-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DCgcIb40Lk7u2zXKYuw8IWYdGAljG/y3UEfXZRgiFU0EL4TgGzZgADnmhBfCr7aW bYQoE943Jz9pPuTr8sryrA== /in/edgar/work/20000814/0000832813-00-000004/0000832813-00-000004.txt : 20000921 0000832813-00-000004.hdr.sgml : 20000921 ACCESSION NUMBER: 0000832813-00-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXCAL ENTERPRISES INC CENTRAL INDEX KEY: 0000832813 STANDARD INDUSTRIAL CLASSIFICATION: [3559 ] IRS NUMBER: 592855398 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-17069 FILM NUMBER: 700220 BUSINESS ADDRESS: STREET 1: 100 N TAMPA ST STREET 2: STE 3575 CITY: TAMPA STATE: FL ZIP: 33602 BUSINESS PHONE: 8132240228 MAIL ADDRESS: STREET 1: 100 NORTH TAMPA ST SUITE 3575 STREET 2: 100 NORTH TAMPA ST SUITE 3575 CITY: TAMPA STATE: FL ZIP: 33602 FORMER COMPANY: FORMER CONFORMED NAME: ASSIX INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 10QSB 1 0001.txt 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, 2000 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from _______________ to _______________ Commission File No. 0-17069 Excal Enterprises, Inc. --------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Delaware 59-2855398 - ------------------------------- ---------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 100 North Tampa Street, Suite 3575, Tampa, Florida 33602 -------------------------------------------------------- (Address of principal executive offices) (813) 224-0228 ------------------------- Issuer's telephone number ___________________________________________________ (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 [ ] As of July 31, 2000, there were 3,871,377 shares of the issuer's common stock, par value $0.001, outstanding. Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X] PART I - FINANCIAL INFORMATION Item 1. Financial Statements. EXCAL ENTERPRISES, INC. CONSOLIDATED BALANCE SHEET JUNE 30, 2000 ASSETS (unaudited) Current assets Cash and cash equivalents $ 6,470,602 Marketable securities 206,601 Accounts receivable, less allowance of $144,421 760,835 Notes receivable 306,736 Income tax receivable 181,000 Inventory 702,279 Prepaid expenses and deposits 579,829 Deferred tax asset 284,000 ---------- Total current assets 9,491,882 ---------- Property, plant and equipment Land 1,600,000 Buildings and improvements 6,954,676 Furniture, fixtures, vehicles and equipment 2,158,496 ---------- 10,713,172 Less accumulated depreciation and amortization 2,276,955 ---------- Net property, plant and equipment 8,436,217 ---------- Notes receivable - related parties 261,394 Restricted cash reserves 621,956 Commission costs, less accumulated amortization of $336,832 319,633 Loan costs, less accumulated amortization of $458,141 374,843 ---------- Total Assets $ 19,505,925 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 615,960 Accrued liabilities 455,939 Reserve for litigation 434,246 Revolving line of credit 386,711 Current portion of long-term debt 501,079 ---------- Total current liabilities 2,393,935 Long-term debt 13,025,272 Deferred tax liability 1,247,000 ---------- Total liabilities 16,666,207 ---------- Minority interest equity 1,041 Stockholders' equity Preferred stock, $.01 par value, 7,500,000 shares authorized, 5,000,000 shares issued, no shares outstanding -- Common stock, $.001 par value, 20,000,000 shares authorized, 4,738,866 shares issued, 3,871,377 shares outstanding 4,738 Additional paid-in capital 3,985,842 Retained earnings 2,717,237 Less 867,489 shares of common stock held in treasury at cost ( 2,751,510) ---------- 3,956,307 Less notes receivable from stockholders ( 1,117,630) ---------- Total stockholders' equity 2,838,677 ---------- Total Liabilities and Stockholders' Equity $ 19,505,925 ========== The accompanying notes are an integral part of the consolidated financial statements. EXCAL ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended June30 ------------------------- 2000 1999 --------- --------- Rental revenue $ 1,291,638 $ 1,198,833 Sports licensing sales 409,741 304,102 --------- --------- Total net revenue 1,701,379 1,502,935 Cost of sports licensing sales 389,218 316,317 --------- --------- Gross margin 1,312,161 1,186,618 --------- --------- Rental operating costs 597,115 545,992 Sports licensing operating costs 450,381 338,337 Depreciation and amortization 154,113 160,140 --------- --------- Total operating costs 1,201,609 1,044,469 --------- --------- Net operating profit 110,552 142,149 --------- --------- Other expense (income) Interest expense 319,520 322,802 Professional fees related to litigation 59,372 48,499 Net realized and unrealized loss on marketable securities 188,457 -- Gain on disposals of assets ( 1,741) -- Interest income ( 141,463) ( 141,673) Miscellaneous income ( 11,574) ( 20,885) --------- --------- Net other expense 412,571 208,743 --------- --------- Loss before income taxes ( 302,019) ( 66,594) Income tax provision (benefit) 15,000 ( 26,000) --------- --------- Net loss $( 317,019) $( 40,594) ========= ========= Loss per share Basic $( .08) $( .01) ========= ========= Diluted $( .08) $( .01) ========= ========= Weighted average shares outstanding Common 3,876,731 4,262,349 Common and equivalent 3,876,731 4,262,349 The accompanying notes are an integral part of the consolidated financial statements. EXCAL ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended June 30 -------------------------- 2000 1999 --------- --------- Cash provided by operating activities Net loss $( 317,019) $( 40,594) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 183,169 193,130 Other adjustments 42,908 ( 42,410) Increase in net operating assets ( 792,410) ( 475,955) --------- --------- Net cash used by operating activities ( 883,352) ( 365,829) --------- --------- Cash flows from investing activities Proceeds from sale of assets 5,000 -- Property and equipment additions ( 53,582) ( 8,763) --------- --------- Net cash used by investing activities ( 48,582) ( 8,763 --------- --------- Cash flows from financing activities Net proceeds from notes payable 13,624 10,034 Principal repayments of long-term debt ( 50,293) ( 43,094) Purchase of treasury stock ( 45,422) ( 148,983) --------- --------- Net cash used by financing activities ( 82,091) ( 182,043) --------- --------- Decrease in cash (1,014,025) ( 556,635) Cash and cash equivalents at beginning of period 7,484,627 9,655,973 --------- --------- Cash and cash equivalents at end of period $ 6,470,602 $ 9,099,338 ========= ========= The accompanying notes are an integral part of the consolidated financial statements. EXCAL ENTERPRISES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - FINANCIAL STATEMENTS In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of (a) the results of operations for the three-month periods ended June 30, 2000 and 1999, (b) the financial position at June 30, 2000, and (c) cash flows for the three-month periods ended June 30, 2000 and 1999, have been made. Certain reclassifications have been made to the financial statements for the three- month periods ended June 30, 1999 to conform to the June 30, 2000 presentation. None of the reclassifications affected the financial position or results of operations. The unaudited consolidated financial statements and notes are presented as permitted by Form 10-QSB. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. The accompanying consolidated financial statements and notes should be read in conjunction with the audited financial statements and notes of the Company for the fiscal year ended March 31, 2000. The revenue of the sports licensing division has been very seasonal with the majority of its revenue in the months of July through November. The results of operations for the three-month period ended June 30, 2000 are not necessarily indicative of those to be expected for the entire year. NOTE 2 - NOTES PAYABLE The Company's $375,000 line of credit with European American Bank expired in July 2000. Renewal terms have not been finalized. In addition, Roxbury was in violation of the financial loan covenants regarding the level of equity and debt-to-equity ratio at June 30, 2000. Therefore, the entire balance of the term loan is included in the current portion of long-term debt at June 30, 2000. NOTE 3 - STOCKHOLDERS' EQUITY During the three months ended June 30, 2000, the Company purchased 20,300 shares of its common stock in market transactions at an aggregate cost of $45,422. NOTE 4 - SEGMENT INFORMATION The Company has two reportable business segments. These segments have been determined by product line and consist of the rental of commercial real estate and the manufacture and distribution of sports licensing products. The revenue shown on the face of the financial statements was from external sources. The segment information disclosures not included on the face of the financial statements are detailed in the tables below. The "Other" category includes corporate related items and income and expense items not allocated to reportable segments. Three Months Ended June 30 -------------------------- 2000 1999 --------- --------- Segment income (loss) before income taxes Real estate operations $ 352,278 $ 267,620 Sports licensing operations ( 475,597) ( 380,822) Other ( 178,700) 46,608 --------- --------- Total income (loss) before income taxes $( 302,019) $( 66,594) ========= ========= As of June 30 --------------------------- 2000 1999 ---------- ---------- Identifiable assets Real estate operations $14,221,173 $13,323,226 Sports licensing operations 2,086,862 2,500,103 Other 3,197,890 6,186,442 ---------- ---------- Total identifiable assets $19,505,925 $22,009,771 ========== ========== Item 2. Management's Discussion and Analysis. Except for historical matters, the matters discussed in this Form 10-QSB are forward-looking statements based on current expectations. Forward-looking statements, including without limitation, statements relating to the Company's plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) the Company's plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of the Company, (ii) the Company's plans and results of operations will be affected by economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services, and prices; and (iii) other risks and uncertainties as indicated from time to time in the Company's filings with the Securities and Exchange Commission. The following discussion should be read in conjunction with the information contained in the financial statements of the Company and the notes thereto appearing elsewhere herein and in conjunction with Management's Discussion and Analysis set forth in the Company's Form 10-KSB for the fiscal year ended March 31, 2000. The following discussion compares the results of operations for the three- month period ended June 30, 2000 (First Quarter 2001) with the three-month period ended June 30, 1999 (First Quarter 2000). Results of Continuing Operations The Company's operations fall into two distinct businesses: the manufacture and distribution of sports licensing products and the rental of commercial real estate. In December 1998, the Company acquired Roxbury Industries Corp ("Roxbury"), which produces and distributes knit products licensed by most professional and major college teams. The Company owns, leases, and manages a two story warehouse and office facility containing approximately 1,666,000 square feet of rentable space located on approximately 74 acres in an industrial park in Duval County, Florida. Sports Licensing Products Roxbury's revenue has been very seasonal with the majority of its revenue in the months of July through November. Revenue increased by 35% in First Quarter 2001 to $409,741 from $304,102 in First Quarter 2000. The majority of the increased revenue was in the private-label product line. The 4.0T product line had a 34% increase in revenue in First Quarter 2001. These two product lines accounted for 65% of total revenue in the last fiscal year and 78% of revenue in First Quarter 2001. While revenue for First Quarter 2001 was 35% over First Quarter 2000, the sales orders booked in First Quarter 2001 were 84% over First Quarter 2000. The 4.0T sales orders booked in the First Quarter 2001 were 109% over First Quarter 2000. After evaluating operating costs and gross margins, the Company decided to sell its screen printing operation. The operation was closed in June 2000 and the equipment was sold. Screen printing operations only accounted for $160,000 in revenue in the last fiscal year and $46,000 in revenue for First Quarter 2001. The cost of goods sold increased 23% as a result of increased revenue. However, cost of goods sold decreased as a percentage of revenue from 104% in First Quarter 2000 to 95% in First Quarter 2001. The cost of goods sold for First Quarter 2001 is higher than is to be expected on an annual basis because the manufacturing overhead is allocated over less goods during the slower months of the Company's seasonal business. Approximately $69,000 in overhead costs were allocated to cost of goods sold in the first quarter of both 2001 and 2000. As revenue increases in the next two quarters, the overhead, as a percentage of revenue, will decrease. Also, as licensed product revenue becomes a larger percentage of total revenue, the gross margin is expected to increase. Operating costs increased $112,044 (33%) to $450,381 in First Quarter 2001 from $338,337 in First Quarter 2000. This increase is due to increased expenditures on market research and various marketing programs and the addition of personnel in sales, sales support, operations, customer service and design. Depreciation and amortization included in operating costs decreased by $1,030 in First Quarter 2001 as compared to First Quarter 2000. The depreciation and amortization included in cost of goods sold decreased from $32,990 in First Quarter 2000 to $29,055 in First Quarter 2001. The net operating loss of the sports licensing division increased from $357,826 in First Quarter 2000 to $436,102 in First Quarter 2001. Commercial Real Estate The commercial real estate operations consist of the lease and management of property located in Jacksonville, Florida (Imeson Center). The property consists of approximately 1,392,000 square feet of warehouse space and 274,000 square feet of office space. The Company's lease agreements are structured to include a base minimum rental fee, a contingent rental fee to reimburse the Company for operating expenses, common area maintenance costs, insurance and property taxes, and a requirement that the tenant pay for its own utilities. Net revenue increased 8% to $1,291,638 in First Quarter 2001 from $1,198,833 in First Quarter 2000. The base minimum rental fee increased by $38,433 (4%) in First Quarter 2001 as a result of increases in the base minimum rent per square foot. The contingent rental fee increased by $54,372 (25%) in the three-month period as a result of an increase in reimbursable operating costs, primarily property taxes. Operating costs increased $51,123 (9%) to $597,115 in First Quarter 2001 from $545,992 in First Quarter 2000. The primary reason for the increase was an increase in property taxes and professional fees. Property taxes increased significantly due to a revaluation of the Imeson Center by the Duval County property appraiser in September 1999. Depreciation and amortization decreased by $4,997 in First Quarter 2001 to $147,869, as compared to First Quarter 2000. The net operating profit of the commercial real estate division increased from $499,975 in First Quarter 2000 to $546,654 in First Quarter 2001. Consolidated Operating Results Revenue increased by 13% to $1,701,379 for First Quarter 2001 from $1,502,935 for First Quarter 2000. The increase was the result of increased revenue in both the commercial real estate and sports licensing operations. The increase in costs of goods sold was the result of increased revenue in the sports licensing operation offset by a decrease in cost of goods sold as a percentage of revenue. Operating costs increased by 15% to $1,201,609 in First Quarter 2001 from $1,044,469 in First Quarter 2000. The increase was the result of an increase in property taxes in the commercial real estate operation and additional sales and marketing expenditures in the sports licensing operation. The net operating profit declined $31,597 in First Quarter 2001 to $110,552 as compared to $142,149 in First Quarter 2000. Beginning in the fourth quarter of fiscal 2000, the Company invested in publicly traded equity securities. The Company incurred a loss of $188,457 in First Quarter 2001 from these investments. An income tax provision of $15,000 was recorded in First Quarter 2001 despite having a consolidated loss before income taxes. This occurred because Roxbury files separate income tax returns and $135,000 in tax benefits from its losses were not recognized in First Quarter 2001. The benefit from these losses will be recognized when Roxbury generates pretax income. Liquidity and Capital Resources The cash used by operating activities was $883,352 in First Quarter 2001 compared to $365,829 in First Quarter 2000. The Company's operations used $90,942 in working capital in First Quarter 2001 compared to $110,126 of working capital provided in First Quarter 2000. The increases in net operating assets for both First Quarter 2001 and First Quarter 2000 were primarily from an increase in accounts receivable and inventory in the sports licensing division, an increase in prepaid property taxes in the real estate division and a reduction in corporate accrued expenses. In addition, the accounts payable of the sports licensing division were reduced by over 20% in First Quarter 2001. Property and equipment additions in First Quarter 2001 were primarily for equipment used at the Imeson Center. Property and equipment additions in First Quarter 2000 were for equipment used at Roxbury. Cash of $82,091 was used by financing activities in First Quarter 2001, as compared to cash used by financing activities of $182,043 in First Quarter 2000. The decrease in cash used by financing activities was related to a reduction in the number of shares of its common stock the Company purchased in First Quarter 2001 as compared to First Quarter 2000. The Company did not have any material commitments for capital expenditures as of June 30, 2000 other than for ordinary expenses incurred during the usual course of business. The Company is currently negotiating with Laney & Duke for the renewal of their lease of the warehouse space at Imeson Center that expires on December 31, 2000. This lessee accounted for the majority of the commercial rental revenue and non-renewal would have a significant impact on the Company's operating results and liquidity. The Company is looking for additional tenants for Imeson Center for the remaining 41,000 square feet of office space and to replace America Online when their lease expires in June 2002. It is expected that any new tenant will require the Company to incur significant costs related to renovation of the property to meet the tenant's needs. Additionally, the Company is considering opportunities to further develop the Imeson Center. Roxbury is incurring additional marketing expenses to expand its revenue base and distribution channels. These expanded marketing activities may not generate the revenue projected and result in future losses. Although the Company has not identified any specific opportunities at this time, the Company is expending resources to identify potential opportunities to expand the Company's business operations into other areas. Any new business operation will likely involve a substantial commitment of Company resources and a significant degree of risk. The Company also has potential liability related to litigation. In addition, the Company has been and expects to continue repurchasing shares of its stock. Roxbury is in violation of the loan covenants of its loans from European American Bank and has not finalized terms for renewal of its line of credit. While the Company has a significant current liquidity position, any of the above mentioned items could require significant capital resources in excess of the Company's current liquidity position, requiring it to raise additional capital through public or private debt or equity financing. The availability of these capital sources will depend upon prevailing market conditions, interest rates, and the then existing financial position and results of operations of the Company. Therefore, no assurances can be made by the Company that such additional capital will be available. PART II - OTHER INFORMATION Item 1. - Legal Proceedings No material events have occurred in the Company's ongoing litigation matters. For the history of such litigation, please refer to the Company's Annual Report on Form 10-KSB for the fiscal year ended March 31, 2000. Item 2. Exhibits and Reports on Form 8-K. (a) Exhibits 27 Financial Data Schedule (b) Reports on Form 8-K. None. (c) Sales of Unregistered Securities. None. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EXCAL ENTERPRISES, INC. Registrant Dated: August 9, 2000 /s/ W. CAREY WEBB W. Carey Webb President and Chief Executive Officer Dated: August 9, 2000 /s/ TIMOTHY R. BARNES Timothy R. Barnes Vice President and Chief Financial Officer EX-27 2 0002.txt
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER ENDED JUN 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. 3-MOS MAR-31-2001 JUN-30-2000 6,470,602 206,601 1,392,992 144,421 702,279 9,491,882 10,713,172 2,276,955 19,505,925 2,393,935 13,025,272 0 0 4,738 2,833,939 19,505,925 1,701,379 1,701,379 389,218 1,590,827 93,051 0 319,520 (302,019) 15,000 (317,019) 0 0 0 (317,019) (.08) (.08)
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