UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
Annual Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
For the Fiscal Year Ended June 30, 1998
Transition Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Commission File Number 333-29903
AMMONIA HOLD, INC.
(Name of small business issuer 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) (Zip Code)
Issuer's telephone no.: (304) 684-7053
Securities registered pursuant to Section 12(b) of the Exchange
Act: None
Securities registered pursuant to Section 12(g) of the Exchange
Act: Common
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and
no disclosure will be contained, to the best of the Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
State the issuer's revenues for its most recent fiscal year.
$ 1,134,189
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the
stock was sold, or the average bid and ask prices of such stock as
of a specified date within 60 days. $9,016,586 (Based on price of
$1.25 on October 9, 1998 and 7,213,269 shares held by non-
affiliates)
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 October 1, 1998
Common Stock, Par Value 7,967,190
$.001 per share
DOCUMENTS INCORPORATED BY REFERENCE
NONE
Transitional Small Business Disclosure Format. Yes No
<PAGE>
AMMONIA HOLD, INC.
TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business . . . . . . . . . . . . . . . 1
Item 2. Description of Property. . . . . . . . . . . . . . . . 6
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . 6
Item 4. Submission of Matter to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . 6
PART II
Item 5. Market for Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . 6
Item 6. Management's Discussion and Analysis or
Plan of Operation. . . . . . . . . . . . . . . . . . . 8
Item 7. Financial Statements . . . . . . . . . . . . . . . . . 12
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . 24
PART III
Item 9. Directors, Executive Officers, Promoters and
Control persons; Compliance with Section 16(a)
of the Exchange Act. . . . . . . . . . . . . . . . . . 24
Item 10. Executive Compensation . . . . . . . . . . . . . . . . 25
Item 11. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . 26
Item 12. Certain Relationships and Related Transactions . . . . 27
PART IV
Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . . . 27
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-i-
<PAGE>
PART I
Item 1. Description of Business
History
Ammonia Hold, Inc. ("AMHD" or the "Company") was incorporated
on July 10, 1980 under the laws of the State of Utah as Ewing Oil
Mining Company and initially engaged in the oil development
business. The Company subsequently ceased its original business
activity and thereafter primarily investigated and sought new
business opportunities.
In June 1994, the Company acquired Ammonia Hold, Inc., a Texas
corporation ("AMHD-Texas"), engaged in the business of developing
products designed to stop the formation of ammonia and other odors
associated with animal waste. Subsequent to the acquisition, all
of the Company's activities have been related to the development,
manufacturing and marketing of odor eliminating products. For
accounting purposes the acquisition was treated as a
recapitalization of AMHD-Texas with AMHD-Texas as the acquirer
(reverse acquisition). Also in June 1994, the Company changed its
name to Ammonia Hold, Inc.
The Company's principal executive offices are located at 10
Gunnebo Drive, Lonoke, Arkansas 72086, and its telephone number is
(501) 676-2994.
Business Development
The Company is engaged in the business of manufacturing and
marketing odor eliminating products for use in connection with farm
and domestic animals and municipal biosolid facilities. The
Company's products are specifically designed to stop the formation
of ammonia and other odors associated with animal waste and provide
safe, simple, economical reduction of ammonia and associated vapor
in poultry houses and other areas where animal wastes are present.
The Company markets its products to farms, poultry houses, co-ops,
large retail chains and grocery stores throughout the United States
and other countries including Canada and Mexico.
In 1995, the Company created a wholly owned subsidiary,
Fivestar Products Corporation, to import and acquire related
products for sale and distribution by way of television and mass
merchandisers. Fivestar Products Corporation has not engaged in
material activity to date and the Company does not intend to
develop this business.
The Company manufactures products specifically designed to
control ammonia and other odors associated with animal urine and
feces using a patented process. The Company's line of products
have the ability to counter the formation of ammonia when urine and
solid animal waste is exposed to free oxygen in the air. The
Company's patented process binds the nitrogen present in animal
waste and municipal biosolids, thus halting the natural production
of ammonia. The Company's products are designed for industrial use
in poultry production and livestock confinement areas and with
household pets.
The Company's principal product is called "Ammonia Hold,"
developed after 15 years of research by the individual inventor
and patented by him in 1989. Ammonia Hold is a granular light gray
substance that uses a mono-calcium phosphate base with a blend of
trace materials and other inert ingredients. Ammonia Hold counters
the natural formation of ammonia when animal wastes are exposed to
free oxygen in the air. Use of Ammonia Hold decreases ammonia
levels. High atmospheric ammonia levels have been shown by numerous
independent studies to cause respiratory tract damage in poultry,
resulting in higher mortality and condemnation rates,
and decreasing feed efficiency.
The Company also markets a related product known as "Odor
Scentry ", a variation of Ammonia Hold sold in smaller granular
form or in aerosol form, which uses the same process as Ammonia
Hold to isolate the individual elements that must combine to create
ammonia. Odor Scentry , the Company's first consumer product
previously marketed under the name Odor Halt, is sold in pet
stores and pet departments of retail stores for home use in the
elimination of odors associated with pet litter pans for
domesticated animals such as cats and birds, gerbils, hamsters and
rabbits. Users of Odor Scentry add the product to their pets'
litter pan to remove common odors. Odor Scentry is available in
natural-like scents of spice or citrus and may also be used to
prevent odors from forming in trash cans and in removing odors
from cars and carpets where undesirable odors have developed
previously. Odor Scentry for Healthcare Facilities is a related
product formulated and packaged for the nursing home industry.
This product is used as a carpet deodorizer or mixed with water
to clean and deodorize.
A related product is "Odor Scentry Spray," an aerosol
powder spray variation for consumer use. This product can halt
the natural production of common household odors originating in
garbage cans, diaper pails, and in moisture-and-mildew-ridden
areas. Odor Scentry Spray is also used to remove odors from
cars and carpets where undesirable smells have developed.
A new product recently introduced is "Barn Guard ", a granular
product specifically intended for the equestrian market. Barn
Guard is long-lasting, easy-to-use and eliminates odors in
horse stalls and all types of livestock pens. It is non-toxic
and contains no perfumes or masking agents. Another
recently developed product is "Odor Scentry Premium Cat Litter."
This product when used in household litter pans forms flushable
clumps of both liquid and solid waste which are both completely
flushable in non-septic tank systems. Odor Scentry Premium Cat
Litter is all-natural, biodegradable, and almost completely
dust-free and is designed to prevent tracking by cats after
using the litter pan. Both Barn Guard and Odor Scentry Premium Cat
Litter use the same process as Ammonia Hold to isolate the
individual chemical elements that must combine to create ammonia.
The Company has received the results of Phase I and Phase II
testing of biosolids composting tests to determine the effects of
the Ammonia Hold product on municipal biosolids and waste
management. CalRecovery, a waste management consulting and
engineering firm, completed the two-phase study. On a research
scale and a commercial scale, the tests demonstrated that the
addition of the Ammonia Hold will accelerate the process of
composting sludge, increase the retention of nitrogen, and
control the emission of ammonia during the composting process.
The product could be of interest to municipal wastewater treatment
facilities that are considering or are currently composting sludge
as a method of waste management. Possible benefits of Ammonia Hold
application for treatment facilities include reduction of
composting costs and control of air emissions and odor, with odor
being the number one cause of complaints to health and
environmental regulatory agencies. There can be no assurance
that positive test results will lead to a new commercially viable
use for Ammonia Hold, or to what extent a commercial market may
exist.
In May 1998, the Company acquired Super Dry Industries, Inc.
("Super Dry") in exchange for cash and shares of the Company's
common stock. Super Dry, a Mississippi corporation located in
Shuqualak, Mississippi, is engaged in the manufacture and
distribution of "Litter Purrferred," a patented cat litter, and
other oil and grease absorbent products. Super Dry also owns a
production and packaging facility in Shuqualak, associated mineral
reserves and certain patents and trademarks. As a result of the
acquisition of Super Dry, the Company expects to increase its
manufacturing capacity and to use Super Dry's mineral reserves in
the production of the Company's products.
Marketing
Management estimates that more than half of all households in
the United States have pets. Management further estimates that
over six billion broiler chickens, 280 million turkeys and 21
million ducks are produced in the United States each year. In order
to address this market, management has created a marketing strategy
combining the use of direct sales representatives and trade and
consumer advertising. This strategy targets not only the retail
market consisting of pet stores and pet departments of grocery and
other retail stores, but also the commercial and industrial animal
markets. Major retailers of the Company's products are WalMart,
PETCO and Kmart.
Presently, the Company uses the services of independent
sales representatives to cover its marketing area, primarily in
the continental United States. Management intends to increase its
marketing force as business demands warrant such expansion and the
Company has sufficient funds available to retain the appropriate
personnel.
Patents
The Company's principal patent, Method for Producing
Monocalcium Phosphate and Products Produced therefrom, (U.S.
Patent No. 4,838,922) was issued in June 1989 and acquired in
1990 from the inventor, Billy J. Green by the Company's
predecessor for 5,000 shares of AHI-Texas common stock, $100,000
cash and a note payable in the amount of approximately $312,000. Of
this amount, $250,000 was later retired by the issuance of 50,000
shares of Company common stock. The patent refers to an
improved method of producing monocalcium phosphate. The second
patent, Animal Litter containing Magnesium Montmorillonite (U.S.
Patent No. 5,529,022) was granted in June 1996 and acquired
from Sanex Corporation by the Company in August 1996 for $250,000,
paid $50,000 in cash and the remainder by the issuance of 35,714
shares of Common Stock valued at $5.60 per share. The officers
and directors of Sanex are Marjorie Burman-Nelson and Scott
Burman. The purchase price for these patents and the value
attributable to the shares of common stock issued in the
transaction was based on arms-length negotiations between the
parties.
Pursuant to the Company's acquisition of Super Dry, it
acquired Super Dry's U.S. Patent No.5,469,809" (granted November
28, 1995), Non Dusting Clumping Animal Litter, related to a process
for creating cat litter. Super Dry acquired the patent by
assignment on August 11, 1995, at which time the patent was
pending, from its inventor C. Douglass Coleman. The Company also
acquired Super Dry's trademark registrations for "Litter
Purrferred" and "Super Dry."
Competition
Presently, there are several companies marketing products
similar to those produced and marketed by the Company
including, without limitation, General Chemical Corporation and
Jones Hamilton for ammonia abatement additives and Clorox, Oil
DRI Corp and American Colloid for cat litter. Most of these
companies are larger than the Company with longer histories of
operation and greater financial and personnel resources. Also,
most of these competitors have established some market share in the
market in which the Company will be competing. The ability of the
Company to penetrate these markets will depend on many factors
including, but not limited to, its ability to obtain sufficient
capital to enhance and broaden its marketing of its products, to
develop new and improved products, to obtain and retain necessary
management and advisory personnel, and the establishment of a
comprehensive marketing plan.
Employees
Presently, the Company has twenty-five employees consisting of
four management persons, eighteen production persons and three
administrative person. The Company does not currently offer its
employees any bonus, profit sharing or deferred compensation
plan nor is there any employment contract with any employee.
Management intends to hire additional qualified personnel as
business conditions warrant. In addition to its full-time
employees, the Company may use the services of certain outside
consultants and advisors as needed on a contract basis.
Management considers the relations between the Company and its
employees to be good.
Facilities
The Company's principal place of business and corporate
offices are located at 10 Gunnebo Drive, Lonoke, Arkansas 72086.
The facilities are in good condition and consist of approximately
15,000 square feet of manufacturing and warehouse space used for
the production of the Company's products and storage area for
inventory and raw materials. The Company has begun expanding the
Lonoke, Arkansas facility, increasing its size by 15,000 square
feet. The building and land are held in fee without mortgage. The
Company also rents on a month to month basis, warehouse space for
a mixing facility in Little Rock, Arkansas for rent of $1,360. On
August 5, 1997 the Company purchased ten acres of land and 55,000
square foot office and manufacturing facility in Lonoke for cash of
$392,920, in order to meet expansion requirements. This property
was subsequently exchanged for a fifteen percent (15%) interest
(1,777,500 shares of common stock) in Pet Quarters.com, Inc.
Upon the Company's acquisition of Super Dry, it acquired title
to Super Dry's production and packaging facility located in
Shuqualak, Mississippi. The facility is held in fee without
mortgage. The Company intends to continue using the facility to
manufacture Super Dry products and for other uses.
Research and Development
The Company has not allocated specific funds for conducting
research and development activities. Due to the nature of the
Company's business, funds will be allocated for research and
development as needed.
Item 2. Description of Property
The information required by this Item is contained in Item 1
above, under the heading "Facilities."
Item 3. Legal Proceedings
There are no material pending legal proceedings to which the
Company is a party or to which any of its property is subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's
Securities Holders during the fourth quarter of the Company's
fiscal year ending June 30, 1998.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's Common Stock is eligible to be traded in the
over-the-counter market and quotations are published on the OTC
Bulletin Board under the symbol "AMHD," and in the National
Quotation Bureau, Inc. ("NQB") "pink sheets" under Ammonia Hold,
Inc. Inclusion on the OTC Bulletin Board permits price quotations
for the Company's shares to be published by such service.
The following table sets forth the range of high and low bid
prices of the Company's shares for each quarterly period for the
past two fiscal years starting July 1, 1996, as reported by the
NQB. These prices represent prices between dealers, do not include
retail markups, markdowns or commissions and do not represent
actual transactions.
Fiscal Year High Low
(Starting July 1)
1997
First Quarter $ 8.00 $ 5.25
Second Quarter 8.62 4.06
Third Quarter 6.75 4.56
Fourth Quarter 5.62 3.44
1998
First Quarter 5.00 2.94
Second Quarter 3.75 1.44
Third Quarter 3.09 1.06
Fourth Quarter 2.94 1.72
1999
First Quarter 2.12 1.47
Second Quarter(1) 1.62 1.25
___________________________
(1) As of October 6, 1998
As of September 30, 1998 there were approximately 1,173
holders of record of the Company's Common Stock, which figure does
not take into account those shareholders whose certificates are
held in the name of broker-dealers. The Company estimates that in
excess of 1,000 shareholders of the Company hold their shares in
the name of broker-dealers.
Dividend Policy
The Company has not declared or paid cash dividends or made
distributions in the past on its common stock, and the Company does
not anticipate that it will pay cash dividends or make
distributions in the foreseeable future. The Company currently
intends to retain and invest future earnings to finance its
operations.
On June 5, 1997 the Company issued 3,000 shares of Series A
Convertible Preferred Stock, par value $.001 per share. Shares of
the Preferred Stock were entitled to receive dividends as if they
were converted to Common Stock pursuant to the terms set forth
below. Upon liquidation, dissolution, or winding up, these shares
would be entitled to a liquidation preference of $1,000 per share.
Each share of Preferred Stock was convertible, at the option
of the holder at any time, into common stock as follows:
$1,000 divided by the lower of (1) sixty-five percent (65%) of
the market price of the common stock (determined by the
closing bid price averaged over the five preceding days prior
to conversion), or (2) $3.515625, adjusted for stock splits or
dividends.
The Company recorded a deemed dividend related to the issuance
of the preferred stock. This deemed dividend is due to the large
discount between the conversion price and the market price of
common stock on the day of issuance. The deemed dividend is
calculated at $1,600,000 which represents the amount of common
stock the preferred shareholders could have converted to (65%
divided by $3,000,000) on the day of issuance less the $3,000,000
received. Retained earnings and additional paid in capital have
been adjusted to reflect the dividend.
During the fiscal year ended June 30, 1998, all of the
preferred shareholders converted their shares of Preferred Stock
into an aggregate 2,979,413 share of common stock.
Recent Sales of Unregistered Securities
A description of recent sales of unregistered securities can
be found in the Consolidated Statements of Stockholders' Equity and
Note 5 to the Consolidated Financial Statements which can be found
elsewhere within this Form 10-KSB.
Item 6. Management's Discussion and Analysis or Plan of Operation
The following information should be read in conjunction with
the consolidated financial statements and notes thereto appearing
elsewhere in this Form 10-KSB.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement
of Financial Accounting Standard ("SFAS") No. 128, "Earnings Per
Share" and Statement of Financial Accounting Standards No. 129
"Disclosures of Information About an Entity's Capital Structure."
SFAS No. 128 provides a different method of calculating earnings
per share than is currently used in accordance with Accounting
Principles Board Opinion No. 15, "Earnings Per Share." SFAS No. 128
provides for the calculation of "Basic" and "Dilutive" earnings per
share. Basic earnings per share includes no dilution and is
computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution
of securities that could share in the earnings of an entity,
similar to fully diluted earnings per share. SFAS No. 129
establishes standards for disclosing information about an entity's
capital structure. SFAS No. 128 and SFAS No. 129 are effective for
financial statements issued for periods ending after December 15,
1997. Their implementation is not expected to have a material
effect on the financial statements.
The Financial Accounting Standards Board has also issued SFAS
No. 130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 130 establishes standards for reporting and
display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and
distributors to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income
be reported in a financial statement that displays with the same
prominence as other financial statements. SFAS No. 131 supersedes
SFAS No. 14 "Financial Reporting for Segments of a Business
Enterprise." SFAS No. 131 establishes standards on the way that
public companies report financial information about operating
segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for
disclosure regarding products and services, geographic areas and
major customers. SFAS No. 131 defines operating segments as
components of a company about which separate financial information
is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in
assessing performance.
SFAS 130 and 131 are effective for financial statements for
periods beginning after December 15, 1997 and requires comparative
information for earlier years to be restated. Because of the
recent issuance of the standard, management has been unable to
fully evaluate the impact, if any the standard may have on future
financial statement disclosures. Results of operations and
financial position, however, will be unaffected by implementation
of the standard.
Results of Operations
The following table sets forth the percentage relationship to
total net sales of principal items contained in the Company's
Statements of Operations for the two most recent fiscal years ended
June 30, 1998, and 1997. It should be noted that percentages
discussed throughout this analysis are stated on an approximate
basis.
Fiscal Years Ended
June 30,
1998 1997
Total net sales. . . . . . . . . . . . . . . . . 100% 100%
Cost of sales. . . . . . . . . . . . . . . . . . 53% 72%
Gross profit . . . . . . . . . . . . . . . . . . 47% 28%
General and administrative expenses. . . . . . . 98% 141%
Other income . . . . . . . . . . . . . . . . . . 58% 6%
Income (loss) before income taxes. . . . . . . . 7% (107%)
Provisions (benefit) for income taxes. . . . . . - (0%)
Net income (loss). . . . . . . . . . . . . . . . 7% (107%)
For the Year Ended June 30, 1998 Compared to the Year Ended
June 30, 1997
Total sales, net of allowances and discounts, for the fiscal
year ended June 30, 1998 ("1998") increased 2% from the fiscal year
ended June 30, 1997 ("1998") due to an increase in product shipped.
Cost of sales (as a percentage of total revenues) decreased to 53%
for 1998, from 72% for 1997 due to the more efficient packaging and
distribution procedures and a higher margin product mix. Actual
cost of sales decreased 24% for 1998 also due to more efficient
packaging and distribution and a higher margin product mix, and
lower raw materials costs.
General and administrative expenses decreased 29% for 1998
primarily due to the one-time write-off of consulting fees in 1997.
As a percentage of total revenues, general and administrative
expenses decreased from 141% in 1997 to 98% in 1998 due to reduced
consulting fees in 1998.
Other income increased to $663,249 in 1998 from $62,426 in
1997 due to increased interest income from cash balances and income
received from the Company's bond and equity portfolio. The Company
earned a net income of $81,427 in 1998 compared to a net loss of
$1,181,320 in 1997. The 1998 income was offset by loss of $51,000
contributed by the Company's newly acquired subsidiary, Super Dry
Industries, Inc., which was acquired in May 1998.
Net Operating Losses
The Company has accumulated approximately $1,446,000 of net
operating loss carryforwards as of June 30, 1998, which may be
offset against future taxable income through the year 2009 when the
carryforwards expire. The use of these losses to reduce future
income taxes will depend on the generation of sufficient taxable
income prior to the expiration of the net operating loss
carryforwards. In the event of certain changes in control of the
Company, there will be an annual limitation on the amount of net
operating loss carryforwards which can be used. No tax benefit has
been reported in the financial statements for the year ended June
30, 1998 because the potential tax benefits of the loss
carryforward is offset by valuation allowance of the same amount.
Liquidity and Capital Resources
Historically, the Company's working capital needs have been
satisfied by sales revenues and from the sale of securities.
Working capital at June 30, 1998 was $3,275,513, including cash of
$854,883 and investments in trading equities of $1,646,575. Net
cash used by operating activities for 1998 was $271,846 compared to
$896,713 in 1997. This change is primarily attributed to the
$81,427 net profit in 1998 compared to the $1,181,320 net loss in
1997 and the $351,319 increase in prepaid expenses in 1998. The
improvement in net cash used in 1998 was partially offset by the
$252,336 increase in accounts receivable and $259,512 increase in
inventories for the same period. Accounts receivable increased due
to increased orders from existing and new customers, and
inventories increased due to the build-up in inventories in
anticipation of increase demand from existing and new customers.
Net cash used by investing activities for 1998 was $2,097,482
compared to $398,570 in 1997, primarily due to the purchase of
facilities and the purchase of securities during 1998. The Company
did not realize any cash from financing activities in 1998,
although it did realized $4,170,000 from the sale of preferred and
common stock in 1997.
The Company anticipates meeting its working capital needs
during 1999 fiscal year primarily with revenues from operations.
The Company believes that it has adequate cash reserves to meet any
routine contingency during 1999. Management does not presently
foresee a need for additional financing activities in 1999 unless
the Company undertakes expansion or makes additional acquisitions.
Management has no definitive plans for expansions or additional
acquisitions.
As of June 30, 1998, the Company had total assets of
$6,242,837 and total stockholders' equity of $6,021,628. Further,
the Company had $854,883 in cash and cash equivalents and an
additional $1,646,575 in investments in trading equities.
Year 2000
Year 2000 issues may arise if computer programs have been
written using two digits (rather than four) to define the
applicable year. In such case, programs that have time-sensitive
logic may recognize a date using "00" as the year 1900 rather than
the year 2000, which could result in miscalculations or system
failures.
AMHD has completed its assessment of the Year 2000 issue and
believes that any costs of addressing the issue will not have a
material adverse impact on AMHD's financial position. AMHD
believes that its existing computer systems and software will not
need to be upgraded to mitigate the Year 2000 issues. AMHD has not
incurred any costs associated with its assessment of the Year 2000
problem. In the event that Year 2000 issues impact AMHD's
accounting operations and other operations aided by its computer
system, AMHD believes, as part of a contingency plan, that it has
adequate personnel to perform those functions manually until such
time that any Year 2000 issues are resolved.
AMHD believes that third parties with whom it has material
relationships will not materially be affected by the Year 2000
issues as those third parties are relatively small entities which
do not rely heavily on information technology ("IT") systems and
non-IT systems for their operations. However, if AMHD and third
parties upon which it relies are unable to address any Year 2000
issues in a timely manner, it could result in a material financial
risk to AMHD, including loss of revenue and substantial
unanticipated costs. Accordingly, AMHD plans to devote all
resources required to resolve any significant Year 2000 issues in
a timely manner.
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: Changing economic conditions,
interest rate trends, continued acceptance of the Company's
products in the marketplace, competitive factors, and other risks
detailed in the Company's periodic report filings with the
Securities and Exchange Commission.
Item 7. Financial Statements
The Company's financial statements as of and for the fiscal
years ended June 30, 1998 and 1997 have all been examined to the
extent indicated in their report by Crouch Bierwolf & Chisholm,
independent certified public accountants, and have been prepared in
accordance with generally accepted accounting principles and
pursuant to Regulation S-B as promulgated by the Securities and
Exchange Commission. The aforementioned financial statements are
included herein in response to Item 7 of this Form 10-KSB.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors
Ammonia Hold, Inc.
We have audited the accompanying consolidated balance sheet of Ammonia
Hold, Inc. and subsidiaries as of June 30, 1998 and the related
consolidated statement of operations, stockholders' equity and cash
flows for the years ended June 30, 1998 and 1997. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. Au audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Ammonia Hold, Inc. and it's subsidiaries as of June 30, 1998 and
the results of their operations and cash flows for the years ended
June 30, 1998 and 1997 in conformity with generally accepted
accounting principles.
Crouch, Bierwolf & Chisholm
September 25, 1998
<PAGE>
Ammonia Hold, Inc. and Subsidiaries
Consolidated Balance Sheets
ASSETS
June 30,
1998
CURRENT ASSETS
Cash and cash equivalents (Note 1) $ 854,883
Accounts receivable net of
allowance for doubtful accounts
of $25,275 299,086
Prepaid expenses 30,213
Investments in Trading equities (Note 1) 1,646,575
Inventory 587,376
Other receivables and accrued interest 78,589
Total Current Assets 3,496,722
PROPERTYY, PLANT
AND EQUIPMENT
Depreciable assets - net of accumulated
depreciation (Note 1) 1,359,628
Land 246,212
Total Property, Plant and
Equipment 1,605,840
OTHER ASSETS
Patents - net of accumulated
amortization of $222,123 (Note 1) 441,063
Investment in Held to Maturity Bonds 699,212
Total Other Assets 1,140,275
TOTAL ASSETS $ 6,242,837
(continued)
<PAGE>
Ammonia Hold, Inc. and Subsidiaries
Consolidated Balance Sheets
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30,
1998
CURRENT LIABILITIES
Accounts payable $ 198,189
Accrued expenses 23,020
Total Current Liabilities 221,209
STOCKHOLDERS' EQUITY
Series A Convertible Preferred
Stock. 3,000 shares authorized
0 shares issued and outstanding
at June 30, 1998 -
Common Stock, par value $.001
authorized shares 100,000,000:
7,967,190 shares Issued and outstanding 7,967
Paid in Capital 10,096,457
Accumulated deficit (4,046,091)
Less: Treasury stock at cost (36,705)
Total Stockholders' Equity 6,021,628
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 6,242,837
<PAGE>
Ammonia Hold, Inc. and Subsidiaries
Consolidated Statements of Operations
For the years ended June 30,
1998 1997
SALES - NET ALLOWANCE
AND DISCOUNTS $ 1,134,189 $1,110,490
COST OF SALES 605,707 798,874
GROSS PROFIT 528,482 311,616
GENERAL & ADMINISTRATIVE 1,110,304 1,560,362
OTHER INCOME 663,249 62,426
INCOME (LOSS) BEFORE
INCOME TAXES 81,427 (1,186,320)
PROVISIONS (BENEFIT) FOR
INCOME TAXES - (5,000)
NET INCOME (LOSS) $ 81,427 $(1,181,320)
DEEMED DIVIDEND (NOTE 6) - (1,600,000)
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ 81,427 $(2,781,320)
NET INCOME (LOSS) PER SHARE $ 0.014 $ (0.620)
WEIGHTED AVERAGE
OUTSTANDING SHARES 6,006,323 4,485,803
FULLY DILUTED EARNINGS (LOSS)
PER SHARE $ 0.011 $ (0.620)
FULLY DILUTED AVERAGE OUTSTANDING
SHARES 7,610,364 4,485,803
<PAGE>
<TABLE>
Ammonia Hold, Inc.
Consolidated Statements of Stockholders' Equity
<CAPTION>
Additional Additional Retained
Preferred Shares Paid-in Common Stock Paid-in Earnings Treasury
Shares Amount Capital Shares Amount Capital (Deficit) Stock
<C> <C> <C> <C> <C> <C> <C> <C>
Balance on June 30, 1996 - - - 3,867,278 $ 3,867 $ 3,224,195 $(1,346,198) $ -
Issued common stock for patent - - - 35,714 36 199,964 - -
Issued common stock for cash - - - 488,666 488 499,512 - -
Issued common stock for cash - - - 76,923 77 499,923 - -
Issued common stock for cash - - - 90,834 91 544,909 - -
Issued common stock for cash 3,000 3 2,624,997 - - - - -
Deemed Dividend (Note 7) - - - - - 1,600,000 (1,600,000) -
Net income (loss) for the
year ended June 30, 1997 - - - - - - (1,181,320) -
Balance on June 30, 1997 3,000 $ 3 $ 2,624,997 4,559,415 $ 4,559 $ 6,568,503 $ (4,127,518) $ -
Preferred stock converted
to common stock (3,000) (3) (2,624,997) 2,979,413 2,980 2,622,020 - -
Issued common stock to
acquire subsidiary - - - 403,362 403 856,740 - -
Issued common stock to
cancel options - - - 25,000 25 49,194 - -
Treasury stock at cost - - - - - - - (36,705)
Net income (loss) for the
year ended June 30, 1998 - - - - - - 81,427 -
Balance on June 30, 1998 - $ - $ - 7,967,190 $ 7,967 $10,096,457 $ (4,046,091) $ (36,705)
</TABLE>
<PAGE>
Ammonia Hold, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended June 30,
1998 1997
Cash Flows from Operating Activities
Net gain (loss) $ 81,427 $(1,181,320)
Non-cash items:
Depreciation 62,116 44,426
Amortization 39,011 37,852
Bad debt expense 4,500 468
Stock issued to cancel options 49,219 -
Stock received from building sale (495,704) 550,504
Changes in current assets and liabilities:
(Increase) decrease in:
Accounts receivable (252,336) 4,592
Prepaid expenses/deposits 351,319 (360,924)
Inventories (259,512) (38,287)
Increase (decrease) in:
Accounts payable 125,094 66,777
Income tax payable - (16,199)
Accrued liabilities 23,020 (4,602)
Net Cash provided (Used) by
Operating Activities (271,846) (896,713)
Cash Flows from Investing Activities
Purchase Facility (392,920) -
Purchase of equity & bonds (1,457,037) -
Purchase of property and equipment (72,525) (398,570)
Acquisition of subsidiary (175,000) -
Net Cash Provided (Used) by
Investing Activities (2,097,482) (398,570)
Cash Flows from Financing Activities
Issuance of Preferred Stock - 2,625,000
Issuance of common stock - 1,545,000
Net Cash Provided (Used) by
Financing Activities - 4,170,000
Increase (Decrease) in Cash (2,369,328) 2,874,717
Cash and Cash Equivalents at
Beginning of Period 3,224,211 349,494
Cash and Cash Equivalents at
End of Period $ 854,883 $ 3,224,211
(Continued)
<PAGE>
Ammonia Hold, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Continued)
For the years ended June 30,
1998 1997
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION:
Cash paid for interest $ 29 $ -
Cash paid for income taxes - -
NON CASH FINANCING
ACTIVITIES:
Issued stock for subsidiary $ 857,143 -
Issued stock for patent - $ 200,000
<PAGE>
AMMONIA HOLD, INC. AND Subsidiaries
Notes to Consolidated Financial Statements
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization - Ammonia Hold, Inc. (AHI-Utah) (formerly Key
Waste management, Inc.) was incorporated in the state of Utah
on July 10, 1980. On June 30, 1994, pursuant to a stock
exchange agreement, AHI-Utah acquired all of the stock of
Ammonia Hold, Inc. (AHI-Texas), a Texas corporation, in
exchange for 2,679,391 shares of AHI-Utah which represented 71%
of the total outstanding shares. Because the shares issued in
the acquisition of AHI-Texas represented 71% of the then
outstanding shares of AHI-Utah, AHI-Texas was deemed, for
financial reporting purposes, to have acquired AHI-Utah.
Accordingly, the acquisition of AHI-Utah by AHI-Texas was
accounted for as a purchase of the net liabilities of AHI-Utah
consisting principally of an insignificant amount of accounts
payable.
FiveStar Products Corporation (FiveStar) was incorporated in
the state of Utah on March 31, 1995. FiveStar had no material
activity.
Super Dry Industries, Inc. (a Mississippi corporation) (Super
Dry) was incorporated on January 20, 1992. Effective May 1,
1998 Ammonia Hold, Inc. acquired all of the issued and
outstanding shares of Super Dry in exchange for $175,000 cash,
and $600,000 worth of Ammonia Hold restricted common stock.
The number of shares issued was determined by multiplying the
stock price at closing by .70 then dividing the result into
600,000. The total number of restricted common stock was
403,362.
Acquisition of Subsidiary - On May 1, 1998, the Company
acquired 100% of the common stock of Super Dry Industries, Inc.
for $175,000 in cash and 403,362 shares of restricted common
stock in Ammonia Hold. The stock was valued at $857,143 or
$2.15 per share. The acquisition was recorded as a purchase
for financial accounting purposes.
Capitalization Changes - Immediately prior to the merger, the
shareholders of AHI-Utah approved a 20 for 1 reverse split.
Common stock issued and outstanding, and additional paid-in
capital have been restated to reflect the reverse stock split.
The shareholders also authorized 25,000,000 shares of preferred
stock $.001 par value, with terms, rights and preferences to be
determined by the Board of Directors at the time of issuance.
As of June 30, 1997, 3,000 preferred shares have been issued
for $2,625,000 in cash.
The principal business of the Company is the manufacture of
monocalcium phosphate and related products for sale to
retailers mainly in the United States. The company sells its
products to some international customers (about 5% of total
sales).
Principles of Consolidation - The consolidated financial
statements as of June 30, 1998 and 1997 include the accounts of
AHI-Utah, its wholly owned subsidiary FiveStar, and the
activity of Super Dry from May 1, 1998 to June 30, 1998.
Collectively, these entities are referred to as the Company.
All significant intercompany transactions and accounts have
been eliminated.
Accounting Method - The Company's financial statements are
prepared using the accrual method of accounting.
Cash and Cash Equivalents - The Company considers all highly
liquid investments with a maturity of three months or less when
purchased to be cash equivalents.
Inventories - Inventories are reported at the lower of cost or
market as determined on the first-in first-out (FIFO) method.
Prepaid Consulting Fees - During fiscal 1996, the Company
issued 117,000 shares of stock to an unrelated party in an
exchange for $643,500 of prepaid marketing services. At
December 31, 1996, substantially all of the prepaid marketing
expenses had been expensed. In May 1997, the Company prepaid
$405,000 in cash and options (see note 8) for a six month
marketing contract. At June 30, 1997 prepaid consulting fees
included $334,482 from this contract.
Patent - Patent costs are capitalized as incurred and are
amortized over the remaining life of the patent. The company
considers the estimated life of patents to be 17 years.
Purchase and Sale of Property - On August 5, 1997, the Company
purchased ten acres of land and a 55,000 square foot
manufacturing/office facility for $392,920. The facility was
rented until November, 1997. During November 1997, the Company
sold the building for $888,750 worth of restricted common stock
of Pet Quarter Inc. (1,777,500 shares). The shares were valued
at fifty cents per share. The property was appraised at
$975,000. The restricted stock is recorded as "Investment in
Trading Equities" since the restriction will expire within one
year.
The Company acquired an option to purchase the facility within one year
of the sale for 1,777,500 shares of Pet Quarters Inc. stock.
<PAGE>
Ammonia hold, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Depreciable Property- Property, plant and equipment is stated at
cost. Major renewals and betterments are capitalized while
expenditures for maintenance and repairs are charged to operations
as incurred. Depreciation is computed on the straight-line method
over estimated useful lives of five to ten years for equipment and
fixtures and thirty years for buildings.
Property, Plant and Equipment consist of the following:
June 30,
1998
Building $ 361,262
Equipment 1,100,186
Fixtures 37,139
Land 246,212
Total property, plant and equipment 1,744,799
Less: accumulated depreciation (138,959)
Net property, plant and equipment $ 1,605,840
Depreciation expense was $62,116 and $44,426 for the years ended
June 30, 1998 and 1997, respectively.
Net Income (Loss) Per Share - The computation of net income (loss)
per common share is based on the weighted average number of common
shares outstanding during the period. Fully diluted earnings per
share includes the assumed conversion of preferred stock into common
stock at the beginning of the period.
Provision for Income Taxes - Deferred income taxes arise from timing
differences between financial reporting and tax reporting income and
expenses. Deferred taxes are classified as current or noncurrent,
depending on the classification of the assets and liabilities to
which they relate. Deferred taxes arising from timing differences
that are not related to an asset or liability are classified as
current or noncurrent, depending on the periods in which the timing
differences are expected to reverse.
Super Dry was an S corporation prior to its acquisition by Ammonia
Hold. As such, the past operating losses are not available for use
by the Company as they were reported on the individual tax returns
of the previous shareholders.
The Company has a June 30 year end for income tax reporting
purposes. The Company has approximately $1,446,000 of net operating
losses that may be offset against future taxable income. These NOL
carryforwards begin to expire in 2009. The Company believes there
is a 50% or greater chance that the remaining carryforward will
expire unused, therefore, no provision for tax benefit has been
recorded.
Use of Estimates in the Preparation of Financial Statements - The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements, and revenues and expenses during
the reporting period. In these financial statements, assets,
liabilities and earnings involve extensive reliance on management's
estimates. Actual results could differ form those estimates.
<PAGE>
Ammonia Hold, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 1998
NOTE 2 - INVENTORIES
The company uses the FIFO (first-in, first-out) method for inventory
valuation.
Inventories consist of the following at June 30, 1998:
1998
Raw materials $ 145,407
Work-in-progress 269,456
Finished goods 172,513
Total $ 587,376
NOTE 3 - OPERATING LEASES
The Company rents office and warehouse space on a month-to-month
basis with monthly rental payments of approximately $1,360. Total
rent expense amounted to $15,233 and $18,329 for the years ended
June 30, 1998 and 1997, respectively.
NOTE 4 - SALES TO PRINCIPAL CUSTOMER
The majority of the Company's sales (approximately 46% in the years
ended June 30, 1998 and 1997) were to a principal customer, which is
a national retail chain located in the United States, of which
$86,878 and $42,077 was receivable at June 30, 1998 and 1997.
NOTE 5 - STOCKHOLDERS' EQUITY TRANSACTIONS
During the year ended June 30, 1997, the Company had the following
stock transactions:
1. The Company issued 35,714 shares of common stock in exchange
for a patent. The patent was valued at $200,000.
2. The Company issued 488,666 shares of common stock in exchange
for $500,000 in cash.
3. The Company issued 76,923 shares of common stock in exchange
for $500,000 in cash.
4. The Company issued 90,834 shares of common stock in exchange
for $545,000 in cash.
The price at which stock was issued differed due to differences in
separately negotiated agreements and changes in trading volumes.
During the year ended June 30, 1998, the Company had the following
stock transactions:
1. All of the preferred stockholders converted their preferred
stock for common stock during the year (See Note 7).
2. The Company issued 403,362 shares of common stock (along with
cash) to acquire Super Dry Industries, Inc. (See Note 1)
3. The Company issued 25,000 shares of restricted common stock to
cancel options to purchase 500,000 shares of common stock (see
Note 7). The Company recorded an expense of $49,219 to reflect the
market price of the common stock at the time of the transaction.
<PAGE>
Ammonia Hold, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 1998
NOTE 6-PREFERRED STOCK
On June 5, 1997 the Company issued 3,000 shares of Series A
Convertible Preferred Stock. These shares have a par value of
$.001 and are entitled to receive dividends as if they were
converted to Common Stock (see conversion rights below). Upon
liquidation, dissolution, or winding up, these shares are
entitled to a liquidation preference of $1,000 per share.
Each share is convertible, at the option of the holder at any
time, into common stock as follows:
$1,000 divided by the lower of (1)sixty-five percent
(65%) of the market price of the common stock
(determined by the closing bid price averaged over the
five preceding days prior to conversion) or
(2)$3.515625, adjusted for stock splits or dividends.
The Company has recorded a deemed dividend related to the
issuance of the preferred stock. This deemed dividend is due to
the large discount between the conversion price and the market
price of common stock on the day of issuance. The deemed
dividend is calculated at $1,600,000 which represents the amount
of common stock the preferred shareholders could have converted
to (65% divided by $3,000,000) on the day of issuance less the
$3,000,000 received. Retained earnings and additional paid in
capital have been adjusted to reflect the dividend.
During the year ended June 30, 1998, all of the preferred
shareholders converted their shares of preferred stock for common
stock.
NOTE 7-WARRANTS AND OPTIONS:
The Company has the following options outstanding at June 30, 1997.
Amount Price Expiration
100,000 Shares $ 4.25 May 22, 1998
100,000 Shares 4.75 May 22, 2002
100,000 Shares 5.25 May 22, 1999
100,000 Shares 6.25 May 22, 2000
100,000 Shares 7.25 May 22, 2001
100,000 Shares 8.25 May 22, 2002
These options were cancelled by issuing 25,000 shares of common
stock (See Note 6).
On May 14, 1998, the Company entered into an agreement with a
marketing firm in which the marketing firm will market the
Company's products to wholesalers and retailers. In connection
with this agreement the Company granted options to purchase an
aggregate of 1,100,000 shares of the Company's common stock for
the purchase price of $2.6875 per share.
The first 550,000 shares are exercisable if the aggregate sales
of company products for which the marketing firm is responsible
reaches $5,000,000 within 18 months of May 14, 1998.
The second 550,000 shares are exercisable if the aggregate sales
of company products for which the marketing firm is responsible
reaches $10,000,000 within 3 years of May 14, 1998.
If the first option is not exercisable because sales did not
reach $5,000,000 but the sales within 3 years does reach
$10,000,000 then an additional 550,000 shares will be
exercisable.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
This Item is not Applicable.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the
Exchange Act
The following table sets forth the names, ages, and offices
held with the Company by it's directors and executive officers:
Name Position Director Since Age
Michael D. Parnell President, Chief 1996 39
Executive Officer
and Director
Dan N. Thompson Secretary/Treasurer 1994 35
Chief Financial
Officer and Director
Robert S. Ligon Director 1994 76
Charles R. Nickle Director 1997 44
William H. Ketchum Director 1997 66
All directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and
qualified. There are no agreements with respect to the election of
directors. The Company has not compensated its directors for
service on the Board of Directors or any committee thereof. Any
non-employee director of the Company is reimbursed for expenses
incurred for attendance at meetings of the Board of Directors and
any committee of the Board of Directors. The Executive Committee
of the Board of Directors, to the extent permitted under Utah law,
exercises all of the power and authority of the Board of Directors
in the management of the business and affairs of the Company
between meetings of the Board of Directors. Each executive officer
serves at the discretion of the Board of Directors.
The business experience of each of the persons listed above
during the past five years is as follows:
Michael D. Parnell is the President and Chief Executive
Officer of the Company. Mr. Parnell is a graduate of the
University of Arkansas with a degree in Agricultural Economics. He
has over 17 years experience in the investment banking business was
associated with Paine Webber until 1997. Mr. Parnell has been
associated with the Company since its inception and became
President and a director in 1996.
Dan N. Thompson is the Secretary / Treasurer and Chief
Financial Officer of the Company. Mr. Thompson is a graduate of
Texas A & M with a degree in industrial distribution. Mr. Thompson
is currently the Denver district sales manager for the Trane
Corporation.
Robert S. Ligon is a graduate from the University of Arkansas
with a degree in business administration. In 1989, Mr. Ligon
retired from Ligon Brothers, Inc., a heavy equipment wholesaler.
Mr. Ligon was the original President of AHI-Texas.
Charles R. Nickle is a graduate from the University of
Arkansas with a degree in civil engineering. Mr. Nickle is
currently Vice President of McGoodwin, Williams and Yates, Inc.
His professional experience includes project planning, design, and
construction management of water treatment facilities and
distribution systems, drainage facilities and wastewater treatment
and collection facilities.
William H. Ketchum is a graduate from the University of
Arkansas with a degree in business administration and a masters in
operational management. Mr. Ketchum is a retired Naval Officer
and is currently involved in real estate, cattle and farming
operations, and the sanitation and recycling business.
Item 10. Executive Compensation
The Company does not have a bonus, profit sharing, or deferred
compensation plan for the benefit of its employees, officers or
directors, nor has the Company entered into employment contracts
with any of the aforementioned persons. Beginning with the quarter
ended March 31, 1998, director receive $500 per quarter as a
directors' fee.
Cash Compensation
The following table sets forth all cash compensation paid by
the Company for services rendered to the Company for the fiscal
years ended June 30, 1996, 1997 and 1998, to the Company's Chief
Executive Officer. No executive officer of the Company has earned
a salary greater than $100,000 annually for any of the periods
depicted.
<PAGE>
Summary Compensation Table
Other All
Annual Other
Name and Fiscal Compen- Compen-
Principal Position Year Salary Bonus sation sation
Michael D. Parnell, 1998 $55,499 $ -0- $ -0- $1,000
President, C.E.O. 1997 53,999 -0- -0- -0-
1996 -0- -0- -0- -0-
Mathew Hoff(1) 1997 53,999 -0- -0- -0-
President, C.E.O 1996 26,512 -0- -0- -0-
__________________
(1) President and C.E.O. of the Company until 1997
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information, to the best
knowledge of the Company as September 30, 1998, with respect to
each person known by the Company to own beneficially more than 5%
of the Company's outstanding common stock, each director and all
directors and officers as a group.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class(1)
Michael D. Parnell* 478,508 6.0%
10 Gunnebo Drive
Lonoke, AR 72086
Dan N. Thompson* 3,353 .04%
10 Gunnebo Drive
Lonoke, AR 72086
Robert S. Ligon* 223,210 2.8
10 Gunnebo Drive
Lonoke, AR 72086
Charles R. Nickle* 25,000 .3%
10 Gunnebo Drive
Lonoke, AR 72086
William H. Ketchum* 23,850 .3%
10 Gunnebo Drive
Lonoke, AR 72086
All directors and executive 753,921 9.5%
officers as a group
(5 persons in group)
* Director and/or executive officer
Note: Unless otherwise indicated in the footnotes below, the
Company has been advised that each person above has sole
voting power over the shares indicated above.
(1) Based upon 7,967,190 shares of common stock outstanding on
October 9, 1998.
Item 12. Certain Relationships and Related Transactions
During the Company's last two fiscal years, there have been no
transactions between the Company and any officer, director, nominee
for election as director, or any shareholder owning greater than
five percent (5%) of the Company's outstanding shares, nor any
member of the above referenced individuals' immediate family,
except as set forth below.
During the fiscal year ended June 30, 1997, the Company
borrowed $68,000 from the trust of the mother of the Company's
President, Michael D. Parnell, of which Mr. Parnell is trustee.
The loan was represented by a note dated February 28, 1996, which
was due upon demand and carried an interest rate of eight percent
(8%) per annum. The loan was repaid in its entirety as of June 30,
1997.
Also during the fiscal year ended June 30, 1997, the Company
acquired from one of its directors, William H. Ketchum, ten (10)
acres of land located in Lonoke, Arkansas, in exchange for 41,200
shares of the Company's common stock. The property was used to
develop the Company's current principal place of business.
PART V
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Exhibit Name
*3.1 Articles of Incorporation and all amendments thereto
*3.2 By-Laws
*4.1 Instrument defining rights of holders
*10.1 Licensing Agreement dated April 1, 1996 with Grace Holdings
21.1 Subsidiaries
27 Financial Data Schedules
* Previously filed as Exhibit to Form SB-2.
(b) The Company did not file any reports on Form 8-K for the
three month period ended June 30, 1998.
<PAGE>
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.
AMMONIA HOLD, INC.
BY: /S/ Michael D. Parnell
(Signature)
Michael D. Parnell,
President and C.E.O.
Dated: October 13, 1998
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
Signature Title Date
President, C.E.O. and
Director October 13, 1998
/S/ Michael D. Parnell
(Signature)
Michael D. Parnell
Vice President and
Director October 13, 1998
/S/ Dan N. Thompson Chief Accounting Officer
(Signature) Principal Financial Officer
Dan N. Thompson
October 13, 1998
/S/ Robert S. Ligon Director
(Signature)
Robert S. Ligon
October 13, 1998
/S/ Charles R. Nickle Director
(Signature)
Charles R. Nickle
October 13, 1998
/S/ William H. Ketchum Director
(Signature)
William H. Ketchum
EXHIBIT 21.1
SUBSIDIARIES OF AMMONIA HOLD, INC.
The following are subsidiaries of Ammonia Hold, Inc., a Utah
corporation:
1. Ammonia Hold, Inc., a Texas corporation, 100% owned by
Ammonia Hold, Inc.
2. Fivestar Products Corporation, a Utah corporation, 100%
owned by Ammonia Hold, Inc.
3. Super Dry Industries, Inc., a Mississippi corporation,
100% owned by Ammonia Hold, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE AMMONIA HOLD, INC. FINANCIAL
STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-1-1997
<PERIOD-END> JUN-30-1998
<CASH> 854,883
<SECURITIES> 1,646,575
<RECEIVABLES> 324,361
<ALLOWANCES> 25,275
<INVENTORY> 587,376
<CURRENT-ASSETS> 3,496,722
<PP&E> 1,498,587
<DEPRECIATION> 138,959
<TOTAL-ASSETS> 6,242,837
<CURRENT-LIABILITIES> 221,209
<BONDS> 0
0
0
<COMMON> 7,967
<OTHER-SE> 10,096,457
<TOTAL-LIABILITY-AND-EQUITY> 6,242,837
<SALES> 1,134,189
<TOTAL-REVENUES> 1,134,189
<CGS> 605,707
<TOTAL-COSTS> 1,110,304
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 81,427
<INCOME-TAX> 0
<INCOME-CONTINUING> 81,427
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 81,427
<EPS-PRIMARY> .011
<EPS-DILUTED> .011
</TABLE>
