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, 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 December 31, 1998
Common Stock, $.001 par value 7,967,190
<PAGE>
TABLE OF CONTENTS
Heading Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements. . . . . . . . . . . . 3
Consolidated Balance Sheets -- December 31, 1998
and June 30, 1998. . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations -- three and
six months ended December 31, 1998 and 1997. . . . . . 6
Consolidated Statements of Cash Flows -- six
months ended December 31, 1998 and 1997. . . . . . . . 7
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
<PAGE>
PART I
Item 1. Financial Statements
The following unaudited Financial Statements for the period
ended December 31, 1998, have been prepared by the Company.
AMMONIA HOLD, INC.
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and June 30, 1998
<PAGE>
Ammonia Hold, Inc. and Subsidiaries
Balance Sheets
Assets
December 31, June 30,
1998 1998
(unaudited) (audited)
Current assets
Cash and Cash equivalents $ 363,887 $ 854,883
Accounts receivable net of
allowance for doubtful accounts
of $25,275 and $14,186, respectively 398,785 299,086
Prepaid expenses 57,825 30,213
Investments in Trading equities 1,936,553 1,646,575
Inventory 664,154 587,376
Other receivables and accrued interest 65,530 78,589
Total Current Assets $ 3,486,734 $ 3,496,722
PROPERTY, PLANT & EQUIPMENT
Depreciable assets - net of accumulated
depreciation 1,647,482 1,359,628
Land 251,212 246,212
Total Property, Plant and Equipment 1,898,694 1,605,840
OTHER ASSETS
Patents - net of accumulated
amortization of $241,638 and
$183,121, respectively 421,556 441,063
Investment in Held to Maturity Bonds - 699,212
Total Other Assets 421,556 1,140,275
Total Assets $ 5,806,984 $ 6,242,837
(continued)
<PAGE>
Ammonia Hold, Inc. and Subsidiaries
Balance Sheets
(continued)
Liabilities and Stockholders' Equity
December 31, June 30,
1998 1998
(unaudited) (audited)
CURRENT LIABILITIES
Accounts payable $ 94,566 $ 198,189
Accrued payroll taxes 10,274 -
Accrued expenses - 23,020
Total Current Liabilities 104,840 221,209
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 - -
Common Stock, par value $.001
authorized shares 100,000,000:7,967,190 &
4,559,415 shares issued and outstanding,
respectively 7,967 7,967
Addition paid in capital 10,096,457 10,096,457
Accumulated Deficit (3,986,855) (4,046,091)
Less: Treasury stock at cost (415,425) (36,705)
Total Stockholders' Equity (Deficit) 5,702,144 6,021,628
Total Liabilities and Stockholders' Equity $ 5,806,984 $ 6,242,837
<PAGE>
Ammonia Hold, Inc. and Subsidiaries
Statements of Operations
For the Three Months For the Six Months
Ended December 31, Ended December 31,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Total Revenues $ 574,753 $ 249,822 $ 1,056,524 $ 488,867
Cost of Sales 370,056 129,769 651,947 259,143
Gross Profit 204,697 120,053 404,577 229,724
General &
Administrative Expenses 361,380 149,691 666,113 274,787
Other Income 172,213 33,938 320,772 70,023
Income (Loss)
Before Income Taxes 15,530 4,300 59,236 24,960
Provisions For Income Taxes - 940 - -
Net Income 15,530 3,360 59,236 24,960
Net (Loss) Per Share $ .0019 $ .0007 $ .0074 $ .0055
Weighted Average
Outstanding Shares 7,967,190 4,559,415 7,967,190 4,559,415
Ammonia Hold, Inc. and Subsidiaries
Statement of Cash Flows
For the Six Months
Ended December 31,
1998 1997
Cash Flows form Operating Activities:
Net gain (loss) $ 59,236 $ 24,960
Non-cash items:
Depreciation 36,264 11,100
Amortization 19,506 14,334
Changes in current assets and liabilities:
(Increase) decrease in:
Accounts receivable (86,640) (205,700)
Prepaid expenses/deposits (27,612) 32,739
Inventories (76,778) (64,096)
Increase (decrease) in:
Accounts payable (103,622) (5,207)
Income tax payable -
Accrued liabilities (12,746) 1,149
Net Cash Provided (Used) by
Operating Activities (192,392) (190,721)
Cash Flows from Investing Activities
Purchase land (5,000)
Purchase of equity and bonds 409,234
Purchase of property and equipment (324,118) (403,552)
Purchase Treasury stock (378,720)
Net Cash Provided (Used) by
Investing Activities (298,604) (403,552)
Cash Flows from Financing Activities:
Issuance of Preferred Stock - -
Issuance of common stock - -
Net Cash Provided by
Financing Activities - -
Net increase (decrease) in cash (490,996) (594,273)
Cash and Cash Equivalents at
Beginning of Period 854,883 3,224,211
Cash and Cash Equivalents at
End of Period $ 363,887 $ 2,673,275
Supplemental Cash Flow Information:
Cash paid for interest $ - $ -
Cash paid for income taxes $ - $ -
Ammonia Hold, Inc. and Subsidiaries
December 31, 1998
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
GENERAL
Ammonia Hold, Inc. and Subsidiaries (the Company) has elected to
omit substantially all footnotes to the financial statements for the
three months ended December 31, 1998 since there have been no
material changes (other than indicated in other footnotes) to the
information previously reported by the Company in their Annual
Report filed of Form 10-KSB for the Fiscal year ended June 30, 1998.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and
records of the Company without audit. However, such information
reflects all adjustment which are, in the opinion of management,
necessary to properly reflect the results of the interim period
presented. The information presented is not necessarily indicative
of the results from operations expected for the full fiscal year.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
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, 1998 and 1997. 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,
1998 1997 1998 1997
(Unaudited) (Unaudited)
Total revenues . . . . . . 100% 100% 100% 100%
Cost of sales. . . . . . . 64 52 62 53
Gross profit . . . . . . . 36 48 38 47
General and Administrative
expenses . . . . . . . . 63 60 63 56
Other income . . . . . . . 30 13 30 14
Income before income taxes 3 1 5 5
Provisions income taxes. . - 0 - -
Net income . . . . . . . . 3 1 5 5
Results of Operations
Total revenues for the three month period ended December 31,
1997 ("second quarter of fiscal 1998") increased 130% from the
second quarter of fiscal 1997, and increased 116% for the six
month period ended December 31, 1998 ("first half of fiscal 1998")
compared to the 1997 period. These increases are primarily due to
increased distribution and new customer shipments. Cost of sales
(as a percentage of total revenues) increased to 64% for the second
quarter of fiscal 1998 from 52% for the second quarter of fiscal
1997, and increased to 62% for the first half of fiscal 1997 from
53% for the comparable 1997 period. These percentage increases for
the 1998 periods are the result of shipment of lower margin
absorbent products due to the acquisition of Super Dry Industries,
Inc. ("Super Dry"). Actual cost of sales increased 185% for the
second quarter of fiscal 1998 and increased 152% for the first half
of fiscal 1998 compared to the corresponding 1997 periods due to
the increase in marketing costs associated with the increase in
total revenues and the shipment of lower margin absorbent products.
General and administrative expenses for second quarter and
first half of fiscal 1998 increased 141% and 142%, respectively,
when compared to the corresponding 1997 periods, primarily
attributed to salaries and other costs associated with Super Dry.
As a percentage of total revenues, general and administrative
expenses increased from 60% for the second quarter of fiscal 1997
to 63% for the second quarter of fiscal 1998, and from 56% for the
first half of fiscal 1997 to 63% for the first half of fiscal 1998.
Other income increased to $172,213 for the second quarter of
fiscal 1998 from $33,938 for the comparable 1997 period, and also
increased to $320,772 for the first half of fiscal 1998 from
$70,023 for the 1997 period due to interest income from cash
balances and gains from investments. The net income for the second
quarter and first half of fiscal 1998 increased to $15,530 and
$59,236, respectively, as compared with $3,360 and $24,960 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, 1998 was
$3,381,894, a 3% increase from $3,275,513 at December 31, 1996.
This increase is primarily attributed to the 33% increase in
accounts receivable due to increased customer orders, and 18%
increase in investments in trading equities reflecting gains in
investments. During this same period, inventory increased 13% due
to the need to maintain adequate levels for anticipated increased
orders, and prepaid expenses increased 91% reflecting marketing and
insurance cost. These increases were partially offset by the 57%
decrease in cash due to cash used for the purchase of property and
equipment of $324,118 and the $103,622 decrease in accounts
payable. The Company also expended $378,720 for the repurchase of
its own common stock pursuant to the Company's stock repurchase
program.
Net cash used by operating activities for the first half of
fiscal 1998 was $192,392 compared to net cash used of $190,721 for
the comparable 1997 period. Net cash used by investing activities
was $298,604 for the first half of fiscal 1998 compared to $403,552
for the 1997 period reflecting the Company's purchase of property
and equipment and the repurchase of its own common stock. The
Company also realized $409,234 realized from the sale of
securities.
The Company anticipates meeting its working capital needs
during the remainder of the 1998 fiscal year partially with
revenues from operations and income from its investments. It is
possible that the Company may investigate 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 and investment income 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, 1998, the Company had total assets of
$5,806,984 and total stockholders' equity of $5,702,144. In
comparison, as of June 30, 1998, the Company had total assets of
$6,242,837 and total stockholders' equity of $6,021,628. This
decrease in total assets for the first half of fiscal 1998 is
primarily due to the acquisition of property and equipment during
the period.
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, 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.
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.
<PAGE>
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 December 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: February 23, 1999 By /S/ Michael D. Parnell
MICHAEL D. PARNELL,
President and Director
Date: February 23, 1999 By /S/ Dan N. Thompson
DAN N. THOMPSON, Secretary,
Treasurer, Chief
Financial Officer and
Director
(Principal Accounting
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE AMMONIA HOLD, INC. FINANCIAL
STATEMENTS FOR THE PERIOD ENDED DECEMBER 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-1-1998
<PERIOD-END> DEC-31-1998
<CASH> 363,887
<SECURITIES> 1,936,553
<RECEIVABLES> 424,060
<ALLOWANCES> 25,275
<INVENTORY> 664,154
<CURRENT-ASSETS> 3,486,734
<PP&E> 1,898,694
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,806,984
<CURRENT-LIABILITIES> 104,840
<BONDS> 0
0
0
<COMMON> 7,967
<OTHER-SE> 10,096,457
<TOTAL-LIABILITY-AND-EQUITY> 5,806,984
<SALES> 574,753
<TOTAL-REVENUES> 574,753
<CGS> 370,056
<TOTAL-COSTS> 361,380
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,530
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,530
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,530
<EPS-PRIMARY> .002
<EPS-DILUTED> .002
</TABLE>
