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, 1997
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.
(Name of Small Business Issuer in Its Charter)
Iowa 42-1155462
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
317 Savannah Park Road, Cedar Falls, Iowa 50613
(Address of Principal Executive Offices) (Zip Code)
(319) 268-0473
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(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__
5,086,123 Common Shares were outstanding as of September 30, 1997.
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance sheets,
August 31, 1997 (unaudited)
and May 31, 1997 1
Unaudited Condensed Consolidated Statements of
Operations Three Months Ended
August 31, 1997 and 1996 2
Unaudited Condensed Consolidated Statements of
Cash Flows, Three Months Ended August 31, 1997
and 1996 3
Notes to Condensed Financial Statements
(unaudited) 4
Item 2. Management's Discussion and Analysis or
Plan of Operation 5
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports of Form 8-K 7
<PAGE>
<TABLE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS
AUGUST 31, MAY 31,
1997 1997*
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 5,053 $ 263,518
Trade receivables, net of allowance for
doubtful accounts August 31, 1997
$169,500; May 31, 1997 $165,000 2,933,660 3,344,742
Inventories (Note 2) 4,739,935 3,885,154
Income tax benefits 93,459 --
Other current assets 329,991 352,584
--------- ---------
Total Current Assets 8,102,098 7,845,998
--------- ---------
LONG TERM RECEIVABLES AND OTHER ASSETS
Notes receivable, net of current portion 145,903 149,132
Goodwill 1,119,327 1,138,081
Other assets 186,329 193,127
----------- -----------
1,451,559 1,480,340
----------- -----------
PROPERTY AND EQUIPMENT, at cost,
less accumulated depreciation August 31, 1997
$876,004; May 31, 1997 $782,912 2,027,489 2,059,140
--------- ---------
$11,581,146 $11,385,478
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 2,362,718 $ 1,317,076
Other Liabilities and accrued items 815,381 1,388,333
------- ---------
Total Current Liabilities 3,178,099 2,705,409
--------- ---------
LONG-TERM DEBT 2,027,114 2,108,381
--------- -----------
STOCKHOLDERS' EQUITY
Common stock 322,923 322,798
Additional paid-in capital 2,892,782 2,898,636
Retained earnings 3,276,341 3,369,945
--------- ---------
6,492,046 6,591,379
Less cost of treasury stock 116,113 19,691
---------- -----------
6,375,933 6,571,688
--------- ---------
$11,581,146 $11,385,478
========== ==========
</TABLE>
*Condensed from Audited Financial Statements.
See notes to Condensed Financial Statements.
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months ended August 31, 1997 and 1996
1997 1996
---- ----
Net Sales $2,597,927 $1,890,119
--------- ---------
Costs and Expenses
Cost of goods sold 1,882,906 1,319,725
Selling and administrative expenses 691,038 546,610
Research and development expenses 109,306 97,005
Interest Expense 72,699 23,585
------ ------
2,755,949 1,986,925
(158,022) (96,806)
Other Income 11,803 39,627
------ ------
Income (loss) before Income Taxes (146,219) (57,179)
Income Taxes (credits) (52,615) (19,100)
Net Income (loss) $(93,604) $(38,079)
======== ========
Earnings (loss) per Common Share $ (.02) $ (.01)
Weighted Average Number of Shares 5,101,560 4,013,765
========= =========
See Notes to Condensed Financial Statements.
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS Three Months Ended August 31, 1997 and
August 31, 1996
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash (used in) operating activities $(1,223,861) $(267,549)
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of equipment -- 46,413
Purchase of property and equipment (76,950) (195,577)
Payments received on long-term
notes receivable 3,097 2,975
------------ -----------
Net cash (used in) investing
activities (73,853) (146,189)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings 2,130,000 --
Proceeds from long-term borrowings -- 1,337,000
Principal payments on short term borrowings (904,000) --
Principal payments on long-term borrowings (84,600) (920,610)
Net proceeds from issuance of common stock
August 31, 1997 2000 shares; August 31, 1996 none 1,771 --
Purchase of common stock for the treasury (96,422) --
Stock Registration Fees (7,500) --
------- ----
Net cash provided by financing activities 1,039,249 416,390
---------- -------
Increase (decrease) in Cash and
Cash Equivalents (258,465) 2,652
CASH AND CASH EQUIVALENTS
Beginning 263,518 517
----------- -------
Ending $ 5,053 $ 3,169
============ ===========
See notes to Condensed Financial Statements.
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Condensed Financial Statements
The financial statements of Top Air Manufacturing, Inc. and its wholly owned
subsidiary (Ficklin Machine Co.) have been presented on a consolidated basis as
of August 31, 1997, May 31, 1997 and for the three months ended August 31, 1997.
The period ended August 31, 1996 only includes financial information of Top Air
as a result of the acquisition of Ficklin Machine on January 15, 1997. All
significant intercompany accounts and transactions have been eliminated.
The condensed consolidated balance sheet as of August 31, 1997 and the condensed
consolidated statements of operations and cash flows for the three months ended
August 31, 1997 and 1996 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, 1997 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, 1997 Annual Report to Shareholders.
The results of operations for the periods ended August 31, 1997 and 1996 are not
necessarily indicative of the operating results for the full year.
Note 2. Inventories
Inventories consist of the following:
August 31, 1997 May 31, 1996
Finished Goods $3,937,927 $3,421,222
Work in Process 308,845 257,099
Raw Materials and Supplies 493,163 206,833
---------- ----------
$4,739,935 $3,885,154
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Net Sales:
Top Air Manufacturing Inc.'s ("Top Air" or the "Company") net sales for the
first quarter of fiscal 1997 increased 37% to $2,597,927 compared to $1,890,119
for the same period last year. The increase was a result of incremental sales of
approximately $1,432,000 derived from the acquisition of Ficklin Machine Co.,
Inc. ("Ficklin Machine") offset by a decrease in sales of Top Air products of
approximately $725,000. The Top Air sales decrease was due to a decrease of
approximately $425,000 resulting from the sale of two product lines during the
second quarter of fiscal year end May 31, 1997. These product lines were in a
declining stage of their life cycle and their elimination will allow the company
to concentrate on the lines with the greatest sales potential. The remaining
$300,000 portion of the decrease was due to lower sales volume of spraying
equipment and parts resulting from a poor spraying season during the first
quarter of fiscal year end May 31, 1998, compared to the same quarter a year
ago.
Operating Costs & Expenses:
The Company's cost of goods sold for the quarter ended August 31, 1997 increased
to 72% of net sales compared to 70% for the first quarter of the previous year.
The increase, as a percentage of sales, was a result of the inclusion of sales
of Ficklin Machine products which have somewhat lower profit margins than Top
Air products.
Operating expenses increased 24% to $800,344 for the first quarter of fiscal
1997 compared to $643,615 for the previous year. The increase was primarily a
result of the incremental expenses incurred from the Ficklin Machine
acquisition.
Interest Expense:
Interest expense increased 208% to $72,699 compared to $23,585 for the first
quarter of last year. The increase was due to higher levels of short-term and
long-term debt outstanding during the period primarily as a result of the
acquisition of Ficklin Machine.
Income Taxes:
The income tax credits of $52,615 and $19,100 for the quarters ended August 31,
1997 and 1996, represent the benefit that would be received if the loss of the
quarter was carried back to reclaim income tax paid in prior years.
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
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 $96,604 combined with the purchase of
common stock for the treasury of approximately $97,000 resulted in a decrease in
working capital of approximately $217,000.
Liquidity and Capital Resources:
At August 31, 1997 the Company had working capital of $5,140,589 an increase of
$1,140,652 over a year ago and an increase of $216,590 since May 31, 1997. The
increase from a year ago is primarily a result of approximately $1,200,000 of
working capital picked up with the acquisition of Ficklin Machine on January 15,
1997. The increase since May 31, 1997 is described in the changes in financial
position above. The current ratio decreased to 2.55 from 2.90 at May 31, 1997.
The Companys capital expenditures for the second quarter of fiscal 1998 will
include the purchase of a Whitney 3700 ATC CNC fabrication machine for
approximately $750,000. This machine will provide many benefits such as
significant reductions in labor costs and piece part run times as well as
improved quality of finished products. The Whitney will replace six older
machines. The Company intends to finance this machine with long-term bank debt.
The Company believes it has access to sufficient working capital for its present
and foreseeable future.
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number
10(a) Employment Agreement between the Company and Steven R. Lind
adopted by the Board of Directors November 6, 1992.
10(b) First Amendment to Employment Agreement between the Company and
Steven R. Lind adopted by the Board of Directors October 19,
1994.
11 Statement re computation of earnings per common share
27 Financial Data Schedule
(b) There were no reports on Form 8-K filed for the quarter ended August 31,
1997.
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 15, 1997 /s/ Steven R. Lind
--------------------------------
Steven R. Lind
President and Chief Executive Officer;
Principal Executive Officer
Date October 15, 1997 /s/ Steven F. Bahlmann
--------------------------------
Steven F. Bahlmann
Controller; Chief Accounting
Officer
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
EXHIBIT 10 (a)
EMPLOYMENT AGREEMENT
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 6th day of November, 1992, by and
between TOP AIR MANUFACTURING INC., a corporation organized and existing under
the laws of the State of Iowa (hereinafter called "Employer"), and STEVEN R.
LIND, a resident of the State of Iowa (hereinafter called "Employee").
WHEREAS, Employer represents that it wishes to employ said Employee
under any and all terms set forth in this Agreement; and
WHEREAS, Employee represents and is willing to work diligently for said
Employer under any and all terms set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants of the parties
hereto, it is agreed as follows:
1. EMPLOYMENT. Employer hereby employs Employee to assume the
responsibilities of President and Chief Operating Officer of Employer or such
other senior management responsibilities as the Board of Directors of Employer
(the "Board") may from time to time prescribe, and Employee hereby accepts
employment upon the terms and conditions hereinafter set forth. Employer and
Employee acknowledge and agree that Employee's senior management
responsibilities may apply to some or all of the operations or divisions of
Employer, as determined by the Board from time to time.
2. TERM. The term of this Agreement shall begin on November 6, 1992 and
shall extend until terminated by Employer pursuant to paragraph 10(a) or 10(b)
below, or until terminated by Employee pursuant to paragraph 10(c) below.
3. DUTIES. Employee agrees that during his period of employment he will
serve Employer on a full-time basis faithfully, diligently, confidently and to
the best of his ability, and shall perform all duties incident to the offices he
may hold from time to time, and all such further duties as may reasonably be
assigned to him from time to time by the Board pursuant to paragraph 1 hereof.
4. COMPENSATION. In full consideration of the services to be rendered
by Employee during the term of this Agreement, the Employer shall compensate him
as follows:
(a) He shall receive a fixed annual salary of $52,500 payable
semi-monthly.
(b) Employee shall be entitled to receive employee benefits
including, but not limited to medical insurance, life insurance,
disability insurance, and pension benefits or similar plans or programs
<PAGE>
now existing or hereafter established to the extent that he is eligible
under the general provisions of the applicable plans, provided however,
that the Board may increase or decrease these benefits as long a
Employee is not discriminated against.
5. EXTENT OF SERVICE. Employee shall devote his entire time, attention
and energies to the business of the Employer, and shall not, during the term of
this Agreement, be engaged in other business activities, whether or not such
business activities are pursued for gain, profit or other pecuniary advantage;
but this shall not be construed as preventing the Employee from investing his
assets in such form or manner as will not require any services on the part of
Employee in the operation of the affairs of the companies in which such
investments are made.
6. DISCLOSURE OF INFORMATION. Employee recognizes and acknowledges that
the financial or other affairs of the Employer, as they may exist from time to
time, are valuable, special and unique assets of the Employer, and Employee
agrees that he shall not, during or after the term of his employment, disclose
financial or other affairs of the Employer or any portion thereof to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever except for any bona fide Employer business purpose designated and
approved by the Board.
7. DISCLOSURE OF TRADE SECRETS. Employee further recognizes and
acknowledges that the secret processes, procedures, list of customers, bidding
methods, all discoveries and inventions, together with all knowledge and
information which the Employee shall acquire during the term of this Agreement
affecting the business of the Employer, are valuable, special and unique assets
of the Employer, and Employee agrees that he shall not, during or after the term
of his employment, disclose said secret processes, procedures, list of
customers, bidding methods, any discoveries and inventions, together with any
knowledge and information which the Employee shall acquire during the term of
this Agreement affecting the business of the Employer, to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever
except for any bona fide Employer business purpose designated and approved by
the Board. The Employee further agrees not to divulge or publish or authorize
anyone else to divulge or publish during or after the term of this Agreement
knowledge of said secret processes I procedures, list of customers, bidding
methods, discoveries or inventions or any other confidential information
acquired in the course of his employment concerning the Employer's business.
8. RESTRICTIVE COVENANT - NON-COMPETITION. Employee agrees that on the
termination for any reason whatsoever of his employment with the Employer, he
will not, for a period of two (2) years from the date of such termination,
2
<PAGE>
directly or indirectly engage in or own any part of any company engaged in the
same or similar competitive line of business carried on by the Employer or work,
on a full-time, part-time or consultant basis, for any corporation, partnership,
sole proprietorship or any other legal entity engaged in such business or
similar competitive line of business within any of the States of Iowa, Illinois,
Indiana or Minnesota, nor will he in any way directly or indirectly, attempt to
hire the Employer's employees or take away any of the Employer's business or
customers or destroy, injure or damage the goodwill of the Employer with its
customers.
Employee further agrees that in the event that the Employer, its
successors or assigns, shall bring any action for the enforcement of any or all
provisions of this covenant not to compete, and if the Court shall find on the
basis of the evidence introduced in said action that this paragraph 8 is
unreasonable then the Court shall make a finding as to what is reasonable and
shall enforce this Agreement by judgment or decree to the extent of such
finding.
9. OWNERSHIP OF INVENTIONS. Employee promises and agrees that he will
disclose fully and reveal promptly to Employer any and all inventions,
discoveries, processes, methods, designs, products and know-how, which Employee
may invent, discover, acquire or develop, either alone or in conjunction with
others, during Employee's employment by Employer (hereinafter collectively
referred to as "Discoveries"), where said Discoveries (i) relate to, or in any
way pertain to or are connected with the business of Employer, or (ii) were
developed at Employer's expense or on its premises, or (iii) resulted directly
or indirectly from such employment by Employer, or relate to articles or
products made, sold, used or bought by Employer, or (iv) were being considered
for design, development, sale, purchase or use by Employer during such
employment by Employer, and Employee further promises and agrees that said
Discoveries shall be the sole and exclusive property of Employer; and Employee,
whenever requested to do so by Employer, and without further compensation or
consideration shall properly execute any and all applications, assignments and
other instruments which Employer shall deem necessary in order to (a) apply for
and obtain, in the name of Employer, a patent, trademark or copyright for said
Discoveries, and (b) assign and convey to Employer the sole and exclusive right,
title and interest in and to said Discoveries, and any applications, patents,
trademarks or copyrights thereon. Employee hereby warrants, represents and
confirms that he neither holds nor has any interest in any patent, patent right,
patent application, trademark, trademark application, license agreement or
copyright related in any way to the business of Employer; and Employee further
agrees that any future application for any patent, patent right, trademark or
copyright for any of said Discoveries shall be made in the name of Employer.
3
<PAGE>
Employee agrees that, in the event that subsequent to his employment,
his assistance is needed to secure, defend, or enforce any patent, trademark or
copyright, Employee will provide any such assistance and Employer will pay
reasonable compensation for his time at a rate to be negotiated.
Employee acknowledges that the restrictions contained in this paragraph
9 are reasonable and necessary in order to protect Employer's legitimate
business interests and any violation thereof would result in irreparable injury
to Employer. Employee further acknowledges and agrees that in the event of any
violation hereof, Employer shall be authorized and entitled to seek, from any
court of competent jurisdiction, (i) preliminary and permanent injunctive
relief; (ii) an equitable accounting of all profits or benefits arising out of
the violation; and (iii) damages arising from the breach. Such rights or
remedies shall be cumulative and in addition to any other rights or remedies to
which Employer may be entitled. The prevailing party in any such lawsuit shall
further be entitled to recover his reasonable attorneys, fees, court costs and
expenses,
Employer's failure to exercise a right hereunder in the event of a
breach by Employee of any term hereof shall not be construed as a waiver of such
breach or prevent Employer from thereafter enforcing strict compliance with any
and all terms of this Employment Agreement.
10. TERMINATION OF AGREEMENT.
(a) Employer may terminate this Agreement, effective
on a date designated in a written notice to Employee upon the
occurrence of any of the following:
(i) Failure or refusal of Employee to perform his
duties and obligations under this Agreement;
(ii) Death of Employee; or
(iii) Disability of Employee, defined as an
inability to perform his work for 45 consecutive days,
or for 90 days within any 12-month period; or
(iv) The commission by Employee of any felony or any
other act constituting fraud, embezzlement or misappropriation
of funds (civil or criminal).
In the event of a termination pursuant to this paragraph 10(a), compensation
shall be paid on a prorated basis through the date of termination, subject to
any rights of offset of Employer.
(b) Employer may terminate this Agreement for any reason not
specified in paragraph 10(a) hereof, effective on a date designated in a written
4
<PAGE>
notice to Employee. In the event of a termination pursuant to this paragraph
10(b), Employee's compensation shall be paid on a prorated basis through the
effective date of termination, subject to any rights of offset of Employer; and
in addition, Employee shall be paid a termination payment equal to $26,250. Such
termination payment shall be subject to any rights of offset of Employer. Such
termination payment shall be paid in 12 equal, consecutive semi-monthly
installments. Termination payment installments shall be made, until fully paid,
on the same days following Employee's termination that Employee would have
otherwise received his regular semi-monthly salary payments had he not been
terminated.
(c) Employee may terminate this Agreement upon sixty (60)
days' prior written notice. In the event of a termination pursuant to this
paragraph 10(c), compensation shall be paid on a prorated basis through the date
of termination, subject to any rights of offset of Employer.
11. WAIVER OF BREACH. The waiver by the Employer of the breach of any
provisions of this Agreement by Employee shall not operate or be construed as a
waiver of any subsequent breach by Employee.
12. APPLICABLE LAW. This Agreement and the validity of this provision
shall be construed under the laws of the State of Iowa.
13. ENTIRE AGREEMENT. This instrument constitutes the entire agreement
of the parties and supersedes and replaces all previous agreements, whether
written or oral, relating to the employment relationship of Employer and
Employee. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
14. SEPARABILITY OF PROVISIONS. In the event that any provision of this
Agreement is found by a Court to be void or unenforceable, the provision shall
be construed to be separable from the other provisions of this Agreement, which
shall retain full force and effect.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
TOP AIR MANUFACTURING, INC.
By: /s/ S. Lee Kling
S. Lee Kling, Chairman
of the Board
"Employer"
/s/ Steven R. Lind
Steven R. Lind
"Employee"
6
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
EXHIBIT 10 (b)
AMENDMENT TO EMPLOYMENT AGREEMENT
<PAGE>
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("First Amendment") is
entered into as of the 19th day of October, 1994, by and between TOP AIR
MANUFACTURING, INC., an Iowa corporation ("Employer"), and STEVEN R. LIND, a
resident of the State of Iowa ("Employee").
RECITALS:
A. Employer and Employee are parties to a certain Employment Agreement,
dated as of November 6, 1992 (the "Employment Agreement").
B. The Employment Agreement provides for the employment of Employee to
assume the responsibilities of President and Chief Operating Officer of
Employer, or such other senior management responsibilities as the Board of
Directors of Employer (the "Board") may prescribe, all on the terms and
conditions set forth in the Employment Agreement.
C. The parties desire to amend the Employment Agreement in certain
respects and to acknowledge certain actions previously taken by them related to
Employee's employment.
NOW THEREFORE, in consideration of the premises, the agreements
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Employer and Employer agree as
follows:
1. The Employment Agreement is hereby amended by deleting paragraph
4(a) thereof in its entirety and substituting the following in lieu thereof:
(a) "He shall receive an initial fixed annual salary of
$52,500.00, payable semi-monthly. The Board may, by
appropriate Board action, increase, but not decrease,
Employee's fixed annual salary under this Agreement
at any time during the term of this Agreement."
2. The Employment Agreement is hereby further amended by deleting the
second sentence of paragraph 10(b) thereof in its entirety and substituting the
following in lieu thereof:
"In the event of a termination pursuant to this
paragraph 10(b), Employee's compensation shall be
paid on a prorated basis through the effective date
of termination, subject to any rights of offset of
1
<PAGE>
Employer; and in addition, Employee shall be paid a
termination fee equal to 50% of Employee's then
current fixed annual salary under paragraph 4(a)
hereof."
3. Employer and Employee acknowledge and agree that the Board has
increased Employee's fixed annual salary under the Employment Agreement on two
previous occasions, that Employee's fixed annual salary under the Employment
Agreement is currently $59,000.00, and that Employer and Employee have at all
times intended that such increases would not limit, terminate or modify any
provision of the Employment Agreement other than modify the fixed annual salary
of Employee under paragraph 4(a) of the Employment Agreement and modify the
amount of the termination payment under the second sentence of paragraph 10(b)
of the Employment Agreement.
4. As amended by this First Amendment, the Employment Agreement is
hereby ratified and affirmed and is in full force and effect,
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the day and year first above written.
TOP AIR MANUFACTURING, INC.
By: /s/ S. Lee Kling
S. Lee Kling, Chairman
of the Board
"Employer"
/s/ Steven R. Lind
Steven R. Lind
"Employee"
2
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
EXHIBIT 11
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
<PAGE>
TOP AIR MANUFACTURING, INC.
EXHIBIT 11 - COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
<TABLE>
<CAPTION>
Column A Column B Column C
Weighted Income
Average (Loss) Per
Number of Net Common
Shares Income Share
Outstanding* (Loss) (B/A)
-------------------------------------------
<S> <C> <C> <C>
Three months ended:
August 31, 1997 5,101,560 $(93,604) $(.02)
August 31, 1996 4,013,765 (38,079) $(.01)
</TABLE>
Three Months Ended August 31,
1997 1996
---- ----
*Computation of weighted average number of
common shares outstanding and
common equivalent shares:
Common shares outstanding at the
beginning of the period 5,135,548 4,013,765
Weighted average of common shares
issued (retired) during the period (33,988) --
Weighted average of the common
equivalent shares attributable to
stock options granted, computed
under the treasury stock method # -- --
---------- ----------
Weighted average number of common
and common equivalent shares 5,101,560 4,013,765
========= =========
# The stock options have not been included because they are antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> AUG-31-1997
<CASH> 5,053
<SECURITIES> 0
<RECEIVABLES> 3,103,160
<ALLOWANCES> 169,500
<INVENTORY> 4,739,935
<CURRENT-ASSETS> 8,102,098
<PP&E> 2,903,493
<DEPRECIATION> 876,004
<TOTAL-ASSETS> 11,581,146
<CURRENT-LIABILITIES> 3,178,099
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0
0
<COMMON> 322,923
<OTHER-SE> 6,053,010
<TOTAL-LIABILITY-AND-EQUITY> 11,581,146
<SALES> 2,597,927
<TOTAL-REVENUES> 2,609,730
<CGS> 1,882,906
<TOTAL-COSTS> 2,683,250
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 72,699
<INCOME-PRETAX> (146,219)
<INCOME-TAX> (52,615)
<INCOME-CONTINUING> (93,604)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (93,604)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
