<PAGE> 1
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________.
Commission file number: 0-10147
SAN DIEGO BANCORP
(Exact name of registrant as specified in its charter)
California 95-355578
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3335 South 900 East, Suite 230, Salt Lake City, Utah 84106
(Address of principal executive offices) (Zip Code)
(801) 467-5339
Registrant's telephone number, including area code
Not Applicable
(Former name, former address, and former fiscal year,
if changed since last report.)
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), Yes [ ] No [X] and (2) has
been subject to such filing requirements for the past 90 days. Yes [X] No[ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date.
Class Outstanding as of March 31, 1995
----- --------------------------------
Common Stock, No Par Value 9,102,908
EXPLANATORY NOTE: THIS REPORT IS BEING FILED ON OR ABOUT AUGUST 5, 1996,
WHICH IS BEYOND THE DATE ON WHICH THE REPORT WOULD HAVE BEEN TIMELY FILED AND
DOES NOT CONTAIN INFORMATION CONCERNING EVENTS OCCURING SUBSEQUENT TO MARCH
31, 1995.<PAGE>
<PAGE> 2 PART I - FINANCIAL INFORMATION
- ------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders'
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
The unaudited balance sheet of the Company as of March 31, 1995, and the
related audited balance sheet of the Company as of December 31, 1994, the
unaudited related statements of operations and cash flows for the three month
period ended March 31, 1995 and 1994, and the unaudited statement of
stockholders' equity for the three month periods ended March 31, 1994 and
1995, are attached hereto and incorporated herein by this reference.
Operating results for the quarter ended March 31, 1995, are not
necessarily indicative of the results that can be expected for the year ending
December 31, 1995.
- ------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ------------------------------------------------------------------------------
General
San Diego Bancorp (SDBC) was incorporated under the laws of the State of
California on May 19, 1979, for the primary purpose of acting as a bank
holding corporation for several subsidiaries, and the principal business was
in the industrial loan market conducted through a subsidiary named El Camino
Thrift and Loan Association. During several years preceding 1986, SDBC
incurred substantial losses and during 1986 management decided to discontinue
all operating activities, and liquidate the remaining assets and liabilities.
The subsidiaries were either dissolved or sold for nominal amounts, and SDBC
became a "shell" corporation by December 31, 1986, and had no material
operations until September, 1993. On September 21, 1993, SDBC acquired 100%
of the outstanding common stock of Enviro-Guard Corporation (a corporation
incorporated in the State of Utah on May 30, 1991) from Enviro-Guard Holding
Corporation (a corporation incorporated in the State of Colorado on June 10,
1987). This transaction was accounted for as a reverse acquisition whereby
the acquired corporation (Enviro-Guard Corporation) gains controlling
stockholder interest in the acquiring corporation<PAGE>
<PAGE> 3
(SDBC), and the financial statements of Enviro-Guard Corporation are
presented on a continuous basis since inception in May of 1991.
Enviro-Guard Corporation has developed a line of organically-based
insecticide products made from natural compounds with the objective of
achieving environmentally-friendly, yet effective results. In August of 1992,
Enviro-Guard acquired 100% of the outstanding common stock of Diatect
International, Inc. (Diatect), (incorporated in the State of Kansas in 1989).
Diatect has developed and owns the rights to three EPA registered
insecticides. Also in August of 1992, Enviro-Guard acquired 100% of the
outstanding common stock of D.S.D., Inc. (incorporated in the State of Kansas
in 1982). The principal business activity of D.S.D., Inc., is the
manufacturing and sale of cattle dusters and mineral feeders as well as the
blending and sale of various agricultural related insecticides.
On December 18, 1992, Enviro-Guard Corporation completed negotiations to
acquire 90.14% of the outstanding common stock (891,250 shares) of White
Mountain Mining and Manufacturing, Inc. ("White Mountain") (an Idaho
Corporation). White Mountain owns 83 unpatented BLM mining claims located in
Malheur County, Oregon. The purpose of this acquisition of the mining
property is for Enviro-Guard Corporation to have a source of diatomite, which
is an important organic ingredient for its environmentally-safe insecticides.
On December 30, 1993, SDBC acquired 100% of the outstanding common stock
of Actagro Acquisition, Inc., (formerly Actagro, Inc.). Actagro Acquisition,
Inc., is a California corporation which manufactures and sells organic based
agricultural fertilizer to customers in the Southern San Joaquin Valley. On
December 6, 1994, SDBC divested itself of Actagro. In the divestiture, the
shareholders of Actagro returned 715,063 shares of SDBC common stock for
cancellation.
With the acquisition and subsequent divestiture of Actagro Acquisition,
Inc. in 1993 and 1994, respectively, a comparison of prior periods with the
three-month period ended March 31, 1995, is of limited benefit in
understanding the Company's financial position.
Ability of the Company to Continue as a Going Concern
For the three-month period ended March 31, 1995, the Company has
incurred a consolidated net loss of $341,868. In addition, at March 31, 1995,
current liabilities exceeded current assets by $1,237,067.
During the first three months of 1995, the Company converted $28,167 in
accrued salaries and wages and $79,567 in other liabilities to equity. In the
future, management anticipates the conversion of an additional $600,000 in
debt (principally notes payable and accruals) to equity during fiscal years
1995 and 1996. The Company also believes that without additional conversions
of debt to equity and restructuring the payment terms of short-term debt,
substantial doubt remains as to the Company's ability to meet its current
obligations and continue in business. The Company has taken steps to address
its insolvency problems by working with its creditors to keep them informed
of the Company's progress in meeting outstanding liabilities. For the most
part, the Company's creditors have been patient, waiting for payment at a
future date. <PAGE>
<PAGE> 4
The Company is attempting to obtain additional working capital from
several sources, including investment banking firms, private investors and
state funding agencies interested in assisting growing companies within the
agri-environmental sector. Management intends to obtain equity financing
through the sale of the Company's securities.
The Company must meet monthly operational expenses of approximately
$85,000. Currently, the Company is unable to meet this amount. However,
management believes that additional revenue generated by the marketing sales
of its Enviro-Guard and Diatect product line will ultimately alleviate a
substantial portion of the shortfall. Until those revenues eventuate, the
Company is dependent upon outside funding to sustain it.
Results from Operations
During the first three months of fiscal year 1995, the Company had
revenues of $109,322, cost of sales of $51,522, operating expenses of
$352,071, other losses of $104,292 and an income tax benefit of $56,695.
These yielded a net loss of $341,868, compared to a loss of $220,309 (which
included Actagro) for the same period of 1994. The substantial portion of the
first quarter 1995 loss was due to three factors: a loss on the sale of the
building that housed the Company's administrative offices ($109,332),
professional fees ($69,103), and depreciation and amortization ($62,623). The
Company believes that many of the operating and administrative expenses
associated with the first quarter loss were due, in part, to insufficient cash
flow and the illiquid nature of the Company's non-current assets. Because of
liquidity difficulties, many expenses were paid through the issuance of common
stock.
Management is hopeful that once its products are in the marketplace, the
losses from operations the Company currently suffers will be alleviated by
increased sales revenue and profitability. Currently, the Company has not had
the working capital to effectively market its products.
Liquidity and Capital Resources
The Company has a severe working capital deficit. As of March 31, 1995,
the Company's working capital deficit totaled $1,237,067 compared with
$1,182,199 at December 31, 1994. The Company has current liabilities totaling
$1,344,675 and no long term debt. At the end of 1994, current liabilities and
long term debt were $1,261,626 and $120,228, respectively. During the first
quarter of 1995, total liabilities decreased $37,179. Despite the slight
reduction in total debt, the Company's working capital deficit has had a
direct correlation to the Company's inability to expand and market its
products effectively.
If the Company is unable to obtain some funds in the near future, it
will not be able to continue in business. The Company, therefore, continues
to seek working capital from several sources, including equity markets and
private investors. There is no assurance, however, that these efforts will be
successful. The Company does feel that it will increase revenues from
operations as it moves from the development stage of its products, which has
included lengthy and costly time in obtaining EPA approval. <PAGE>
<PAGE> 5
With Enviro-Guard's products in the market place and with adequate financial
support, the Company anticipates revenues to offset on-going expenses. The
Company is uncertain, however, as to whether there will be sufficient revenues
to cover prior years' obligations.
As previously stated, the Company's lack of cash has affected its
ability to effectively market Enviro-Guard's products. The marketing strategy
will require funds to be fully effect. Accordingly, although the Company
anticipates more revenue from its products then it has received in the past,
it will not be as profitable as it could be with additional funding for full
implementation of its marketing and promotional plans.
Management Changes
In February 1995, James Dayley resigned as President of the Company.
Both he and Dale Christiansen resigned their positions on the Board of
Directors at the same time. Mr. Christiansen continued with the Company as
Chief Financial Officer. Mr. George H. Henderson became President of the
Company on an interim basis until another Company President could be found.
Additions to Mr. Robert Crouch on the Board of Directors included Mr.
Henderson, John L. Runft and Elwynn S. Hewlett, Jr.
<PAGE>
<PAGE> 6
SAN DIEGO BANCORP
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF MARCH 31, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
(Unaudited)
March 31, 1995 December 31, 1994
CURRENT ASSETS ----------------- -----------------
Accounts Receivable $ 48,950 $ 17,980
Advances to Employees 276 276
Inventories 57,882 57,882
Prepaid expenses 500 3,289
----------------- -----------------
Total Current Assets 107,608 79,427
----------------- -----------------
PROPERTY, PLANT AND EQUIPMENT
Buildings Lease Hold Improvements 27,119 314,218
Mining property 4,423,005 4,440,543
Equipment 270,279 270,279
----------------- -----------------
Total Property, Plant and Equipment 4,720,403 5,025,040
Less accumulated depreciation 234,075 251,377
----------------- -----------------
Net Property, Plant and Equipment 4,486,328 4,773,663
----------------- -----------------
OTHER ASSETS
Investment in EPA labels, Net of
amortization 3,730,724 3,804,364
Notes receivable 250,000 250,000
Deposits 467 467
Other assets 1,159 1,179
----------------- -----------------
Total Other Assets 3,982,350 4,056,010
----------------- -----------------
TOTAL ASSETS $ 8,576,286 $ 8,909,100
================= =================
/TABLE
<PAGE>
<PAGE> 7
SAN DIEGO BANCORP
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF MARCH 31, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
(Unaudited)
March 31, 1995 December 31, 1994
CURRENT LIABILITIES ----------------- -----------------
Accounts payable $ 162,643 $ 165,474
Bank overdraft 6,142 1,847
Dealer deposits 10,625 10,625
Interest payable 99,766 113,090
Income taxes payable 33,563 33,563
Other accrued liabilities 81,510 29,134
Notes payable 635,904 505,561
Current portion of long-term debt 314,522 402,332
----------------- -----------------
Total Current Liabilities 1,344,675 1,261,626
----------------- -----------------
LONG-TERM LIABILITIES
Long-Term debt, less current portion -0- 120,228
----------------- -----------------
DEFERRED TAX LIABILITY 1,367,061 1,458,563
----------------- -----------------
COMMITMENTS
MINORITY INTEREST 340,215 340,215
----------------- -----------------
STOCKHOLDERS' EQUITY
Common stock, no - par value; 20,000,000 shares
authorized; 9,102,908 and 8,203,267 shares issued
and outstanding, respectively 8,801,825 8,550,140
Common stock subscribed 83,500 197,450
Accumulated deficit (3,360,990) (3,019,122)
----------------- -----------------
Total Stockholder's Equity 5,524,335 5,728,468
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,576,286 $ 8,909,100
================= =================
/TABLE
<PAGE>
<PAGE> 8
SAN DIEGO BANCORP
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED
March 31, 1995 AND 1994
<TABLE>
<CAPTION>
Three Months Ended
------------------
<S> <C> <C>
March 31, 1995March 31, 1994
----------------- -----------------
REVENUES $ 109,322 $ 1,879,950
COST OF SALES 51,522 908,856
----------------- -----------------
GROSS PROFIT 57,800 971,094
----------------- -----------------
OPERATING EXPENSES
Salaries, wages and benefits 73,743 428,361
Consulting 18,004 86,197
Research and development 77,368
Travel 15,436 80,369
Rent 4,441 46,864
Interest 20,177 95,508
Utilities 3,589 22,415
Depreciation and amortization 62,623 112,639
Advertising 49,399 4,233
Office 9,266 76,905
Taxes and licenses 2,693 9,832
Professional fees 69,103 87,984
Insurance 6,294 37,274
Bad debts 6,355
Repairs and maintenance 775 31,213
Miscellaneous 16,528 3,967
----------------- -----------------
Total Operating Expenses 352,071 1,207,484
----------------- -----------------
(LOSS) FROM OPERATIONS (294,271) (236,390)
----------------- -----------------
OTHER INCOME (LOSS)
(Loss) on sale of property (109,332)
Interest 2,150 5,199
Royalties 490
Miscellaneous 2,400 10,882
----------------- -----------------
Total Other Income (Loss) (104,292) 16,081
----------------- -----------------
(LOSS) BEFORE INCOME TAX BENEFIT (398,563) (220,309)
INCOME TAX BENEFIT 56,695
----------------- -----------------
NET (LOSS) $ (341,868) $ (220,309)
================= =================
NET (LOSS) PER SHARE (Primary) $(.039) $(.034)
================= =================
/TABLE
<PAGE>
<PAGE> 9
SAN DIEGO BANCORP
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE THREE MONTH PERIODS
ENDED MARCH 31, 1994 AND MARCH 31, 1995
<TABLE>
<CAPTION>
Common Stock Common Stock Accumulated
Shares Amount Subscribed Deficit Total
----------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balances as of December 31, 1993 6,394,953 $8,432,969 $ 495,268 $ (1,248,759)$7,679,478
Stock Options exercised at prices
ranging from $.50 to $2.50 207,000 232,000 232,000
Common Stock Subscribed to be
issued for debt reduction 189,150 189,150
Net (Loss) (220,309) (220,309)
-------------- ------------ -------------- ------------- ------------
Balances as of March 31, 1994 6,601,953 $8,664,969 $ 684,418 $ (1,469,068) $ 7,880,319
============== ============ ============== ============= ============
Balances as of December 31, 1994 8,203,267 $8,550,140 $ 197,450 $ (3,019,122) $ 5,728,468
Common Stock issued for services at
$.10 to $.35 per share 469,348 79,568 79,568
Common Stock Subscribed to be
issued for debt reduction 30,000 30,000
Conversion of Common Stock Subscribed 359,875 143,950 (143,950) 0
Common Stock issued for accrued salaries
and wages at $.40 per share 70,418 28,167 28,167
Net (Loss) (341,868) (341,868)
Balances as of March 31, 1995 9,102,908$ 8,801,825 $ 83,500 $ (3,360,990) $ 5,524,335
</TABLE>
<PAGE>
<PAGE> 10
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1995 AND 1994
<TABLE>
<CAPTION>
Three Months Ended
------------------
<S> <C>
March 31, 1995 March 31, 1994
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (341,868) $ (220,309)
Add items not requiring the use of cash:
Depreciation, amortization and non-cash
expenses 176,847 98,186
(Increase) in accounts receivable (30,970) (572,187)
Decrease in advances 31,575
(Increase) in interest receivable (246)
Decrease in income tax receivable 54,491
(Increase) in inventories (47,966)
Decrease in deposits 3,289
(Increase) in prepaid expenses (520) (221,289)
(Decrease) in accounts payable (2,831) (41,628)
(Decrease) in deferred tax credit (91,502)
Increase in accrued compensation 81,086
Increase (decrease) in interest payable (13,324) 51,464
Increase in other accrued liabilities 52,376 3,096
----------------- -----------------
NET CASH FLOWS USED FROM OPERATING ACTIVITIES (248,503) (783,727)
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
(Acquisition) disposal of property,
plant and equipment 304,365 (117,287)
(Increase) reduction of intangibles 17,538 (4,684)
----------------- -----------------
NET CASH FLOWS PROVIDED (USED) FROM INVESTING
ACTIVITIES 321,903 (121,971)
----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions 232,000
Net proceeds from notes payable 444,865 602,604
Reduction of long term debt (522,560)
----------------- -----------------
NET CASH FLOWS PROVIDED (USED) FROM FINANCING
ACTIVITIES (77,695) 834,604
----------------- -----------------
NET INCREASE (DECREASE) IN CASH (4,295) (71,094)
CASH BALANCE AT BEGINNING OF PERIOD (1,847) 125,787
----------------- -----------------
CASH BALANCE AT END OF PERIOD$ (6,142)$ 54,693
================= =================
/TABLE
<PAGE>
<PAGE> 11
The condensed consolidated financial statements of San Diego Bancorp
included herein have been prepared without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Although, certain
information normally included in financial statements prepared in accordance
with generally accepted accounting principles has been condensed or omitted,
San Diego Bancorp believes that the disclosures are adequate to make the
information presented not misleading. The condensed consolidated financial
statements should be read in conjunction with the financial statements and
notes thereto included in San Diego Bancorp's annual report on Form 10-KSB for
the fiscal year ended December 31, 1994.
The condensed consolidated financial statements included herein reflect
all normal recurring adjustments that, in the opinion of management, are
necessary for a fair representation. The results for interim periods are not
necessarily indicative of trends or of results to be expected for a full year.
PART II - OTHER INFORMATION
- ------------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
- ------------------------------------------------------------------------------
See San Diego Bancorp's annual report on Form 10-KSB for the fiscal year
ended December 31, 1994.
- ------------------------------------------------------------------------------
ITEM 2. CHANGES IN SECURITIES
- ------------------------------------------------------------------------------
None.
- ------------------------------------------------------------------------------
ITEM 3. DEFAULTS UPON SECURITIES
- ------------------------------------------------------------------------------
None.
- ------------------------------------------------------------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------------------------
None.
- ------------------------------------------------------------------------------
ITEM 5. OTHER INFORMATION
- ------------------------------------------------------------------------------
None.
- ------------------------------------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------------------------------------------
(a) Exhibits.
Exhibit
No. Description
27Financial Data Schedule
(b) Reports on Form 8-K. None
- ------------------------------------------------------------------------------
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.
SAN DIEGO BANCORP
(Registrant)
Dated: July 31, 1996 By /s/ DALE H CHRISTIANSEN
--------------------------------------------
Dale H Christiansen, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED MARCH
31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-QSB FOR THE PERIOD ENDED MARCH 31,
1995.
</LEGEND>
<CIK> 0000319124
<NAME> SAN DIEGO BANCORP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 49,226
<ALLOWANCES> 0
<INVENTORY> 57,882
<CURRENT-ASSETS> 107,608
<PP&E> 4,720,403
<DEPRECIATION> 234,075
<TOTAL-ASSETS> 8,576,286
<CURRENT-LIABILITIES> 1,344,675
<BONDS> 0
0
0
<COMMON> 8,885,325
<OTHER-SE> (3,360,990)
<TOTAL-LIABILITY-AND-EQUITY> 8,576,286
<SALES> 109,322
<TOTAL-REVENUES> 114,362
<CGS> 51,522
<TOTAL-COSTS> 331,894
<OTHER-EXPENSES> 109,332
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,177
<INCOME-PRETAX> (398,563)
<INCOME-TAX> (56,695)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (341,868)
<EPS-PRIMARY> (0.039)
<EPS-DILUTED> (0.039)
</TABLE>
