SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 1998
Commission file number 1-9431
ESCAGENETICS CORPORATION
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(Name of Small Business Issuer in Its Charter)
Delaware 94-3012230
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
Suite 605, 1075 Bellevue Way NE, Bellevue, WA 98004
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(Address of Principal Executive Offices) (Zip Code)
(206) 901-3595
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(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 past 90 days.
Yes X No____
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes X No____
The number of shares of the issuer's common stock outstanding as of March 1,
1999 was 73,402,516 shares, par value $0.0001 per share.
PART I
ITEM 1 - Financial Statements
ESCAGENETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
December 31, 1998
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ASSETS
Current assets:
Cash $ 4,000
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Total assets $ 4,000
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LIABILITIES AND SHAREHOLDERS' EQUITY DEFICIENCY
Current liabilities:
Accounts payable $ 11,000
Due to Genesee Holdings, Inc. 65,000
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Total liabilities 76,000
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Shareholders' equity deficiency:
Preferred stock; $0.01 par value; 1,000,000 shares
authorized; none issued or outstanding
Common stock; $0.0001 par value; 100,000,000 shares
authorized; 73,402,516 shares issued and outstanding 7,000
Additional paid-in capital 134,000
Accumulated deficit (213,000)
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Total shareholders' equity deficiency (72,000)
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Total liabilities and shareholders' equity deficiency $ 4,000
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See note to financial statements.
ESCAGENETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended December 31,
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1998 1997
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Miscellaneous revenue $ 0 $ 0
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Operating expenses:
Accounting and legal 16,000 3,000
General and administrative 2,000 3,000
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Total expenses 18,000 6,000
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Net loss (18,000) (6,000)
Accumulated deficit, beginning of period (195,000) (183,000)
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Accumulated deficit, end of period $(213,000) $(189,000)
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Net loss per share $ (0.00) $ (0.00)
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Weighted average common shares outstanding 73,402,516 73,402,516
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See note to financial statements.
ESCAGENETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended December 31,
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1998 1997
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Cash flows from operating activities:
Net loss $(18,000) $(6,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Changes in operating assets and liabilities:
Accounts payable 10,000
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Net cash used in operating activities (8,000) (6,000)
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Net cash flows provided by financing activities from
advances from Genesee Holdings, Inc. 11,000 10,000
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Net increase in cash 3,000 4,000
Cash at beginning of period 1,000 0
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Cash at end of period $ 4,000 $ 4,000
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See note to financial statements.
ESCAGENETICS CORPORATION AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIODS ENDED DECEMBER 31, 1998 AND 1997
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1. Unaudited information
The consolidated financial statements for the three month periods ended
December 31, 1998 and 1997 are unaudited and reflect all adjustments
which are, in the opinion of management, necessary for the fair
presentation of the financial position and operating results for the
periods presented. Certain footnote disclosures normally included with
financial statements prepared in accordance with generally accepted
accounting principles have been omitted from these consolidated financial
statements. Accordingly, these consolidated financial statements should
be read in conjunction with the September 30, 1998 audited consolidated
financial statements and notes thereto included in the Company's annual
report on Form 10-KSB for the year ended September 30, 1998.
ITEM 2 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations
Effective as of August 22, 1996 the Company was reorganized pursuant to a
plan of reorganization that was confirmed by the US Bankruptcy Court. Since
the reorganization date, the Company has adopted a September 30 fiscal year.
The Company has had no revenues from operations since the reorganization
date. The Company does not plan to continue the business activities that it
previously conducted. It plans to pursue a business combination or other
strategic transaction. No candidate for such a transaction has been
identified. The Company believes its status as a public company may be
attractive to a private company wishing to avoid an initial public offering
but there is no guarantee that a business combination or other strategic
transaction will be consummated.
The Company expects to fund its expenses during fiscal 1999 with advances
from its majority shareholder, Genesee Holdings, Inc. ("Holdings"). These
advances are expected to total approximately $30,000 during fiscal 1999. The
Company expects Holdings to continue to fund its expenses until a business
combination or other strategic transaction is consummated. There is no
guarantee that the Company is a viable party for a business combination or
other strategic transaction. If a business combination or other strategic
transaction is not consummated in a timeframe suitable to Holdings or cannot
be consummated due to excessive cost or for any other reason, Holdings will
cease to advance funds to the Company.
The Company has no employees and no fixed assets. The Company does not
anticipate hiring any employees or purchasing any assets until such time as a
business combination or other strategic transaction is consummated or is
imminent.
PART II
ITEM 1 -- Legal Proceedings
None.
ITEM 2 -- Changes in Securities and Use of Proceeds
None.
ITEM 3 -- Defaults Upon Senior Securities
None.
ITEM 4 -- Submission of Matters to a Vote of Security Holders
On October 13, 1998, the holder of 66,060,000 shares of common stock of the
Company, constituting approximately 90 percent of the outstanding shares of
common stock of the Company as of that date, executed a stockholder consent
for the purpose of amending the Restated Certificate of Incorporation of the
Company. The amendment modified the provisions applicable to the Company's
stock. Notice of the stockholder consent was sent on November 20, 1998 to
the holders of record of common stock. Under the Company's Restated
Certificate of Incorporation and Delaware law, the stockholder consent
constitutes
action by the stockholders of the Company as if such action were taken at a
meeting of the stockholders of the Company.
ITEM 5 -- Other Items
None.
ITEM 6 -- Exhibits and Reports on Form 8-K
(a) Exhibits
3 Restated Certificate of Incorporation
27.1 Financial Data Schedule
(b) Forms 8-K
No reports on Form 8-K were filed during the quarter ended December 31, 1998.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
ESCAGENETICS CORPORATION
By /s/ Michelle Kline
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Michelle Kline
President and Treasurer
(Principal Executive Officer and
Principal Financial Officer)
Dated: 3/17/99
EXHIBIT 3
RESTATED CERTIFICATE OF INCORPORATION
OF
ESCAGENETICS CORPORATION
A STOCK CORPORATION
I. NAME
The name of the corporation is ESCAgenetics Corporation.
II. DURATION
The corporation is organized under the General Corporation Law of
Delaware and shall have perpetual existence.
III. REGISTERED OFFICE AND AGENT
The corporation's registered office in the state of Delaware shall be
located at 1013 Centre Road, in the City of Wilmington, County of New Castle,
Zip Code 19805. The registered agent in charge thereof shall be United States
Corporation Company.
IV. PURPOSE
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the laws of the State
of Delaware.
V. STOCK AND STOCKHOLDERS
5.1 The aggregate number of shares of stock that the corporation is
authorized to issue is One Hundred and One Million (101,000,000), consisting
of One Hundred Million (100,000,000) shares of Common Stock with a par value
of One-One Hundredth of One Cent ($.0001) per share (the "Common Stock") and
One Million (1,000,000) shares of Preferred Stock with a par value of One
Cent ($.01) per share (the "Preferred Stock").
5.1.1 PREFERRED STOCK
The Preferred Stock may be issued in one or more series at
such time or times and for such consideration or considerations as the board
of directors may determine. Each series shall be so designated as to
distinguish the shares thereof from the shares of all other series and
classes. Except as may be expressly provided in this Certificate of
Incorporation, including any certificate of designations for a series of
Preferred Stock, different series of Preferred Stock shall not be construed
to constitute different classes of shares for the purpose of voting by
classes.
The board of directors is expressly authorized, subject to
the limitations prescribed by law and the provisions of this Certificate of
Incorporation, to provide for
the issuance of all or any shares of the Preferred Stock in one or more
series, each with such designations, preferences, voting powers (or no voting
powers), relative, participating, optional or other special rights and
privileges and such qualifications, limitations or restrictions thereof as
shall be stated in the resolution or resolutions adopted by the board of
directors to create such series, and a certificate of designations setting
forth a copy of said resolution or resolutions shall be filed in accordance
with the General Corporation Law of the State of Delaware. The authority of
the board of directors with respect to each such series shall include without
limitation of the foregoing the right to specify the number of shares of each
such series and to authorize an increase or decrease in such number of shares
and the right to provide that the shares of each such series may be: (i)
subject to redemption at such time or times and at such price or prices; (ii)
entitled to receive dividends (which may be cumulative or non-cumulative) at
such rates, on such conditions, and at such times, and payable in preference
to, or in such relation to, the dividends payable on any other class or
classes or any other series; (iii) entitled to such rights upon the
dissolution of, or upon any distribution of the assets of, the corporation;
(iv) convertible into, or exchangeable for, shares of any other class or
classes of stock, or of any other series of the same or any other class or
classes of stock of the corporation at such price or prices or at such rates
of exchange, and with such adjustments, if any; (v) entitled to the benefit
of such limitations, if any, on the issuance of additional shares of such
series or shares of any other series of Preferred Stock; or (vi) entitled to
such other preferences, powers, qualifications, rights and privileges, all as
the board of directors may deem advisable and as are not inconsistent with
law and the provisions of this Certificate of Incorporation.
5.1.2 COMMON STOCK
(a) RELATIVE RIGHTS OF PREFERRED STOCK AND COMMON STOCK.
All preferences, voting powers, relative, participating, optional or other
special rights and privileges, and qualifications, limitations, or
restrictions of the Common Stock are expressly made subject and subordinate
to those that may be fixed with respect to any shares of the Preferred Stock.
(b) VOTING RIGHTS. Except as otherwise required by law or
this Certificate of Incorporation, including any certificate of designations
for a series of Preferred Stock, each holder of Common Stock shall have one
vote in respect of each share of stock held by him of record on the books of
the corporation for the election of directors and on all matters submitted to
a vote of stockholders of the corporation.
(c) DIVIDENDS. Subject to the preferential rights of the
Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive, when and if declared by the board of directors, out of the assets of
the corporation which are by law available therefor, dividends payable either
in cash, in property or in shares of capital stock.
(d) DISSOLUTION, LIQUIDATION OR WINDING UP. In the event
of any dissolution, liquidation or winding up of the affairs of the
corporation, after distribution in
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full of the preferential amounts, if any, to be distributed to the holders of
shares of the Preferred Stock, holders of Common Stock shall be entitled,
unless otherwise provided by law or this Certificate of Incorporation,
including any certificate of designations for a series of Preferred Stock, to
receive all of the remaining assets of the corporation of whatever kind
available for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
5.2 Stockholders of the corporation shall not have the right to
cumulate votes with respect to elections of directors in the manner
prescribed by Title 8, Section 214, of the General Corporation Law of
Delaware.
5.3 A quorum shall exist at any meeting of stockholders if a majority
of the votes entitled to be cast is represented in person or by proxy. In the
case of any meeting of stockholders that is adjourned more than once because
of the failure of a quorum to attend, those who attend the third convening of
such meeting, although less than a quorum, shall nevertheless constitute a
quorum for the purpose of electing directors, provided that the percentage of
shares represented at the third convening of such meeting shall not be less
than one-third of the shares entitled to vote.
5.4 Except in circumstances where special stockholder voting
requirements are prescribed by applicable law, any contract, transaction, or
act of the corporation or of any director or officer of the corporation that
shall be authorized, approved or ratified by the affirmative vote of a
majority of shares shall, insofar as permitted by law, be as valid and as
binding as though ratified by every stockholder of the corporation.
5.5 No stockholder of the corporation shall have, solely by reason of
being a stockholder, any preemptive or preferential right or subscription
right to any stock of the corporation or to any obligations convertible into
stock of the corporation, or to any warrant or option for the purchase
thereof, except to the extent provided by written agreement with the
corporation.
5.6 Special meetings of the stockholders for any purpose or purposes
may be called at any time only by a majority of the Board of Directors or the
Chairman of the Board (if one be appointed) or the President or one or more
stockholders holding not less than twenty-five percent (25%) of all the
shares entitled to be cast on any issue proposed to be considered at that
meeting.
5.7 The Board of Directors shall have the authority to issue shares of
the capital stock of the corporation and the certificates therefor subject to
such transfer restrictions and other limitations as it may deem necessary to
promote compliance with applicable federal and state securities laws, and to
regulate the transfer thereof in such manner as may be calculated to promote
such compliance or for any other reasonable purpose.
VI. BOARD OF DIRECTORS
6.1 The number of directors of the corporation shall be fixed as
provided in the Bylaws and may be changed from time to time by amending the
Bylaws.
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6.2 The election of directors need not be by written ballot unless the
Bylaws so provide.
6.3 Subject to the limitations of the General Corporation Law of
Delaware, and subject to the power of the stockholders of the corporation to
change or repeal the Bylaws, the Board of Directors is expressly authorized
to make, amend, or repeal the Bylaws of the corporation unless the
stockholders in adopting, amending or repealing a particular bylaw have
provided expressly that the Board of Directors may not amend or repeal that
bylaw.
VII. INDEMNIFICATION
7.1 The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such
action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his or her conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith and
in a manner in which he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his or her conduct
was unlawful.
7.2 The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by him or her in connection with the defense or settlement of such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his or her duty to
the corporation unless and only to the extent that the Court of Chancery or
the court in which such action, suit or proceeding was brought shall
determine upon application that, despite the adjudication of liability but in
view of
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all circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery or such other
court shall deem proper.
7.3 To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 7.1, and 7.2, or in
defense of any claim, issue or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by him or her in connection therewith.
7.4 Any indemnification under Section 7.1 or 7.2 (unless ordered by a
court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in Section 7.1 or 7.2. Such
determination shall be made (a) by the Board of Directors by a majority vote
of a quorum consisting of directors who were not parties to such action, suit
or proceeding, or (b) if such a quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (c) by the stockholders.
7.5 Expenses (including attorneys' fees) incurred by an officer of
director in defending a civil or criminal action, suit or proceeding may be
paid by the corporation in advance of the final disposition of such action,
suit or proceeding as authorized in the manner provided in Section 7.4 upon
receipt of an undertaking by or on behalf of such officer or director to
repay such amount if it should be ultimately determined that such person is
not entitled to be indemnified by the corporation as authorized in this
Article or otherwise. Such expenses incurred by other employees and agents
shall be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
7.6 The indemnification and advancement of expenses provided by or
granted pursuant to the other Sections of this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in
his or her official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person. The indemnification
powers of the corporation shall be as broad as is allowed under applicable
law.
7.7 Upon the majority vote of a quorum of the Board of Directors, the
corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer,
trustee, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
or her and incurred by him or her in any such capacity, or arising out of his
or her status as such, whether or not the corporation shall have indemnified
him or her against such liability under the provisions of this Article.
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VIII. DIRECTOR LIABILITY
To the fullest extent permitted by the General Corporation Law of
Delaware, as it exists on the date hereof or may hereafter be amended, a
director of this corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. Any amendment to or repeal of this Article shall not
adversely affect a director of the corporation with respect to any conduct of
such director occurring prior to such amendment or repeal.
IX. MISCELLANEOUS
9.1 Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a
summary way of this corporation or of any creditor or stockholder thereof or
on the application of any receiver or receivers appointed for this
corporation under the provisions of section 291 of Title 8 of the Delaware
Code or on the application of trustees in dissolution or of any receiver or
receivers appointed for this corporation under the provisions of section 279
of Title 8 of the Delaware Code, order a meeting of the creditors or
corporation, as the case may be, to be summoned in such manner as the said
court directors. If a majority in number representing three-fourths in value
of the creditors or class of creditors, and/or of the stockholders or class
of stockholders of this corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders,
of this corporation, as the case may be, and also on this corporation.
9.2 Except as otherwise provided in this Certificate, as amended from
time to time, the corporation reserves the right to amend, alter, change, or
repeal any provision contained in this Certificate in any manner now or
hereafter prescribed or permitted by statute. All rights, powers, privileges
and discretionary authority granted or conferred upon stockholders or
directors in this Certificate are granted subject to this reservation. A
stockholder of the corporation does not have a vested property right
resulting from any provision of this Certificate of Incorporation.
9.3 The corporation shall have authority to correct clerical errors in
any documents filed with the Secretary of State of Delaware, including this
Certificate or any amendments hereto, without the necessity of special
stockholder approval of such corrections.
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