<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 1998
Commission file number 1-9431
ESCAGENETICS CORPORATION
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(Name of Small Business Issuer in Its Charter)
Delaware 94-3012230
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
Suite 605, 1075 Bellevue Way NE, Bellevue, WA 98004
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(Address of Principal Executive Offices) (Zip Code)
(206) 901-3595
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(Issuer's Telephone Number, Including Area Code)
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 past 90 days.
Yes X No
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Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes X No
----- -----
The number of shares of the issuer's common stock outstanding as of December 15,
1998 was 73,402,516 shares, par value $0.0001 per share.
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PART 1
ITEM 1 - Financial Statements
ESCAGENETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
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<TABLE>
<CAPTION>
March 31,
1998
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<S> <C>
ASSETS
Current assets:
Cash $ 0
---------
Total assets $ 0
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LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable $ 1,000
Due to GFL Ultra Fund, Ltd. 52,000
---------
Total liabilities 53,000
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Shareholders' equity (deficiency):
Preferred stock; $0.01 par value; 1,000,000 shares
authorized; none issued or outstanding
Common stock; $0.0001 par value; 101,000,000 shares
authorized; 73,402,516 shares issued and outstanding 7,000
Additional paid-in capital 134,000
Accumulated deficit (194,000)
---------
Total shareholders' equity (deficiency) (53,000)
---------
Total liabilities and shareholders' equity (deficiency) $ 0
---------
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</TABLE>
SEE NOTE TO FINANCIAL STATEMENTS
2
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ESCAGENETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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<TABLE>
<CAPTION>
Three months ended March 31, Six months ended March 31,
---------------------------- --------------------------
1998 1997 1998 1997
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Revenues:
Miscellaneous $ 0 $ 0 $ 0 $ 3,000
---------- ---------- ---------- ----------
Operating expenses:
Accounting and legal 2,000 40,000 5,000 116,000
General and administrative 3,000 6,000 6,000 30,000
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Total expenses 5,000 46,000 11,000 146,000
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Net loss (5,000) (46,000) (11,000) (143,000)
Accumulated deficit, beginning of period (189,000) (112,000) (183,000) (15,000)
---------- ---------- ---------- ----------
Accumulated deficit, end of period $ (194,000) $ (158,000) $ (194,000) $ (158,000)
---------- ---------- ---------- -----------
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Net loss per share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average common shares outstanding 73,402,516 73,402,516 73,402,516 73,402,516
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
SEE NOTE TO FINANCIAL STATEMENTS
3
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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<TABLE>
<CAPTION>
Six months ended March 31,
--------------------------
1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net loss $(11,000) $(143,000)
Adjustments to reconcile net loss to net cash flows
used in operating activities:
Changes in operating assets and liabilities:
Accounts payable (2,000) 18,000
Amounts due to pre-petition creditors (216,000)
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Net cash used in operating activities (13,000) (341,000)
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Cash flows from investing activities:
Additional investment in Potato Products
International, Ltd. prior to sale (27,000)
Proceeds from sale of Potato Products
International, Ltd. 175,000
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Net cash provided by investing activities 0 148,000
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Cash flows from financing activities:
Advances from GFL Ultra Fund, Ltd. 13,000 117,000
Repayments to GFL Ultra Fund, Ltd. (135,000)
-------- ---------
Net cash provided by (used in) financing
activities 13,000 (18,000)
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Net decrease in cash 0 (211,000)
Cash at beginning of period 0 224,000
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Cash at end of period $ 0 $ 13,000
-------- ---------
-------- ---------
</TABLE>
SEE NOTE TO FINANCIAL STATEMENTS
4
<PAGE>
ESCAGENETICS CORPORATION AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 1998 AND 1997
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1. Unaudited information
The consolidated financial statements for the three and six month periods
ended March 31, 1998 and 1997 are unaudited and reflect all adjustments
which are, in the opinion of management, necessary for the fair presentation
of the financial position and operating results for the periods presented.
Certain footnote disclosures normally included with financial statements
prepared in accordance with generally accepted accounting principles have
been omitted from these consolidated financial statements. Accordingly,
these unaudited consolidated financial statements should be read in
conjunction with the September 30, 1997 audited consolidated financial
statements and notes thereto included in the Company's annual report on
Form 10-KSB for the year ended September 30, 1997.
5
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Effective as of August 22, 1996 the Company was reorganized pursuant to a plan
of reorganization that was confirmed by the US Bankruptcy Court. Since the
reorganization date, the Company has adopted a September 30 fiscal year.
The Company has had no revenues from operations since the reorganization date.
The Company does not plan to continue the business activities that it previously
conducted. It plans to pursue a business combination or other strategic
transaction. No candidate for such a transaction has been identified. The
Company believes its status as a public company may be attractive to a private
company wishing to avoid an initial public offering but there is no guarantee
that a business combination or other strategic transaction will be consummated.
The Company expects to fund its expenses during fiscal 1998 with advances from
its majority shareholder, GFL Ultra Fund, Ltd. ("Ultra"). These advances are
expected to total approximately $15,000 during fiscal 1998. The Company expects
Ultra to continue to fund its expenses until a business combination or other
strategic transaction is consummated. There is no guarantee that the Company is
a viable party for a business combination or other strategic transaction. If a
business combination or other strategic transaction is not consummated in a
timeframe suitable to Ultra or cannot be consummated due to excessive cost or
for any other reason, Ultra will cease to advance funds to the Company.
The Company has no employees and no fixed assets. The Company does not
anticipate hiring any employees or purchasing any assets until such time as a
business combination or other strategic transaction is consummated or is
imminent.
PART II
ITEM 1 - Legal Proceedings
None.
ITEM 2 - Changes in Securities and Use of Proceeds
None.
ITEM 3 - Defaults Upon Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
None.
6
<PAGE>
ITEM 5 - Other Items
None.
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Forms 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 1998.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ESCAGENETICS CORPORATION
By /s/ Michelle Kline
-----------------------------------
Michelle Kline
President and Treasurer
(Principal Executive Officer and
Principal Financial Officer)
Dated: January 12, 1999
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7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S MARCH 31, 1998
QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US $
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 53,000
<BONDS> 0
0
0
<COMMON> 7,000
<OTHER-SE> (60,000)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (11,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
