<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 November 30, 1995
--------------------------------------
or
( ) Transition report under Section 13 or 15(d) of the Exchange
Act.
For the transition period from ------------ to ----------------------
Commission File Number: 0-10571
---------------------------------------------
TOP AIR MANUFACTURING, INC.
- ---------------------------------------------------------------------
(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
------ -------
4,013,765 Common Shares were outstanding as of December 31, 1995.
<PAGE> 2
TOP AIR MANUFACTURING, INC.
<TABLE>
INDEX
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed balance sheets, November 30, 1995
(unaudited) and May 31, 1995 1
Unaudited condensed statements of operations
three months and six months ended November 30, 2
1995 and 1994
Unaudited condensed statements of cash
flows, six months ended November 30, 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
</TABLE>
<PAGE> 3
<TABLE>
TOP AIR MANUFACTURING, INC.
CONDENSED BALANCE SHEETS
<CAPTION>
ASSETS
NOVEMBER 30, MAY 31,
1995 1995<F*>
------------ --------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 6,137 $ 414,748
Trade receivables, net of allowance
for doubtful accounts November 30,
1995 $98,000; May 31, 1995 $59,000 1,982,853 1,276,544
Inventories (Note 2) 3,096,868 1,553,830
Income tax benefits 88,792 --
Other current assets 308,342 96,649
---------- ----------
Total Current Assets 5,482,992 3,341,771
---------- ----------
LONG TERM RECEIVABLE AND OTHER ASSETS
Notes receivable, net of current
portion 308,917 54,711
Other assets 125,391 73,734
---------- ----------
434,308 128,445
---------- ----------
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation November 30,
1995 $928,595; May 31, 1995 $831,371 1,600,131 778,706
---------- ----------
7,517,431 4,248,922
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt 1,212,751 69,385
Other Liabilities and accrued items 1,331,168 955,870
---------- ----------
Total Current Liabilities 2,543,919 1,025,255
---------- ----------
LONG-TERM DEBT 1,526,535 270,207
---------- ----------
DEFERRED INCOME TAX CREDITS 79,000 79,000
---------- ----------
STOCKHOLDERS' EQUITY
Common stock 250,860 198,402
Additional paid-in capital 1,417,960 840,877
Retained earnings 1,718,848 1,835,181
---------- ----------
3,387,668 2,874,460
Less cost of treasury stock 19,691 --
---------- ----------
3,367,977 2,874,460
---------- ----------
$7,517,431 $4,248,922
========== ==========
<FN>
<F*>Condensed from Audited Financial Statements.
See notes to Condensed Financial Statements.
</TABLE>
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<PAGE> 4
<TABLE>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $2,521,886 $ 699,303 $3,967,065 $ 969,334
---------- ---------- ---------- ----------
Costs and Expenses
Cost of goods
sold 1,874,456 462,087 2,958,340 677,411
Selling and
administrative
expenses 531,624 279,748 987,355 546,230
Research and
development
expenses 90,210 30,649 171,475 81,589
Interest
expense 53,830 16,352 86,237 21,013
---------- ---------- ---------- ----------
2,550,120 788,836 4,203,407 1,326,243
---------- ---------- ---------- ----------
(28,234) (89,533) (236,342) (356,909)
Other Income 22,480 11,001 45,709 20,911
---------- ---------- ---------- ----------
Income (loss)
before
Income Taxes (5,754) (78,532) (190,633) (335,998)
Income Taxes
(credits) (2,300) (31,200) (74,300) (133,400)
---------- ---------- ---------- ----------
Net Income
(loss) $ (3,454) $ (47,332) $ (116,333) $ (202,598)
========== ========== ========== ==========
Earnings (loss)
per Common Share $ .00 $ (.01) $ (.03) $ (.06)
========== ========== ========== ==========
Weighted Average
Number of Shares 4,013,040 3,174,433 3,898,132 3,174,357
========== ========== ========== ==========
See Notes to Condensed Financial Statements.
</TABLE>
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<PAGE> 5
<TABLE>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Six months Ended November 30, 1995 and 1994.
<CAPTION>
1995 1994
---------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash (used in) operating
activities $ (892,846) $(1,192,671)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of equipment 55,250 54,650
Purchase of property and equipment (134,456) (255,444)
Payments received on long-term
notes receivable 10,784 16,500
---------- -----------
Net cash (used in) investing
activites (68,422) (184,294)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings 2,458,100 910,000
Proceeds from long-term borrowings 1,900,000 360,000
Principal payments on short term
borrowings (1,429,100) (158,000)
Net proceeds from issuance of common
stock November 30, 1995 1,666 shares
November 30, 1994 333 shares 1,291 198
Principal payments on long-term
borrowings (2,357,943) (174,452)
Purchase of common stock for the
treasury (19,691) --
---------- -----------
Net cash provided by (used in)
financing activites 552,657 937,746
---------- -----------
(Decrease) in Cash and Cash
Equivalents (408,611) (439,219)
CASH AND CASH EQUIVALENTS
Beginning 414,748 440,241
---------- -----------
Ending $ 6,137 $ 1,022
========== ===========
See notes to Condensed Financial Statements.
</TABLE>
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<PAGE> 6
<TABLE>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOW
Six months Ended November 30, 1995 and 1994.
<CAPTION>
1995 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 November 30, 1995 and
the condensed statements of operations for the three
months and six months ended November 30, 1995 and 1994
and the condensed statements of cash flows for the six
months ended November 30, 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 November 30, 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 November 30,
1995 and 1994 are not necessarily indicative of the
operating results for the full year.
Note 2. Inventories
<TABLE>
Inventories consist of the following:
<CAPTION>
November 30, May 31,
1995 1995
---------- ----------
<S> <C> <C>
Finished Goods $2,634,549 $1,470,682
Work in Process 200,193 36,095
Raw Materials and Supplies 262,126 47,053
---------- ----------
$3,096,868 $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
RESULTS OF OPERATIONS
Net Sales:
Net sales for the second quarter and six months ended November
30, 1995 increased 261% and 309%, respectively, compared to
sales for the same periods last year. The increase for the
second quarter was primarily a result of shipping spraying
equipment orders earlier than the prior year coupled with the
incremental sales picked up in the acquisition of Clay Equipment.
The increase for the six month period was a result of the
accelerated shipments and incremental sales mentioned above,
combined with increased parts sales during the summer from an
extended spraying season. The incremental sales from the
acquisition of Clay Equipment were $1,462,252 for the second
quarter and $2,467,562 for the six month period.
Operating Costs & Expenses:
The Company's cost of goods sold for the second quarter and six
months ended November 30, 1995 increased to 74% and 75% compared
to 66% and 70% for the same periods of the previous year. The
increases are primarily a result of some duplication of effort
associated with operating out of two facilities since the
purchase of Clay Equipment. In addition, Clay has experienced
significantly lower profit margins than Top Air due to many
inefficiencies associated with the old, antiquated building they
have been operating in. It is anticipated that higher profit
margins should be experienced after Top Air consolidates the two
locations into a newly constructed facility in the summer of
1996.
Operating expenses increased to $621,834 and $1,158,830 for the
second quarter and six months ended November 30, 1995, compared
to $310,397 and $627,819 for the same periods last year. The
increases primarily resulted from incremental expenses incurred
from the acquisition of Clay Equipment.
Interest Expense:
Interest expense increased 229% to $53,830 from $16,352 for the
second quarter and 310% to $86,237 from $21,013 for the six
months ended November 30, 1995. The increases were a result of
additional debt incurred from the acquisition of Clay Equipment.
Income Tax Expense:
The income tax credits of $2,300 and $31,200 for the quarters
ended November 30, 1995 and 1994 and $74,300 and $133,400 for the
six months ended November 30, 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 $116,333 and net
purchases of fixed assets of approximately $80,000 combined
with effects of the acquisition of Clay Equipment which included
the purchase of fixed assets of approximately $900,000, net of
depreciation, and other long-term assets of $180,000 offset by
the assumption of long-term debt of $1,320,000 and the issuance
of $630,000 in common stock resulted in an increase of working
capital of approximately $625,000.
Liquidity and Capital Resources:
At November 30, 1995 the Company had working capital of
$2,939,073 an increase of $1,153,037 over a year ago and an
increase of $622,557 since May 31, 1995. The increases are
primarily a result of the acquisition of Clay Equipment discussed
in the Company's 10QSB for the period ended August 31, 1995. The
current ratio decreased to 2.16 at November 30, 1995 from 3.26 at
May 31, 1995. The Company will move to a new 85,000 square foot
facility in the summer of 1996 as a result of the Clay Equipment
acquisition. The details of this move were described in the
Company's August 31, 1995 10QSB. The Company believes it has
access to sufficient working capital for its present and
foreseeable future.
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<PAGE> 10
TOP AIR MANUFACTURING, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
(a) Exhibits
<CAPTION>
Page Number
In Sequential
Exhibit Number Numbering System
-------------- ----------------
<S> <C>
(11) Statement re computation of loss
per common share 9
(b) There were no reports on Form 8-K filed for the quarter ended
November 30, 1995.
</TABLE>
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 January 12, 1996 /s/ Steven R. Lind
----------------------- -------------------------------------
Steven R. Lind
President, Chief Executive Officer
Date January 12, 1996 /s/ Steven F. Bahlmann
----------------------- -------------------------------------
Steven F. Bahlmann
Controller
-8-
<PAGE> 1
<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 divided by A)
--------------- -------- ----------------
<S> <C> <C> <C>
Six months ended:
November 30, 1995 3,898,132 (116,333) (.03)
November 30, 1994 3,174,357 (202,598) (.06)
Three months ended:
November 30, 1995 4,013,040 (3,454) .00
November 30, 1994 3,174,433 (47,332) (.01)
<CAPTION>
Six Months Ended Three Months Ended
November 30, November 30,
1995 1994 1995 1994
---------------- ------------------
<S> <C> <C> <C> <C>
<F*>Computation of weighted
average number of
common shares
outstanding and
common equivalent
shares:
Common shares out-
standing at the
beginning of the
period 3,174,433 3,174,100 4,012,099 3,174,433
Weighted average of
common shares
issued during
the period 723,699 257 941 --
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 3,898,132 3,174,357 4,013,040 3,174,433
========= ========= ========= =========
<FN>
<F#>The stock options have not been included because they are
anti dilutive.
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> NOV-30-1995
<CASH> 6,137
<SECURITIES> 0
<RECEIVABLES> 1,982,853
<ALLOWANCES> 98,000
<INVENTORY> 3,096,868
<CURRENT-ASSETS> 5,482,992
<PP&E> 2,528,726
<DEPRECIATION> 928,595
<TOTAL-ASSETS> 7,517,431
<CURRENT-LIABILITIES> 2,543,919
<BONDS> 0
<COMMON> 250,860
0
0
<OTHER-SE> 3,117,117
<TOTAL-LIABILITY-AND-EQUITY> 7,517,431
<SALES> 3,967,065
<TOTAL-REVENUES> 4,012,774
<CGS> 2,958,340
<TOTAL-COSTS> 4,117,170
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 86,237
<INCOME-PRETAX> (190,633)
<INCOME-TAX> (74,300)
<INCOME-CONTINUING> (116,333)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (116,333)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
