<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
COMMISSION FILE NUMBER 1-7894
ERLY INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
CALIFORNIA 95-2312900
(State of Incorporation) (I.R.S. Employer Identification No.)
8641 UNITED PLAZA BLVD., SUITE 300, BATON ROUGE, LA (70809)
(Address of Principal Executive Offices)
225-922-4540
(Registrant's telephone number, including area code)
----------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class)
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES NO X
--- ---
As of March 31, 2000 there were 5,762,088 common shares outstanding and
such shares have been delisted from the Nasdaq Stock Market, and are not
eligible for quotation on the OTC Bulletin Board. Therefore the shares of common
stock have no market value.
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court. Yes [X] No [ ].
-1-
<PAGE> 2
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
-2-
<PAGE> 3
ERLY INDUSTRIES, INC.
FORM 10-K ANNUAL REPORT
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
TABLE OF CONTENTS
PART I
ITEM 1 Business
ITEM 2 Properties
ITEM 3 Legal Proceedings
ITEM 4 Submission of Matters to a Vote of Security Holders
PART II
ITEM 5 Market for the Company's Common Stock and Related Stockholder Matters
ITEM 6 Selected Consolidated Financial Data
ITEM 7 Management's Discussion and Analysis of Financial Condition and Results
of Operations
ITEM 7A Quantitative and Qualitative Disclosures About Market Risk
ITEM 8 Consolidated Financial Statements and Supplementary Data
ITEM 9 Changes in and Disagreements on Accounting and Financial Disclosure
PART III
ITEM 10 Directors and Executive Officers of the Company
ITEM 11 Executive Compensation
ITEM 12 Security Ownership of Certain Beneficial Owners and Management
ITEM 13 Certain Relationships and Related Transactions
PART IV
ITEM 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
-3-
<PAGE> 4
FORWARD-LOOKING STATEMENTS
Special Cautionary Notice Regarding Forward-Looking Statements
This report includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 which involve
risks and uncertainties. All statements, other than the statements of
historical facts, included in this report that address activities,
events or developments that ERLY Industries Inc., a California
corporation (the "Company"), expects or anticipates will or may occur
in the future, including such things as business strategy and measures
to implement strategy, competitive strengths, goals, expansion and
growth of the Company's business and operations, plans, references to
future success and other such matters are forward-looking statements.
When used in this report, the words" anticipates," "believes,"
"expects," or words of similar import are intended to identify
forward-looking statements. The forward-looking statements are based on
certain assumptions and analyses made by the Company in light of its
experience and its perception of historical trends, current conditions
and expected future developments as well as other factors it believes
are appropriate in the circumstances. However, whether actual results
and developments will conform to the Company's expectations and
predictions is subject to a number of risks: general economic, market
or business conditions; the opportunities (or lack thereof) that may be
presented to and pursued by the Company; competitive actions by other
companies; changes in laws or regulations; and other factors, many of
which are beyond the control of the Company. Consequently, all of the
forward-looking statements made in this report are qualified by these
cautionary statements and there can be no assurance that the actual
results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected
consequences to or effects on the Company or its business operations.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to publish revised forward-looking
statements to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events. Readers are urged to
carefully review and consider the various disclosures made by the
Company to advise interested parties of certain risks and other factors
that may affect the Company's business and operating results, including
the disclosures made under the caption "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in this report.
PART I
ITEM 1 Business
ERLY Industries, Inc. "ERLY" or the "Company" filed a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy
Code, in the U.S Bankruptcy Court for the Southern District of Texas,
Corpus Christi Division (the "Bankruptcy Court") on September 28, 1998.
Watch-Edge International, Inc. (WEI) (formerly known as Chemonics
Industries, Inc.), a wholly owned subsidiary of ERLY, also filed a
voluntary petition for reorganization under Chapter 11 of the
bankruptcy code on November 30, 1998 in the Bankruptcy Court. Both
companies continued to operate after the filing of their respective
petitions as debtors-in-possession. Other subsidiaries of ERLY included
in its August 20, 1999 consolidated balance sheet included The Beverage
Source, Inc. and ERLY Juice, Inc. Other subsidiaries of WEI
-4-
<PAGE> 5
included in the consolidated balance sheet included Chemonics
Fire-Trol, Inc. and Chemonics International, Inc., ("Old Chemonics").
At the date ERLY filed its petition for reorganization in bankruptcy,
it held 81% of the voting power of American Rice, Inc. ("ARI"),
comprised of 32% direct common stock equity interest and an additional
49% voting preferred stock interest. ERLY previously included ARI in
its consolidated balance sheet with appropriate adjustments to reflect
the 81%. ERLY's 81% stock interest in ARI had been pledged by ERLY to
ARI's creditors. ARI filed for bankruptcy under Chapter 11 of the
Bankruptcy Code on August 11, 1998. Its plan of reorganization provided
no distribution or continuing ownership to ERLY or ARI's other
shareholders. Accordingly, ERLY has not included ARI, or ARI's
wholly-owned subsidiaries, in its consolidated balance sheet.
The Bankruptcy Court's confirmation order of the Joint Plan of
Reorganization as modified became effective August 20, 1999. This
completed a significant financial restructuring which resulted in the
Company retaining no assets of value and a discharge of all
liabilities. The Company has accounted for the restructuring in
accordance with the American Institute of Certified Public Accountants
Statement of Position 90-7, Financial Reporting by Entities in
Reorganization under the Bankruptcy Code, which requires that assets
and liabilities be adjusted to their fair values ("fresh-start" values)
and a new reporting entity created. Accordingly, the Company's
consolidated balance sheet at August 20, 1999 reflected the assets and
liabilities at the fair value assessed by management of zero (see Notes
3 and 5 of the Consolidated Financial Statements for additional
discussion) and reclassified the value of common stock to eliminate a
deficit retained earnings.
Since August 20, 1999, the Company has not engaged in any business
activities.
The Company currently has only one employee, Nanette N. Kelley, who
serves as President, Chief Executive Officer, and Chairman of the
Board.
ITEM 2 Properties
As a result of ERLY's Chapter 11 reorganization, it owns no property
other than the shares of WEI and other subsidiaries.
ITEM 3 Legal Proceedings
On August 9, 1999, the Bankruptcy Court enclosed in order (the
"Confirmation Order") which confirmed a Chapter 11 Joint Plan of
Reorganization as Modified filed by ERLY and WEI (the "Debtors") and
ERLY's Creditor's Committee (the "Plan") in the above-referenced
bankruptcy proceedings. The Confirmation Order provides that all
entities who have held, hold or may hold a claim against the directors
are permanently enjoined on or after the confirmation date from making
demand on, commencing, or continuing in any manner any action or
proceeding of any kind with respect to any such claim against the
Debtors.
The Plan became effective on August 20, 1999 and provided that all of
the assets of ERLY and WEI (except certain contracts and assets, which
management has determined to be of no
-5-
<PAGE> 6
value, net operating losses and carryovers, and stock of WEI) are to be
paid, transferred and assigned to a newly formed limited partnership
for the benefit of the creditors. The purpose of the limited
partnership is to liquidate assets of the Debtors and to distribute
those proceeds to the Creditors.
All claims and causes of action of ERLY and WEI existing as of and
subsequent to the petition date were preserved and inure to the benefit
of the reorganized Debtors and are not extinguished by the Confirmation
Order. In full and final satisfaction of all claims against the
Debtors, the Confirmation Order automatically (i) vests all property of
the Debtors and their estates, including the Debtors' actions (ii)
transfers and/or assigns to the limited partnership for the benefit of
the Debtors' Creditors, and all property of the Debtors' estates and
their subsidiaries, except where noted in the preceding paragraph.
On August 20, 1999, all intercompany claims by and among the Debtors or
Old Chemonics were eliminated, all guarantees executed by the Debtors
or Old Chemonics were deemed to have been one obligation of ERLY
payable solely by the limited partnership and any claim filed or to be
filed against the Debtors were deemed one claim filed or to be filed
against the Debtors were deemed one claim against ERLY payable solely
by the limited partnership, all remaining assets of Old Chemonics were
either assigned to, paid, or otherwise vest and assigned to the limited
partnership.
ITEM 4 Submission of Matters to a Vote of Security Holders
The Company did not submit any matters to a vote of security holders
during the fourth quarter of fiscal 2000.
PART II
ITEM 5 Market for the Company's Common Stock and Related Stockholder Matters
(Item 201)
(a) Market Information
The Company's common stock, $0.01 par value per share, has been
delisted from the Nasdaq Stock Market and is no longer eligible for
quotation on the Over the Counter Bulletin Board and therefore no
established public trading market exists for such securities.
(b) Holders
There are approximately 1075 shareholders of record as of March 31,
2000.
(c) Dividends
The Company has never paid cash dividends and has no present intention
to declare or pay cash dividends in the foreseeable future.
ITEM 6 Selected Consolidated Financial Data
-6-
<PAGE> 7
ERLY INDUSTRIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
-7-
<PAGE> 8
ERLY INDUSTRIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
-8-
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditors' Report 10
Consolidated Balance Sheets 11
Consolidated Statement of Operations 12
Consolidated Statement of Cash Flows 13
Consolidated Statement of Changes in Stockholders' Deficit 14
Notes to Consolidated Balance Sheet 15
</TABLE>
-9-
<PAGE> 10
INDEPENDENT AUDITORS' REPORT
The Board of Directors
ERLY Industries, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of ERLY Industries,
Inc. and Subsidiaries as of March 31, 2000 and August 20, 1999, and the
consolidated statements of operations, changes in stockholders' deficit, and
cash flows for the period August 21, 1999 to March 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to in the first
paragraph present fairly, in all material respects, the consolidated financial
position of ERLY Industries, Inc. and Subsidiaries as of March 31, 2000 and
August 20, 1999, and the results of their consolidated operations and their cash
flows for the period from August 21, 1999 to March 31, 2000, in accordance with
generally accepted accounting principles.
As more fully described in Note 9, the Company has no ongoing operations or
sources of capital and significant uncertainties as to its intended future
operations, if any.
/s/ POSTLETHWAITE & NETTERVILLE, APAC
June 12, 2000
Baton Rouge, Louisiana
-10-
<PAGE> 11
ERLY INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND AUGUST 20, 1999
<TABLE>
<CAPTION>
ASSETS
MARCH 31, 2000 AUGUST 20, 1999
-------------- ---------------
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $ 193,413 $ --
------------- -------------
TOTAL ASSETS $ 193,413 $ --
============= =============
LIABILITIES AND STOCK HOLDERS' EQUITY
LIABILITIES
Compensation payable to stockholder $ 400,000 $ --
------------- -------------
Total current liabilities 400,000 --
------------- -------------
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' DEFICIT
Preferred stock, $100 par value, 6,000 shares authorized,
no shares issued or outstanding -- --
Common stock, $.01 par value, 15,000,000 shares authorized,
5,762,088 shares issued and outstanding -- --
Retained deficit (206,587) --
------------- -------------
Total stockholders' deficit (206,587) --
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 193,413 $ --
============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
-11-
<PAGE> 12
ERLY INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD AUGUST 21, 1999 TO MARCH 31, 2000
<TABLE>
<S> <C>
REVENUE $ --
-----------
EXPENSES
Administrative expense (Note 7) 402,674
-----------
OPERATING LOSS (402,674)
-----------
OTHER INCOME
Refund of funds previously expended (Note 4) 194,382
Interest income 1,705
-----------
Total other income 196,087
-----------
LOSS BEFORE INCOME TAXES (206,587)
INCOME TAX EXPENSE --
-----------
NET LOSS $ (206,587)
===========
Basic and diluted loss per share $ (0.04)
===========
Weighted average shares outstanding 5,762,088
===========
</TABLE>
The accompanying notes are an integral part of this statement.
-12-
<PAGE> 13
ERLY INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD AUGUST 21, 1999 TO MARCH 31, 2000
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (206,587)
Adjustments to reconcile net loss to net cash
provided by operating activities
Accrual of compensation payable to stockholder 400,000
-------------
Total cash provided by operating activities 193,413
-------------
Cash at beginning of period --
-------------
Cash at end of period $ 193,413
=============
</TABLE>
The accompanying notes are an integral part of this statement.
-13-
<PAGE> 14
ERLY INDUSTRIES AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE PERIOD AUGUST 21, 1999 TO MARCH 31, 2000
<TABLE>
<CAPTION>
Preferred Stock Common Stock
------------------------- ------------------------- Total
No. of No. of Retained Stockholders'
Shares Amount Shares Amount Deficit Deficit
---------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at August 21, 1999 -- $ -- 5,762,088 $ -- -- $ --
Net loss -- -- -- -- (206,587) (206,587)
---------- ---------- ---------- ---------- ---------- ----------
Balance at March 31, 2000 -- $ -- 5,762,088 $ -- $ (206,587) $ (206,587)
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
-14-
<PAGE> 15
ERLY INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
1. Organization, Basis of Presentation, and Principles of Consolidation
ERLY Industries, Inc.(ERLY) filed for a voluntary petition of
reorganization under Chapter 11 of the U.S. Bankruptcy Code, in the U.S.
Bankruptcy Court for the Southern District of Texas, Corpus Christi
Division (the Bankruptcy Court) on September 28, 1998 (see Note 2).
Watch-Edge International, Inc. (WEI) (formerly known as Chemonics
Industries, Inc.), a wholly owned subsidiary of ERLY, also filed a
voluntary petition for reorganization under Chapter 11 of the bankruptcy
code on November 30, 1998 in the Bankruptcy Court. Both Companies
continued to operate since the filing of their petitions as
debtor-in-possession. Other subsidiaries of ERLY included in the
consolidated balance sheets presented include The Beverage Source, Inc.
and ERLY Juice, Inc. Other subsidiaries of WEI included in the
consolidated balance sheet presented include Chemonics Fire-Trol, Inc. and
Chemonics International, Inc. (Collectively referred to as the Company)
At the date ERLY filed its petition for bankruptcy, it held 81% of the
voting power of American Rice, Inc. (ARI), comprised of 32% direct common
stock equity interest and an additional 49% voting preferred stock
interest. ERLY previously included ARI in its consolidated financial
statements with appropriate adjustments to reflect the minority interest.
ERLY's 81% stock interest in ARI has also been pledged by ERLY to ARI's
creditors. ARI filed for bankruptcy under Chapter 11 of the Bankruptcy
Code on August 11, 1998. (Case No. 98-21895 before the Bankruptcy Court).
ARI filed a Plan of Reorganization that was confirmed and made effective
October 1, 1999 provided no distribution or continuing ownership to ERLY
or ARI's other shareholders. Accordingly, ERLY has not included ARI, or
ARI's wholly-owned subsidiaries, in the consolidated balance sheets
presented at March 31, 2000 and August 20, 1999.
As described in Note 3, the Bankruptcy Court's confirmation of the
Company's Joint Plan of Reorganization became effective August 20, 1999.
This completed a significant financial restructuring which resulted in the
Company retaining no assets of value and a discharge of liabilities. The
Company has accounted for the restructuring in accordance with the
American Institute of Certified Public Accountants Statement of Position
90-7, "Financial Reporting by Entities in Reorganization under the
Bankruptcy Code", which requires that assets and liabilities be adjusted
to their fair values ("fresh-start" values) and a new reporting entity
created. Accordingly, the consolidated balance sheet at August 20, 1999
reflect the assets and liabilities at the fair value assessed by
management of zero (see Notes 3 and 4 for additional discussion) and
reclassified the value of common stock to eliminate a deficit retained
earnings. The financial statements presented reflect the Company's
activities since the August 20, 1999 bankruptcy Confirmation Order through
March 31, 2000.
The preparation of a consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
balance sheet. Actual results could differ from those estimates.
-15-
<PAGE> 16
ERLY INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
2. Bankruptcy Proceedings
On August 9, 1999, the Bankruptcy Court confirmed a Chapter 11 Joint Plan
of Reorganization as Modified filed by ERLY and WEI (the Debtors) and
ERLY's Creditor's Committee (the Plan) in the above referenced bankruptcy
proceedings. The Confirmation Order provides that all entities who have
held, hold or may hold a claim are permanently enjoined on or after the
confirmation date from making demand on, commencing, or continuing in any
manner any action or proceeding of any kind with respect to any such claim
against the Debtors.
The Plan was effective on August 20, 1999 and provides that all of the
assets of ERLY and WEI (except certain contracts and assets, which
management has determined to be of no value, necessary for the Debtors to
continue operations involving a sublease and Terminal Service Agreement in
connection with the WEI operations in Phoenix, Arizona, net operating
losses and carryovers, and stock of WEI) are to be paid, transferred and
assigned to a newly formed limited partnership for the benefit of the
creditors. The purpose of the limited partnership is to liquidate assets
of the Debtors and to distribute those proceeds to the Creditors.
All claims and causes of action of ERLY and WEI existing as of and
subsequent to the petition date were preserved and inure to the benefit of
the reorganized Debtors and are not extinguished by the Confirmation
Order. In full and final satisfaction of all claims against the Debtors,
the Confirmation Order shall automatically (i) vest all property of the
Debtors and their Estates, including the Debtors' actions (ii) transfer
and/or assign to the limited partnership for the benefit of the Debtors'
Creditors, and all property of the Debtors' estates and their
subsidiaries, except the exceptions in the preceding paragraph.
On August 20, 1999, all intercompany claims by and among the Debtors or
Old Chemonics were eliminated, all guarantees executed by the Debtors or
Old Chemonics were deemed to have been one obligation of ERLY payable
solely by the limited partnership and any claim filed or to be filed
against the Debtors were deemed one claim against ERLY payable solely by
the limited partnership, all remaining assets of Old Chemonics were either
assigned to, paid, or otherwise vest and assigned to the limited
partnership.
3. Income Taxes
Company is not able to determine its net operating loss (NOL)
carryforwards at August 20, 1999 or March 31, 2000; however, it could be
significant on a consolidated tax return basis. The NOL is subject to
certain tax sharing agreements and continuing disputes with its former
subsidiary, American Rice, Inc., which have thus far prohibited the
preparation of these tax returns and the assessment of any NOLs.
Management does not know whether the NOL will have any significant value
after any adjustments for events occurring during the bankruptcy
proceedings including the sale of assets, forgiveness of indebtedness, as
well as the possible de-consolidation of American Rice, Inc. for income
tax purposes.
-16-
<PAGE> 17
ERLY INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
3. Income Taxes (continued)
Due to the inability of management to ascertain the amount of any NOLs
available to the Company as well as the uncertainty of future taxable
income during the NOL carryover period, management has established a full
valuation allowance at March 31, 2000 and August 20, 1999. Federal NOL
carry forwards generally have a 15 or 20 year carry forward period.
However, due to the inability to determine the amount of any NOL also
prohibit the estimation of the carryover periods. Due to the inability to
determine the amount of any NOL, management has established the valuation
allowance to be any amount necessary to reduce the tax benefit of any NOL
to zero.
Related to the significant uncertainty associated with the NOLs described
above, the possibility exists that the Company could ultimately be liable
for income taxes. Although, management believes that the Company should
not have taxable income or liabilities, significant uncertainties exist as
to the possibility that income taxes may be owed by the Company. These
financial statements do not provide for any possible income taxes that
could ultimately be owed by the Company.
4. Refund of Funds Previously Expended
During February 2000, The Beverage Source, a wholly owned subsidiary,
received a refund of funds previously held in escrow by an engineering
firm for the purpose of funding environmental remediation. Management had
previously estimated that no funds held in escrow would be recoverable and
accordingly estimated no value to the escrow funds or no additional
liability related to remediation matter.
The recovery of these funds has been recorded as other income in the post
bankruptcy operations of the Company ended March 31, 2000. Management
believes there are no rights or claims at March 31, 2000 to assets of The
Beverage Source, which did not file for bankruptcy. The possibility
remains that litigation could be brought against the Companies by
creditors to the previously described bankruptcy proceedings, or by
others, making claim to the assets of The Beverage Source which were
previously estimated to have no value. At March 31,2000, management has
not established a liability to reflect such contingent liabilities or
claims if they in fact emerge.
5. Specific Contracts and Leases
WEI leased a parcel of property in Phoenix, Arizona under a quarter to
quarter tenancy that was paid through September 30, 1999. WEI had
subleased the property to two entities. WEI was also party to a Terminal
Service Agreement whereby WEI provides certain equipment and services.
Management sold all equipment at this location for approximately $750 and
terminated these leases and contracts on September 30, 1999.
Management has determined that there is no value to these leases or
agreements at August 20, 1999 and accordingly has reduced the carrying
value of these assets to zero in the presented consolidated balance
sheet.
-17-
<PAGE> 18
ERLY INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
6. Stockholders' Equity
At March 31, 2000 and August 20, 1999, ERLY had 6,000 shares of $100 par
value preferred stock authorized but unissued.
At March 31, 2000 and August 20, 1999, ERLY had 15,000,000 shares of $.01
par value common stock authorized and 5,762,088 shares issued and
outstanding.
In the fiscal year ended March 31, 1996, ERLY granted stock options to a
key employee for 88,500 shares at a price of $4.55 per share (as adjusted
for stock dividends). These options were to expire on their own terms in
the year 2001. These options were cancelled by action of ERLY's Board of
Directors and are not deemed outstanding at August 20, 1999.
The consolidated financial statements are presented in accordance with
Statement on Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share". Basic EPS is completed using the weighted average number of
shares outstanding during the period. Diluted EPS gives the effect of the
potential dilution of earnings which may have occurred if dilutive
potential shares had been issued. Since the Company incurred a net loss,
both basic and diluted earnings per share are the same amount.
7. Related Party Transactions
From time-to-time the Company receives management and administrative
services by entities or individuals related to a shareholder of the
Company. These entities may also incur certain limited operating costs on
behalf of the Company. These services are provided without cost to the
Company. Although the value of these services and costs has not been
determined, management believes the total value to have been
insignificant during the period August 21, 1999 to March 31, 2000.
The Board of Directors for ERLY retained its current Chairman of the
Board, President, and Chief Executive Officer, who is also a stockholder,
at a set monthly amount of compensation plus a supplemental fee to be
determined by the ERLY Board of Directors at the conclusion of the
previously described bankruptcy proceedings. In July 1999, ERLY's Board
of Directors approved a supplemental fee to be paid of $400,000. The
supplemental fee was submitted to the Bankruptcy Court as an
administrative cost of the bankruptcy proceeding to be paid from the
estate of the bankruptcy proceedings. The supplemental fee was not
approved for payment by the Bankruptcy Court. Management for ERLY intends
to honor the supplemental fee agreement previously declared by the Board
of Directors. Accordingly, a liability and related compensation expense
have been accrued as payable to this individual at March 31, 2000.
8. Significant Litigation
The Company has been involved in significant litigation related to
actions brought prior to its bankruptcy petition and as a part of its
bankruptcy proceedings. Based on management's assessment of these
proceedings, and considering the Confirmation Order discussed in Note 2,
the balance sheets presented provide no liabilities for such litigation
and asserted or unasserted contingent liabilities at August 20, 1999 and
March 31, 2000.
-18-
<PAGE> 19
ERLY INDUSTRIES AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
9. Uncertainty Related to Future Business Operations
The ERLY and WEI emerged from voluntary bankruptcy on August 20, 1999
with no assets of value, liabilities, or equity. The Companies have no
ongoing operations and reflect a deficit of $203,913 at March 31, 2000.
Management has and continues to evaluate various business plans and
alternatives strategies for the Company to pursue.
On March 22, 2000, the Board of Directors accepted the terms of an
agreement to provide a controlling interest of ERLY's commons stock to a
group of investors at an undetermined date subsequent to March 31, 2000.
There can be no assurance offered that ERLY will be successful in
developing a viable business plan obtaining the capital necessary to
carry out a business plan or to continue as a going concern.
-19-
<PAGE> 20
ITEM 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations
ITEM 7A Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
ITEM 8 Consolidated Financial Statements and Supplementary Data
ITEM 9 Changes in and disagreements with Accountants on Accounting and
Financial Disclosure (Item 304)
On or about March 1, 1999, Postlethwaite & Netterville, APAC ("P&N") was
appointed by the Bankruptcy Court to prepare the tax returns of ERLY. On
or about August 16, 1999, ERLY engaged P&N as its principal accountant to
audit its balance sheet upon the effectiveness of its Plan. P&N completed
its audit of ERLY's balance sheet at August 20, 1999 and issued its
report on October 4, 1999.
There have been no disagreements on accounting or financial disclosures.
PART III
ITEM 10 Directors and Executive Officers of the Company
William D. Blake (67) has served as a director of the Company since 1998.
Since 1961, Mr. Blake has served as General Manager of Quatre Parish
Company and John A. Bel Estate and since 1988 as President of The
Lacassane Company, companies primarily engaged in the agriculture/land
holdings business. Mr. Blake also manages a substantial block of real
estate in Louisiana.
Robert Arthur Seale (58) has been a member of the Company's Board of
Directors since 1998. Mr. Seale was a senior partner and administrative
head of the Personal Tax & Estates Group of the law firm Vinson & Elkins
L.L.P. in Houston, Texas until his retirement in March 1997. Mr. Seale
had practiced law with Vinson & Elkins since 1969. His practice focused
on tax and financial structuring of businesses involved in mining,
aircraft manufacturing, thoroughbred racing and breeding, banking and
real estate development. During the last five years, Mr. Seale has been
involved as a consultant in the tax-free reorganizations of closely-held
businesses and "split-offs" of corporations for business purposes.
Nanette Noland Kelley (41) has served as the Company's President and
Chief Executive Officer since 1998, and as Chairman of the Board of
Directors since 1998. Ms. Kelley has been the President and Chief
Executive Officer of The Powell Group since 1991. The Powell Group is a
privately held holding company engaged primarily in agriculture and
communications. Ms. Kelley presently serves as the Chairman of General
Health System, an integrated health care delivery system. General Health
System is engaged in
-20-
<PAGE> 21
health care delivery in Baton Rouge, Louisiana, through two hospitals,
four nursing homes, an HMO, a TPA, a behavioral health unit, a home
health unit, private physician practices and a foundation. General Health
System is a not for profit 501(c)(3) organization.
Eugene A. Cafiero (74) has served as a director of the Company since
1998. Mr. Cafiero has been Chairman of Voltarc Technologies, Inc., a
major manufacturer of specialty lamps and wiring devices for germicidal,
aerospace, reprographic, illuminated sign and other applications since
1993. From 1986 to 1993, Mr. Cafiero served as Chairman and Chief
Executive Officer of KD Holdings, Inc. and KDI Corporation, a diversified
manufacturing company. Mr. Cafiero also served as Chief Executive Officer
of Ariadne Australia, Ltd. And President and Chief Executive Officer of
Mid-American Communications. Mr. Cafiero is the past president and
director of Keene Corporation, a manufacturer of bearings, lighting
fixtures, electronics and laminated products for printed circuit boards
and other applications; past president and chief operating officer and
vice chairman of Chrysler Corporation; principle founder of Computerized
Security Systems, maker of electronic locks for the lodging industry.
Beryl F. Anthony, Jr. (64) has been a director since 1998. Mr. Anthony is
currently a partner in the Washington, D.C. office of Winston & Strawn
and has been a member of such firm since January 1993 specializing in
legislative law. Mr. Anthony was previously a member of the United States
House of Representatives, having been elected to serve from his home
district in Arkansas.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16"), requires the Company's directors and certain officers and
beneficial owners (collectively, the "reporting persons") of the Company's
common stock, $0.01 par value per share (the "Common Stock") to file with the
Securities and Exchange Commission reports of ownership and changes in ownership
of the Common Stock. The reporting persons are required to furnish the Company
with copies of all reports filed pursuant to Section 16(a).
Based solely upon a review of such reports received by it, or written
representations from certain reporting persons that no Form 5 reports were
required for those persons, the Company believes that, during fiscal 2000, all
filing obligations applicable to the reporting persons were complied with.
ITEM 11 Executive Compensation
ERLY's Board of Directors agreed to pay Nanette Kelley a salary of $10,000 per
month salary during the bankruptcy proceedings plus a supplemental fee of
$400,000.00. The $10,000 per month was paid but the supplemental fee has not
been paid yet. She has received no compensation since ERLY came out of
bankruptcy on August 20, 1999.
There are no other executives receiving compensation.
-21-
<PAGE> 22
ITEM 12 Security Ownership of Certain Beneficial Owners and Management
ITEM 13 Certain Relationship and Related Transactions
PART IV
ITEM 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.
EXHIBITS
Financial Statements
Included in Part II of this report:
<TABLE>
<S> <C>
Independent Auditors' Report Page 10
March 31, 2000 and August 20, 1999
Consolidated Balance Sheets Page 11
For the period August 21, 1999 to March 31, 2000
Consolidated Statement of Operations Page 12
Consolidated Statement of Cash Flows Page 13
Consolidated Statement of Changes in Stockholders' Deficit Page 14
Notes to Consolidated Financial Statements Page 15
</TABLE>
Financial Statement Schedules
Included in Part IV of this report:
Individual financial statements of the registrant have been omitted
because consolidated financial statements of the registrant and its subsidiaries
required by Item 8 have been included in part II of this report and, as of March
31, 2000, the registrant and its subsidiaries were not engaged in any
operations.
No financial statement schedules have been presented because they are
not applicable or are not required or the information required to be set forth
therein is included in the consolidated financial statements or notes thereto.
EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Document
----------- -----------------------
<S> <C>
21 -List of Subsidiaries of the Company
</TABLE>
-22-
<PAGE> 23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, ERLY Industries Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ERLY INDUSTRIES, INC.
/s/ NANETTE N. KELLEY
---------------------------
Nanette N. Kelley President
and Chief Executive Officer
June 13, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ NANETTE N. KELLEY
--------------------------
Nanette N. Kelley Chairman of the Board, June 13, 2000
President and Chief
Executive Officer
/s/ BERYL F. ANTHONY, JR.
--------------------------
Beryl F. Anthony, Jr. Director June 13, 2000
/s/ WILLIAM D. BLAKE
--------------------------
William D. Blake Director June 13, 2000
/s/ EUGENE A. CAFIERO
--------------------------
Eugene A. Cafiero Director June 13, 2000
/s/ ROBERT ARTHUR SEALE
--------------------------
Robert Arthur Seale Director June 13, 2000
</TABLE>
-23-
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
21 List of Subsidiaries of the Company
27 Financial Data Schedule
</TABLE>
