July - March 1995, decreased $541,765 (98%) to $10,030 from $551,795
for July - March 1994. This decrease reflects the Company's payment of the
remaining amount of its debt to PNC Bank of Kentucky, Inc. ("PNC") in February
1994 and all of its Mass Mutual Life Insurance Company ("Mass Mutual") debt in
September 1993.
Gain on the sale of assets for Jan. - March 1995 increased $24,005 to
$19,973 from a loss of $4,032 for Jan. - March 1994. Gain on the sale of
assets for the nine month period, July - March 1995, increased $26,189 to
$14,343 from a loss of $11,846 for July - March 1994.
For the three months ended March 31, 1995 the Company reported income
before income taxes and extra-ordinary gain of $29,403 versus income of
$10,814,052 during the same period of the prior fiscal year. The Company
generated net income, after taxes, of $29,403 for the Jan. - March 1995 period
as compared to income of $13,096,293 for the comparable Jan. - March 1994
period. For the nine months ended March 31, 1995 the Company reported a loss
before income taxes and extra-ordinary gain of $1,464,636 versus income of
$10,050,962 during the same period of the prior fiscal year. The Company
generated a net loss, after taxes, of $1,464,636 for the July - March 1995
period as compared to income of $18,645,703 for the comparable July - March
1994 period. The reason for the reduction in income is due to the non-
recurrence of the extra-ordinary item and the reduction in revenues from the
Sears settlement.
E. Liquidity and Capital Resources:
The Company's consolidated balance sheet is presented on a classified
basis. As of March 31, 1995, the Company's primary sources of liquidity were
$47,847 in cash, $3,038,622 in marketable securities and certificates of
deposit, and $241,022 of trade accounts receivable. As of March 31, 1995, the
aggregate amount of the Company's short term liabilities (accounts payable,
accrued liabilities, income taxes payable, accrued interest and sales and
payroll taxes payable) was $1,261,102. The net liquidity of the Company as of
March 31, 1995 was $2,066,389.
Management believes these net sources of liquidity and cash flow will be
adequate to meet present obligations maturing in the fiscal year ending June
30, 1995.
Due to the classification of certain investments as trading securities, see
footnote 2, the $8,130,437 of proceeds from the sale of such securities (which
had been purchased with the proceeds from the Sears settlement) falls into
cash provided by operating activities. Because of that classification, the
Company generated cash provided by operating activities during the July -
March 1995 period of $3,985,533 compared with net cash provided by operating
activities of $2,738,769 for the July - March 1994 period. Absent the sale
of those securities, the Company would not have had a positive cash flow from
operating activities for the nine month period, rather it would have used
$2,970,533 of cash in operating activities for the July - March 1995 period.
For the three month period ended Jan. - March 1995 , the Company used cash
from operating activities, exclusive of the trading securities, of $489,516.
The Company purchased a 35,000 square foot office/warehouse facility for
use by its automotive division for a total purchase price of $450,000 on July
8, 1994 and spent an additional $56,000 for improvements. The Company owns
this property free and clear of liens and encumbrances. The Company's
principal executive offices will remain located in downtown Tampa.
Net cash used in investing activities in the July - March 1995 period was
$4,674,491, as compared with $440,265 for the July - March 1994 period. Of
the $4,674,491 amount, $3,390,116 was used to purchase securities held to
maturity. Of the $1,284,375 used for capital expenditures, $192,034 was used
by the Imeson Center to purchase equipment and to renovate the Jacksonville
property. The remaining $1,092,341 used in investing activities represents
the purchase of the Company's 35,000 square foot office/warehouse building for
$450,000, leasehold improvements at the new building, the purchase of
additional inventory, the capitalization of costs for the improvement of the
TM7000, and the purchase of other items that are used in the business.
Net cash provided by financing activities in the July - March 1995 period
was $311,897, as compared to net cash used by financing activities of
$2,474,493 for the July - March 1994 period. This change is primarily due to
the settlement and payment of all of the Company's outstanding debt, except
for certain long-term lease obligations, and the financing of certain
automobile and equipment loans and insurance finance agreements.
The Company has incurred and expects to incur substantial legal expenses
and settlement costs associated with the SEC investigation and other current
litigation. The Company is unable to predict the total legal and settlement
costs that will ultimately be incurred in these matters. The Company's other
litigation matters involved ASX Investment, Kerry F. Marler (a former officer
and director), and Harvey More (a consultant on the Sears settlement). The
Company is attempting to recover from Mr. Marler the costs associated with the
ASX lawsuit, but there is no assurance such costs can be recovered from him.
PART II - OTHER INFORMATION
Item 1. - Legal Proceedings - No material events have occurred in the
Company's ongoing litigation matters. For the prior history of
such litigation, please refer to the Company's Annual Report on
Form 10-KSB for the year ended June 30, 1994.
Item 2. - Changes in Securities - None.
Item 3. - Defaults Upon Senior Securities - None.
Item 4. - Submission of Matters to a Vote of Security Holders - None
Item 5. - Other Information - None.
Item 6. - Exhibits and Reports on Form 8-K.
(a) Exhibits
Reg. S-B
Item No.
Description Exhibit
Page No.
11(a) Computation of Earnings per Share attached
(b) Reports on Form 8-K
During its most recent quarter ended March 31, 1995, no current Reports on
Form 8-K were filed by the Company.
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.
Excal Enterprises, Inc.
Registrant
Dated May 13, 1996 /s/W. Carey Webb
W. Carey Webb
Chief Executive Officer and President
Dated May 13, 1996 /s/Timothy R. Barnes
Timothy R. Barnes
Vice President and Chief Financial Officer
ASSIX INTERNATIONAL, INC. Exhibit 11
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
Primary earnings per common and
common equivalent share:
Net income (loss) $ 29,403 $13,096,293 $(1,464,636) $18,645,703
Add interest on long-term
debt net of income taxes (a) -- -- -- --
------ ---------- --------- ----------
Adjusted income (loss)
applicable to common and
common equivalent shares $ 29,403 $13,096,293 $(1,464,636) $18,645,703
====== ========== ========= ==========
Weighted average number of common and
common equivalent shares outstanding:
Weighted average number of shares
of common stock outstanding 4,666,866 4,666,866 4,666,866 4,666,866
Common stock equivalents
representing dilutive
options and warrants (b) -- -- -- --
-------- --------- --------- ---------
Weighted average number of
common and common equivalent
shares outstanding 4,666,866 4,666,866 4,666,866 4,666,866
========= ========= ========= =========
Income (loss) from continuing
operations (after taxes) $ .01 $ 2.35 $( .31) $ 2.19
Extra-ordinary item -- .46 -- 1.81
---- ---- ---- ----
Primary earnings (loss) per common
and common equivalent share $ .01 $ 2.81 $( .31) $ 4.00
==== ==== ==== ====
(a) Adjustment to net income (loss) has been shown net of tax effects which
were calculated at 39% of the gross amount of the adjustment.
(b) Earnings (loss) per common and common equivalent share for the three
months ended March 31, 1995, and 1994 have been computed based upon the
weighted average number of common shares outstanding during the period.
Common stock warrants and options are not considered in the computations
because they are anti-dilutive in the aggregate.
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-QSB/A1 FOR THE
QUARTER ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 47847
<SECURITIES> 3038622
<RECEIVABLES> 324534
<ALLOWANCES> 952
<INVENTORY> 351053
<CURRENT-ASSETS> 4340087
<PP&E> 8193819
<DEPRECIATION> 1572609
<TOTAL-ASSETS> 13812466
<CURRENT-LIABILITIES> 1261102
<BONDS> 73928
0
0
<COMMON> 4713
<OTHER-SE> 9878924
<TOTAL-LIABILITY-AND-EQUITY> 13812466
<SALES> 1464506
<TOTAL-REVENUES> 1883352
<CGS> 0
<TOTAL-COSTS> 3337958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10030
<INCOME-PRETAX> (1464636)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1464636)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1464636)
<EPS-PRIMARY> (.31)
<EPS-DILUTED> (.31)
</TABLE>
