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, 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 December 31, 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 -- December 31, 1999
and June 30, 1999. . . . . . . . . . . . . . . . . . . 2
Statements of Operations -- three and six
months ended December 31, 1999 and 1998. . . . . . . . 4
Statements of Cash Flows -- three and six
months ended December 31, 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. . . . . . . . 10
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of
Securities Holders . . . . . . . . . . . . . . . . . . 10
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 December 31, 1999, have been prepared by the Company.
AMMONIA HOLD, INC.
FINANCIAL STATEMENTS
December 31, 1999 and June 30, 1999
Ammonia Hold, Inc. and Subsidiaries
Balance Sheets
Assets
December 31, June 30,
1999 1999
(unaudited) (audited)
Current assets
Cash and Cash equivalents $ 15,378 $ 11,181
Accounts receivable net of
allowance for doubtful accounts
of $25,275 984,083 766,746
Prepaid expenses 28,631 28,790
Investments in Trading equities 1,454,000 1,218,740
Inventory 773,078 858,663
Other receivables and accrued investment income 33,516 26,390
Notes receivable-current 297,680 361,410
Total Current Assets $ 3,586,366 $ 3,271,920
PROPERTY, PLANT & EQUIPMENT
Depreciable assets - net of accumulated
depreciation 1,651,453 1,689,071
Land 281,212 281,212
Total Property, Plant and Equipment 1,932,665 1,970,283
OTHER ASSETS
Deposits 55,000 50,000
Patents - net of accumulated
amortization of $280,641 and
$261,134, respectively 382,554 402,061
Investment 697,100 747,100
Total Other Assets 1,134,654 1,199,161
Total Assets $ 6,653,685 $ 6,441,364
(continued)
Ammonia Hold, Inc. and Subsidiary
Balance Sheets
(continued)
Liabilities and Stockholders' Equity
December 31, June 30,
1999 1999
(unaudited) (audited)
CURRENT LIABILITIES
Accounts payable $ 324,717 $ 238,264
Note payable - related party 115,113 -
Accrued expenses 16,854 27,050
Margin account and overdraft - 99,114
Total Current Liabilities 474,684 364,428
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 (3,477,228) (3,579,293)
Total Stockholders' Equity (Deficit) 6,179,001 6,076,936
Total Liabilities and Stockholders' Equity $ 6,653,685 $ 6,441,364
Ammonia Hold, Inc. and Subsidiaries
Statement of Operations
For the Three Months For the Six Months
Ended December 31, Ended December 31,
1999 1998 1999 1998
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Total Revenues $ 817,051 $ 574,753 $ 1,806,229 $ 1,056,524
Cost of Sales 500,944 370,056 1,000,412 651,947
Gross Profit 316,107 204,697 805,817 404,577
General &
Administrative Expenses 468,656 287,639 806,662 556,787
Sales & Marketing 382,691 73,741 670,739 109,326
Total Expenses 851,347 361,380 1,477,401 666,113
Loss from Operations (535,240) (156,683) (671,584) (261,536)
Other Income/expense (58,676) 172,213 37,449 320,772
Other Comprehensive income 661,200 - 736,200 -
Income (Loss)
Before Income Taxes 67,284 15,530 102,065 59,236
Provisions For Income Taxes - - - -
Net Income 67,284 15,530 102,065 59,236
Net Income (Loss) Per Share $ .0088 $ .0019 $ .013 $ .0074
Weighted Average
Outstanding Shares 7,638,190 7,967,190 7,638,190 7,967,190
Ammonia Hold, Inc. and Subsidiaries
Statement of Cash Flows
For the Six Months
Ended December 31,
1999 1998
Cash Flows from Operating Activities:
Net gain (loss) $ 102,065 $ 59,236
Non-cash items:
Depreciation 69,138 36,264
Amortization 19,507 19,506
Comprehensive income (net) (679,105)
Changes in current assets and liabilities:
(Increase) decrease in:
Accounts receivable (224,463) (86,640)
Prepaid expenses/deposits (4,841) (27,612)
Inventories 85,585 (76,778)
Increase (decrease) in:
Accounts payable 86,453 (103,622)
Income tax payable - -
Accrued liabilities (109,310) (12,746)
Net Cash Provided (Used) by
Operating Activities (654,971) (192,392)
Cash Flows from Investing Activities
Purchase land (5,000)
Purchase of equity and bonds 409,234
Purchase of property and equipment (31,520) (324,118)
Purchase Treasury stock (378,720)
Note Receivable (decrease) 63,730
Note Payable (increase) 115,113
Sale of Stock 511,845
Net Cash Provided (Used) by
Investing Activities 659,168 (298,604)
Cash Flows from Financing Activities:
Issuance of Preferred Stock - -
Issuance of Common stock - -
Net Cash Provided by
Financing Activities - -
Net increase (decrease) in cash 4,197 (490,996)
Cash and Cash Equivalents at
Beginning of Period 11,181 854,883
Cash and Cash Equivalents at
End of Period $ 15,378 $ 363,887
Supplemental Cash Flow Information:
Cash paid for interest $ - $ -
Cash paid for income taxes $ - $ -
Ammonia Hold, Inc. and Subsidiaries
December 31, 1999
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, 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 on 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 adjustments 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 and six month periods ended December
31, 1999 and 1998. It should be noted that percentages discussed
throughout this analysis are stated on an approximate basis.
Three Months Ende Six Months Ended
December 31, December 31,
1999 1998 1999 1998
(Unaudited) (Unaudited)
Total revenues . . . . . . . . . . . 100% 100% 100% 100%
Cost of sales. . . . . . . . . . . . 61 64 55 62
Gross profit . . . . . . . . . . . . 39 36 45 38
General and Administrative
expenses . . . . . . . . . . . . . 58 50 45 53
Sales & marketing expenses . . . . . 47 13 37 10
(Loss) from operations . . . . . . . (66) (27) (37) (25)
Other income (expense) . . . . . . . (7) 30 2 30
Other comprehensive income . . . . . 81 - 41 -
Income before income taxes . . . . . 8 3 6 5
Provisions income taxes. . . . . . . - - - -
Net income . . . . . . . . . . . . . 8 3 6 5
Results of Operations
Total revenues for the three and six month periods ended
December 31, 1999 ("first quarter" and "first half" of fiscal 2000,
respectively) increased 42% and 71% when compared to the respective
1999 fiscal periods. The increases are due primarily to increased
sales and marketing activity and new customer orders. Cost of sales
(as a percentage of total revenues) decreased to 61% for the second
quarter of fiscal 2000 from 64% for the second quarter of 1999, and
decreased to 55% for the first half of fiscal 2000 from 62% for the
first half of 1999. These decreases are due primarily to shipment
of higher margin products. Actual cost of sales increased 35% and
53% for the second quarter and first half of fiscal 2000,
respectively, compared to the corresponding 1999 period. This
reflects the 42% and 71% increases in sales for the respective
fiscal 2000 periods.
General and administrative expenses for the second quarter and
first half of fiscal 2000 increased 63% and 45% for the second
quarter and first half of fiscal 2000, respectively, compared to the
corresponding 1999 periods. 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 increased from 50% to 58% for the second quarter of fiscal
2000, and decreased from 53% to 45% for the first half of fiscal
2000. The increase for the second quarter is attributed to
increased salaries related to additional staff to accommodate new
customer accounts and increased legal fees. The decrease for the
first half of fiscal 2000 is due to the increase in sales.
Sales and marketing expenses increased 419% and 514% for the
second quarter and first half of fiscal 2000, respectively, compared
to fiscal 1999 results. The increases are due primarily to
increased promotional costs associated with new customer orders.
As a percentage of total revenues, sales and marketing expenses
increased from 13% to 47% for the second quarter of fiscal 2000, and
from 10% to 37% for the first half of fiscal 2000.
For the second quarter of fiscal 2000, the Company had a net
other expenses of $58,676 compared to a net other income of $172,213
for the 1999 period, primarily due to the sale by the Company of
investment securities in the 1999 period. For the first half of
fiscal 2000, the Company had net other income of $37,449 compared
to net other income of $$320,772 for the 1999 period. This decrease
is due to reduced investment activity by the Company. The Company
also recorded other comprehensive income of $ 661,200 and $736,200
for the second quarter and first half of fiscal 2000 due to the
increase in unrealized appreciation in the Company's equity
investments.
Net income for the second quarter and first half of fiscal 2000
increased to $67,284 (333%) and to $102,065 (72%), respectively
compared to $15,530 and $59,236 for the corresponding 1999 periods.
These results are attributed to the increase in gross profit from
operations of 55% and 99% for the second quarter and first half of
fiscal 2000, respectively, primarily due to increased sales. Also,
during the second quarter and first half of fiscal 2000, the Company
realized income from the sale of investments and from unrealized
gains.
Liquidity and Capital Resources
For the past two fiscal years, the Company's working capital
needs have been satisfied primarily through its operations and by
cash provided from its investing activities. Working capital at
December 30, 1999 was $3,111,682, a 7% increase from $2,907,492 at
June 30, 1999. The increase in working capital is primarily
attributed to the 28% increase in accounts receivable due to
increased sales, and the 19% increase in investments in trading
equities reflecting appreciation of investments held by the Company.
The increase in working capital was partially offset by 10% decrease
in inventory due to order fluctuations, the 18% in notes receivable
reflecting repayment of promissory notes, and the 36% increase in
accounts payable due to inventory turnover. to accommodate
anticipated sales, and the elimination of a $99,114 margin account
overdraft.
Net cash used by operating activities for the first half of
fiscal 2000 $654,971 compared to net cash used of $192,392
corresponding 1999 period. This increase in cash used is primarily
attributed to the $224,263 increase in accounts receivable due to
increased sales and the $679,105 from unrealized gains from
appreciation of investments held by the Company. Also during the
first half of fiscal 2000, the Company realized $659,168 from
investing activities due to the sale of investment securities.
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. If the Company's operations are not
adequate to fund its operations and it is unable to secure financing
from private sources or from the sale of its securities, the Company
could experience a cash flow shortage which could curtail the
Company's operations.
As of December 31, 1999, the Company had total assets of
$6,653,685 and total stockholders' equity of $6,179,001. 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.
Following negotiations with the Commission, the Company and
Mr. Parnell each entered into settlements with the Commission on
December 28, 1999. Without admitting or denying the allegations set
forth in the Complaint, the Company and Mr. Parnell consented to the
entry of separate Final Judgments which permanently restrains and
enjoins the Company and Mr. Parnell from violating certain
securities laws and regulations. Mr. Parnell was further required
to pay a civil penalty of $25,000. The Company believes that the
entry of the Final Judgments will not have a material adverse effect
on the Company or its business.
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 December 31, 1999.
<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 18, 2000 By /S/ Michael D. Parnell
MICHAEL D. PARNELL,
President and Director
Date: February 18, 2000 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, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-1-1999
<PERIOD-END> DEC-31-1999
<CASH> 15,378
<SECURITIES> 1,454,000
<RECEIVABLES> 1,009,358
<ALLOWANCES> 25,275
<INVENTORY> 773,078
<CURRENT-ASSETS> 3,586,366
<PP&E> 1,932,665
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,653,685
<CURRENT-LIABILITIES> 474,684
<BONDS> 0
0
0
<COMMON> 7,638
<OTHER-SE> 9,648,591
<TOTAL-LIABILITY-AND-EQUITY> 6,653,685
<SALES> 1,806,229
<TOTAL-REVENUES> 1,806,229
<CGS> 1,000,412
<TOTAL-COSTS> 1,477,401
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 102,065
<INCOME-TAX> 0
<INCOME-CONTINUING> 102,065
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 102,065
<EPS-BASIC> .13
<EPS-DILUTED> .13
</TABLE>
