1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
SEPTEMBER 17, 1996
------------------
TEXAS EQUIPMENT CORPORATION
---------------------------
(FORMERLY, MARINEX MULTIMEDIA CORPORATION)
------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA
------
(State or other jurisdiction of incorporation or organization)
Commission File Number:
33-47921-A
----------
62-1459870
----------
(IRS Employer Identification Number)
C/O PAUL CONDIT
---------------
1305 HOBBS HIGHWAY
------------------
SEMINOLE, TX 79360
------------------
(Address of principal executive offices)
915-758-3643
------------
(Registrant's telephone number, including area code)
Item 1. Changes in Control of Registrant.
None. See previous Form 8-K.
Item 2. Acquisition or Disposition of Assets.
2
A. Not applicable. See previous 8-K
Item 3. Bankruptcy or Receivership. Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
On September 17, 1996, the Company issued a press release
setting forth the signing of an Acquisition Agreement under the terms
of which the Company acquired Texas Equipment Co., Inc.
As of October 7, 1996, the Company changed its name to "Texas
Equipment Corporation". The symbol was changed from "MRNX" to "TEXQ".
Item 6. Resignations of Registrant's Directors.
Not applicable.
Item 7. Financial Statements and Exhibits.
A. Financial Statements of Business Acquired. The
Financial Statements are included herewith.
B. Proforma Financial Information. The Financial
Statements are included herewith.
C. Exhibits.
1. Report of Independent Certified Public
Accountants of Killman, Murrell & Company dated November 11, 1996 and
accompanying Financial Statements and Schedules, located at F-2.
Item 8. Change in Fiscal Year. 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 hereunto duly authorized.
3
TEXAS EQUIPMENT CORPORATION
By: /s/ Paul Condit
-------------------------------------
Paul Condit
President
Date: November 18, 1996
4
TABLE OF CONTENTS
Page
----
Report of Independent Certified Public Accountants F-2
Balance Sheets F-3
Statements of Operations F-5
Statements of Stockholders' Equity F-6
Statements of Cash Flow F-7
Notes to Financial Statements F-9
Financial Schedules F-22
Schedule I - Consolidat ing Balance Sheet, December 31, 1995 F-23
Schedule II - Consolidating Statement of Operations, Year Ended December 31, 1995 F-25
Schedule III - Consolidating Balance Sheet, September 30, 1996 (Unaudited) F-26
Schedule IV - Consolidating Statement of Operations, Nine Months Ended
September 30, 1996 (Unaudited) F-28
F-1
5
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Texas Equipment Co., Inc.
1305 Hobbs Highway
Seminole, Texas 79360
We have audited the accompanying balance sheets of Texas Equipment Co., Inc. as
of December 31, 1995 and 1994, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above presents fairly, in
all material respects, the financial position of Texas Equipment Co., Inc. as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The consolidating financial statements
included on Schedules I and II are presented for the purpose of additional
analysis and are not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KILLMAN, MURRELL AND COMPANY, P.C.
Odessa, Texas
November 11, 1996
F-2
6
TEXAS EQUIPMENT CO., INC.
BALANCE SHEETS
ASSETS
DECEMBER 31,
-------------------------- SEPTEMBER 30,
1994 1995 1996
---------- ---------- -------------
(Unaudited)
CURRENT ASSETS
Cash and Temporary Cash Investments $ 508,463 $ 250,031 $ 1,221,060
Accounts Receivable -
Trade 261,116 213,777 738,359
Employees and Other 24,043 14,051 20,889
Inventories, at the lower of cost (principally
specific identification and
average cost) or market value - Note 2 6,003,182 6,439,238 7,272,077
---------- ---------- -----------
TOTAL CURRENT ASSETS 6,796,804 6,917,097 9,252,385
---------- ---------- -----------
LAND, BUILDINGS AND
EQUIPMENT, at cost - Note 3 1,761,131 2,182,355 2,125,413
Less Accumulated Depreciation (569,109) (737,475) (804,985)
---------- ---------- -----------
NET LAND, BUILDINGS AND
EQUIPMENT 1,192,022 1,444,880 1,320,428
---------- ---------- -----------
OTHER ASSETS
Finance Receivables - Note 4 492,824 693,674 839,694
Cash Surrender Value of Insurance 200,986 228,550 240,939
Other Assets 83,885 73,585 109,305
Goodwill, net of accumulated
amortization of $28,604,
$41,318, and $50,853,
respectively 162,094 149,380 139,845
Related Party Receivables 118,525 117,542 132,018
---------- ---------- -----------
TOTAL OTHER ASSETS 1,058,314 1,262,731 1,461,801
---------- ---------- -----------
TOTAL ASSETS $9,047,140 $9,624,708 $12,034,614
========== ========== ===========
The accompanying notes are an
integral part of these financial statements.
(Continued)
F-3
7
TEXAS EQUIPMENT CO., INC.
BALANCE SHEETS
(CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
DECEMBER 31,
----------------------- SEPTEMBER 30,
1994 1995 1996
---------- ---------- -------------
(Unaudited)
CURRENT LIABILITIES
Notes Payable - Note 8 $ 91,914 $ 300,000 $ 300,000
Current Maturities of
Long-Term Debt - Note 9 680,979 271,447 267,130
Accounts Payable Trade -
John Deere Company 2,261,094 3,096,801 3,769,240
Other 576,234 436,952 854,419
Accrued Expenses - Note 10 353,065 308,226 422,057
Customer Deposits 54,966 - 72,035
Deferred Tax Liability - Note 7 423,300 377,300 377,300
---------- ---------- -----------
TOTAL CURRENT LIABILITIES 4,441,552 4,790,726 6,062,181
---------- ---------- -----------
LONG-TERM DEBT, net of current
maturities - Note 9 1,438,889 1,195,378 974,430
DEFERRED TAX LIABILITY - Note 7 104,800 152,000 152,000
COMMITMENTS AND CONTINGENCIES -
Notes 4, 6, 11 and 12 - - -
---------- ---------- -----------
TOTAL LIABILITIES 5,985,241 6,138,104 7,188,611
---------- ---------- -----------
STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value.
Authorized 3,000,000; Issued
and Outstanding 424,999 in 1994 and
596,305 in 1995 and 1996 424,999 596,305 596,305
Common Stock, No Par Value.
Authorized 1,000,000; Issued and
Outstanding 100,000 100,000 100,000 100,000
Paid in Capital - - 927,613
Retained Earnings 2,633,377 2,886,776 3,318,562
---------- ---------- -----------
3,158,376 3,583,081 4,942,480
Less Treasury Shares - 40,000
Shares of Common Stock, at cost (96,477) (96,477) (96,477)
---------- ---------- -----------
TOTAL STOCKHOLDERS' EQUITY 3,061,899 3,486,604 4,846,003
---------- ---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $9,047,140 $9,624,708 $12,034,614
========== ========== ===========
The accompanying notes are an
integral part of these financial statements.
F-4
8
TEXAS EQUIPMENT CO., INC.
STATEMENTS OF OPERATIONS
YEARS ENDED
DECEMBER 31, NINE MONTHS ENDED
----------------------------- SEPTEMBER 30,
1994 1995 1996
----------- ----------- -----------------
(Unaudited)
REVENUES $20,964,570 $25,031,608 $19,507,714
COST OF REVENUES 18,046,846 21,648,257 16,949,797
----------- ----------- -----------
GROSS PROFIT 2,917,724 3,383,351 2,557,917
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
Commissions, Salaries, and
Employee Benefits 1,647,859 1,821,616 1,080,664
Amortization and Depreciation 173,418 181,080 114,651
Collection and Bad Debt Expense 84,998 139,505 70,696
Other Operating Expenses 873,578 793,698 679,771
----------- ----------- -----------
Total Selling, General and
Administrative Expenses 2,779,853 2,935,899 1,945,782
----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest Income 187,720 181,008 110,974
Interest Expense (237,212) (243,122) (75,792)
Other Income 14,680 31,355 15,566
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 103,059 416,693 662,883
INCOME TAXES - Note 7 44,428 163,294 231,097
----------- ----------- -----------
NET INCOME $ 58,631 $ 253,399 $ 431,786
=========== =========== ===========
The accompanying notes are an
integral part of these financial statements.
F-5
9
TEXAS EQUIPMENT CO., INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
PREFERRED STOCK COMMON STOCK TOTAL
------------------- ------------------ PAID IN RETAINED TREASURY STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS SHARES EQUITY
------- -------- ------- -------- -------- ---------- -------- -------------
Balance, December 31, 1993 224,910 $224,910 100,000 $100,000 $ - $2,574,746 $(96,477) $2,803,179
Stock Bonus Plan Issuance 200,089 200,089 - - - - - 200,089
Net Income - - - - - 58,631 - 58,631
------- -------- ------- -------- -------- ---------- -------- ----------
Balance, December 31, 1994 424,999 424,999 100,000 100,000 - 2,633,377 (96,477) 3,061,899
Stock Bonus Plan Issuance 171,306 171,306 - - - - - 171,306
Net Income - - - - - 253,399 - 253,399
------- -------- ------- -------- -------- ---------- -------- ----------
Balance, December 31, 1995 596,305 596,305 100,000 100,000 - 2,886,776 (96,477) 3,486,604
Parent Company Contribution-
September 17, 1996 - - - - 927,613 - - 927,613
Net Income (Unaudited) - - - - - 431,786 - 431,786
------- -------- ------- -------- -------- ---------- -------- ----------
Balance, September 30, 1996 596,305 $596,305 100,000 $100,000 $927,613 $3,318,562 $(96,477) $4,846,003
(Unaudited) ======= ======== ======= ======== ======== ========== ======== ==========
The accompanying notes are an
integral part of these financial statements
F-6
10
TEXAS EQUIPMENT CO., INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED
DECEMBER 31, NINE MONTHS ENDED
-------------------------- SEPTEMBER 30,
1994 1995 1996
----------- --------- -----------------
(Unaudited)
CASH FLOW FROM OPERATING ACTIVITIES
Net Income $ 58,631 $ 253,399 $ 431,786
Adjustments to Reconcile Net Income
to Net Cash from Operating Activities
Amortization and Depreciation 173,418 181,080 114,651
Loss on Disposal of Assets 11,728 - 3,502
Deferred Taxes (92,800) 1,200 -
Increase in Finance Receivable (97,073) (200,850) (146,020)
Increase in Preferred Stock 200,089 171,306 -
Changes in Current Assets and Liabilities
(Increase) Decrease in Accounts
Receivable 445,455 57,331 (531,420)
(Increase) Decrease in Inventories 1,002,860 (436,056) (832,839)
Increase (Decrease) in Accounts
Payable (2,179,130) 696,425 1,089,906
Increase (Decrease) in Accrued
Liabilities (14,835) (44,839) 113,831
Increase (Decrease) in Customer
Deposits 52,368 (54,966) 72,035
----------- --------- ----------
NET CASH FLOW PROVIDED
(USED) BY OPERATING
ACTIVITIES (439,289) 624,030 315,432
----------- --------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of Land, Buildings and Equipment (152,895) (421,224) (30,336)
Proceeds from Sale of Equipment 47,214 - 46,170
Increase in Cash Surrender Value of Insurance (28,579) (27,564) (12,389)
(Increase) Decrease in Related Party Receivables (66,999) 983 (14,476)
(Increase) Decrease in Other Assets (80,540) 10,300 (35,720)
----------- --------- ----------
NET CASH FLOWS (USED) BY
INVESTING ACTIVITIES (281,799) (437,505) (46,751)
----------- --------- ----------
The accompanying notes are an
integral part of these financial statements.
(Continued)
F-7
11
TEXAS EQUIPMENT CO., INC.
STATEMENTS OF CASH FLOWS
(CONTINUED)
YEARS ENDED
DECEMBER 31, NINE MONTHS ENDED
----------------------------- SEPTEMBER 30,
1994 1995 1996
----------- ----------- -----------------
(Unaudited)
CASH FLOW FROM FINANCING ACTIVITIES
Proceed from Note Borrowings 2,048,243 1,203,569 410,279
Repayment of Note Borrowings (1,150,704) (1,648,526) (635,544)
Capital Contribution - - 927,613
----------- ----------- ----------
Net Cash Flow Provided (Used) By
Financing Activities 897,539 (444,957) 702,348
----------- ----------- ----------
NET INCREASE (DECREASE) IN CASH 176,451 (258,432) 971,029
CASH AT THE BEGINNING OF THE PERIOD 332,012 508,463 250,031
----------- ----------- ----------
CASH AT THE END OF THE PERIOD $ 508,463 $ 250,031 $1,221,060
=========== =========== ==========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash Paid During the Period For:
Interest Expense $ 238,576 $ 199,549 $ 87,484
=========== =========== ==========
Income Taxes $ 225,533 $ 33,240 $ 203,699
=========== =========== ==========
The accompanying notes are an
integral part of these financial statements.
F-8
12
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 1: NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Texas Equipment Co., Inc. ("TEC"), a Texas corporation, is a retailer of John
Deere and other agricultural equipment with its headquarters in Seminole,
Texas. TEC's market area is approximately one hundred (100) square miles
surrounding Seminole, Texas, which includes large tracts of lands in the South
Plains of Texas and in Eastern New Mexico. In excess of ninety percent (90%)
of equipment sales are made to customers participating in agriculture;
therefore, TEC has a concentration of customers in a geographic area and in a
single industry and is tied to a sole supplier (John Deere) for a significant
portion of its new equipment purchases.
The summary of significant accounting policies of TEC is presented to assist in
understanding TEC's financial statements. The financial statements and notes
are representations of TEC's management, who is responsible for their integrity
and objectivity. These accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
Accounting 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 amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Inventories
Inventories are stated at the lower of cost or market value. Cost is
determined using the specific identification method for new and used
agricultural equipment and average cost for parts.
Buildings and Equipment
Depreciation of buildings and equipment is provided principally on the
straight-line method using estimated useful lives ranging from five to forty
years.
Major renewals and betterments are added to the property accounts while the
cost of repairs and maintenance is charged to operating expenses in the period
incurred. Cost of assets retired or otherwise disposed of and the applicable
accumulated depreciation are removed from the accounts, and the resultant gain
or loss, if any, is reflected in operations.
Cash Surrender Value of Insurance
The insurance policies carried on the lives of current and former officers of
TEC had a face value of $1,800,000 at December 31, 1995 and September 30, 1996.
Borrowings against the cash surrender values as of these dates were $170,104
and $181,240, respectively.
Goodwill Amortization
Goodwill is being amortized on a straight-line basis over a period of fifteen
(15) years.
(Continued)
F-9
13
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 1: NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED):
Finance Receivables
TEC has entered into retail finance agreements with two credit corporations
whereby TEC's customers can finance selected purchases from TEC, and TEC
guarantees a portion of the financed balance. A portion of the financed
balance is not remitted to TEC but is held by the finance companies to insure
the payment of amounts financed. At such time as the amounts are repaid to the
credit corporation, the withheld amounts may be remitted to TEC.
John Deere Payable
John Deere Company provides various inventory financing arrangements for its
dealers, and, at times the payment terms extended beyond a twelve month period;
however, all amounts due the John Deere Company are reflected as current
liabilities since the debt was incurred to acquire inventory.
Income Taxes
TEC records income tax expense using the liability method of accounting for
deferred income taxes. Under the liability method, deferred tax assets and
liabilities are recognized for the expected future tax consequences of
temporary differences between the financial statement and income tax bases of
TEC's assets and liabilities. An allowance is recorded when it is more likely
than not that any or all of a deferred tax asset will not be realized. The
provision for income taxes includes taxes currently payable plus the net change
during the year in deferred tax assets and liabilities recorded by TEC.
Concentration of Credit Risk
TEC places its cash and temporary cash investments with high credit quality
financial institutions. At times such investments may be in excess of FDIC
insurance limits. At December 31, 1995 and September 30, 1996, the deposit
exceeding FDIC insurance limits were $758,000 and $1,653,000, respectively.
Fair Value of Financial Instruments
Unless otherwise indicated, the fair values of all reported assets and
liabilities which represent financial instruments (none of which are held for
trading purposes) approximate the carrying values of such amounts.
Capital Stock
TEC's articles of incorporation provide for the following stock issues:
- Two classes of common stock with no par value
- One million (1,000,000) authorized voting common shares
- One million (1,000,000) authorized non-voting common shares
- Three million (3,000,000) authorized, no par value, non-voting
preferred shares, with a dividend rate of six percent (6%) per annum,
noncumulative
(Continued)
F-10
14
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 1: NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED):
At December 31, 1994 and 1995, and September 30, 1996, TEC had issued no
non-voting common shares and the Board of Directors of TEC had not declared
dividends on the non-voting preferred stock.
Cash Flow Statement
TEC considers cash and temporary cash investments as cash equivalents for
purposes of the statement of cash flows.
NOTE 2: INVENTORIES
At December 31, 1994 and 1995, and September 30, 1996 (unaudited) inventories
consisted of:
1994 1995 1996
----------- ----------- -----------
(Unaudited)
New Equipment $ 3,051,095 $ 3,301,682 $ 3,327,106
Used Equipment 1,197,708 1,426,894 2,335,095
Parts 1,754,379 1,710,662 1,609,876
----------- ----------- -----------
$ 6,003,182 $ 6,439,238 $ 7,272,077
=========== =========== ===========
Substantially all of the inventories are pledged as security for accounts
payable to John Deere or various notes payable.
NOTE 3: LAND, BUILDINGS AND EQUIPMENT
At December 31, 1994 and 1995, and September 30, 1996 (unaudited), land,
buildings and equipment consisted of:
1994 1995 1996
---------- ---------- -----------
(Unaudited)
Land and Buildings $ 853,590 $1,146,818 $1,159,411
Vehicles 435,548 435,548 348,271
Furniture and Fixtures 282,996 383,032 394,869
Equipment and Tools 188,997 216,957 222,862
---------- ---------- ----------
1,761,131 2,182,355 2,125,413
Less Accumulated Depreciation (569,109) (737,475) (804,985)
---------- ---------- ----------
Net $1,192,022 $1,444,880 $1,320,428
========== ========== ==========
Depreciation Expense $ 160,705 $ 168,366 $ 105,116
========== ========== ==========
F-11
15
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 4: FINANCE RECEIVABLES
At December 31, 1994 and 1995, and September 30, 1996 (unaudited), the finance
receivables were as follows:
1994 1995 1996
--------- --------- -----------
(Unaudited)
John Deere Credit $ 310,667 $ 462,817 $ 634,527
Agricredit Acceptance 182,157 230,857 205,167
--------- --------- ---------
$ 492,824 $ 693,674 $ 839,694
========= ========= =========
The applicable outstanding financed balances for each program were as follows:
1994 1995 1996
----------- ----------- -----------
(Unaudited)
John Deere Credit $21,735,745 $24,459,979 $21,823,102
Agricredit Acceptance 5,363,557 5,144,230 4,216,035
----------- ----------- -----------
$27,099,302 $29,604,209 $26,039,137
=========== =========== ===========
In accordance with credit agreements, these finance companies withhold one
percent (1%) of each financed contract accepted from TEC. When the finance
company experiences a loss on a contract, the loss is charged against TEC's
finance receivable. TEC's credit risk is limited to the finance receivables;
however, on an annual basis, the finance receivable is compared to the total
outstanding credit balances and if the finance receivable is greater than the
required amount (3% to 4% of outstanding credit balance), the overage may be
remitted to TEC.
NOTE 5: EMPLOYEE BENEFIT PLANS
Effective January 1, 1993, TEC adopted its "Stock Bonus Plan" (the "Plan").
Contributions to the Plan are at the discretion of the employer subject to
certain limitations imposed by the federal tax code. The Plan covers
substantially all full time employees and the covered employees become vested
in the employer's contribution at the rate of twenty percent (20%) per year
after three years of service. TEC's shareholders authorized the issuance of
preferred stock in 1993 for the exclusive use in funding the Plan.
Contributions to the Plan aggregated $200,089 and $171,306 in 1994 and 1995,
respectively.
In March, 1994, TEC adopted a flexible health benefit plan (a cafeteria plan)
which covers substantially all full time employees on the 90th day following
commencement of employment. The health benefit plan is a minimum funded plan
with specific and aggregate stop loss insurance provided for to limit the
overall exposure to TEC. The specific stop loss is $20,000 per employee at
December 31, 1995 and September 30, 1996. The expense associated with the
health benefit plan aggregated $18,142 and $208,346 for 1994 and 1995,
respectively.
On September 20, 1994, TEC adopted the "TEXAS EQUIPMENT COMPANY, INC. 401(K)
PLAN" (the "401(k) Plan") which covers all employees that have attained the age
of twenty-one (21) years and have one year of service. Contributions by TEC
are discretionary, and TEC has made no contributions to the 401(k) Plan from
inception to September 30, 1996.
F-12
16
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 6: DEALER AGREEMENTS
TEC has entered into the following dealer agreements with the John Deere
Company:
- John Deere Agricultural Dealer Agreement
- John Deere Commercial Products Dealer Agreement
- John Deere Lawn and Garden Dealer Agreement
- John Deere Lawn and Grounds Care Sales Center Agreement
- John Deere Agricultural Dealer Leasing Agreement
- John Deere Agricultural Dealer Finance Agreement
These dealer agreements can be, in general, terminated by the death of the
major shareholder of TEC, close out or sale of a substantial portion of TEC's
business, default by TEC under any chattel mortgage or other security agreement
with the John Deere Company, TEC receiving a written termination notice from
John Deere Company at least one hundred eighty (180) days prior to the
effective date of notification, or mutual consent of TEC and John Deere Company.
For the years ended December 31, 1994 and 1995, sales of John Deere new
equipment, parts and warranty services aggregated 46% and 55% of total revenue,
respectively.
In addition, TEC has the following dealer agreements in effect:
- Farm Plan - FPC Financial
- K-Imports, Inc.
- Wil-Rich, a division of TIC United Corp.
- Yetter Manufacturing Company
- Hardi Inc.
- NEDA Financial, Ltd., L.P.
- West Texas Lee Co., Inc.
- AGCO Marketing Group
(Continued)
F-13
17
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 6: DEALER AGREEMENTS (CONTINUED)
These agreements include various provisions, including the guaranty of payment
by TEC and termination clauses. The agreement with FPC Financial (the "Farm
Plan") provides TEC a method to collect accounts receivables for parts, service
and small whole good sales in three days; however, TEC has guaranteed the
repayment to FPC Finance for its customers included under the merchant
authorized and special guaranty farm plan programs. At December 31, 1995 and
September 30, 1996, TEC was contingently liable under these programs in the
amount of $109,752 and $83,145, respectively.
NOTE 7: INCOME TAXES
At December 31, 1994 and 1995, the income tax expense (benefit) consists of the
following components:
1994 1995
-------- --------
Current $137,228 $162,094
Deferred (92,800) 1,200
-------- --------
Total Income Expense $ 44,428 $163,294
======== ========
The following reconciles income tax expense reported in the statements of
operations to income taxes that would be obtained by applying the statutory tax
rate (34%) to income before income taxes:
1994 1995
-------- --------
Expected Income Tax Expense
at 34% $ 35,040 $141,676
Officers' Insurance 4,597 8,677
Penalties and Other 4,791 12,941
-------- --------
$ 44,428 $163,294
======== ========
The deferred tax liability in the accompanying balance sheets consists of the
following components:
Current 1994 1995
--------
Inventories $407,300 $430,300
Other Deferred Liabilities 84,400 32,600
Other Deferred Assets (68,400) (85,600)
-------- --------
Total Current 423,300 377,300
-------- --------
Long-Term
Accumulated Depreciation 51,700 55,600
Goodwill Amortization 39,200 50,800
Other 13,900 45,600
-------- --------
Total Long-Term 104,800 152,000
-------- --------
Total $528,100 $529,300
======== ========
F-14
18
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 8: NOTES PAYABLE
A summary of notes payable at December 31, 1994 and 1995, and September 30,
1996 (unaudited), is as follows:
1994 1995 1996
---- ---- ----
(Unaudited)
Note payable to a credit corporation, $ 41,089 $ - $ -
payable in monthly installments of $1,700, due
March 1, 1995, secured by equipment
10% note payable to a bank, payable on demand 50,825 - -
and if no demand made, February 10, 1995,
secured by inventory, accounts receivable,
and equipment
11.25% note payable to a bank, payable on demand - 300,000 300,000
or if no demand is made then $100,000 principal
reduction at December 15, 1996, secured
by equipment, vehicles, and company stock
-------- -------- --------
$ 91,914 $300,000 $300,000
======== ======== ========
NOTE 9: LONG-TERM DEBT
A summary of long-term debt at December 31, 1994 and 1995, and September 30,
1996 (unaudited), is as follows:
1994 1995 1996
---- ---- ----
(Unaudited)
9.9% note payable to a credit corporation, $ 18,368 $ 6,427 $ -
payable in two installments of $5,700 before
November 1, 1993 and monthly installments of
$1,102 including interest due June 1, 1996, secured
by equipment
9.9% note payable to a credit corporation 72,142 5,876 -
payable in monthly installments of $4,439 including
interest due January 1, 1996, secured by equipment
12% note payable to an individual payable in two annual 4,500 - -
installments of $5,000 and $4,500, respectively, plus
interest, due January 5, 1995, secured by equipment
(Continued)
F-15
19
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 9: LONG-TERM DEBT (Continued)
1994 1995 1996
---- ---- ----
(Unaudited)
6.5% note payable to a bank, payable upon demand $200,000 $ - $ -
or if no demand on June 17, 1995, secured by equipment
9.9% note payable to a credit corporation, 11,660 - -
payable in monthly installments of $405, including
interest, due October 15, 1997, secured by equipment
8.4% note payable to a credit corporation, payable in 29,430 26,044 14,671
monthly installments of $619, including interest, due
December 1, 1998, secured by equipment
10.4% variable interest rate note payable to a credit 1,113 - -
corporation, payable in monthly installments of $564,
including interest, due June 1, 1995, secured by equipment
12% note payable to an individual, payable in monthly 33,989 30,397 28,262
installments of $600, including interest due on March 1,
2002, secured by company stock
12% note payable to an individual, payable in monthly 36,686 33,466 31,268
installments of $600, including interest, due on
January 1, 2003, secured by company stock
10.5% note payable to individuals, payable in five annual 10,000 5,000 5,000
installments of $5,000, plus interest, due December 1,
1997, secured by real estate
3.0% note payable to a credit corporation, payable in 11,872 5,790 1,949
monthly installments of $490, including interest,
due January 14, 1997, secured by vehicle
8.5% note payable to a credit corporation, payable in 6,282 1,232 -
monthly installments of $417, due on April 15, 1996,
secured by vehicle
8.9% note payable to a credit corporation, payable in 14,141 7,111 -
monthly installments of $622, including interest,
due on January 15, 1997, secured by vehicle
(Continued)
F-16
20
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 9: LONG-TERM DEBT (Continued)
1994 1995 1996
---- ---- ----
(Unaudited)
8.9% note payable to a credit corporation, payable in $ 71,443 $ - $ -
annual installments of $18,195, including interest,
due March 20, 1999, secured by equipment
9.2% note payable to a credit corporation, payable in 113,729 13,027 9,002
annual installments of $147,127, including interest,
due March 20, 1999, secured by equipment
10% note payable to a bank, payable in monthly 51,364 23,089 11,489
installments of $1,450, including interest, due
August 1, 1999, secured by real estate
12.5% note payable to a bank, payable in monthly 12,444 - -
installments of $750, including interest, due
July 8, 2019, secured by real estate
Base rate (11.25% in 1995) note payable to a bank, 363,088 275,135 205,525
payable in monthly installments of $10,000, including
interest, due June 16, 1998, secured by real estate,
inventory, and accounts receivable
9.9% note payable to a credit corporation, 22,715 - -
payable in monthly installments of $1,237, including
interest, due September 1, 1996, secured by equipment
8.4% note payable to a credit corporation, payable in 648 - -
monthly installments of $653, including interest, due
March 1, 1995, secured by equipment
8.0% note payable to a credit corporation, payable in 59,179 - -
monthly installments of $1,270, including interest,
due September 1, 1999, secured by equipment
8.0% note payable to a credit corporation, payable in 63,358 - -
monthly installments of $1,359, including interest,
due September 1, 1999, secured by equipment
8.0% note payable to a credit corporation, payable in 64,977 53,010 -
monthly installments of $1,394, including interest,
due September 1, 1999, secured by equipment
(Continued)
F-17
21
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 9: LONG-TERM DEBT (Continued)
1994 1995 1996
---- ---- ----
(Unaudited)
8.0% note payable to a credit corporation, payable in $ 64,977 $ - $ -
monthly installments of $1,394, including interest,
due September 1, 1999, secured by equipment
8.0% note payable to a credit corporation, payable in 63,358 - -
monthly installments of $1,359, including interest,
due September 1, 1999, secured by equipment
8.0% note payable to a credit corporation, payable in 68,419 - -
monthly installments of $1,468, including interest,
due September 1, 1999, secured by equipment
8.4% variable rate note payable to a credit corporation, 7,422 5,001 3,048
payable in monthly installments of $246, including
interest, due October 1, 1999, secured by equipment
1% over Prime (8.25% at 1995) variable interest 450,631 425,245 405,027
rate note payable to an individual, payable in monthly
installments of $5,000, including interest, due
September 28, 2012, secured by real estate
10.4% note payable to a credit corporation, payable in 11,042 2,905 -
monthly installments of $742, including interest,
due August 20, 1999, secured by equipment
8.4% note payable to a credit corporation payable in 11,742 8,365 5,951
monthly installments of $353, including interest, due
March 1, 1998, secured by equipment
10% note payable to an individual, payable in annual 6,000 4,000 4,000
installments of $2,000, including interest, due
October 19, 1998, secured by real estate
10% note payable to an individual, payable in annual - 10,000 10,000
payments of $11,200, including interest, due
December 15, 1996, secured by real estate
11.4% note payable to a credit corporation, - 60,000 -
payable in monthly payments of $1,563, including
interest, due January 1, 2008, secured by equipment
10% note payable to a credit corporation, - 94,000 90,000
payable in annual installments of $13,400, including
interest, due February 1, 2002, secured by real
estate
(Continued)
F-18
22
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 9: LONG-TERM DEBT (Continued)
1994 1995 1996
---- ---- ----
(Unaudited)
9.9% note payable to a credit corporation, $ 73,763 $ 7,579 $ 3,977
payable in monthly installments of $5,812, including
interest, due June 1, 1999, secured by equipment
9.9% note payable to a credit corporation, payable in - 79,890 79,890
annual installments of $21,020, including interest,
due September 20, 2002, secured by equipment
11.4% note payable to a credit corporation, - 7,048 -
payable in monthly installments of 540, including
interest, due October 1, 1997, secured by equipment
11.4% note payable to a credit corporation, - 7,775 -
payable in monthly installments of $393, including
interest, due October 1, 1997, secured by equipment
11.9% note payable to a credit corporation, - 31,494 -
payable in monthly installments of $920, including
interest, due June 15, 1999, secured by equipment
11.9% note payable to a credit corporation, - 20,719 5,289
payable in monthly installments of $802, including
interest, due June 1, 1998, secured by equipment
10.15% note payable to a credit corporation, payable in 26,385 23,116
monthly installments of $620, including interest, due
June 1, 2000, secured by equipment
11.4% note payable to a credit corporation, - 8,662 6,765
payable in monthly installments of $286, including
interest, due December 15, 1998, secured by equipment
11.4% note payable to a credit corporation, - 12,049 4,625
payable in monthly installments of $397, including
interest, due December 15, 1998, secured by equipment
9.9% note payable to a credit corporation, payable in - - 31,649
annual installments of $9,663, including interest,
due April 20, 2000, secured by equipment
(Continued)
F-19
23
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 9: LONG-TERM DEBT (Continued)
1994 1995 1996
---- ---- ----
(Unaudited)
10.9% note payable to a credit corporation, $ - $ - $ 35,200
payable in annual installments of $10,858, including
interest, due April 1, 2001, secured by equipment
10.4% note payable to a credit corporation, - - 23,589
payable in monthly installments of $1,736, including
interest, due April 1, 2001, secured by equipment
10% note payable to an individual, payable on demand - - 21,028
Borrowings against cash surrender value life insurance 89,386 170,104 181,240
policies ---------- ---------- ----------
2,119,868 1,466,825 1,241,560
Less Current Maturities 680,979 271,447 267,130
---------- ---------- ----------
$1,438,889 $1,195,378 $ 974,430
========== ========== ==========
Aggregate maturities of long-term debt for the five years ending in the year
2000 are as follows:
Years Ending
December 31,
------------
1996 $ 271,447
1997 273,584
1998 208,605
1999 106,865
2000 74,487
Thereafter 531,837
----------
$1,466,825
==========
F-20
24
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 10: ACCRUED EXPENSES
Accrued expenses were comprised of the following:
December 31,
---------------------------------- September 30,
1994 1995 1996
---------- ---------- -------------
(Unaudited)
Salaries and Commissions $ 99,761 $ 48,852 $ 63,842
Interest 13,545 53,131 41,439
Income Taxes 37,228 166,082 229,400
State Taxes 17,809 24,687 33,000
Payroll Taxes 75,104 9,026 8,136
Property Taxes 69,000 - 43,000
Other 40,618 6,448 3,240
---------- ---------- -------------
$ 353,065 $ 308,226 $ 422,057
========== ========== =============
NOTE 11: INTERIM FINANCIAL DATA (UNAUDITED)
The balance sheet of September 30, 1996 and the statements of operations, cash
flows and shareholders' equity for the nine month period ended September 30,
1996, are unaudited. In the opinion of management, these statements have been
prepared on the same basis as the audited financial statements and includes all
adjustments, consisting only of normal recurring adjustments necessary to state
fairly the information set forth therein. The data disclosed in the notes to
financial statements for this period is unaudited. Operating results for the
nine months ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996.
NOTE 12: MERGER
On September 17, 1996, all of the outstanding stock of TEC was acquired by
Marinex Multimedia Corporation. Marinex Multimedia Corporation subsequently
changed its name to Texas Equipment Corporation. The merger was accounted for
as a pooling-of-interest and consolidating balance sheets and statements of
operation for the merged entity are presented on Schedules I through IV.
F-21
25
SCHEDULES
F-22
26
TEXAS EQUIPMENT CORPORATION
SCHEDULE I
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1995
ASSETS
------
TEXAS MARINEX
EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL ELIMINATIONS TOTAL
---------- ----------- ---------- ------------ -------------
CURRENT ASSETS
Cash and Temporary Cash
Investments $ 250,031 $ 88,536 $ 338,567 - $ 338,567
Accounts Receivable -
Trade 213,777 - 213,777 - 213,777
Employees and Other 14,051 - 14,051 - 14,051
Inventories 6,439,238 6,439,238 - 6,439,238
---------- -------- ---------- ---------- ----------
TOTAL CURRENT
ASSETS 6,917,097 88,536 7,005,633 - 7,005,633
---------- -------- ---------- ---------- ----------
LAND, BUILDINGS AND
EQUIPMENT, at cost 2,182,355 76,866 2,259,221 - 2,259,221
Less Accumulated Depreciation (737,475) (21,630) (759,105) - (759,105)
---------- -------- ---------- ---------- ----------
NET LAND, BUILDINGS
AND EQUIPMENT 1,444,880 55,236 1,500,116 - 1,500,116
---------- -------- ---------- ---------- ----------
OTHER ASSETS
Finance Receivables 693,674 - 693,674 - 693,674
Cash Surrender Value of Insurance 228,550 - 228,550 - 228,550
Other Assets 73,585 7,860 81,445 - 81,445
Goodwill 149,380 - 149,380 - 149,380
Related Party Receivables 117,542 - 117,542 - 117,542
---------- -------- ---------- ---------- ----------
TOTAL OTHER ASSETS 1,262,731 7,860 1,270,591 - 1,270,591
---------- -------- ---------- ---------- ----------
TOTAL ASSETS $9,624,708 $151,632 $9,776,340 $ - $9,776,340
========== ======== ========== ========== ==========
(Continued)
F-23
27
TEXAS EQUIPMENT CORPORATION SCHEDULE I
(Continued)
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
TEXAS MARINEX
EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL ELIMINATIONS TOTAL
---------- ----------- ---------- ------------ -------------
CURRENT LIABILITIES
Notes Payable $ 300,000 $ - $ 300,000 $ - $ 300,000
Current Maturities of
Long-Term Debt - Note 8 271,447 100,000 371,447 371,447
Accounts Payable Trade -
John Deere Company 3,096,801 - 3,096,801 - 3,096,801
Other 436,952 7,830 444,782 - 444,782
Accrued Expenses 308,226 250,892 559,118 - 559,118
Deferred Tax Liability 377,300 - 377,300
---------- --------- ---------- --------- ----------
TOTAL CURRENT
LIABILITIES 4,790,726 358,722 5,149,448 - 5,149,448
---------- --------- ---------- --------- ----------
LONG-TERM DEBT, net of
current maturities 1,195,378 - 1,195,378 - 1,195,378
DEFERRED TAX LIABILITY 152,000 - 152,000 - 152,000
- - - - -
---------- --------- ---------- --------- ----------
TOTAL LIABILITIES 6,138,104 358,722 6,496,826 - 6,496,826
---------- --------- ---------- --------- ----------
STOCKHOLDERS' EQUITY
(DEFICIT)
Preferred Stock 596,305 - 596,305 (596,305) -
Common Stock 100,000 4,510 104,510 (83,150) 21,360
Paid in Capital - 232,016 232,016 582,978 814,994
Retained Earnings (Deficit) 2,886,776 (443,616) 2,443,160 - 2,443,160
---------- --------- ---------- --------- ----------
3,583,081 (207,090) 3,375,991 (96,477) 3,279,514
Less Treasury Shares -
40,000 Shares of
Common Stock, at cost (96,477) - (96,477) 96,477 -
---------- --------- ---------- --------- ----------
TOTAL STOCK-
HOLDERS' EQUITY
(DEFICIT) 3,486,604 (207,090) 3,279,514 - 3,279,514
---------- --------- ---------- --------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $9,624,708 $ 151,632 $9,776,340 $ - $9,776,340
========== ========= ========== ========= ==========
F-24
28
TEXAS EQUIPMENT CORPORATION SCHEDULE II
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
MARINEX
TEXAS EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL
--------------- ----------- -------------
REVENUES $ 25,031,608 $ 353,264 $ 25,384,872
COST OF REVENUES 21,648,257 - 21,648,257
------------ ---------- ------------
GROSS PROFIT 3,383,351 353,264 3,736,615
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 2,935,899 839,731 3,775,630
OTHER INCOME (EXPENSE)
Interest Income 181,008 - 181,008
Interest Expense (243,122) - (243,122)
Other Income 31,355 - 31,355
------------ ---------- ------------
INCOME (LOSS) BEFORE INCOME
TAXES 416,693 (486,467) (69,774)
INCOME TAXES 163,294 - 163,294
------------ ---------- ------------
NET INCOME (LOSS) $ 253,399 $ (486,467) $ (233,068)
============ ========== ============
F-25
29
TEXAS EQUIPMENT CORPORATION SCHEDULE III
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1996
(UNAUDITED)
ASSETS
------
TEXAS MARINEX
EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL ELIMINATIONS TOTAL
---------- ----------- ----------- ------------ -------------
CURRENT ASSETS
Cash and Temporary Cash
Investments $ 1,221,060 $ 882,545 $ 2,103,605 $ - $ 2,103,605
Accounts Receivable -
Trade 738,359 102,711 841,070 - 841,070
Employees and Other 20,889 - 20,889 - 20,889
Inventories 7,272,077 - 7,272,077 - 7,272,077
----------- ----------- ----------- --------- -----------
TOTAL CURRENT
ASSETS 9,252,385 985,256 10,237,641 - 10,237,641
----------- ----------- ----------- --------- -----------
LAND, BUILDINGS AND
EQUIPMENT, at cost 2,125,413 102,962 2,228,375 - 2,228,375
Less Accumulated Depreciation (804,985) (32,260) (837,245) - (837,245)
----------- ----------- ----------- --------- -----------
NET LAND, BUILDINGS
AND EQUIPMENT 1,320,428 70,702 1,391,130 - 1,391,130
----------- ----------- ----------- --------- -----------
OTHER ASSETS
Investment - 927,613 927,613 (927,613) -
Finance Receivables 839,694 - 839,694 - 839,694
Cash Surrender Value of Insurance 240,939 - 240,939 - 240,939
Other Assets 109,305 7,860 117,165 - 117,165
Goodwill 139,845 - 139,845 - 139,845
Related Party Receivables 132,018 - 132,018 - 132,018
----------- ----------- ----------- --------- -----------
TOTAL OTHER ASSETS 1,461,801 935,473 2,397,274 (927,613) 1,469,661
----------- ----------- ----------- --------- -----------
TOTAL ASSETS $12,034,614 $ 1,991,431 $14,026,045 $(927,613) $13,098,432
=========== =========== =========== ========= ===========
(Continued)
F-26
30
TEXAS EQUIPMENT CORPORATION SCHEDULE III
(Continued)
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1996
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
TEXAS MARINEX
EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL ELIMINATIONS TOTAL
----------- ------------ ----------- ------------ -------------
CURRENT LIABILITIES
Notes Payable $ 300,000 $ - $ 300,000 $ - $ 300,000
Current Maturities of
Long-Term Debt 267,130 - 267,130 - 267,130
Accounts Payable Trade -
John Deere Company 3,769,240 - 3,769,240 - 3,769,240
Other 854,419 28,842 883,261 - 883,261
Accrued Expenses 422,057 1,009 423,066 - 423,066
Customer Deposit 72,035 - 72,035 - 72,035
Deferred Tax Liability 377,300 - 377,300 - 377,300
----------- ----------- ----------- ----------- -----------
TOTAL CURRENT
LIABILITIES 6,062,181 29,851 6,092,032 - 6,092,032
----------- ----------- ----------- ----------- -----------
LONG-TERM DEBT, net of
current maturities 974,430 - 974,430 - 974,430
DEFERRED TAX LIABILITY 152,000 - 152,000 - 152,000
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES 7,188,611 29,851 7,218,462 - 7,218,462
----------- ----------- ----------- ----------- -----------
STOCKHOLDERS' EQUITY
(DEFICIT)
Preferred Stock 596,305 - 596,305 (596,305) -
Common Stock 100,000 7,842 107,842 (83,150) 24,692
Paid in Capital 927,613 3,189,434 4,117,047 (344,635) 3,772,412
Retained Earnings (Deficit) 3,318,562 (1,235,696) 2,082,866 - 2,082,866
----------- ----------- ----------- ----------- -----------
4,942,480 1,961,580 6,904,060 (1,024,090) 5,879,970
Less Treasury Shares -
40,000 Shares of
Common Stock, at cost (96,477) - (96,477) 96,477 -
----------- ----------- ----------- ----------- -----------
TOTAL STOCK-
HOLDERS' EQUITY
(DEFICIT) 4,846,003 1,961,580 6,807,583 (927,613) 5,879,970
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $12,034,614 $ 1,991,431 $14,026,045 $ (927,613) $13,098,432
=========== =========== =========== =========== ===========
F-27
31
TEXAS EQUIPMENT CORPORATION SCHEDULE IV
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
MARINEX
TEXAS EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL
--------------- ----------- -------------
REVENUES $ 19,507,714 $ 107,637 $ 19,615,351
COST OF REVENUES 16,949,797 293,678 17,243,475
------------ ---------- ------------
GROSS PROFIT (LOSS) 2,557,917 (186,041) 2,371,876
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,945,782 683,032 2,628,814
OTHER INCOME (EXPENSE)
Interest Income 110,974 27,005 137,979
Interest Expense (75,792) (5,250) (81,042)
Licensing Fee Settlement - 55,238 55,238
Other Income 15,566 - 15,566
------------ ---------- ------------
INCOME (LOSS) BEFORE INCOME
TAXES 662,883 (792,080) (129,197)
INCOME TAXES 231,097 - 231,097
------------ ---------- ------------
NET INCOME (LOSS) $ 431,786 $ (792,080) $ (360,294)
============ ========== ============
F-28