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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
AMENDMENT 1
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Act of 1934
KNOX NURSERY, INC.
------------------
(Name of Small Business issuer in its charter)
FLORIDA 59-1787808
------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4349 N. HIAWASSEE ROAD, ORLANDO, FLORIDA 32818
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(Address of principal executive offices)
(407) 293-3721
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(Issuer's telephone number)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
NONE NONE
Securities registered or to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.001 PAR VALUE PER SHARE
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(Title of Class)
On June 30, 1999 the Registrant had outstanding 11,605,000 shares of Common
Stock, par value $0.001 per share.
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[KNOX NURSERY INC. LETTERHEAD]
MANAGEMENT'S STATEMENT ON THE JUNE 30, 1999 INTERIM FINANCIALS
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to SEC Form 10-SB. In the opinion of the
Company, all adjustments and information necessary for a fair presentation have
been included. Operating results for the six months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999. The unaudited financial statements should be read in
conjunction with the audited financial statements for the year December 31,
1998.
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KNOX NURSERY, INC.
BALANCE SHEETS
JUNE 30, 1999 & 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 145,341 $ 739,544
Trade accounts receivable 467,249 912,356
Refundable income taxes 0 138,834
Inventories 779,419 452,671
Prepaid expenses 6,497 9,405
Note receivable 1,694 40,067
Deposits 4,158 3,358
----------- -----------
Total current assets 1,404,358 2,296,235
Investment in cooperative bank 10,478 13,591
----------- -----------
Total investments 10,478 13,591
Property and equipment 9,246,492 9,060,961
Less accumulated depreciation/amortization (3,268,122) (2,577,932)
----------- -----------
Net property and equipment 5,978,370 6,483,029
Deferred loan issuance fees, net of amortization 66,555 60,162
----------- -----------
$ 7,459,761 $ 8,853,017
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current installment of long-term debt $ 268,000 $ 268,000
Accounts payable 265,031 622,304
Accrued expenses 207,442 195,001
----------- -----------
Total current liabilities 740,473 1,085,305
Long-term debt, excluding current installments 3,890,172 4,161,201
Due to stockholders 200,000 475,000
Deferred tax liability 364,753 511,778
----------- -----------
Total liabilities 5,195,398 6,233,284
Stockholder's equity
Common stock 11,605 11,605
Additional paid-in capital 1,184,670 1,190,608
Retained earnings 1,082,553 1,417,520
Treasury stock (14,465) 0
----------- -----------
Total stockholder's equity 2,264,363 2,619,733
----------- -----------
$ 7,459,761 $ 8,853,017
</TABLE>
See accompanying notes to financial statements.
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KNOX NURSERY, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 & 1998
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Sales $3,992,838 $3,926,003
Cost of Sales 2,550,524 2,490,148
---------- ----------
Gross Profit 1,442,314 1,435,855
Operating expenses 1,035,319 896,284
---------- ----------
Operating income 406,995 539,571
Other income (expense):
Interest expense (171,355) (220,441)
Interest and dividend income 194 702
Other (4,830) 34,510
---------- ----------
Total other income (expense) (175,991) (185,229)
---------- ----------
Net income before income taxes 231,004 354,342
Income tax provision 0 0
-- --
Net income $ 231,004 $ 354,342
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 5
KNOX NURSERY, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 & 1998
<TABLE>
<CAPTION>
Six months ended June 30: Variance
----------------------------------------------------------------------
Per Cent Per Cent Increase/(Decrease)
1999 of Sales 1998 of Sales Amount Per Cent
---------- -------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sales
Plug Division $2,640,681 86.1% $2,850,624 72.6% $(209,943) -7.4%
Finished Product Division 1,352,157 33.9% 1,075,379 27.4% 276,778 25.7%
---------- ----- ---------- ----- --------- -------
Total Sales 3,992,838 100.0% 3,926,003 100.0% 66,835 1.7%
Cost of sales:
Plugs 1,647,586 62.4% 1,762,368 61.8% (114,782) -6.5%
Finished Products 902,938 66.8% 727,780 67.7% 175,158 24.1%
---------- ----- ---------- ----- --------- -------
Total Cost of Sales 2,550,524 63.9% 2,490,148 63.4% 60,376 2.4%
Gross profit 1,442,314 36.1% 1,435,855 36.6% 6,459 0.4%
Operating expenses
Advertising 129,105 3.2% 5,043 0.1% 124,062 2460.1%
Amortization 7,847 0.2% 7,847 0.2% 0 0.0%
Bad debt 6,000 0.2% 10,000 0.3% (4,000) -40.0%
Computer 6,413 0.2% 3,836 0.1% 2,577 67.2%
Consulting fees 5,355 0.1% 6,281 0.2% (926) -14.7%
Depreciation 340,600 8.5% 330,000 8.4% 10,500 3.2%
Employee welfare 17,754 0.4% 16,771 0.4% 983 5.9%
Equipment lease 62,457 1.6% 62,457 1.6% 0 0.0%
Gas & oil 16,141 0.4% 9,841 0.3% 6,300 64.0%
Insurance 103,659 2.6% 96,227 2.5% 7,432 7.7%
Interest 171,355 4.2% 220,441 5.6% (49,086) -22.3%
Legal and accounting 20,635 1.7% 35,915 0.9% (15,280) -6.9%
Miscellaneous 3,919 0.1% 1,861 0.0% 2,058 5.7%
Office supplies and postage 9,520 0.2% 11,791 0.3% (2,271) -19.3%
Payroll taxes 86,087 2.2% 80,369 2.0% 5,718 7.1%
Propane and natural gas 15,316 0.4% 23,160 0.6% (7,844) -33.9%
Salaries - office 123,964 3.1% 112,909 2.9% 11,055 9.8%
Taxes, licenses, and fees 2,020 0.1% 20,592 0.5% (18,572) -90.2%
Telephone 25,762 0.6% 27,015 0.7% (1,253) -4.6%
Trash removal 7,704 0.2% 6,203 0.2% 1,501 24.2%
Travel and entertainment 10,041 0.3% 5,861 0.1% 4,180 71.3%
Utilities 35,120 0.9% 22,305 0.6% 12,815 57.5%
---------- ----- ---------- ----- --------- -------
Total operating expenses 1,206,674 30.2% 1,116,725 28.4% 89,949 8.1%
---------- ----- ---------- ----- --------- -------
Operating income (loss) 235,640 5.9% 319,130 8.1% (83,490) -26.2%
Other income (expense) (4,636) -0.1% 35,212 0.9% (39,848) -113.2%
---------- ----- ---------- ----- --------- -------
Net profit before
income taxes $ 231,004 5.8% $ 354,342 9.0% $(123,338) -34.8%
</TABLE>
See accompanying notes to financial statements.
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KNOX NURSERY, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
------- ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1996 $ 500 $ 218,900 $ 2,197,305 $ 0 $ 2,416,705
Increase of authorized common stock 7,500 (7,500) 0
Issuance of common stock 200 94,800 95,000
Net loss (1,134,127) (1,134,127)
------- ---------- ----------- -------- -----------
Balances, December 31, 1997 8,200 306,200 1,063,178 0 1,377,578
Issuance of common stock 3,405 884,408 0 0 887,813
Purchase of treasury stock 0 0 0 (25,403) (25,403)
Sale of treasury stock 0 (5,938) 0 10,938 5,000
Net income (loss) 0 0 (211,629) 0 (211,629)
------- ---------- ----------- -------- -----------
Balances, December 31, 1998 $11,605 $1,184,670 $ 851,549 (14,465) $ 2,033,359
Issuance of common stock 0 0 0 0 0
Purchase of treasury stock 0 0 0 0 0
Net income (loss) 0 0 231,004 0 231,004
------- ---------- ----------- -------- -----------
Balances, June 30, 1999 $11,605 $1,184,670 $ 1,082,553 $(14,465) $ 2,264,363
</TABLE>
See accompanying notes to financial statements.
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KNOX NURSERY, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 & 1998
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Increase in cash and cash equivalents:
Cash flows from operating activities:
Net income $ 231,004 $ 354,342
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 348,347 337,847
Cash provided by (used for) changes in:
Trade accounts receivable (113,280) (480,974)
Inventories 200,000 440,664
Refundable income taxes 0 (47,547)
Prepaid expenses 8,885 6,384
Deposits (1,650) (1,000)
Accounts payable (229,510) (358,905)
Accrued expenses and other liabilities 42,799 (54,433)
--------- ---------
Net cash provided by operating activities 486,595 196,378
Cash flows from investing activities:
Purchase of property and equipment (155,668) (31,328)
--------- ---------
Net cash used in investing activities (155,668) (31,328)
Cash flows from financing activities:
Proceeds from issuance of stock 0 887,813
Repayment of long-term debt (239,957) (747,420)
Proceeds from long-term borrowings 0 0
Proceeds from investment in bank 3,113 0
Net increase (decrease) in due to stockholders (50,000) 390,000
Loan issuance fees (22,087) 0
--------- ---------
Net cash provided by financing activities (308,931) 530,393
--------- ---------
Net change in cash and cash equivalents 21,996 695,443
Cash and cash equivalents at beginning of year 123,345 44,101
--------- ---------
Cash and cash equivalents at June 30 $ 145,341 $ 739,544
</TABLE>
See accompanying notes to financial statements.
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KNOX NURSERY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 & 1998
(1) Summary of Significant Accounting Policies
(a) Description of Business
Knox Nursery, Inc. is located in Central Florida and has two operating
divisions: 1) the Finished Products Division, with sales of 4 inch annuals
to wholesalers, landscapers, and large final-use customers located
primarily in Central Florida, and 2) the Plug Division, with sales of
seeding annuals (plugs) to brokers and other nurseries located throughout
the United States.
(b) Inventories
Inventories of plants, seeds and supplies are stated at the lower of cost
(first-in, first-out) or market.
(c) Property and Equipment
Property and equipment are stated at cost. Assets are depreciated by the
straight-line and accelerated methods over the estimated useful lives of
the individual assets.
(d) Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
General business credits which include investment tax credits and job
credits are accounted for as a reduction of income tax liability in the
year realized.
(e) Cash Equivalents
Cash equivalents represent short-term, highly liquid commercial paper
readily convertible to cash and with an original maturity of three months
or less.
(f) Investment in Cooperative Bank
Investment in cooperative bank is carried at cost increased for the amount
of patronage refund certificates and patrons' equity allocated, less
distribution received.
(g) Use of Estimates
Management of the Company has made certain estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from these estimates.
(Continued)
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KNOX NURSERY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(2) INVENTORIES
Inventories at June 30, 1999 and 1998 consisted of the following:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Work in process $660,480 $355,000
Materials and supplies 118,939 97,671
-------- --------
$779,419 $452,671
======== ========
</TABLE>
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at June 30, 1999 and 1998 consist of the
following:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Land $ 272,169 $ 272,169
Buildings and improvements 6,824,688 6,806,255
Machinery and equipment 1,547,888 1,527,852
Automobile equipment 259,732 259,732
Office furniture and equipment 201,598 182,438
Construction in process 140,417 12,515
----------- -----------
9,246,492 9,060,961
Less accumulated depreciation (3,268,122) (2,577,932)
----------- -----------
Net property, plant and equipment $ 5,976,370 $ 6,483,029
</TABLE>
(Continued)
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KNOX NURSERY, INC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 & 1998
(4) Long-term Debt
Long-term debt consists of the following at June 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
NationsBank:
Construction loan ($4,500,000 limit) with interest fixed at
7.5%, principal, and interest due in level monthly
payments based on a 15-year amortization with a final
balloon payment of all unpaid principal and accrued
interest on May 8, 2002. Loan is collateralized by
land, buildings and improvements. $4,047,933 $4,215,832
Commercial loan ($160,000 limit) with interest at a fixed
rate of 7.5%, due in 59 equal monthly installments
ending May 8, 2001. Loan is collateralized by land,
buildings and improvements. 67,015 100,579
Commercial loan ($200,000 limit) with interest at a fixed
rate of 7.5%, due in 36 equal monthly installments
ending February 5, 2000. Loan is collateralized by
land, buildings and improvements. 43,224 112,790
Credit line loan ($600,000 limit) with interest equal to
the prime rate plus 1%. Line of credit renews annually
with similar terms and rates. Loan is collateralized by
and, buildings and improvements. 0 0
---------- ----------
4,158,172 4,429,201
Less current installments 268,000 268,000
---------- ----------
Long-term debt, excluding current installments $3,890,172 $4,161,201
</TABLE>
Aggregate principal maturities for the years subsequent to June 30, 1999
are as follows:
<TABLE>
<S> <C>
1999 (6 months) $ 148,652
2000 243,601
2001 233,338
2002 3,532,581
----------
$4,158,172
</TABLE>
(Continued)
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KNOX NURSERY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 & 1998
(5) Leases
The Company leases certain production equipment under lease agreements
classified as operating leases. Future minimum lease payments under
non-cancelable operating leases (with initial or remaining lease terms
in excess of one year) as of June 30, 1999 are:
<TABLE>
<CAPTION>
Year ended December 31,
<S> <C>
1999 (six months) $ 55,386
2000 117,843
2001 90,843
---------
Total $ 264,072
</TABLE>
Rent expense for the six months ended June 30, 1999 and 1998 was
$62,457.
(6) Income Taxes
No income tax expense provision is necessary for the six months ended
June 30, 1999 or 1998. Based on management's assessment of financial
projections for the remainder of the year, the Company will finish 1999
with a net operating loss, as it did in 1998.
(7) Profit Sharing Plan
The Company has established a voluntary Employee Savings Plan, 401(K),
available to all employees who meet certain eligibility requirements.
The plan provides for a matching by the Company of the employee's
contribution to the plan not to exceed certain specified limits.
During the six months ended June 30, 1999 and 1998, total Company
contributions to the plan were $14,126 and $14,196, respectively.
(8) Common Stock
The Articles of Incorporation authorize the Company to issue 50,000,000
shares, of which 40,000,000 are to be common and provides for the
issuance of 10,000,000 preferred shares, both with a par value of $.001
per share. At June 30, 1999, 11,605,000 shares of common stock were
issued and outstanding.
(9) Contingencies
In the normal course of business, the Company is subject to certain
obligations and litigation. Management, after consultation with
counsel, intends to vigorously defend its positions and is of the
opinion that the ultimate resolution of such matters will not have a
material adverse effect on the Company's financial position or results
of operation.
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
KNOX NURSERY, INC.
By: /s/ Bruce R. Knox
---------------------------------
Bruce R. Knox, President
Date: November 19, 1999
