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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2000
Commission file number 1-9431
ESCAGENETICS CORPORATION
(Name of Small Business Issuer in Its Charter)
Delaware | 94-3012230 | |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
Suite 605, 1075 Bellevue Way NE, Bellevue, WA |
|
98004 |
(Address of Principal Executive Offices) | (Zip Code) |
(206) 901-3595
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.0001 par value per share.
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
Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. / /
Issuer's revenues for its most recent fiscal year were $-0-.
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. $220,275 as of October 17, 2000.
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 outstanding of the issuer's common stock as of October 17, 2000 was 73,402,516 shares.
Transitional Small Business Disclosure Format (check one): Yes No X
Part I
Item 1Business Description
Formed in 1986, ESCAgenetics Corporation ("the Company") was organized to develop and commercialize high-value, plant derived products for the agricultural and pharmaceutical markets. The Company actively conducted its business between 1987 and the early part of 1995. In January 1995, the Company scaled back its business activities and became largely a dormant business. In January 1996, the Company filed a bankruptcy petition for protection under Chapter 11 of the U.S. Bankruptcy Code. At the time of the bankruptcy filing, the Company retained rights to certain plant extracts and related patents, its date palm inventory and related technology and patents and its hybrid true potato seed inventory and related technology and patents. The Company sold the plant extracts and related patents and its date palm inventory as part of the bankruptcy reorganization.
The Company's amended plan of reorganization (the "Amended Plan of Reorganization") became effective on August 22, 1996. Under the Amended Plan of Reorganization, GFL Ultra Fund, Ltd. ("Ultra"), the Company's largest debt holder, received 25% of the cash available to unsecured creditors and 90% of the Company's common stock. The remaining cash was distributed proportionately to the remaining unsecured creditors and the remaining 10% of the Company's common stock remained owned by its previous shareholders. The bankruptcy proceeding was officially closed effective March 31, 1997. In July, 1998 Genesee Holdings, Inc. ("Holdings") acquired by merger all the assets of Ultra.
On December 27, 1996, the Company sold 100% of the common stock outstanding of its wholly owned subsidiary, Potato Products International, Ltd. (formerly known as TPS Products Company) to an affiliate of Ultra for $175,000. Prior to the sale, the Company transferred to Potato Products International, Ltd. title to all of its tangible and intangible assets other than cash on hand and the stock of PHYTOpharmaceuticals, Inc. (an inactive majority owned subsidiary), SRE ESCAgenetics Corporation (an inactive wholly owned subsidiary) and Potato Products International, Ltd. The Company used the proceeds from the sale to repay amounts owed to Ultra for cash advances and to pay for the costs associated with preparing the Company for a business combination or other strategic transaction.
The Company has been dormant during the fiscal year ended September 30, 2000. The Company has had no employees since November 1996. The Company does not plan to continue the business activities that it conducted prior to its reorganization. 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.
Item 2Description of Property
None.
Item 3Legal Proceedings
None.
Item 4Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the shareholders during the fourth quarter of fiscal 2000.
2
Part II
Item 5Market for Common Equity and Related Shareholder Matters
The Company's Common Stock trades under the symbol "ESNG" on the OTC Bulletin Board. The market for the Company's Common Stock is limited, sporadic and highly volatile. The following table sets forth the high and low bid prices per share of the Company's Common Stock during its last two fiscal years as reported by the OTC Bulletin Board. These prices reflect inter-dealer prices, without retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions.
|
High |
Low |
|||
---|---|---|---|---|---|
Fiscal 1999 | |||||
First Quarter | 0.0010 | 0.0010 | |||
Second Quarter | 0.0010 | 0.0010 | |||
Third Quarter | 1.1250 | 0.0200 | |||
Fourth Quarter | 0.0469 | 0.0100 | |||
Fiscal 2000 | |||||
First Quarter | 0.1300 | 0.0100 | |||
Second Quarter | 0.2000 | 0.0300 | |||
Third Quarter | 0.1100 | 0.0500 | |||
Fourth Quarter | 0.0550 | 0.0300 |
The number of shareholders of record as of September 30, 2000 was 498.
It is the present policy of the Company not to pay cash dividends. Any payment of cash dividends in the future will depend upon the amount of funds legally available for that purpose, the Company's earnings, financial condition, capital requirements and other factors that the Board of Directors may deem relevant.
Item 6Management's Discussion and Analysis of Financial Condition and Results of Operations
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 2001 with advances from its majority shareholder, Holdings. These advances are expected to total approximately $50,000 during fiscal 2001. The Company expects Holdings 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 Holdings or cannot be consummated due to excessive cost or for any other reason, Holdings may 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.
Item 7Financial Statements
The financial statements of the Company are included in this report commencing on page F-1.
Item 8Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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Part III
Item 9Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Executive Officers and Directors
The following table sets forth the name, age and position of each person who was serving as an executive officer or director of the Company at October 17, 2000:
Name |
Age |
Office |
||
---|---|---|---|---|
Michelle Kline | 42 | President, Treasurer, Secretary, Director | ||
Greg L. Key |
|
35 |
|
Director |
Ms. Kline was appointed as an officer and director as of August 23, 1996. Mr. Key was appointed as a director on October 9, 1998. Ms. Kline and Mr. Key have been employees of Genesee Services Corp., an affiliate of Holdings, since 1990.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership and changes of ownership with the Securities and Exchange Commission (the "SEC"). Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the Company with copies of all such reports they file.
Based solely on its review of the copies of such reports received by the Company, the Company believes that, during the fiscal year ended September 30, 2000, all filing requirements applicable to its officers and directors, and all of the persons known to the Company to own more than ten percent of its Common Stock, were complied with by such persons.
Item 10Executive Compensation
The Company has had no employees since November 1996 and did not compensate its officer or directors during the fiscal year ended September 30, 2000. Their employer compensates Ms. Kline and Mr. Key for services rendered to their employer. No portion of their compensation is specifically attributable to their service as officer or director of the Company.
Item 11Security Ownership of Beneficial Owners and Management
The table below sets forth information as to the beneficial owner of record that was known by the Company to own beneficially more than 5% of the 73,402,516 shares of issued and outstanding Common Stock of the Company as of October 10, 2000.
Title of Class |
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percent of Class |
||||
---|---|---|---|---|---|---|---|
Common Stock | Genesee Holdings, Inc. c/o ESCAgenetics Corporation Suite 605, 1075 Bellevue Way NE Bellevue, WA 98004 |
86,860,000 shares* | 92.2 | % |
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Neither Ms. Kline nor Mr. Key beneficially owns any shares of the Company or an interest in Holdings.
Item 12Certain Relationships and Related Transactions
At September 30, 2000 the Company owed $160,000 to Holdings for loans provided to finance the Company's business activities. The loans are convertible into equity at the rate of 130 shares per dollar at Holding's option. Holdings has waived its right to receive interest on the loans through September 30, 2000.
During the fiscal year ended September 30, 2000, the Company paid $6,090 to an affiliate of Holdings for general and administrative expenses consisting primarily of accounting and research services.
Item 13Exhibits, Lists and Reports on Form 8-K
Exhibit Number |
|
Exhibit Title |
---|---|---|
3.1 | * | Certificate of incorporation |
3.2 |
** |
By-laws |
21 |
|
Subsidiaries of registrant |
27.1 |
|
Financial Data Schedule |
5
Board
of Directors and Shareholders
ESCAgenetics Corporation and Subsidiaries
Bellevue, Washington
We have audited the accompanying consolidated balance sheet of ESCAgenetics Corporation and Subsidiaries (the Company) as of September 30, 2000, and the related consolidated statements of operations and cash flows for the years ended September 30, 2000 and 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ESCAgenetics Corporation and Subsidiaries as of September 30, 2000, and the results of their operations and their cash flows for the years ended September 30, 2000 and 1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not established profitable operations, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
BADER
MARTIN ROSS & SMITH, P.S.
Seattle, Washington
October 12, 2000
F-1
ESCAGENETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
ASSETS
Current assets cash | $ | 1,000 | ||
Total assets | $ | 1,000 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY DEFICIENCY
Liabilities: | ||||||||
Accounts payable | $ | 7,000 | ||||||
Due to Genesee Holdings, Inc. | 160,000 | |||||||
Total liabilities, all current | 167,000 | |||||||
Shareholders' equity deficiency: | ||||||||
Common stock | 7,000 | |||||||
Additional paid-in capital | 134,000 | |||||||
Accumulated deficit | (307,000 | ) | ||||||
Total shareholders' equity deficiency | (166,000 | ) | ||||||
Total liabilities and shareholders' equity deficiency | $ | 1,000 | ||||||
See notes to consolidated finanical statements.
F-2
ESCAGENETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
|
Years ended September 30, |
|||||||
---|---|---|---|---|---|---|---|---|
|
2000 |
1999 |
||||||
Revenues | $ | 0 | $ | 0 | ||||
Operating expenses: | ||||||||
Accounting and legal | 30,000 | 37,000 | ||||||
General and administrative | 19,000 | 26,000 | ||||||
Total expenses | 49,000 | 63,000 | ||||||
Net loss | (49,000) | (63,000) | ||||||
Accumulated deficit, beginning of year | (258,000) | (195,000) | ||||||
Accumulated deficit, end of year | $ | (307,000) | $ | (258,000) | ||||
Net loss per share | $ | (0.00) | $ | (0.00) | ||||
Weighted average common shares outstanding | 73,402,516 | 73,402,516 | ||||||
See notes to consolidated finanical statements.
F-3
ESCAGENETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Years ended September 30, |
||||||||
---|---|---|---|---|---|---|---|---|---|
|
2000 |
1999 |
|||||||
Cash flows from operating activities: | |||||||||
Net loss | $ | (49,000 | ) | $ | (63,000 | ) | |||
Change in accounts payable | 4,000 | 2,000 | |||||||
Net cash used in operating activities | (45,000 | ) | (61,000 | ) | |||||
Net cash provided by financing activities, advances from Genesee Holdings, Inc. |
43,000 | 63,000 | |||||||
Net increase (decrease) in cash | (2,000 | ) | 2,000 | ||||||
Cash at beginning of year | 3,000 | 1,000 | |||||||
Cash at end of year | $ | 1,000 | $ | 3,000 | |||||
See notes to consolidated finanical statements.
F-4
ESCAGENETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of significant accounting policies
Principles of consolidation and basis of presentation
The consolidated financial statements include the accounts of ESCAgenetics Corporation (the "Company") and its majority and wholly owned subsidiaries, PHYTOpharmaceuticals, Inc. and SRE ESCAgenetics Corporation, after elimination of all significant intercompany accounts and transactions. The Company's subsidiaries did not have any significant operating activities during the periods presented.
Operations
Formed in 1986, the Company was organized to develop and commercialize high-value, plant-derived products for the agricultural and pharmaceutical markets. In January 1995, the Company scaled back its business activities and became largely a dormant business. In January 1996, the Company filed a bankruptcy petition for protection under Chapter 11 of the U.S. Bankruptcy Code, and the Company's plan of reorganization became effective on August 22, 1996. The bankruptcy proceeding was officially closed effective March 31, 1997.
Genesee Holdings, Inc. ("Holdings") owns ninety percent of the outstanding common stock of the Company. Currently, all operating expenses are being funded by Holdings through a line of credit (Note 3). During the years ended September 30, 2000 and 1999, the Company paid $6,090 and $0, respectively, to an affiliate for operating expenses.
The Company does not plan to continue the business activities that it conducted prior to its reorganization. It plans to pursue a business combination or other strategic transaction. No candidate for such a transaction has been identified. Ultimately, the continuation of the Company as a going concern is dependent upon the establishment of profitable operations. Management believes Holdings will continue to fund expenditures until such time as a business combination or other strategic transaction is consummated.
Because the achievement of these plans is dependent upon future events, there can be no assurance that future profitable operations will occur as planned.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Net loss per share
Net loss per share is calculated on the basis of weighted average number of common shares outstanding. Common stock equivalents are excluded from the computation, as their effect is antidilutive.
2. Shareholders' equity
The Company has authorized 101,000,000 shares of Common Stock with a par value of $.0001 per share and 1,000,000 shares of Preferred Stock with a par value of $.01 per share. There were 73,402,516
F-5
shares of Common Stock issued and outstanding at September 30, 2000 and 1999. No shares of Preferred Stock are outstanding.
3. Due to Holdings
At September 30, 2000, the Company owed $160,000 to Holdings for advances provided to finance the Company's expenses. The advances are convertible into equity at the rate of 130 shares per dollar at Holdings' option. Holdings has waived its right to receive interest on the loans through September 30, 2000.
4. Income taxes
The Company has accumulated net operating loss carryforwards of approximately $172,000 that are available to offset future taxable income, if any, through 2019. Realization of the net operating loss carryforwards is dependent upon future profitable operations. Accordingly, management has recorded a valuation allowance to reduce deferred tax assets associated with net operating loss carryforwards to zero at September 30, 2000.
F-6
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: |
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/s/ MICHELLE KLINE Michelle Kline, President |
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Date: October 17, 2000 |
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In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: |
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/s/ MICHELLE KLINE Michelle Kline Principal Executive, Financial and Accounting Officer and Director |
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Date: October 17, 2000 |
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By: |
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/s/ GREG L. KEY Greg L. Key, Director |
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Date: October 17, 2000 |
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