SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarter ended June 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 000-23531
AGRITOPE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 93-0820945
(State of incorporation) (I.R.S. Employer Identification No.)
16160 SW Upper Boones Ferry Road
Portland, Oregon 97224-7744
(Address of principal executive offices) (Zip code)
(503) 670-7702
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has 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 [ ]
Number of shares of Registrant's Common Stock, $.01 par value, outstanding
as of July 31, 1999: 4,069,858
<PAGE>
AGRITOPE, INC.
PART I. FINANCIAL INFORMATION
PAGE NO.
--------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AGRITOPE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
as of September 30, 1998 and June 30, 1999............... 2
Condensed Consolidated Statements of Operations
for the three months and nine months ended
June 30, 1999 and 1998................................... 3
Condensed Consolidated Statements of Changes in Stockholders' Equity
for the nine months ended June 30, 1999.................. 4
Condensed Consolidated Statements of Cash Flows
for the nine months ended June 30, 1999 and 1998......... 5
Notes to Condensed Consolidated Financial Statements......... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ................................... 7
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................ 11
1
<PAGE>
AGRITOPE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
6/30/99 9/30/98
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents ............................................. $ 1,656,469 3,904,087
Trade accounts receivable, net ........................................ 461,013 1,033,860
Other accounts receivable ............................................. 267,887 124,690
Inventories (Note 2) .................................................. 4,790,489 3,289,172
Prepaid expenses ...................................................... 111,262 172,196
------------ ------------
7,287,120 8,524,005
Property and equipment, net ........................................... 3,660,861 4,100,804
Patents and proprietary technology, net ............................... 1,894,783 1,736,998
Other assets and deposits ............................................. 9,861 28,519
------------ ------------
$ 12,852,625 $ 14,390,326
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable ...................................................... $ 569,938 178,171
Current portion of long-term debt...................................... 4,576 4,255
Current portion of long-term lease liability........................... 204,495 358,404
Revolving line of credit (Note 3)...................................... 1,100,000 -
Deposits on customer orders............................................ 1,533,342 599,944
Salaries, benefits and other accrued liabilities ...................... 543,196 499,313
------------ ------------
3,955,547 1,640,087
Long-term portion of installment notes payable......................... 6,499 10,238
Long-term lease liability, less current portion........................ - 115,785
Minority interest in consolidated subsidiary .......................... 1,368,451 1,613,977
--------- ---------
5,330,497 3,380,087
Commitments and contingencies (Note 3)................................. - -
Stockholders' equity
Preferred stock, $.01 par value- 10,000,000 shares authorized,
Series A- 214,285 shares outstanding ................................. 2,143 2,143
Common stock, $.01 par value- 30,000,000 shares authorized,
4,069,858 and 4,050,150 shares outstanding, respectively.............. 40,698 40,502
Additional paid-in capital ............................................ 57,732,547 57,386,675
Accumulated deficit.................................................... (50,253,260) (46,419,081)
----------- ------------
7,522,128 11,010,239
$ 12,852,625 $ 14,390,326
</TABLE>
2
<PAGE>
AGRITOPE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
6/30/99 6/30/98 6/30/99 6/30/98
<S> <C> <C> <C> <C>
Revenues
Product sales ................................... $ 1,225,341 $ 663,562 $ 1,559,875 $ 845,619
Grants and contracts ............................ 303,279 - 628,021 71,815
----------- ----------- ---------- -----------
1,528,620 663,562 2,187,896 917,434
Costs and expenses
Product costs ................................... 1,195,091 648,111 1,540,101 816,775
Research and development costs .................. 814,045 745,385 2,265,976 1,820,677
Selling, general and administrative expenses..... 916,573 884,715 2,728,547 2,494,749
----------- ----------- ---------- -----------
2,925,709 2,278,211 6,534,624 5,132,201
Loss from operations ............................ (1,397,089) (1,614,649) (4,346,728) (4,214,767)
Other income (expense), net
Interest income.................................. 11,617 68,985 105,285 162,852
Interest expense................................. (4,211) (248) (4,626) (793)
Other, net....................................... (6,400) (128,650) 166,364 (125,053)
------------ ------------ ---------- ------------
1,006 (59,913) 267,023 37,006
Minority interest in subsidiary net loss......... $ 93,112 $ 185,225 $ 245,526 $ 439,922
Net loss......................................... $ (1,302,971) $ (1,489,337) $ (3,834,179) $ (3,737,839)
Net loss per share (basic and diluted)........... $ (.32) $ (.37) $ (.94) $ (1.04)
Weighted average number of
shares outstanding (basic and diluted)...... 4,065,803 4,037,260 4,058,648 3,592,437
</TABLE>
3
<PAGE>
AGRITOPE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES AMOUNT ADDITIONAL ACCUMULATED
PREFERRED COMMON PREFERRED COMMON PAID-IN CAPITAL DEFICIT
<S> <C> <C> <C> <C> <C> <C>
Balances at September 30, 1998......... 214,285 4,050,150 $2,143 $40,502 $57,386,675 $(46,419,081)
Common stock issued
as compensation .................... - 19,708 - 196 40,260 -
Compensation expense
for stock option grants ............ - - - - 316,920 -
Equity issuance costs.................. - - - - (11,308) -
Net loss for the period ............... - - - - - ( 3,834,179)
-------------------- ------ --------- -------------- -------------
Balances at June 30, 1999.............. 214,285 4,069,858 $2,143 $40,698 $57,732,547 $(50,253,260)
</TABLE>
4
<PAGE>
AGRITOPE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
6/30/99 6/30/98
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss .............................................................. $ (3,834,179) $ (3,737,839)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization ......................................... 984,939 665,531
Loss on sale of property............................................... 3,637 54
Decrease in accounts receivable ....................................... 429,650 217,291
(Increase) in inventories ............................................. (1,501,317) (2,684,347)
Decrease in prepaid expenses .......................................... 60,934 32,295
Decrease (increase) in other assets and deposits ...................... 18,658 (13,802)
Increase in deposits on customer orders................................ 933,398 812,971
Increase (decrease) in accounts payable and accrued liabilities ....... 435,650 (91,695)
Common stock issued as compensation for services....................... 40,456 27,866
Compensation expense for stock option grants........................... 316,920 287,280
Minority interest in subsidiary operating results...................... (245,526) (439,922)
Other, net............................................................. - 150,167
------------ ------------
Net cash used in operating activities.................................. (2,356,780) (4,774,150)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment ................................... (344,131) (1,791,312)
Proceeds from sale of property ........................................ 900 11,033
Expenditures for patents and proprietary technology ................... (363,187) (467,448)
------------- -------------
Net cash used in investing activities.................................. (706,418) (2,247,727)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt............................................. - -
Principal payments on long-term debt................................... (3,418) (3,225)
Payments on long-term lease obligation................................. (269,694) (220,295)
Proceeds from revolving line of credit (Note 3)........................ 1,100,000 -
Proceeds from issuance of stock ....................................... (11,308) 9,812,418
Minority interest investment in subsidiary ............................ - 1,765,453
Cash contribution from Epitope, Inc. .................................. - 1,248,140
------------ ------------
Net cash provided by financing activities.............................. 815,580 12,602,491
Net increase (decrease) in cash and cash equivalents .................. (2,247,618) 5,580,614
Cash and cash equivalents at beginning of period ...................... 3,904,087 4,384
------------ ------------
Cash and cash equivalents at end of period............................. $ 1,656,469 $ 5,584,998
</TABLE>
5
<PAGE>
AGRITOPE, INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 THE COMPANY
Agritope, Inc. (the "Company" or "Agritope") is an Oregon-based agricultural
biotechnology company that develops improved plant products and provides
technology to the agricultural industry. Through its 64 percent-owned
subsidiary, Vinifera, Inc. ("Vinifera"), Agritope is also engaged in the
business of propagating, growing, and distributing grapevine plants. Until
December 30, 1997, Agritope was a wholly owned subsidiary of Epitope, Inc.
("Epitope").
The condensed consolidated financial statements included herein are unaudited;
however, in the opinion of management, the interim data include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial position and results of operations for the interim
periods. These condensed consolidated financial statements should be read in
conjunction with the full year financial statements and notes thereto included
in the Company's 1998 Annual Report on Form 10-K. Results of operations for the
three-month and nine-month periods ended June 30, 1999 are not necessarily
indicative of the results of operations expected for the full fiscal year.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION. The accompanying condensed consolidated financial
statements of Agritope include the assets, liabilities, revenues and expenses of
Agritope and its subsidiaries. All significant intercompany transactions and
balances have been eliminated. Certain prior year amounts have been reclassified
to conform to current year presentation.
INVENTORIES. Inventories consisted principally of growing grapevine plants at
Vinifera. The components of inventory are summarized as follows:
6/30/99 9/30/98
(Unaudited)
Operating supplies........................ $ 124,213 $ 142,900
Work-in process........................... 1,297,351 128,374
Finished goods............................ 3,368,925 3,017,898
--------- ------------
$4,790,489 $3,289,172
NET LOSS PER SHARE. Basic and diluted loss per share has been computed using the
weighted average number of shares of common stock outstanding during the period.
The following potentially dilutive securities are excluded from net loss per
share calculations as their effect would have been antidilutive:
6/30/99 6/30/98
Options to purchase common stock.......... 1,713,928 1,407,164
Warrants to purchase common stock......... 583,333 583,333
Convertible preferred stock............... 214,285 214,285
---------- ----------
2,511,546 2,204,782
NOTE 3 BANK LINES OF CREDIT
REVOLVING LINE OF CREDIT. In June 1999, Vinifera borrowed $1.1 million from a
commercial bank under a revolving line of credit. The proceeds were used to
finance inventory production and repay a $1 million line of credit advanced by
Agritope. The line provides for borrowings of up to $1.5 million and is secured
by Vinifera's inventories and accounts receivable and is guaranteed by one of
Vinifera's minority shareholders. The line bears interest at the prime rate. It
expires on May 1, 2000.
ACCOUNTS RECEIVABLE LINE OF CREDIT. In May 1999, Agritope entered into an
agreement with a commercial bank pursuant to which the bank will advance up to
$500,000 based on 80% of qualified and approved accounts receivable. The line of
credit bears interest at the rate of 2% per month and each advance carries an
administration fee of 0.65%. It expires on May 20, 2000. The Company has not
made any borrowings under the line.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of operations and financial condition should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's 1998 Annual Report on Form 10-K and with the
financial statements and notes thereto included in this Form 10-Q.
CERTAIN STATEMENTS SET FORTH BELOW CONSTITUTE "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
STATEMENTS THAT EXPRESSLY OR BY IMPLICATION PREDICT FUTURE RESULTS, PERFORMANCE
OR EVENTS ARE FORWARD-LOOKING. IN ADDITION, THE WORDS "BELIEVES," "INTENDS,"
"EXPECTS," "ANTICIPATES," "ESTIMATES," AND SIMILAR EXPRESSIONS IDENTIFY FORWARD
LOOKING-STATEMENTS. THE FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY OR INDUSTRY RESULTS TO BE MATERIALLY
DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY THE FORWARD-LOOKING STATEMENTS. WITH RESPECT TO THE COMPANY, THESE
FACTORS INCLUDE ITS LIMITED INDEPENDENT OPERATING HISTORY; UNCERTAINTY OF
ADDITIONAL FUNDING; LOSS OR IMPAIRMENT OF SOURCES OF CAPITAL; DEPENDENCE ON
STRATEGIC PARTNERS; UNCERTAINTIES RELATING TO PATENTS AND PROPRIETARY
INFORMATION; DEPENDENCE ON KEY PERSONNEL; TECHNOLOGICAL CHANGE AND COMPETITION;
UNCERTAINTIES AS TO ACCEPTANCE OF GENETICALLY ENGINEERED PRODUCTS; CHANGES IN
LAWS OR REGULATIONS; AS WELL AS THE OTHER FACTORS DISCUSSED IN EXHIBIT 99 TO THE
COMPANY'S 1998 ANNUAL REPORT ON FORM 10-K, WHICH IS HEREBY INCORPORATED BY
REFERENCE. GIVEN THESE UNCERTAINTIES, READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THE FORWARD-LOOKING STATEMENTS. AGRITOPE DOES NOT INTEND TO UPDATE
ANY FORWARD-LOOKING STATEMENTS.
Agritope, Inc. (the "Company" or "Agritope") consists of two units: Agritope
Research and Development and Vinifera, Inc. ("Vinifera"). Agritope Research and
Development uses biotechnology in the development of new plant varieties. To
date, Agritope has not completed commercialization of its technology. A portion
of the research and development efforts conducted by Agritope has been performed
under various research grants and contracts. Vinifera is engaged in the
grapevine propagation and distribution business.
RECENT DEVELOPMENTS
GENE DISCOVERY PROGRAM. In July 1999, Agritope and Rhone-Poulenc Agro, a
division of Rhone-Poulenc, S.A. formed Agrinomics LLC ("Agrinomics") which has
begun a research, development and commercialization program in the field of
agricultural functional genomics. The program is called the ACTTAG(TM) Gene
Discovery Program. Agritope owns a 50% interest in Agrinomics and Rhone-Poulenc
Agro owns the remaining 50% interest.
Rhone-Poulenc Agro has agreed to make capital contributions to Agrinomics, in
cash, totaling $20 million over a five-year period. A $5 million contribution to
support the first year of operations was made in July 1999. Agritope contributed
technology, a collection of seed generated using activation tagging techniques
and expertise in molecular and cell biology. In addition, Agritope will perform
research work at its Oregon research facility, greenhouses and farm.
Rhone-Poulenc Agro will also provide high-throughput screening, robotics,
microarray and bioinformatics technologies and support, and perform research
work for Agrinomics at Rhone-Poulenc Agro's research facility in Research
Triangle Park, North Carolina.
Through its fully integrated functional genomics program, Agrinomics intends to
develop a network of research and commercial alliances with a broad range of
interests. Discussions with several prospective sponsors are underway. Alliance
participants would provide funding for specific projects. Participants would
receive rights to technology in their field of interest as well as access to
technology developed within the Agrinomics network.
VINIFERA, INC. In June 1999, the Company entered into stock purchase agreements
with certain minority shareholders of Vinifera pursuant to which minority
ownership of Vinifera will increase from 36% to approximately 50%. The
agreements provide for the shareholders to purchase shares of Vinifera common
stock from Agritope over a three-year period. In July 1999, the shareholders
made the first purchase under the agreements. Agritope received proceeds
totaling $874,000 and its ownership interest in Vinifera was reduced from 64% to
7
<PAGE>
57%. In June 1999, in a related transaction, Vinifera repaid the $1 million
balance on its working capital line of credit to Agritope and replaced the line
with a $1.5 million revolving bank line of credit (See Note 3 of Notes to
Condensed Consolidated Financial Statements). SBIR GRANT. In April 1999,
Agritope was awarded a grant by the United States Department of Agriculture
Cooperative State Research, Education and Extension Service under the Small
Business Innovation Research Program. The award will provide $65,000 over a
five-month period to fund a research program regarding development of resistance
in red raspberry to raspberry bush dwarf virus.
RESULTS OF OPERATIONS
REVENUES. Total revenues were $1,529,000 and $2,188,000 for the three-month and
nine-month periods ended June 30, 1999, respectively, representing an increase
of $865,000 and $1,271,000, respectively, over revenues recorded for the
corresponding periods in the prior fiscal year, as summarized below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30 (IN THOUSANDS, EXCEPT %) 1999 1998
DOLLARS PERCENT DOLLARS PERCENT
<S> <C> <C> <C> <C>
Product sales-
Grape plant sales......................................... $ 1,226 80% $ 664 100%
Grants and contracts...................................... 303 20 - -
----- --- ----- ---
$ 1,529 100% $ 664 100%
NINE MONTHS ENDED JUNE 30 (IN THOUSANDS, EXCEPT %) 1999 1998
DOLLARS PERCENT DOLLARS PERCENT
Product sales-
Grape plant sales......................................... $ 1,560 71% $ 845 92%
Grants and contracts...................................... 628 29 72 8
------ --- ---- ----
$ 2,188 100% $ 917 100%
</TABLE>
Vinifera's sales of grapevines increased $561,000 (84%) and $715,000 (85%) in
the third quarter and first nine months of fiscal 1999, respectively, as
compared to the third quarter and first nine-months of fiscal 1998. Vinifera's
sales are highly seasonal and generally occur in the spring and summer planting
seasons. However, unseasonable weather conditions caused certain customers to
delay orders that were originally scheduled for delivery in fiscal 1998. The
delayed orders were either deferred to the 1999 planting season or delivered in
the quarter ended March 31, 1999. As of June 30, 1999, Vinifera had firm orders
totaling $1.7 million for delivery in the summer of 1999 and $2.1 million for
delivery in the spring and summer of 2000 compared to firm orders of $1.8
million as of June 30, 1998 scheduled for delivery in the 1998 planting season,
and $1.1 million for delivery in 1999.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses amounted to
$814,000 and $2.3 million, respectively, for the quarter and nine months ended
June 30, 1999, representing increases of $69,000 (9%) and $445,000 (24%),
respectively, over the corresponding prior-year periods. The higher research and
development costs in the current fiscal year reflect increased efforts to
develop and propagate crops containing Agritope's patented ethylene control
technology and stepped-up research efforts to explore the potential of certain
genes obtained from the Salk Institute. Rent, depreciation and other costs of
occupancy attributable to research activities also increased as a result of the
Company's move to expanded quarters in March 1998.
8
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $32,000 (4%) and $234,000 (9%),
respectively, in the three-month and nine-month periods ended June 30, 1999, as
compared to the corresponding periods ended June 30, 1998. Major components
accounting for the net increase included increased compensation expense related
to amortization of expense for stock options granted in December 1997, increased
sales expenses at Vinifera and increased legal fees related to the Company's
proposed gene discovery program. Rent, depreciation and other costs of occupancy
also increased as a result of the Company's move to expanded quarters in March
1998. The increases were partially offset by decreases in other professional
fees and travel expenses due to the fact that expenses in the first quarter of
the 1998 fiscal year included non-recurring fees and expenses incurred in
connection with the transition from operating as a wholly owned subsidiary to
operating as an independent public company.
OTHER INCOME (EXPENSE), NET. Interest income decreased $57,000 in the quarter
ended June 30, 1999 compared to the quarter ended June 30, 1998 due to a
corresponding decrease in cash available for investment. In March 1999, Vinifera
received a one-time payment of $170,000, representing reimbursement for certain
expenses incurred in prior years to explore establishment of a grapevine nursery
business in Spain in cooperation with a minority shareholder of Vinifera.
Vinifera ultimately decided to discontinue its participation and was reimbursed
for expenses it incurred for the benefit of the venture.
LIQUIDITY AND CAPITAL RESOURCES
6/30/99 9/30/98
Cash and cash equivalents................ $1,656,469 $3,904,087
Working capital ......................... 3,331,573 6,883,918
As of June 30, 1999, Agritope had working capital of $3.3 million, as compared
to working capital of $6.9 million at September 30, 1998. During the nine months
ended June 30, 1999, expenditures for property and equipment were $344,000,
principally for greenhouse improvements and expansion of grapevine propagation
blocks at Vinifera. The Company also expended $363,000 for proprietary
technology related to its patent portfolio. For the nine-months ended June 30,
1999, Vinifera used internally generated cash from collection of accounts
receivable and deposits on future orders to fund operations and capital
expenditures. Agritope's cash requirements for the nine-month period were
supplied primarily from cash reserves supplemented by research funding from
government agencies and Vilmorin Clause & Cie ("Vilmorin"), a research partner.
In addition, Agritope received $1 million from Vinifera in connection with
refinancing of the Vinifera line of credit with a commercial bank (See Note 3 of
Notes to Condensed Consolidated Financial Statements).
Historically, Agritope's requirements for operations, working capital and
business expansion have been funded by receipts of cash from its former parent
company, Epitope, Inc., supplemented by $5.4 million principal amount of
convertible notes, $3.5 million of investments in Vinifera by minority
shareholders, $9.9 million net proceeds from private placement of equity
securities and $1.2 million in funding from strategic partners and other
research grants. On December 1, 1997, in anticipation of its spin-off from
Epitope, Agritope assumed responsibility for funding its future activities.
During the quarter ended December 31, 1997, Agritope received a capital
contribution of $1.2 million from Epitope to fund cash requirements during the
months of October and November 1997 and Epitope advanced $917,000 for December
cash requirements.
On December 30, 1997, Epitope distributed 100% of Agritope's outstanding common
stock to shareholders of Epitope. On December 31, 1997, Agritope sold 1.3
million shares of common stock in a private placement transaction at a price of
$7 per share for aggregate proceeds of $9.4 million. In January 1998, Agritope
sold 214,285 shares of Series A Preferred Stock at a price of $7 per share for
aggregate proceeds of $1.5 million and repaid to Epitope $976,000 of advances
for cash requirements after December 1, 1997.
9
<PAGE>
Agritope expects to continue to require significant funds to support its
operations and research activities. It intends to use cash reserves, cash
generated from sales of products, research funding from strategic partners and
other research grants to provide the necessary funds. Agritope may also receive
additional funds from the sale of equity securities. Additional capital may not
be available on acceptable terms, if at all, and the failure to raise such
capital would have a material adverse effect on Agritope's business, financial
condition, and results of operations.
Vilmorin has agreed to fund additional projects totaling $400,000 for work to be
performed from July 1, 1999 to June 30, 2000. Agritope also expects to complete
work under its matching grant from the National Institute of Standards and
Technology in the remainder of the current contract year ending December 31,
1999, for total reimbursements of $305,000.
Agritope has completed a Year 2000 review of its systems and procedures to
determine the costs and risks related to the Year 2000 date conversion. As a
result of this review, Agritope believes that it will not incur material Year
2000 remedial costs and that its operations will not be materially affected by
the Year 2000 conversion, and as a consequence it has not established a
contingency plan.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the three months ended
June 30, 1999.
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.
AGRITOPE, INC.
August 12, 1999 /s/ ADOLPH J. FERRO
- ----------------- --------------------
Date Adolph J. Ferro
Chairman, President and Chief Executive Officer
(PRINCIPAL EXECUTIVE OFFICER)
August 12, 1999 /s/ GILBERT N. MILLER
- ----------------- ----------------------
Date Gilbert N. Miller
Executive Vice President and Chief Financial Officer
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
11
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
27. Financial Data Schedule 13
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated financial statements included herein and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,656,469
<SECURITIES> 0
<RECEIVABLES> 485,067
<ALLOWANCES> 24,054
<INVENTORY> 4,790,489
<CURRENT-ASSETS> 7,287,120
<PP&E> 6,345,936
<DEPRECIATION> (2,685,075)
<TOTAL-ASSETS> 12,852,625
<CURRENT-LIABILITIES> 3,955,547
<BONDS> 0
0
2,143
<COMMON> 40,698
<OTHER-SE> 7,479,287
<TOTAL-LIABILITY-AND-EQUITY> 12,852,625
<SALES> 1,559,875
<TOTAL-REVENUES> 2,187,896
<CGS> 1,540,101
<TOTAL-COSTS> 1,540,101
<OTHER-EXPENSES> 4,994,523
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,626
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