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Previous: FRANKLIN TEMPLETON JAPAN FUND, NSAR-B, 1997-05-28 |
Next: GABELLI MONEY MARKET FUNDS, NSAR-A, 1997-05-28 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter period ended March 31, 1997
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period from _____ to _____
Commission File No. 33-47921-A
Texas Equipment Corp.
- -------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 62-1459870
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
110 Greene St., Suite 800, New York, New York 10012
- -------------------------------------------------------------------------------
(Address of principal executive offices)
(212) 334-6700
- -------------------------------------------------------------------------------
(Issuer's Telephone number)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer (1) has 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 |_|
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity as of the latest practicable date: 24,704,886
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- ------------
(Unaudited)
CURRENT ASSETS
<S> <C> <C>
Cash and Temporary Cash Investments $ 666,656 $ 2,661,058
Accounts Receivable -
Trade 1,074,516 872,815
Employees and Other 578,391 204,649
Inventories, at the lower of cost (principally specific
identification and average cost) or market value 11,573,175 5,380,188
Prepaid Expenses 12,500 12,500
------------- -------------
TOTAL CURRENT ASSETS 13,905,238 9,131,210
----------- ------------
LAND, BUILDINGS AND EQUIPMENT, at cost 3,917,990 2,111,369
Less Accumulated Depreciation (942,831) (866,927)
------------ ------------
NET LAND, BUILDINGS AND EQUIPMENT 2,975,159 1,244,442
------------ ------------
OTHER ASSETS
Finance Receivables 791,200 731,028
Cash Surrender Value of Insurance 129,156 129,156
Other Assets 22,945 23,945
Goodwill, net of accumulated amortization of $57,209 133,489 136,667
Stockholders' Receivables 137,115 215,810
------------- ------------
TOTAL OTHER ASSETS 1,213,905 1,236,606
------------ ------------
TOTAL ASSETS $18,094,302 $11,612,258
=========== ===========
</TABLE>
The accompanying note is an integral
part of these consolidated financial statements.
(Continued)
F-1
<PAGE>
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ -------------
(Unaudited)
CURRENT LIABILITIES
<S> <C> <C>
Notes Payable $ 458,500 $ 300,000
Current Maturities of Long-Term Debt 377,644 396,022
Accounts Payable Trade -
John Deere Company 7,228,562 2,190,355
Other 765,292 437,564
Accrued Expenses 749,092 753,271
Customer Deposits 285,315 79,500
Deferred Tax Liability 159,800 159,800
------------- ------------
TOTAL CURRENT LIABILITIES 10,024,205 4,316,512
------------ ------------
LONG-TERM DEBT, net of current maturities 1,682,932 1,005,762
DEFERRED TAX LIABILITY 107,200 107,200
------------- ------------
TOTAL LIABILITIES 11,814,337 5,429,474
------------ ------------
STOCKHOLDERS' EQUITY
Common Stock, $.001 Par Value. Authorized 25,000,000;
Issued and Outstanding 24,704,886 24,705 24,705
Paid in Capital 2,534,952 2,534,952
Retained Earnings 3,720,308 3,623,127
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 6,279,965 6,182,784
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $18,094,302 $11,612,258
=========== ===========
</TABLE>
The accompanying note is an integral part
of these consolidated financial statements.
F-2
<PAGE>
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------
1997 1996
------------- ------------
<S> <C> <C>
REVENUES $9,885,086 $6,834,616
COST OF REVENUES (8,496,751) (6,076,112)
---------- ----------
GROSS PROFIT 1,388,335 758,504
---------- ----------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
Commissions, Salaries, and
Employee Benefits 515,537 328,380
Amortization and Depreciation 76,482 38,576
Collection and Bad Debt Expense 14,205 12,109
Marinex Operating Expenses 228,162 -
Other Operating Expenses 419,200 165,161
----------- ----------
Total Selling, General and
Administrative Expenses 1,253,586 544,226
---------- ----------
OTHER INCOME (EXPENSE)
Interest Income 53,693 40,520
Interest Expense (53,571) (67,126)
Other Income (Expense) 12,550 (8,648)
----------- -----------
INCOME BEFORE INCOME TAXES 147,421 179,024
INCOME TAXES 50,240 60,870
----------- ----------
NET INCOME $ 97,181 $ 118,154
=========== =========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING 24,704,886 16,850,000
========== ==========
EARNINGS PER SHARE $ .00 $ .01
============= ============
</TABLE>
The accompanying note is an integral
part of these consolidated financial statements.
F-3
<PAGE>
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
TOTAL
PREFERRED STOCK COMMON STOCK STOCK-
------------------ -------------------- PAID IN RETAINED TREASURY HOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS SHARES EQUITY
------ ------ --------- ------ -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 596,305 596,305 100,000 100,000 - 2,886,776 (96,477) 3,486,604
Acquisition of Parent - Note 1
September 17, 1996 (596,305) (596,305) 24,604,886 (75,295) 2,534,952 - 96,477 1,959,829
Net Income - - - - - 736,351 - 736,351
---------- --------- ----------- --------- ---------- ---------- ---------- -----------
Balance, December 31, 1996 - - 24,704,886 24,705 2,534,952 3,623,127 - 6,182,784
Net Income (Unaudited) - - - - - 97,181 - 97,181
---------- --------- ----------- --------- ---------- ---------- ---------- -----------
Balance, March 31, 1997 - $ - 24,704,886 $ 24,705 $2,534,952 $3,720,308 $ - $6,279,965
========== ========= =========== ========= ========== ========== ========== ==========
</TABLE>
The accompanying note is an integral
part of these consolidated financial statements
F-4
<PAGE>
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
----------- ---------
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 97,181 $118,114
Adjustments to Reconcile Net Income
to Net Cash from Operating Activities
Amortization and Depreciation 79,082 38,575
Gain on Disposal of Assets - 3,502
(Increase) Decrease in Finance Receivable (60,172) 1,792
Changes in Current Assets and Liabilities
(Increase) in Accounts Receivable (575,443) (515,941)
(Increase) in Inventories (6,192,987) (365,794)
Increase in Accounts Payable 5,365,935 824,240
Increase (Decrease) in Accrued Liabilities (4,179) 47,024
Increase in Customer Deposits 205,815 -
(Increase) Decrease in Other Assets 1,000 (36,617)
------------- ---------
NET CASH FLOW (USED) PROVIDED
BY OPERATING ACTIVITIES (1,083,768) 114,895
----------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of Land, Buildings and Equipment (1,834,621) (5,461)
Proceeds from Sale of Equipment 28,000 46,507
(Increase) Decrease in Stockholders' Receivables 78,695 (7,552)
------------ ---------
NET CASH FLOWS (USED) PROVIDED
BY INVESTING ACTIVITIES $(1,727,926) $ 33,494
----------- --------
</TABLE>
The accompanying note is an integral
part of these consolidated financial statements.
(Continued)
F-5
<PAGE>
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
------------ ----------
<S> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Note Borrowings $1,242,101 $116,232
Repayments of Note Borrowings (424,809) (211,006)
----------- --------
NET CASH FLOW PROVIDED (USED) BY
FINANCING ACTIVITIES 817,292 (94,774)
----------- ---------
NET (DECREASE) INCREASE IN CASH (1,994,402) 53,615
CASH AT THE BEGINNING OF THE PERIOD 2,661,058 250,031
---------- --------
CASH AT THE END OF THE PERIOD $ 666,656 $303,646
========== ========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash Paid During the Period For:
Interest Expense $90,694 $ 24,251
======= ========
Income Taxes $50,000 $ -
======= ========
</TABLE>
The accompanying note is an integral
part of these consolidated financial statements.
F-6
<PAGE>
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principals for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulations S-X. They do not include all information and notes
required by generally accepted accounting principals for complete financial
statements. However, except as disclosed, there has been no material change
in the information disclosed in the notes to consolidated financial
statements included in the Annual Report on Form 10-K of Texas Equipment
Corporation and Subsidiaries for the year ended December 31, 1996. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 1997, are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1997.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and results
of Operations.
Revenues increased approximately 45% to $9,885,086 from $6,834,616, in the first
quarter of 1997 compared to the first quarter of 1996. Gross margins also
increased in the first quarter of 1996, to approximately 14% from 11%, resulting
in an increase of gross profit to $1,388,335 from $758,504, an increase of
approximately 83%. These revenues are derived solely from the company's
agricultural sales and the increase reflects the acquisition by the Company of
three additional stores.
Selling, general and administrative expenses increased to $1,253,586 in the
first quarter of 1997 compared to $544,226 in the first quarter of 1996. While
Commissions, Salaries, and Employee Benefits increased to $515,537 from
$328,380. This increase results from increased sales. Other Operating Expenses
also increased, to $419,200 from $165,161. This increase is principally
attributable to accounting and legal fees incurred in the first quarter of 1997.
A significant portion of the accounting and legal fees reflect the cost of being
publicly held and the cost the Company has incurred in defending litigation
brought by Messrs. Braun and Platkin, principals in the Company's wholly owned
subsidiary, Marinex.
Marinex incurred a loss of $228,162 on gross revenues of $60,400. This amount is
included in the Company's Selling, General and Administrative costs. These costs
include amounts paid to Messrs. Braun and Platkin, directors and officers of
Marinex, as well as legal fees advanced by Marinex in its litigation against the
Company as described in more detail below.
Liquidity and Capital Resources
Texas Equipment Co., Inc., the Company's subsidiary selling John Deere
agricultural equipment, continues to expand its operations on a profitable
basis. This expansion, however, is inhibited by the cost of litigation commenced
by Messrs. Braun and Platkin who together constitute an absolute majority of the
board of directors of Marinex. As noted below virtually all of the working
capital of Marinex has been expended for legal expenses related to the
litigation and purported salaries for Messrs. Braun and Platkin.
Recently, the Company learned that in the first quarter of 1997, Marinex
recorded $90,000 in prepaid legal expenses and $360,000 in prepaid salaries.
Management of the Company believes, but does not know, that the $90,000 prepaid
legal expense is being used to fund legal expenses of the litigation brought
against the Company by Messrs. Braun and Platkin, and the $360,000 represent
prepayments of salaries to Messrs. Braun and Platkin for the second, third and
fourth quarters of 1997. The Company is currently evaluating its options,
including the possible initiation of litigation, with respect to such
prepayments.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 24 - Financial Data Schedule
(b) Form 8-K dated May 12, 1997, Item 5
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: May 23, 1997
/s/ Paul Condit
---------------
Paul Condit, President and principal
financial officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 666,656
<SECURITIES> 0
<RECEIVABLES> 1,652,907
<ALLOWANCES> 0
<INVENTORY> 11,573,175
<CURRENT-ASSETS> 13,905,238
<PP&E> 2,975,159
<DEPRECIATION> 73,304
<TOTAL-ASSETS> 18,094,302
<CURRENT-LIABILITIES> 10,024,205
<BONDS> 0
0
0
<COMMON> 24,705
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 18,094,302
<SALES> 9,885,086
<TOTAL-REVENUES> 9,885,086
<CGS> 8,496,751
<TOTAL-COSTS> 1,253,586
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,571
<INCOME-PRETAX> 147,421
<INCOME-TAX> 50,240
<INCOME-CONTINUING> 97,181
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 97,181
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0
</TABLE>
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