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EXCEL - IDEA: XBRL DOCUMENT - OXFORD TECHNOLOGIES INC | Financial_Report.xls |
EX-31 - EX 31 - OXFORD TECHNOLOGIES INC | ex31.htm |
EX-32 - EX 32 - OXFORD TECHNOLOGIES INC | ex32.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q/A
(Amendment No. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2011
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-49854
OXFORD TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3615974
(State or other jurisdiction of incorporation or organization (I.R.S. Employer Identification No.)
80 WALL STREET, SUITE 818, NEW YORK, NEW YORK 10005
(Address of principal executive offices) (Zip Code)
(212) 809-1200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.0001 PAR VALUE
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes [X] No [ ]
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non- accelerated filer or a smaller reporting company. See definition of "large accelerated filer, accelerated filer" and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ] Non Accelerated filer [ ] Smaller Reporting Company [X]
1
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 18,564,002 shares of common stock as of November 9, 2011.
Explanatory Note
This Amendment No. 1 on Form 10-Q/A (this "Amendment") amends the Companys Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, originally filed with the Securities and Exchange Commission on November 14, 2011 (the "Original Filing").
We are filing this Amendment only for the purpose of attaching required XBRL exhibits, which were failed to attach to the Original Filing. Except as set forth in the immediately preceding sentence, this Amendment does not alter or restate any of the information set forth in the Original Filing.
This Amendment continues to speak as of the date of the Form 10-Q filed on November 14, 2011 and we have not updated the disclosures contained herein to reflect events that have occurred since the filing of the Original Filing.
As required, currently-dated certifications from the Company's Principal Executive and Principal Financial Officer have been included as exhibits to this Amendment.
2
OXFORD TECHNOLOGIES, INC.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION |
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Item 1. | Financial Statements | 3 |
| Consolidated Balance Sheets as of September 30, 2011 (unaudited) and December 31, 2010 | 3 |
| Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2011 and 2010 (unaudited) | 4 |
| Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010 (unaudited) | 5 |
| Notes to Consolidated Financial Statements (unaudited) | 6 |
Item 2. | Managements Discussion and Analysis of Plan of Operations | 9 |
Item 3. | Quantitative and Qualitative Disclosure about Market Risk | 12 |
Item 4. | Controls and Procedures | 12 |
PART II OTHER INFORMATION |
| |
Item 1 | Legal Proceedings | 12 |
Item 1A | Risk Factors | 13 |
Item 2 | Unregistered Sales of Equity and Securities and Use of Proceeds | 13 |
Item 3 | Defaults Upon Senior Securities | 13 |
Item 4 | Removed and Reserved | 13 |
Item 5 | Other Information | 13 |
Item 6. | Exhibits | 13 |
SIGNATURES | 13 |
Item 1.
Financial Statements
3
OXFORD TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
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| September 30 |
| December 31 |
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| 2011 |
| 2010 |
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| US $'000 |
| US $'000 |
| ASSETS |
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Current Assets: |
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|
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| Cash and cash equivalents |
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| 3,003 |
| 2,456 | ||
| Accounts receivable, net of allowance of $57 and $0 |
| 6,106 |
| 4,994 | |||
| Inventory, net |
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| 8,072 |
| 5,232 | |
| Other current assets |
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| 402 |
| 424 | |
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| Total Current Assets | 17,583 |
| 13,106 | |||
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| Property and equipment, net of accumulated depreciation |
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| of $25,522 and $24,893 |
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| 8,898 |
| 9,345 | ||
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| Deferred tax assets - net non-current |
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| 369 |
| 368 | ||
| Security deposits |
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| 43 |
| 43 | |
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| Total Assets | 26,893 |
| 22,862 | |||
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| LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities |
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| Accounts payable |
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| 4,011 |
| 4,547 | |
| Accounts payable, related party |
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| 996 |
| 901 | ||
| Taxes payable |
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| 881 |
| 410 | |
| Checks in excess of cash in bank |
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| 3,803 |
| 1,106 | ||
| Accrued liabilities - current |
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| 239 |
| 948 | ||
| Capital Leases - current portion |
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| 398 |
| 444 | ||
| Note payable - related party |
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| 1,360 |
| 1,359 | ||
| Deferred revenue - leases current |
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| 1,679 |
| 457 | ||
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| Total Current Liabilities | 13,367 |
| 10,172 | |||
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Commitments and Contingencies |
| - |
| - | ||||
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Long-term Liabilities |
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| Capital leases, non-current portion |
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| 225 |
| 484 | ||
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| Total Long-term Liabilities | 225 |
| 484 | |||
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| Total Liabilities | 13,592 |
| 10,656 | |||
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Stockholders' Equity |
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| Preferred stock, $.0001 par value, 20,000,000 shares authorized, |
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| none issued and outstanding | - |
| - | ||||
| Common stock, $.0001 par value, 80,000,000 shares authorized, |
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| 18,564,002 shares issued and outstanding |
| 2 |
| 2 | |||
| Additional paid in capital |
|
| 33,478 |
| 33,478 | ||
| Accumulated other comprehensive income |
| (3,519) |
| (3,489) | |||
| Accumulated deficit |
|
|
| (16,660) |
| (17,785) | |
|
| Total Stockholders' Equity | 13,301 |
| 12,206 | |||
|
| Total Liabilities and Stockholders' Equity | 26,893 |
| 22,862 |
See accompanying notes to the unaudited condensed consolidated financial statements
4
OXFORD TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS) (UNAUDITED)
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| Three-Months Ended September 30, |
| Nine-Months Ended September 30, | ||||
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| 2011 |
| 2010 |
| 2011 |
| 2010 |
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| US $'000 |
| US $'000 |
| US $'000 |
| US $'000 |
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Net Sales |
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| 8,509 |
| 7,114 |
| 23,855 |
| 19,078 | |
Cost of Goods Sold | (6,958) |
| (6,154) |
| (19,891) |
| (16,511) | |||||
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| Gross Profit | 1,551 |
| 960 |
| 3,964 |
| 2,567 | ||
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Operating Expenses |
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| Selling, general and administrative | 1,221 |
| 1,075 |
| 3,419 |
| 3,128 | ||||
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| Operating Income / (Loss) | 330 |
| (115) |
| 545 |
| (561) | ||
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Other Non-Operating Income and Expenses |
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| Rental income |
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| 248 |
| 230 |
| 732 |
| 689 | |
| Interest income |
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| 1 |
| 1 |
| 3 |
| 2 | |
| Interest expense |
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|
| (49) |
| (57) |
| (155) |
| (175) | |
| Net Income / (Loss) before Income Tax Benefit | 530 |
| 59 |
| 1,125 |
| (45) | ||||
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Income tax benefit / (expense) | - |
| 35 |
| - |
| 35 | |||||
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| Net Income / (Loss) | 530 |
| 94 |
| 1,125 |
| (10) | |||
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Other Comprehensive Income / (Loss) |
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| Foreign currency translation adjustment, net of tax | (384) |
| 518 |
| (30) |
| (161) | ||||
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Comprehensive Income / (Loss), net of tax | 146 |
| 612 |
| 1,095 |
| (171) | |||||
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Basic and Diluted Earnings / (Loss) Income |
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per Common Share |
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| 0.03 |
| 0.01 |
| 0.06 |
| (0.00) | ||
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Weighted Average Common Shares Outstanding | 18,564,002 |
| 18,564,002 |
| 18,564,002 |
| 18,564,002 |
See accompanying notes to the unaudited condensed consolidated financial statements
5
OXFORD TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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| Nine-Months Ended | ||
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| September 30, |
| September 30, |
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| 2011 |
| 2010 |
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| US $'000 |
| US $'000 |
Cash Flows from Operating Activities: |
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| Net Income (loss) |
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| 1,125 |
| (10) | |
| Adjustments to reconcile net income (loss) to net |
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| cash used in operating activities: |
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| Depreciation and amortization |
| 616 |
| 720 | ||
| Changes in operating assets and liabilities: |
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| Accounts receivable |
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| (1,154) |
| (501) | |
| Inventories |
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| (2,941) |
| (1,567) |
| Prepaid expenses |
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| 28 |
| 2 | |
| Accounts payable |
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| (561) |
| 857 | |
| Taxes payable |
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| 362 |
| 343 | |
| Accrued expenses and other payables |
| (562) |
| (86) | ||
| Interest payable - related party |
| (49) |
| (71) | ||
| Deferred income |
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| 1,268 |
| 226 | |
| Cash used in operating activities | (1,868) |
| (87) | |||
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Cash Flows from Investing Activities: |
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| Purchase of property and equipment |
| (147) |
| - | ||
| Cash used in investing activities | (147) |
| - | |||
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Cash Flows from Financing Activities: |
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| Checks in excess of bank balance |
| 2,796 |
| 482 | ||
| Proceeds from related party |
| 100 |
| 576 | ||
| Debt instrument periodic payment - principal | (316) |
| (324) | |||
| Cash provided by financing activities | 2,580 |
| 734 | |||
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Effect of foreign currency translation on cash | (18) |
| (43) | ||||
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Net decrease in cash and cash equivalents |
| 547 |
| 604 | |||
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Cash and Cash Equivalents, Beginning |
| 2,456 |
| 2,312 | |||
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Cash and Cash Equivalents, Ending |
| 3,003 |
| 2,916 | |||
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Supplemental Cash Flow Information: |
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| Cash Payments For: |
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| Interest |
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| - |
| - |
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| Taxes |
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| - |
| - |
See accompanying notes to the unaudited condensed consolidated financial statements
6
OXFORD TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2011
1.
NATURE OF OPERATIONS
Oxford Technologies, Inc. (the Company) and its subsidiary, Axiom Manufacturing Services Limited (Axiom) provide electronic manufacturing services (EMS) to third parties in the following market sectors: computers and related products, industrial control equipment, testing and instrumentation products and medical devices. Axiom offers its customers a comprehensive integrated design and manufacturing service from initial design to volume production, direct order fulfilment and aftermarket support. The Companys customer base is primarily in the United Kingdom.
The Company was incorporated in the State of Delaware on March 8, 2002. On February 12, 2003, the Company acquired Axiom by issuing 13,564,002 shares of its common stock in exchange for all issued and outstanding capital shares of Axiom owned by Great Admirer Limited (Great Admirer), a Hong Kong Corporation. The Company as the legal acquirer was the registrant on that date and remains the registrant with the Securities and Exchange Commission. The merger was accounted for as a reverse acquisition under accounting principles generally accepted in the United States of America. As a result of the acquisition, Axiom became the Companys wholly-owned subsidiary and Great Admirer became the controlling shareholder of the Company. The continuing operations of the Company will reflect the consolidated operations of Oxford and its wholly-owned subsidiary, Axiom.
At the time Great Admirer acquired Axiom in 2002, Great Admirer was a non-operating shell company and incurred minimal costs to acquire Axiom. Therefore no costs incurred by Axiom were recorded in the accounts of Axiom.
Axiom was incorporated in South Wales, United Kingdom on September 3, 1980, under the name of Aiwa (UK) Limited, with the Company subsequently being renamed Axiom Manufacturing Services Limited on April 10, 2002.
On July 29, 2008 The Company acquired 100% of the share capital (1,000 shares) of Axiom MS Limited (AMS). AMS was incorporated on July 29, 2008 to seek new business opportunities.
Axioms principal office and manufacturing facility is located at Technology Park, Newbridge, South Wales, United Kingdom. AMS is the owner of the above mentioned facility.
In January 2011 the Company transferred all of its 13,564,002 shares in Axiom Manufacturing Services Limited to Axiom MS Limited. In exchange Axiom MS Limited issued 700 shares of its common stock to Oxford Technologies Inc.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Financial Statements Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for full year financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for the nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. These financial statements and notes included herein should be read in conjunction with the Companys audited consolidated financial statements and the notes thereto that are included in the Companys annual report on Form 10-K for the year ended December 31, 2010.
7
Net Income / (Loss) Per Common Share
Basic net income/ (loss) per share of common stock is calculated by dividing the net income/ (loss) by the weighted average number of shares of common stock outstanding during the period.
Foreign Currency Translation
The functional currency of the Company's operations in the UK is the British Pound Sterling. The financial statements of the Company were translated to US dollars using quarter-end exchange rates for the balance sheets and weighted average exchange rates for the statements of operations and statements of cash flows. Equity transactions were translated using historical rates. Foreign currency translation gains or losses as a result of fluctuations in the exchange rates are reflected in the statements of stockholders equity in total comprehensive income or loss.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Sales revenues are generally recognized when the products are shipped to the customers or services are rendered, net of discounts, returns and allowances. All revenues generated and the associated cost of sales incurred relate to the EMS service offering (manufacturing of OEM customer products) in 2011, with 99% of revenues coming from this source and the remaining percentage of revenue and cost of sales relating to the provision of a market return and repair service.
Trade Receivables
Trade receivables are stated at net realisable value. This value includes an appropriate estimated allowance for uncollectible accounts. The allowance is calculated based upon an evaluation of the level of past due accounts and the relationship with the financial status of our customers.
Inventory
Inventories are stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. Inventory quantities on hand are regularly reviewed and where necessary, reserves for excess and unusable inventories recorded.
| September 30 | December 31 |
| 2011 | 2010 |
| US $'000 | US $'000 |
|
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Raw Materials | 5,645 | 3,628 |
Work in Progress | 2,321 | 1,572 |
Finished Goods | 106 | 32 |
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| 8,072 | 5,232 |
8
Property, Plant and Equipment
Property, plant and equipment are recorded at cost, net of accumulated depreciation. Depreciation is computed on a straight line basis over estimated useful lives of various asset classes as follows:
Building and building improvements
20 to 45 years
Machinery and equipment
5 to 10 years
Fixtures and fittings
3 to 8 years
Upon retirement or sales, the costs and related depreciation of the asset disposed of, are removed from the accounts and any resulting gain or loss is included in the determination of income. Repairs and maintenance costs are expensed as incurred. The Company reviews its property and equipment annually for impairment, and accordingly will write down those assets to their estimated fair value.
Income Taxes
Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognised for deductible temporary differences and operating loss carry forwards and deferred tax liabilities are recognised for taxable temporary differences. In the current period, decreases in net operating losses (and their associated deferred tax assets) attributable to reducing current taxable income are offset by increases in temporary deductible differences, which results in nominal income tax expense or benefit.
Fair Value of Financial Instruments
The carrying amounts of the Companys financial instruments, which include cash, accounts receivable, accounts payable and accrued expenses are representative of their fair values due to the short-term maturity of these instruments.
Funding Arrangements
The Company has an invoice discounting facility provided by its bankers under which the bank advances up to 80% of the value of qualifying invoices on presentation. This is repaid when the customer settles the invoice with the remaining 20% released to the Company less bank charges at this time. The Company is responsible for collecting the debt. Security for the advances under this facility is provided by a charge over the accounts receivable of the Company. The amount held at this facility is shown in Checks in Excess of Cash in Bank on the balance sheet. Axiom Manufacturing Services accounts for this as a transfer of receivables as a secured borrowing with pledge of collateral. Management believes that this treatment complies with guidance provided in FASB ASC 860-30-25-3.
Borrowings on this facility amounted to $1.3 million at September 30, 2011. Borrowings are included with Checks in Excess of Cash in Bank under the liability section of the balance sheet.
Charges incurred amounted to $0.1 million to September 30, 2011 and interest for the same period amounted to $0.04 million. Charges are included within Operating Expenses in the statement of operations and comprehensive income.
9
Checks in Excess of Cash in Bank
The components of this balance sheet account are shown below:
| September 30 | December 31 |
| 2011 | 2010 |
| US $'000 | US $'000 |
|
|
|
Current Account | 61 | - |
Deposit Account | 47 | 89 |
Invoice Finance | (1,333) | (104) |
Unpresented Checks | (2,578) | (1,091) |
|
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|
Total | (3,803) | (1,106) |
Recently Issued Accounting Pronouncements
We have reviewed recent accounting pronouncements and determined they will have no present or future impact on our business. Accounting standards updates have been issued through 2011-09.
3.
COMMITMENTS
Capital Lease
At the end of each lease the company will purchase the equipment. The leases are a mixture of 3 and 5 year terms.
4.
SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued. Per our evaluation we noted no significant subsequent event that requires disclosure.
ITEM 2. MANAGEMENTS DISCUSSION & ANALYSIS OR PLAN OF OPERATIONS
Forward-Looking Statements
The discussion in this quarterly report on Form 10-Q contains forward-looking statements. Such statements are based upon beliefs of management as well as assumptions made by and information currently available to management of the Company as of the date of this report. These forward looking statements can be identified by the use of such verbs as expect, anticipate, believe or similar verbs or conjugations of such verbs. If any of these assumptions prove incorrect or should unanticipated circumstances arise, the actual results of the Company could materially differ from those anticipated by such forward-looking statements. The Company assumes no obligation to update any such forward-looking statements.
Overview
The Company was incorporated in the State of Delaware on March 8, 2002 as a blank check company. On February 12, 2003, the Company acquired 100% of the outstanding securities of Axiom Manufacturing Services Limited (Axiom) with the issuance and exchange of 13,562,002 shares of the Companys common stock (the Merger). Although the
10
Company is the legal survivor in the Merger and remains the registrant with the SEC, under accounting principles generally accepted in the United States, the Merger was accounted for as a reverse acquisition, whereby Axiom is considered the acquirer for financial reporting purposes as its shareholders controlled more than 50% of the post transaction combined company. Among other matters, this requires us to present all financial statements, prior historical financial statements and other information of Axiom and requires a retroactive restatement of Axiom historical shareholders investment for the equivalent number of shares of common stock received in the Merger. Accordingly, the Companys consolidated financial statements present the results of the operations of Axiom for the year ended December 31, 2002, and reflect the acquisition of the Company on February 12, 2003 under the purchase method of accounting. Subsequent to February 12, 2003, the Companys operations reflect the combined operations of the former Oxford and Axiom.
The Company conducts its business through its subsidiary Axiom Manufacturing Services Limited. Prior to its acquisition by Great Admirer in April 2002, Axiom was a wholly-owned subsidiary of Aiwa Europe Limited, which in turn was a wholly-owned subsidiary of the Aiwa Company of Japan (note that the Aiwa business was acquired by the Sony Corporation on October 1, 2002). As the sole original equipment manufacturer of Aiwa's own-brand products in Europe, Axiom was responsible for producing consumer electronics products (primarily audio and visual equipment) on behalf of the Aiwa Company of Japan, for distribution in the UK, France, Germany, Poland and the Netherlands. In December 2000, due to gradually declining profit margins, Axiom started to provide electronic manufacturing services (EMS) for third parties. In July 2001 production of Aiwa branded products was terminated and Axiom became solely an EMS provider offering its customers a comprehensive and integrated design and manufacturing service, from initial product design through to volume production and aftermarket support. On July 29, 2008, The Company acquired 100% of the share capital (1,000 shares) of Axiom MS Limited (AMS). AMS was incorporated on July 29, 2008, to seek new business opportunities. In January 2011, The Company transferred all of its shares in Axiom to AMS. In exchange AMS issued 700 shares of its common stock to The Company.
The Company provides electronics manufacturing services in the business to business or business to industry sectors and to original equipment manufacturers in the following market sectors:
·
Medical devices
·
Industrial control equipment
·
Domestic appliances
·
Computer and related products
·
Testing and instrumentation products
·
Ministry of Defense products
As a result of efficiently managing costs and assets, Axiom is able to offer its customers an outsourcing solution that represents a lower total cost of acquisition than that typically provided by the OEMs own manufacturing operation. OEMs contract with Axiom to build their products or to obtain services related to product development and prototyping, volume manufacturing or aftermarket support. In many cases Axiom builds products that carry the brand name of its customers and substantially all of Axioms manufacturing services are provided on a turnkey basis where Axiom purchases customer specific components from suppliers, assembles the components onto printed circuit boards, performs post production testing and provides the customer with production process and test documentation. Axiom also provides manufacturing services on a consignment basis where material is free issued by the customer for Axiom to build into finished printed circuit boards or product. Axiom offers its customers flexible just-in-time delivery programs which allow product shipments to be closely coordinated with the customers inventory requirements. Additionally Axiom completes the assembly of final product for its customers by integrating the manufactured printed circuit boards into the customers finished products.
11
RESULTS OF OPERATIONS
Nine-month periods ending September 30, 2011 and 2010
Revenues
Revenues for the nine month period ended September 30, 2011 were $23.9 million, an increase of 25% or $4.8 million as compared to the same period of the previous year. The increase in revenue is due to an increase in sales orders and new customers.
Cost of Sales
Cost of sales consists of the material cost of goods sold, direct overhead, direct wages, direct utilities and direct depreciation expenses. For the nine months ended September 30, 2011 cost of sales were $19.9 million, an increase of $3.4 million as compared to the nine months ended September 30, 2010. Cost of sales as a percentage of sales is 83% which is 4% lower than the same period of the previous year. Direct wages and direct depreciation are now a lower percentage of sales than previous years.
Operating Expenses
Operating expenses consist of selling, general and administrative expenses. For the nine months ended September 30, 2011 operating expenses were $3.4 million, an increase of 9.3% as compared to the same period of the previous year. The increase stems from consultancy fees, recruitment, welfare, removal, test equipment and consumables.
Rental Income
For the nine months ended September 30, 2011 rental income was $0.7 million which remains consistent with $0.7 million of the same period of the previous year.
Interest Expense
Interest expense for the nine months ended September 30, 2011 amounted to $0.2 million which remains consistent with $0.2 million of the same period of the previous year.
Net Income / (Loss)
For the nine months ended September 30, 2011 net income was $1.1 million as compared to a net loss of $0.01 million for the nine months ended September 30, 2010. This resulted in a basic income per share of $0.06 on weighted average common shares outstanding of 18,564,002 for the nine months ended September 30, 2011 as compared to a $0.00 for the same period of the previous year.
Liquidity and Capital Resources
The Companys primary source of capital is cash provided by operations and borrowings under its credit facilities. As of September 30, 2011 the Company had cash and cash equivalents of around $3.0 million.
For the nine months ended September 30, 2011 net cash used in operating activities was $1.9 million as compared to $0.9 for the same period of the previous year. The main reasons for this was an increase in inventory and of accounts receivable.
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For the nine months ended September 30, 2011 net cash used in investing activities was $0.2 million as compared to $0 million for the same period of the previous year. The increase is due to the purchase of fixed assets.
For the nine months ended September 30, 2011 net cash provided by financing activities was $2.5 million as compared to $0.7 million for the same period of the previous year. This amount is due to an increase in checks in excess of cash in bank.
For the nine months ended September 30, 2011 short-term capital needs were met by invoice discounting, finance lease arrangements, inter-company and bank loans. The Companys banking facilities comprise an invoice discounting facility with a maximum advance limit of $3.1 million subject to the level of qualifying sales invoiced and a bank overdraft limit of $0.2 million. Interest rates are calculated with reference to bank base rates. At September 30, 2011 interest on invoice discounting facility was charged at 2% above Base and interest on the bank overdraft at 2% above Base. The inter-company loan interest rate is 5%, the finance lease agreements have varying interest rates ranging from 6% to 7.5% and the note payable demands an interest rate of 6%. The accounts receivable of the Company is collateral for this arrangement.
The following summarizes our debt and other contractual obligations at September 30, 2011.
| Amount |
|
|
Description | $000 |
| Term |
Invoice discounting | 1,333 |
| Ongoing until facility terminated |
Note Payable | 1,360 |
| Payable in full on December 31, 2011 |
Inter-company loan | 1,216 |
|
|
Finance lease agreement | 403 |
| Mix 3 and 10 year-term commencing August 2005 to December 2010 |
Total | 4,312 |
|
|
The inter-company loans are not eliminated on consolidation, as the loans were from related parties which do not get consolidated with Oxford Technologies Inc. The balance per the consolidated balance is shown as follows:
|
| Amount |
Description |
| $000 |
Accounts payable related party |
| 996 |
Capital lease current portion |
| 156 |
Capital lease non-current portion |
| 64 |
Total |
| 1,216 |
As of the date of this report, we are in compliance with all covenants under our existing credit facilities.
In the event that adequate funding is not available from existing credit facilities, we would work with existing lenders to identify additional sources of financing. We have no current plans to make significant capital expenditures. At present we do not have any arrangements for financing except those mentioned above. While there can be no assurance that we will have sufficient funds over the next twelve months, we believe that funds generated from operations plus borrowings under our invoice discounting facility will be adequate to meet our anticipated operating expenses, capital expenditure and debt obligations for at least the next twelve months. Nevertheless, our continuing operating and investing activities may require us to obtain additional sources of financing. There can be no assurance that any necessary additional financing will be available to us on commercially reasonable terms, if at all.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements.
Critical Accounting Policies
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Disclosure of the Companys significant accounting policies is included in Note 1 to the consolidated financial statements of the Companys Annual Report on Form 10-K for the year ended December 31, 2010. Some of these policies require management to make estimates and assumptions that may affect the reported amounts in the Companys financial statements.
ITEM 3. Quantitative & Qualitative Disclosures about Market Risk
This item is not required for a smaller reporting company.
ITEM 4. Controls & Procedures
(a) Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2011. Based on that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
As used herein, the term disclosure controls and procedures means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the rules and forms issued by the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Companys management, including its principal executive officer or officers and its principal financial officer or officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
(b) Changes in Internal Controls over Financial Reporting
During the third quarter of 2011 there was no change in internal control over financial reporting.
PART II
OTHER INFORMATION
Item 1. Legal Information
Not applicable
Item 1A. Risk Factors
Our 2010 Form 10-K contains a detailed discussion of certain risk factors that could materially adversely affect our business, operating results or financial condition. There were no material changes in these risk factors since such disclosure.
Item 2. Unregistered Sales of Equity Securities and use of Proceeds
Not Applicable
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Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Removed and Reserved
Item 5. Other Information
Not Applicable
Item 6. Exhibits
(a) Exhibits
Exhibit No.
Description
31.1 Certification Pursuant to rules 13a-14(a) and 15d-14(a) of the Exchange Act.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
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, hereunto duly authorized.
Oxford Technologies, Inc.
By: Vivian Lam
Vivian Lam, President and Chief Financial Officer
November 14, 2011
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