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 March 31, 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 March 31, 2000, 4,128,058 shares of the registrant's common stock, par value
$.01 per share, were issued and outstanding.
<PAGE>
AGRITOPE, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
as of March 31, 2000 and September 30, 1999............................................. 3
Condensed Consolidated Statements of Operations
for the three months and six months ended March 31, 2000 and 1999....................... 4
Condensed Consolidated Statements of Changes in Stockholders' Equity
for the three months and six months ended March 31, 2000................................ 4
Condensed Consolidated Statements of Cash Flows
for the three months and six months ended March 31, 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................... 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................................................ 13
</TABLE>
<PAGE>
AGRITOPE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
3/31/00 9/30/99
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets
Cash and cash equivalents....................................... $ 1,943,056 $ 4,203,937
Trade accounts receivable, net.................................. 391,872 355,187
Other accounts receivable....................................... 155,703 165,480
Due from affiliate.............................................. 241,274 119,088
Inventories..................................................... 6,469,009 5,053,888
Prepaid expenses................................................ 264,233 73,440
---------- ----------
Total current assets............................................ 9,465,147 9,971,020
Property and equipment, net..................................... 3,212,845 3,511,824
Patents and proprietary technology, net......................... 1,875,262 1,945,586
Other assets and deposits ...................................... 42,752 42,752
---------- ----------
$14,596,006 $15,471,182
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable................................................ $ 690,092 $ 642,178
Revolving line of credit........................................ 1,484,000 1,463,000
Advances from minority shareholders of subsidiary............... 681,562 180,616
Current portion of installment notes payable.................... 4,576 4,576
Current portion of lease liability.............................. 72,979 140,935
Deposits on customer orders..................................... 2,123,772 1,173,303
Salaries, benefits and other accrued liabilities................ 536,946 580,028
---------- ----------
Total current liabilities....................................... 5,593,927 4,184,636
Long-term portion of installment notes payable.................. 3,875 5,465
Minority interest............................................... 1,757,477 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; 4,128,058 shares
and 4,070,612 shares issued and outstanding,
respectively.................................................. 41,281 40,706
Additional paid-in capital...................................... 60,650,450 60,369,181
Accumulated deficit............................................. (53,458,147) (51,094,487)
---------- ----------
7,240,727 9,322,543
$14,596,006 $15,471,182
</TABLE>
3
<PAGE>
AGRITOPE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
3/31/00 3/31/99 3/31/00 3/31/99
<S> <C> <C> <C> <C>
Revenues
Product sales.................................. $ 402,939 $260,340 $ 447,459 $ 334,534
Government research grants..................... 82,509 80,138 179,426 132,744
Research projects with strategic partners...... 48,372 83,714 143,625 191,998
Research projects with affiliate............... 577,759 - 942,003 -
--------- --------- --------- ---------
1,111,579 424,192 1,712,513 659,276
Costs and expenses
Product costs ................................. 380,261 243,912 420,632 345,010
Research and development expenses.............. 980,690 752,063 2,009,679 1,451,931
Selling, general and administrative expenses... 900,076 936,698 1,873,652 1,811,974
--------- --------- --------- ---------
2,261,027 1,932,673 4,303,963 3,608,915
Loss from operations........................... (1,149,448) (1,508,481) (2,591,450) (2,949,639)
Other income (expense), net
Interest income................................ 29,388 25,037 74,741 93,668
Interest expense............................... (32,632) (198) (74,574) (415)
Other, net..................................... 173 176,400 467 172,764
--------- --------- --------- ---------
(3,071) 201,239 634 266,017
Minority interest in subsidiary net loss....... 109,916 35,344 227,156 152,414
--------- --------- --------- ---------
Net loss....................................... $(1,042,603) $(1,271,898) $(2,363,660) $(2,531,208)
Net loss per share (basic and diluted)......... $(0.25) $(0.31) $(0.58) $(0.62)
Weighted number of shares outstanding ......... 4,121,235 4,059,992 4,095,785 4,055,071
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
PREFERRED COMMON ADDITIONAL ACCUMULATED
STOCK STOCK PAID-IN CAPITAL DEFICIT
Balances at September 30, 1999................. $7,143 $40,706 $60,369,181 $(51,094,487)
Common stock issued as compensation -
54,196 shares................................. - 542 72,813 -
Compensation expense for stock option grants... - - 210,289 -
Common stock issued upon exercise of stock
options - 3,250 shares........................ - 33 8,467
Equity issuance costs.......................... - - (10,300) -
Net loss for the period........................ - - - (2,363,660)
----- ------ ---------- -----------
Balances at March 31, 2000..................... $7,143 $41,281 $60,650,450 $(53,458,147)
</TABLE>
4
<PAGE>
AGRITOPE, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
3/31/00 3/31/99
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss............................................................. $(2,363,660) $(2,531,208)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ....................................... 674,389 655,685
Loss on sale of property............................................. - 3,637
Compensation expense for stock awards................................ 73,355 26,106
Compensation expense for stock option grants......................... 236,384 213,780
Minority interest in subsidiary operating results.................... (227,156) (152,414)
(Increase) decrease in accounts receivable........................... (26,908) 885,277
(Increase) in receivable from affiliate.............................. (122,186) -
(Increase) in inventories............................................ (1,415,121) (1,441,121)
(Increase) decrease in prepaid expenses.............................. (190,793) 18,046
Decrease in other assets and deposits................................ - 14,383
Increase in accounts payable and accrued liabilities................. 4,832 256,344
Increase in deposits on customer orders.............................. 950,469 848,028
--------- ---------
Net cash used in operating activities................................ (2,406,395) (1,203,457)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment.................................. (216,080) (252,723)
Proceeds from sale of property....................................... - 900
Expenditures for patents and proprietary technology.................. (89,006) (254,722)
--------- ---------
Net cash used in investing activities................................ (305,086) (506,545)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt................................. (1,590) (2,264)
Payments on long-term lease liability................................ (67,956) (185,311)
Proceeds from revolving line-of-credit............................... 21,000 -
Advances from minority shareholders of subsidiary.................... 500,946 -
Proceeds from issuance of stock...................................... 8,500 -
Equity issuance costs................................................ (10,300) (11,308)
--------- ---------
Net cash provided by (used in) financing activities.................. 450,600 (198,883)
Net (decrease) in cash and cash equivalents.......................... (2,260,881) (1,908,885)
Cash and cash equivalents at beginning of period..................... 4,203,937 3,904,087
--------- ---------
Cash and cash equivalents at end of period........................... $ 1,943,056 $ 1,995,202
</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 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 six-month periods ended March 31, 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:
3/31/00 9/30/99
(UNAUDITED)
Operating supplies......................... $ 134,285 $ 143,757
Work-in-process............................ 1,124,319 1,437,617
Finished goods............................. 5,210,405 3,472,514
--------- ---------
$6,469,009 $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:
3/31/00 3/31/99
Options to purchase common stock........... 1,834,398 1,728,928
Warrants to purchase common stock.......... 708,333 583,333
Convertible preferred stock................ 714,285 214,285
--------- ---------
3,257,016 2,526,546
6
<PAGE>
NOTE 3 SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosure of cash flow information is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
3/31/00 3/31/99 3/31/00 3/31/99
<S> <C> <C> <C> <C>
Cash paid during the period for interest........$32,586 $198 $74,379 $415
</TABLE>
AGRITOPE, INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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. 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 3/31/00 9/30/99
ASSETS (UNAUDITED)
Current assets
<S> <C> <C>
Cash and marketable securities............................ $4,310,401 $4,784,798
Other accounts receivable................................. 16,103 16,404
Prepaid expenses.......................................... 10,000 -
--------- ---------
4,336,504 4,801,202
Property, plant and equipment, net........................ 1,106,511 142,940
Patents and proprietary technology, net................... 41,829 -
--------- ---------
Total assets............................................ $5,484,844 $4,944,142
LIABILITIES AND MEMBERS' EQUITY
Current liabilities
Accounts payable........................................ $ 262,389 $ 61,594
Due to Agritope......................................... 241,274 119,088
Deferred revenue........................................ 1,125,000 -
--------- ---------
1,628,663 180,682
Members' equity........................................... 3,856,181 4,763,460
--------- ---------
Total liabilities and members' equity................... $5,484,844 $4,944,142
</TABLE>
7
<PAGE>
OPERATING RESULTS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
3/31/00 3/31/00
<S> <C> <C>
Research contract revenues................................ $ 375,000 $ 375,000
Operating expenses
Research and development.................................. $ 963,638 1,338,325
Administration............................................ 52,602 74,433
--------- ---------
1,016,240 1,412,758
Interest earned........................................... 69,116 130,478
--------- ---------
Net loss.................................................. $ (572,124) $ (907,280)
</TABLE>
AGRITOPE, INC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
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 MARCH 31, 2000
<S> <C> <C> <C>
Revenues from external sources.......... $ 708,640 $ 402,939 $ 1,111,579
Intersegment revenues................... - - -
Operating loss.......................... (925,438) (224,010) (1,149,448)
Intersegment interest income (expense).. - - -
Interest income......................... 28,537 851 29,388
Interest expense........................ - (32,632) (32,632)
Other income............................ - 173 173
--------- --------- ----------
Segment loss............................ (896,901) (255,618) (1,152,519)
Depreciation and amortization........... 171,522 170,116 341,638
Expenditures for long-lived assets...... 62,113 90,315 152,428
Segment assets.......................... 5,549,241 9,046,765 14,596,006
RESEARCH AND GRAPEVINE
DEVELOPMENT PROPAGATION TOTAL
THREE MONTHS ENDED MARCH 31, 1999
Revenues from external sources.......... $ 163,852 $ 260,340 $ 424,192
Intersegment revenues................... 29,070 (29,070) -
Operating loss.......................... (1,254,731) (253,750) (1,508,481)
Intersegment interest income (expense).. 14,584 (14,584) -
Interest income......................... 25,037 - 25,037
Interest expense........................ - (198) (198)
Other income............................ 6,400 170,000 176,400
--------- --------- ----------
Segment loss............................ (1,208,710) (98,532) (1,307,242)
Depreciation and amortization........... 171,467 161,116 332,583
Expenditures for long-lived assets...... 165,857 131,639 297,496
Segment assets.......................... 5,290,045 7,562,664 12,852,079
</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
SIX MONTHS ENDED MARCH 31, 2000
<S> <C> <C> <C>
Revenues from external sources.......... $ 1,265,054 $ 447,459 $ 1,712,513
Intersegment revenues................... - - -
Operating loss.......................... (2,134,038) (457,412) (2,591,450)
Intersegment interest income (expense).. - - -
Interest income......................... 71,493 3,248 74,741
Interest expense........................ - (74,574) (74,574)
Other income............................ - 467 467
--------- ------- ---------
Segment loss............................ (2,062,545) (528,271) (2,590,816)
Depreciation and amortization........... 341,410 332,979 674,389
Expenditures for long-lived assets...... 167,465 137,621 305,086
RESEARCH AND GRAPEVINE
DEVELOPMENT PROPAGATION TOTAL
SIX MONTHS ENDED MARCH 31, 1999
Revenues from external sources.......... $ 324,742 $ 334,534 $ 659,276
Intersegment revenues................... 55,579 (55,570) -
Operating loss.......................... (2,390,544) (559,095) (2,949,639)
Intersegment interest income (expense).. 30,580 (30,580) -
Interest income......................... 93,668 - 93,668
Interest expense........................ - (415) (415)
Other income............................ 6,400 166,364 172,764
--------- ------- ---------
Segment loss............................ (2,259,896) (423,726) (2,683,622)
Depreciation and amortization........... 335,533 320,152 655,685
Expenditures for long-lived assets...... 311,055 196,390 507,445
</TABLE>
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 SIX MONTHS ENDED MARCH 31, 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 MARCH 31 DEVELOPMENT PROPAGATION TOTAL
REVENUES FROM EXTERNAL SOURCES
<S> <C> <C> <C>
2000.................................... $708,640 $402,939 $1,111,579
1999.................................... 163,852 260,340 424,192
--------- ------- ---------
Increase................................ $544,788 $142,599 $687,387
SEGMENT LOSS
2000.................................... $ (896,901) $ (255,618) $(1,152,519)
1999.................................... (1,208,710) (98,532) (1,307,242)
--------- ------- ---------
(Increase) decrease..................... $ 311,809 $ (157,086) $ 154,723
NET LOSS
2000..................................................................... $(1,042,603)
1999..................................................................... (1,271,898)
---------
Decrease................................................................. $ 229,295
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
RESEARCH AND GRAPEVINE
SIX MONTHS ENDED MARCH 31 DEVELOPMENT PROPAGATION TOTAL
REVENUES FROM EXTERNAL SOURCES
<S> <C> <C> <C>
2000.................................... $1,265,054 $447,459 $1,712,513
1999.................................... 324,742 334,534 659,276
--------- ------- ---------
Increase................................ $940,312 $112,925 $1,053,237
SEGMENT LOSS
2000.................................... $(2,062,545) $(528,271) $(2,590,816)
1999.................................... (2,259,896) (423,726) (2,683,622)
--------- ------- ---------
(Increase) decrease..................... $ 197,351 $(104,545) $ 92,806
NET LOSS
2000..................................................................... $(2,363,660)
1999..................................................................... (2,531,208)
---------
Decrease................................................................. $ 167,548
</TABLE>
REVENUES. Total revenues for the three-month and six-month periods ended March
31, 2000, amounted to $1.1 million and $1.7 million, respectively, representing
increases of $687,000 and $1.1 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 second quarter and first six months of fiscal 2000, increased
$545,000 and $940,000, respectively, to $709,000 and $1.3 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 $403,000 and $447,000 for the second quarter and first
six months of fiscal 2000, respectively, representing increases of $143,000
(55%) and $113,000 (34%) as compared to the second quarter and first six-months
of fiscal 1999. Vinifera's sales are highly seasonal and generally occur in the
spring and summer planting seasons. As of March 31, 2000, Vinifera had firm
orders totaling $4.6 million and $0.3 million for delivery in the spring and
summer of 2000 and 2001, respectively, as compared to firm orders of $2.9
million and $0.7 million as of March 31, 1999 which were scheduled for delivery
in the 1999 and 2000 planting seasons.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses amounted to
$981,000 and $2.0 million, respectively, for the quarter and six months ended
March 31, 2000, representing increases of $229,000 (30%) and $558,000 (38%),
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 $36,000 (4%) and increased by $62,000 (3%),
respectively, in the three-month and six-month periods ended March 31, 2000 as
compared to the corresponding periods ended March 31, 1999. The year-to-date
increases were largely due to the effect of incentive compensation payments made
only in the first quarter of fiscal 2000. Increased occupancy costs associated
with the leasing of additional office space during the period were partially
offset by reduced legal fees.
11
<PAGE>
OTHER INCOME (EXPENSE), NET. Interest income amounted to $29,000 and $75,000,
respectively, for the three-month and six-month periods ended March 31, 2000 as
compared to $25,000 and $94,000, respectively, for the three-month and six-month
periods ended March 31, 1999. The changes in interest income were due to
corresponding changes in cash available for investment. Interest expense totaled
$33,000 and $75,000, respectively, for the second quarter and first six months
of fiscal 2000, representing interest accrued for a working capital loan
Vinifera obtained in June 1999. 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
3/31/00 9/30/99
Cash and cash equivalents................... $1,943,056 $4,203,937
Working capital ............................ 3,871,220 5,786,384
As of March 31, 2000, Agritope had working capital of $3.9 million, as compared
to working capital of $5.8 million as of September 30, 1999. During the six
months ended March 31, 2000, expenditures for property and equipment were
$216,000, including $80,000 expended by Agritope for equipment and computer
software, $92,000 expended by Vinifera for greenhouse improvements and $44,000
spent for expansion of grapevine propagation blocks at Vinifera. The Company
also expended $89,000 for proprietary technology related to patent prosecution
and maintenance of its patent portfolio. For the six months ended March 31,
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
six-month period were supplied primarily from cash reserves and research
funding.
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. 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 March 31 1999, 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The company held its Annual Meeting of Stockholders on February 29,
2000. Voting shareholders took the following actions at the meeting:
1. The common stockholders voted to elect the following nominees to
the Company's Board of Directors to serve as Class 3 Directors
until the 2003 Annual Meeting:
Votes for Votes Withheld
Michel de Beaumont 4,237,091 24,053
Nancy L. Buc 4,238,428 22,716
The continuing members of Agritope's Board of Directors are Adolph
J. Ferro and Gilbert N. Miller (terms expiring in 2001) and W.
Charles Armstrong, James T. King and Roger L. Pringle (terms
expiring in 2002).
2. The Series A Preferred shareholder voted to elect the following
nominee to serve on the Company's Board of Directors until the
2001 Annual Meeting:
Votes For Votes Withheld
Pierre Lefebvre 714,285 None
There were no abstentions or broker non-votes with respect to either
proposal.
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.
May 12, 2000 /s/ ADOLPH J. FERRO
- ------------------------- --------------------------------------------------
Date Adolph J. Ferro
Chairman, President and Chief Executive Officer
(PRINCIPAL EXECUTIVE OFFICER)
May 12, 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
<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> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,943,056
<SECURITIES> 0
<RECEIVABLES> 807,156
<ALLOWANCES> (18,307)
<INVENTORY> 6,469,009
<CURRENT-ASSETS> 9,465,147
<PP&E> 6,662,421
<DEPRECIATION> (3,449,576)
<TOTAL-ASSETS> 14,596,006
<CURRENT-LIABILITIES> 5,544,538
<BONDS> 0
0
7,143
<COMMON> 41,281
<OTHER-SE> 7,192,303
<TOTAL-LIABILITY-AND-EQUITY> 14,596,006
<SALES> 447,459
<TOTAL-REVENUES> 1,712,513
<CGS> 420,632
<TOTAL-COSTS> 420,632
<OTHER-EXPENSES> 3,883,331
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,574
<INCOME-PRETAX> (2,363,660)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,363,660)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,363,660)
<EPS-BASIC> (.58)
<EPS-DILUTED> (.58)
</TABLE>
