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, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 000-23531
AGRITOPE, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-0820945
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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 [ ]
On June 30, 2000, 4,130,697 shares of the registrant's common stock, par value
$.01 per share, were issued and outstanding.
<PAGE>
AGRITOPE, INC.
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
PAGE
<S> <C>
Condensed Consolidated Balance Sheets
as of June 30, 2000 and September 30, 1999........................................ 3
Condensed Consolidated Statements of Operations
for the three months and nine months ended June 30, 2000 and 1999................. 4
Condensed Consolidated Statements of Changes in Stockholders' Equity
for the three months and nine months ended June 30, 2000.......................... 4
Condensed Consolidated Statements of Cash Flows
for the three months and nine months ended June 30, 2000 and 1999................. 5
Notes to Condensed Consolidated Financial Statements.................................. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS .................................................. 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........................ 12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................................. 13
</TABLE>
<PAGE>
AGRITOPE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
6/30/00 9/30/99
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets
Cash and cash equivalents....................................... $ 1,463,343 $ 4,203,937
Trade accounts receivable, net.................................. 1,046,141 355,187
Other accounts receivable....................................... 379,041 165,480
Due from affiliate.............................................. - 119,088
Inventories..................................................... 5,207,734 5,053,888
Prepaid expenses................................................ 281,218 73,440
--------- ---------
Total current assets............................................ 8,377,477 9,971,020
Property and equipment, net..................................... 3,110,110 3,511,824
Patents and proprietary technology, net......................... 1,871,923 1,945,586
Other assets and deposits ...................................... 42,752 42,752
---------- ----------
$13,402,262 $15,471,182
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable................................................ $ 605,338 $ 642,178
Due to affiliate, net........................................... 16,913 -
Revolving line of credit........................................ 1,484,000 1,463,000
Advances from minority shareholders of subsidiary............... 918,562 180,616
Current portion of installment notes payable.................... 4,576 4,576
Current portion of lease liability.............................. 52,641 140,935
Deposits on customer orders..................................... 1,159,938 1,173,303
Salaries, benefits and other accrued liabilities................ 775,269 580,028
--------- ---------
Total current liabilities....................................... 5,017,237 4,184,636
Long-term portion of installment notes payable.................. 3,036 5,465
Minority interest............................................... 1,698,925 1,958,538
Commitments and contingencies................................... - -
Stockholders' equity
Preferred stock, par value $.01
10,000,000 shares authorized; 714,285 shares
shares issued and outstanding................................. 7,143 7,143
Common stock, par value $ .01
30,000,000 shares authorized; 4,130,697 shares
and 4,070,612 shares issued and outstanding,
respectively.................................................. 41,307 40,706
Additional paid-in capital...................................... 60,769,763 60,369,181
Accumulated deficit............................................. (54,135,149) (51,094,487)
---------- ----------
6,683,064 9,322,543
$13,402,262 $15,471,182
</TABLE>
3
<PAGE>
AGRITOPE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
6/30/00 6/30/99 6/30/00 6/30/99
<S> <C> <C> <C> <C>
Revenues
Product sales................................... $ 2,383,495 $ 1,225,341 $ 2,830,954 $ 1,559,875
Government research grants...................... 111,139 97,447 290,565 230,191
Research projects with strategic partners....... 184,561 205,832 328,186 397,830
Research projects with affiliate................ 705,734 - 1,647,737 -
--------- --------- --------- ---------
3,384,929 1,528,620 5,097,442 2,187,896
Costs and expenses
Product costs .................................. 2,242,224 1,195,091 2,662,856 1,540,101
Research and development expenses............... 1,155,416 814,045 3,165,095 2,265,976
Selling, general and administrative expenses.... 851,481 916,573 2,725,133 2,728,547
--------- --------- --------- ---------
4,249,121 2,925,709 8,553,084 6,534,624
Loss from operations............................ (864,192) (1,397,089) (3,455,642) (4,346,728)
Other income (expense), net
Interest income................................. 26,237 11,617 100,978 105,285
Interest expense................................ (34,768) (4,211) (109,342) (4,626)
Other, net...................................... 124,738 (6,400) 125,205 166,364
------- ------ ------- -------
116,207 1,006 116,841 267,023
Minority interest in subsidiary net loss........ 70,983 93,112 298,139 245,526
------ ------ ------- -------
Net loss........................................ $(677,002) $(1,302,971) $(3,040,662) $(3,834,179)
Net loss per share (basic and diluted).......... $(.16) $(.32) $(.74) $(.94)
Weighted number of shares outstanding .......... 4,128,186 4,065,803 4,106,546 4,058,648
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED COMMON ADDITIONAL ACCUMULATED
STOCK STOCK PAID-IN CAPITAL DEFICIT
<S> <C> <C> <C> <C>
Balances at September 30, 1999................. $7,143 $40,706 $60,369,181 $(51,094,487)
Common stock issued as compensation -
56,335 shares................................. - 563 86,160 -
Compensation expense for stock option grants... - - 314,759 -
Common stock issued upon exercise of stock
options - 3,750 shares........................ - 38 9,963 -
Equity issuance costs.......................... - - (10,300) -
Net loss for the period........................ - - (3,040,662)
----- ------ ---------- ----------
Balances at June 30, 2000...................... $7,143 $41,307 $60,769,763 $(54,135,149)
</TABLE>
4
<PAGE>
AGRITOPE, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
6/30/00 6/30/99
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss............................................................. $(3,040,662) $(3,834,179)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ....................................... 988,496 984,939
Loss on sale of property............................................. - 3,637
Common stock issued as compensation for services..................... 86,723 40,456
Compensation expense for stock option grants......................... 353,285 316,920
Minority interest in subsidiary operating results.................... (298,139) (245,526)
(Increase) decrease in accounts receivable........................... (904,515) 429,650
Decrease in net receivable from/payable to affiliate................. 136,001 -
(Increase) in inventories............................................ (153,846) (1,501,317)
(Increase) decrease in prepaid expenses.............................. (207,778) 60,934
Decrease in other assets and deposits................................ - 18,658
Increase in accounts payable and accrued liabilities................. 158,401 435,650
Increase (decrease) in deposits on customer orders................... (13,365) 933,398
--------- ---------
Net cash used in operating activities................................ (2,895,399) (2,356,780)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment.................................. (346,452) (344,131)
Proceeds from sale of property....................................... - 900
Expenditures for patents and proprietary technology.................. (166,667) (363,187)
------- -------
Net cash used in investing activities................................ (513,119) (706,418)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt................................. (2,429) (3,418)
Payments on long-term lease liability................................ (88,294) (269,694)
Proceeds from revolving line-of-credit............................... 21,000 1,100,000
Advances from minority shareholders of subsidiary.................... 737,946 -
Proceeds from issuance of stock...................................... 10,001 -
Equity issuance costs................................................ (10,300) (11,308)
------- -------
Net cash provided by (used in) financing activities.................. 667,924 815,580
Net decrease in cash and cash equivalents............................ (2,740,594) (2,247,618)
Cash and cash equivalents at beginning of period..................... 4,203,937 3,904,087
--------- ---------
Cash and cash equivalents at end of period........................... $ 1,463,343 $ 1,656,469
</TABLE>
5
<PAGE>
AGRITOPE, INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 THE COMPANY
Agritope, Inc. is an Oregon-based agricultural functional genomics and
biotechnology company that develops improved plant products and provides
technology to the agricultural industry. Agrinomics LLC, a 50% owned subsidiary,
conducts a functional genomics research program. Vinifera, Inc., a 57% owned
subsidiary, offers superior grapevine plants to the premium wine industry
together with disease testing and elimination services. Superior Tomato
Associates, LLC, a 66-2/3% owned subsidiary, was formed to develop and market
longer-lasting tomatoes. Agrimax Floral Products, Inc., a wholly owned inactive
subsidiary, holds a 8.9% interest in UAF Limited Partnership, a fresh flower
distribution operation based in Tampa, Florida.
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 accompanying notes
included in Agritope's 1999 Annual Report on Form-10-K. Results of operations
for the three-month and nine-month periods ended June 30, 2000 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:
6/30/00 9/30/99
(UNAUDITED)
Operating supplies..................... $144,070 $ 143,757
Work-in-process........................ 785,438 1,437,617
Finished goods......................... 4,278,226 3,472,514
--------- ---------
$5,207,734 $5,053,888
NET LOSS PER SHARE. Basic earnings per share and diluted earnings per share are
computed using the methods prescribed by Statement of Financial Accounting
Standards No. 128, "Earnings Per Share". Basic earnings per share is calculated
using the weighted-average number of common shares outstanding for the period.
Diluted earnings per share is computed using the weighted-average number of
common shares and dilutive common equivalent shares outstanding. Basic and
diluted earnings per share are the same for all periods presented since Agritope
was in a loss position in all periods. The following potentially dilutive
securities are excluded from net loss per share calculations, as their effect
would have been antidilutive:
6/30/00 6/30/99
Options to purchase common stock....... 1,875,363 1,713,928
Warrants to purchase common stock...... 708,333 583,333
Convertible preferred stock............ 714,285 214,285
--------- ---------
3,297,981 2,511,546
6
<PAGE>
AGRITOPE, INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosure of cash flow information is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
6/30/00 6/30/99 6/30/00 6/30/99
<S> <C> <C> <C> <C>
Cash paid during the period for interest...........$34,768 $4,211 $109,342 $4,626
</TABLE>
NOTE 4 AGRINOMICS LLC
In July 1999, Agritope and Aventis CropScience S.A. formed Agrinomics LLC to
conduct a research, development and commercialization program in the field of
agricultural functional genomics. Agritope owns a 50% interest in Agrinomics and
Aventis CropScience owns the remaining 50% interest. Aventis CropScience has
agreed to make capital contributions in cash totaling $20 million over a
five-year period, of which $5 million was contributed in 1999 and $4 million was
contributed in July 2000. Agritope contributed certain technology and a
collection of seed generated using such technology. Agritope and Aventis
CropScience also perform research work at their respective facilities. The
technology contributed to Agrinomics by Agritope had a zero basis for financial
reporting purposes. Accordingly, Agritope has recorded its investment in
Agrinomics as zero and will not include in its consolidated financial statements
its proportionate share of the results of operations of Agrinomics until such
time that Agritope makes capital contributions to Agrinomics, if ever.
Summarized financial information for Agrinomics is as follows:
<TABLE>
<CAPTION>
FINANCIAL POSITION 6/30/00 9/30/99
ASSETS (UNAUDITED)
Current assets
<S> <C> <C>
Cash and marketable securities............................ $1,949,331 $4,784,798
Other accounts receivable................................. 2,174 16,404
Due from Agritope......................................... 16,913 -
Prepaid expenses.......................................... 10,000 -
--------- ---------
1,978,418 4,801,202
Property, plant and equipment, net........................ 2,053,182 142,940
Patents and proprietary technology, net................... 61,355 -
--------- ---------
Total assets.............................................. $4,092,955 $4,944,142
LIABILITIES AND MEMBERS' EQUITY
Current liabilities
Accounts payable.......................................... $ 11,591 $ 61,594
Due to Agritope........................................... - 119,088
Deferred revenue.......................................... 750,000 -
------- -------
761,591 180,682
Members' equity 3,331,364 4,763,460
--------- ---------
Total liabilities and members' equity $4,092,955 $4,944,142
</TABLE>
7
<PAGE>
AGRITOPE, INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
OPERATING RESULTS THREE MONTHS ENDED NINE MONTHS ENDED
(UNAUDITED) 6/30/00 6/30/00
<S> <C> <C>
Research contract revenues................................ $ 375,000 $ 750,000
Operating expenses
Research and development.................................. 866,301 2,204,625
Administration............................................ 79,879 154,311
------- ---------
946,180 2,358,936
Interest earned........................................... 46,362 176,840
------- ---------
Net loss.................................................. $ (524,818) $ (1,432,096)
</TABLE>
NOTE 5...SEGMENT INFORMATION
Agritope is organized into two segments: The Research and Development segment
develops improved plant products and provides technology to the agricultural
industry. The Grapevine Propagation segment, operated by Vinifera, propagates
and grows grapevine plants and distributes them to the premium wine industry. It
also provides disease testing and elimination services.
<TABLE>
<CAPTION>
RESEARCH AND GRAPEVINE
DEVELOPMENT PROPAGATION TOTAL
THREE MONTHS ENDED JUNE 30, 2000
<S> <C> <C> <C>
Revenues from external sources.......... $1,001,434 $2,383,495 $3,384,929
Intersegment revenues................... - - -
Operating loss.......................... (733,772) (130,420) (864,192)
Intersegment interest income (expense).. - - -
Interest income......................... 26,192 45 26,237
Interest expense........................ - (34,768) (34,768)
Other income............................ - 68 68
------- ------- -------
Segment loss............................ (707,580) (165,075) (872,655)
Depreciation and amortization........... 147,530 166,576 314,106
Expenditures for long-lived assets...... 149,845 58,189 208,034
Segment assets.......................... 5,057,460 8,345,803 13,403,263
RESEARCH AND GRAPEVINE
DEVELOPMENT PROPAGATION TOTAL
THREE MONTHS ENDED JUNE 30, 1999
Revenues from external sources.......... $303,279 $1,225,341 $1,528,620
Intersegment revenues................... 98,726 (98,726) -
Operating loss.......................... (1,152,364) (244,725) (1,397,089)
Intersegment interest income (expense).. 9,708 (9,708) -
Interest income......................... 11,617 - 11,617
Interest expense........................ - (4,211) (4,211)
Other income............................ (6,400) - (6,400)
--------- ------- ---------
Segment loss............................ (1,137,439) (258,644) (1,396,083)
Depreciation and amortization........... 172,183 157,071 329,254
Expenditures for long-lived assets...... 124,724 75,149 199,873
Segment assets.......................... 5,043,687 7,808,938 12,852,625
</TABLE>
8
<PAGE>
AGRITOPE, INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
NOTE 5 SEGMENT INFORMATION, CONTINUED
<TABLE>
<CAPTION>
RESEARCH AND GRAPEVINE
DEVELOPMENT PROPAGATION TOTAL
NINE MONTHS ENDED JUNE 30, 2000
<S> <C> <C> <C>
Revenues from external sources.......... $2,266,488 $2,830,954 $5,097,442
Intersegment revenues................... - - -
Operating loss.......................... (2,867,810) (587,832) (3,455,642)
Intersegment interest income (expense).. - - -
Interest income......................... 97,685 3,293 100,978
Interest expense........................ - (109,342) (109,342)
Other income............................ - 535 535
--------- ------- ---------
Segment loss............................ (2,770,125) (693,346) (3,463,471)
Depreciation and amortization........... 488,940 499,555 988,495
Expenditures for long-lived assets...... 317,309 195,810 513,119
RESEARCH AND GRAPEVINE
DEVELOPMENT PROPAGATION TOTAL
NINE MONTHS ENDED JUNE 30, 1999
Revenues from external sources.......... $628,021 $1,559,875 $2,187,896
Intersegment revenues................... 154,296 (154,296) -
Operating loss.......................... (3,542,908) (803,820) (4,346,728)
Intersegment interest income (expense).. 40,288 (40,288) -
Interest income......................... 105,285 - 105,285
Interest expense........................ - (4,626) (4,626)
Other income............................ - 166,364 166,364
--------- ------- ---------
Segment loss............................ (3,397,335) (682,370) (4,079,705)
Depreciation and amortization........... 507,716 477,223 984,939
Expenditures for long-lived assets...... 435,779 271,539 707,318
</TABLE>
NOTE 6 BORROWING ARRANGEMENTS
ADVANCES TO VINIFERA FROM MINORITY SHAREHOLDERS. In September 1999, certain
minority shareholders of Vinifera agreed to advance $519,000, interest-free to
Vinifera. The amounts to be advanced are equal to the second installment payable
by the shareholders to Agritope under certain stock purchase agreements and they
are to be repaid to the shareholders on or before October 15, 2000.
In March and May 1999, two minority shareholders agreed to advance up to
$600,000, interest free to Vinifera. As of June 30, 2000, $400,000 of the total
had been advanced to Vinifera and is included as a current liability in the
accompanying financial statements.
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 advance by
Agritope. The line provides for borrowings of up to $1.5 million, all of which
was outstanding as of June 30, 2000. It 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 (9.5% as of June 30,
2000). It expires on November 1, 2000.
9
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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. THE WORDS "BELIEVES," "INTENDS,"
"EXPECTS," "ANTICIPATES," "ESTIMATES," AND SIMILAR EXPRESSIONS ALSO 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 AGRITOPE 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
AGRITOPE, 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 CONSUMER ACCEPTANCE OF GENETICALLY
ENGINEERED PRODUCTS; CHANGES IN LAWS OR REGULATIONS; AS WELL AS THE OTHER
FACTORS DISCUSSED IN EXHIBIT 99 TO AGRITOPE'S 1999 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.
The following discussion of operations and financial condition should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Agritope's 1999 Annual Report on Form 10-K and with the
Financial Statements and accompanying Notes included in this Form 10-Q.
RESULTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2000 AND 1999
SEGMENT RESULTS. The comparative operating results for Agritope's two business
segments are summarized below:
<TABLE>
<CAPTION>
RESEARCH AND GRAPEVINE
THREE MONTHS ENDED JUNE 30 DEVELOPMENT PROPAGATION TOTAL
REVENUES FROM EXTERNAL SOURCES
<S> <C> <C> <C>
2000.................................... $1,001,434 $2,383,495 $3,384,929
1999.................................... 303,279 1,225,341 1,528,620
------- --------- ---------
Increase................................ $698,155 $1,158,154 $1,856,309
SEGMENT LOSS
2000.................................... $ (707,580) $ (165,075) $ (872,655)
1999.................................... (1,137,439) (258,644) (1,396,083)
--------- ------- ---------
Decrease................................ $ 429,859 $ 93,569 $ 523,428
NET LOSS
2000..................................................................... $ (677,002)
1999..................................................................... (1,302,971)
---------
Decrease................................................................. $ 625,969
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
RESEARCH AND GRAPEVINE
NINE MONTHS ENDED JUNE 30 DEVELOPMENT PROPAGATION TOTAL
REVENUES FROM EXTERNAL SOURCES
<S> <C> <C> <C>
2000.................................... $2,266,488 $2,830,954 $5,097,442
1999.................................... 628,021 1,559,875 2,187,896
--------- --------- ---------
Increase................................ $1,638,467 $1,271,079 $2,909,546
SEGMENT LOSS
2000.................................... $(2,770,125) $ (693,346) $(3,463,471)
1999.................................... (3,397,335) (682,370) (4,079,705)
--------- ------- ---------
(Increase) decrease..................... $ 627,210 $ (10,976) $ 616,234
NET LOSS
2000..................................................................... $(3,040,662)
1999..................................................................... (3,834,179)
---------
Decrease................................................................. $ 793,517
</TABLE>
REVENUES. Total revenues for the three-month and nine-month periods ended June
30, 2000 amounted to $3.4 million and $5.1 million, respectively, representing
increases of $1.9 and $2.9 million, respectively, over revenues recorded for the
corresponding periods in the prior fiscal year.
As compared to corresponding prior year periods, research and development
revenues for the third quarter and first nine months of fiscal 2000 increased
$698,000 and $1.6 million, respectively, to $1.0 million and $2.3 million. The
increases were due to revenues from contract work performed for the Company's
newly formed joint venture, Agrinomics LLC.
Sales of grapevines were $2.4 million and $2.8 million for the third quarter and
first nine months of fiscal 2000, respectively, representing increases of $1.2
million (95%) and $1.3 million (82%) as compared to the third quarter and first
nine-months of fiscal 1999. Vinifera's sales are highly seasonal and generally
occur in the spring and summer planting seasons. As of June 30, 2000, Vinifera
had firm orders totaling $1.7 million for delivery in the remaining months of
fiscal 2000 and $1.1 million for delivery in the spring and summer of 2001,
respectively, as compared to firm orders of $1.7 million and $2.1 million as of
June 30, 1999, which were scheduled for delivery in the 1999 and 2000 planting
seasons.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses amounted to
$1.2 million and $3.2 million, respectively, for the quarter and nine months
ended June 30, 2000, representing increases of $341,000 (42%) and $899,000
(40%), respectively, over the corresponding prior-year periods. The increases in
both periods reflected increases in staffing and activities related to work
performed for Agrinomics LLC and occupancy costs associated with leasing of
additional laboratory space.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased by $65,000 (7%) and $3,000, respectively, in
the three-month and nine-month periods ended June 30, 2000 as compared to the
corresponding periods ended June 30, 1999. The year-to-date decreases were
largely due to reduced legal expenses.
OTHER INCOME (EXPENSE), NET. Interest income amounted to $26,000 and $101,000,
respectively, for the three-month and nine-month periods ended June 30, 2000 as
compared to $12,000 and $105,000, respectively, for the three-month and
nine-month periods ended June 30, 1999. The changes in interest income were due
to corresponding changes in cash available for investment. Interest expense
totaled $35,000 and $109,000, respectively, for the third quarter and first nine
months of fiscal 2000, representing interest incurred for a working capital loan
Vinifera obtained in June 1999. In June 2000, Agritope sold its 8.9% interest in
UAF LP to the managing partner of UAF LP for $124,760, which is included in
other income.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
6/30/00 9/30/99
Cash and cash equivalents................... $1,463,343 $4,203,937
Working capital ............................ 3,360,240 5,786,384
As of June 30, 2000, Agritope had working capital of $3.4 million, as compared
to working capital of $5.8 million as of September 30, 1999. During the nine
months ended June 30, 2000, expenditures for property and equipment were
$346,000, including $153,000 expended by Agritope for equipment and computer
software, $134,000 expended by Vinifera for greenhouse improvements and $60,000
spent for expansion of grapevine propagation blocks at Vinifera. The Company
also expended $167,000 for proprietary technology related to patent prosecution
and maintenance of its patent portfolio. For the nine months ended June 30,
2000, Vinifera used internally generated cash from deposits on future orders and
non-interest-bearing advances from minority shareholders to fund operations,
working capital and capital expenditures. Agritope's cash requirements for the
nine-month period were supplied primarily from cash reserves and research
funding.
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, Agritope received the first proceeds under
the agreements, totaling $874,000 thereby reducing its equity interest from 64%
to 57%. Agritope has extended the due date for the second installment of
$519,000 from July 15, 2000 to October 15, 2000 (see Note 6).
Agritope expects to continue to require significant funds to support its
operations and research activities. It intends to utilize 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 and it is presently seeking
such funding. 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of June 30, 2000, Vinifera, Inc. a majority-owned subsidiary of the Company
had borrowings under a $1.5 million revolving line of credit, which is subject
to interest rate risk. Due to the short-term nature of the borrowings under this
credit facility, an immediate 10% increase in interest rates would not have a
material effect on the Company's financial condition or the results of
operations.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
13
<PAGE>
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 14, 2000 /s/ ADOLPH J. FERRO
------------------------- --------------------------------------------------
Date Adolph J. Ferro
Chairman, President and Chief Executive Officer
(PRINCIPAL EXECUTIVE OFFICER)
August 14, 2000 /s/ GILBERT N. MILLER
------------------------- -------------------------------------------------
Date Gilbert N. Miller
Executive Vice President, Chief Financial Officer
and Director
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
14
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
27. Financial Data Schedule
15
