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 September 30, 2006
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to .
----------------- ------------------
COMMISSION FILE NUMBER: 0-13403
AMISTAR CORPORATION
(Exact name of small business issuer as specified in its charter)
CALIFORNIA 95-2747332
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
237 Via Vera Cruz
San Marcos, California 92078
(Address of principal executive offices) (Zip code)
(760) 471 -1700 (Issuer's
telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 [ ]
Indicate by check mark whether the registrant is a shell company (as defined by
Rule 12b-2 of the Exchange Act)
Yes [ ] No [X]
There were 3,306,544 shares of common stock outstanding as of November 10, 2006.
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [X]
AMISTAR CORPORATION
FORM 10-QSB
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements.................3
Notes to the Unaudited Condensed Consolidated Financial Statements ...6
Item 2. Management's Discussion and Analysis and Results of Operations.......18
Item 3. Controls and Procedures..............................................24
PART II OTHER INFORMATION
Item 1. Legal Proceedings.....................................................25
Item 4. Submission of Matters to a Vote of Security Holders...................25
Item 5. Other Information.....................................................25
Item 6. Exhibits and Reports..................................................25
Part I
ITEM 1. FINANCIAL STATEMENTS
AMISTAR CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited and in thousands, except share data)
Sept. 30, Dec. 31,
2006 2005 (A)
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 183 $ 1,482
Trade accounts receivable, net of
reserves of $18 (2006) and $10 (2005) 607 373
Inventories, net of reserves of
$1,333 (2006) and $1,789 (2005) 1,362 2,079
Assets of discontinued operation 11 673
Demonstration equipment 89 61
Prepaid expenses 103 174
--------- ---------
Total current assets 2,355 4,842
Property and equipment, net 108 98
Other assets 256 457
--------- ---------
$ 2,719 $ 5,397
========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 125 $ 805
Customer deposits and accrued liabilities 1,119 1,178
Liabilities of discontinued operation -- 61
Current portion of deferred gain on sale lease-back of property 300 417
--------- ---------
Total current liabilities 1,544 2,461
Deferred gain on sale lease-back of property, net of current portion 1,202 3,315
Other long-term liabilities 179 104
--------- ---------
Total liabilities 2,925 5,880
--------- ---------
Common stock subject to registration 500 --
Shareholders' equity:
Preferred stock,$.01 par value. Authorized
2,000,000 shares; none outstanding -- --
Common stock, $.01 par value. Authorized
20,000,000 shares; 3,306,544 and
3,169,544 shares issued and
outstanding at September 30, 2006 and
December 31, 2005, respectively 32 32
Additional paid-in capital 4,869 4,746
Retained deficit (5,607) (5,261)
--------- ---------
Total shareholders' deficit (706) (483)
--------- ---------
$ 2,719 $ 5,397
========= =========
(A) Derived from the audited consolidated financial statements as of December
31, 2005.
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
AMISTAR CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited and in thousands, except per share data)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2006 2005 2006 2005
------- ------- ------- -------
Net sales $ 2,162 $ 545 $ 4,069 $ 2,764
Cost of sales 1,658 502 3,271 2,114
------- ------- ------- -------
Gross profit 504 43 798 650
------- ------- ------- -------
Operating expenses:
Selling 414 315 1,133 919
General and administrative 511 863 1,553 2,223
Engineering, research and development 225 267 739 883
------- ------- ------- -------
1,150 1,445 3,425 4,025
------- ------- ------- -------
Operating loss from continuing operations (646) (1,402) (2,627) (3,375)
Other income 2,038 118 2,276 353
------- ------- ------- -------
Income (loss) from continuing operations
before income taxes 1,392 (1,284) (351) (3,022)
Income tax expense 1 1 3 4
------- ------- ------- -------
Net income (loss) from continuing operations 1,391 (1,285) (354) (3,026)
Income (loss) from discontinued operations
net of income taxes (3) 110 8 (59)
------- ------- ------- -------
Net income (loss) $ 1,388 $(1,175) $ (346) $(3,085)
======= ======= ======= =======
Income (loss) per common share on
continuing operations-basic and diluted $ 0.42 $ (0.40) $ (0.11) $ (0.96)
======= ======= ======= =======
Income (loss) per common share on
discontinued operations-basic and diluted $ (0.00) $ 0.03 $ 0.00 $ (0.02)
======= ======= ======= =======
Weighted-average shares
outstanding, basic and diluted 3,307 3,155 3,251 3,147
======= ======= ======= =======
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
AMISTAR CORPORATION
Consolidated Statements of Cash Flows
(Unaudited and in thousands)
Nine months ended September30, 2006 2005
- --------------------------------------------------------------------------------------------------
(Revised)
Cash flows from operating activities:
Net loss $ (346) $(3,085)
Net cash provided by operating activities of
discontinued operation 585 1,344
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 30 32
Amortization of deferred gain on sale lease-back of property (2,230) (312)
Share-based compensation expense 103 50
Changes in assets and liabilities:
Trade accounts receivable, net (234) 214
Inventories, net 717 242
Demonstration equipment (28) (58)
Prepaid expenses and other assets 272 23
Accounts payable, customer deposits, accrued and
other liabilities (664) (232)
------- -------
Net cash used in operating activities (1,795) (1,782)
------- -------
Cash flows from investing activities:
Purchase of property and equipment (40) (43)
Purchase of property and equipment of discontinued operations -- (14)
Proceeds from sale of property and equipment of
discontinued operation 16 127
------- -------
Net cash provided by (used in) investing activities (24) 70
------- -------
Cash flows from financing activities:
Redemption of Industrial Development Bonds -- (2,700)
Decrease in restricted cash, net -- 2,788
Issuance of common stock 500 --
Exercise of stock options 20 24
------- -------
Net cash provided by financing activities 520 112
------- -------
Net decrease in cash and cash equivalents (1,299) (1,600)
Cash and cash equivalents, beginning of period 1,482 3,172
------- -------
Cash and cash equivalents, end of period $ 183 $ 1,572
======= =======
Supplemental disclosure of cash flow information-
Cash paid during the period for:
Interest $ -- $ 4
======= =======
Income taxes $ 4 $ 8
======= =======
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) BUSINESS AND CURRENT EVENTS
Discontinued Operations
- -----------------------
In September 2005, the Company discontinued its Amistar Manufacturing
Services division ("AMS") segment. As of September 30, 2005, the AMS Segment met
all of the criteria in Statement of Financial Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," to be
presented as discontinued operations. Accordingly, all current and prior period
financial information related to the AMS segment has been presented as
discontinued operations in the accompanying condensed consolidated financial
statements.
Income (loss) from discontinued operations consists of direct revenues
and direct expenses of the AMS segment, including cost of revenues, as well as
other fixed and allocated costs to the extent that such costs will be eliminated
as a result of the transaction. General corporate overhead costs have not been
allocated to discontinued operations.
The operating, investing and financing portion of cash flows
attributable to discontinued operations have separately disclosed, which in
previous reports, were reported on a combined basis as a single amount.
A summary of the operating results of the AMS segment included in
discontinued operations in the accompanying condensed consolidated statements of
operations are as follows:
Three months ended Nine months ended
Sept. 30, Sept. 30,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net sales $ -- $ 2,169 $ 238 $ 7,206
============ ============ ============ ============
Income from discontinued operations (3) 110 8 (59)
Income taxes -- -- -- --
------------ ------------ ------------ ------------
Net income (loss) from discontinued operations $ (3) $ 110 $ 8 $ (59)
============ ============ ============ ============
6
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
A summary of the major components of assets and liabilities of the
discontinued operation are as follows:
Sept. 30, Dec. 31,
2006 2005
---------- ---------
Accounts receivable,net $ 8 $ 506
Inventory, net of reserves 3 165
Equipment held for sale -- 2
---------- ---------
Assets of discontinued operation $ 11 $ 673
========== =========
Accounts payable and accrued liabilities -- 61
---------- ---------
Liabilities of discountinued operation $ -- $ 61
========== =========
Litigation
- ----------
On August 26, 2004, Amistar Corporation, Distributed Delivery Networks
Corporation, and William Holmes (the CEO of Distributed Delivery Networks) were
sued by Asteres, Inc. in the California Superior Court for the County of San
Diego, California. The complaint alleged causes of action for misappropriation
of trade secret, breach of a confidential disclosure agreement, unfair
competition and breach of the covenant of good faith and fair dealing.
Subsequently the Company filed a counter-claim for fraud, anti-trust violation
and other wrongful actions. On February 2, 2006, the Company and affiliates
settled the litigation with Asteres, Inc. and affiliates. According to the terms
of the settlement agreement, all parties dismissed their complaints with
prejudice. The terms of the settlement agreement did not have a financial impact
on the Company, other than its obligation for legal defense fees and costs.
Liquidity and Management's Plan
- -------------------------------
The Company's cash used in operating activities increased $13,000 from
$1,782,000 in the nine months ended September 30, 2005 to $1,795,000 in the nine
months ended September 30, 2006, primarily due to an increase in accounts
receivable, decrease in accounts payable, customer deposits, accrued and other
liabilities, and partially offset by a decreased loss, a decrease in inventory
and a decrease in prepaid and other assets in the nine months ended September
30, 2006, compared to the same period in 2005. Working capital decreased
$1,570,000 to $811,000 at September 30, 2006, compared to $2,381,000 at December
31, 2005, due primarily to the operating loss from continuing operations in the
nine months ended September 30, 2006.
Cash provided from discontinued operations decreased $759,000 to
$585,000 in the nine months ended September 30, 2006, compared to $1,344,000 in
the comparable period of 2005, primarily due to collection of accounts
receivable, reduction of inventory and sale of fixed assets of the discontinued
operation during the nine months ended September 30, 2006, compared to when the
division was still operating in the same period of 2005.
7
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company incurred litigation expenses, included in General and
Administrative expense of $83,000 during the nine months ended September 30,
2006, related to the case that was settled with Asteres. The Company used cash
of approximately $260,000 and issued 62,500 unregistered shares of common stock
to its law firm to satisfy its accounts payable obligation for legal fees during
the nine months ended September 30, 2006.
Inter-company loans totaling $347,000 and $2,174,000, were made to
Distributed Delivery Networks, its majority-owned subsidiary to fund its
operations during the nine months and inception to date periods ended September
30, 2006, respectively.
On March 30, 2006, the Company and Mr. Marshall (a director of the
Company), along with certain members of management, entered into a $1,500,000
revolving credit line facility, secured by accounts receivable, having a term of
two years, with interest on advances accruing at prime plus two percentage
points, to provide working capital for the Company. The credit line facility has
no financial covenants. As of the filing date of this report, no advances have
been made on the credit line.
On March 30, 2006, the Company and Mr. Marshall and its law firm entered
into separate Stock Purchase and Registration Rights Agreements by which the
Company issued 62,500 unregistered shares of common stock in April 2006 in
return for $250,000 or $4.00 per share. The proceeds from the sale of shares to
Mr. Marshall were used for working capital. The shares issued to the Company's
law firm were to satisfy $250,000 of the payable owed for legal fees. The
Registration Rights Agreements requires the Company, using its best efforts, to
file a Registration Statement to effect a shelf registration.
The Company reduced its facility costs by terminating its lease for the
approximate 80,000 square foot building it occupies and entered into a new lease
for a reduced amount of space totaling approximately 31,000 square feet, with a
term of five years at a base rental rate of $32,100 on September 21, 2006. The
Company estimates that the new lease will reduce its occupancy costs by
approximately $32k per month, beginning in the fourth quarter of 2006.
Based on the Company's cash position, and assuming currently planned
expenditures and level of operations, management believes the Company will not
have sufficient capital resources for the twelve months ending September 30,
2007, and has an approximately six-month supply of cash and available borrowings
on its line of credit. To remain viable beyond the six month period ended March
31, 2007, the Company must return to profitability, which will be largely
dependent on its success in generating sales of its Rx-APM-448, reduce its
facility costs and/or raise debt or equity capital.
The Company is considering its equity capital needs and options and has
had ongoing discussions with potential investors. Management believes it will be
required to obtain sufficient purchase orders for its Rx-APM(TM)-448
demonstrating that 1) the product has moved beyond the trial stage of
development and 2) that market demand exists for the product, in order to be
successful in its efforts to raise equity capital on favorable terms. There can
be no assurances that the Company will be successful in achieving these
objectives or the extent to which the Company will be able to achieve a
profitable level of operations or sufficient liquidity to sustain operations. If
the Company is not successful in executing the aforementioned plan, there will
be substantial doubt about its ability to continue as a going concern.
8
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
- ---------------------
The accompanying unaudited condensed consolidated financial statements
of the Company have been prepared in accordance with Rule 10-01 of Regulation
S-X promulgated by the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
accounting principles generally accepted in the United States of America. In the
opinion of the Company, however, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the Company's
financial position as of September 30, 2006, its results of operations for the
three and nine months ended September 30, 2006 and 2005, and its cash flows for
the nine months ended September 30, 2006 and 2005, respectively. The results of
operations of the Company for the three and nine month periods ended September
30, 2006, may not be indicative of future results. These unaudited condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's annual report
on Form 10-KSB for the year ended December 31, 2005 as filed with the Securities
and Exchange Commission on March 30, 2006.
Inventories
- -----------
Inventories are stated at the lower of cost (first-in, first-out) or
market and include material, labor and manufacturing overhead costs. Inventories
consist of the following (in thousands), net of reserves of $1,333 and $1,789 at
September 30, 2006 and December 31, 2005, respectively:
September 30, Dec. 31,
2006 (In thousands) 2005 (In thousands)
-------------------------- ---------------------------
AIA ddn Total AIA ddn Total
------ --- ------ ------- ----- ------
Raw Material $ 222 $ - $ 222 $ 196 $ - $ 196
Work In Process 757 - 757 680 - 680
Finished Goods 378 5 383 1,185 18 1,203
-------------------------- ---------------------------
Total $1,357 $ 5 $1,362 $ 2,061 $ 18 $2,079
========================== ===========================
9
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Earnings Per Common Share
- -------------------------
The Company calculates net income (loss) per share in accordance with SFAS
No. 128, "Earnings Per Share". Under SFAS No. 128, basic net earnings per common
share is calculated by dividing net loss by the weighted-average number of
common shares outstanding during the reporting period. Diluted net loss per
common share reflects the effects of potentially dilutive securities. Weighted
average shares used to compute net income (loss) per share are presented below
(in thousands):
Three months ended Nine months ended
Sept. 30, Sept. 30,
2006 2005 2006 2005
------------------ -----------------
Weighted-average shares, basic 3,307 3,155 3,251 3,147
Dilutive effect of stock options -- -- -- --
------------------ -----------------
Weighted-average shares, diluted 3,307 3,155 3,251 3,147
================== =================
Options to purchase approximately 204,000 and 146,000 shares of potentially
dilutive common stock were excluded from the calculation of diluted net income
(loss) per share for the three and nine months ended September 30, 2006 and
2005, respectively, because the effects of these instruments were anti-dilutive.
10
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Industry Segments and Geographic Information
The following table summarizes the Company's two continuing operating
segments: Amistar Industrial Automation ("AIA"), which encompasses the
manufacture and distribution of manufacturing machinery, specialty products, and
related accessories and the Company's majority-owned subsidiary Distributed
Delivery Networks, which encompasses prototype development, manufacturing,
start-up operating costs, and marketing of automation equipment primarily to the
retail pharmacy market. The Company identifies reportable segments based on the
unique nature of operating activities, customer base and marketing channels.
Information is also provided by major geographical area (dollars in thousands).
Total assets are reflected for the discontinued segment.
AIA
-----------------------------
DISTRIBUTED
UNITED DELIVERY CONTINUING DISCONTIN.
STATES FOREIGN TOTAL NETWORKS CORPORATE TOTAL SEGMENT
- --------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 2006
Net sales $ 2,017 $ 49 $ 2,066 $ 96 $ -- $ 2,162 $ --
======= ======== ======= =========== =========== ============ ===========
Depreciation and amortization 2 -- 2 1 6 10 --
======= ======== ======= =========== =========== ============ ===========
Loss from operations (441) (34) (475) (171) -- (646) (3)
======= ======== ======= =========== =========== ============ ===========
Total assets 1,822 250 2,072 171 465 2,708 11
======= ======== ======= =========== =========== ============ ===========
Additions to long-lived assets 39 -- 39 -- -- 39 --
======= ======== ======= =========== =========== ============ ===========
THREE MONTHS ENDED SEPTEMBER 30, 2005
Net sales $ 624 $ (90) $ 534 $ 11 $ -- $ 545 $ 2,169
======= ======== ======= =========== =========== ============ ===========
Depreciation and amortization 7 -- 7 1 1 9 60
======= ======== ======= =========== =========== ============ ===========
Loss from operations (1,201) -- (1,201) (201) -- (1,402) 110
======= ======== ======= =========== =========== ============ ===========
Total assets 1,648 25 1,673 166 2,102 3,941 1,692
======= ======== ======= =========== =========== ============ ===========
Additions to long-lived assets -- -- -- -- -- -- --
======= ======== ======= =========== =========== ============ ===========
NINE MONTHS ENDED SEPTEMBER 30, 2006
Net sales $ 3,823 $ 138 $ 3,961 $ 108 $ -- $ 4,069 $ 238
======= ======== ======= =========== =========== ============ ===========
Depreciation and amortization 16 -- 16 3 11 30 --
======= ======== ======= =========== =========== ============ ===========
Income (loss) from operations (1,974) (116) (2,090) (537) -- (2,627) 8
======= ======== ======= =========== =========== ============ ===========
Additions to long-lived assets 40 -- 40 -- -- 40 --
======= ======== ======= =========== =========== ============ ===========
NINE MONTHS ENDED SEPTEMBER 30, 2005
Net sales $ 2,608 $ 145 $ 2,753 $ 11 $ -- $ 2,764 $ 7,206
======= ======== ======= =========== =========== ============ ===========
Depreciation and amortization 21 -- 21 3 8 32 113
======= ======== ======= =========== =========== ============ ===========
Loss from operations (2,571) (143) (2,714) (661) -- (3,375) (59)
======= ======== ======= =========== =========== ============ ===========
Additions to long-lived assets 37 -- 37 -- 6 43 14
======= ======== ======= =========== =========== ============ ===========
11
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements, continued
(Unaudited)
Product Warranty Information
- ----------------------------
The Company provides for the estimated cost of product warranties at
the time revenue is recognized. While the Company engages in extensive product
quality programs and processes, including actively monitoring and evaluating the
quality of its component suppliers, the Company's warranty obligation is
affected by product failure rates and the related material usage, field service
and delivery costs incurred in correcting a product failure. Should actual
product failure rates, material usage, or service delivery costs differ from the
Company's estimates, revisions to the estimated warranty liability would be
required.
Warranty cost and accrual information is as follows for the three and
nine months ended September 30, 2006 and 2005 (in thousands):
Charged to
Beginning costs Ending
Balance and expense Deductions Balance
- ------------------------------------------------------------------------------
Three months ended:
9/30/2006 $ 62 $ 79 $ (3) $ 138
========= =========== =========== ===========
9/30/2005 $ 53 $ 12 $ (18) $ 47
========= =========== =========== ===========
Nine months ended:
9/30/2006 $ 41 $ 123 $ (26) $ 138
========= =========== =========== ===========
9/30/2005 $ 31 $ 70 $ (54) $ 47
========= =========== =========== ===========
12
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements, continued
(Unaudited)
Stock-Based Compensation
- ------------------------
In December 2004, the Financial Accounting Standards Board (FASB)
revised Statement of Financial Accounting Standards No. 123 (FAS 123R),
"Share-Based Payment," which establishes accounting for share-based awards
exchanged for employee services and requires companies to expense the estimated
fair value of these awards over the requisite employee service period. On April
14, 2005, the U.S. Securities and Exchange Commission adopted a new rule
amending the effective dates for FAS 123R. In accordance with the new rule, the
Company adopted the accounting provisions of FAS 123R beginning in the first
quarter of 2006.
Under FAS 123R, share-based compensation cost is measured at the grant
date, based on the estimated fair value of the award, and is recognized as
expense over the employee's requisite service period. The Company has no awards
with market or performance conditions. The Company adopted the provisions of FAS
123R on January 1, 2006, the first day of the 2006, using a modified prospective
application, which provides for certain changes to the method for valuing
share-based compensation. Under the modified prospective application, prior
periods are not revised for comparative purposes. The valuation provisions of
FAS 123R apply to new awards and to awards that are outstanding on the effective
date and subsequently modified or cancelled. Estimated compensation expense for
awards outstanding at the effective date will be recognized over the remaining
service period of four years using the compensation cost calculated for pro
forma disclosure purposes under FASB Statement No. 123, "Accounting for
Stock-Based Compensation" (FAS 123).
On November 10, 2005, the FASB issued FASB Staff Position No. FAS
123(R)-3, "Transition Election Related to Accounting for Tax Effects of
Share-Based Payment Awards."
The Company has elected to adopt the alternative transition method
provided in this FASB Staff Position for calculating the tax effects of
share-based compensation pursuant to FAS 123R. The alternative transition method
includes a simplified method to establish the beginning balance of the
additional paid-in capital pool (APIC pool) related to the tax effects of
employee share-based compensation, which is available to absorb tax deficiencies
recognized subsequent to the adoption of FAS 123R.
The Company has elected to continue utilizing the Black-Scholes
valuation model to measure fair value of future grants. FAS 123R requires
forfeitures on grants issued subsequent to January 1, 2006, to be estimated at
the time of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates.
Stock option grants of 81,500 shares at a weighted average fair value
of $1.75 per share using the Black-Scholes valuation model were made in the
nine-months ended September 30, 2006, with the following weighted average
assumptions:
Volatility 80.48%
Risk-free interest rate 5.13%
Forfeiture rate 14.60%
13
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements, continued
(Unaudited)
The volatility assumption was based on historical closing stock prices
of the Company's stock over the past five years consistent with the option term.
The risk-free interest rate assumption was based on the observed
interest rates consistent with the option term.
The forfeiture rate assumption was based on the Company's historical
option cancellation information.
The Company has adopted the safe-harbor, mid-point of term, estimated
option life of 3.75 years for any grants made in 2006 and 2007.
The Company recorded estimated share-based compensation expense of
$11,000 and $27,000 during the three and nine-months ended September 30, 2006,
respectively, related to the 2006 grants. The Company recorded estimated
share-based compensation expense of $26,000 and $76,000 during the three and
nine-months ended September 30, 2006, respectively, related to grants and awards
made prior to 2006.
Total share-based compensation expense for all awards was recognized
for the three and nine months ended September 30, 2006, as follows (in
thousands, except per share data).
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPT. 30, SEPT. 30,
2006 2006
------------ -----------
Cost of sales $ 2 $ 4
Selling (29)
9
General and Administrative 59
74
Engineering, research and development 5
16
------------ -----------
Share-based compensation expense, before of taxes 37
103
Related income tax benefits --
--
------------ -----------
Share-based compensation expense, net of taxes $ 37 $ 103
============ ===========
Net share-based compensation expense, per common share:
Basis and Diluted $ 0.01 $ 0.02
============ ===========
Pro Forma Information under FAS 123 for Periods Prior to Fiscal 2006
- --------------------------------------------------------------------
Prior to adopting the provisions of FAS 123R, the Company recorded
estimated compensation expense for employee stock options based upon their
intrinsic value on the date of grant pursuant to Accounting Principles Board
Opinion 25 (APB 25), "Accounting for Stock Issued to Employees" and provided the
required pro forma disclosures of FAS 123.
14
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements, continued
(Unaudited)
Because the Company established the exercise price based on the fair
market value of the Company's stock at the date of grant, the stock options had
no intrinsic value upon grant, and therefore no estimated expense was recorded
prior to adopting FAS 123R. Each accounting period, the Company reported the
potential dilutive impact of stock options in its diluted earnings per common
share using the treasury-stock method. Out-of-the-money stock options (i.e., the
average stock price during the period was below the strike price of the stock
option) were not included in diluted earnings per common share as their effect
was anti-dilutive.
Had the Company determined employee stock based compensation cost based
on a fair value model at the grant date for its stock options under SFAS 123
prior to January 1, 2006, the Company's net loss per share would have been
adjusted to the pro forma amounts for the three and nine months ended September
30, 2006 and 2005 as follows (in thousands, except per share amounts):
Period ended September 30, 2005
- ------------------------------------------------------------------- Three Months Nine Months
Ended Ended
----------- -----------
Net loss - as reported $ (1,175) (3,085)
Total stock-based employee compensation
expense included in reported net income, net of tax (A) 16 50
Total stock-based employee compensation
expense determined under fair-value-based method
for all rewards, net of tax (33) (101)
----------- -----------
Pro forma net loss $ (1,192) (3,136)
=========== ===========
Loss per share:
Basic and diluted, as reported $ (0.37) (0.98)
Basic and diluted, pro forma $ (0.37) (0.98)
(A) In addition to compensation expense, this amount is also recorded
as an increase to Additional Paid-In Capital.
There were 30,000 shares granted during the three and nine months ended
September 30, 2005 to directors from the 2005 plan. The estimated share-based
compensation expense related to the grants for the three and nine months ended
September 30, 2005, was recorded at a weighted-average fair value of $1.81, on
the date of grant using the Black-Scholes fair value option-pricing model with
the following weighted-average assumptions: expected life of 4.8 years, expected
volatility of 60%, no dividends, and risk-free interest rate of 3.78%.
15
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements, continued
(Unaudited)
Stock option activity during the nine months ending September 30, 2006 was as
follows:
WEIGHTED AGGREGATE
NUMBER AVE EXERCISE INTRINSIC
OF SHARES PRICE VALUE
--------- ------------ ---------
Outstanding, Dec. 31, 2005 134,250 $ 2.14
Granted 81,500 3.40
Exercised (12,000) 1.65
Expired -- --
-------- --------
Outstanding, Sept. 30, 2006 203,750 $ 2.63 $ 196,000
======== ======== =========
The ranges of exercise prices on options outstanding at September 30, 2006 are
as follows:
Weighted
Average
Remaining Weighted Weighted
Contractual Average Average
Range of Number Life (In Exercise Number Exercise
Exercise Price Outstanding Years) Price Exercisable Price
- --------------------------------------------------------------------------------
$0.81 - $1.00 25,250 1.40 $ 0.81 9,113 $ 0.81
$1.76 - $2.21 67,000 2.50 2.16 63,795 2.16
$3.30 - $3.40 111,500 4.50 3.33 25,500 3.40
- --------------------------------------------------------------------------------
$0.81 - $3.40 203,750 3.20 $ 2.63 98,408 $ 2.04
================================================================================
Commitments
- -----------
On September 21, 2006, the Company and Veritek Manufacturing LLC
entered into an agreement to terminate the existing lease dated September 15,
2004, for the Company's San Marcos, California headquarters facility, which was
assigned to Veritek Manufacturing LLC, as part of a real estate purchase
transaction. Simultaneous with the termination of the lease dated September 15,
2004, the Company entered into a new lease for approximately 31,000 square feet
of office and manufacturing space in the existing building. The new lease has a
term of five years, and a monthly rental rate of $32,100, plus a pro-rata share
of common area expenses. The lease termination and new lease transactions
resulted in a base rent reduction of $20,067 per month and a net refund of the
security deposit of $200,736. The
16
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements, continued
(Unaudited)
Company incurred a brokerage commission expense of approximately $54,000 related
to the new lease and agreed to contribute $50,000 towards the cost of a new
roof.
As a result of the lease transactions, the Company recorded an $1,917,000
increase in recognition of the deferred gain on the sale-leaseback of the
Company's headquarters facility in other income during the third quarter of
2006. The increased recognition represents the excess of deferred gain on sale
and leaseback of property over the present value of the new lease base rent
obligation.
17
AMISTAR CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward Looking Statements
- --------------------------
This Quarterly Report contains forward-looking statements within the
meaning of the Private Securities Reform Act of 1995, including statements
regarding market opportunities, customer acceptance of products, gross margin,
marketing expenses, and liquidity. These forward-looking statements involve
risks and uncertainties, and the cautionary statements set forth below identify
important factors that could cause actual results to differ materially from
those in any such forward-looking statements. Such factors include, but are not
limited to, adverse changes in general economic conditions, including changes in
the specific markets for the Company's products, product availability, decreased
or lack of growth in the electronics industry, adverse changes in customer order
patterns, increased competition, lack of acceptance of new products, pricing
pressures, lack of success in technological advancements, risks associated with
foreign trade, fluctuations in the price of the Company's stock, ability to
continue as a going concern as described in the Liquidity section as well as
other factors.
RESULTS OF OPERATIONS
THIRD QUARTER 2006 COMPARED TO THIRD QUARTER 2005
Net Sales
- ---------
Net sales for the third quarter of 2006 increased $1,617,000, or 297%,
to $2,162,000 compared to $545,000 for the same period in the prior year. The
increase in net sales was primarily due to an increase in Amistar Industrial
Automation ("AIA") distributed product line sales and to a lesser extent, due to
an increase in AIA custom factory automation machine and AIA DataPlace machine
sales. The Company is continuing to experience an increase in machine and Custom
Factory Automation equipment orders.
Following is a discussion of AIA sales by product line:
DataPlace machine sales increased $82,000, or 29%, to $362,000 from
$280,000 during the third quarter of 2006, compared to the third quarter of
2005, primarily due to the sale of five DataPlace machines during the third
quarter of 2006, compared to the sale of three machines during the same period
of 2005. Demand for the Company's DataPlace machines has been uneven with no
clear trend over the past several years.
Through-hole assembly machines, spare parts and service sales increased
$27,000, or 18%, to $174,000 in the third quarter of 2006, from $147,000 in the
same period of 2005, primarily due to larger than normal shipments in the third
quarter compared to the trend of declining sales, due to a declining number of
through-hole machines in production in the industry that require spare parts.
Distributed circuit board assembly machine, accessory and spare parts
sales increased $951,000, or 1145% to $1,034,000, in the third quarter of 2006
from $83,000 in the same quarter of 2005, due primarily to sales of six
circuit-board assembly machines in the three months ended Sept. 30, 2006
compared to only spare parts and accessories sold in the comparable quarter of
2005.
Custom factory automation sales increased $472,000, or 1967%, to
$496,000 in the third quarter of 2006 from $24,000 in the comparable quarter of
2005, due primarily to shipments of machines and engineering services in the
quarter ended September 30, 2006, compared to sales of only machine ship
services in the same period of 2005.
18
AMISTAR CORPORATION
Results of Operations, Continued
Distributed Delivery Networks sales increased $85,000 or 772% to
$96,000 during the third quarter of September 30, 2006, compared to $11,000 in
the same period of 2005. The increased sales in the third quarter of 2006, is
primarily due to sales of two initial Rx-APM-448 machines in the third quarter
of 2006, compared to rental and install services sales in the same period of
2005 The timing and extent of market acceptance for the Rx-APM-448 is uncertain,
as the market is in an early stage and the technology is new.
Gross Profit
- ------------
Gross profit increased $461,000, or 1072%, to $504,000 during the third
quarter of 2006, compared to $43,000 in the same period in 2005. The increase
was due primarily to increased sales in the third quarter of 2006. The gross
margin percentage increased 15% to 23% during the third quarter of 2006,
compared to 8% in the same period in 2005, due primarily to the effect of
relatively flat unabsorbed manufacturing overhead costs, which represented a
lower % of cost of goods sold in the third quarter of 2006, compared to the same
period in 2005.
Selling Expenses
- ----------------
Selling expenses increased $99,000, or 31%, to $414,000 in the third
quarter of 2006 from $315,000 in the comparable quarter of 2005, due primarily
to increased commissions on increased sales in the third quarter of 2006.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses decreased $352,000, or 40%, to
$511,000 in the third quarter of 2006, from $863,000 in the third quarter of
2005, due primarily to $431,000 in litigation defense costs in the third quarter
of 2005, compared to none in the third quarter of 2006. In addition, occupancy
costs allocated to general and administrative expense increased in the third
quarter of 2006, compared to the same period of 2005.
Engineering, Research and Development Expenses
- ----------------------------------------------
Engineering, research and development expenses decreased $42,000, or
16%, to $225,000 in the third quarter of 2006, compared to $267,000 for the same
period in 2005, due primarily to decreased development costs related to the
Rx-APM(TM)-448 machine for the retail and other pharmacy markets. During the
third quarter of 2006, development efforts were focused on ongoing enhancements
Rx-APM(TM)-448 machine and customer specific applications.
The engineering staff has been used primarily in support of custom
factory engineering design activities and development of the Rx-APM(TM)-448
machine. During the third quarter of 2006, costs of $116,000 were incurred
related to the development of the Rx-APM(TM)-448 machine, compared to $148,000
during the same quarter of 2005.
Other Income
- ------------
Other income increased $1,920,000 to $2,038,000 in the third quarter of
2006, from $118,000 in the same period of 2005, primarily due to an $1,917,000
increase in recognition of the deferred gain on the sale-leaseback of the
Company's headquarters facility in the third quarter of 2006, due to the
termination of the existing lease for the headquarters facility and the
consummation of a new lease for a reduced amount of space. The increased
recognition of the gain on the sale-leaseback of the Company's headquarters
facility represents the excess of deferred gain on sale and leaseback of
property over the present value of the base-rent obligation related to the new
lease.
19
AMISTAR CORPORATION
Results of Operations, Continued
Income Taxes
- ------------
The $1,000 provision represents the Company's minimum tax liability to
various states for each of the third quarters of 2006 and 2005. A 100% valuation
allowance was recorded against deferred tax assets.
Discontinued operations
- -----------------------
The loss from discontinued operations increased $113,000 in the third
quarter of 2006 to $3,000 compared to income of $110,000, due primarily to gain
on sale of fixed assets in the third quarter of 2005, compared to none in 2006.
AMS sales decreased $2,169,000, to $0 in the third quarter of 2006 from
$2,169,000 for the comparable quarter in 2005, primarily due to the
discontinuance of operations in 2005.
Gross profit (loss) decreased $113,000 to ($3,000) in the third quarter
of 2006 from $110,000 in the comparable period of 2005, due primarily to the
discontinuance of operations.
NINE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO THE SAME PERIOD IN 2005
Net Sales
- ---------
Net sales for the nine months ended September 30, 2006, increased
$1,305,000, or 47% to $4,069,000 from $2,764,000 in the same period in 2005. The
increase in net sales was primarily due to the increase in AIA Distributed
machine sales.
Following is a discussion of AIA sales by product line:
DataPlace machine sales decreased $150,000, or 19% from $806,000 during
the nine months ended September 30, 2005, to $656,000 for the nine months ended
September 30, 2006, primarily due to fewer machines sold in the nine months
ended September 30, 2006, compared to the same period of 2005. The Company sold
seven machines in the nine months ended September 30, 2006, compared to nine in
the same period of 2005. The decrease in machine sales in the nine months ended
September 30, 2006 was primarily due to the sale of a DataPlace laser machine
for $85,000 in the nine months ended September 30, 2005, compared to none in the
nine months ended September 30, 2006. Demand for the Company's DataPlace
machines has been uneven with no clear trend over the past several years.
Through-hole assembly machines, spare parts and service sales decreased
$147,000, or 24%, to $474,000 in the nine months ended September 30, 2006 from
$621,000 in the same period of 2005, primarily due to a sale of the last
remaining through-hole assembly machine during the nine months ended September
30, 2005 and to a lesser extent due to the trend of the declining number of
through-hole machines in production in the market requiring spare parts.
Distributed circuit board assembly machine, accessory and spare parts
sales increased $1,475,000, or 533%, in the nine months ended September 30,
2006, to $1,752,000 from $277,000 in the same period of 2005. The increase is
primarily due to sales of seven circuit-
20
AMISTAR CORPORATION
Results of Operations, Continued
board assembly machines in the nine months ended September 30, 2006, versus the
sale of only spare parts and accessories sold in the comparable period of 2005.
Custom factory automation sales increased $30,000, or 3%, to $1,079,000
the nine months ended September 30, 2005 from $1,049,000 in the same period of
2005, primarily due to a recent trend of growth in custom factory automation
orders and sales.
Distributed Delivery Networks, (the Company's majority-owned
subsidiary) sales increased $97,000 to $108,000 in the nine months ended
September 30, 2006, from $11,000 in the same period of 2005, due to the initial
sale of two Rx-APM-448 machines in the nine months ended September 30, 2006,
compared to only installation services and rental revenue during the comparable
period in 2005. The timing and extent of market acceptance for the Rx-APM-448 is
uncertain, as the market is in an early stage and the technology is new.
Gross Profit
- ------------
Gross profit increased $148,000, or 23%, to $798,000 during the nine
months ended September 30, 2006, from $650,000 during the same period of 2005,
primarily due to increased sales. The gross margin percentage decreased 4% from
24% during the nine months ended September 30, 2005, to 20% during the nine
months ended September 30, 2006, due primarily to a decrease in DataPlace and
Through-Hole machine, parts and service sales, that historically generate higher
gross margins and to an increase in Distributed, Industrial Automation and
Distributed Delivery Networks sales that historically generate lower margins.
Selling Expenses
- ----------------
Selling expenses increased $214,000, or 23%, to $1,133,000 in the nine
months ended September 30, 2006 from $919,000 in the comparable period of 2005,
due primarily to increased commission expense related to increased sales,
increased personnel costs resulting from the relocation of personnel from the
discontinued operation to the AIA division and to increased Distributed Delivery
Networks field demonstration personnel costs in the nine months ended September
30, 2006, compared to the comparable period in 2005. The increased field
demonstration personnel costs in Distributed Delivery Networks during the nine
months ended September 30, 2006, was due to support costs related to an
increased number of Rx-APM machines in the field on trial.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses decreased $670,000, or 30%, from
$2,223,000 in the nine months ended September 30, 2005, to $1,553,000 in the
nine months ended September 30, 2006, due primarily to an $943,000 decrease in
litigation defense costs in the nine months ended September 30, 2006, and
partially offset by increased occupancy, audit and general legal costs compared
to the same period in 2005.
Engineering, Research and Development Expenses
- ----------------------------------------------
Engineering, research and development expenses decreased $144,000, or
16%, from $883,000 in the nine months ended September 30, 2005, to $739,000 in
the nine months ended September 30, 2006, due primarily to decreased development
costs related to the Rx-APM(TM)-448 machine. During the nine months ended
September 30, 2006, development efforts were focused on completion of the
initial development phase and ongoing enhancements to the Rx-APM(TM)-448 machine
and on customer specific applications.
21
AMISTAR CORPORATION
Results of Operations, Continued
The engineering staff has been used primarily in support of custom
factory engineering design activities and development of the Rx-APM(TM)-448
machine. During the nine months ended September 30, 2006, costs of $420,000 were
incurred related to the development of the Rx-APM(TM)-448 machine, compared to
$625,000 during the same period of 2005.
Other Income
- ------------
Other income increased $1,923,000 to $2,276,000 in the nine months
ended September 30, 2006, from $353,000 in the same period of 2005, primarily
due to an $1,917,000 increase in recognition of the deferred gain on the
sale-leaseback of the Company's headquarters facility in the nine months ended
September 30, 2006, due to the termination of the existing lease for the
headquarters facility and the consummation of a new lease for a reduced amount
of space. The increased recognition of gain on the sale-leaseback of the
Company's headquarters facility represents the excess of deferred gain on sale
and leaseback of property over the present value of the new lease base rent
obligation.
Income Taxes
- ------------
The $3,000 and $4,000 provision represents the Company's minimum tax
liability to various states for the nine-month periods ended September 30, 2006,
and 2005, respectively. A 100% valuation allowance was recorded against deferred
tax assets.
Discontinued operations
- -----------------------
The income from discontinued operations increased $68,000 in the nine
months ended September 30, 2006, to $8,000 compared to a loss of $59,000 in the
same period of 2005, due primarily to increased gross profit and from gain on
sale of equipment.
AMS sales decreased $6,968,000, from $7,206,000 in the nine months
ended September 30, 2005, to $238,000 in the nine months ended September 30,
2006, primarily due to the discontinuance of operations in 2005.
Gross profit increased $67,000 to $8,000 in the nine months ended
September 30, 2006, from a loss of $59,000 in the comparable period of 2005, due
primarily to the discontinuance of operations, the resulting elimination of
factory overhead costs, and higher margin commission income in the nine months
ended September 30, 2006. During the nine months ended September 30, 2006, sales
consisted of products shipped out of finished goods inventory and commission
income earned from the successor contract manufacturer.
The cash flows provided from discontinued operations of $585,000 was
primarily due to a reduction of inventory and accounts receivable, proceeds from
the sale of equipment and partially offset by a reduction in accounts payable.
22
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
LIQUIDITY AND MANAGEMENT'S PLAN
The Company's cash used in operating activities increased $13,000 from
$1,782,000 in the nine months ended September 30, 2005 to $1,795,000 in the nine
months ended September 30, 2006, primarily due to an increase in accounts
receivable, decrease in accounts payable, customer deposits, accrued and other
liabilities, and partially offset by the decreased loss, a decrease in inventory
and a decease in prepaid and other assets in the nine months ended September 30,
2006, compared to the same period in 2005. Working capital decreased $1,570,000
to $811,000 in the nine months ended September 30, 2006, compared to $2,381,000
in the comparable period of 2005, primarily due to the operating loss from
continuing operations in the nine months ended September 30, 2006.
Cash provided from operations of discontinued operations decreased
$759,000 to $585,000 in the nine months ended September 30, 2006, compared to
$1,344,000 in the comparable period of 2005, primarily due to collection of
accounts receivable, reduction of inventory and sale of fixed assets of the
discontinued operation during the nine months ended September 30, 2006, compared
to when the division was still operating in the same period of 2005.
The Company incurred litigation expenses, included in General and
Administrative expense of $83,000 during the nine months ended September 30,
2006, related to the case that was settled with Asteres. The Company used cash
of approximately $260,000 and issued 62,500 unregistered shares of common stock
to its law firm to satisfy its accounts payable obligation for legal fees during
the nine months ended September 30, 2006.
Inter-company loans totaling $347,000 and $2,174,000, were made to
Distributed Delivery Networks, its majority-owned subsidiary to fund its
operations during the nine months and inception to date periods ended September
30, 2006, respectively
On March 30, 2006, the Company and Mr. Marshall, along with certain
members of management, entered into a $1,500,000 revolving credit line facility,
secured by accounts receivable, having a term of two years, with interest on
advances accruing at prime plus two percentage points, to provide working
capital for the Company. The credit line facility has no financial covenants. As
of the filing date of this report, no advances have been made on the credit
line.
On March 30, 2006, the Company and Mr. Marshall and its law firm
entered into separate Stock Purchase and Registration Rights Agreements by which
the Company issued 62,500 unregistered shares of common stock in April 2006 in
return for $250,000 or $4.00 per share. The proceeds from the sale of shares to
Mr. Marshall were used for working capital. The shares issued to the Company's
law firm were to satisfy $250,000 of the payable owed for legal fees. The
Registration Rights Agreements requires the Company, using its best efforts, to
file a Registration Statement to effect a shelf registration.
The Company reduced its facility costs by terminating its lease for the
approximate 80,000 square foot building it occupies and entered into a new lease
for a reduced amount of space totaling approximately 31,000 square feet, with a
term of five years at a base rental rate of $32,100 on September 21, 2006. The
Company estimates that the new lease will reduce its occupancy costs by
approximately $32k per month, beginning in the fourth quarter of 2006.
23
AMISTAR CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Based on the Company's cash position, and assuming currently planned
expenditures and level of operations, management believes the Company will not
have sufficient capital resources for the twelve months ending September 30,
2007, and has an approximately six-month supply of cash and available borrowings
on its line of credit. To remain viable beyond the six month period ending March
31, 2007, the Company must return to profitability, which will be largely
dependent on its success in generating sales of its Rx-APM-448, and/or raise
debt or equity capital.
The Company is considering its equity capital needs and options and has
had ongoing discussions with potential investors. Management believes it will be
required to obtain sufficient purchase orders for its Rx-APM(TM)-448
demonstrating that 1) the product has moved beyond the trial stage of
development and 2) that market demand exists for the product, in order to be
successful in its efforts to raise equity capital on favorable terms. There can
be no assurances that the Company will be successful in achieving these
objectives or the extent to which the Company will be able to achieve a
profitable level of operations or sufficient liquidity to sustain operations. If
the Company is not successful in executing the aforementioned plan, there will
be substantial doubt about its ability to continue as a going concern.
ITEM 3. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, an evaluation was
performed, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to the Securities Exchange Act of 1934, as amended. Based
upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that, as of the end of the period covered by this report, our
disclosure controls and procedures were effective.
24
PART II. OTHER INFORMATION
ITEM 1-3. Non-Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS
(a) Exhibits:
10.15 Loan and Security Agreement dated March 30, 2006.
Incorporated by reference of the Company's Form 8-K
filed April 3, 2006.
10.16 Registration rights agreements dated March 30, 2006.
Filed with this report.
10.17 Lease dated September 21, 2006 with Veritek
Manufacturing LLC.
31.1 Certifications of the Company's President and Chief
Financial Officer, pursuant to Section 302 of the
Sarbanes-Oxley Act
32.1 Certifications of the Company's President and Chief
Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act
(b) Reports on Form 8-K
Form 8-k filed on February 1, 2006, reporting under items 8 Form
8-K filed on April 3, 2006, reporting under items 2 and 9. Form
8-K filed on April 4, 2006, reporting under items 7 and 12. Form
8-K filed on May 24, 2006, reporting under items 2 and 9. Form
8-K filed on September 21, 2006, reporting under items 1, 2 and 9
25
Amistar Corporation
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.
Dated: November 16, 2006
AMISTAR CORPORATION
By /s/ Gregory D. Leiser
-------------------------------------------
Gregory D. Leiser
Vice President Finance and Chief Financial
Officer (Principal Financial and Accounting
Officer)
26