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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 Quarterly Period Ended March 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number 1-10192
AGRISTAR INC.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 76-023220
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(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
100 HAWTHORN
CONROE, TEXAS 77301
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(Address of principal Issuer's telephone number (409) 760-3433
executive offices) --------------
N/A
---
(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 Securities Exchange Act of 1934 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
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the last practicable date:
TITLE OF EACH CLASS OUTSTANDING AT JANUARY 31, 1996
Common Stock, $.01 Par Value 32,612,404
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TABLE OF CONTENTS
PART I FINANCIAL INFORMATION PAGE
ITEM I Consolidated Financial Statements
Consolidated Balance Sheet as of March 31, 1996 3
Consolidated Statements of Operations for the
Three-month Periods Ended March 31,
1996 and March 31, 1995 4
Consolidated Statements of Cash Flows for the
Three-month Period Ended March 31, 1996 and
March 31, 1995 5
Notes to Consolidated Financial Statements 7
ITEM 2 Management's Discussion and Analysis of
Financial Conditions and Results of Operations 8
PART II OTHER INFORMATION 9
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AGRISTAR INC.
CONSOLIDATED BALANCE SHEET
ASSETS
March 31,
1996
Current Assets: (Unaudited)
Cash and Cash Equivalents $ 53,971
Trade accounts receivable 95,537
Inventories 1,097,779
Deposits 13,106
Prepaid Expenses 35,881
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Total current assets $ 1,296,274
Investment in minority-owned subsidiary 1
Property, plant and equipment, net 239,535
Patent costs, net 217,398
Organizational and non-comp. costs 2,781
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TOTAL ASSETS $ 1,755,989
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 444,657
Accrued acquisition costs 62,433
Payable to a related party 35,410
Notes payable - stockholders 120,000
Note payable to an individual* 300,000
Notes payable to ArmRoy Stewart 76,000
Unearned income 35,000
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Total current liabilities $ 1,073,500
Stockholders' Equity:
Common Stock: Authorized 50,000,000
Shares of $.01 par value: 32,612,404 shares
issued and outstanding 326,124
Additional Paid-In Capital 7,453,450
Accumulated Deficit (7,097,085)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,755,989
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*Repayment of the indebtness is secured by a first lien on the assets of Stewart
Orchids and a pledge of 100% of the outstanding capital stock of the corporate
entity holding such assets.
The accompanying notes are an integral part of these financial statements.
3
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AGRISTAR INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
QUARTER
ENDED MARCH 31,
1996 1995
-------- --------
REVENUES $415,394 $596,440
COST OF GOODS SOLD 191,137 323,158
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Gross Profit 224,257 273,282
OPERATING EXPENSES:
General and Administrative 221,737 238,366
Research and Development -- --
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Total Operating Expenses 221,737 238,366
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OPERATING 2,520 34,916
OTHER INCOME (EXPENSE)
Other Income 3,000 3,007
Interest Expense (11,175) (2,174)
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Total Other Income (8,175) 833
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NET LOSS ($ 5,655) $ 35,749
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-------- --------
NET INCOME PER SHARE $ -- $ --
-------- --------
-------- --------
The accompanying notes are an integral part of these financial statements.
4
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AGRISTAR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIOD ENDED
QUARTER
ENDED MARCH 31,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ (5,655) $ 35,749
Adjustments to Reconcile Net Income
to Net Cash Used in
Operating Activities:
Depreciation and Amortization 16,445 19,827
Changes in Current Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 18,453 (67,511)
(Increase) Decrease in Inventory (50,497) (4,885)
(Increase) Decrease in Prepaid
Expenses and Deposits 11,899 5,851
Increase (Decrease) in Accounts Payable
and Accrued Liabilities 29,613 22,153
(Decrease) in Unearned Income -- (13,025)
Accrued Acquisition Cost (8,143) (29,262)
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Net Cash Used in Operating Activities 12,115 (31,103)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of Fixed Assets (848) --
-------- --------
Net Cash (Used In) Investing Activities (848) --
--------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Payment of bank loan -- --
Loan from shareholder -- --
--------
Net Cash Used in Financing Activities -- --
NET INCREASE (DECREASE) IN CASH 11,267 (31,103)
CASH AT BEGINNING OF YEAR 42,704 50,183
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CASH AT END OF PERIOD $ 53,971 $ 19,080
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-------- --------
The accompanying notes are an integral part of these financial statements.
5
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AGRISTAR INC.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for the three-month period ended March 31,
1996 1995
----------- -----------
(Unaudited) (Unaudited)
Interest $11,175 $2,174
Income taxes -- --
DISCLOSURE OF ACCOUNTING POLICY
For the purpose of the statement of cash flows, the Registrant considers all
highly liquid debt instruments purchased with a maturity of three-months or less
to be cash equivalents.
6
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AGRISTAR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
The consolidated balance sheet of AgriStar Inc. (the "Registrant") as of
March 31, 1996, and the consolidated statement of operations for the three-month
periods ended March 31, 1996 and March 31, 1995 and the consolidated statements
of cash flows for the three-month period ended March 31, 1996 and March 31, 1995
included herein are unaudited; however, in the opinion of management, they
reflect all adjustments necessary to present fairly the consolidated financial
position, results of operations and changes in financial position of the
Registrant at March 31, 1996. The consolidated financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Registrant's Annual Report on Form 10-KSB for the year ended December 31,
1995.
2. ACCRUED ACQUISITION COSTS
The Registrant's 1993 acquisition of certain assets of Stewart Orchids
include quarterly cash payments equal to 10 percent of revenues received from
sales of the acquired inventory through January 1996. The contingent payments
were recorded as part of the purchase price, and were not to exceed cash of
$280,000 and 300,000 shares of restricted common stock issuable at a rate of
one share of common stock for every $8.33 of revenues from the sale of the
acquired inventory. In January 1996, ArmRoy Stewart agreed to a final balance
of $76,000 payable in 24 equal payments with interest.
3. INVESTMENT IN CONSOLIDATED FOREIGN OWNED SUBSIDIARY
On December 31, 1995, the Registrant devested itself of its investment in
AgriStar de Venezuela, S.A. Production was discontinued at the micropropagation
facility in 1994, and the remaining inventory was sold. A final net loss of
$38,208 was reflected in December 31, 1995.
4. INVESTMENT IN MINORITY OWNED SUBSIDIARY
The Registrant's investment in AgriStar (Asia) Ltd., a 49 percent owned
Hong Kong corporation, is accounted for under the equity method of accounting.
The Registrant has no obligation to fund the operating losses of AgriStar (Asia)
Ltd. Accordingly, the Registrant has not recognized its equity in the operating
losses of AgriStar (Asia) Ltd. beyond its investment. The investment is not
expected to be material to the Registrant's 1996 financial statements.
7
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AGRISTAR INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues during the three months ended March 31, 1996 were $415,394 as
compared with the revenues of $596,440 during the comparable three months
ending March 31, 1995 for a decrease of $175,766. The decrease was due to a
reduction in sales of AgriStar due to the economic conditions in Mexico. We
changed our sales program from potato exports to producing orchids for sales to
wholesalers.
The Registrant's gross margin during the quarter ended March 31, 1996 was
$224,257 as compared with a gross margin of $273,282 during the comparable
quarter of 1995. The 54% gross profit on sales was increased from the previous
year because of most of the sales from both locations are now sales of orchids
which have a higher profit margin.
Selling, general and administrative expenses for the quarter ended March
31, 1996 was $221,737 as compared to $238,366 for the same period of 1995. The
decrease of $16,629 is principally due to decrease in personnel and other
expenses in AgriStar.
The Registrant, however, continues to suffer from liquidity constraints and
there can be no assurance that the Registrant will be able to pay its
obligations when due.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Registrant had total assets of $1,755,989 including
$1,296,274 of current assets, and total current liabilities of $1,073,500. In
August, 1995, the Registrant obtained a loan of $300,000 at 12% to help purchase
inventory and reduce other debt. On May 20, 1996, notice was received by
Registrant that the maturity of the note was being accelerated due to failure to
pay the interest which was due on March 4, 1996. The notice calls for payment
of the principle and interest due. When (and if) its current financial
resources are exhausted, the Registrant will, in all likelihood, be required to
seek additional financing from outside sources. Due to uncertainties with
respect to the timing of revenues from sales, the Registrant is presently unable
to estimate the amount of additional capital that will be required (if) its
current financial resources are exhausted. The Registrant has no commitment for
such additional financing, if required, and there is no assurance that the
Registrant will be successful in obtaining additional financing or that such
financing, if required, will be on terms acceptable to the Registrant.
8
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AGRISTAR INC.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Cause No,. 95-40253, DOHERTY v. AGRISTAR, INC., ET AL. State Court
action, Harris County, Texas. Action seeking injunctive relief from sale of
assets, subsidiaries or divisions of AgriStar, Inc. other than in the normal
course of business pending review or accounting of financial records.
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits None
B. Reports on Form 8-K None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
May 29, 1996
Conroe, Texas AGRISTAR INC.
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Cal Froberg
President
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 53,971
<SECURITIES> 0
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<INVENTORY> 1,097,779
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<SALES> 415,394
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