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 March 31, 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 March 31, 1998
Common Stock, $.001 par value 7,538,828
<PAGE>
TABLE OF CONTENTS
Heading Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements. . . . . . . 1
Consolidated Balance Sheets -- March 31, 1998
and June 30, 1997. . . . . . . . . . . . . . 2
Consolidated Statements of Operations -- three and
nine months ended March 31, 1998 and 1997. . 4
Consolidated Statements of Stockholders' Equity 5
Consolidated Statements of Cash Flows -- nine
months ended March 31, 1998 and 1997 . . . . 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. . . . . . . . . . . . . . . 12
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 March 31, 1998, have been prepared by the Company.
AMMONIA HOLD, INC.
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 and June 30, 1997
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Consolidated Balance Sheets
ASSETS
March 31, June 30,
1998 1997
CURRENT ASSETS (unaudited) (audited)
Cash and cash equivalents $2,671,651 $3,224,211
Accounts receivable net of
allowance for doubtful accounts
of $14,186 and $14,186 315,701 120,339
Prepaid expenses 34,050 29,950
Prepaid consulting fees 317,325 334,482
Inventory 307,307 198,915
Tax benefit receivable 5,000 5,000
Total Current Assets 3,651,034 3,912,897
PROPERTY, PLANT AND EQUIPMENT
Depreciable assets-net of
accumulated depreciation 908,279 519,073
Land 226,600 226,600
Total Property, Plant
and Equipment 1,134,879 745,673
OTHER ASSETS
Building fund - -
Patents-net of accumulated
amortization of $183,121
and $145,269 456,277 480,074
Prepaid consulting fees-non
current portion 1,425 900
Deposits - 16,200
Total Other Assets 457,702 497,174
TOTAL ASSETS $5,243,615 $5,155,744
(continued)
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Consolidated Balance Sheets
(continued)
LIABILITIES AND STOCKHOLDERS EQUITY
March 31, June 30,
1998 1997
CURRENT LIABILITIES (unaudited) (audited)
Accounts payable $ 99,691 $ 85,200
Accrued payroll taxes 2,077 -
Income tax payable - -
Total Current Liabilities 101,768 85,200
STOCKHOLDERS EQUITY
Series A convertible preferred
stock, $.001 par value;
25,000,000 shares authorized;
3,000 shares issued and
outstanding - 3
Common stock, par value $.001,
authorized shares 100,000,000:
7,538,828 and 4,559,415 shares
issued and outstanding 7,539 4,559
Paid in capital - preferred - 2,624,997
Paid in capital - common 9,190,523 6,568,503
Accumulated deficit (4,033,995) (4,127,518)
Less Treasury Stock (22,220) -
Total Stockholders Equity 5,141,847 5,070,544
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $5,243,615 $5,155,744
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Consolidated Statements of Operations
For the Three Months Ended For the Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
(unaudited) (unaudited) (unaudited) (unaudited)
Sales - Net of Allowances
And Discounts $ 360,236 $ 270,550 $ 849,103 $ 905,628
Cost of Sales 173,293 191,320 432,436 672,491
Gross Profit 186,943 79,230 416,667 233,137
General & Administrative 149,585 206,082 424,372 922,001
Other Income 31,205 14,564 101,228 48,386
Income (Loss) Before
Income Taxes 68,563 (112,288) 93,523 (640,478)
Provisions (Benefit)
for Income Taxes - - - (5,000)
Net Income (Loss) 68,563 (112,288) 93,523 (635,478)
Net Income (Loss) per Share $ .009 $ (.025) $ .017 $ (.14)
Weighted Average
Outstanding Shares 7,349,728 4,485,803 5,489,519 4,525,503
<PAGE>
<TABLE>
Ammonia Hold, Inc. and Subsidiary
Consolidated Statements of Stockholders Equity
From July 1, 1995 through March 31, 1998
Preferred Stock Common Stock
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additional Additional Retained
Paid-in Paid-in Treasury Earnings
Shares Amount Capital Shares Amount Capital Stock (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)
Company purchase of
Treasury Stock - - - - - - (22,220) -
Conversion of
Preferred stock (3,000) (3) (2,624,997) 2,979,413 2,980 2,622,020 - -
Net Income for the
Nine months ended
March 31, 1998
(unaudited) - - - - - - - 93,523
Balance March 31,
1998 - $ - $ - 7,538,828 $7,539 $9,190,523 $(22,220) $(4,033,995)
</TABLE>
<PAGE>
Ammonia Hold, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Nine months For the Nine months
ended March 31, ended March 31,
1998 1997
(unaudited) (unaudited)
Cash Flows from Operating Activities:
Net income (loss) $ 93,523 $ (635,478)
Non-cash item:
Depreciation 22,200 23,674
Amortization 23,797 27,741
Bad Debt expense - -
Write off license agreement - -
Stock issued for services - -
Consulting expense - -
Changes in current assets
and liabilities:
(Increase)decrease in:
Accounts receivable (195,362) (27,562)
Prepaid expense/deposits 28,732 622,175
Inventories (108,392) (2,147)
Increase (decrease) in:
Accounts payable 14,491 115,159
Accrued liabilities 2,077 (10,597)
Net cash provided (used) by
operating activities (118,934) 112,965
Cash flows from investing activities:
Purchase Patent - (237,346)
Purchase of property and equipment (411,406) -
Purchase of Treasury Stock (22,220) (492,648)
Net cash provided (used) by
Investing activities (433,626) (729,994)
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 (552,560) 927,971
Cash and Cash Equivalent at
beginning of period 3,224,211 349,494
Cash and Cash Equivalent at
end of period $ 2,671,651 $ 1,277,465
(continued)
Ammonia Hold, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(continued)
For the Nine months For the Nine months
ended March 31, ended March 31,
1998 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
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 nine month periods ended March
31, 1998 and 1997. It should be noted that percentages discussed
throughout this analysis are stated on an approximate basis.
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
(Unaudited) (Unaudited)
Sales. . . . . . . . . . 100 % 100 % 100 % 100 %
Cost of sales. . . . . 48 71 51 74
Gross profit . . . . . . 52 29 49 26
General and Administrative
expenses . . . . . . . 42 76 50 102
Other income . . . . . . 9 5 12 5
Income (loss) before
income taxes . . . . . 19 (42) 11 (71)
Provisions (benefit) for
income taxes . . . . . - - - (1)
Net income . . . . . . . 19 (42) 11 (70)
Results of Operations
Total sales, net of allowances and discounts, for the three
month period ended March 31, 1998 ("third quarter of fiscal 1998")
increased 33% from the third quarter of fiscal 1997 due to new
customer shipments, and decreased 6% for the nine month period
ended March 31, 1998 ("first nine months of fiscal 1998") compared
to the 1997 period, due to decreased orders from one customer.
Cost of sales (as a percentage of total revenues) decreased to 48%
for the third quarter of fiscal 1998, from 71% for the third
quarter of fiscal 1997, and decreased to 51% for the first nine
months of fiscal 1998 from 74% for the comparable 1997 period.
These percentage decreases for the 1998 periods are the result of
more efficient packaging and distribution procedures and a higher
margin product mix. Actual cost of sales decreased 9% for the
third quarter of fiscal 1998 and 36% for the first nine months of
fiscal 1998 compared to the corresponding 1997 periods also due to
more efficient packaging and distribution and higher margin product
mix.
<PAGE>
General and administrative expenses for third quarter and
first nine months of fiscal 1998 decreased 27% and 54%,
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 76% for the third
quarter of fiscal 1997 to 42% for the third quarter of fiscal 1998,
and from 102% for the first nine months of fiscal 1997 to 50% for
the first nine months of fiscal 1998.
Other income increased to $31,205 (114%) for the third quarter
of fiscal 1998 from $14,564 for the 1997 period, and also increased
to $101,228 (109%) for the first nine months of fiscal 1998 from
$48,386 for the 1997 period due to interest income from cash
balances. The net profit for the third quarter and first nine
months of fiscal 1998 increased to $68,563 and $93,523,
respectively, as compared with losses of $112,288 and $635,478 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 March 31, 1998 was $3,549,266,
a decrease from $3,827,697 at June 30, 1997, primarily attributed
to the $552,560 (17%) decrease in cash due to cash used for the
purchase of property and equipment of $411,406, and increases in
accounts payable of $195,362 due to increased raw material and
packaging supplies necessary for increased orders, and inventories
of $108,392 due to the necessity of having sufficient finished
product available for shipments.
Net cash used by operating activities for the first nine
months of fiscal 1998 was $118,934 compared to net cash provided of
$112,,965 for the comparable 1997 period. This change is primarily
attributed to the increases in accounts receivable and inventories
during the 1998 period and due to the significant increase in
prepaid expenses and deposits and the increase in accounts payable
during the 1997 period. Net cash provided by financing activities
for the first nine months of fiscal 1998 was $0 compared to
$1,545,000 for the 1997 period, realized from the issuance of
common stock. Also during the first nine months of 1998, the
Company issued a total of 2,979,413 shares of common stock upon the
conversion of preferred stock.
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 March 31, 1998, the Company had total assets of
$5,243,615 and total stockholders' equity of $5,141,847. 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 nine months of fiscal 1998
is primarily due to increased inventories and accounts receivable
and 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
During the third quarter of 1998, the Company issued a total
of 2,979,413 shares of its authorized but previously unissued
common stock to 24 persons upon the conversion of certain preferred
stock. The Company did not receive any cash related to the
issuance. As of the date hereof, no shares of convertible
preferred stock remain outstanding.
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 March 31, 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: May 18, 1998 By /S/ Michael D. Parnell
(Signature)
MICHAEL D. PARNELL,
President and Director
Date: May 18, 1998 By /S/ Dan N. Thompson
(Signature)
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 MARCH 31, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-1-1997
<PERIOD-END> MAR-31-1998
<CASH> 2,671,651
<SECURITIES> 0
<RECEIVABLES> 329,887
<ALLOWANCES> 14,186
<INVENTORY> 307,307
<CURRENT-ASSETS> 3,651,034
<PP&E> 1,134,879
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,243,615
<CURRENT-LIABILITIES> 101,768
<BONDS> 0
0
0
<COMMON> 7,539
<OTHER-SE> 9,190,523
<TOTAL-LIABILITY-AND-EQUITY> 5,243,615
<SALES> 360,236
<TOTAL-REVENUES> 360,236
<CGS> 173,293
<TOTAL-COSTS> 149,585
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 68,563
<INCOME-TAX> 0
<INCOME-CONTINUING> 68,563
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,563
<EPS-PRIMARY> .009
<EPS-DILUTED> .009
</TABLE>
