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 June 30, 1996
[ ] 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 AUGUST 30, 1996
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 June 30, 1996 3
Consolidated Statements of Operations for the
Three-month and Six-month Periods Ended June 30,
1996 and June 30, 1995 4
Consolidated Statements of Cash Flows for the
Six-month Period Ended June 30, 1996 and June 30, 1995 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
2
AGRISTAR INC.
CONSOLIDATED BALANCE SHEET
ASSETS
June 30,
1996
Current Assets: (Unaudited)
Cash and Cash Equivalents $ 47,006
Trade accounts receivable 69,933
Inventories 1,100,836
Deposits 13,106
Prepaid Expenses 36,180
Other Current Assets 774
-----------
Total current assets $ 1,267,835
Investment in minority-owned subsidiary 1
Property, plant and equipment, net 235,733
Patent costs, net 211,906
Organizational and non-comp. costs 2,472
-----------
TOTAL ASSETS $ 1,717,947
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 321,925
Accrued acquisition costs 62,433
Payable to a related party 53,000
Notes payable - stockholders 120,000
Note payable to an individual 300,000
Note payable to Arm-Roy Stewart 67,307
Unearned income 35,000
-----------
Total current liabilities $ 959,665
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 7,453,450
Accumulated Deficit (7,021,292)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,717,947
-----------
-----------
The accompanying notes are an integral part of these financial statements.
3
AGRISTAR INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
QUARTER SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1996 1995 1996 1995
-------- -------- -------- ----------
REVENUES $506,003 $656,566 $921,397 $1,253,006
COST OF GOODS SOLD 200,200 $307,905 391,337 631,063
-------- -------- -------- ----------
Gross Profit 305,803 348,661 530,060 621,943
OPERATING EXPENSES:
General and Administrative 313,754 251,032 535,491 489,398
Research and Development -- -- -- --
-------- -------- -------- ----------
Total Operating Expenses 313,754 251,032 535,491 489,398
-------- -------- -------- ----------
OPERATING (LOSS) (7,951) 97,629 (5,431) 132,545
OTHER INCOME (EXPENSE)
Other Income 92,744 2,993 95,744 6,000
Interest Expense (9,000) (2,175) (20,175) (4,349)
-------- -------- -------- ----------
Total Other Income 83,744 818 75,569 1,651
-------- -------- -------- ----------
NET INCOME (LOSS) $ 75,793 98,447 70,138 134,196
-------- -------- -------- ----------
-------- -------- -------- ----------
NET INCOME PER SHARE $ -- -- $ -- --
-------- -------- -------- ----------
-------- -------- -------- ----------
The accompanying notes are an integral part of these financial statements.
4
' AGRISTAR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED
QUARTER
ENDED JUNE 30,
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 70,138 $134,196
Adjustments to Reconcile Net Income
to Net Cash Used in
Operating Activities:
Depreciation and Amortization 13,745 39,171
Changes in Current Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 44,057 (53,278)
(Increase) Decrease in Inventory (53,554) (14,187)
(Increase) Decrease in Other current assets (774) 0
(Increase) Decrease in Net patent costs 5,492 0
(Increase) Decrease in Net organization costs 309 0
(Increase) Decrease in Prepaid
Expenses and Deposits 11,600 128
Increase (Decrease) in Accounts Payable
and Accrued Liabilities (75,529) (12,879)
(Decrease) in Unearned Income 0 (75,116)
Accrued Acquisition Cost 0 (50,140)
-------- --------
Net Cash Used in Operating Activities 15,484 (32,105)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of Fixed Assets (2,489) (484)
-------- --------
Net Cash (Used In) Investing Activities (2,489) (484)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Payment of Arm Roy Stewart note (8,693) 0
-------- --------
Net Cash Used in Financing Activities (8,693) 0
NET INCREASE (DECREASE) IN CASH 4,302 (32,589)
CASH AT BEGINNING OF YEAR 42,704 50,183
-------- --------
CASH AT END OF PERIOD $ 47,006 $ 17,594
-------- --------
-------- --------
The accompanying notes are an integral part of these financial statements.
5
AGRISTAR INC.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for the six-month period ended June 30,
1996 1995
----------- -----------
(Unaudited) (Unaudited)
Interest $20,175 $4,349
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
JUNE 30, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
The consolidated balance sheet of AgriStar Inc. (the "Registrant") as of
June 30, 1996 and the consolidated statement of operations for the three-month
and six-month periods ended June 30, 1996 and June 30, 1995 and the consolidated
statements of cash flows for the six-month period ended June 30, 1996 and June
30, 1995 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 June 30, 1996. 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,
1995.
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. In January 1996. ArmRoy Stewart agreed to a final balance
of $76,000 payable in 24 equal payments with interest.
3. INVESTMENT IN CONSOLIDATED FOREIGN OWNED SUBSIDIARY
On December 31, 1995, the Registrant divested itself of its investment
in AgriStar de Venezuela, S.A. Production was discontinued at the
micropropagation facility in 1994, and the remaining inventory was sold. A
final net loss of $38,208 was reflected in December 31, 1995.
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 1996 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 June 30, 1996 were $506,003 as
compared with the revenues of $656,566 during the comparable three months
ending June 30, 1995 for a decrease of $150,563. The decrease was due to a
reduction in sales of AgriStar Flowers due to prolonged winter conditions
throughout the US and to the absence of potato mini-tuber sales from AgriStar's
micropropagation facility. The lower sales were at a higher gross margin than
in the same period in 1995.
The Registrant's gross margin during the quarter ended June 30, 1996 was
$305,803 as compared with a gross margin of $348,661 during the comparable
quarter of 1995. The 60% gross profit on sales was increased from the previous
year because of higher margins on orchids plant sales.
Selling, general and administrative expenses for the quarter ended June 30,
1996 was $313,754, as compared to $251,032 for the same period of 1995. The
increase of $62,722 is principally due to the addition of sales and management
staff at Stewart Orchids and increased travel expenses related to sales
promotions.
Other income during the quarter ending June 30, 1996 was $92,744 as
compared to $2,993 for the same period in 1995. The increase was due to the
cancellation of certain debts owed by the Company.
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 June 30, 1996, the Registrant had total assets of $1,717,947 including
$1,267,835 of current assets, and total current liabilities of $959,665. In
August, 1995, the Registrant obtained a loan of $300,000 at 12% to help purchase
inventory and reduce other debt. On May 20, 1996, notice was received by
Registrant that the maturity of the note was being accelerated due to failure to
pay the interest which was due on March 4, 1996. The notice calls for payment
of the principle and interest due. As of the date of this report, the payment
of this note has been postponed indefinitely while the Company seeks additional
financing. 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
NONE
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
9
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.
August 30, 1996
Conroe, Texas AGRISTAR INC.
/s/ CAL A. FROBERG
--------------------------------
Cal A. Froberg
President
10