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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

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,  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]


Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes [   ]     No    [X]





1





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 May 6, 2014.


OXFORD TECHNOLOGIES, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2014

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements

3

 

Consolidated Balance Sheets as of March 31, 2014 (unaudited) and December 31, 2013

3

 

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended March 31, 2014 and 2013 (unaudited)

4

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013 (unaudited)

5

 

Notes to Consolidated Financial Statements (unaudited)

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

10

Item 3.

Quantitative and  Qualitative Disclosure about Market Risk

13

Item 4.

Controls and Procedures

13

PART II – OTHER INFORMATION

 

Item 1

Legal Proceedings

13

Item 1A

Risk Factors

13

Item 2

Unregistered Sales of Equity and Securities and Use of Proceeds

14

Item 3

Defaults Upon Senior Securities

14

Item 4

Mine Safety Disclosures

14

Item 5

Other Information

14

Item 6.

Exhibits

14

SIGNATURES

14



Item 1.

Financial Statements




2




OXFORD TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

March 31, 2014

 

December 31, 2013

 

 

 

 

 

 

US $'000

 

US $'000

 

 

 

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

2,275

 

2,437

 

Accounts receivable

 

 

 

11,402

 

10,689

 

Inventory, net

 

 

 

10,547

 

8,567

 

Line of credit

 

 

 

-

 

2,772

 

Other current assets

 

 

 

244

 

550

 

 

Total Current Assets

24,468

 

25,015

 

 

 

 

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $23,455 and $22,987

9,805

 

8,643

 

 

 

 

 

 

 

 

 

 

Deferred tax assets - (net non-current)

1,721

 

1,711

 

Security deposits

 

 

 

46

 

46

 

 

 

 

 

 

 

 

 

 

 

Total Assets

36,040

 

35,415

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts payable

 

 

 

8,485

 

8,750

 

Accounts payable, related party

 

 

1,249

 

1,245

 

Line of credit

 

 

 

782

 

-

 

Taxes payable

 

 

 

935

 

1,065

 

Accrued liabilities

 

 

 

1,789

 

2,503

 

Capital Leases - current portion

 

 

344

 

90

 

Note payable - related party

 

 

1,452

 

1,443

 

Deferred income

 

 

 

372

 

1,483

 

 

Total Current Liabilities

15,408

 

16,579

 

 

 

 

 

 

 

 

 

Long-term Liabilities

 

 

 

 

 

 

 

Capital leases, non-current portion

 

 

1,059

 

64

 

 

Total Long-term Liabilities

1,059

 

64

 

 

Total Liabilities

16,467

 

16,643

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

Preferred stock, $.0001 par value, 20,000,000 shares authorized,

 

 

 

 

 none issued and outstanding

-

 

-

 

Common stock, $.0001 par value, 80,000,000 shares authorized,

 

 

 

 

 18,564,002 shares issued and outstanding

 

2

 

2

 

Additional paid in capital

 

 

33,478

 

33,478

 

Accumulated other comprehensive income

 

(2,325)

 

(2,441)

 

Accumulated deficit

 

 

 

(11,582)

 

(12,267)

 

 

Total Stockholders' Equity

19,573

 

18,772

 

 

Total Liabilities and Stockholders' Equity

36,040

 

35,415


See accompanying notes to the unaudited condensed consolidated financial statements







3





OXFORD TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS) (UNAUDITED)



 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

March 31, 2014

 

March 31, 2013

 

 

 

 

 

 

US $'000

 

US $'000

 

 

 

 

 

 

 

 

 

Net Sales

 

 

 

 

12,355

 

13,544

Cost of Goods Sold

(10,256)

 

(11,165)

 

 

 

Gross Profit

2,099

 

2,379

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Selling, general and administrative

1,631

 

1,323

 

 

 

Operating Income

468

 

1,056

 

 

 

 

 

 

 

 

 

Other Non-Operating Income and Expenses

 

 

 

 

 

Rental income

 

 

 

217

 

190

 

Interest income

 

 

 

1

 

1

 

Interest expense

 

 

 

(6)

 

(5)

 

Net Income before Income Tax Benefit

680

 

1,242

 

 

 

 

 

 

 

 

 

Income tax benefit

5

 

                        -

 

 

Net Income

685

 

1,242

 

 

 

 

 

 

 

 

 

Other Comprehensive Income / (Loss)

 

 

 

 

Foreign currency translation and transaction adjustment, net of tax

116

 

(837)

 

 

 

 

 

 

 

 

 

Comprehensive Income

801

 

405

 

 

 

 

 

 

 

 

 

Basic and Diluted Earnings Income

 

 

 

 

 

per Common Share

 

 

 

0.04

 

0.07

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding

18,564,002

 

18,564,002






See accompanying notes to the unaudited condensed consolidated financial statements









4






OXFORD TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


 

 

 

 

 

Three Months Ended

 

 

 

 

 

March 31, 2014

 

March 31, 2014

 

 

 

 

 

US $'000

 

US $'000

Cash Flows from Operating Activities:

 

 

 

 

 

Net Income

 

 

685

 

1,242

 

Adjustments to reconcile net income to net cash used in operating activities

 

 

 

 

 

Depreciation and amortization

 

331

 

279

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

 

(646)

 

1,051

 

Inventory

 

 

 

(1,923)

 

2,658

 

Prepaid expenses

 

 

 

305

 

150

 

Accounts payable

 

 

 

(316)

 

(4,902)

 

Taxes payable

 

 

 

(136)

 

(98)

 

Accrued liabilities and other payables

 

 

(727)

 

(625)

 

Deferred income

 

 

 

(1,117)

 

(2,434)

 

Cash used in operating activities

(3,544)

 

(2,679)

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(115)

 

(3)

 

Cash used in investing activities

(115)

 

(3)

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

Net borrowings under line of credit

 

3,559

 

2,554

 

Proceeds from related party

 

 

4

 

 

 

Debt instrument periodic payment - principal

 

(48)

 

(62)

 

Cash provided by  financing activities

3,515

 

2,492

 

 

 

 

 

 

 

 

Effect of foreign currency translation on cash

 

(18)

 

(157)

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(162)

 

(347)

 

 

 

 

 

 

 

 

Cash and Cash Equivalents, Beginning

 

 

2,437

 

2,517

 

 

 

 

 

 

 

 

Cash and Cash Equivalents, Ending

 

 

2,275

 

2,170

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

Non cash investing and financing activities:

 

 

 

 

 

 Equipment acquired by capital lease

 

 

1,295

 

-

 

 

 

 

 

 

 

 

 

 Cash payments for Interest

 

 

 

6

 

4

 

 

 

 

 

 

 

 

 

 Cash payments for Taxes

 

 

 

-

 

-



See accompanying notes to the unaudited condensed consolidated financial statements





5






OXFORD TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31, 2014

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 Company’s 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 Company’s 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.

Axiom’s 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 three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. These financial statements and notes included



6




herein should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto that are included in the Company’s annual report on Form 10-K for the year ended December 31, 2013.

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 2014, 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.

 

March 31, 2014

December 31, 2013

 

US $'000

US $'000

 

 

 

Raw Materials

6,200

5,763

Work in Progress

3,550

2,311

Finished Goods

797

493

 

 

 

 

10,547

8,567







7





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.


Fair Value of Financial Instruments


The carrying amounts of the Company’s 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.


Concentration of Credit Risk


Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company maintains cash balances at financial institutions within the UK which are insured by the Financial Services Authority up to limits of approximately $142,000. The Company also maintains cash balances at financial institutions which from time to time, may exceed Federal Deposit Insurance Corporation insured limits of $250,000 for banks located in the US. As of March 31, 2014 and 2013 the Company did not have any deposits in excess of the federally insured limits in its US banks. The Company has not experienced any losses with regard to its bank accounts and believes it is not exposed to any risk of loss on its cash bank accounts.


Accounts receivable are unsecured and are derived from revenues earned from customers located in the UK. Five customers represent 79% and 78% of sales respectively in 2014 and 2013. Six customers represent 88% and 75%  of accounts receivable respectively in 2014 and 2013. The majority of revenue is generated from the UK.


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 Line of Credit 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.

The Company was in credit on this facility as at March 31, 2014 of $2.9 million, the Company was also in credit as at March 31, 2013 of $2.1 million. The balance on this account is included within Line of Credit on the balance sheet.



8




Charges incurred amounted to $0.05 million to March 31, 2014 as compared to $0.04 million to March 31, 2013. No interest was charged for the period ended March 31, 2014 or for the same period of the previous year. This is due to the facility being used less. Charges are included within ‘Operating Expenses’ in the statement of operations and comprehensive income and interest charged on this facility would normally be shown within interest expense under ‘Other Income and Expenses’.

Line of Credit


The components of this balance sheet account are shown below:

 

March 31, 2014

December 31, 2013

 

US $'000

US $'000

 

 

 

Current Account

20

               2,740      

Deposit Account

49

50

Invoice Finance

2,891

(5)

Unpresented Checks

(3,742)

(13)

 

 

 

Total

(782)

2,772


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 2014-08.

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.

Future principal lease payments are as follows:


Year ended December 31,

US $’000

 

 

2014

344

2015

303

2016

259

2017

259

2018

238

Total

1,403

Less current portion

(344)

Long term portion

1,059


4.      SUBSEQUENT EVENTS


The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued. There are no subsequent events that require disclosure.







9




ITEM 2.  MANAGEMENT’S 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 Company’s common stock (“the Merger”). Although the 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 Company’s 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 Company’s 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 Defence 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 OEM’s own manufacturing operation. OEM’s contract with Axiom to build their products or to obtain services related to product development



10




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 Axiom’s 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.

RESULTS OF OPERATIONS

Three-month periods ending March 31, 2014 and 2013

Revenues


Revenues for the three month period ended March 31, 2014 were $12.4 million a decrease of 9% as compared to $13.5 million for the three months ended March 31, 2013. The first quarter of 2013 included a large contract from a customer which ended in 2013 this accounts for the comparable decrease in 2014.

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 three months ended March 31, 2014 cost of sales were $10.3 million as compared to $11.2 million for the same period of the previous year. Cost of sales as a percent of revenue was 83% compared to 82% for the previous year. The increase is due to an increase in direct wages.

Operating Expenses


Operating expenses consist of selling, general and administrative expenses. For the three months ended March 31, 2014 operating expenses were $1.6 million an increase of 23% compared to $1.3 million for the same period of the previous year. The increase is mainly due to increases in the following wages, travel, welfare, test consumables, maintenance, telephone and freight.

Rental Income


For the three months ended March 31, 2014 rental income was $0.2 million the same figure as the three months ended March 31, 2013.


Interest Expense


Interest expense for the three months ended March 31, 2014 amounted to $0.006 million as compared to $0.005 million for the three months ended March 31, 2013.


Net Income


For the three months ended March 31, 2014 net income was $0.7 million compared to $1.2 million for the three months ended March 31, 2013. This resulted in a basic income per share of $0.04 on weighted average common shares outstanding of 18,564,002 for the three months ended March 31, 2014 as compared to $0.07 for the same period of the previous year.


Liquidity and Capital Resources


The Company’s primary source of capital is cash provided by operations and borrowings under its credit facilities. As of March 31, 2014 the Company had cash and cash equivalents of around $2.3 million.




11




For the three months ended March 31, 2014 net cash used in operating activities was $3.5 million as compared to $2.7 million for the same period of the previous year. Much of the net cash used is due to an increase in inventory.


For the three months ended March 31, 2014 net cash used in investing activities was $0.1 million as compared to $0.003 million for the same period of the previous year. The increase is due to the purchase of some large machines during the first quarter of 2014.


For the three months ended March 31, 2014 net cash provided by financing activities was $3.5 million as compared to $2.5 million for the same period of the previous year. This amount is due to an increase in the borrowings from line of credit.


For the three months ended March 31, 2014 short-term capital needs were met by invoice discounting, finance lease arrangements, inter-company and bank loans. The Company’s banking facilities comprise an invoice discounting facility with a maximum advance limit of $3.3 million subject to the level of qualifying sales invoiced. Interest rates are calculated with reference to bank base rates.  At March 31, 2014 interest on invoice discounting facility was charged 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 March 31, 2014.


 

Amount

 

 

Description

$'000

 

Term

Invoice discounting

(2,891)

 

Ongoing until facility terminated.

Note Payable – related party

1,452

 

Payable in full on December 31, 2014

Accounts payable - related party

1,249

 

Inter-company loan

Finance lease agreements

1,403

 

Mix of 3 & 10 yr term commencing September 2008 to March 2014

 

1,213

 

 


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.

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.







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Critical Accounting Policies


Disclosure of the Company’s significant accounting policies is included in Note 2 to the consolidated financial statements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. Some of these policies require management to make estimates and assumptions that may affect the reported amounts in the Company’s 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 March 31, 2014. 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 Company’s 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 first quarter of 2014 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 2013 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.  Mine Safety Disclosures

None

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:/s/ Vivian Lam

Vivian Lam, President and Chief Financial Officer

Date: May 8, 2014



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