U.S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
------- -------
Commission file number 0-17321
HITOX CORPORATION OF AMERICA
(Exact name of small business issuer as specified in its charter)
Delaware 74-2081929
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Furman Plaza Building
418 Peoples Street, Corpus Christi, Texas 78401
(Address of principal executive offices)
Issuer's telephone number: (512) 882-5175
None
(Former name, former address and former fiscal
year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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, $0.25 par value 4,657,487
(Class) (Outstanding as of July 18, 1996)
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
<PAGE> 1
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HITOX CORPORATION OF AMERICA
INDEX
Page No.
--------
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets--
June 30, 1996 and December 31, 1995 3-4
Condensed Statements of Income--
three months ended June 30, 1996 and 1995 and
six months ended June 30, 1996 and 1995 5
Condensed Statements of Cash Flows--
six months ended June 30, 1996 and 1995 6
Notes to Condensed Financial
Statements 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-12
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
<PAGE> 2
<PAGE>
<TABLE>
HITOX CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(in thousands)
<CAPTION>
June 30, 1996 December 31,
(Unaudited) 1995
------------------- -------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,335 $ 828
Trade accounts receivable; no allowance for
doubtful accounts considered necessary 1,615 1,130
Other receivables 45 28
Inventories:
Raw materials 3,546 2,923
Finished goods 798 1,141
Supplies 85 90
------------------- -------------------
Total inventories 4,429 4,154
Other current assets 112 36
------------------- -------------------
Total current assets 10,536 6,176
Property, plant and equipment 9,073 8,983
Accumulated depreciation (4,940) (4,645)
------------------- -------------------
4,133 4,338
Other assets 142 171
------------------- -------------------
$ 14,811 $ 10,685
=================== ===================
<FN>
See Notes to Condensed Financial Statements
</FN>
</TABLE>
<PAGE> 3
<PAGE>
<TABLE>
HITOX CORPORATION OF AMERICA
CONDENSED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(in thousands, except par value)
<CAPTION>
June 30, 1996 December 31,
(Unaudited) 1995
------------------- -------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,399 $ 1,254
Accrued expenses 332 538
Current maturities of long-term debt 61 59
------------------- -------------------
Total current liabilities 1,792 1,851
Subordinated debentures - related party 5,000 5,000
Other long-term debt, excluding current maturities 374 406
------------------- -------------------
Total liabilities 7,166 7,257
Commitments and contingencies
Shareholders' equity:
Common stock $.25 par value; authorized 10,000
shares; shares outstanding after deducting 88
shares held in treasury, 4,657 at June 30, 1996
and 3,657 at December 31, 1995, respectively 1,186 936
Additional paid-in capital 14,341 10,603
Accumulated deficit (7,839) (8,068)
------------------- -------------------
7,688 3,471
Less: cost of treasury stock (43) (43)
------------------- -------------------
Total shareholders' equity 7,645 3,428
------------------- -------------------
$ 14,811 $ 10,685
=================== ===================
<FN>
See Notes to Condensed Financial Statements
</FN>
</TABLE>
<PAGE> 4
<PAGE>
<TABLE>
HITOX CORPORATION OF AMERICA
CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Sales $ 2,953 $ 3,204 $ 5,655 $ 5,872
Costs and expenses:
Cost of products sold 2,067 2,122 4,038 4,037
Selling, administrative and general 570 645 1,086 1,140
------------ ------------ ------------ ------------
Operating income 316 437 531 695
Other income (expenses):
Interest income 5 8 8 32
Interest expense (143) (159) (287) (330)
Other, net (10) (9) (23) (17)
------------ ------------ ------------ ------------
Income before income tax 168 277 229 380
Provision for income tax -- 1 -- 1
------------ ------------ ------------ ------------
NET INCOME $ 168 $ 276 $ 229 $ 379
============ ============ ============ ============
Income per common share:
Primary $ 0.04 $ 0.07 $ 0.06 $ 0.10
Fully diluted 0.04 0.07 0.06 0.10
Weighted average common shares and
equivalents outstanding:
Primary 3,805 3,772 3,764 3,713
Fully diluted 3,865 3,772 3,837 3,733
<FN>
See Notes to Condensed Financial Statements
</FN>
</TABLE>
<PAGE> 5
<PAGE>
<TABLE>
HITOX CORPORATION OF AMERICA
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<CAPTION>
Six Months Ended
June 30,
--------------------------------------
1996 1995
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 229 $ 379
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 325 349
Inventory valuation charge 4 --
Other -- 6
Changes in working capital:
Receivables (502) (681)
Inventories (279) (27)
Other current assets (76) 31
Accounts payable and accrued expenses (61) 715
----------------- -----------------
Net cash (used in) provided by operating activities (360) 772
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (91) (120)
----------------- -----------------
Net cash used in investing activities (91) (120)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (30) (31)
Net payments on revolving line of credit -- (2,267)
Proceeds from the issuance of common stock 3,988 --
----------------- -----------------
Net cash provided by (used in) financing activities 3,958 (2,298)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,507 (1,646)
CASH AND CASH EQUIVALENTS:
AT BEGINNING OF PERIOD 828 2,483
----------------- -----------------
AT END OF PERIOD $ 4,335 $ 837
================= =================
Supplemental disclosure of cash flow information:
Interest paid $ 244 $ 510
Income taxes paid 3 1
Income tax refunds received -- 39
<FN>
See Notes to Condensed Financial Statements
</FN>
</TABLE>
<PAGE> 6
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. Accounting Policies
Basis of Presentation
The interim financial statements of Hitox Corporation of America (the
"Company") are unaudited, but include all adjustments which the Company deems
necessary for a fair presentation of its financial position and results of
operations. All adjustments are of a normal and recurring nature. Results of
operations for interim periods are not necessarily indicative of the results to
be expected for the full year. All significant accounting policies conform to
those previously set forth in the Company's fiscal 1995 Annual Report on Form
10-KSB.
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amount of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from these estimates.
Reclassification
Certain reclassifications have been made to prior years' condensed
financial statements to conform to present reporting classifications.
Stock Based Compensation
The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The Company has accounted for stock option grants in accordance with
APB Opinion No. 25, Accounting for Stock Issued to Employees, and, accordingly,
recognized no compensation expense for the stock option grants. The Company
will not adopt FASB Statement No. 123, Accounting for Stock-Based Compensation
and will continue to account for stock option grants in accordance with APB
Opinion No. 25. FASB Statement 123 requires certain disclosures about stock-
based compensation plans for all companies regardless of the method used to
account for them. Effective in 1996 calendar year-end financial statements,
companies that continue to apply APB 25 will be required to disclose pro forma
information as if the measurement provisions of Statement 123 had been adopted
in their entirety.
2. Debt
On August 31, 1995, the Company entered into a new loan agreement (the
"Loan Agreement") with NationsBank of Texas, N.A., (the "Bank"). The Loan
Agreement extends the maturity of a mortgage note on the Company's headquarters
building which had a principal balance of $435,000 on June 30, 1996. The
mortgage note is payable in 77 equal monthly installments of $8,390 each,
<PAGE> 7
<PAGE>
including principal and interest, at an interest rate of 9.5%, and matures
February 28, 2002. The Loan Agreement also increases the amount of the
Company's revolving line of credit from $1,400,000 to $2,000,000, and extends
the maturity date until April 30, 1997. The line of credit provides for
monthly interest payments on any outstanding principal balance at an interest
rate of the Bank's prime rate plus 1%. The Company had no outstanding balance
on the line of credit at June 30, 1996. Both the line of credit and the
mortgage note are secured by the office building, inventory and accounts
receivable. The Loan Agreement contains covenants which, among other things,
require maintenance of certain financial ratios. The Company was in compliance
with all covenants for the quarter ended June 30, 1996.
On June 30, 1996, the Company had $5,000,000 outstanding in subordinated
debenture notes (the "Debentures"), due June 15, 1999, interest payable
monthly, with $500,000 quarterly principal repayments to begin on September 15,
1997. The Company was in compliance with all covenants under the Debenture's
governing instrument for the quarter ended June 30, 1996.
3. Commitments
The Company purchases raw materials under a supply agreement (the "Supply
Agreement"). The Supply Agreement contains a take or pay arrangement for
specified quantities on a yearly basis, with a fixed price for the first two
years of its five year term. The Company anticipates that it will need and
take delivery of the quantities stipulated in the Supply Agreement.
4. Sale of Common Stock and Partial Prepayment of Debentures
On June 26, 1996, the Company completed the previously announced sale of
1,000,000 shares of common stock at $4.00 per share to Syarikat Megawati Sdn.
Bhd. ("Syarikat Megawati"). Syarikat Megawati is the majority owner of
Malaysian Titanium Corporation, which supplies the Company with its primary raw
material, synthetic rutile. The $4,000,000 proceeds from the sale were used to
prepay $4,000,000 of the outstanding principal balance on the Debentures on
July 1, 1996.
5. Subsequent Events
On July 31, 1996, the Company executed an amended loan agreement with the
Bank (the "Amended Loan Agreement"). The Amended Loan Agreement provides a new
$1,000,000 term loan (the "Term Loan") to the Company, with an interest rate of
8.17% per annum. The repayment terms of the Term Loan provide for monthly
payments of interest only until December 31, 1996, with monthly payments of
principal and interest of $31,415 beginning January 31, 1997, with the final
payment due on January 31, 2000. The proceeds of the Term Loan were used to
prepay the remaining $1,000,000 principal balance on the Debentures on July 31,
1996. Also as part of the Amended Loan Agreement, the expiration date of the
Company's line of credit was extended from April 30, 1997 to April 30, 1998,
and the interest rate was reduced from the Bank's prime rate plus 1.0% to the
Bank's prime rate plus 0.75%. The Amended Loan Agreement also reduces the
<PAGE> 8
<PAGE>
interest rate on the mortgage note on the building which includes the Company's
corporate headquarters from 9.5% to 9.0%.
<PAGE> 9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Sales:
Net sales for the second quarter of 1996 were $2,953,000 as compared to
$3,204,000 for the same quarter in 1995. Total net sales for the six months
ended June 30, 1996 were $5,655,000 compared with $5,872,000 for the same
period in 1995. The three month and six month decreases of approximately
$251,000 and $217,000, respectively, are due to decreases in sales quantities,
which are a result of general softness in the titanium dioxide pigment market,
both domestically and abroad, as well as continued weakness in the PVC market.
Titanium dioxide prices have fallen on weak demand as users have worked off
excess inventories purchased in 1995.
Gross Profit:
Gross profit for the second quarter of 1996 was $886,000, as compared to
$1,082,000 for the second quarter of 1995, a decrease of $196,000. Gross
profit as a percentage of sales decreased to 30.0% in the second quarter this
year as compared to 33.8% in the same quarter last year. The year to date
gross profit for the six months ended June 30, 1996 was $1,617,000, or 28.6% of
net sales compared with $1,835,000, or 31.3% of net sales for the same period
of 1995. The decrease in gross profit percentage for 1996 compared with 1995
is primarily the result of higher raw material costs in 1996, which had been
expected.
Expenses:
Total selling, administrative and general expenses declined from $645,000
during the second quarter of 1995, to $570,000 for the second quarter of 1996,
representing a decrease of approximately 11.6%. Total selling, administrative
and general expenses decreased from $1,140,000 during the six months ended June
30, 1995, to $1,086,000 for the same period of 1996, representing approximately
a 4.7% decrease. The net decrease in 1996 total selling, administrative and
general expenses compared with 1995 was accomplished in spite of an increase in
selling expenses for 1996, which was more than offset by a decrease in
administrative and general expenses, primarily from reductions in professional
fees and other cost reductions.
Interest Income:
During the second quarter of 1996, excess funds were deposited in short-
term interest bearing investments resulting in interest income of $5,000.
Total interest income for the six months ended June 30, 1996 was $8,000.
Interest income for the second quarter and first half of 1995 was $8,000 and
$32,000, respectively. Included in the six month total for 1995 is $20,000
resulting from a one time foreign currency transaction gain.
<PAGE> 10
<PAGE>
Interest Expense:
Interest expense decreased $16,000 in the second quarter of 1996 as
compared with the same quarter last year. For the six month period ended June
30, 1996, interest expense decreased $43,000, compared with 1995. Interest
expense was higher in 1995 because the Company accrued additional interest on
unpaid interest related to its subordinated debentures (the "Debentures"),
because the Company's bank prohibited making payments to the Debenture holders.
That situation was resolved with the signing of a new loan agreement in August
of 1995. In 1996, all scheduled payments to the Debenture holders have been
timely made.
Provision for Income Tax:
The Company has net operating loss and other carry forwards available to
offset the Company's regular taxable income. However, the Company is subject
to alternative minimum tax. Provision for income tax was $1,000 for the three
months and six months ended June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
At the end of June, the Company completed the previously announced sale of
1,000,000 shares of common stock at $4.00 per share. The result was an
unusually large working capital position at June 30, 1996 of $8,744,000, which
included $4,335,000 in cash. The cash balance was drawn down to prepay
$4,000,000 in outstanding 10.5% subordinated debentures at par on July 1, 1996.
After considering the effect of the payoff of the Debentures on July 1, the
Company's cash balance at June 30, 1996 would have been $335,000. The Company
used a net $360,000 of cash in operating activities for the six months ended
June 30, 1996, primarily as a result of changes in working capital. Accounts
receivable increased at June 30, 1996 compared with December 31, 1995, due to
higher sales volumes, and inventory has increased due to the seasonal increase
in raw material purchases.
The Company on an ongoing basis will finance its operations principally
through cash flows generated by operations, through bank financing and through
cash on hand. The Company has a continuing need for working capital to finance
raw material purchases, primarily synthetic rutile, which is now purchased
under a supply agreement (the "Supply Agreement") with its former subsidiary,
Malaysian Titanium Corporation. The Supply Agreement contains a take or pay
arrangement for specified quantities on a yearly basis, with a fixed price for
the first two years of its five year term. The Company anticipates that it
will need and take delivery of the quantities stipulated in the Supply
Agreement.
<PAGE> 11
<PAGE>
On August 31, 1995, the Company entered into a new loan agreement (the
"Loan Agreement") with NationsBank of Texas, N.A., (the "Bank"). The Loan
Agreement extends the maturity of a mortgage note on the Company's headquarters
building which had a principal balance of $435,000 on June 30, 1996. The
mortgage note is payable in 77 equal monthly installments of $8,390 each,
including principal and interest, at an interest rate of 9.5%, and matures
February 28, 2002. The Loan Agreement also increases the amount of the
Company's revolving line of credit from $1,400,000 to $2,000,000, and extends
the maturity date until April 30, 1997. The line of credit provides for
monthly interest payments on any outstanding principal balance at an interest
rate of the Bank's prime rate plus 1%. The Company had no outstanding balance
on the line of credit at June 30, 1996.
The Company owed $5,000,000 in subordinated debt (the "Debentures") at
June 30, 1996. On July 1, 1996, the Company prepaid $4,000,000 of principal on
the Debentures using proceeds from the sale of common stock. (See Note 4 of
the Notes to Condensed Financial Statements).
On July 31, 1996, the Company executed an amended loan agreement with the
Bank (the "Amended Loan Agreement"). The Amended Loan Agreement provides a new
$1,000,000 term loan (the "Term Loan") to the Company, with an interest rate of
8.17% per annum. The repayment terms of the Term Loan provide for monthly
payments of interest only until December 31, 1996, with monthly payments of
principal and interest of $31,415 beginning January 31, 1997, with the final
payment due on January 31, 2000. The proceeds of the Term Loan were used to
prepay the remaining $1,000,000 principal balance on the Debentures on July 31,
1996. Also as part of the Amended Loan Agreement, the expiration date of the
Company's line of credit was extended from April 30, 1997 to April 30, 1998,
and the interest rate was reduced from the Bank's prime rate plus 1.0% to the
Bank's prime rate plus 0.75%. The Amended Loan Agreement also reduces the
interest rate on the mortgage note on the building which includes the Company's
corporate headquarters from 9.5% to 9.0%.
<PAGE> 12
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K
Page No.
--------
(a) Exhibit 10 - First Amendment to Loan Agreement 14
Exhibit 11 - Earnings per share 17
Exhibit 27 - Financial Data Schedule 18
(b) Reports on Form 8-K: None
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.
Hitox Corporation of America
- --------------------------------------
(Registrant)
Date: August 12, 1996 THOMAS A. LANDSHOF
----------------- ---------------------------------
Thomas A. Landshof, President and
Chief Executive Officer
Date: August 12, 1996 CRAIG A.SCHKADE
----------------- ---------------------------------
Craig A. Schkade, Chief Financial
Officer (Principal Financial and
Accounting Officer)
<PAGE> 13
<PAGE>
Exhibit 10
FIRST AMENDMENT TO LOAN AGREEMENT
This is a First Amendment to a Loan Agreement by and among HITOX
CORPORATION OF AMERICA, a Delaware corporation ("Borrower") and NATIONSBANK OF
TEXAS, N.A., a national banking association ("NationsBank").
Borrower has entered into a loan agreement with NationsBank dated August
31, 1995, ("Loan Agreement"). Words which are capitalized herein which are
defined in the Loan Agreement shall have the same meanings as in the Loan
Agreement. Borrower has requested NationsBank to make an additional loan to it
and to modify the Revolving Note and Term Note as set forth herein.
NOW, THEREFORE, for valuable consideration, Borrower and NationsBank
mutually agree that the Loan Agreement shall be, and is hereby, amended as
follows:
1. Amendment to Paragraph 1.1. Paragraph 1.1 of the Loan Agreement is
amended to change "April 30, 1997" in the fourth line to "April 30, 1998," and
to substitute the promissory note which is attached as Exhibit A hereunto, with
a reduction in the interest rate from the prior note, as the "Revolving Note"
referred to in the Loan Agreement.
2. Amendment to Paragraph 1.5. Paragraph 1.5 of the Loan Agreement is
amended to read as follows:
1.5 Term Loan. NationsBank is the owner of a promissory note dated
June 27, 1988 from Borrower to Corpus Christi National Bank in the
original principal amount of $750,000, which has been modified by
Modifications of Promissory Note dated June 1, 1989, November 30, 1990 and
August 31, 1995 (as modified herein, the "Term Note"). NationsBank agrees
to lower the interest rate specified in the Term Note as indicated in the
Modification of Note which is attached as Exhibit C-1.
3. Addition of Paragraph 1.5a. Section I of the Loan Agreement is
amended to add the following as a new Paragraph 1.5a:
1.5a. Additional Term Loan. NationsBank agrees to lend Borrower the
sum of $1,000,000, which shall be evidenced by the promissory note which
is attached as Exhibit E, to which reference is here made for all purposes
("Additional Term Note").
4. Modification of Paragraph 1.7. Paragraph 1.7 of the Loan Agreement
is amended to add ",the Additional Term Note) after "Revolving Note" in the
second line, and to change "Exhibits A and C" to "Exhibits A, C-1 and E" in the
seventh line.
5. Modification of Paragraph 4.10. Paragraph 4.10 of the Loan Agreement
is amended to change "the lesser of $500,000 or a number which is equal to the
prior year's annual depreciation and net profit less all scheduled principal
<PAGE> 14
<PAGE>
payments on the Notes and all other loan obligations during 1996 and each
successive year thereafter," to "$1,000,000,".
6. Modification of Paragraph 4.17. Paragraph 4.17 of the Loan Agreement
is amended to change "$3,000,000" in the third line to "$3,500,000."
7. Modification of Paragraph 4.18. Paragraph 4.18 of the Loan Agreement
is amended to change "$2,800,000" in the second line to "$7,000,000 on December
31, 1996, increasing by $250,000 on each annual anniversary date thereof (i.e.,
$7,250,000 on December 31, 1997, $7,500,000 on December 31, 1998, etc.)."
8. Deletion of Paragraph 4.19. Paragraph 4.19 of the Loan Agreement is
deleted in its entirety.
9. Modification of Paragraph 4.20. Paragraph 4.20 of the Loan Agreement
is amended to change "0.6" in the third line to "0.75".
10. Financial Statements; Litigation. Borrower represents to NationsBank
that all financial statements which have been furnished to NationsBank are
correct and complete in all material respects, and fairly represent the
financial condition of Borrower on the dates thereof or for the periods
specified therein, and that no material adverse change has occurred since the
date of the latest of such financial statements. No litigation, arbitration
proceedings or governmental or regulatory proceedings are pending or threatened
against Borrower which, if adversely determined, would be likely to adversely
affect Borrower's financial condition or the legality, validity or
enforceability of the Loan Agreement, Notes or Security Documents.
11. Prior Documents. Borrower ratifies and confirms that all of the
representations and warranties, covenants, events of default and other
provisions of the Loan Agreement are true and correct and remain in full force
and effect, as of the date hereof. Borrower further ratifies and confirms that
all of the Security Documents shall also remain in full force and effect until
the Notes are paid in full.
12. RELEASE. For valuable consideration received to the full
satisfaction of Borrower, Borrower waives and releases any and all causes of
action against NationsBank, its agents and employees, for all acts and
omissions which have occurred prior to the signing of this First Amendment to
Loan Agreement, including but not limited to all causes of action for claims of
usury, fraud, deceit, misrepresentation, conspiracy, unconscionability, duress,
economic duress, defamation, control, interference with corporate governance,
tortious interference with contractual and business relationships, conflicts of
interest, misuse of insider information, concealment, disclosure, secrecy,
misuse of collateral, wrongful release of collateral, failure to inspect,
environmental due diligence, negligent loan processing and administration,
wrongful setoff, violations of statutes and regulations of governmental
entities and agencies (both civil and criminal), racketeering activities,
security and antitrust violations, tying arrangements, deceptive trade
practices (to the maximum extent permitted by law), and breach or abuse of any
alleged fiduciary duty, special relationship, course of conduct and/or
obligation of good faith and fair dealing. NationsBank and Borrower further
agree that the amount of their damages in all causes of action, including
<PAGE> 15
<PAGE>
causes of action arising after the date hereof, shall be limited to exclude all
(i) punitive and exemplary damages, (ii) damages attributable to lost profits
or opportunity, (iii) damages attributable to mental anguish and (iv) damages
attributable to pain and suffering, and the parties do hereby waive and release
all such damages with respect to any and all causes of action which may arise
at any time against any other party, their agents and employees.
13. THE WRITTEN LOAN AGREEMENT AS AMENDED, THE NOTES AND ALL CURRENTLY
AND PREVIOUSLY EXECUTED SECURITY DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Dated: July 31, 1996.
BORROWER:
HITOX CORPORATION OF AMERICA
By: THOMAS A. LANDSHOF
-------------------------------------
Thomas A. Landshof, President and CEO
NATIONSBANK:
NATIONSBANK OF TEXAS, N.A.
By: WILLIAM HULSEY
-------------------------------------
William Hulsey, Vice President
<PAGE> 16
<PAGE>
<TABLE>
Hitox Corporation of America Exhibit 11
Computation of Earnings Per Share (EPS)
(in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- ------------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE SHARES OUTSTANDING
Common Stock 3,712 3,657 3,685 3,657
Common Stock Equivalents, assumed exercise
of stock options and warrants (Treasury
Stock Method at average market value) 93 115 79 56
--------- --------- --------- ---------
Total for Primary EPS 3,805 3,772 3,764 3,713
Assumed exercise of stock options and
warrants (Treasury Stock Method at
greater of average or end of period
market value) 60 -- 73 20
--------- --------- --------- ---------
Total for Fully Diluted EPS 3,865 3,772 3,837 3,733
INCOME
Income for primary EPS:
Net income $ 168 $ 276 $ 229 $ 379
Income for fully diluted EPS:
Net income 168 276 229 379
INCOME PER SHARE
Primary $ 0.04 $ 0.07 $ 0.06 $ 0.10
Fully Diluted 0.04 0.07 0.06 0.10
</TABLE>
<PAGE> 17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> $4335
<SECURITIES> 0
<RECEIVABLES> 1615
<ALLOWANCES> 0
<INVENTORY> 4429
<CURRENT-ASSETS> 10536
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0
0
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</TABLE>
