<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly Period ended August 31, 1995
------------------------------------
or
Transition report under Section 13 or 15(d) of the Exchange
Act.
For the transition period from to
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Commission File Number: 0-10571
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TOP AIR MANUFACTURING, INC.
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(Exact name of small business issuer as specified in its charter)
Iowa 42-1155462
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
406 Hwy 20, Parkersburg, Iowa 50665
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(Address of principal executive offices) (Zip Code)
(319) 346-1788
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(Issuer's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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4,012,765 Common Shares were outstanding as of September 30, 1995.
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TOP AIR MANUFACTURING, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed balance sheets, August 31, 1995
(unaudited) and May 31, 1995 1
Unaudited condensed statements of operations
three months ended August 31, 1995 and 1994 2
Unaudited condensed statements of cash
flows, three months ended August 31, 1995 and 1994 3 & 4
Notes to condensed financial statements (unaudited) 5
Item 2. Management's Discussion and Analysis or
Plan of Operation 6 & 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports of Form 8-K 8 & 9
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<TABLE>
TOP AIR MANUFACTURING, INC.
CONDENSED BALANCE SHEETS
ASSETS
<CAPTION>
AUGUST 31, MAY 31,
1995 1995<F*>
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 64,502 $ 414,748
Trade receivables, net of allowance
for doubtful accounts August 31,
1995 $90,000; May 31, 1995 $59,000 1,165,576 1,276,544
Inventories (Note 2) 3,012,039 1,553,830
Income tax benefits 77,348 --
Other current assets 421,370 96,649
---------- ----------
Total Current Assets 4,740,835 3,341,771
---------- ----------
LONG TERM RECEIVABLE AND OTHER ASSETS
Notes receivable, net of current
portion 183,418 54,711
Other assets 122,374 73,734
---------- ----------
PROPERTY AND EQUIPMENT, at cost, less 305,792 128,445
---------- ----------
accumulated depreciation August 31,
1995 $875,131; May 31, 1995 $831,371 1,666,666 778,706
---------- ----------
6,713,293 4,248,922
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt 665,650 69,385
Other Liabilities and accrued items 1,007,439 955,870
---------- ----------
Total Current Liabilities 1,673,089 1,025,255
---------- ----------
LONG-TERM DEBT 1,591,064 270,207
---------- ----------
DEFERRED INCOME TAX CREDITS 79,000 79,000
---------- ----------
STOCKHOLDERS' EQUITY
Common stock 250,756 198,402
Additional paid-in capital 1,416,773 840,877
Retained earnings 1,722,302 1,835,181
---------- ----------
3,389,831 2,874,460
Less cost of treasury stock 19,691 --
---------- ----------
3,370,140 2,874,460
---------- ----------
$6,713,293 $4,248,922
========== ==========
<FN>
<F*>Condensed from Audited Financial Statements.
See notes to Condensed Financial Statements.
</TABLE>
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<TABLE>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
Three Months ended August 31, 1995 and 1994
<CAPTION>
1995 1994
----------------------
<S> <C> <C>
Net Sales $1,445,179 $ 270,032
---------- ---------
Cost and Expenses
Cost of goods sold 1,083,884 215,325
Selling and administrative expenses 455,731 266,482
Research and development expenses 81,265 50,940
Interest expense 32,407 4,660
---------- ---------
1,653,287 537,407
---------- ---------
(208,108) (267,375)
Other Income 23,229 9,909
---------- ---------
Income (loss) before Income Taxes (184,879) (257,466)
Income Taxes (credits) (72,000) (102,200)
---------- ---------
Net income (loss) $ (112,879) $(155,266)
========== =========
Earnings (loss) per Common Share (.03) (.05)
========== =========
Weighted Average Number of Shares 3,784,472 3,196,496
========== =========
See Notes to Condensed Financial Statements.
</TABLE>
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<PAGE> 5
<TABLE>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Three months Ended August 31, 1995 and 1994.
<CAPTION>
1995 1994
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash (used in) operating
activities $ (343,847) $(666,204)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of equipment 19,000 30,250
Purchase of property and equipment (99,221) (104,186)
Payments received on long-term
notes receivable 5,125 --
---------- ---------
Net cash (used in) investing
activites (75,096) (73,936)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings 882,100 327,000
Proceeds from long-term borrowings 1,900,000 --
Principal payments on short term
borrowings (389,100) (17,000)
Net proceeds from issuance of common
stock August 31, 1995 none
August 31, 1994 333 shares -- 198
Principal payments on long-term
borrowings (2,304,612) (6,890)
Purchase of common stock for the
treasury (19,691) --
---------- ---------
Net cash provided by (used in)
financing activites 68,697 (303,308)
---------- ---------
(Decrease) in Cash and Cash
Equivalents (350,246) (436,832)
CASH AND CASH EQUIVALENTS
Beginning 414,748 440,241
---------- ---------
Ending $ 64,502 $ 3,409
========== =========
See notes to Condensed Financial Statements.
</TABLE>
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<TABLE>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Three months Ended August 31, 1995 and 1994.
<S> <C>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Acquisition of Clay Equipment:
Working capital acquired $1,329,160
Fair value of other assets acquired, principally
property and equipment 1,127,825
Long-term debt assumed (1,828,735)
----------
$ 628,250
==========
Issuance of common stock, 837,666 shares $ (628,250)
==========
</TABLE>
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<PAGE> 7
TOP AIR MANUFACTURING, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Condensed Financial Statements
The condensed balance sheet as of August 31, 1995 and the
statements of operations and cash flows for the three
months ended August 31, 1995 and 1994, have been prepared
by the Company without audit. In the opinion of
management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows
at August 31, 1995 and for all periods presented have been
made.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principals have been
condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the
Company's May 31, 1995 Annual Report to Shareholders. The
results of operations for the periods ended August 31,
1995 and 1994 are not necessarily indicative of the
operating results for the full year.
Note 2. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
August 31, May 31,
1995 1995
---------- ----------
<S> <C> <C>
Finished Goods $2,142,168 $1,470,682
Work in Process 497,252 36,095
Raw Materials and Supplies 372,619 47,053
---------- ----------
$3,012,039 $1,553,830
========== ==========
</TABLE>
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<PAGE> 8
TOP AIR MANUFACTURING, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The acquisition of substantially all of the assets of Clay Equipment
Corporation was completed on June 26, 1995. In connection with the
transaction, the Company issued 837,666 shares of no par value common stock
and assumed certain liabilities that existed on the date of the closing.
The acquisition was accounted for under the purchase method of accounting,
and accordingly, the results of operations from Clay Equipment have been
included in the Company's financial statements commencing with the date of
the acquisition.
RESULTS OF OPERATIONS
Net Sales:
Net sales for the first quarter of Fiscal 1995 increased 435% to
$1,445,179 compared to $270,032 for the same period last year. A
portion of the increase, $169,837, resulted from increased shipments
of spraying equipment and parts due to an extended spraying season in
certain parts of the midwest. The balance of the increase, $1,005,310,
resulted from the incremental sales picked up in the acquisition of
Clay Equipment.
Operation Costs & Expenses:
The Company's cost of goods sold for the quarter ended August 31, 1995
decreased to 75% of net sales compared to 80% for the first quarter of
the previous year. The decrease, as a percentage of sales, was
primarily a result of overhead being spread over a substantially
higher volume of sales.
Operating expenses increased 69% to $536,996 for the first quarter of
fiscal 1995 compared to $317,422 for the previous year. The increase
was primarily a result of the incremental expenses incurred from the
Clay Equipment acquisition.
Interest Expense:
Interest expense increased 595% to $32,407 compared to $4,660 for the
first quarter of last year. The increase was due to the additional
debt incurred from the Clay Equipment acquisition.
Income Taxes:
The income tax credits of $72,000 and $102,200 for the quarters ended
August 31, 1995 and 1994, represent the benefit that would be received
if the loss for the quarter was carried back to reclaim income tax
paid in prior years.
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<PAGE> 9
TOP AIR MANUFACTURING, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Material Changes in Financial Position:
The Company's loss from operations of $112,879 combined with the
purchase of fixed assets of approximately $900,000, net of
depreciation, and other long-term assets of $177,000 offset by the
assumption of long-term debt of $1,320,000 and the issuance of
$630,000 in common stock in connection with the acquisition of Clay
Equipment, resulted in an increase in working capital of approximately
$750,000.
Liquidity and Capital Resources:
At August 31, 1995 the Company had working capital of $3,067,746, an
increase of $1,302,082 over a year ago and an increase of $751,230
since May 31, 1995. The increases are primarily a result of the
acquisition of Clay Equipment on June 26, 1995. This transaction
resulted in an increase of approximately $1,500,000 in inventory and
$300,000 of other term liabilities and normal seasonal working capital
changes of the Company. The current ratio decreased to 2.83 at August
31, 1995 from 3.26 at May 31, 1995. As a result of the Clay Equipment
acquisition the Company will move to a new 85,000 square foot
facility. The new facility is being constructed by the City, to be
leased by the City to the Company (as assignee of Clay Equipment)
under a lease for an initial term of 10 years (with a renewable five
year option on the part of the City, as lessor) at an annual rental
of $200,664 (which includes real estate and personal property
taxes), and Top Air will be responsible for the payment of all
utilities, insurance and maintenance. The relocation costs of the
former Clay Equipment facility will be borne by the City and the
Federal Economic Development Authority. The cost of relocating the
Company's Parkersburg facility, which is not expected to be material,
will be provided from internally generated funds. The Company will
have an option to buy the new facility for $1.3 million at the end of
the lease term.
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<PAGE> 10
TOP AIR MANUFACTURING, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Page Number
In Sequential
Exhibit Number Numbering System
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(11) Statement re computation of loss
per common share 8
(b) Reports on Form 8-K
There were two reports on Form 8-K filed with the Securities
and Exchange Commission for the quarter ended August 31,
1995. The first 8-K was dated and filed on July 5, 1995 and
in it the Company reported that it had completed the
acquisition of substantially all of the assets of Clay
Equipment on June 26, 1995 for 837,666 shares of the
Company's no par common stock and the assumption of certain
liabilities of Clay Equipment.
The second 8-K was dated and filed on July 31, 1995
and in it the Company presented proforma financial
information prepared using the purchase method of
accounting for the acquisition of Clay Equipment on
June 26, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TOP AIR MANUFACTURING, INC.
---------------------------
(Registrant)
Date October 13, 1995 /s/ Steven R. Lind
--------------------- ------------------------------------
Steven R. Lind
President, Chief Executive Officer
Date October 13, 1995 /s/ Steven F. Bahlmann
--------------------- ------------------------------------
Steven F. Bahlmann
Controller
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<TABLE>
TOP AIR MANUFACTURING, INC.
EXHIBIT 11 - COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
<CAPTION>
Column A Column B Column C
Weighted Income
Average (Loss) Per
Number of Net Common
Shares Income Share
Outstanding<F*> (Loss) (B/A)
--------------- ---------- ----------
<S> <C> <C> <C>
Three months ended:
August 31, 1995 3,784,472 (112,879) (.03)
August 31, 1994 3,174,281 (155,266) (.05)
<CAPTION>
Three Months Ended
August 31,
1995 1994
-------- ----------
<S> <C> <C>
<F*>Computation of weighted average number
of common shares outstanding and common
equivalent shares:
Common shares outstanding at the
beginning of the period 3,174,433 3,174,100
Weighted average of common shares
issued during the period 610,039 181
Weighted average of the common
equivalent shares attributable to
stock options granted, computed under
the treasury stock method<F#> -- --
--------- ---------
Weighted average number of common and
common equivalent shares 3,784,472 3,174,281
========= =========
<FN>
<F#>The stock options have not been included because they are anti-
dilutive.
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TOP AIR MANUFACTURING, INC. QUARTERLY REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> AUG-31-1995
<CASH> 64,502
<SECURITIES> 0
<RECEIVABLES> 1,165,576
<ALLOWANCES> 90,000
<INVENTORY> 3,012,039
<CURRENT-ASSETS> 4,740,835
<PP&E> 2,541,797
<DEPRECIATION> 875,131
<TOTAL-ASSETS> 6,713,293
<CURRENT-LIABILITIES> 1,673,089
<BONDS> 0
<COMMON> 250,756
0
0
<OTHER-SE> 3,119,384
<TOTAL-LIABILITY-AND-EQUITY> 6,713,293
<SALES> 1,445,179
<TOTAL-REVENUES> 1,468,408
<CGS> 1,083,884
<TOTAL-COSTS> 1,620,880
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,407
<INCOME-PRETAX> (184,879)
<INCOME-TAX> (72,000)
<INCOME-CONTINUING> (112,879)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (112,879)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
