UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ x ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1999
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from ___________ to ______________
Commission file number 0-29258
AQUAPRO CORPORATION
(Exact name of Registrant as specified in its charter)
Tennessee 62-1598919
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
1100 Highway 3, Sunflower, Mississippi 38778
(Address and Zip Code of Principal Executive Offices)
Registrant's telephone number,
including area code: (601) 569-3331
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
preceding 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 [ ]
As of February 1, 2000, Registrant had outstanding 4,892,381 shares of common
stock, its only class of common equity outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No[ X ]
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS Page No.
Condensed Consolidated Balance Sheet at December
31, 1999 (unaudited) and June 30, 1999 3
Condensed Consolidated Statements of Operations for
the Three and Six Months ended December 31, 1999 and 1998
(unaudited) 5
Condensed Consolidated Statements of Cash Flows for the six
Months ended December 31, 1999 and 1998 (unaudited) 7
Notes to Unaudited Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Outlook 11
Part II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AquaPro Corporation
Condensed Consolidated Balance Sheets
December 31, June 30,
1999 1999
(unaudited) (Note)
Assets ___________ ____________
Current assets:
Cash and cash equivalents $1,000 $86,264
Trade accounts receivable 292,340 243,136
Other receivable 104,000
Live fish inventories 5,983,144 6,264,923
Prepaid expenses 145,273 21,038
____________ ____________
Total currents assets 6,421,757 6,719,361
Property, buildings and equipment,net 6,954,984 7,035,066
Investments in cooperatives 169,240 411,456
Other assets 148,127 170,205
____________ ____________
Total assets $13,694,108 $14,336,088
============ ============
See accompanying notes to unaudited consolidated financial statements.
December 31, June 30,
1999 1999
(unaudited) (Note)
Liabilities and stockholders' equity ___________ ____________
Current liabilities:
Notes payable $791,809 $1,388,493
Accounts payable 236,374 548,768
Accrued expenses 284,757 99,002
Current maturitires of long-term debt 1,419,084 1,523,347
---------- ------------
Total current liabilites 2,732,024 3,559,610
Long-term debt, less current maturities 4,504,183 4,334,081
Stockholders' equity:
Common stock, no par value - authorized
100,000,000 shares, issued and
outstanding 4,892,381 at December 31,
1999 and 4,890,381 shares at June 30,
1999 15,374,819 15,371,912
Unearned compensation (12,844) (32,444)
Retained earnings (deficit) (8,904,074) (8,897,071)
___________ ____________
Total stockholders' equity 6,457,901 6,442,397
___________ ____________
Total liabilities and stockholders'
equity $13,694,108 $14,336,088
=========== ============
See accompanying notes to unaudited consolidated financial statements.
AquaPro Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months ended
December 31
1999 1998
---------- ----------
Net sales $1,838,118 $1,870,423
Cost of products sold 1,375,416 1,422,061
---------- ----------
Gross profit 462,702 448,362
Selling, general and administrative 441,470 456,012
---------- ----------
Operating income/(loss) 21,232 (7,650)
Other (income) expense:
Equity in losses on investment in
cooperatives 44,569
Interest expense 169,421 119,707
Other, net (70,842) (91,614)
---------- ---------
98,579 72,662
---------- ---------
Net loss (77,348) (80,312)
========== =========
Basic and diluted net loss per
share (0.02) (0.02)
========== =========
Basic and diluted weighted average
common shares outstanding 4,892,381 4,883,068
========== ==========
See accompanying notes to unaudited consolidated financial statements.
AquaPro Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
Six Months ended
December 31
1999 1998
---------- ----------
Net sales $3,853,819 $3,548,963
Cost of products sold 2,852,596 2,723,201
---------- ----------
Gross profit 1,001,223 825,662
Selling, general and administrative 803,095 838,270
---------- ----------
Operating income/(loss) 198,128 (12,608)
Other (income) expense:
Equity in losses on investment in
cooperatives (11,814) 67,569
Interest expense 335,080 250,075
Other, net (118,136) (191,373)
---------- ---------
205,130 126,271
---------- ---------
Net loss $(7,002) $(138,879)
========== =========
Basic and diluted net loss per
share (0.00) (0.03)
========== =========
Basic and diluted weighted average
common shares outstanding 4,892,8381 4,885,568
========== ==========
See accompanying notes to unaudited consolidated financial statements.
AquaPro Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months ended
December 31
1999 1998
---------- ----------
Net cash provided by operating
activities $482,138 $359,500
Cash flows from investing activities:
Purchases of property and equipment (370,043) (75,591)
Proceeds from note receivable from
affiliate -- 27,998
Refund on stock investment -- 14,220
Net cash used in investing activities (338,857) (33,373)
--------- ----------
Cash flows from financing activities:
Net decrease in notes payable (309,104) (264,559)
Principal payments on long-term
borrowings (247,809) (105,511)
Proceeds from long-term borrowings 313,647 --
--------- ----------
(240,359) (370,070)
--------- -----------
Net decrease in cash and cash
equivalents (85,264) (43,943)
Cash and cash equivalents at beginning
of period 86,264 112,631
---------- ----------
Cash and cash equivalents at end of
period $1,000 $68,688
========== ==========
Non-cash financing activities:
Conversion of Preferred Warrants to
common stock $-- $48,530
Cancellation of 12,000 shares of
common stock -- 48,000
========= ===========
Issuance of 2,000 shares of
common stock 2,907 --
========== ===========
See accompanying notes to unaudited consolidated financial statements.
AquaPro Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
December 31, 1999
1. Basis of Presentation of Unaudited Financial Statements
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for three-month and six-month periods
ended December 31, 1999 is not necessarily indicative of the results
that may be expected for fiscal year ended June 30, 2000.
The balance sheet at June 30, 1999 has been derived from the audited
consolidated financial statements at that date but does not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Companys annual report on
Form 10-KSB for the year ended June 30, 1999.
2. Investment in Cooperative
During the second quarter of fiscal 2000, the Company surrendered its
shares of stock in Delta Pride Catfish, Inc. (Delta Pride) as payment
in kind for Delta Prides losses allocated to the Company for the fiscal
year ended June 30, 1999. The carrying amount of the Companys investment
in Delta Pride was $242,216 which approximated the liability to Delta Pride
for the losses allocated to Company at the time of the exchange.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Actual results could differ materially from those projected in
the forward-looking statements as a result of certain factors including those
set forth in this Item 2 and elsewhere in, or incorporated by reference into,
this report. The Registrant has attempted to identify forward-looking
statements in this report by placing an asterisk (*) following each sentence
containing such statements.
RESULTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 1999
COMPARED TO THREE MONTHS ENDED DECEMBER 31, 1998
NET SALES. Net sales during the three-month period ended December 31, 1999
totaled $1,838,118 compared to $1,870,423 for the same period in 1998. This
represents a decrease of $32,305 or 1.7%. Volume decreased 90,035 pounds to
2,549,855 pounds of fish sold compared to 2,639,890 pounds sold during the
three-month period ended December 31, 1998. Accordingly, volume represented
a 3.4% decrease during the three months ended December 31, 1999 compared to
the same period in 1998. The average price per pound sold increased from
70.9 to 72.1 cents, a 1.7% increase in the three-month period ended
December 31, 1999 compared to the same period in 1998. The reduction in
sales volume was a result of intentionally carrying inventory over into
January when the price of fish increased.
COST OF PRODUCTS SOLD AND GROSS PROFIT. Cost of products sold was $1,375,416,
a decrease of $46,645 or 3.3% compared to the same three-month period in 1998,
while net sales decreased 1.7%. On a per pound basis, the costs of products
sold was 53.9 cents in the three-month periods ended December 31, 1999 and
1998. The gross profit margin from fish sales was 25% during the three-
month period ended December 31, 1999 as compared to 24% in the same period
in 1998. Cost of products sold is largely dependent on the Companys cost
structure in the previous year due to the 12 to 18 month grow out period
required for fish to mature.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses during the three month period ended December 31, 1999 were $441,615 or
$14,397 lower than in the three-month period ended December 31, 1998. The
selling, general and administrative expenses represented a decrease in relation
to sales volume, from 24.4% to sales in the three-month period month ended
December 31, 1998 compared to 24.0% of sales in the same period in 1999.
DELTA PRIDE ASSESSMENT (EQUITY IN LOSSES ON INVESTMENT IN
COOPERATIVES).
Effective November 1, 1999, the Company ceased paying assessments to Delta
Pride Catfish, Inc. (Delta Pride), a catfish processing cooperative, of which
the Company had been a shareholder/member since 1992. The assessments were
made prorata on the Delta Pride shares based on Delta Prides operating
deficits for its fiscal year ended June 30,1999. On December 8, 1999, the
Company reached an agreement with Delta Pride whereby the Company surrendered
its stock and effectively withdrew as a member of the Delta Pride
cooperative. The Company was thereby relieved of any liability for the
current or future assessments. Including the Company, more than 40 percent
of Delta Prides stockholders have surrendered all or a portion of their
shares on a similar basis.
The Company had in past periods established various reserves for anticipated
Delta Pride assessments. Accordingly, recognition for the transaction resulted
in a net gain to income of the Company of $11,814 in December of 1999.
INTEREST EXPENSE. Interest expense increased $49,714 or 41.5% to $169,421 in
the three-month period ended December 31, 1999 compared to the same period in
1998, due principally to an increase in average borrowings.
RESULTS OF OPERATIONS SIX MONTHS ENDED DECEMBER 31, 1999
COMPARED TO SIX MONTHS ENDED DECEMBER 31, 1998
NET SALES. Net sales during the six-month period ended December 31, 1999
totaled $3,853,819 compared to $3,548,863 for the same period in 1998. This
represents an increase of $304,956 or 8.62%. Volume increased 395,950 pounds
to 5,285,060 pounds of fish sold compared to 4,889,110 pounds sold during the
six-month period ended December 31, 1998. Accordingly, volume represented a
8.1% increase during the six months ended December 31, 1999 compared to the
same period in 1998. The increase in volume for the six-month period is a
result of additional sales volume capacity that was added by the new Kroeker
farm purchased in fiscal year 1999, and the rebuilding of 135 acres of the
Hidden Lakes farm. Volume is expected to increase at approximately the same
percentage during the entire fiscal year. This volume increase was enhanced
by an increase of approximately one point two cents per pound in the average
selling price of fish.
COST OF PRODUCTS SOLD AND GROSS PROFIT. Cost of products sold was
$2,852,596, an increase of $129,395 or 4.8% compared to the same six month
period of 1998, while net sales increased 8.6%. On a per pound basis, the
costs of products sold a decrease from 55.7 cents in the six-month period
ended December 31, 1998 to 54 cents in 1999. Margin from fish sales was 26%
during the six-month period ended December 31,1999 as compared to 23.3% in
the same period for 1998. This improvement is in part due to the lower cost
of feed.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses during the six-month period ended December 31, 1999 were $803,095 or
$35,175 lower than in the six-month period ended December 31, 1998. Selling,
general and administrative expenses also represented a decrease in relation to
sales volume, from 23.6% to sales for the six months ending December 31, 1998
to 20.8% to sales in 1999, due to an increase in production and sales volume.
DELTA PRIDE ASSESSMENT (EQUITY IN LOSSES IN INVESTMENT IN
COOPERATIVE).
Effective November 1, 1999, the Company ceased paying assessments to Delta
Pride Catfish, Inc. (Delta Pride), a catfish processing cooperative, of
which the Company had been a shareholder/member since 1992. The assessments
were made prorata on the Delta Pride shares based on Delta Prides operating
deficits for its fiscal year ended June 30,1999. On December 8, 1999, the
Company reached an agreement with Delta Pride whereby the Company surrendered
its stock and effectively withdrew as a member of the Delta Pride
cooperative. The Company
was thereby relieved of any liability for the current or future assessments.
Including the Company, more than 40 percent of Delta Prides stockholders have
surrendered all or a portion of their shares on a similar basis.
The Company had in past periods established various reserves for anticipated
Delta Pride assessments. Accordingly, recognition for the transaction resulted
in a net gain to income of the Company of $11,814 in December of 1999.
INTEREST EXPENSE. Interest expense increased $85,005 or 34% to $335,080 in the
six-month period ended December 31, 1999 compared to the same period in 1998,
due principally to an increase in average borrowings.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999, the Company had a current ratio of 2.35 to 1, compared
to 1.89 to 1 at June 30, 1999. Current assets exceeded current liabilities by
$3,689,733 at December 31, 1999 compared to $3,159,751 at June 30, 1999. Cash
and cash equivalents decreased during the six- month period ended December 31,
1999 by $85,264.
Cash and cash equivalents were used primarily grow live fish inventories. Live
fish inventories remained flat at approximately 10.7 million pounds at June 30,
1999 and December 31, 1999, while the cost basis of this inventory decreased by
approximately $298,000. During the summer months and through the end of
October, fish consume the greatest amount of feed during the year. Feed costs
are added to inventory when purchased.
For the six-month period ended December 31, 1999, the Company had cash flows
from operations of $482,138 compared to an inflow of $359,500 for the same
period in the previous year.
During the six-month period ended December 31, 1999, the Company purchased
approximately $327,000 in property and equipment to replace and or upgrade
existing assets.
Year 2000*
The Company has not experienced any year 2000 problems as a result of the year
change to 2000.
OUTLOOK
This outlook section contains a number of forward-looking statements, all of
which are based on current expectations. Actual results may differ materially.
These statements do not reflect the potential impact of any future mergers or
acquisitions except as noted below.
Based on past growth and government and industry estimates, management expects
the demand on consumption of catfish to continue to grow. For example, United
States Department Census estimates that sales of catfish during the calender
year 1999 increased 32 million pounds over that of 1998, a growth rate of 5.7
percent.
At the same time, industry sources estimate that current catfish supplies are
short. The price paid for catfish by processors had increased to 75 cents per
pound in January, 2000 and 80 cents per pound in February. This increase in
processor prices occurred more than a month before they were anticipated by
industry estimates. Management expects these price increases to result in
higher revenues and margins for the Company during its third fiscal quarter.
NET SALES. The Companys revenues increased by 8.2 percent for the first 6
months of its fiscal year 2000. If the Companys sales budgets are met for
its third fiscal quarter, management expects revenues to increase over those
for the same period during last year by approximately the same percentage. The
Companys catfish sales from the 325 acre Kroeker farm acquired in 1999 are
expected to contribute significantly to an increase in the Companys revenues
for its fourth fiscal quarter of this year.
In 2000, management plans to seek additional financing in order to
acquire additional land and production capacity. If the Company is successful
in adding additional capacity in 2000, an increase in catfish production from
this expansion should be experienced by the spring of 2001, when the Company
has been historically short of fish. Cyclically, catfish prices are
typically the highest for the year during the spring season. By adding
production capacity during the spring, the Company hopes to increase revenues
and margins by taking advantage of the historical price cycle.
COSTS OF PRODUCTS SOLD AND GROSS PROFIT. The Companys continuing
efforts to reduce costs of operations have resulted in decreases in overall
feed cost and other costs of products sold, thereby increasing the Companys
gross profit margins. These reductions have more than offset the increase in
costs of production due to having higher live fish inventory costs in
connection with the Companys commencement of production at the Kroeker farm
in 1999. Management believes that its continued efforts to control feed and
other operational costs together with its anticipated reduction in production
costs relating to the Kroeker farm inventory, will continue to reduce cost of
products sold as a percentage of revenues.
The reduction of costs of production have resulted in increase of operational
profit margins. Other conditions affecting the Companys margins include fish
prices (which increased in 1999 and the first two month of 2000) and startup
cost which would likely be incurred in connection with the Companys
acquisition of additional farming capacity. In addition, analysis of the
Companys costs of maintaining a special crew for seining led to a reduction
of labor and vehicle costs by outsourcing those responsibilities.
SELLING, GENERAL AND ADMINISTRATIVE. General and administrative
expenses continue to decline as a result of managements efforts. The Companys
increased sales volume has not caused a corresponding increase in general and
administrative expenses. Selling expenses tend to be variable and do increase
with increasing sales. In November of 1999 the company outsourced the seining
of fish for sale.
OTHER INCOME AND LOSSES. Historically, the Company has suffered large losses
as a result of its ownership in Delta Pride Catfish Processors. For the first
six months of last fiscal year the loss was $67,569. By the end of last
fiscal year the Companys share of Delta Prides operating loss had increased
to $339,838. In addition to that the Company recorded an additional $628,000
impairment loss to adjust its investment in of the Delta Pride stock to its
appraised value. By the end of last fiscal year the loss caused by Delta Pride
had increased to a total of $967,838.
As explained above, the Company withdrew as a member of the Delta Pride
processing cooperative in December, 1999. As a result, the Company is no
longer subject to past or future operating losses of this cooperative. The
Company is arranging processing of its fish through independent processors.
These processors are currently paying prices equal or greater than that
received from the Delta Pride cooperative. As these processors are independent,
the Company is not subject to liability for assessment or charge-backs based
on the processors operating deficits. Additionally, management is exploring
options to establish ownership, either alone or through investment with others,
of proprietary processing facilities.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
2,000 shares were issued in July to George S. Hastings, Jr. as
bonus compensation to Mr. Hastings under his employment contract
with the company.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
On January 31, 2000, stockholders at the Companys Annual Meeting
of Stockholders, voted to:
A. Change the number of Directors of the company to no less
than four (4) nor more than seven (7) members.
B. Elected three (3) new Directors to the Board, bringing total
sitting Directors to six (6).
C. Approved the 1999 Flexible Incentive Plan for Employees.
D. Appointed Ernst & Young, LLP as independent auditors
for the Corporation
Item 5. Other Information
See Attachment A
Document relating to the surrender of Delta Pride Stock by
AquaPro Corporation on December 8,1999.
Item 6. Exhibits and Reports on Form 8-K
Exhibits: None
Reports on Form 8-K: None
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AquaPro Corporation
(Registrant)
Dated: February 11, 2000 By: /s/ Mike Horton
CFO & Secretary
EXHIBIT A
WAIVER AND FULL AND FINAL RELEASE
(Voluntary Complete Stock Surrender)
Whereas, AQUA PRO COPORATION, hereinafter referred to as
Shareholder, is a Shareholder of Delta Pride Catfish, Inc., a Mississippi
Corporation, which operates and is taxed as a cooperative under various
provisions of the Internal Revenue Code, and
Whereas, Delta Pride has incurred operating losses and has sought
reimbursement from this Shareholder for its respective share of the losses;
and
Whereas, in order to fully and finally settle and compromise this matter,
Shareholder is willing to convey and surrender all stock owned by
Shareholder to Delta Pride, and Delta Pride is willing to accept such stock, on
the terms and conditions set forth herein;
Now therefore it is agreed as follows:
1. Shareholder conveys herewith 1968 shares of the common stock
of Delta Pride to Delta Pride Catfish Company, by delivering Certificate
Numbers 1216, 1222, 1223, 1224, 1225, 1282, and 1283, and authorize any
officer of Delta Pride to transfer the ownership of the shares on the records
of the company. If any of the certificates are not physically delivered with
the execution of this agreement, Shareholder warrant that such certificates
numbered___are lost, destroyed, or misplaced, warrant that they are the owner
of such certificates, free and clear of all liens, and warrants that the
certificates and shares represented by them have not been converted, pledged,
or otherwise encumbered.
2. Delta Pride hereby releases Shareholder, its officers, directors,
agents, servants and employees from any and all claims, demands, actions,
causes of action or suits in law or in equity, of whatsoever kind or nature,
whether known or unknown, for or because of any matter or thing done,
omitted or suffered to be done before and including the date hereof, on
account of all damages of every kind, and injuries, both to the person or
property (including claims that injuries, damages and losses which have already
developed and which are now known or anticipated) in any way relating to the
following:
a. any and all claims arising out of Shareholders purchase,
ownership, or surrender of the shares;
b. any losses incurred or claims related thereto for any fiscal year;
c. any claim related to the business of Delta Pride; and
d. from Modification of Allocation System And Notice of Intent to
Determine Eligibility to Continue as Shareholder of Delta Pride.
2A. Delta Pride hereby released GEORGE S. HASTINGS, JR. From any
and all claims, demands, actions, causes of action or suits in law or in
equity, of whatsoever kind or nature, whether known or unknown, for or because
of any matter or thing done, omitted or suffered to be done before and
including the date hereof, on account of all damages of every kind, and
injuries, both to the person or property (including claims that injuries,
damages, and losses may not be fully known and hence may be more numerous or
more serious than is now understood and expected, and all claims now
anticipated) in any way relating to their services as an officer, director,
agent, servant and/or employess of Delta Pride.
This Waiver and Release shall apply to any and all claims and/or demands
of Delta Pride and of any and all other persons or entities, if any, known and
unknown, who claim through Delta Pride, subject to provisions of paragraph 4
herein, if applicable.
3. Shareholder hereby release Delta Pride, along with its past,
present, and future directors, officers, agents, employees, attorneys, and
representatives, all hereinafter collectively referred to as "Releases," from
any and all claims, demands, actions, causes of action or suits in law or in
equity, of whatsoever kind or nature, whether known or unknown, for or because
of any matter or thing done, omitted or suffered to be done before and
including the datehereof, on account of all damages of every kind, and
injuries, both to the person or property (including claims that injuries,
damages, and losses may not be fully known and hence may be more numerous or
more serious than is now understood and expected, and all claims now
unanticipated, unexpected, and unknown, as well as to all injuries, damages,
and losses which have already developed and which are now known or anticipated)
in any way relating to the following:
a. any and all claims arising out of Shareholder purchase, ownership,
or surrender of the shares;
b. any losses incurred or claims related thereto for any fiscal year;
c. any claim related to the business of Delta Pride; and
d. from Modification of Allocation System And Notice of Intent to
Determine Eligibility to Continue as Shareholder of Delta Pride.
This Waiver and Release shall apply to any and all claims and/or demands
of Shareholder and of any and all other persons or entities, if any, known or
unknown, who claim through the Shareholder.
4. Provided, however, that if Shareholder, or any of them, or any
entity which the Board of Directors (after full disclosure of the facts by
Shareholder) determines is owned or controlled by them in substantial part,
purchase stock in Delta Pride, or any sucessor thereof, within ten (10) years
from the date of the execution of this document, then the Shareholder agrees-
as a condition to assignments of allocation rights or the approval of transfer
of such stock recognized by Delta Pride-- as follows:
a. to pay sum of $11,115.37 to Delta Pride; and
b. to agree in writing to assume the negative equities associated
with the surrendered stock in the amount of $359,418.36 pro rata at $182.63
per share but not to exceed $359,418.36.
5. Shareholder expressly represents and warrants:
a. That no promise or inducement not herein expressed has been made
to Shareholder;
b. That in executing this Waiver and Release, Shareholder is not
relying upon any statement or representation made by any person or party
released or their agents or representatives concerning the nature, extent or
duration of Shareholders injuries, losses or damages, or the legal liability
therefor, or concerning any other thing or matter;
c. That the above mentioned consideration received by Shareholder is
in full satisfaction of all the aforesaid claims and demands, actions and
causes of action whatsoever, both known and unknown against RELEASEES;
d. That Shareholder of full age and/or legally competent and/or have
the authority to sign this Waiver and Release;
e. That before signing this Waiver and Release, Shareholder has been
fully informed of its contents and meaning and have signed it with full
knowledge thereof;
f. That Shareholder has not assigned any right as a result of the
transactions hereinabove recited to any person or organization, private or
governmental, so that Shareholder retains and hereby fully and finally release
all rights with regard to claims, actions, expenses and/or damages arising as a
result of the allegations hereinabove recited;
6. Shareholder waives all rights as a shareholder of Delta Pride
Catfish, Inc. for a determination of eligibility and/or hearing as provided in
the Articles of Incorporation and By-Laws and relinquishes any and all claims
and causes of action against RELEASEES;
7. All Parties expressly deny any and all liability whatsoever in
this matter, and Shareholder and RELEASEES, their agents, attorneys,
successors and assigns, do hereby agree to keep the terms and conditions of
this document private and confidential and that the terms and provisions
thereof will not be disclosed in whole or in part to any person who does not
have a direct financial interest in and to said document. The confidentitality
of this Waiver and Release is an intergral and material part of the
considerations hereof.
8. Shareholder declares that it has read (or had read to them) in
full this Waiver and Release and have and this Waiver and Release explained
to them by their attorney and each Shareholder, individually, and/or in his/her
representative capacity, signs this Waiver and Release with a full
understanding of his/her rights and the consequences of entering into and
signing this Waiver and Release and that the signature of each hereto
evidences the fact that this Waiver and Release was voluntarily entered into
with full knowledge and understanding of the consequences thereof.
9. Arbitration Agreement
a. In the event of any dispute, claim, question, or disagreement
arising out of or relating to this Agreement or the breach thereof, or any
other issue related to the ownership of the stock or the operation of Delta
Pride, the parties hereto shall use their best efforts to settle such disputes,
claims, questions, or disagreement. To this effect, they shall consult and
negotiate with each other, in good faith and, recognizing their mutual
interests, attempt to reach a just and equitable solution satisfactory to
both parties.
b. If they do not reach solution, then upon notice by either party
to the other, all disputes, claims, questions, or differences arising out of
or relating to this Agreement or the breach thereof, or any other issue
related to the ownership of the stock or the operation of the Delta Pride,
shall be finally settled by arbitration administered by the American
Arbitration Association in the accordance with the provisions of its
Commercial rules.
c. The arbitration proceedings shall be conducted before a panel of
three neutral arbitrators, selected under the auspices of and in accordance
with the procedures of the AAA.
d. The arbitrators shall have the discretion to order a pre-hearing
exchange of information by the parties, including, without limitation,
production of requested documents, exchange of summaries of testimony of
proposed witnesses, and examination by deposition of parties.
e. Either party may make an application to the arbitrator seeking
injunctive relief to maintain the status quo until such time as the arbitration
award is rendered or the controversy is otherwise resolved.
f. All arbitration proceedings shall take place in the city of
Jackson, Mississippi.
g. The award of the arbitrator shall have the authority to award any
remedy or relief that a court of this state could order or grant, including,
without limitation, specific performance of any obligation created under the
agreement. The arbitrators are also authorized to award any parties such sums
as shall be deemed proper for the time, expense, and trouble of arbitration,
including arbitration fees and attorneys fees.
WITNESS OUR SIGNATURES, this the ____ day of ____________,A.D.,1999
AQUA PRO CORPORATION
BY:(S) George S. Hastings, Jr.
Authorized Official
(S) GEORGE S. HASTINGS, JR.
Individually
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] JUN-30-2000
[PERIOD-END] DEC-31-1999
[CASH] 1,000
[SECURITIES] 0
[RECEIVABLES] 292,340
[ALLOWANCES] 0
[INVENTORY] 5,983,144
[CURRENT-ASSETS] 462,640
[PP&E] 10,394,223
[DEPRECIATION] 3,439,249
[TOTAL-ASSETS] 13,694,108
[CURRENT-LIABILITIES] 2,732,024
[BONDS] 4,504,183
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 15,374,819
[OTHER-SE] (8,916,918)
[TOTAL-LIABILITY-AND-EQUITY] 13,694,108
[SALES] 3,853,819
[TOTAL-REVENUES] 3,853,819
[CGS] 2,852,596
[TOTAL-COSTS] 2,852,596
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 335,080
[INCOME-PRETAX] (7,002)
[INCOME-TAX] 0
[INCOME-CONTINUING] (7,002)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (7,002)
[EPS-BASIC] 0
[EPS-DILUTED] 0
</TABLE>
