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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
AMENDMENT 2
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
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(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.
MANAGEMENT'S STATEMENT ON THE SEPTEMBER 30, 1999 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 nine months ended September 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,
1999.
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KNOX NURSERY, INC.
BALANCE SHEETS
September 30, 1999 & 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 151,798 $ 505,736
Trade accounts receivable 345,201 300,584
Inventories 979,419 542,671
Prepaid expenses 2,055 2,937
Note receivable 1,694 40,067
Deposits 46,665 3,358
----------- -----------
Total current assets 1,526,832 1,395,353
Investment in cooperative bank 10,478 13,591
----------- -----------
Total investments 10,478 13,591
Property and equipment 9,502,858 9,075,054
Less accumulated depreciation/amortization (3,438,372) (2,741,820)
Net property and equipment 6,064,486 6,333,234
Deferred loan issuance fees, net of amortization 77,353 56,239
----------- -----------
$ 7,679,149 $ 7,798,417
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installment of long-term debt 316,000 $ 268,000
Accounts payable 478,512 236,955
Accrued expenses 268,003 218,979
----------- -----------
Total current liabilities 1,062,515 723,934
Long-term debt, excluding current installments 4,457,561 4,096,404
Due to stockholders 95,000 250,000
Deferred tax liability 364,753 511,778
----------- -----------
Total liabilities 5,979,829 5,582,116
Stockholders' equity
Common stock 11,605 11,605
Additional paid-in capital 1,184,670 1,190,608
Retained earnings 517,510 1,014,088
Treasury stock (14,465) 0
----------- -----------
Total stockholders' equity 1,699,320 2,216,301
----------- -----------
$ 7,679,149 $ 7,798,417
</TABLE>
See accompanying notes to financial statements.
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KNOX NURSERY, INC.
STATEMENTS OF OPERATIONS
For the nine months ended September 30, 1999 & 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Sales $ 4,707,105 $ 4,514,311
Cost of Sales 3,235,350 3,046,533
----------- -----------
Gross Profit 1,471,755 1,467,778
Operating expenses 1,505,548 1,279,055
----------- -----------
Operating income (33,793) 188,723
Other income (expense):
Interest expense (294,529) (322,154)
Interest and dividend income 287 6,670
Other (6,004) 77,669
----------- -----------
Total other income (expense) (300,246) (237,815)
----------- -----------
Net loss ($ 334,039) ($ 49,092)
</TABLE>
See accompanying notes to financial statements.
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KNOX NURSERY, INC.
STATEMENTS OF OPERATIONS
For the nine months ended September 30, 1999 & 1998
<TABLE>
<CAPTION>
Nine months ended September 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 $ 3,031,567 64.4% $ 3,071,826 68.0% ($ 40,259) (1.3%)
Finished Product Division 1,675,538 35.6% 1,442,485 32.0% 233,053 16.2%
--------- ---- --------- ---- -------
Total Sales 4,707,105 100.0% 4,514,311 100.0% 192,794 4.3%
Cost of sales:
Plugs 2,008,790 66.3% 2,006,188 65.3% 2,602 0.1%
Finished Products 1,226,560 73.2% 1,040,345 72.1% 186,215 17.9%
--------- --------- -------
Total Cost of Sales 3,235,350 68.7% 3,046,533 67.5% 188,817 6.2%
--------- ---- --------- ---- -------
Gross profit 1,471,755 31.3% 1,467,778 32.5% 3,977 0.3%
Operating expenses
Advertising 168,219 3.6% 15,361 0.3% 152,858 995.1%
Amortization 11,771 0.3% 11,771 0.3% 0 0.0%
Bad debt 9,000 0.2% 15,000 0.3% (6,000) (40.0%)
Computer 8,458 0.2% 8,524 0.2% (66) (0.8%)
Consulting fees 9,891 0.2% 10,133 0.2% (242) (2.4%)
Depreciation 510,750 10.9% 495,000 11.0% 15,750 3.2%
Employee welfare 26,857 0.6% 23,500 0.5% 3,357 14.3%
Equipment lease 82,759 1.8% 82,759 1.8% 0 0.0%
Gas & oil 22,974 0.5% 13,779 0.3% 9,195 66.7%
Insurance 143,407 3.0% 122,527 2.7% 20,880 17.0%
Interest 294,529 6.3% 322,154 7.1% (27,625) (8.6%)
Legal and accounting 31,397 0.7% 39,220 0.9% (7,823) (2.4%)
Miscellaneous 8,171 0.2% 5,772 0.1% 2,399 6.1%
Office supplies and postage 12,040 0.3% 12,143 0.3% (103) (0.8%)
Payroll taxes 123,211 2.6% 109,104 2.4% 14,107 12.9%
Propane and natural gas 15,426 0.3% 23,188 0.5% (7,762) (33.5%)
Salaries - office 187,729 4.0% 164,614 3.6% 23,115 14.0%
Taxes, licenses, and fees 5,672 0.1% 21,141 0.5% (15,469) (73.2%)
Telephone 39,270 0.8% 39,310 0.9% (40) (0.1%)
Trash removal 12,804 0.3% 7,672 0.2% 5,132 66.9%
Travel and entertainment 16,775 0.4% 12,125 0.3% 4,650 38.4%
Utilities 58,967 1.3% 46,412 1.0% 12,555 27.1%
--------- ---- --------- ---- -------
Total operating expense 1,800,077 38.2% 1,601,209 35.5% 198,868 12.4%
--------- ---- --------- ---- -------
Operating income (loss) (328,322) (7.0%) (133,431) (3.0%) (194,891) 146.1%
Other income (expense) (5,717) (0.1%) 84,339 1.9% (90,056) (106.8%)
--------- ---- --------- ---- -------
Net profit before income taxes ($ 334,039) (7.1%) ($ 49,092) (1.1%) ($284,947) 580.4%
</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 & 1997
Nine months ended September 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 (334,039) 0 (334,039)
------- ----------- ----------- -------- -----------
Balances, September 30, 1999 $11,605 $ 1,184,670 $ 517,510 ($14,465) $ 1,699,320
</TABLE>
See accompanying notes to financial statements.
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KNOX NURSERY, INC.
STATEMENT OF CASH FLOWS
For the nine months ended September 30, 1999 & 1998
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Increase in cash and cash equivalents:
Cash flows from operating activities:
Net income ($334,039) ($ 49,092)
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 522,521 506,771
Cash provided by (used for) changes in:
Trade accounts receivable 7,768 130,798
Inventories 0 350,664
Refundable income taxes 0 91,294
Prepaid expenses 13,327 12,852
Deposits (44,157) (1,000)
Accounts payable (16,029) (744,254)
Accrued expenses and other liabilities 103,360 (30,453)
--------- ---------
Net cash provided by operating activities 252,751 267,580
Cash flows from investing activities:
Purchase of property and equipment (409,838) (46,541)
Net cash used in investing activities (409,838) (46,541)
Cash flows from financing activities:
Proceeds from issuance of stock 0 887,813
Repayment of long-term debt (324,568) (812,217)
Proceeds from long-term borrowings 700,000 0
Proceeds from investment in bank 3,113 0
Net increase (decrease) in due to stockholders (155,000) 165,000
Loan issuance fees (38,005) 0
--------- ---------
Net cash provided by financing activities 185,540 240,596
--------- ---------
Net change in cash and cash equivalents 28,453 461,635
Cash and cash equivalents at beginning of year 123,345 44,101
--------- ---------
Cash and cash equivalents at September 30 $151,798 $ 505,736
</TABLE>
See accompanying notes to financial statements.
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KNOX NURSERY, INC.
NOTES TO FINANCIAL STATEMENTS
September 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 seedling 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
September 30, 1999 & 1998
(2) Inventories
Inventories at September 30, 1999 and 1998 consisted of the following:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Work in process $835,480 $425,000
Materials and supplies 143,939 117,671
-------- --------
$979,419 $542,671
</TABLE>
(3) Property, Plant and Equipment
Property, plant and equipment at September 30, 1999 and 1998 consist of
the following:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Land $ 272,169 $ 272,169
Buildings and improvements 6,828,313 6,806,255
Machinery and equipment 1,579,799 1,527,852
Automotive equipment 304,294 259,732
Office furniture and equipment 201,598 185,483
Construction in process 316,685 23,563
---------- ----------
9,502,858 9,075,054
Less accumulated depreciation (3,438,372) (2,741,820)
---------- ----------
Net property, plant and equipment $6,064,486 $6,333,234
</TABLE>
(Continued)
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KNOX NURSERY, INC.
Notes to Financial Statements
September 30, 1999 & 1998
(4) Long-term Debt
Long-term debt consists of the following at September 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 $3,995,232 $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 57,562 100,579
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 24,825 112,790
Commercial loan ($300,000 limit) with interest at a fixed
rate of 8.5%, due in 60 equal monthly installments ending
August 25, 2004. Loan is collateralized by land, buildings
and improvements 295,942 0
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
land, buildings and improvements 400,000 0
---------- ----------
4,773,561 4,429,201
Less current installments 316,000 268,000
---------- ----------
Long-term debt, excluding current installments $4,457,561 $4,161,201
</TABLE>
Aggregate principal maturities for the years subsequent to September 30, 1999
are as follows:
<TABLE>
<S> <C>
1999 (9 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
September 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 September 30, 1999 are:
<TABLE>
<S> <C>
Year ended December 31,
1999 (nine months) $ 27,693
2000 117,843
2001 90,843
-------
Total $236,379
</TABLE>
Rent expense for the nine months ended September 30, 1999 and 1998 was
$82,759.
(6) Income Taxes
No income tax expense provision is necessary for the nine months ended
September 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 nine months
ended September 30, 1999 and 1998, total Company contributions to the plan
were $ 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: December 9, 1999
