UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 333-29903
AMMONIA HOLD, INC.
(Exact name of small business issuer as specified in its charter)
Utah 75-2337459
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 Gunnebo Drive, Lonoke, Arkansas 72086
(Address of principal executive offices)
Registrant's telephone no., including area code: (501) 676-2994
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Class Outstanding as of September 30, 1998
Common Stock, $.001 par value 7,967,190
<PAGE>
TABLE OF CONTENTS
Heading Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements. . . . . . . . . . . . 1
Balance Sheets -- September 30, 1998
and June 30, 1998. . . . . . . . . . . . . . . . . . . 2
Statements of Operations -- three months
ended September 30, 1998 and 1997. . . . . . . . . . . 4
Consolidated Statements of Cash Flows -- three
months ended September 30, 1998 and 1997 . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . 6
Item 2. Management's Discussion and Analysis and
Results of Operations. . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 9
Item 2. Changes In Securities. . . . . . . . . . . . . . . . . . 9
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of
Securities Holders . . . . . . . . . . . . . . . . . . 9
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 9
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . 10
-i-
<PAGE>
PART I
Item 1. Financial Statements
The following unaudited Financial Statements for the period
ended September 30, 1998, have been prepared by the Company.
AMMONIA HOLD, INC.
FINANCIAL STATEMENTS
September 30, 1998 and June 30, 1998
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Balance Sheets
Assets
September 30, June 30,
1998 1998
(unaudited) (audited)
Current assets
Cash and Cash equivalents $ 1,200,163 $ 854,883
Accounts receivable net of
allowance for doubtful accounts
of $20,776 and $25,275,
respectively 348,123 299,086
Prepaid expenses 56,708 30,213
Investments in Trading equities 913,740 1,646,575
Inventory 688,046 587,376
Other receivables and accrued interest 67,332 78,589
Total Current Assets $ 3,274,112 $ 3,496,722
PROPERTY, PLANT & EQUIPMENT
Depreciable assets - net of
accumulated depreciation 1,494,018 1,359,628
Land 251,212 246,212
Total Property, Plant and Equipment 1,745,230 1,605,840
OTHER ASSETS
Patents - net of accumulated
amortization of $231,885 and
$222,123, respectively 431,309 441,063
Investment in Held to Maturity Bonds 717,149 699,212
Total Other Assets 1,148,458 1,140,275
Total Assets $ 6,167,800 $ 6,242,837
(continued)
The accompanying notes are an integral part of these financial statements
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Balance Sheets
(continued)
Liabilities and Stockholders' Equity
September 30, June 30,
1998 1998
(unaudited) (audited)
CURRENT LIABILITIES
Accounts payable $ 256,393 $ 198,189
Accrued expenses 22,322 23,020
Total Current Liabilities 278,715 221,209
STOCKHOLDERS' EQUITY
Common Stock, par value $.001
authorized shares 100,000,000:
7,967,190 shares issued
and outstanding 7,967 7,967
Additional Paid-in Capital 10,096,457 10,096,457
Accumulated Deficit (4,014,491) (4,046,091)
Less: Treasury stock at cost (200,848) (36,705)
Total Stockholders' Equity (Deficit) 5,889,085 6,021,628
Total Liabilities and
Stockholders' Equity $ 6,167,800 $ 6,242,837
The accompanying notes are an integral part of these financial statements
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Statements of Operations
For the Three Months
Ended September 30,
1998 1997
TOTAL REVENUES $ 481,771 $ 239,045
COST OF SALES 281,891 129,374
GROSS PROFIT 199,880 109,671
GENERAL & ADMINISTRATIVE EXPENSES 304,733 125,096
OTHER INCOME 148,559 36,085
INCOME (LOSS) BEFORE INCOME TAXES 43,706 20,660
PROVISIONS FOR INCOME TAXES - -
NET INCOME 43,706 20,660
NET (LOSS) PER SHARE $ 0.005 $ 0.004
WEIGHTED AVERAGE OUTSTANDING SHARES 7,967,190 4,559,415
The accompanying notes are an integral part of these financial statements
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Statement of Cash Flows
For the Three Months
ended September 30,
1998 1997
(Unaudited) (Unaudited)
Cash Flows form Operating
Activities:
Net gain (loss) $ 43,706 $ 20,660
Non-cash items:
Depreciation 17,264 6,284
Amortization 9,753 9,139
Changes in current assets and liabilities:
(Increase) decrease in:
Accounts receivable (37,780) (66,753)
Prepaid expenses/deposits (26,495) -
Inventories (100,670) 5,141
Increase (decrease) in:
Accounts payable 58,204 (2,465)
Income tax payable - -
Accrued liabilities (698) (479)
Net Cash Provided (Used) by Operating Activities (36,716) (28,473)
Cash Flows from Investing Activities
Purchase land (5,000) -
Purchase of equity and bonds 702,793 -
Purchase of property and equipment (151,654) (522,463)
Purchase Treasury stock (164,143) -
Net Cash Provided (Used) by Investing Activities 381,996 (522,463)
Cash Flows from Financing Activities:
Issuance of Preferred Stock - -
Issuance of common stock - -
Net Cash Provided by Financing Activities - -
Net increase (decrease) in cash 345,280 (550,936)
Cash and Cash Equivalents at Beginning of Period 854,883 3,224,211
Cash and Cash Equivalents at End of Period $ 1,200,163 $ 2,673,275
Supplemental Cash Flow Information:
Cash paid for interest $ - $ -
Cash paid for income taxes $ - $ -
The accompanying notes are an integral part of these financial statements
<PAGE>
Ammonia Hold, Inc. and Subsidiary
September 30, 1998
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
GENERAL
Ammonia Hold, Inc. and Subsidiary (the Company) has elected to omit
substantially all footnotes to the financial statements for the
three months ended September 30, 1998 since there have been no
material changes (other than indicated in other footnotes) to the
information previously reported by the Company in their Annual
Report filed of Form 10-KSB for the Fiscal year ended June 30, 1998.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and
records of the Company without audit. However, such information
reflects all adjustment which are, in the opinion of management,
necessary to properly reflect the results of the interim period
presented. The information presented is not necessarily indicative
of the results from operations expected for the full fiscal year.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following table sets forth the percentage relationship to
sales of principal items contained in the Company's Statements of
Operations for the three month periods ended September 30, 1998 and
1997. It should be noted that percentages discussed throughout this
analysis are stated on an approximate basis.
Three Months Ended
March 31,
1998 1997
(Unaudited)
Total revenues . . . . . . . . . . . . . . . . . . . . 100 % 100 %
Cost of sales. . . . . . . . . . . . . . . . . . . . 59 % 54 %
Gross profit . . . . . . . . . . . . . . . . . . . . . 41 % 46 %
General and Administrative expenses . . . . . . . . . 63 % 52 %
Other income . . . . . . . . . . . . . . . . . . . . . 31 % 15 %
Income (loss) before income taxes. . . . . . 9 % 9 %
Provisions income taxes. . . . . . . . . . . . . . . . - -
Net income . . . . . . . . . . . . . . . . . . . . . . 9 % 9 %
Results of Operations
Total sales, net of allowances and discounts, for the three
month period ended September 30, 1998 ("first quarter of fiscal
1998") increased 102% from the first quarter of fiscal 1997 due
primarily to new customer shipments. Cost of sales (as a percentage
of total revenues) increased to 59% for the first quarter of fiscal
1998, from 54% for the first quarter of fiscal 1997 due to the
shipment of lower margin absorbent products. Actual cost of sales
increased 118% for the first quarter of fiscal 1998 compared to the
corresponding 1997 period. This reflects the 102% increase in sales
for the period and the shipment of lower margin absorbent products
as a result of the acquisition of Super Dry Industries, Inc. ("Super
Dry").
General and administrative expenses for first quarter of fiscal
1998 increased 144% compared to the corresponding 1997 period,
primarily attributed to salaries and other costs associated with
Super Dry. As a percentage of total revenues, general and
administrative expenses increased from 52% for the first quarter of
fiscal 1997 to 63% for the first quarter of fiscal 1998, due to an
increase in salaried employees resulting from the Super Dry
acquisition.
Other income increased to $148,559 (312%) for the first quarter
of fiscal 1998 from $36,085 for the 1997 period due to interest
income from cash balances and gains from investments. The net
profit for the first quarter of fiscal 1998 increased to $43,706
compared with $20,660 for the corresponding 1997 period.
Liquidity and Capital Resources
Historically, the Company's working capital needs have been
satisfied by operations and financing activities through the sale
of securities. Working capital at September 30, 1998 was
$2,995,397, a decrease from $3,275,513 at June 30, 1998. The
decrease in working capital is primarily attributed to the 29%
increase in accounts payable, expenditures for the purchase of new
property and equipment ($151,654), and for the repurchase by the
Company of its own common stock ($164,143). This decrease in
working capital was partially offset with the $49,037 (16%) increase
in accounts receivable due to new customer orders.
During the first three months of 1998, the Company generated
cash by liquidating investments which resulted in the $913,740 (56%)
decrease in investments in trading equities. These funds were used
to increase cash by $345,280 (40%),inventories by $100,670 (17%),
and prepaid expenses by $26,495 (88%).
Net cash used by operating activities for the first three
months of fiscal 1998 was $36,716 compared $28,473 for the
comparable 1997 period. This change is primarily attributed to the
increases in net income and accounts payable, partially offset by
increases in accounts receivable, prepaid expenses and inventories.
Net cash provided by investing activities for the first three months
of fiscal 1998 $381,996 compared to net cash used of $522,463 for
the 1997 period. This result is due to the purchase of property and
equipment during the first three months of fiscal 1997 and the sale
of equity and bond investments during the first three months of
fiscal 1998.
The Company anticipates meeting its working capital needs
during the next twelve months primarily with revenues from
operations resulting from increased marketing activities related to
the Company's products. Management has not entered into any new
arrangements or definitive agreements for additional private
placement of securities and/or a public offering. If the Company's
operations are not adequate to fund its operations and it is unable
to secure financing from the sale of its securities or from private
lenders, the Company could experience a cash flow shortage which
could curtail the Company's operations.
As of September 30, 1998, the Company had total assets of
$6,167,800 and total stockholders' equity of $5,889,085. In
comparison, as of June 30, 1998, the Company had total assets of
$6,242,837 and total stockholders' equity of $6,021,628. This
decrease in total assets for the first three months of fiscal 1998
is primarily due to the decrease in investments in trading equities
and accounts receivable.
In the opinion of management, inflation has not had a material
effect on the operations of the Company.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. The Company wishes to advise readers that
actual results may differ substantially from such forward-looking
statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in or implied by the statements, including, but
not limited to, the following: the ability of the Company to
generate working capital, the development of the Company's existing
and new products, the potential market for the Company's products,
competitive factors, and other risks detailed in the Company's
periodic report filings with the Securities and Exchange Commission.
PART II
Item 1. Legal Proceedings
There are presently no material pending legal proceedings to
which the Company or any of its subsidiaries is a party or to which
any of its property is subject and, to the best of its knowledge,
no such actions against the Company are contemplated or threatened.
Item 2. Changes In Securities
This Item is not applicable to the Company.
Item 3. Defaults Upon Senior Securities
This Item is not applicable to the Company.
Item 4. Submission of Matters to a Vote of Security Holders
This Item is not applicable to the Company.
Item 5. Other Information
This Item is not applicable to the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedules
(b) Reports on Form 8-K
No report on Form 8-K was filed by the Company during the
three month period ended September 30, 1998.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange
Act of 1934, the Registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMMONIA HOLD, INC.
Date: November 16, 1998 By /S/ Michael D. Parnell
MICHAEL D. PARNELL,
President and Director
Date: November 16, 1998 By /S/ Dan N. Thompson
DAN N. THOMPSON, Secretary,
Treasurer, Chief
Financial Officer and Director
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION
EXTRACTED FROM THE AMMONIA HOLD, INC. FINANCIAL
STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-1-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,200,163
<SECURITIES> 913,740
<RECEIVABLES> 368,899
<ALLOWANCES> 20,776
<INVENTORY> 688,046
<CURRENT-ASSETS> 3,274,112
<PP&E> 1,745,230
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,167,800
<CURRENT-LIABILITIES> 278,715
<BONDS> 0
0
0
<COMMON> 7,967
<OTHER-SE> 10,096,457
<TOTAL-LIABILITY-AND-EQUITY> 6,167,800
<SALES> 481,771
<TOTAL-REVENUES> 630,330
<CGS> 281,891
<TOTAL-COSTS> 304,733
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 43,706
<INCOME-TAX> 0
<INCOME-CONTINUING> 43,706
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,706
<EPS-PRIMARY> .005
<EPS-DILUTED> .005
</TABLE>
