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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 the quarterly period ended SEPTEMBER 30, 1996
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10192
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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 (409) 760-3433
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(Address of principal executive offices) Issuer's telephone number
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:
COMMON STOCK, $.01 PAR VALUE--32,612,404 SHARES OUTSTANDING AT MARCH 15, 1997
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TABLE OF CONTENTS
PART I --FINANCIAL INFORMATION
ITEM I CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet as of September 30, 1996 3
Consolidated Statements of Operations for the Three-month and
Nine-month Periods Ended September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows for the Nine-month
Period Ended Periods Ended September 30, 1996 and 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
2
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AGRISTAR INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
SEPTEMBER 30, 1996
(UNAUDITED)
Current Assets:
Cash and Cash Equivalents $ (4,396)
Trade accounts receivable 48,487
Inventories 763,953
Deposits from related party 13,131
Prepaid Expenses 14,725
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Total Current Assets 835,900
Investment in minority-owned subsidiary 1
Property, plant and equipment, net 242,534
Patent costs, net 220,795
Organizational and non-comp. costs 1,875
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TOTAL ASSETS $ 1,301,105
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 256,680
Accrued acquisition costs 63,582
Note payable - capital lease 43,459
Note payable - stockholders 120,000
Note payable to an individual 300,000
Note payable to ArmRoy Stewart 56,191
Unearned income 35,000
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Total Current Liabilities $ 874,912
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 7,453,075
Accumulated Deficit (7,353,006)
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Total stockholders' equity 426,193
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,301,105
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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AGRISTAR INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS PERIODS ENDED
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
QUARTER NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
--------- -------- ---------- ----------
REVENUES $ 493,575 $408,453 $1,414,973 $1,661,460
COST OF GOODS SOLD 426,600 201,924 817,937 832,988
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Gross Profit 66,975 206,529 597,036 828,472
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OPERATING EXPENSES:
General and Administrative 318,421 232,706 853,912 722,103
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Total Operating Expenses 318,421 232,706 853,912 722,103
--------- -------- ---------- ----------
OPERATING INCOME (251,446) (26,177) (256,876) 106,369
--------- -------- ---------- ----------
OTHER INCOME (EXPENSE)
Other Income (57,526) 4,003 38,218 10,003
Interest Expense (22,743) (1,740) (42,918) (6,090)
--------- -------- ---------- ----------
Total Other Income (Expense) (80,269) 2,263 (4,700) 3,913
--------- -------- ---------- ----------
NET INCOME (LOSS) $(331,715) $(23,914) $ (261,576) $ 110,282
========= ======== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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AGRISTAR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
NINE MONTHS
ENDED SEPTEMBER 30,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $(261,576) $ 110,282
Adjustments to Reconcile Net Income
to Net Cash Used in Operating Activities:
Depreciation and Amortization 14,650 57,961
Changes in Current Assets and Liabilities:
(Decrease) Increase in Accounts Receivable 30,093 (50,137)
(Decrease) Increase in Inventory 283,329 (68,722)
(Decrease) in Net Patent Costs 3,090 -0-
(Increase) in Net Organization Costs (3,089) -0-
Decrease (Increase) in Prepaid
Expenses and Deposits 33,030 (3,494)
(Decrease) in Accounts Payable
and Accrued Liabilities (108,275) (133,995)
(Decrease) in Unearned Income -0- (73,950)
(Decrease) in Accrued Acquisition Cost (6,994) (65,505)
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Net Cash Used in Operating Activities (15,742) (227,560)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of Fixed Assets (4,545) (484)
Net Cash (Used In) Investing Activities (4,545) (484)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net activity - net (26,813) -0-
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Net Cash Used in Financing Activities (26,813) -0-
NET (DECREASE) IN CASH 47,100 (228,044)
CASH AT BEGINNING OF YEAR 42,704 50,183
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CASH AT END OF PERIOD $ (4,396) $(177,861)
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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 nine-month period ended September 30,
1996 1995
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(Unaudited) (Unaudited)
Interest $6,090 $3,435
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.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
6
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AGRISTAR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
The consolidated balance sheet of AgriStar Inc. (the "Registrant") as of
September 30, 1996, the consolidated statement of operations for the three-month
and nine-month periods ended September 30, 1996 and 1995 and the consolidated
statements of cash flows for the nine-month periods ended September 30, 1996 and
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 September 30, 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 April 1996. The contingent payments were
recorded as part of the purchase price, and are 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. The balance payable at September 30, 1996 is payable in cash of
$56,191 and the 300,000 shares of stock.
3. INVESTMENT IN CONSOLIDATED FOREIGN OWNED SUBSIDIARY
The Registrant's investment in AgriStar de Venezuela, S.A. consists
primarily of inventory. Production was discontinued at the micropropagation
facility in 1995, and the investment is not expected to be material to the
Registrant's 1996 financial statements.
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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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues during the three months ended September 30, 1996 were $493,575 as
compared with the revenues of $408,453 during the comparable three months ending
September 30, 1995 for an increase of $85,032. The Registrant's gross margin
during the quarter ended September 30, 1996 was $66,975 as compared with a gross
margin of $206,529 during the comparable quarter of 1995.
Selling, general and administrative expenses for the quarter ended
September 30, 1996 was $318,421, as compared to $232,706 for the same period of
1995.
At September 30, 1996, the Registrant continued 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 September 30, 1996, the Registrant had total assets of $1,301,105
including $835,900 of current assets, and total current liabilities of $874,912.
Accordingly, at Septembner 30, 1996, the Registrant was technically insolvent.
Due to its insolvency, and its inability to obtain additional financing on any
terms, the Registrant sold its remaining interest in Stewart Orchids to an
unrelated third party in the fourth quarter of 1996 and has effectively ceased
operations. While the Registrant continues to occupy its Conroe facility and is
actively seeking a purchaser for such facilities, the Registrant is, at the date
of this Report on Form 10-QSB, effectively a shell with no material business
operations.
PLAN OF OPERATIONS
The Company has not engaged in any material operations since divesting its
interest in Stewart Orchids. The Company's plan of operation for the next twelve
months is to seek the acquisition of assets, property or business that may
benefit the Company and its stockholders. Because the Company has no material
financial resources, management anticipates that to achieve any such
acquisition, the Company will be required to issue shares of its common stock as
the sole consideration for such acquisition.
During the next twelve months, the Company's only foreseeable cash
requirements will relate to maintaining the Company in good standing and paying
the expenses associated with reviewing and investigating potential business
ventures. At the date of this Report on Form 10-QSB, the Company has not begun
reviewing and investigating potential business ventures and since it has not
identified any such venture, it is impossible to predict the amount of any
future expenditures that may be required. In the event that additional funding
is required in order to maintain the Company in good standing and/or to review
or investigate any potential merger or acquisition candidate, the Company may
attempt to raise such funding through a private placement of its common stock.
At the present time, management has no plans to offer or sell any
securities of the Company. However, at such time as the Company may decide to
engage in such activities, management may use any legal means of conducting such
offer or sale, including registration with the appropriate federal and state
regulatory agencies and any registration exemptions that may be available to the
Company under applicable federal and state laws.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Cause No. 9607-13958-CV, AGRICOLA GAPA, F.S.A. de C.V. vs. AGRISTAR INC.
and BENROD ENTERPRISES, INC. dba EAGLE GROCERY AND MARKET, District Court of
Mavrick County, Texas. Law suit based on defective merchandise and negligent
storage of same.
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.
March 31, 1997
Conroe, Texas AGRISTAR INC.
/s/ Dominic Man-Kit Lam
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Dominic Man-Kit Lam
Chairman
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> (4,396)
<SECURITIES> 0
<RECEIVABLES> 48,487
<ALLOWANCES> 0
<INVENTORY> 763,953
<CURRENT-ASSETS> 835,900
<PP&E> 242,534
<DEPRECIATION> 344,639
<TOTAL-ASSETS> 1,301,105
<CURRENT-LIABILITIES> 874,912
<BONDS> 0
0
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<COMMON> 32,612,404
<OTHER-SE> 358,365
<TOTAL-LIABILITY-AND-EQUITY> 1,301,105
<SALES> 493,575
<TOTAL-REVENUES> 493,575
<CGS> 426,600
<TOTAL-COSTS> 426,600
<OTHER-EXPENSES> 318,421
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (22,743)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (331,715)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (331,715)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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