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 December 31, 1997
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 December 31, 1997
Common Stock, $.001 par value 4,559,415
<PAGE>
TABLE OF CONTENTS
Heading Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements. . . . . . . 1
Consolidated Balance Sheets -- December 31, 1997
and June 30, 1997. . . . . . . . . . . . . . 2
Consolidated Statements of Operations -- three and
six months ended December 31, 1997 and 1996. 4
Consolidated Statements of Stockholders' Equity 5
Consolidated Statements of Cash Flows -- six
months ended December 31, 1997 and 1996. . . 6
Notes to Consolidated Financial Statements . . 8
Item 2. Management's Discussion and Analysis and
Results of Operations. . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . 11
Item 2. Changes In Securities. . . . . . . . . . . . . 11
Item 3. Defaults Upon Senior Securities. . . . . . . . 11
Item 4. Submission of Matters to a Vote of
Securities Holders . . . . . . . . . . . . . 11
Item 5. Other Information. . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . 13
-i-
<PAGE>
PART I
Item 1. Financial Statements
The following unaudited Financial Statements for the period
ended December 31, 1997, have been prepared by the Company.
AMMONIA HOLD, INC.
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and June 30, 1997
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Consolidated Balance Sheets
ASSETS
December 31, June 30,
1997 1997
CURRENT ASSETS (unaudited) (audited)
Cash and cash equivalents $2,629,938 $3,224,211
Accounts receivable net of
allowance for doubtful accounts
of $14,186 and $14,186 326,039 120,339
Prepaid expenses 29,950 29,950
Prepaid consulting fees 317,418 334,482
Inventory 263,011 198,915
Tax benefit receivable 5,000 5,000
Total Current Assets 3,571,356 3,912,897
PROPERTY, PLANT AND EQUIPMENT
Depreciable assets-net of accumulated
depreciation 911,525 519,073
Land 226,600 226,600
Total Property, Plant and
Equipment 1,138,125 745,673
OTHER ASSETS
Building fund - -
Patents-net of accumulated
amortization of $183,121
and $145,269 465,740 480,074
Prepaid consulting fees-non
current portion 1,425 900
Deposits - 16,200
Total Other Assets 467,165 497,174
TOTAL ASSETS $5,176,646 $5,155,744
(continued)
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Consolidated Balance Sheets
(continued)
LIABILITIES AND STOCKHOLDERS EQUITY
December 31, June 30,
1997 1997
CURRENT LIABILITIES (unaudited) (audited)
Accounts payable $ 79,993 $ 85,200
Accrued payroll taxes 1,149 -
Income tax payable - -
Total Current Liabilities 81,142 85,200
STOCKHOLDERS EQUITY
Series A convertible preferred stock,
$.001 par value; 25,000,000 shares
authorized; 3,000 shares issued and
outstanding at June 30, 1997 3 3
Common stock, par value $.001, authorized
shares 100,000,000: 4,559,415
shares issued and outstanding
respectively 4,559 4,559
Paid in capital - preferred 2,624,997 2,624,997
Paid in capital - common 6,568,503 6,568,503
Accumulated deficit (4,102,558) (4,127,518)
Total Stockholders Equity 5,095,504 5,070,544
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 5,176,646 $ 5,155,744
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Consolidated Statements of Operations
For the Three Months Ended For the Six Months Ended
December 31, December 31,
1997 1996 1997 1996
Sales - Net of Allowances
And Discounts $ 249,822 $ 329,806 $ 488,867 $ 635,078
Cost of Sales 129,769 234,162 259,143 481,171
Gross Profit 120,053 95,644 229,724 153,907
General & Administrative 149,691 668,658 274,787 715,919
Other Income 33,938 16,909 70,023 33,822
Income (Loss) Before
Income Taxes 4,300 (556,105) 24,960 (528,190)
Provisions (Benefit)
for Income Taxes 940 (5,000) - 100
Net Income (Loss) 3,360 (561,105) 24,960 (528,290)
Net Income (Loss) per Share $ .0007 $ (.12) $ 0.0055 $ (.117)
Weighted Average
Outstanding Shares 4,559,415 4,525,503 4,559,415 4,525,503
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Consolidated Statements of Stockholders Equity
From July 1, 1995 through June 30 1997
Preferred Stock Common Stock
Additional Additional Retained
Paid-in Paid-in Earnings
Shares Amount Capital Shares Amount Capital (Deficit)
Balance on June 30,
1995 - - - 3,399,078 $3,399 $ 773,863 $ (274,192)
Issued common stock
for land - - - 41,200 41 226,559 -
Issued common stock
for consulting
services - - - 117,000 114 643,383 -
Issued common stock
for licensing
agreement and cash - - - 200,000 200 1,099,800 -
Issued shares in
exchange for the
cancellation of
options - - - 110,000 110 480,590 -
Net income (loss) for
the year ended
June 30, 1996 - - - - - - (1,072,006)
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 preferred
stock for cash 3,000 3 2,624,997 - - - -
Deemed dividend - - - - - 1,600,000 (1,600,000)
Net 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)
Net Income for the
Six months ended
December 31, 1997
(unaudited) - - - - - - 24,960
Balance December 31,
1997 3,000 $ 3 $2,624,997 4,559,415 $4,559 $6,568,503 $(4,102,558)
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Six months For the Six months
ended December 31, ended December 31,
1996 1997
Cash Flows from Operating Activities:
Net income (loss) $ (528,290) $ 24,960
Non-cash item:
Depreciation 12,567 11,100
Amortization 18,278 14,334
Bad Debt expense - -
Write off license agreement - -
Stock issued for services - -
Consulting expense - -
Changes in current assets and liabilities:
(Increase)decrease in:
Accounts receivable (40,699) (205,700)
Prepaid expense/deposits 328,675 32,739
Inventories (2,147) (64,096)
Increase (decrease) in:
Accounts payable 119,189 (5,207)
Income tax payable (5,294) -
Accrued liabilities 3,081 1,149
Net cash provided (used) by
operating activities (94,640) (190,721)
Cash flows from investing activities:
Cash used for building costs (165,027) -
Purchase of property and equipment (215,752) (403,552)
Net cash provided (used) by
Investing activities (370,779) (403,552)
Cash flows from financing activities:
Issuance of preferred stock - -
Issuance of common stock 1,545,000 -
Net cash provided (used) by
Financing activities 1,545,000 -
Increase (decrease) in Cash 1,019,581 (594,273)
Cash and Cash Equivalent at beginning
of period 349,494 3,224,211
Cash and Cash Equivalent at end of period $ 1,369,075 $ 2,629,938
(continued)
Ammonia Hold, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(continued)
For the Six months For the Six months
ended June 30, ended June 30,
1996 1997
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION
Cash paid for interest $ - $ -
Cash paid for income tax $ - $ -
NON CASH FINANCING ACTIVITIES
Issued stock for consulting services $ - $ -
Issued stock for land - -
Issued stock for licensing agreement - -
Issued stock for patent $ - $ -
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Notes to Consolidated Financial Statements
June 30, 1997 and 1996
NOTE 1 - INTERIM FINANCIAL STATEMENTS
Management has elected to omit all the disclosures for the interim
financial statements ended December 31, 1997 but has made all the
necessary adjustments to present accurate financial statements for
the six months presented.
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 and six month periods ended December
31, 1997 and 1996. It should be noted that percentages discussed
throughout this analysis are stated on an approximate basis.
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
(Unaudited) (Unaudited)
Sales. . . . . . . . . . 100 % 100 % 100 % 100 %
Cost of sales. . . . . 52 71 53 76
Gross profit . . . . . . 48 29 47 24
General and Administrative
expenses . . . . . . . 60 203 56 113
Other income . . . . . . 14 5 14 5
Income (loss) before
income taxes . . . . . 0 (169) 5 83
Provisions (benefit) for
income taxes . . . . . 0 (2) - 0
Net income . . . . . . . 1 167 5 83
Results of Operations
Total sales, net of allowances and discounts, for the three
month period ended December 31, 1997 ("second quarter of fiscal
1998") decreased 24% from the second quarter of fiscal 1997, and
23% for the six month period ended December 31, 1997 ("first half
of fiscal 1998") compared to the 1997 period, primarily due to
decreased orders from one customer and some shipments being moved
into the third quarter of fiscal 1998. Cost of sales (as a
percentage of total revenues) decreased to 52% for the second
quarter of fiscal 1998, from 71% for the second quarter of fiscal
1997, and decreased to 53% for the first half of fiscal 1997 from
76% for the comparable 1997 period. These percentage decreases for
the 1997 periods are the result of more efficient packaging and
distribution procedures and a higher margin product mix. Actual
cost of sales decreased 45% for the second quarter of fiscal 1998
and decreased 46% for the first half of fiscal 1998 compared to the
corresponding 1997 periods also due to more efficient packaging and
distribution and higher margin product mix, and because of the
decrease in total sales.
General and administrative expenses for second quarter and
first half of fiscal 1998 decreased 78% and 62%, respectively, when
compared to the corresponding 1997 periods, primarily attributed to
the one-time write-off of consulting fees in the 1997 periods. As
a percentage of total revenues, general and administrative expenses
decreased from 203% for the second quarter of fiscal 1997 to 60%
for the second quarter of fiscal 1998, and from 113% for the first
half of fiscal 1997 to 56% for the first half of fiscal 1998.
Other income increased to $33,938 for the third quarter of
fiscal 1998 from $16,909 for the 1997 period, and also increased to
$70,023 for the first half of fiscal 1998 from $33,822 for the 1997
period due to interest income from cash balances. The net profit
for the second quarter and first half of fiscal 1998 increased to
$3,360 and $24,960, respectively, as compared with losses of
$561,105 and $528,290 for the respective corresponding 1997
periods.
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 December 31, 1997 was
$3,490,214, a decrease from $3,827,667 at December 31, 1996,
primarily attributed to the $594,273 decrease in cash due to cash
used for the purchase of property and equipment of $$403,552. This
decrease in working capital was partially offset by the $205,700
increase in accounts receivable due to increased sales on account,
and the $64,096 increase in inventory due to anticipated future
demand and an increase in warehouse capacity.
Net cash used by operating activities for the first half of
fiscal 1998 was $190,721 compared to net cash used of $94,640 for
the comparable 1997 period. This change is primarily attributed to
the decrease in net loss for the first half of fiscal 1998,
partially offset by the increase in accounts receivable for the
same period and a significant increase in prepaid expenses for the
1997 period. Net cash provided by financing activities for the
first half of fiscal 1998 was $0 compared to $1,545,000 for the
1997 period realized from the issuance of common stock.
The Company anticipates meeting its working capital needs
during the remainder of the 1998 fiscal year partially with
revenues from operations, and by investigating the possibility of
interim financing to provide working capital and to increase
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 December 31, 1997, the Company had total assets of
$5,176,646 and total stockholders' equity of $5,095,504. In
comparison, as of June 30, 1997, the Company had total assets of
$5,155,744 and total stockholders' equity of $5,070,544. This
increase in total assets for the first half of fiscal 1998 is
primarily due to the acquisition of property and equipment during
the period.
In the opinion of management, inflation has not had a material
effect on the operations of the Company.
PART II
Item 1. Legal Proceedings
There are presently no other 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.
<PAGE>
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 December 31, 1997.
<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: February 19, 1998 By /S/ Michael D. Parnell
(Signature)
MICHAEL D. PARNELL,
President and Director
Date: February 19, 1998 By /S/ Dan N. Thompson
(Signature)
DAN N. THOMPSON, Secretary,
Treasurer, Chief
Financial Officer and
Director
(Principal Accounting
Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE AMMONIA HOLD, INC. FINANCIAL
STATEMENTS FOR THE PERIOD ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-1-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,629,938
<SECURITIES> 0
<RECEIVABLES> 340,225
<ALLOWANCES> 14,186
<INVENTORY> 263,011
<CURRENT-ASSETS> 3,571,356
<PP&E> 1,138,125
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,176,646
<CURRENT-LIABILITIES> 81,142
<BONDS> 0
0
3
<COMMON> 4,559
<OTHER-SE> 9,193,500
<TOTAL-LIABILITY-AND-EQUITY> 5,176,646
<SALES> 488,867
<TOTAL-REVENUES> 488,867
<CGS> 259,143
<TOTAL-COSTS> 274,787
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 24,960
<INCOME-TAX> 0
<INCOME-CONTINUING> 24,960
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,960
<EPS-PRIMARY> .005
<EPS-DILUTED> .005
</TABLE>
