1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ x ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from ___________ to ______________
Commission file number 0-29258
AQUAPRO CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Tennessee 62-1598919
--------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
4307 Central Pike, Hermitage, Tennessee 37076
- --------------------------------------------------------------------------------
(Address and Zip Code of Principal Executive Offices)
Registrant's telephone number, including area code: (615) 899-0804
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 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 [ ]
----- -----
As of May 11, 1998, Registrant had outstanding 2,671,847 shares of common stock,
its only class of common equity outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
----- -----
2
INDEX
PART I. FINANCIAL INFORMATION
Page No.
--------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at March 31, 1998 (Unaudited)
and June 30, 1997............................................................3
Condensed Consolidated Statements of Operations for the Three
and Nine Months Ended March 31, 1998 and 1997
(Unaudited)..................................................................5
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended March 31, 1998 and 1997 (Unaudited).............................7
Notes to Unaudited Condensed Consolidated Financial Statements.................8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................................9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................................15
Item 2. Changes in Securities.........................................................15
Item 3. Defaults Upon Senior Securities...............................................15
Item 4. Submission of Matters to a Vote of Security Holders...........................15
Item 5. Other Information.............................................................15
Item 6. Exhibits and Reports on Form 8-K..............................................15
2
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AquaPro Corporation
Condensed Consolidated Balance Sheets
March 31, June 30,
1998 1997
---------------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 458,177 $ 202,894
Trade accounts receivable 357,222 108,009
Receivables from affiliates 27,998 27,998
Live fish inventories 4,653,402 5,740,124
Prepaid expenses 45,213 10,516
---------------------------
Total current assets 5,542,012 6,089,541
Property, buildings and equipment, net 5,668,389 5,639,753
Investments in cooperatives 998,894 883,518
Delivery rights and other intangible assets, net 80,381 104,161
---------------------------
Total assets $12,289,676 $12,716,973
===========================
3
4
March 31, June 30,
1998 1997
---------------------------
(Unaudited)
Liabilities and stockholders' equity
Current liabilities:
Notes payable $ 97,615 $ 689,462
Accounts payable 147,663 523,255
Accrued salaries 114,997 239,994
Accrued interest and other 38,094 74,628
Accrued preferred dividends 102,527 --
Current maturities of long-term debt 382,860 272,258
---------------------------
Total current liabilities 883,756 1,799,597
Long-term debt, less current maturities 3,110,588 4,102,980
Stockholders' equity:
Series A Preferred Stock, no par value - authorized 900,000 shares,
cumulative, convertible, issued and outstanding 585,869 at March 31,
1998 and 235,507 at June 30, 1997 4,584,708 1,837,408
Preferred stock, par value to be determined by the
Board of Directors - authorized 100,000 shares, none
issued -- --
Common stock, no par value - authorized 100,000,000
shares, issued and outstanding 2,671,847 at March 31,
1998 and 2,670,667 shares at June 30, 1997 10,585,784 10,588,311
Unearned compensation (57,188) (126,563)
Retained earnings (deficit) (6,817,972) (5,484,760)
---------------------------
Total stockholders' equity 8,295,332 6,814,396
---------------------------
Total liabilities and stockholders' equity $12,289,676 $12,716,973
===========================
See accompanying notes to unaudited condensed consolidated financial statements.
4
5
AquaPro Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months ended
March 31
1998 1997
----------------------------
Revenues:
Net sales $ 1,913,200 $ 492,165
Management fees from affiliates -- 4,500
----------------------------
1,913,200 496,665
Cost of products sold 1,636,528 630,401
Selling, general and administrative 474,369 433,512
----------------------------
Operating loss (197,697) (567,248)
Other (income) expense:
Equity in losses on investment in cooperatives 68,000 136,000
Interest expense 126,075 129,941
Other, net (47,079) (31,421)
----------------------------
146,996 234,520
----------------------------
Net loss $ (344,693) $ (801,768)
============================
Basic net loss per share $ (0.17) $ (0.31)
============================
Weighted average common shares outstanding 2,674,097 2,652,538
============================
See accompanying notes to unaudited condensed consolidated financial statements.
5
6
AquaPro Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
Nine Months ended
March 31
1998 1997
----------------------------
Revenues:
Net sales $ 4,168,988 $ 2,507,729
Management fees from affiliates 13,500
----------------------------
4,168,988 2,521,229
Cost of products sold 3,585,000 2,541,896
Selling, general and administrative 1,341,449 1,118,028
----------------------------
Operating loss (757,461) (1,138,695)
Other (income) expense:
Equity in losses on investment in cooperatives 95,257 166,000
Interest expense 338,262 455,745
Other, net (127,104) (132,385)
----------------------------
306,415 489,360
----------------------------
Net loss $(1,063,876) $(1,628,055)
============================
Basic net loss per share $ (0.50) $ (0.63)
============================
Weighted average common shares outstanding 2,672,039 2,629,835
============================
See accompanying notes to unaudited condensed consolidated financial statements.
6
7
AquaPro Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months ended
March 31
1998 1997
----------------------------
Net cash used in operating activities $ (112,497) $(1,314,284)
Cash flows from investing activities:
Purchases of property and equipment (547,694) (328,116)
Purchases of cooperative stock and related payments (191,376) (62,000)
----------------------------
Net cash used in investing activities (739,070) (390,116)
Cash flows from financing activities:
Net increase (decrease) in notes payable (401,473) (291,426)
Principal payments on long-term borrowings (258,853) (445,430)
Proceeds from long-term borrowings 170,700 381,978
Proceeds from issuance of preferred stock 1,763,286 1,560,924
Payments of preferred stock dividends (166,810) (31,605)
----------------------------
Net cash provided by financing activities 1,106,850 1,174,441
----------------------------
Net increase (decrease) in cash and cash equivalents 255,283 (529,959)
Cash and cash equivalents at beginning of period 202,894 1,228,136
----------------------------
Cash and cash equivalents at end of period $ 458,177 $ 698,177
============================
Non-cash financing activities:
Conversion of long-term debt to Series A Preferred
Stock $ 984,014 $ --
============================
Conversion of long-term debt to Common Stock $ 39,661 $ --
============================
See accompanying notes to unaudited condensed consolidated financial statements.
7
8
AquaPro Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31, 1998
1. Basis of Presentation of Unaudited Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with the rules of the Securities and Exchange Commission and,
therefore, do not include all information and footnotes otherwise necessary
for a fair presentation of financial position, results of operations and
cash flows, in conformity with generally-accepted accounting principles.
However, the information furnished, in the opinion of management, reflects
all adjustments necessary to present fairly the financial position, results
of operations and cash flows on a consistent basis. The results of
operations are not necessarily indicative of results which may be expected
for any other interim period or for the year as a whole.
2. Long-Term Debt and Stockholders' Equity
On May 29, 1998, all of the Company's outstanding Preferred Stock will
convert to Common Stock. The conversion ratio will be the average closing
price of the Company's Common Stock during its first 65 trading days (which
commenced February 24, 1998). Based on trading as of May 14, 1998, the
Company estimates that the exchange ratio will approximate 3.3 to 4 shares
of Common Stock to be issued for each share of Preferred Stock, or
1,900,000 to 2,400,000 shares of Common Stock issued in exchange for
585,869 shares of Preferred Stock. Additionally, the Company will pay the
Preferred Stock dividends for the period January 1, 1998 through May 28,
1998 with shares of Common Stock on June 1, 1998. The number of shares of
Common Stock to be issued for this dividend will be computed using the same
exchange ratio as the conversion of Preferred Stock to Common Stock
discussed above.
During the nine months ended March 31, 1998, the Company commenced and
completed an exchange offer to certain holders of its 10.35% investor notes
payable. Each holder was offered 1.3 shares of Series A Preferred Stock for
each $10 of notes held. The offer was made for a total of $1,147,513 of
notes. In the aggregate, $984,014 of notes were exchanged for 127,922
shares of Series A Preferred Stock.
Also during the nine months ended March 31, 1998, the Company realized net
proceeds of $1,763,286 from the sale of 227,194 shares of Series A
Preferred Stock through its Preferred Stock Rights Offering.
3. Basic and Diluted Net Loss per Common Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 128, Earnings per Share. Statement No. 128 replaced
the previously reported primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options,
warrants, and convertible securities. Diluted earnings per share is very
similar to the previously reported fully diluted earnings per share. All
earnings per share amounts for all periods have been presented, and where
necessary, restated to conform to the Statement No. 128 requirements.
8
9
Basic net loss per common share is computed by dividing net loss applicable
to common stock (net loss less dividend requirements for Series A Preferred
Stock of $106,731 and $269,337 in the three and nine month periods ended
March 31, 1998, respectively, and $26,380 and $31,605 in the three and nine
month periods ended March 31, 1997) by the weighted average number of
common shares outstanding (2,674,097 and 2,672,039 shares in the three and
nine month periods ended March 31, 1998, respectively, and 2,652,538 and
2,629,835 shares in the three and nine month periods ended March 31, 1997,
respectively). Diluted loss per common share has not been presented due to
the antidilutive effects of outstanding stock options and warrants.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual resullts could differ materially from those
projected in the forward-looking statements as a result of certain factors
including those set forth in this Item 2 and elsewhere in, or incorporated
by reference into, this report. The Registrant has attempted to identify
forward-looking statements in this report by placing an asterisk (*)
following each sentence containing such statements.
RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1997
REVENUE. Net sales during the three month period ended March 31, 1998
totaled $1,913,200 compared to $492,165 for the same period in 1997. This
represents an increase of $1,421,035 or 288.7%. Volume increased 2,014,000
pounds to 2,686,000 pounds of catfish sold, a record quarterly high for the
Company, compared to 672,000 pounds sold during the three month period
ended March 31, 1997. Accordingly, volume represented a 299.7% increase
during the three months ended March 31, 1998 compared to the same period in
1997. Volume increased due to increased stocking and feeding levels
attained in calendar 1997 compared to calendar 1996.
Sales volume is greatly affected by stocking and feeding levels in the 12
to 18 month grow out period required for fish to mature to market size.
This increase in volume was partially offset by a price decrease of
approximately 2 cents a pound to 71 cents realized in 1998 compared to 1997
when the average price of fish sold was 73 cents. This decrease in average
price resulted from lower prices received by the Company's major
9
10
customers from food distributors, restaurants, and grocers due to an
increase in competitive pricing policies as processors attempted to
increase their market share. The Company's major customers in turn passed
on the lower prices to the catfish farmers, including the Company. The
trend of these lower prices continued until late in February 1998 when
prices rose to 74 to 75 cents per pound. In May 1998, prices have risen to
78 to 80 cents per pound. However, the Company cannot predict the future
trend of fish prices.*
Management expects sales volume in the next two quarters to be lower than
the record volume attained in the quarter ended March 31, 1998.*
COST OF PRODUCTS SOLD AND MARGIN. Cost of Products Sold was $1,636,528, an
increase of $1,006,127 or 159.6% compared to the same three month period of
1997, while net sales increased 288.7%. Margin from fish sales was 14.5%
during the three month period ended March 31, 1998 as compared to a
negative margin of 28% in the same period in 1997. During the quarter ended
March 31, 1997, the Company recorded $244,000 of additional reserves for
mortality. These reserves were deemed necessary as spring weather
approached and inventory was physically observed, indicating that winter
kill of catfish was higher than previously estimated. Had this reserve not
been required, margin from fish sales would have been 21.5% for the quarter
ended March 31, 1997. As of the beginning of May 1998, management is not
aware of any significant mortality or winter kill affecting inventory for
the quarter ended March 31, 1998.
Cost of Products Sold is largely dependent on the Company's cost structure
in the previous year due to the 12 to 18 month grow out period required for
fish to mature. Feed is a significant component of the cost of growing
catfish. The cost of feed was higher during the period affecting the
quarter ended March 31, 1998 than the quarter ended March 31, 1997.
Additionally, there was a 3% decline in average price in the quarter ended
March 31, 1998 compared to the same period in 1997.
The Company has contracted to purchase approximately 90 percent of its
budgeted feed consumption for calendar year 1998 at an average price of
$239 per ton. Accordingly, the Company believes its feed costs will decline
approximately five percent in calendar year 1998 which should benefit
margins in calendar year 1999.*
SELLING, GENERAL AND ADMINISTRATIVE. Selling, General and Administrative
expenses during the three month period ended March 31, 1998 were $474,369
or $40,857 higher than in the three month period ended March 31, 1997. This
increase was primarily due to the increase in selling expenses related to
the increase in sales volume discussed above.
10
11
DELTA PRIDE ASSESSMENT (EQUITY IN LOSSES ON INVESTMENT IN COOPERATIVE).
During the three month period ended March 31, 1998, the Company recorded a
net charge of $68,000 for its share of estimated losses of Delta Pride's
operations. During the same period in 1997, the charge for Delta Pride's
operating losses was $136,000. In January 1998, the Company made its final
assessment payment to Delta Pride covering the year ended June 30, 1997.
Such payments totaled $191,376 and were made at various times from July
1997 through the final payment in January 1998.
INTEREST EXPENSE. Interest expense decreased $3,866 or 3% to $126,075 in
the three month period ended March 31, 1998 compared to the same period in
1997. Long-term debt levels were lower during the 1998 period compared to
1997 due to the conversion of $984,014 in debt to preferred stock during
the quarter ended September 30, 1997. The effect of these lower debt levels
was partially offset by slightly higher interest rates due to variable rate
adjustments on certain debt effective January 1, 1998. Additionally, the
average outstanding balances on short-term feed lines of credit were higher
in the quarter ended March 31, 1998 than in the same period in the prior
year. Management anticipates slightly higher levels of debt and interest
expense during the next four quarters due to funding certain capital
expenditures and increased levels of short-term borrowings during the
summer feeding season.*
SEASONALITY OF OPERATING RESULTS. In prior years, the revenues of AquaPro
have fluctuated from quarter to quarter depending on stocking levels and
results of feeding. Also, prices for live fish have tended to rise during
the first part of the year and drift downward during the summer, only to
rise again in September and October and fall in November and December
before beginning the annual price cycle again. However, this did not occur
in 1997 as prices fell in the early part of 1997 and did not recover until
late February 1998. Accordingly, interim operating results of the Company
may vary from quarter to quarter and year to year and cannot be predicted
with certainty.*
RESULTS OF OPERATIONS NINE MONTHS ENDED MARCH 31, 1998 COMPARED TO NINE
MONTHS ENDED MARCH 31, 1997
REVENUE. Net sales during the nine month period ended March 31, 1998
totaled $4,168,988 compared to $2,507,729 for the same period in fiscal
year 1997. This represents an increase of $1,661,259 or 66.2%. Volume
increased 2,538,000 pounds to 5,816,000 pounds of fish sold, a record nine
month high for the Company, compared to 3,278,000 pounds sold during the
nine month period ended March 31, 1997. Accordingly, volume represented a
77.4% increase during the nine months ended March 31, 1998 compared to the
same period in fiscal year 1997. Volume increased due to increased stocking
and feeding levels attained in calendar 1997 compared to calendar 1996.
Sales volume is greatly affected by stocking and feeding levels in the 12
to 18 month grow out period required for fish to mature to market size.
This increase in
11
12
volume was partially offset by a price decrease of approximately 5 cents a
pound to 72 cents realized in 1998 compared to 1997 when the average price
of fish sold was 77 cents. This decrease in average price resulted from
lower prices received by the Company's major customers from food
distributors, restaurants, and grocers due to an increase in competitive
pricing policies as processors attempted to increase their market share.
The Company's major customers in turn passed on the lower prices to the
catfish farmers, including the Company. The trend of these lower prices
continued until late in February 1998 when prices rose to 74 to 75 cents
per pound. In May 1998, prices have risen to 78 to 80 cents per pound.
However, the Company cannot predict the future trend of fish prices.*
COST OF PRODUCTS SOLD AND MARGIN. Cost of Products Sold was $3,585,000 an
increase of $1,043,104 or 41% compared to the same nine month period of
fiscal year 1997, while net sales increased 66.2%. Margin from fish sales
was 14% during the nine month period ended March 31, 1998 as compared to a
negative margin of 1.4% in the same period in fiscal year 1997. During the
nine month period ended March 31, 1997, the Company recorded $462,000 of
additional reserves for mortality. Certain ponds were emptied for
refurbishing and mortality adjustments of $218,000 were recorded in Cost of
Products Sold. Additionally, as spring weather approached and inventory was
physically observed,evidence indicated that winter kill of catfish was
$244,000 higher than previously estimated. Had these reserves not been
required, margin from fish sales would have been 17.1% for the nine month
period ended March 31, 1997. As of the beginning of May 1998, management is
not aware of any significant mortality or winter kill affecting inventory
for the nine month period ended March 31, 1998.
Cost of Products Sold is largely dependent on the Company's cost structure
in the previous year due to the 12 to 18 month grow out period required for
fish to mature. Feed is a significant component of the cost of growing
catfish. The cost of feed was higher during the period affecting the nine
months ended March 31, 1998 than the nine months ended March 31, 1997.
Additionally, there was a 6.5% decline in average price in the nine month
period ended March 31, 1998 compared to the same period in fiscal year
1997.
The Company has contracted to purchase approximately 90 percent of its
budgeted feed consumption for calendar year 1998 at an average price of
$239 per ton. Accordingly, the Company believes its feed costs will decline
approximately five percent in calendar year 1998 which should benefit
margins in calendar year 1999.*
SELLING, GENERAL AND ADMINISTRATIVE. Selling, General and Administrative
expenses during the nine month period ended March 31, 1998 were $1,341,449
or $223,421 higher
12
13
than in the nine month period ended March 31, 1997. This increase was
primarily due to a 77.4% increase in volume of fish sold during the period
as discussed above.
DELTA PRIDE ASSESSMENT (EQUITY IN LOSSES ON INVESTMENT IN COOPERATIVE).
During the nine month period ended March 31, 1998, the Company recorded a
net charge of $95,257 for its share of estimated losses of Delta Pride's
operations. During the same period in 1997, the charge was estimated at
$166,000. In January 1998, the Company made its final assessment payment to
Delta Pride covering the year ended June 30, 1997. Such payments totaled
$191,376 and were made at various times from July 1997 through the final
payment in January 1998.
INTEREST EXPENSE. Interest expense decreased $117,483 or 25.8% to $338,262
in the nine month period ended March 31, 1998 compared to the same period
in 1997. Debt levels were lower during the 1998 period compared to 1997 due
to the conversion of $984,014 in debt to preferred stock during the quarter
ended September 30, 1997. The effect of these lower debt levels was
partially offset by slightly higher interest rates due to variable rate
adjustments on certain debt effective January 1, 1998. Additionally, the
average outstanding balances on short-term feed lines of credit were higher
in the nine month period ended March 31, 1998 than in the same period in
the prior year. Management anticipates slightly higher levels of debt and
interest expense during the next four quarters due to funding certain
capital expenditures and increased levels of short-term borrowings during
the summer feeding season.*
SEASONALITY OF OPERATING RESULTS. In prior years, the revenues of AquaPro
have fluctuated from quarter to quarter depending on stocking levels and
results of feeding. Also, prices for live fish have tended to rise during
the first part of the year and drift downward during the summer, only to
rise again in September and October and fall in November and December
before beginning the annual price cycle again. However, this did not occur
in 1997 as prices fell in the early part of 1997 and did not recover until
late February 1998. Accordingly, interim operating results of the Company
may vary from quarter to quarter and year to year and cannot be predicted
with certainty.*
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, the Company had a current ratio of 6.3 to 1, as
opposed to 3.4 to 1 at June 30, 1997. Current assets exceeded current
liabilities by $4,658,256 in March 1998 compared to $4,289,944 in June
1998. Cash and cash equivalents increased during the nine month period
ended March 31, 1998 by $255,283.
Cash and cash equivalents were used primarily to fund operating losses,
grow live fish inventories, and reduce notes payable and long-term debt.
Life fish inventories decreased by approximately $1,087,000 during the nine
month period ended March 31, 1998 due to the increase in sales volume as
discussed above. Management expects live fish
13
14
inventories to increase during the next two quarters since catfish consume
the greatest amount of feed during the summer months. Feed costs are added
to inventory when purchased.
During the nine month period ended March 31, 1998, the Company purchased
approximately $548,000 in property and equipment. In August 1998, the
Company moved its administrative offices in Mississippi to one of its farms
from an office facility it had previously shared with another catfish
farming operation. This move required the purchase and installation of
double wide mobile trailer homes on the Company's farm land in Sunflower,
Mississippi. The total cost of this move was approximately $150,000,
including the trailers, utility hook-ups, well construction, and ground
preparation. The remaining capital expenditures consisted primarily of pond
rebuilding and related equipment. The Company expects total capital
expenditures to approximate $900,000 for the year ending June 30, 1998.*
During the nine month period ended March 31, 1998, the Company realized net
proceeds from the sale of preferred stock and additional long-term
borrowings of $1,763,286 and $170,700, respectively. Short-term notes
payable decreased approximately $592,000 as the Company's feed credit lines
were paid off in March 1998 and a short-term demand note to a former
officer and director of the Company was reclassified to long-term debt.
Additionally, principal payments totaling $258,853 were made to reduce
long-term debt and preferred stock dividends of $166,810 were paid during
the nine months ended March 31, 1998.
The Company intends to fund its operations primarily through fish sales,
working capital, and its new $1,000,000 in feed line of credit. On May 14,
1998, a $1,000,000 credit line was established with a bank in Mississippi
as a revolving line of credit for catfish feed purchases. Borrowings are
secured by two of the Company's catfish farming properties, shares of the
Company's cooperative processing stock, and all accounts receivable and
live fish inventories. Interest is paid monthly and principal is paid with
approximately 50 percent of all collections of accounts receivable.
Interest accrues at the prime rate plus 165 basis points and the commitment
expires March 31, 1999 with no prepayment penalty.
The Company may require additional capital for growth through acquisition,
which it may seek through equity or debt financing, collaborative
arrangements with corporate partners, equipment lease financing or funds
from other sources. No assurance can be given that these funds will be
available to the Company on acceptable terms, if at all. In addition,
because of the Company's need for funds to support future operations, it
may seek to obtain funds when conditions are favorable, even if it does not
have an immediate need for additional capital at such time.
14
15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
During the nine months ended March 31, 1998, the Company
commenced and completed an exchange offer to certain holders of
its 10.35% investor notes payable. Each holder was offered 1.3
shares of Series A Preferred Stock for each $10 of notes held.
The offer was made for a total of $1,147,513 of notes. In the
aggregate, $984,014 of notes were exchanged for 127,922 shares of
preferred stock.
Also during the nine months ended March 31, 1998, the Company
realized net proceeds of $1,763,286 from the sale of 227,194
shares of Series A Preferred Stock through its Preferred Stock
Rights Offering.
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: 10.11 Four Agreements with Delta Western
(Indi-Bell)
27 Financial Data Schedule (SEC use only)
(b) Reports on Form 8-K: The Company filed a Current Report on
Form 8-K on January 26, 1998 regarding the resignation of
an officer and director.
15
16
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AquaPro Corporation
(Registrant)
Dated: May 14, 1998 By: /s/ Eric P. Braschwitz
------------ -----------------------------
Chief Financial Officer
and Secretary