<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the quarter ended Commission File No. 0-13403
June 30, 2000
--------------------------------------------------------------------------------
AMISTAR CORPORATION
(Exact name of registrant as specified in its Charter)
--------------------------------------------------------------------------------
STATE OF CALIFORNIA 95-2747332
(State or other jurisdiction of Incorporation or (I.R.S. Employer
organization) Identification No.)
237 VIA VERA CRUZ 92069
SAN MARCOS, CALIFORNIA (Zip Code)
(Address of principle executive offices)
(760) 471-1700
(Registrant's telephone number, including area code)
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), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No __
CLASS OUTSTANDING AT JULY 28, 2000
Common Stock $.01 Par Value 3,136,500
1
<PAGE>
Part I
Item 1. Financial Statements
<TABLE>
AMISTAR CORPORATION
Condensed Balance Sheets
(In thousands)
<CAPTION>
June 30,* Dec. 31,
2000 1999
------------------ ------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,148 $ 2,476
Trade accounts and contracts receivable, net 3,873 3,539
Income taxes receivable 210 208
Inventories 2,730 3,047
Demonstration equipment 175 118
Prepaid expenses 114 72
------------------ ------------------
Total current assets 10,250 9,460
Property and equipment, net 5,096 5,382
Restricted cash 1,329 1,329
Other assets 128 114
------------------ ------------------
$ 16,803 $ 16,285
================== ==================
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 490 $ 515
Accrued liabilities 786 683
------------------ ------------------
Total current liabilities 1,276 1,198
Industrial development bonds 4,500 4,500
Shareholders' equity:
Common stock 31 31
Additional paid-in capital 4,589 4,589
Retained earnings 6,407 5,967
------------------ ------------------
Total shareholders' equity 11,027 10,587
------------------ ------------------
$ 16,803 $ 16,285
================== ==================
*Unaudited
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.
2
<PAGE>
<TABLE>
AMISTAR CORPORATION
Condensed Statements of Earnings
(Unaudited and In thousands, except per share data)
<CAPTION>
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 5,471 $ 3,288 $ 10,246 $ 7,908
Cost of sales 4,057 2,962 7,704 6,520
---------------- ---------------- ---------------- -----------------
Gross profit 1,414 326 2,542 1,388
Operating expenses:
Selling 477 660 1,032 1,462
General & administrative 334 274 601 545
Research & development 263 310 531 658
---------------- ---------------- ---------------- -----------------
1,074 1,244 2,164 2,665
---------------- ---------------- ---------------- -----------------
Earnings (loss) from operations 340 (918) 378 (1,277)
Other income (expense), net 38 (21) 62 (32)
---------------- ---------------- ---------------- -----------------
Earnings (loss) before
income taxes 378 (939) 440 (1,309)
Income tax benefit - (375) - (523)
---------------- ---------------- ---------------- -----------------
Net earnings (loss) $ 378 $ (564) $ 440 $ (786)
================ ================ ================ =================
Basic and diluted earnings (loss)
per common share $ 0.12 $ (0.18) $ 0.14 $ (0.25)
================ ================ ================ =================
Weighted average shares
outstanding 3,137 3,137 3,137 3,137
================ ================ ================ =================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.
3
<PAGE>
<TABLE>
AMISTAR CORPORATION
Statements of Cash Flows
(Unaudited and In thousands)
<CAPTION>
Six months ended June 30, 2000 1999
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net earnings (loss) $ 440 $ (786)
Adjustments to reconcile net earnings (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 371 361
Gain on sale of equipment - (6)
Changes in assets and liabilities:
Trade accounts and contracts receivable, net (334) 854
Income taxes receivable (2) (537)
Inventories 317 4
Demonstration equipment (57) 160
Prepaid expenses and other assets (56) 50
Accounts payable and accrued liabilities 78 (226)
--------------- ---------------
Net cash provided by (used in) operating activities 757 (126)
Cash flows from investing activities:
Capital expenditures (85) (164)
Proceeds from sale of equipment - 6
--------------- ---------------
Cash flows used in investing activities (85) (158)
Net increase (decrease) in cash and cash equivalents 672 (284)
Cash and cash equivalents at the beginning of the period 2,476 1,477
--------------- ---------------
Cash and cash equivalents at the end of the period $ 3,148 $ 1,193
=============== ===============
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 88 $ 77
Income tax $ 3 $ 14
</TABLE>
4
See accompanying notes to condensed financial statements
<PAGE>
AMISTAR CORPORATION
Notes to Condensed Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
---------------------
The Interim Condensed Financial Statements of Amistar Corporation, a
California corporation (the "Company") have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such rules and
regulations. These Interim Condensed Financial Statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's 1999 annual report on Form 10-K as filed with the Securities and
Exchange Commission on March 17, 2000.
Inventories
-----------
Inventories are stated at the lower of cost (first-in, first-out) or market
and include material, labor and manufacturing costs. Inventories consist of the
following (in thousands):
June 30,* Dec. 31,
2000 1999
--------------- ---------------
Raw Material $ 874 $ 965
Work In Process 962 1,074
Finished Goods 894 1,008
--------------- ---------------
$ 2,730 $ 3,047
=============== ===============
* Unaudited
Income taxes
------------
During the year ended December 31, 1999, the Company recorded a 100%
valuation allowance against its deferred income tax assets. This valuation was
based on the 1999 year-to-date loss position and management's belief that it is
more likely than not that the Company will not be able to utilize the benefits
of the deferred tax assets in the future. There was no income tax provision for
the three or six months ended June 30, 2000 due to the utilization of existing
federal and state net operating loss carry-forwards.
5
<PAGE>
AMISTAR CORPORATION
Notes to Condensed Financial Statements, Continued
Industry Segments and Geographic Information
--------------------------------------------
The following table summarizes the Company's two operating segments:
Machine Sales and Service, which encompass the manufacture and distribution of
assembly machines and related accessories and Amistar Manufacturing Services
(AMS). The Company identifies reportable segments based on the unique nature of
operating activities, customer base and marketing channels. Information is also
provided by major geographical area.
<TABLE>
<CAPTION>
Machine Sales and Service
-------------------------------------------------
United Rest of Mfg.
States Europe World Total Services Corporate Total
----------------------------------------------------------------------------------------------------------------- ------------
THREE MONTHS ENDED JUNE 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales to unaffiliated
customers $ 2,645 $ 58 $ 226 $ 2,929 $ 2,542 $ - $ 5,471
============= ============ ========= ============ ============= ============ ============
Earnings (loss) from operations 479 11 71 561 (221) - 340
============= ============ ========= =========== ============ =========== ============
Total assets 4,876 172 570 5,618 2,643 8,542 16,803
============= ============ ========= =========== ============ =========== ============
THREE MONTHS ENDED JUNE 30, 1999
Net sales to unaffiliated
customers $ 1,366 $ (113) $ 178 $ 1,431 $ 1,857 $ - $ 3,288
============= ============ ========= ============ ============= ============ ============
Earnings (loss) from operations (683) 7 (62) (738) (180) - (918)
============= ============ ========= ============ ============= ============ ============
Total assets 8,922 1,349 124 10,395 2,842 7,510 20,747
============= ============ ========= ============ ============= ============ ============
SIX MONTHS ENDED JUNE 30, 2000
Net sales to unaffiliated
customers $ 4,954 $ 119 $ 895 $ 5,968 $ 4,278 $ - $ 10,246
============= ============ ========= ============ ============= ============ ============
Earnings (loss) from operations 634 15 114 763 (385) - 378
============= ============ ========= ============ ============= ============ ============
SIX MONTHS ENDED JUNE 30, 1999
Net sales to unaffiliated
customers $ 3,978 $ 20 $330 $ 4,328 $3,580 $ - $ 7,908
============= ============ ========= ============ ============= ============ ============
Earnings (loss) from operations (893) (4) (74) (971) (306) - (1,277)
============= ============ ========= ============ ============= ============ ============
</TABLE>
6
<PAGE>
AMISTAR CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward Looking Statements
--------------------------
This Quarterly Report contains forward-looking statements within the
meaning of the Private Securities Reform Act of 1995, particularly statements
regarding market opportunities, customer acceptance of products, gross margin
and marketing expenses. These forward-looking statements involve risks and
uncertainties, and the cautionary statements set forth below, identify important
factors that could cause actual results to differ materially from those in any
such forward-looking statements. Such factors include, but are not limited to,
adverse changes in general economic conditions, including changes in the
specific markets for the Company's products, product availability, decreased or
lack of growth in the electronics industry, adverse changes in customer order
patterns, increased competition, lack of acceptance of new products, pricing
pressures, lack of success in technological advancements, risks associated with
foreign trade and other factors.
RESULTS OF OPERATIONS
Net Sales
---------
Net sales for the three months ended June 30, 2000 were $5,471,000 compared
to $3,288,000 for the same period in the prior year. The current quarter sales
improvement was due to a 105% increase in machine sales and a 37% increase in
manufacturing services sales over the same quarter in 1999. During the current
period, shipments of the Company's new DataPlace(TM) label placement machine
shipments were equal to the prior quarter ended March 31, 2000. DataPlace
machine sales were made to major OEM and contract manufacturers and included
both repeat and multiple unit orders. The Amistar Manufacturing Services
division (AMS) received increased customer orders related to current products
and for several new products. The increased AMS volume resulted in record sales
for the division in the current quarter.
Gross Profit
------------
The machine division gross profit improved over the comparable quarter in
1999 due to the higher margins realized on the DataPlace machines. The AMS
division gross margin improved over the second quarter of 1999 due to an
increase in the more profitable labor billings and due to greater labor
efficiencies.
Selling Expenses
----------------
Selling expenses decreased in the current quarter due to reduced commission
expenses on machines sold on a direct basis compared to 1999, when sales were
made through representatives. Selling expense also decreased due to marketing
and field service expense reductions made in prior periods.
7
<PAGE>
AMISTAR CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
General and Administrative Expenses
-----------------------------------
General and administrative expenses increased in the current quarter over
the same quarter in 1999 due to an incentive compensation accrual for key
personnel.
Research and Development
------------------------
Research and development expenses decreased due to lower costs incurred on
the DataPlace 100LP machine. Development efforts were focused during the second
quarter of 2000 on enhancements of the DataPlace 100LP machine and the
preliminary development of the next machine in the DataPlace family.
Income tax expense
------------------
There was no income tax provision for the three or six months ended June
30, 2000 due to the utilization of existing federal and state net operating loss
carry-forwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow from operating activities was $757,000 for the six
months ended June 30, 2000. Trade accounts and contracts receivable decreased
primarily due to the repossession of ten private label machines from PricePoint
Micro Technologies due to default on the contract receivable terms. The
repossession occurred in January 2000 and resulted in a transfer of $739,000 in
contracts receivable to finished goods inventory. As of June 30, 2000, all of
the ten repossessed machines have been sold. During 1999, the Company was in
default on financial covenants related to a letter of credit reimbursement
agreement with its bank. The letter of credit supports the $4,500,000 industrial
development bonds. On November 3, 1999, the Company received a waiver related to
these covenants extending through December 31, 2000. Management believes that
the Company will be in compliance with the original financial covenants by the
end of fiscal 2000. The Company is currently in compliance with revised
covenants for the year ended December 31, 2000. The Company believes that cash
provided from operations, and cash balances at June 30, 2000 will be adequate to
support its operating and investing requirements through 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DATA ABOUT MARKET RISK
The Company is exposed to a variety of risks, including foreign currency
fluctuations and changes in interest rates affecting the cost of its debt. A
significant decrease in the exchange rate of Yen versus the U.S. Dollar would
not have a material adverse effect on the Company's financial condition or
results of operations. The Company's only long-term debt at June 30, 2000 is
comprised of Industrial Development bonds. The bonds mature in December 2005,
and accrue interest at a variable monthly rate. A significant increase in
interest rates could have an adverse effect on the Company's financial condition
or results of operations.
8
<PAGE>
PART II.
Items 1-5 Non-Applicable
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits:
Financial data schedule
(b) Reports on form 8-K:
None
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.
AMISTAR CORPORATION
By /s/ William W. Holl
William W. Holl
Chief Financial Officer,
Chief Accounting Officer &
Duly Authorized Officer
9