UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 333-29903
AMMONIA HOLD, INC.
(Exact name of small business issuer as specified in its charter)
Utah 75-2337459
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 Gunnebo Drive, Lonoke, Arkansas 72086
(Address of principal executive offices)
Registrant's telephone no., including area code: (501) 676-2994
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Class Outstanding as of September 30, 1999
Common Stock, $.001 par value 7,638,190
TABLE OF CONTENTS
Heading Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . 1
Balance Sheets -- September 30, 1999
and June 30, 1999. . . . . . . . . . . . . . . . . . . 2
Statements of Operations -- three months
ended September 30, 1999 and 1998. . . . . . . . . . . 4
Statements of Cash Flows -- three
months ended September 30, 1999 and 1998 . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis and
Results of Operations. . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 9
Item 2. Changes In Securities and Use of Proceeds. . . . . . . . 9
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of
Securities Holders . . . . . . . . . . . . . . . . . . 9
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . 11
-i-
PART I
Item 1. Financial Statements
The following unaudited Financial Statements for the period
ended September 30, 1999, have been prepared by the Company.
AMMONIA HOLD, INC.
FINANCIAL STATEMENTS
September 30, 1999 and June 30, 1999
Ammonia Hold, Inc. and Subsidiary
Balance Sheets
Assets
September 30, June 30,
1999 1999
(unaudited) (audited)
Current assets
Cash and Cash equivalents $ 22,571 $ 11,181
Accounts receivable net of
allowance for doubtful accounts
of $20,776 and $25,275, respectively 1,089,323 766,746
Prepaid expenses 28,559 28,790
Investments in Trading equities 1,017,800 1,218,740
Inventory 909,393 858,663
Other receivables and accrued investment income 24,313 26,390
Notes receivable-current 325,018 361,410
Total Current Assets $ 3,416,977 $ 3,271,920
PROPERTY, PLANT & EQUIPMENT
Depreciable assets - net of accumulated
depreciation 1,660,845 1,689,071
Land 281,212 281,212
Total Property, Plant and Equipment 1,942,057 1,970,283
OTHER ASSETS
Deposits 75,000 50,000
Patents - net of accumulated
amortization of $270,887 and
$261,134, respectively 392,307 402,061
Investment in Held to Maturity Bonds 734,600 747,100
Total Other Assets 1,201,907 1,199,161
Total Assets $ 6,560,941 $ 6,441,364
(continued)
Ammonia Hold, In. and Subsidiary
Balance Sheets
(continued)
Liabilities and Stockholders' Equity
September 30, June 30,
1999 1999
(unaudited) (audited)
CURRENT LIABILITIES
Accounts payable $ 431,755 $ 238,264
Accrued expenses 17,468 27,050
Margin account and overdraft - 99,114
Total Current Liabilities 449,223 364,428
STOCKHOLDERS' EQUITY
Common Stock, par value $.001
authorized shares 100,000,000:
7,638,190 shares issued and outstanding 7,638 7,638
Additional Paid-in Capital 9,648,591 9,648,591
Accumulated Deficit (3,544,511) (3,57,293)
Total Stockholders' Equity (Deficit) 6,111,718 6,076,936
Total Liabilities and Stockholders' Equity $ 6,560,941 $ 6,441,364
Ammonia Hold, Inc. and Subsidiary
Statements of Operations and Other Comprehensive Income
For the Three Months
Ended September 30,
1999 1998
TOTAL REVENUES $ 989,178 $ 481,771
COST OF SALES 499,468 281,891
GROSS PROFIT 489,710 199,880
GENERAL & ADMINISTRATIVE EXPENSES 626,054 304,733
OTHER INCOME 96,125 148,559
OTHER COMPREHENSIVE INCOME 75,000 -
INCOME (LOSS) BEFORE INCOME TAXES 34,781 43,706
PROVISIONS FOR INCOME TAXES - -
NET INCOME 34,781 43,706
NET (LOSS) PER SHARE $ .005 $ 0.005
WEIGHTED AVERAGE OUTSTANDING SHARES 7,638,190 7,967,190
Ammonia Hold, Inc. and Subsidiary
Statement of Cash Flows
For the Three Months
ended September 30,
1999 1998
(Unaudited) (Unaudited)
Cash Flows form Operating
Activities:
Net gain (loss) $ 34,781 $ 43,706
Non-cash items:
Depreciation 32,874 17,264
Amortization 9,753 9,753
Comprehensive income (75,000) -
Changes in current assets and liabilities:
(Increase) decrease in:
Accounts receivable (322,577) (37,780)
Prepaid expenses/deposits (22,692) (26,495)
Inventories (50,730) (100,670)
Increase (decrease) in:
Accounts payable 193,491 58,204
Accrued liabilities (108,696) (698)
Net Cash Provided (Used) by Operating Activities (308,796) (36,716)
Cash Flows from Investing Activities
Purchase land - (5,000)
Sale of equity and bonds - 702,793
Purchase of property and equipment - (151,654)
Purchase Treasury stock - (164,143)
Sale of stock 320,186 -
Net Cash Provided (Used) by Investing Activities 320,186 381,996
Cash Flows from Financing Activities:
Issuance of Preferred Stock - -
Issuance of common stock - -
Net Cash Provided by Financing Activities - -
Net increase (decrease) in cash 11,390 345,280
Cash and Cash Equivalents at Beginning of Period 11,181 854,883
Cash and Cash Equivalents at End of Period $ 22,571 $ 1,200,163
Supplemental Cash Flow Information:
Cash paid for interest $ - $ -
Cash paid for income taxes $ - $ -
Ammonia Hold, Inc. and Subsidiary
September 30, 1999
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
GENERAL
Ammonia Hold, Inc. and Subsidiary (the Company) has elected to omit
substantially all footnotes to the financial statements for the
three months ended September 30, 1999 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, 1999.
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.
Item 2. Management's Discussion and Analysis or Plan
of Operations
The following table sets forth the percentage relationship to
sales of principal items contained in the Company's Statements of
Operations for the three month periods ended September 30, 1999 and
1998. It should be noted that percentages discussed throughout this
analysis are stated on an approximate basis.
Three Months Ended
September 30,
1999 1998
(Unaudited)
Total revenues . . . . . . . . . . . . . . . . . . . . 100% 100%
Cost of sales. . . . . . . . . . . . . . . . . . . . 50% 59%
Gross profit . . . . . . . . . . . . . . . . . . . . . 50% 41%
General and Administrative expenses. . . . . . . . . . 63% 63%
Other income . . . . . . . . . . . . . . . . . . . . . 10% 31%
Income (loss) before income taxes. . . . . . 3% 9%
Provisions income taxes. . . . . . . . . . . . . . . . - -
Net income . . . . . . . . . . . . . . . . . . . . . . 3% 9%
Results of Operations
Total sales, net of allowances and discounts, for the three
month period ended September 30, 1999 ("first quarter of fiscal
1999") increased 105% from the first quarter of fiscal 1998 due
primarily to increased sales and marketing activity. Cost of sales
(as a percentage of total revenues) decreased to 50% for the first
quarter of fiscal 1999, from 59% for the first quarter of fiscal
1998 due to shipment of higher margin products. Actual cost of
sales increased 77% for the first quarter of fiscal 1999 compared
to the corresponding 1998 period, reflecting the 105% increase in
sales for the period.
General and administrative expenses for first quarter of fiscal
1999 increased 105% compared to the corresponding 1998 period. This
increase is primarily attributed to salaries and other costs
associated with the Company's subsidiary, Super Dry Industries,
Inc., and increased marketing and promotional costs associated with
new distribution of products. As a percentage of total revenues,
general and administrative expenses remained constant at 63% for the
first quarter of fiscal 1998 and 1999.
Other income decreased to 35%) for the first quarter of fiscal
1999 from the 1998 period due to a reduction in gains from
investments. The net profit for the first quarter of fiscal 1999
decreased 20% to $34,781 compared with $43,706 for the corresponding
1998 period. This was attributed to the decline in investment
income for the 1999 period.
Liquidity and Capital Resources
Historically, the Company's working capital needs have been
satisfied by operations and financing activities through the sale
of securities. Working capital at September 30, 1999 was
$2,967,754, a 2% increase from $2,907,492 at June 30, 1999. The
increase in working capital is primarily attributed to the 42%
increase in accounts receivable due to increased sales, 6 % increase
in inventory to accommodate anticipated sales, and the elimination
of a $99,114 margin account overdraft. Working capital was
negatively impacted in the first quarter of 1999 by the 16% decrease
in investments in trading equities and the 10% decrease in notes
receivable.
During the first quarter of 1999, cash used by operating
activities was $308,796 compared to $36,716 for the first quarter
of 1998. This result was primarily attributed to the $322,577
increase in accounts receivable resulting from increased sales, and
the $193,491 increase in accounts payable due to costs associated
with maintaining higher inventory levels. Also during the first
quarter of 1999, the Company realized $320,186 from the sale of
investment securities. During the first quarter of 1998, the
Company's investing activities provided $381,996, primarily from the
sale of equity and bonds.
The Company anticipates meeting its working capital needs
during the next twelve months primarily with revenues from
operations resulting from increased marketing activities related to
the Company's products. Management has not entered into any new
arrangements or definitive agreements for additional private
placement of securities and/or a public offering. If the Company's
operations are not adequate to fund its operations and it is unable
to secure financing from the sale of its securities or from private
lenders, the Company could experience a cash flow shortage which
could curtail the Company's operations.
As of September 30, 1999, the Company had total assets of
$6,560,941 and total stockholders' equity of $6,111,718. In
comparison, as of June 30, 1999, the Company had total assets of
$6,441,364 and total stockholders' equity of $6,076,936.
In the opinion of management, inflation has not had a material
effect on the operations of the Company.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. The Company wishes to advise readers that
actual results may differ substantially from such forward-looking
statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in or implied by the statements, including, but
not limited to, the following: the ability of the Company to
generate working capital, the development of the Company's existing
and new products, the potential market for the Company's products,
competitive factors, and other risks detailed in the Company's
periodic report filings with the Securities and Exchange Commission.
PART II
Item 1. Legal Proceedings
Except as set forth below, there are no material pending legal
proceedings to which the Company or any of its subsidiaries is a
party or to which any of its property is subject and, to the best
of its knowledge, no such actions against the Company are
contemplated or threatened.
On September 27, 1999, the Securities and Exchange Commission
(the "Commission") filed a Complaint in the United States District
Court for the Middle District of Florida (Orlando Division),
entitled United States Securities and Exchange Commission v.
Corporate Relations Group, Inc., et al. Among the defendants named
in the Complaint are the Company and its President, Michael Parnell.
The Complaint alleges that the Company and Mr. Parnell violated
Sections 5 and 17(a) of the Securities Act of 1933, as amended, and
Section 10(b) of the Securities Exchange Act of 1934, as amended,
and Rule 10b-5 promulgated thereunder. The Complaint further
alleges that the Company and Mr. Parnell made sales of unregistered
securities and reported revenues derived from certain stock sales
as revenue from a licensing agreement.
The Company is actively pursuing a resolution to the action,
including the possibility of a negotiated settlement with the
Commission. Presently, management does not foresee the action
having a material negative impact on the Company.
Item 2. Changes In Securities and Use of Proceeds
This Item is not applicable to the Company.
Item 3. Defaults Upon Senior Securities
This Item is not applicable to the Company.
Item 4. Submission of Matters to a Vote of Security Holders
This Item is not applicable to the Company.
Item 5. Other Information
This Item is not applicable to the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedules
(b) Reports on Form 8-K
No report on Form 8-K was filed by the Company during the
three month period ended September 30, 1999.
SIGNATURES
In accordance with the requirements of the Securities Exchange
Act of 1934, the Registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMMONIA HOLD, INC.
Date: November 23, 1999 By /S/ Michael D. Parnell
MICHAEL D. PARNELL,
President and Director
Date: November 23, 1999 By /S/ Dan N. Thompson
DAN N. THOMPSON, Secretary,
Treasurer, Chief
Financial Officer and
Director
(Principal Accounting Officer)
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<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE AMMONIA HOLD, INC. FINANCIAL
STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
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<SECURITIES> 1,017,800
<RECEIVABLES> 1,110,099
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<CURRENT-ASSETS> 3,416,977
<PP&E> 1,942,057
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<COMMON> 7,638
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<TOTAL-LIABILITY-AND-EQUITY> 6,560,941
<SALES> 989,178
<TOTAL-REVENUES> 989,178
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