UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: September 30, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from: _____________ to _____________
Commission File No.: 000-28865
AMINCOR, INC.
(Exact name of registrant as specific in its charter)
Nevada 88-0376372
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1350 Avenue of the Americas, 24th Floor
New York, NY 10019
(Address of Principal Executive Offices)
(347) 821-3452
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has 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 [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "small
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of November 30, 2010, there were 7,478,409 shares of the Registrant's Class A
common stock and 21,176,262 shares of the Registrant's Class B common stock
outstanding.
EXPLANATORY NOTE
We are filing this Amendment No. 1 to our Quarterly Report on Form 10-Q as
of and for the three and nine months ended September 30, 2010 to (1)
include a combined balance sheet as of December 31, 2009 that was omitted
from the Form 10-Q originally filed on November 30, 2010, and (2) correct
an error in the amount of debt owed to related parties converted into
equity that was reported in the Form 10-Q, as originally filed.
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION................................................ 3
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)..................................... 3
CONSOLIDATED OR COMBINED CONDENSED BALANCE SHEETS.................... 3
COMBINED CONDENSED STATEMENTS OF OPERATIONS.......................... 4
CONSOLIDATED OR COMBINED CONDENSED STATEMENTS OF STOCKHOLDERS'
DEFICIT.............................................................. 5
COMBINED CONDENSED STATEMENTS OF CASH FLOWS.......................... 6
NOTES TO CONSOLIDATED OR COMBINED CONDENSED FINANCIAL STATEMENTS..... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS................................................22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...........22
ITEM 4. CONTROLS AND PROCEDURES..............................................23
PART II - OTHER INFORMATION...................................................23
ITEM 1. LEGAL PROCEEDINGS....................................................23
ITEM 1A. RISK FACTORS.........................................................23
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS..........23
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................................23
ITEM 5. OTHER INFORMATION....................................................23
ITEM 6. EXHIBITS.............................................................23
SIGNATURES....................................................................24
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMINCOR, INC. AND SUBSIDIARY
CONSOLIDATED OR COMBINED CONDENSED BALANCE SHEETS
September 30, December 31,
2010 2009
------------ ------------
(consolidated, (combined,
unaudited, audited)
restated)
ASSETS
CURRENT ASSETS:
Cash $ 22,895 $ 11,725
Due from factor - related party 5,934,927 2,448,315
Inventory 1,300,133 1,440,385
Prepaid expenses and other current assets 154,402 77,652
------------ ------------
TOTAL CURRENT ASSETS 7,412,357 3,978,077
------------ ------------
Property and equipment - net 362,366 393,104
Security deposits 306,667 216,667
------------ ------------
TOTAL ASSETS $ 8,081,390 $ 4,587,848
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 2,954,455 $ 1,501,581
Loan payable - related party 7,106,257 4,258,720
Accrued rent - related party 1,320,000 960,000
Accrued expenses and other current liabilities 848,067 193,860
------------ ------------
TOTAL CURRENT LIABILITIES 12,228,779 6,914,161
------------ ------------
STOCKHOLDERS' DEFICIT:
Convertible preferred stock: $0.001 par value; 3,000,000 shares
authorized, 1,752,823 and -0- shares issued and outstanding
as of September 30, 2010 and December 31, 2009, respectively 1,753 --
Common stock - Class A; $0.001 par value; 22,000,000 shares
authorized, 7,484,813 and 14,126,820 shares issued and outstanding
as of September 30, 2010 and December 31, 2009, respectively 7,485 14,127
Common stock - Class B; $0.001 par value; 40,000,000 shares
authorized, 21,176,262 and -0- shares issued and outstanding
as of September 30, 2010 and December 31, 2009, respectively 21,176 --
Additional paid-in capital 13,090,663 13,106,950
Accumulated deficit (17,268,466) (15,447,390)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIT (4,147,389) (2,326,313)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 8,081,390 $ 4,587,848
============ ============
The accompanying notes are an integral part of these consolidated or
combined condensed financial statements.
3
AMINCOR, INC. AND SUBSIDIARY
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
2010 2009 2010 2009
------------ ------------ ------------ ------------
(Restated) (Restated)
REVENUES: $ 2,813,166 $ 2,069,584 $ 8,514,015 $ 7,725,829
COST OF SALES 2,953,500 2,706,316 7,843,618 8,149,160
------------ ------------ ------------ ------------
Gross profit (loss) (140,334) (636,732) 670,397 (423,331)
------------ ------------ ------------ ------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 972,059 314,157 1,775,890 1,104,251
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (1,112,393) (950,889) (1,105,493) (1,527,582)
INTEREST EXPENSE - RELATED PARTIES 197,303 1,709,733 715,583 4,169,071
------------ ------------ ------------ ------------
NET LOSS $ (1,309,696) $ (2,660,622) $ (1,821,076) $ (5,696,653)
============ ============ ============ ============
NET LOSS PER SHARE:
Basic and diluted $ (0.04) $ (0.19) $ (0.06) $ (0.40)
============ ============ ============ ============
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
Basic and diluted 30,971,388 14,126,820 29,189,177 14,126,820
============ ============ ============ ============
The accompanying notes are an integral part of these consolidated or
combined condensed financial statements
4
AMINCOR, INC. AND SUBSIDIARY
CONSOLIDATED OR COMBINED CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT
(RESTATED)
Convertible Common Stock - Common Stock -
Preferred Stock Class A Class B Additional
---------------- ------------------ ------------------ Paid-in Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit Total
------ ------ ------ ------ ------ ------ ------- ------- -----
Combined balances at
January 1,2009 (Audited) -- $ -- 14,126,820 $14,127 -- $ -- $ 362,323 $ (8,031,589) $(7,655,139)
Net loss for the nine
months ended September
30, 2009 -- -- -- -- -- -- -- (5,696,653) (5,696,653)
--------- ------ ---------- ------- ---------- ------- ----------- ------------ -----------
Combined balances at
September 30, 2009
(Unaudited) -- -- 14,126,820 $14,127 -- -- 362,323 (13,728,242) (13,351,792)
========= ====== ========== ======= ========== ======= =========== ============ ===========
Balances at January 1,
2010 (Audited, restated) -- -- 14,126,820 14,127 -- -- 13,106,950 (15,447,390) (2,326,313)
========= ====== ========== ======= ========== ======= =========== ============ ===========
Issuance of preferred
and common stock to
investors with
underlying interests
in Hammond Investments,
Ltd. and Capstone
Special Purpose
Fund L.P. 1,752,823 1,753 -- -- 21,176,262 21,176 (22,929) -- --
Retirement of common
stock to achieve parity
between among investors
with underlying
interests in Hammond
Investments, Ltd. and
Capstone Special
Purpose Fund, L.P. -- -- (7,056,856) (7,057) -- -- 7,057 -- --
Common stock reissued
from above retirements -- -- 413,249 413 -- -- (413) -- --
Issuance of common stock
in share exchange with
Tulare Holdings, Inc. -- -- 1,600 2 -- -- (2) -- --
Net loss for the nine
months ended September
30, 2010 -- -- -- -- -- -- -- (1,821,076) (1,821,076)
--------- ------ ---------- ------- ---------- ------- ----------- ------------ -----------
Balances at September
30, 2010 (Unaudited) 1,752,823 $1,753 7,484,813 $ 7,485 21,176,262 $21,176 $13,090,663 $(17,268,466) $(4,147,389)
========= ====== ========== ======= ========== ======= =========== ============ ===========
The accompanying notes are an integral part of these consolidated or
combined condensed financial statements
5
AMINCOR, INC. AND SUBSIDIARY
COMBINED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
-----------------------------------
2010 2009
------------ ------------
(restated)
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ (1,821,076) $ (5,696,653)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 82,550 70,551
Change in operating assets and liabilities:
Inventory 140,252 (153,894)
Prepaid expenses and other current assets (76,750) (583,500)
Security deposits (90,000) (90,000)
Accrued interest - related party 318,172 5,684,391
Accrued rent - related party 360,000 360,000
Accounts payable and accrued expenses 2,107,081 992,488
------------ ------------
Net cash provided by operating activities 1,020,229 583,383
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment (51,812) (73,798)
------------ ------------
Net cash used in investing activities (51,812) (73,798)
------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES:
Due from factor - related party - net (3,486,612) (5,929,046)
Net repayment/borrowing from loan - related party 2,529,365 5,400,271
------------ ------------
Net cash used in financing activities (957,247) (528,775)
------------ ------------
Net increase (decrease) in cash 11,170 (19,190)
CASH - beginning of period 11,725 22,968
------------ ------------
CASH - end of period $ 22,895 $ 3,778
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 397,411 $ 2,110,889
============ ============
Taxes $ -- $ --
============ ============
The accompanying notes are an integral part of these consolidated or
combined financial statements.
6
AMINCOR, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED OR COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. NATURE OF BUSINESS AND HISTORY
Amincor, Inc. ("Amincor") was incorporated under the laws of the State of Nevada
on October 8, 1997 under the name of GSE Group, Inc. On October 20, 1997, the
Company changed its name to Global Stock Exchange Corp., on April 18, 2000 to
Joning Corp. and on February 2, 2010 to Amincor, Inc.
Amincor had no business activities from July 2000 to January 2010. On January
28, 2010 Amincor entered into letters of intent to acquire the outstanding stock
of seven operating companies ("Prospective Subsidiaries").
Amincor, under one of the letters of intent, acquired all of the issued and
outstanding shares of Tulare Holdings, Inc."Tulare Holdings") on August 3, 2010
in exchange for 1,600 shares of the Company's restricted Class A shares. Tulare
Holdings' business is conducted through its wholly-owned subsidiary, Tulare
Frozen Foods, LLC. Tulare Holdings and Tulare Frozen Foods, LLC are collectively
referred to as "Tulare." Tulare is in the business of preparing frozen
vegetables (primarily spinach) from produce purchased from growers which are
sold to the food service industry under a private label.
Amincor and Tulare are collectively referred to as the "Company."
In addition to Tulare, the other six separate letters of intent relate to
proposed acquisitions of the following companies:
Tyree Holdings Corp. ("Tyree")
Epic Sports International, Inc. ("Epic')
Baker's Pride, Inc. ("BPI")
Masonry Supply Holding Corp. ("Masonry")
Whaling Distributors, Inc. ("Whaling")
Allentown Metal Works, Inc. ("AMW")
Each letter of intent requires that the following conditions be met before
completing a share exchange under a definitive agreement:
a) A complete and satisfactory due diligence review by the Company of the
books and records of the prospective subsidiary,
b) The occurrence of no material changes in the Company's business or
capitalization between the date of signing the Definitive Agreement
and the date of closing,
c) The completion of audited financial statements of the prospective
subsidiary according to the rules of the United States Securities and
Exchange Commission,
d) Approval of the share exchange by the Company's Board of Directors,
and
7
e) Confirmation that the representations and warranties of the
prospective subsidiary are true and accurate in all material aspects.
After the completion of the due diligence reviews, the letters of intent to
acquire Whaling and AMW were terminated by the Company.
The acquisition of the Tulare frozen vegetable business was precipitated by
defaults under a factoring agreement and a credit facility, both of which had
provisions giving the factor and lender, respectively Capstone Business Credit,
LLC and Capstone Capital Group I, LLC, the right to foreclose on the collateral
securing the factoring agreement and credit facility. Capstone Business Credit,
LLC and Capstone Capital Group I, LLC are related to each other by common
controlling ownership.
Tulare Frozen Foods, LLC was formed in October 2007 and commenced its business
operations of frozen produce processing and marketing in January 2008.
Subsequently, Tulare Holdings, Inc. was incorporated in December 2008 with
Hammond Investments, Ltd. ("Hammond") a wholly owned subsidiary of Capstone
Cayman Special Purpose Fund, LP ("CCSPF") owning 75% of its outstanding shares,
and Capstone Special Purpose Fund L.P. ("CSPF"), owning 25% of its outstanding
shares. The ownership of Tulare Frozen Foods, LLC was thereafter transferred to
Tulare Holdings.
The controlling management of Hammond and CSPF are officers, directors, and
shareholders of Amincor and are also officers and directors of Tulare Holdings.
In those capacities, they have exerted significant influence on the decision
making of both Amincor and Tulare Holdings. Therefore, Amincor's acquisition of
Tulare Holdings' stock has been accounted for as an exchange of shares between
entities under common control, using the pooling-of-interests method, in
accordance with generally accepted ccounting principles ("GAAP").
A condensed combined unaudited summary of operations for the years ended
September 30, 2010 and 2009, and a condensed combined unaudited balance sheet as
of September 30, 2010 are presented below.
8
The following is the summary statements of combined operations for the nine
months ended September 30, 2010 and 2009:
For the Nine Months Ended September 30, 2010
----------------------------------------------------------
Amincor Tulare Combined
------------ ------------ ------------
NET REVENUES $ -- $ 8,514,015 $ 8,514,015
COST OF SALES -- 7,843,618 7,843,618
------------ ------------ ------------
Gross profit -- 670,397 670,397
------------ ------------ ------------
SELLING AND GENERAL ADMINISTRATIVE
EXPENSES 301,000 1,474,890 1,775,890
------------ ------------ ------------
LOSS FROM OPERATIONS (301,000) (804,493) (1,105,493)
INTEREST EXPENSE (INCOME) -
RELATED PARTIES (16,547) 732,130 715,583
------------ ------------ ------------
Net loss $ (284,453) $ (1,536,623) $ (1,821,076)
============ ============ ============
Net loss per share:
Basic and diluted $ (0.01) $ (0.04) $ (0.05)
============ ============ ============
Weighted-average number of shares outstanding:
Basic and diluted 29,189,177 29,189,177 29,189,177
============ ============ ============
For the Nine Months Ended September 30, 2009
----------------------------------------------------------
Amincor Tulare Combined
------------ ------------ ------------
NET REVENUES $ -- $ 7,725,829 $ 7,725,829
COST OF SALES -- 8,149,160 8,149,160
------------ ------------ ------------
Gross loss -- (423,331) (423,331)
------------ ------------ ------------
SELLING AND GENERAL ADMINISTRATIVE
EXPENSES -- 1,104,251 1,104,251
------------ ------------ ------------
LOSS FROM OPERATIONS -- (1,527,582) (1,527,582)
INTEREST EXPENSE - RELATED PARTIES -- 4,169,071 4,169,071
------------ ------------ ------------
Net loss $ -- $ (5,696,653) $ (5,696,653)
============ ============ ============
Net loss per share:
Basic and diluted $ -- $ (0.40) $ (0.40)
============ ============ ============
Weighted-average number of shares outstanding:
Basic and diluted 14,126,820 14,126,820 14,126,820
============ ============ ============
9
The following is the summary statements of combined balance sheets as of
December 31, 2009:
Amincor Tulare Combined
------------ ------------ ------------
Current assets $ -- $ 3,978,077 $ 3,978,077
------------ ------------ ------------
Total assets $ -- $ 4,587,848 $ 4,587,848
------------ ------------ ------------
Current liabilities $ -- $ 6,914,161 $ 6,914,161
------------ ------------ ------------
Total liabilities $ -- $ 6,914,161 $ 6,914,161
------------ ------------ ------------
Stockholders' deficit $ -- $ (2,326,313) $ (2,326,313)
------------ ------------ ------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION OR COMBINATION
The condensed consolidated or combined financial statements include the accounts
of the Company and its wholly owned subsidiary Tulare Holdings. All significant
intercompany transactions have been eliminated in the consolidation or
combination.
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated or combined financial
statements of the Company have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
note disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles ("GAAP") have been
condensed or omitted pursuant to those rules and regulations, although the
Company believes that the disclosures are adequate to make the information not
misleading. In the opinion of management, all adjustments necessary for a fair
statement of the results of operations and financial position for the periods
presented have been reflected as required Regulation S-X. The results of
operations for the interim period presented is not necessarily indicative of the
results of operations to be expected for the year. These condensed consolidated
or combined financal statements should be read in conjunction with the Form
10-12G filing (as amended) dated October 4, 2010 which includes the audited
financial statements for the years ended December 31, 2009 and 2008.
USE OF ESTIMATES
The preparation of the condensed consolidated or combined financial statements
in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the condensed unaudited
consolidated or combined financial statements, and the reported amounts of
revenues and expenses during the reporting period. Significant estimates
include, but are not limited to, depreciation and amortization, and inventory
obsolescence. Actual results could differ from these estimates.
INVENTORY
Inventory consists of frozen produce and related packaging materials and is
valued at the lower of cost (determined by the first-in, first out method) or
market.
10
REVENUE RECOGNITION
Revenue is recognized upon shipment of the product. Allowances, credits and
other adjustments are recorded in the period the related sales occur.
INCOME TAXES
The Company accounts for income taxes in accordance with using the liability
method, which provides for an asset and liability approach to accounting for
income taxes. Under this method, deferred tax assets and liabilities are
recorded for tax effects of temporary differences between the financial
reporting and tax basis of assets and liabilities, and measured using the
current tax rates and laws that are expected to be in effect when the underlying
assets or liabilities are anticipated to be recovered or settled. The Company
records a valuation allowance based on whether its deferred tax assets will,
more likely than not, result in any future tax benefits.
GAAP requires that, in applying the liability method, the financial statement
effects of an uncertain tax position be recognized based on the outcome that is
more likely than not to occur. Under this criterion the most likely resolution
of an uncertain tax position should be analyzed based on technical merits and on
the outcome that will likely be sustained under examination.
3. PER SHARE INFORMATION
Basic earnings per share of common stock("Basic EPS") is computed by dividing
net income by the weighted-average number of shares of common stock outstanding.
Diluted earnings per share of common stock ("Diluted EPS") is computed by
dividing net income by the weighted-average number of shares of common stock,
and dilutive common stock equivalents. GAAP requires the presentation of Basic
EPS and Diluted EPS on the face of the Company's Statements of Operations. There
were no common stock equivalents for the three and nine months ended
September30, 2010 and 2009.
The following table sets forth the computation of basic and diluted per share
information:
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------ -----------------------------
2010 2009 2010 2009
------------ ------------ ------------ ------------
NUMERATOR:
Net loss: $ (1,309,696) $ (2,660,622) $ (1,821,076) $ (5,696,653)
DENOMINATOR:
Weighted-average shares of
common stock outstanding 30,971,388 14,126,820 29,189,177 14,126,820
============ ============ ============ ============
NET LOSS PER SHARE:
Basic and diluted $ (0.04) $ (0.19) $ (0.06) $ (0.40)
============ ============ ============ ============
11
4. RELATED PARTIES AND EQUITY TRANSACTIONS
On December 31, 2009, Tulare converted $15,403,347 of a related party loan and
accrued interest due to Capstone Capital Group I, LLC ("CCGI) into additional
equity of Tulare. It was subsequently determined that the actual amount
converted was $12,744,627, rather than $15,403,347. Therefore, Tulare has
recorded a reduction of $2,658,720 to additional paid-in capital and a
corresponding increase to loan payable - related party as of December 31, 2009
to correct this error and reflect this correction as a restatement of the
December 31, 2009 combined balance sheet. As a result of the increase in the
loan payable - related party, interest expense increased on the combined
statements of operations for the three and nine months ended September 30, 2010
by $106,057 and $318,172, respectively.
As previously noted Tulare was acquired in accordance with the provisions of a
share exchange agreement under which Amincor received all of Tulare's issued and
outstanding common stock in exchange for 1,600 shares of the Company's
restricted Class A common stock.
Prior to the acquisition of Tulare, the Company issued 21,176,262 restricted
shares of Class B non-voting common stock and 1,752,823 shares of preferred
stock to the investors in CCSPF and CSPF as payment-in-kind for their interests
in such entities. As a result of these share issuances to the investors in CCSPF
and CSPF, the individual investors underlying proportionate interest in Amincor
became equivalent to their underlying proportionate interest in the assets
(primarily loans receivable) of Hammond and CSPF. In addition, 7,056,856 shares
of Class A common stock owned by the principals of Amincor were retired. The
calculation of the number of shares retired was subsequently refined and 413,249
additional shares were issued.
Interest and related fees incurred to related parties amounted to approximately
$108,000 and $397,000 for the three and nine months ended September 30, 2010,
respectively.
5. LIQUIDITY
The Company incurred losses and negative cash flows from operations for the nine
months ended September 30, 2010. Tulare has suffered from a lack of liquidity
because the age of its plant and equipment which are costly to maintain. These
additional costs have been reflected in cost of sales in the accompanying
combined statements of operations. In 2011, Tulare managements' intention is to
raise sufficient capital to upgrade the plant and equipment, allowing Tulare to
be more competitive within the industry. In addition, Tulare is currently
implementing a plan to increase working capital. This will allow Tulare to
diversify its product base through the importation and distribution of frozen
vegetables, thereby improving its liquidity. Tulare will continue to utilize its
existing purchase order financing agreement while it negotiates with new asset
based lenders that specialize in financing agricultural businesses.
As described in Note 6 Subsequent Events, the Company entered into four separate
stock purchase agreements which will significantly affect the Company's
operations on an ongoing basis.
12
Management is currently seeking to raise additional equity to support the growth
of the Company. Although management is confident that it will succeed in raising
additional working capital and equity for the Company, there are no assurances
that they will be successful in their endeavors. However, management believes
they have sufficient access to working capital to sustain operations through
September 30, 2011.
6. SUBSEQUENT EVENTS
On October 18, 2010, the Company exercised its rights under the remaining
letters of intent and entered into stock purchase agreements to purchase all of
the issued and outstanding shares of Baker's Pride Inc. and Masonry Supply
Holding Corp.. and 80% of the issued and outstanding shares of Epic Sports
International, Inc. and 86.3% the issued and outstanding stock of Tyree Holdings
Corp.
On October 26, 2010, Epic entered into a Strategic Alliance Agreement ("Epic
Agreement") with Samsung C&T America, Inc. ("Samsung"). Pursuant to the Epic
Agreement, Samsung has appointed Epic as its exclusive representative for the
sale of certain Epic products which will funded and purchased by Samsung and
sold by Epic to various customers worldwide. Epic agrees to provide sourcing and
design of products, quality control and factory monitoring, as well as promoting
the sale of, and soliciting purchase orders from potential customers. As
compensation for services to be rendered by Epic, Samsung shall pay to Epic a
commission on a monthly basis equal to (i) 21% of the net invoice amount billed
to customers if the gross profit ratio is equal to or greater than 33%, or (ii)
if the gross profit ratio is less than 33%, 21% minus the percentage amount of
the gross profit ratio is less than 33%.
Samsung has the right to purchase certain Epic inventory up to $500,000 on terms
mutually agreed upon by parties. In addition, Epic and Samsung have entered into
a Limited Trademark Sub-License Agreements granting Samsung the exclusive right
to use the Epic trademarks in connection with its duties under the Epic
Agreement. The term of the Epic agreement is through December 31, 2014, unless
earlier terminated as defined in the Epic Agreement, and it can be automatically
renewed for consecutive four year terms unless either party gives written
notice.
Concurrently with the signing of the Epic Agreement, Samsung was given an option
to purchase shares of Epic common stock equal to 10% of the aggregate number of
Epic common shares deemed outstanding as of the close business on the exercise
date. The option is valid until December 31, 2014 at an exercise price of $80
per share.
There were no other significant subsequent events requiring disclosure.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Quarterly Report on Form 10-Q contains both historical and "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements, written, oral or otherwise made, represent the
Company's expectation or belief concerning future events. All statements, other
than statements of historical fact, are or may be forward-looking statements.
For example, statements concerning projections, predictions, expectations,
estimates or forecasts, and statements that describe our objectives, future
performance, plans or goals are, or may be, forward-looking statements. These
forward-looking statements reflect management's current expectations concerning
future results and events and can generally be identified by the use of words
such as "may," "will," "should," "could," "would," "likely," "predict,"
"potential," "continue," "future," "estimate," "believe," "expect,"
"anticipate," "intend," "plan," "foresee" and other similar words or phrases, as
well as statements in the future tense.
Forward-looking statements involve known and unknown risks, uncertainties,
assumptions, and other important factors that may cause our actual results,
performance or achievements to be different from any future results, performance
and achievements expressed or implied by these statements. The following
discussion and analysis should be read in conjunction with our consolidated or
combined financial statements and the related notes thereto and other financial
information contained elsewhere in this Form 10-Q. Readers are cautioned not to
place undue reliance on these forward-looking statements, which reflect
management's opinions only as of the date hereof. We undertake no obligation to
revise or publicly release the results of any revision to these forward-looking
statements. Readers should carefully review the factors described in the Section
entitled "Risk Factors" on our Form 10, as amended, and other documents we file
from time to time with the Securities and Exchange Commission (`SEC').
BUSINESS
Amincor, Inc. (the "Company" or "Registrant") was incorporated under the laws of
the state of Nevada on October 8, 1997 under the name GSE Group, Inc. GSE Group,
Inc. was originally formed to provide consulting services for reverse mergers to
public shell corporations and private companies seeking to gain access to the
public markets. On October 20, 1997, GSE Group, Inc. changed its name to Global
Stock Exchange Corp. and on April 28, 2000, Global Stock Exchange Corp. changed
its name to Joning Corp. On February 2, 2010, Joning Corp. changed its name to
Amincor, Inc. On December 30, 2009, Joning Corp. filed an amendment to its
Articles of Incorporation increasing its authorized capital to 65,000,000 shares
divided into 22,000,000 shares of Class A voting Common Stock par value $0.001,
40,000,000 shares of Class B non-voting Common Stock par value $0.001 and
3,000,000 shares of Preferred Stock par value $0.001. In July 2000, Joning Corp.
ceased its business activities. On March 8, 2002, Joning Corp. filed a
Registration Statement on Form 10-SB under the Securities Exchange Act of 1934
(the "Exchange Act") as a shell company with the purpose of finding a suitable
company for a reverse merger transaction.
Joning Corp. ceased filing periodic reports subsequent to its filing of its Form
10-QSB on October 24, 2004 due to the fact that it had no operational business
or pending business transactions.
On June 2, 2008, Joning Corp. filed a Form 15-12G to terminate its registration
as a reporting Company. The Company remained dormant until January, 2010. On
January 28, 2010, the Company entered into separate letters of intent to acquire
the outstanding stock of the following companies: Allentown Metal Works, Inc.,
14
Baker's Pride, Inc., Epic Sports International, Inc., Masonry Supply Holding
Corp., Tulare Holdings, Inc., Tyree Holdings Corp. and Whaling Distributors,
Inc. (the "Target Companies"). After completion of due diligence, the Letters of
Intent to acquire Allentown Metal Works, Inc. and Whaling Distributors, Inc.
were terminated.
On August 3, 2010, Tulare Holdings, Inc. completed a share exchange transaction
with Amincor pursuant to which Amincor acquired all of the issued and
outstanding shares of Holdings and Holdings became a wholly owned subsidiary of
Amincor.
On October 18, 2010, Amincor entered into Stock Purchase Agreements with each of
Baker's Pride, Inc., Masonry Supply Holding Corp., Tyree Holdings Corp. and Epic
Sports International, Inc., pursuant to which Amincor (i) acquired all of the
issued and outstanding stock of Bakers Pride, Inc. and Masonry Supply Holdings
Corp. and (ii) acquired the majority of the issued and outstanding stock of
Tyree Holdings Corp. and Epic Sports International, Inc. Each transaction is
morefully detailed in the respective Form 8-K for each transaction filed with
the United States Securities and Exchange Commission on October 19, 2010.
INFORMATION REGARDING TULARE HOLDINGS, INC.
BACKGROUND
Tulare Holdings, Inc., ("Tulare Holdings") was incorporated on December 29, 2008
and operates through its wholly owned subsidiary Tulare Frozen Foods, LLC, a
California limited liability company formed on October 5, 2007 which commenced
its operations in frozen produce processing and marketing on January 9, 2008.
Tulare Holdings and Tulare Frozen Foods, LLC are collectively referred to as
"Tulare".
Tulare occupies a 35 acre site, in Lindsay, California, strategically located in
the San Joaquin Valley which provides an abundant supply of locally grown
vegetables for processing. The Tulare site includes 350,000 square feet of
buildings for warehousing, production, and manufacturing, with excess capacity
for future growth and product diversification. Tulare is located within close
proximity to the local railroad, with a rail line on the property premises and
also owns a water rights permit.
Tulare's current product line includes frozen spinach, southern greens,
broccoli, cauliflower, and peppers. These products are available in individual
quick freezing ("IQF") bulk, wet pack cartons, and two and three pound poly bags
for retail and foodservice markets. The Tulare customer base is approximately
80% food service, 15% retail, and five percent industrial. Frozen spinach
currently accounts for 75% of Tulare's volume, southern greens accounts for 20%,
and the remaining five percent consists of sales of broccoli and cauliflower.
Tulare has developed a private label for wet pack spinach, which is sold to
retail food markets. Tulare supplies three pound wet pack spinach to three major
institutional food service distributors, representing 80% of Tulare's annual
sales. Additional market growth is targeted in the packaging of other leafy
greens and peppers by establishing Tulare as the low cost producer.
To better align itself with the competition within its industry Tulare hopes to
expand its current customer base on the east coast by importing frozen fruits
and vegetables from abroad. In addition, Tulare intends to acquire additional
market share associated with a new wet pack pouch design that would better cater
to its foodservice customers and to increase its market share beyond the east
coast to include other regions of the United States and Canada as well.
15
By expanding its presence Tulare seeks to become a frozen food distributor
rather than just a frozen food processor. Management believes that the costs and
associated risks correlated with processing frozen fruit and vegetables
domestically will be mitigated by the shift towards imported produce as well as
costs associated with the lack of diversification of the current product mix.
Tulare intends to accomplish this by expanding their offerings to include value
added products and by building a new state of the art facility to handle
domestic production. In addition, Tulare may seek to acquire a significant food
processing and/or distribution company in an effort to facilitate this goal
should an opportunity to do so be made available.
Tulare requires additional capital to expand and improve its facilities and
equipment and additional personnel to achieve economies of scale needed to
become more profitable. Equipment improvements, including high-speed packaging
lines, expansion into rice, pasta and other products would enable the company to
reduce costs, increase market share, and diversify operations. A diversified
product line is essential, as environmental conditions in any given year can
have a positive or negative impact on a particular crop, and ultimately Tulare's
revenues.
COMPETITION
Tulare's competition is divided into two segments: (1) Name Brands and (2)
Private Labeled frozen fruit and vegetable products. The Name Brand segment
includes larger food processors such as Birds Eye Foods, LLC, which sells
vegetables under the "Birds Eye" brand. The Private Labeled segment includes
smaller food processors that package fruits and vegetables under a supermarket's
in store brand name. Tulare's current competitors are primarily in the Private
Labeled segment of the industry. Tulare's major customer base is found in the
Private Labeled sector. Tulare considers Private Labeled packers as the current
source of competition, with the Name Brand competitors being the future
competition of Tulare. The Private Labeled packer segment is much more segmented
and is generally comprised of smaller, privately owned companies when compared
to the Name Brand segment. There are approximately seven companies that Tulare
deems as its direct competitors, including Seneca Foods Corporation, Patterson
Frozen Foods, Inc. and National Frozen Foods Corporation. Tulare's primary
market is located on the east coast of the United States. Tulare distributes its
products to its end user customer through a broker network.
PERSONNEL
Tulare currently has 13 full time employees and believes that its employee
relations are good. Tulare's executive officers are Mr. James E. Fikkert, who
serves as the President, and Mr. Douglas Hagin, who serves as the Chief
Financial Officer.
SEASONALITY
Tulare's revenues are generally higher in the first and fourth quarters because
its customers typically stock up on products for the holidays and replenish
their inventories after the holidays. Tulare's business is dependent on delivery
of crops from field operations to the plant. The growing season and the level of
rain and availability of water also affect the amount of product available for
processing from field operations adding to the seasonality issues. It is typical
for the facility to run at full capacity during the harvest periods and sell
from inventory during the balance of the year.
16
AMOUNT DUE FROM FACTOR AND INVENTORY
In 2008, in order to have access to immediate funding in order to finance their
working capital needs, Tulare entered into a Discount Factoring Agreement (the
"DFA") with Capstone Business Credit, LLC a Delaware limited liability company
(the "Lender"). Pursuant to the DFA, the Lender, from time to time, purchased
accounts, receivables and other forms of obligations and rights to payments
owing to Tulare from its customers for goods sold or services rendered
(collectively, "Accounts Receivable"). In return for the purchase of these
accounts, receivables and other forms of obligations and rights to payments, the
Lender advanced Tulare 80% of the amount of the Accounts Receivable and took a
security interest of Tulare's assets. The remaining 20% of the Accounts
Receivable was held in a "Reserve Account". The Lender assumed the credit risk,
collected the Accounts Receivable and provided bookkeeping and reporting
services. When the Lender collected a payment from customers, the Lender
deducted its fees and interest from the Reserve Account and advanced the
remaining amounts to Tulare. Tulare paid the Lender a commission of one percent
(1%) for the first sixty (60) days that the Account Receivable was outstanding.
After the first sixty (60) days if the Account Receivable had not been paid, the
commission due to the Lender was one and one half percent (1.5%) for each
additional thirty (30) day period In addition to the fees above, interest of
sixteen percent (16%) per annum (based on a 360 day year) was charged as of the
last day of each month based on the face value of the Accounts Receivable
outstanding. In no event did conversion or interest rates under the DFA exceed
the highest rated permitted under the laws of any applicable jurisdiction.
LIQUIDITY
Over the past two years, Tulare has suffered from a lack of liquidity because
its plant and equipment are costly to maintain due to their age. These
additional costs have been reflected in the costs of sales. In the last quarter
of 2010 and in 2011, it is Tulare's intention to raise enough capital to upgrade
the plant and equipment to a state of the art production facility, allowing
Tulare to be more competitive within the industry. In addition, Tulare is
currently implementing a plan as described below to increase working capital.
This will allow Tulare to diversify its product base through the importation and
distribution of frozen vegetables, thereby improving its liquidity. Tulare will
continue to utilize its existing credit facility while it negotiates with new
asset based lenders that specialize in financing agricultural businesses.
Management has made applications for asset based financing to several banks and
asset based lenders for working capital financing. Under the terms of a typical
asset based financing agreement the lender takes the accounts receivable and
inventory of the borrower as collateral for working capital advances. Although
Management has made efforts to acquire asset based financing over the course of
the 3rd Quarter, there have not been any commitments from any lenders to date
that would indicate such a facility has been secured.
In addition to creating liquidity through a working capital facility secured by
Tulare's current assets, Amincor's management has entered into negotiations with
an investment banking firm to underwrite a private equity investment in the
Company which, if successful, will provide Tulare with the capital to purchase
packaging equipment and make physical plant improvements that will reduce the
cost of operations and increase efficiency thereby improving the liquidity of
Tulare.
Tulare intends to purchase new packaging equipment that will allow it to package
its frozen product in a form other than "wet pack". Management future use of the
product. Management also believes that as a result of an increase in working
capital, volume of sales will increase and that consumers and food service
companies will actively seek out Tulare's products in the new packaging because
17
of its versatility. Conversely, it is believed that the cost of operations will
decrease using the new packaging system as the multiple handling that is current
required of the "wet pack" product will no longer be required. The purchase of
the new packaging equipment requires financing and Management intends to lease
the new equipment purchases to secure such financing the equipment.
Although management is confident that it will succeed in raising additional
working capital and equity for Tulare, there are no assurances that they will be
successful in their endeavors. However, management believes they have sufficient
access to working capital to sustain operations through September 30, 2011.
On October 18, 2010, Amincor entered into Stock Purchase Agreements with each of
Baker's Pride, Inc., Masonry Supply Holding Corp., Tyree Holdings Corp. and Epic
Sports International, Inc., pursuant to which Amincor (i) acquired all of the
issued and outstanding stock of Bakers Pride, Inc. and Masonry Supply Holding
Corp. and (ii) acquired the majority of the issued and outstanding stock of
Tyree Holdings Corp. and Epic Sports International, Inc. Each transaction is
more fully detailed in the respective Form 8-K for each transaction filed with
the United States Securities and Exchange Commission on October 19, 2010.
Management intends to consolidate its financial statements to include these
acquisitions and will more fully detail and disclose the effects of these
transactions on the liquidity and financial position of Amincor in its Form 10-K
and accompanying year end audited financial statements, to be filed for its
fiscal year ending December 31, 2010.
CAPITAL RESOURCES
Tulare will continue to utilize its existing capital allocation from Amincor
while it negotiates with new asset based lenders that specialize in financing
agricultural businesses. The current capital allocation consists of a purchase
order allocation of $2,800,000 and an allocation of capital supported by
accounts receivable. The balance on the Purchase order allocation as of
September 30, 2010 was $4,145,912 of which $16,547 of accrued interest is
included. The current interest rate on this loan is 16% simple interest and the
loan agreement expires on January 17, 2013. As of September 30, 2010, the line
supported by accounts receivable had a reserve balance of $5,934,925 which is
used to pay off the purchase order loan.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2010 AND
2009.
The following table presents the statement of operations for the three month
period ended September 30, 2010 for Amincor, Inc on a consolidated or combined
basis. As Amincor did not have any operating activity for the three months ended
September 30, 2009, the statement of operations of our sole operating subsidiary
Tulare Holdings, Inc. is presented herewith for purposes of comparison.
Amincor's acquisition of Tulare Holdings, Inc.'s stock has been accounted for as
an exchange of shares between entities under common control, using the pooling
of interests method, in accordance with generally accepted accounting principles
("GAAP"). The discussion following the table below is based on these results for
the three month period ended September 30, 2010.
18
For the Three Months Ended
September 30,
-------------------------------
2010 2009
------------ ------------
(unaudited) (unaudited)
restated)
REVENUES $ 2,813,166 $ 2,069,584
COST OF SALES 2,953,500 2,706,316
------------ ------------
Gross profit (loss) (140,334) (636,732)
------------ ------------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 972,059 314,157
------------ ------------
LOSS FROM OPERATIONS (1,112,393) (950,889)
INTEREST EXPENSE - RELATED PARTIES 197,303 1,709,733
------------ ------------
NET LOSS $ (1,309,696) $ (2,660,622)
============ ============
NET SALES
Net sales for the three month period ended September 30, 2010 totaled $2,813,166
compared to $2,069,584 for the three month period ended September 30, 2009, an
increase of $743,582 or approximately 36%. The increase is primarily due to an
increased demand for spinach and greens from its existing customers. Tulare is
currently in its third year of operations and the operations have further
stabilized as far as the production of products which has increase sales since
2009.
COST OF SALES
Cost of sales for the three month period ended September 30, 2010 totaled
$2,953,500 or approximately 105% of net revenue compared to $2,706,316, or 131%
of net revenue for the three month period ended September 30, 2009, an increase
of $247,184 or approximately 9%. The increase in the dollar amount was due to a
higher net revenue figure in 2010 than was seen in 2009. Despite the increase in
dollar amount, cost of revenue as a percent of total sales decreased by 26% due
to increases in manufacturing operating processing associated with the
streamlining of the business.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the three month period ended
September 30, 2010 totaled $972,059, or approximately 35% of net revenue
compared to $314,157, or approximately 15% of net revenue for the three month
period ended September 30, 2009, an increase of $657,902 or approximately 209%.
The increase in selling, general and administrative costs during the three month
period ended September 30, 2010 was primarily due to increased costs of
operating associated with completing the necessary audits to become a public
company. In addition, approximately 10% of Tulare's operating expenses are
estimated to be variable with respect to sales so a lesser increase in operating
expenses was the result of the increase in net revenue
19
LOSS FROM OPERATIONS
Loss from operations for the three month period ended September 30, 2010 totaled
($1,112,393), or approximately (40%) of net revenue, compared to loss from
operations of ($950,889), or approximately (46%) of net revenue for the three
month period ended September 30, 2009, an increase in loss from operations of
$161,504 or approximately 17%. The increase in loss from operations was
primarily due to increases in selling, general and administrative expenses as
noted above.
INTEREST EXPENSE
Interest expense for the three month period ended September 30, 2010 totaled
$197,303 as compared to interest expense of $1,709,733 for the three month
period ended September 30, 2009, a decrease in interest expense of $1,512,430,
or approximately 88%. The decrease in interest expense was due to a debt to
equity conversion of Tulare's purchase order financing loan that took place on
December 31, 2009 which decreased the loan balance due from Tulare to Capstone
Capital Group I, LLC.
NET LOSS
Net loss for the three month period ended September 30, 2010 totaled ($1,309,
696) compared to a net loss of ($2,660,622) for the three month period ended
September 30, 2009, a decrease of $1,049,074 or approximately 39%. The decrease
was primarily due to the aforementioned efficiencies in the cost of sales and
the decrease in the principal balance of the purchase order financing loan
balance, which significantly lowered interest expense in 2010.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
The following table presents the statement of operations for the nine month
period ended September 30, 2010 for Amincor, Inc. on a consolidated or combined
basis. As Amincor did not have any operating activity for the nine months ended
September 30, 2009, the statement of operations of our sole operating subsidiary
Tulare Holdings, Inc. is presented herewith for purposes of comparison.
Amincor's acquisition of Tulare Holdings, Inc.'s stock has been accounted for as
an exchange of shares between entities under common control, using the pooling
of interests method, in accordance with GAAP. The discussion following the table
below is based on these results for the nine month period ended September 30,
2010.
20
For the Nine Months Ended
September 30,
-------------------------------
2010 2009
------------ ------------
(unaudited (unaudited)
restated)
REVENUES $ 8,514,015 $ 7,725,829
COST OF SALES 7,843,618 8,149,160
------------ ------------
Gross profit (loss) 670,397 (423,331)
------------ ------------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,775,890 1,104,251
------------ ------------
LOSS FROM OPERATIONS (1,105,493) (1,527,582)
INTEREST EXPENSE - RELATED PARTIES 715,583 4,169,071
------------ ------------
NET LOSS $ (1,821,076) $ (5,696,653)
============ ============
NET SALES
Net sales for the nine months ended September 30, 2010 totaled $8,514,015
compared to $7,725,829 for the nine months ended September 30, 2009, an increase
of $788,186 or approximately 10%. The increase is primarily due to Tulare's
operations stabilizing in 2010 when compared to its 2009 operations.
COST OF SALES
Cost of sales for the nine months ended September 30, 2010 totaled $7,843,618 or
approximately 92% of net revenue compared to $8,149,160, or approximately 106%
of net revenue for the nine months ended September 30, 2009, a decrease of
$305,542 or approximately 4%. The decrease in the dollar amount was due to a
decrease in warehousing expenses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the nine months ended September
30, 2010 totaled $1,775,890, or approximately 21% of net revenue compared to
$1,104,251, or approximately 14% of net revenue for the nine months ended
September 30, 2009, an increase of $671,639 or approximately 61%. The increase
in selling, general and administrative costs during the nine months ended
September 30, 2010 was primarily due to an increase in sales in 2010 with
respect to 2009. Additional expenses incurred in 2010 were related to the
completion of the necessary audits for the Company's Form 10 filed with the
Securities and Exchange Commission.
21
LOSS FROM OPERATIONS
Loss from operations for the nine months ended September 30, 2010 totaled
($1,105,493), or approximately (13%) of net revenue, compared to loss from
operations of ($1,527,582), or approximately (20%) of net revenue for the nine
month period ended September 30, 2009, a decrease in loss from operations of
$422,089 or approximately 28%. The decrease in loss from operations was
primarily due to the aforementioned increase in sales and the decrease in the
cost of revenue. The decrease in loss from operations was partially offset by
the increase in operating expenses.
INTEREST EXPENSE
Interest expense for the nine months ended September 30, 2010 totaled $715,583
compared to interest expense of $4,169,071 for the nine months ended September
30, 2009, a decrease in interest expense of $3,453,488, or approximately 83%.
The decrease in interest expense was due to a debt to equity conversion of
Tulare's purchase order financing loan that occurred on December 31, 2009 which
decreased the loan balance due from Tulare to Capstone Capital Group I, LLC.
NET LOSS
The net loss for the nine months ended September 30, 2010 totaled ($1,821,076)
compared to a net loss of ($5,696,653) for the nine months ended September 30,
2009, a decrease of $3,875,577 or approximately 68%. The decrease was primarily
attributable to the aforementioned decrease in the purchase order financing loan
balance which significantly lowered interest expense in 2010.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the specified time periods. As of the end of the period covered
by this report, our President and Chief Financial Officer evaluated the
effectiveness of our disclosure controls and procedures pursuant to Exchange Act
Rule 13a-15. Based on the evaluation our President and Chief Financial Officer
concluded that our disclosure controls and procedures are not effective in
timely alerting them to material information required to be included in our
periodic SEC filings and in ensuring that information required to be disclosed
by us in the reports that we file or submit under the Act is accumulated and
communicated to our management, including our President and Chief Financial
Officer, or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting that
occurred during the quarter ended September 30, 2010 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
22
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. (REMOVED AND RESERVED)
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
31.1 Chief Executive Officer's Certificate, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.+
31.2 Chief Financial Officer's Certificate, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.+
32.1 Chief Executive Officer's Certificate, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.+
32.2 Chief Financial Officer's Certificate, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.+
----------
+ Filed Herewith
23
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.
AMINCOR, INC.
Date: June 20, 2011 By: /s/ John R. Rice, III
-----------------------------------
John R. Rice, III, President
Date: June 20, 2011 By: /s/ Robert L. Olson
-----------------------------------
Robert L. Olson,
Chief Financial Officer
24