SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For Quarterly Period Ended September 30, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number 1-10192
AGRISTAR INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 76-023220
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
100 HAWTHORN
CONROE, TEXAS 77301
(Address of principal Issuer's telephone number (409) 760-3433
executive offices)
N/A
(Former name, former address and
former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the last practicable date:
TITLE OF EACH CLASS OUTSTANDING AT NOVEMBER 8, 1995
Common Stock, $.01 Par Value 32,612,404
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION PAGE
ITEM I Consolidated Financial Statements
Consolidated Balance Sheet as of September 30, 1995 3
Consolidated Statements of Operations for the
Three-month and Nine-month Periods Ended September 30,
1995 and September 30, 1994 4
Consolidated Statements of Cash Flows for the
Nine-month Period Ended Sept. 30, 1995 and Sept. 30, 1994 5
Notes to Consolidated Financial Statements 7
ITEM 2 Management's Discussion and Analysis of
Financial Conditions and Results of Operations 8
PART II OTHER INFORMATION 9
AGRISTAR INC.
CONSOLIDATED BALANCE SHEET
ASSETS
September 30,
1995
Current Assets: (Unaudited)
Cash and Cash Equivalents $ 120,445
Trade accounts receivable 145,874
Receivable from minority owned subsidiary 9,830
Receivable from related party 24,485
Inventories 1,266,433
Deposits 11,014
Prepaid Expenses 82,855
----------
Total current assets $1,660,936
Investment in minority-owned subsidiary 1
Property, plant and equipment, net 201,973
Patent costs, net 228,381
Organizational and non-comp. costs 3,562
----------
TOTAL ASSETS $2,094,853
----------
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 255,060
Accrued acquisition costs 145,416
Notes payable - stockholders 120,000
Notes payable - to an individual* 300,000
Unearned income 42,950
----------
Total current liabilities $ 863,426
Stockholders' Equity:
Common Stock: Authorized 50,000,000
Shares of $.01 par value: 32,612,404 shares
issued and outstanding 326,124
Additional Paid-In Capital 7,453,075
Accumulated Deficit (6,547,772)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,094,853
----------
----------
*Repayment of the indebtness is secured by a First Lien on the Assets of Stewart
Orchids and a pledge of 100% of the outstanding Capital Stock of the corporate
entity holding such assets.
The accompanying notes are an integral part of these financial statements.
3
AGRISTAR INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
QUARTER NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1995 1994 1995 1994
------ ------ ------ ------
REVENUES $ 408,453 $ 602,091 $1,661,460 $1,769,347
COST OF GOODS SOLD 201,924 206,519 832,988 784,183
---------- ---------- ---------- ----------
Gross Profit 206,529 395,572 828,472 985,164
OPERATING EXPENSES:
General and Administrative 232,706 323,937 722,103 856,564
Research and Development -- -- -- 9,301
---------- ---------- ---------- ----------
Total Operating Expenses 232,706 323,937 722,103 865,865
---------- ---------- ---------- ----------
OPERATING (LOSS) (26,177) 71,635 106,369 119,299
OTHER INCOME (EXPENSE)
Other Income 4,003 4,000 10,003 53,377
Interest Expense (1,740) -- (6,090) (3,435)
---------- ---------- ---------- ----------
Total Other Income 2,263 4,000 3,913 49,942
---------- ---------- ---------- ----------
NET INCOME (LOSS) ($ 23,914) $ 75,635 110,282 169,241
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET INCOME PER SHARE $ -- $ -- $ -- $ .005
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
The accompanying notes are an integral part of these financial statements.
4
AGRISTAR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIOD ENDED
QUARTER
ENDED SEPTEMBER 30,
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 110,282 $ 169,241
Adjustments to Reconcile Net Income
to Net Cash Used in
Operating Activities:
Depreciation and Amortization 57,961 61,283
Changes in Current Assets and Liabilities:
(Increase) Decrease in Accounts Receivable (50,137) (42,989)
(Increase) Decrease in Inventory (68,722) (430,673)
(Increase) Decrease in Prepaid
Expenses and Deposits (3,494) (93,847)
Increase (Decrease) in Accounts Payable
and Accrued Liabilities (133,115) 72,705
(Decrease) in Unearned Income (73,950) 60,964
Accrued Acquisition Cost (65,505) (32,962)
Increase in Advance from Shareholder -- 20,000
---------- ----------
Net Cash Used in Operating Activities (226,680) (216,278)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of Fixed Assets (3,058) (8,886)
---------- ----------
Net Cash (Used In) Investing Activities (3,058) (8,886)
---------- ----------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Payment of bank loan -- (500,000)
Loan from individual 300,000 --
----------
Net Cash Used in Financing Activities -- (500,000)
NET INCREASE (DECREASE) IN CASH 70,262 (725,164)
CASH AT BEGINNING OF YEAR 50,183 790,511
---------- ----------
CASH AT END OF PERIOD $ 120,445 $ 65,347
---------- ----------
---------- ----------
The accompanying notes are an integral part of these financial statements.
5
AGRISTAR INC.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for the nine-month period ended September 30,
1995 1994
-------- --------
(Unaudited) (Unaudited)
Interest $6,090 $3,435
Income taxes -- --
DISCLOSURE OF ACCOUNTING POLICY
For the purpose of the statement of cash flows, the Registrant considers all
highly liquid debt instruments purchased with a maturity of three-months or less
to be cash equivalents.
6
AGRISTAR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
The consolidated balance sheet of AgriStar Inc. (the "Registrant") as of
September 30, 1995 and the consolidated statement of operations for the three-
month and nine-month periods ended September 30, 1995 and September 30, 1994 and
the consolidated statements of cash flows for the nine-month period ended
September 30, 1995 and September 30, 1994 included herein are unaudited;
however, in the opinion of management, they reflect all adjustments necessary to
present fairly the consolidated financial position, results of operations and
changes in financial position of the Registrant at September 30, 1995. The
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Registrant's Annual
Report on Form 10-KSB for the year ended December 31, 1994.
2. ACCRUED ACQUISITION COSTS
The Registrant's 1993 acquisition of certain assets of Stewart Orchids
include quarterly cash payments equal to 10 percent of revenues received from
sales of the acquired inventory through April 1996. The contingent payments
were recorded as part of the purchase price, and are not to exceed cash of
$280,000 and 300,000 shares of restricted common stock issuable at a rate of
one share of common stock for every $8.33 of revenues from the sale of the
acquired inventory. The balance payable at September 30, 1995 is payable in
cash of $145,416 and the 300,000 shares of stock.
3. INVESTMENT IN CONSOLIDATED FOREIGN OWNED SUBSIDIARY
The Registrant's investment in AgriStar de Venezuela, S.A. consists
primarily of inventory. Production was discontinued at the micropropagation
facility in 1994, and the investment is not expected to be material to the
Registrant's 1995 financial statements.
4. INVESTMENT IN MINORITY OWNED SUBSIDIARY
The Registrant's investment in AgriStar (Asia) Ltd., a 49 percent owned
Hong Kong corporation, is accounted for under the equity method of accounting.
The Registrant has no obligation to fund the operating losses of AgriStar (Asia)
Ltd. Accordingly, the Registrant has not recognized its equity in the operating
losses of AgriStar (Asia) Ltd. beyond its investment. The investment is not
expected to be material to the Registrant's 1995 financial statements.
7
AGRISTAR INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues during the three months ended September 30, 1995 were $408,453
as compared with the revenues of $602,091 during the comparable three months
ending September 30, 1994 for a decrease of $193,638. The decrease was due to
a reduction in sales of AgriStar due to the economic conditions in Mexico. We
changed our sales program from potato exports to producing orchids for sales to
wholesalers.
The Registrant's gross margin during the quarter ended September 30,
1995 was $206,529 as compared with a gross margin of $395,572 during the
comparable quarter of 1994. The 50% gross profit on sales was decreased from
the previous year because of drop in exports at AgriStar.
Selling, general and administrative expenses for the quarter ended
September 30, 1995 was $232,706, as compared to $323,927 for the same period of
1994. The decrease of $91,221 is principally due to decrease in personnel and
other expenses in AgriStar.
The Registrant, however, continues to suffer from liquidity constraints
and there can be no assurance that the Registrant will be able to pay its
obligations when due.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Registrant had total assets of $2,094,853
including $1,660,936 of current assets, and total current liabilities of
$564,910. Accordingly, the Registrant anticipates that its current financial
resources will be adequate for its cash requirements for at least 2 months from
the date of this Report on Form 10-QSB. Notwithstanding the foregoing, the
Registrant's actual expenditures and the timing of revenues may vary from
current estimates. In August, the Registrant obtained a loan of $300,000 at 12%
to help purchase inventory and reduce other debt. When (and if) its current
financial resources are exhausted, the Registrant will, in all likelihood, be
required to seek additional financing from outside sources. Due to
uncertainties with respect to the timing of revenues from sales, the Registrant
is presently unable to estimate the amount of additional capital that will be
required (if) its current financial resources are exhausted. The Registrant has
no commitment for such additional financing, if required, and there is no
assurance that the Registrant will be successful in obtaining additional
financing or that such financing, if required, will be on terms acceptable to
the Registrant.
8
AGRISTAR INC.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Case No. 95-40253, DOHERTY V. AGRISTAR, INC., ET AL. State Court
action, Harris County, Texas. Action seeking injunctive relief
from sale of assets, subsidiaries or divisions of AgriStar, Inc.
other than in the normal course of business pending review or
accounting of financial records.
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits None
B. Reports on Form 8-K None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
July 28, 1995
Conroe, Texas AGRISTAR INC.
/s/ Dominic Man-Kit Lam
------------------------------------------
Dominic Man-Kit Lam
(Principal Executive Officer and
Principal Financial and Accounting Officer)
9