SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

(Mark One)
   X    Quarterly report pursuant to Section 13 or 15(d) of the Securities
 ---    Exchange Act of     1934

For the quarterly period ended September 30, 1996 or
                               ------------------   

        Transition report pursuant to Section 13 or 15(d) of the Securities
- ------  Exchange Act of 1934
For the transition period from                       to
                               -------------------------------------------------
    Commission file number           1-5654
                           -----------------------------------------------------

                                    EXX INC
- ------------------------------------------------------------------------------- 
             (Exact Name of Registrant as Specified in Its Charter)

      Nevada                                             88-0325271
- ------------------------------------------------------------------------------- 
(State or Other Jurisdiction of                      (IRS Employer
Incorporation or Organization)                       Identification No.)

1350 East Flamingo Road, Suite 689, Las Vegas, Nevada         89119-5263 
- ------------------------------------------------------------------------------- 
 (Address or Principal Executive Offices)                     (Zip Code)


                                 (702) 598-3223
- ------------------------------------------------------------------------------- 
              (Registrant's Telephone Number, Including Area Code)



                                      NONE
- ------------------------------------------------------------------------------- 
 (Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)

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
      ----     -----

Number of shares of common stock outstanding as of September 30, 1996:
2,031,042 Class A Shares and 675,414 Class B Shares.
- ---------                    -------                

 
PART 1.                     FINANCIAL INFORMATION

ITEM 1.                     FINANCIAL STATEMENTS
- -------                     --------------------

A. BALANCE SHEETS

 
 

  ASSETS                           September 30, 1996        December 31, 1995
  ------                           ------------------        -----------------
                                      (unaudited)                (audited)
                                                        
CURRENT ASSETS:


Cash and cash equivalents           $ 1,516,000                  $ 4,728,000  
Short term investments                2,976,000                      989,000  
Accounts receivable, less                                                     
  allowances of $1,016,000                                                    
  and $994,000                        1,823,000                    2,232,000  
                                                                              
Inventories, at lower of cost or                                              
  market:                                                                     
                                                                              
Raw materials                           580,000                      622,000  
Work in process                         138,000                      162,000  
Finished goods                        2,675,000                    3,117,000  
                                    -----------                  -----------  
                                      3,393,000                    3,901,000  
                                                                              
Other current assets                  1,596,000                      917,000  
Deferred income taxes                   824,000                      824,000  
                                    -----------                  -----------  
                                                                              
    TOTAL CURRENT ASSETS             12,128,000                   13,591,000  
                                                                              
Property, plant and equipment,                                                
  at cost:                                                                    
                                                                              
Land                                     35,000                       35,000  
Buildings and improvements            1,213,000                    1,151,000  
Machinery and equipment               5,436,000                    5,282,000  
                                    -----------                  -----------  
                                                                              
                                      6,684,000                    6,468,000  
                                                                              
Less accumulated depreciation                                                 
  and amortization                   (5,728,000)                  (5,470,000) 
                                    -----------                  -----------  
                                        956,000                      998,000  
                                                                              
Other assets                            690,000                      829,000  
                                    -----------                  -----------  
                                                                              
TOTALS                              $13,774,000                  $15,418,000  
                                    ===========                  ===========   
 
 

See Notes to Financial Statements

                                       2

 
A. BALANCE SHEETS (continued)

 
 

 LIABILITIES                                   September 30, 1996              December 31, 1995 
 -----------                                   ------------------              -----------------
                                                     (unaudited)                  (audited)
                                                                        
CURRENT LIABILITIES:
 
Accounts payable and other
   current liabilities                                $3,847,000               $3,329,000
                                                                                   
Note payable officer                                         ---                1,043,000
                                                       ----------               ----------
                                                                                   
     TOTAL CURRENT LIABILITIES                         3,847,000                4,372,000
                                                       ----------               ----------
                                                                                   
Deferred income taxes                                    253,000                  253,000
                                                       ----------               ---------- 
STOCKHOLDERS' EQUITY                  
- --------------------                  
                                      
                                      
Preferred stock, $.01 par value;      
  Authorized 5,000,000 shares;        
                                      
Common stock, Class A $.01 par value, 
  Authorized 25,000,000 shares;       
  2,787,318 shares issued                                 28,000                   28,000   
Common stock, Class B $.01 par value,                                             
  Authorized 1,000,000 shares;                                                    
  929,106 shares issued                                    9,000                    9,000
                                                                                  
Capital in excess of par value                         3,993,000                3,993,000
                                                                                  
Retained earnings                                      6,545,000                7,660,000 
                                      
Less treasury stock at cost:          
756,276 shares & 756,276 shares       
of Class A Common stock &             
253,692 and 252,092 shares            
of Class B Common stock                                 (901,000)                (897,000)
                                                       ---------                ----------
                                      
TOTAL STOCKHOLDERS' EQUITY                             9,674,000               10,793,000
                                                       ---------               -----------
                                      
TOTALS                                               $13,774,000              $15,418,000
                                                     ===========              ===========
 

See Notes to Financial Statements

                                       3

 
B. STATEMENTS OF INCOME

 
 



                                          For the Three-Month Period Ended   For the Nine-Month Period Ended
                                          --------------------------------   -------------------------------
                                            Sept. 30, 1996  Sept. 30, 1995    Sept. 30, 1996  Sept. 30, 1995
                                            ------------------------------    ------------------------------
                                                                                   
Net sales                                        $5,088,000   $7,761,000         $14,667,000   $24,170,000 
                                                                                                           
Cost of sales                                     3,394,000    4,933,000          10,910,000    14,951,000 
                                                 ----------   ----------         -----------   ----------- 
                                                                                                           
Gross profit                                      1,694,000    2,828,000           3,757,000     9,219,000 
                                                                                                           
Selling, general and                                                                                       
administrative expenses                           2,040,000    2,023,000           5,644,000     6,560,000 
                                                 ----------   ----------         -----------   ----------- 
                                                                                                           
Operating profit (loss)                            (346,000)     805,000          (1,887,000)    2,659,000 
                                                                                                           
Interest expense                                        ---          ---              25,000           --- 
                                                                                                           
Other income                                         53,000      101,000             222,000       302,000 
                                                 ----------   ----------         -----------   ----------- 
                                                                                                           
Income (loss) before provision                                                                             
  for income taxes                                 (293,000)     906,000          (1,690,000)    2,961,000 
                                                                                                           
Provision (credit) for                                                                                     
income taxes                                       (100,000)     335,000            (575,000)    1,017,000 
                                                 ----------   ----------         -----------   ----------- 
                                                                                                           
Net income (loss)                                $ (193,000)  $  571,000         $(1,115,000)  $ 1,944,000 
                                                 ==========   ==========         ===========   ===========   

Income (loss) per
common share:                                    $    (.07)   $      .21          $     (.41)  $       .72
                                                 ==========   ==========         ===========   ===========   

 


See Notes to Financial Statements

                                       4

 


 
 
C.  STATEMENTS OF CASH FLOW
 
                                                          For the Nine-Month Period Ended
                                                          -------------------------------
                                                            Sept. 30, 1996   Sept. 30, 1995
                                                            --------------      -----------
 
                                                                        
Operating activities:
Net income (loss)                                              $(1,115,000)     $ 1,944,000
Adjustments to reconcile net income (loss) to net cash
 provided by (used in) operating activities:
Depreciation                                                       258,000          223,000
Amortization of intangibles                                        197,000          173,000
Deferred income taxes                                                  ---          307,000
Deferred income                                                        ---           31,000
Provision for bad debts                                             22,000           60,000
Increase (decrease) in cash attributable to changes in
 assets and liabilities:
  Accounts receivable                                              387,000           75,000
  Inventories                                                      508,000         (338,000)
  Other current assets                                            (679,000)      (1,060,000)
  Other assets                                                    (217,000)        (420,000)
  Accounts payable and other
   current liabilities                                            (525,000)      (1,607,000)
  Income taxes payable                                                 ---       (2,844,000)
  Deferred income taxes                                                ---              ---
                                                               -----------      -----------
 
Net cash provided by (used in) operating activities             (1,164,000)      (3,456,000)
                                                               -----------      -----------
 
Cash flows from investing activities:
 Purchase of property and equipment                               (216,000)        (431,000)
 Proceeds from maturities of short-term investments, net               ---          717,000
 Purchase of short-term investments                             (1,987,000)             ---
 Proceeds from notes receivable                                    159,000          154,000
                                                               -----------      -----------
 
Net cash provided by (used in) investing activities             (2,044,000)         440,000
                                                               -----------      -----------
 
Cash flows (used in) financing activities:
 Purchase of treasury stock                                         (4,000)             ---
                                                               -----------      -----------
 
Net cash (used in) financing activities                             (4,000)             ---
                                                               -----------      -----------
 
Net increase (decrease) in cash and cash equivalents            (3,212,000)      (3,016,000)
 
Cash and cash equivalents
 beginning of period                                             4,728,000        5,640,000
                                                               -----------      -----------
 
Cash and cash equivalents,
 end of period                                                 $ 1,516,000      $ 2,624,000
                                                               ===========      ===========
 


See Notes to Financial Statements

                                       5

 
C.  STATEMENTS OF CASH FLOW (continued)


                                               For the Nine-Month Period Ended
                                               ------------------------------- 
                                                 Sept. 30, 1996  Sept. 30, 1995
                                               ------------------------------- 


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:


Cash Paid during the year for:
  Interest                                          $25,000      $          ---
  Income taxes                                         ---            3,807,000



SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

                                      NONE





See Notes to Financial Statements

                                       6

 
D.  NOTES TO FINANCIAL STATEMENTS

Note 1:  The unaudited financial statements as of September 30, 1996 and for the
- -------                                                                         
comparative three and nine month periods ended 1996 and 1995 reflect all
adjustments which are in the opinion of management necessary for a fair
presentation of the results for the periods stated.  All adjustments so made are
of a normal recurring nature.  Certain financial information and footnote
disclosure normally included in financial statements in accordance with
generally accepted accounting principles have been condensed or omitted.  The
reader is referred to the audited consolidated financial statements and notes
thereto included in the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.

Note 2:  In October 1994, the stockholders of SFM Corporation (SFM) approved a
- -------                                                                       
plan of reorganization whereby SFM was merged on a tax-free basis into a
subsidiary of EXX INC.  Simultaneous with this merger, each share of common
stock of SFM was converted into three shares of EXX INC  Class A common stock
and one share of EXX INC Class B common stock.  The EXX INC stock is
substantially identical to the former SFM stock in rights and privileges, except
that the stockholders of the outstanding shares of Class B common stock have the
right to elect two-thirds or the next rounded number of Directors in excess of
two-thirds if the number of Directors is not divisible by three and the
stockholders of the outstanding shares of the Class A common stock have the
right to elect the remaining Directors of the Company.  This merger has been
accounted for in a manner similar to a pooling of interests.

Note 3:  Note Payable
- -------  ------------

     As of September 30, 1996 there was no bank debt.

     Under the terms of a revolving credit agreement, as amended and extended to
December 31, 1996, a bank provides the Company with a line of credit and a
letter of credit facility for loans and/or letters of credit aggregating up to
$2,500,000 at a rate of 3/4 of 1% over prime.

     The line of credit is collateralized by substantially all of the Company's
trade accounts receivable, inventories and property and equipment.

     The loan agreement imposes various restrictions on the Company including
the maintenance of minimum net worth of $4,000,000 at the end of any quarter,
and limitations on:  capital expenditures, loans and advances, future
borrowings, payment of dividends, and a limit on the purchase of common stock
for the treasury.  In addition to any other limitations imposed by the loan
agreement covenants, no cash dividend may be paid unless the Company has had net
income aggregating at least $400,000  during the four calendar quarters
immediately preceding the date of payment, and the aggregate dividends paid over
any four calendar quarters may not exceed 40% of the net income for that period.
At September 30, 1996, due to losses in the last two quarters there is a
restriction on the payment of dividends.

     The Company has reduced its revolving line of credit since it has not had
any borrowings for several years and does not anticipate any borrowings in the
immediate future.

Note 4:  Computation of income per common share for the comparative three and
- -------                                                                      
nine month periods ended September 30, 1996 and September 30, 1995, was based on
2,707,789 common shares and 2,707,966 common shares (1996)and 2,708,056 common
shares and 2,708,056 common shares (1995) outstanding, being the average number
of shares outstanding during the respective periods adjusted for the stock split
effective in October 1994.  See Note 2.



See Notes to Financial Statements

                                       7

 
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
- -------  -----------------------------------------------------------------------
         of Operations
         -------------

         A.   Results of Operations
              ---------------------

          Sales for the third quarter of 1996 were $5,088,000  compared to
$7,761,000  in 1995, a 34% decrease.  The Mechanical Equipment Group had total
sales of $2,543,000,  which was 29% greater than the prior year's $1,966,000.
The Toy Segment reflected a sales decrease of 56% to $2,545,000  from $5,795,000
in 1995.

          Third quarter 1996 Toy Segment sales are substantially below the past
year's period due to a continuing negative sales climate throughout the industry
as well as the lack of any license(s) stimulating demand.  Management continues
to work on new product lines and new licenses, in order to increase sales and
improve the bottom line.  Management believes the trend of reduced sales and
losses in the Toy Segment will continue through the fourth quarter and into the
beginning of next year.

          The third quarter sales of the Mechanical Equipment Group reflect an
improvement from the prior year's quarter.  Sales and profits in the Howell
Motors Division improved from the prior year's quarter, while there was a
reduction in sales and the results for the telecommunication business.
Management looks forward to positive results in the Mechanical Equipment Group
for the full year.

          Operating losses were $346,000 compared to profits of $805,000  during
the third quarter of 1995.  The operating losses reflect the Toy Segment's
decline during this period and the effect of a contigency charge regarding a
past sale in the Mechanical Equipment Group.

          Interest expense was $ - 0 -, compared to $ - 0 - the same period last
year.  There was no bank debt in the third quarter of the current year.

          Net loss for the third quarter 1996 was $193,000 or 7 cents per share,
compared to net income of $571,000 or 21 cents per share in the comparable
period of 1995.

          On October 21, 1994, after stockholder and Board of Directors
approval, SFM was merged and became a wholly owned subsidiary of EXX INC a
holding company organized to acquire all the outstanding stock of SFM and each
of its Subsidiaries.  The quarterly per share results are adjusted for the stock
split which is explained and referenced in Note 2 to the financial statements.

          In April 1994, TX Systems, Inc., a newly formed subsidiary of SFM,
acquired the operating assets and business of TX Technologies, Inc. and TX
Software, Inc.  These companies were engaged in the Cable Pressurization and
Monitoring Systems business.

          In February, 1994, Hi-Flier Inc., a newly formed subsidiary of SFM,
purchased the assets of Hi-Flier Manufacturing Co., a leader in the kite
business for more than seventy years.

                                       8

 
         B.   Liquidity and Capital Resources
              -------------------------------

          At September 30, 1996 the Registrant had working capital of
approximately $8,281,000 and a current ratio of 3.15 to 1.  In addition, as
described in Notes to Financial Statements, the Registrant has a credit
agreement with a Bank pursuant to which the bank will provide a line of credit
and letters of credit aggregating $2,500,000 at an interest rate of 3/4 of 1%
above prime.  At September 30, 1996, there was no outstanding debt under this
facility.  The Registrant considers it working capital, as described above, to
be more than adequate to handle its current operating capital needs.

              The line of credit expires on December 31, 1996.

PART II. OTHER INFORMATION

         Not applicable.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                  EXX INC.



                              By:   /s/David A. Segal
                                   ---------------------
                                  David A. Segal
                                  Chairman of the Board and
                                  Chief Executive Officer



Date:     November 13, 1996

                                       9