<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended September 30, 1999
---------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
------------------- -----------------------
Commission file number: 0-18921
-----------------------------------------------------
VERDANT BRANDS, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Minnesota 41-0848688
- --------------------------------------------------------------------------------
(State of incorporation or organization) (I.R.S. Employer Identification No.)
9555 James Avenue South, Suite 200, Bloomington, Minnesota 55431-2543
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(612) 703-3300
- --------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
RINGER CORPORATION
- --------------------------------------------------------------------------------
(Former name)
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 the past 90 days.
[X] Yes [ ] No
The number of shares outstanding of each of the registrant's classes of
capital stock, as of October 31, 1999, was:
Common Stock, $.01 par value 5,112,850 shares
Transitional Small Business Issuer format: [ ] Yes [X] No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
VERDANT BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 77,924 $ 1,783,800
Accounts receivable 14,594,132 10,838,483
Inventories 16,348,392 18,522,875
Prepaid assets 1,518,185 1,813,184
Total current assets 32,538,633 32,958,342
Property and equipment (net) 6,490,606 6,635,656
Intangible assets (net) 17,629,906 19,123,838
Other assets 260,697 210,456
------------ ------------
Total assets $ 56,919,842 $ 58,928,292
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Bank line of credit $ 5,093,748 $ 1,098,247
Accounts payable 7,423,648 13,202,800
Accrued expenses 2,674,484 4,125,463
Current portion of long-term debt 527,734 652,511
------------ ------------
Total current liabilities 15,719,614 19,079,021
Long-Term Debt 18,215,089 16,958,227
Shareholders' Equity:
Common Stock, par value $.01 per share,
authorized 10,000,000 shares, issued and
outstanding 5,112,850 and 5,182,850
shares, respectively 51,129 51,829
Additional paid-in capital 49,489,653 49,515,046
Receivable from sale of common stock (105,000) (249,375)
Accumulated deficit (26,085,166) (26,129,734)
Cumulative translation adjustment (365,477) (296,722)
------------ ------------
Total shareholders' equity 22,985,139 22,891,044
------------ ------------
Total liabilities and shareholders' equity $ 56,919,842 $ 58,928,292
============ ============
</TABLE>
See notes to unaudited consolidated financial statements.
2
<PAGE>
VERDANT BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
NET SALES $ 13,837,284 $ 7,564,474 $ 63,427,895 $39,309,762
COST OF SALES 10,468,546 5,696,822 43,838,818 25,746,190
------------ ------------- ------------ -----------
Gross Profit 3,368,738 1,867,652 19,589,077 13,563,572
OPERATING EXPENSES:
Distribution 1,139,986 973,537 4,730,960 4,023,144
Sales & Marketing 2,102,456 1,632,675 6,904,586 5,159,657
General & Administration 1,089,883 675,954 3,906,218 2,207,039
Product Registration & Development 516,675 427,163 1,701,215 1,518,595
Amortization of Intangibles 323,879 220,574 690,583 617,068
------------ ------------- ------------ -----------
5,172,879 3,929,903 17,933,562 13,525,503
------------ ------------- ------------ -----------
INCOME (LOSS) BEFORE
OTHER EXPENSE (1,804,141) (2,062,251) 1,655,515 38,069
OTHER EXPENSE, NET (653,987) (257,569) (1,610,947) (843,792)
------------ ------------- ------------ -----------
INCOME (LOSS) BEFORE
INCOME TAXES (2,458,128) (2,319,820) 44,568 (805,723)
INCOME TAXES -- -- -- --
------------ ------------- ------------ -----------
NET INCOME (LOSS) $ (2,458,128) $ (2,319,820) $ 44,568 $ (805,723)
============ ============= ============ ===========
Net income (loss) per common
share - basic and diluted $ (.48) $ (.69) $ .01 $ (.24)
============ ============= ============ ===========
Shares used in calculating basic
net income (loss) per share 5,134,004 3,340,755 5,166,568 3,338,739
============ ============= ============ ===========
Shares used in calculating diluted
net income (loss) per share 5,134,004 3,340,755 5,168,069 3,338,739
============ ============= ============ ===========
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
NET INCOME (LOSS) $ (2,458,128) $ (2,319,820) $ 44,568 $ (805,723)
Other comprehensive income
(no tax effect):
Foreign currency translation
adjustments (5,608) (46,940) (68,755) (94,770)
------------ ------------- ------------ -----------
COMPREHENSIVE
INCOME (LOSS) $ (2,463,736) $ (2,366,760) $ (24,187) $ (900,493)
============ ============= ============ ===========
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
VERDANT BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 44,568 $ (805,723)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 1,388,551 1,138,113
Amortization of deferred debt issuance costs 22,711 --
Loss (gain) on disposal of assets (7,656) 10,291
Income from investment in joint venture -- (14,920)
(Increase) decrease in assets:
Trade accounts and notes receivable (3,854,795) (2,755,311)
Inventories 2,138,036 (1,905,921)
Prepaid expenses 204,324 315,918
Increase (decrease) in liabilities:
Accounts payable (6,356,211) 12,370
Accrued expenses (509,380) 362,291
----------- -----------
Net cash used in operating activities (6,929,852) (3,642,865)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (458,326) (158,492)
Proceeds from sale of equipment 101,200 3,767
Purchase of intangible assets (29,400) (81,963)
----------- -----------
Net cash used in investing activities (386,526) (236,688)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from bank line of credit 3,995,501 5,077,396
Proceeds on receivable from sale of common stock 144,375 35,700
Borrowings from long term debt 2,106,246 --
Principal payments on long-term debt (628,971) (1,505,304)
----------- -----------
Net cash received from financing activities 5,617,151 3,607,792
Effect of exchange rate changes on cash (6,649) (20,061)
----------- -----------
Decrease in cash and cash equivalents (1,705,876) (291,822)
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 1,783,800 423,272
----------- -----------
END OF PERIOD $ 77,924 $ 131,450
=========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE>
VERDANT BRANDS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1999
Note 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Verdant
Brands, Inc. (formerly Ringer Corporation) (the "Company") have been
prepared in accordance with generally accepted accounting principles for
interim financial information. They should be read in conjunction with
the annual financial statements included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1998. In the opinion of
management, the interim consolidated financial statements include all
adjustments (consisting of normal recurring accruals) necessary for a
fair presentation of the results for the interim periods presented.
Operating results for the nine months ended September 30, 1999 are not
necessarily indicative of the operating results to be expected for the
fiscal year ending December 31, 1999. Certain reclassifications were
made to prior year financial statements to be consistent with those
classifications used in the current year. These reclassifications had no
effect on shareholders' equity or net income or loss as previously
reported.
On August 23, 1999, the Company completed a one-for-five reverse split
of its common stock. All presentations of outstanding common stock and
earnings per share have been adjusted to reflect the reverse split.
The following table sets forth the calculation of basic and diluted
earnings per share in accordance with Statement on Financial Standard
No. 128, "Earnings Per Share".
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- -------------------------
1999* 1998* 1999 1998*
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Earnings Per Share - Basic
--------------------------
Net income (loss) $(2,458,128) $(2,319,820) $ 44,568 $ (805,723)
----------- ----------- ---------- ----------
Weighted average shares 5,134,004 3,340,755 5,166,568 3,338,739
----------- ----------- ---------- ----------
Net income (loss) per share $ (.48) $ (.69) $ .01 $ (.24)
=========== =========== ========== ==========
Earnings Per Share - Assuming Dilution
--------------------------------------
Net income (loss) $(2,458,128) $(2,319,820) $ 44,568 $ (805,723)
----------- ----------- ---------- ----------
Weighted average shares 5,134,004 3,340,755 5,166,568 3,338,739
Dilutive impact of options and warrants -- -- 1,501 --
----------- ----------- ---------- ----------
Weighted average shares and potential
dilutive shares outstanding 5,134,004 (2,319,820) 5,168,069 3,338,739
----------- ----------- ---------- ----------
Net income (loss) per share $ (.48) $ (.69) $ .01 $ (.24)
=========== =========== ========== ==========
</TABLE>
* The effect of stock options and warrants have been excluded because their
effect is anti-dilutive.
Note 2. ACQUISITION
Merger with Consep, Inc.
------------------------
On December 7, 1998, the Company completed a merger with Consep, Inc.
("Consep"), an Oregon based developer, manufacturer and marketer of
environmentally sensitive pest control products for the commercial
agricultural and consumer home, lawn and garden markets. Consep also
owns and operates commercial products sales and service dealerships
located in California and Massachusetts. Consep was previously publicly
owned with sales of approximately $38 million per year. The Company
acquired all of the outstanding common stock of Consep in exchange for
9,208,989 shares of the Company's registered common stock valued at
$11,511,237. In addition, the Company recorded approximately $380,000 in
direct acquisition expenses.
5
<PAGE>
The Consep acquisition was accounted for using the purchase method of
accounting. Accordingly, the purchase price was allocated to the assets
acquired and liabilities assumed based on their estimated fair market
values at the acquisition date. A final allocation of the purchase price
to net assets acquired is pending the final determination of the fair
market values of inventory, property and equipment. The excess of
purchase price over the estimated fair market value of net assets
acquired ("goodwill") was approximately $3,155,000 and is being
amortized on a straight-line basis over thirty years. Since the
acquisition, the Company has operated the acquired business as a wholly
owned subsidiary. Consep's operations are included in the Company's
consolidated statements of operations from the effective date of the
acquisition of December 1, 1998.
The following table sets forth unaudited combined net sales, net income
and income per share as if the business combination occurred on January
1, 1998. This information is provided for illustrative purposes only. It
is not necessarily indicative of actual operating results that would
have occurred had the acquisition been in effect for the period
presented and is not necessarily indicative of the results which may be
obtained in the future. Amounts are in thousands, except for loss per
share.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1998 September 30, 1998
------------------ ------------------
<S> <C> <C>
Net sales $ 18,201 $ 72,725
Net loss before tax effect (2,851) (1,276)
Net loss (2,851) (1,276)
Loss per share-basic and diluted $ (0.55) $ (0.25)
</TABLE>
Return of Escrow Shares
-----------------------
On August 4, 1999, the Company received 450,000 shares (90,000 shares
after giving effect to the one-for-five reverse stock split) of the
Company's common stock in settlement of the Company's claim against an
escrow account established in connection with the December 1997
acquisition of Southern Resources, Inc. ("SRI"). As a result of the
return of these shares, the Company recorded a reduction in its equity
and goodwill accounts by $421,875, which was the fair market value
attributed to these shares in the original purchase accounting entries
of the Company.
Note 3. Sales of the Company's products are greater during the period of January
1 through June 30 of each year due to seasonal factors.
Note 4. Inventory consists of the following:
September 30, December 31,
1999 1998
------------- ------------
Raw Materials $ 3,345,762 $ 6,547,020
Finished Goods 13,002,630 11,975,855
----------- -----------
$16,348,392 $18,522,875
=========== ===========
Note 5. LONG-TERM DEBT
September 30, December 31,
1999 1998
------------- ------------
Line of credit, long-term portion $12,000,000 $12,000,000
Notes payable 5,070,191 3,638,660
Mortgage loans 1,431,347 1,685,263
Capital lease obligations 228,251 162,934
Other 13,035 123,881
Less current portion (527,734) (652,511)
----------- -----------
$18,215,089 $16,958,227
=========== ===========
Note 6. LINE OF CREDIT
On July 14, 1999, the Company entered into a three-year Amended and
Restated Credit Agreement with GE Capital ("GE") which replaced the
Company's previous $25,000,000 line of credit agreement with GE. The new
credit agreement provides a $35,000,000 line of credit with available
borrowings under the line of credit limited to an aggregate borrowing
base calculated using up to 85% of qualified accounts receivable and up
to 65% of qualified inventory, plus $1 million in the form of
uncollateralized borrowing availability. The annual interest rate on
borrowings on the line of credit is prime plus 0.35 percentage points
through May 2, 2000 and prime plus 0.55 percentage points thereafter on
borrowings against the borrowing base. The new credit agreement also
includes a $2,000,000 term note with annual interest at prime plus 0.8
percentage points which calls for monthly interest
6
<PAGE>
payments with the principal due on July 14, 2002, on the expiration of
the Credit Agreement. Outstanding borrowings on the line of credit as of
September 30, 1999 totaled $17,093,748 of which $12,000,000 has been
classified as long-term debt. On that same date, the Company's excess
borrowing availability under the line of credit was approximately $1.2
million. In connection with the Amended and Restated Credit Agreement,
the Company issued to GE a stock purchase warrant granting GE the right
to purchase up to 1,673,967 shares (334,793 shares after giving effect
to the one-for-five reverse stock split) of the Company's common stock
for $1.19 per share ($5.95 per share after giving effect to the one-for-
five reverse stock split). The warrant's fair market value of $327,032
was recorded as additional paid in capital and deferred debt issuance
costs, which will be amortized to interest expense over the life of the
credit agreement.
Note 7. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash (paid) received for interest during the period for:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- ---------------------------
1999 1998 1999 1998
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Interest paid $(1,019,650) $(287,822) $(1,651,650) $(842,290)
Interest received 18,725 1,576 91,211 7,671
</TABLE>
Financing transactions not affecting cash during the periods are
described below:
o In the third quarter of 1999, the Company received 450,000 shares
(90,000 shares after giving effect to the one-for-five reverse
stock split) of its common stock which was return from escrow in
settlement of a claim made by the Company against the former
shareholders of SRI. Accordingly, the Company reduced equity and
goodwill by $421,875, which is the fair market value of the stock
included in the original purchase accounting for SRI.
o In the third quarter of 1999, the Company issued 125,000 shares
(25,000 shares after giving effect to the one-for-five reverse
stock split) valued at $100,000 as payment on a trade account.
o In connection with an Amended and Restated Credit Agreement, the
Company issued a stock purchase warrant valued at $327,032. The
warrants value was recorded by the Company as additional paid in
capital and deferred debt issuance costs. (See Note 6, "Line of
Credit".)
Note 8. FOREIGN OPERATIONS
International sales activity, consisting of sales outside the United
States, primarily in Canada, accounted for approximately 5.6% and 2.9%
of total sales for the three months ended September 30, 1999 and 1998
and approximately 6.9% and 4.1% of total sales for the nine months ended
September 30, 1999 and 1998 , respectively. A reconciliation for these
periods of domestic and foreign activity for net sales, net income and
identifiable assets is as follows:
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999: Domestic Foreign Total
-------------------------------------- -------- ------- -----
<S> <C> <C> <C>
Net Sales $ 13,057,143 $ 780,141 $ 13,837,284
Net income (loss) (2,181,364) (276,764) (2,458,128)
Identifiable Assets 53,987,224 2,932,618 56,919,842
Three Months Ended September 30, 1998: Domestic Foreign Total
-------------------------------------- -------- ------- -----
Net Sales $ 7,345,964 $ 218,510 $ 7,564,474
Net income (loss) (2,219,348) (100,472) (2,319,820)
Identifiable Assets 34,036,663 765,402 34,802,065
Nine Months Ended September 30, 1999: Domestic Foreign Total
------------------------------------- -------- ------- -----
Net Sales $ 58,997,863 $ 4,430,032 $ 63,427,895
Net income (loss) 195,437 (150,869) 44,568
Identifiable Assets 53,987,224 2,932,618 56,919,842
Nine Months Ended September 30, 1998: Domestic Foreign Total
------------------------------------- -------- ------- -----
Net Sales $ 37,717,284 $ 1,592,478 $ 39,309,762
Net income (loss) (841,665) 35,942 (805,723)
Identifiable Assets 34,036,663 765,402 34,802,065
</TABLE>
Note 9. BUSINESS SEGMENTS
The Company conducts its business in three major market segments -
consumer products, commercial products and commercial dealers.
Consumer Products Segment - The consumer product segment markets
pesticides and fertilizers through lawn and garden retailers and through
lawn and garden distribution channels to home owners and other
consumers. Consumer products consist of environmentally sensitive pest
control products and fertilizers sold under the Safer(R), SureFire(R),
7
<PAGE>
ChemFree(R), Blocker(R), Insectigone(R) and Ringer(R) brands and
traditional pest control products sold under the Dexol(R), Black Leaf(R)
and various private label brands.
Commercial Products Segment - The commercial products segment markets
pest control and fertilizer products to commercial growers in the
agriculture industry through direct sales to growers and through
agricultural product distributors and commercial applicators in the pest
control industry through commercial pesticide distributors. Commercial
products consist of environmentally sensitive pest control products sold
to the agriculture industry under the CheckMate(R) and BioLure(R) brands
and traditional pest control products sold to the commercial pest
control industry under the AllPro(R) brand.
Commercial Dealer Segment - The commercial dealer segment consists of
dealerships owned by a subsidiary of the Company that sells and
distributes a full-line of commercial products and services to growers
in major agricultural regions of California and in the Connecticut River
Valley of Massachusetts. Products distributed include the Company's
products as well as products produced by other manufacturers, including
traditional pesticides, fertilizers, seeds and farm supplies.
A reconciliation for the three and nine months ended September 30, 1999
and 1998 of segment activity for net sales, net income (loss) and
identifiable assets is as follows:
<TABLE>
<CAPTION>
Commercial
Three Months Ended September 30, 1999: Consumer Commercial Dealer Total
-------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales................................. $ 4,877,034 $ 1,773,039 $ 7,187,211 $13,837,284
Net Income (Loss)......................... (2,384,319) (414,149) 340,340 (2,458,128)
Depreciation and Amortization............. 315,000 44,097 44,307 403,404
Interest Expense.......................... (549,866) (41,297) (81,131) (672,294)
Interest Income........................... 8,550 21,447 -- 29,997
Capital Expenditures...................... 88,381 10,119 24,705 123,205
Identifiable Assets....................... $31,666,233 $13,542,826 $11,710,783 $56,919,842
Commercial
Three Months Ended September 30, 1998: Consumer Commercial Dealer Total
-------------------------------------- ----------- ----------- ----------- -----------
Net Sales................................. $ 5,054,882 $ 2,509,592 $ -- $ 7,564,474
Net Income (Loss)......................... (2,262,924) (56,896) -- (2,319,820)
Depreciation and Amortization............. 299,623 70,419 -- 370,042
Interest Expense.......................... (201,904) (91,319) -- (293,223)
Interest Income........................... 4,368 -- -- 4,368
Capital Expenditures...................... 62,223 -- -- 62,223
Identifiable Assets........................... $24,027,391 $10,774,674 $ -- $34,802,065
Commercial
Nine Months Ended September 30, 1999: Consumer Commercial Dealer Total
------------------------------------- ----------- ----------- ----------- -----------
Net Sales................................. $29,535,124 $11,189,889 $22,702,882 $63,427,895
Net Income (Loss)......................... (1,106,896) (73,534) 1,224,998 44,568
Depreciation and Amortization............. 898,456 244,467 245,628 1,388,551
Interest Expense.......................... (1,499,113) (215,468) (81,131) (1,795,712)
Interest Income........................... 13,438 41,255 67,266 121,959
Capital Expenditures...................... 238,616 37,642 182,068 458,326
Identifiable Assets....................... $31,666,233 $13,542,826 $11,710,783 $56,919,842
Commercial
Nine Months Ended September 30, 1998: Consumer Commercial Dealer Total
------------------------------------- ----------- ----------- ----------- -----------
Net Sales................................. $32,196,264 $ 7,113,498 $ -- $39,309,762
Net Income (Loss)......................... (44,173) (761,550) -- (805,723)
Depreciation and Amortization............. 977,780 160,333 -- 1,138,113
Interest Expense.......................... (779,671) (172,262) -- (951,933)
Interest Income........................... 12,566 -- -- 12,566
Capital Expenditures...................... 158,492 -- -- 158,492
Identifiable Assets........................... $24,027,391 $10,774,674 $ -- $34,802,065
</TABLE>
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Name Change to Verdant Brands, Inc.
- -----------------------------------
At the Company's 1998 Annual Shareholders Meeting, the shareholders
approved a proposal to change the Company's name from Ringer Corporation to
Verdant Brands, Inc. The Company announced its intent to change its name in its
first quarter earnings press release on April 30, 1998. The name change occurred
on July 20, 1998. In connection with the name change, the Company adopted the
trading symbol of "VERD" for its shares traded on the NASDAQ National Market
System.
Merger with Consep, Inc.
- ------------------------
On December 7, 1998, the Company completed a merger with Consep, Inc.
("Consep"), an Oregon based developer, manufacturer and marketer of
environmentally sensitive pest control products for the commercial agricultural
and consumer home, lawn and garden markets. Consep also owns and operates
commercial products sales and service dealerships located in California and
Massachusetts. Consep was previously publicly owned with sales of approximately
$38 million per year. The Company acquired all of the outstanding common stock
of Consep in exchange for 9,208,989 shares of the Company's registered common
stock valued at $11,511,237. In addition, the Company recorded approximately
$380,000 in direct acquisition expenses.
The Consep acquisition was accounted for using the purchase method of
accounting. Accordingly, the purchase price was allocated to the assets acquired
and liabilities assumed based on their estimated fair market values at the
acquisition date. A final allocation of the purchase price to net assets
acquired is pending the final determination of the fair market values of
inventory, property and equipment. The excess of purchase price over the
estimated fair market value of net assets acquired ("goodwill") was
approximately $3,155,000 and is being amortized on a straight-line basis over
thirty years. Since the acquisition, the Company has operated the acquired
business as a wholly owned subsidiary. Consep's operations are included in the
Company's consolidated statements of operations from the effective date of the
acquisition for accounting purposes of December 1, 1998.
Reverse Stock Split
- -------------------
On August 23, 1999, the Company completed a one-for-five reverse split on all of
its common stock. Prior to the reverse split, the Company had 25,564,250 shares
of common stock outstanding trading on the Nasdaq Stock Market at $0.875 per
share at the market close on August 22, 1999. After the reverse split, the
Company had 5,112,850 shares of common stock outstanding trading at $4.375 per
share at the market close on August 23, 1999.
Return of Escrow Shares
- -----------------------
On August 4, 1999, the Company received 450,000 shares (90,000 shares
after giving effect to the one-for-five reverse stock split) of the Company's
common stock in settlement of the Company's claim against an escrow account
established in connection with the December 1997 acquisition of Southern
Resources, Inc. ("SRI"). As a result of the return of these shares, the Company
recorded a reduction in its equity and goodwill accounts by $421,875, which was
the fair market value attributed to these shares in the original accounting
entries of the Company.
Seasonal factors effecting sales and results of operations
- ----------------------------------------------------------
Sales during the year are very seasonal. First quarter sales normally
consist of sales on initial orders from direct customers and reorders from
distributors who made their initial purchases for the season in the final
quarter of the preceding year. Second and third quarter sales consist largely of
reorders from direct-ship customers and sales of in-season promotion products.
Fourth quarter sales consist primarily of shipments on early season orders from
distributors who are stocking warehouses for the upcoming spring selling season.
Most of the Company's sales occur during the months of December through June of
each year. The level of sales for the fiscal year depends largely upon the level
of retail sales of the Company's products to home owner consumers and the level
of unsold retail inventory of the Company's products remaining in retail and
wholesale distribution channels carried over from the previous year. Retail
sales to consumers are affected by numerous outside circumstances such as
weather, competitors' products and sales and marketing programs, as well as new
product introductions. Each of these factors can fluctuate substantially from
year to year and from quarter to quarter. Total year sales cannot be accurately
projected with any degree of certainty based on results for the three months and
nine months ended September 30.
9
<PAGE>
Results of Operations
- ---------------------
The following table sets forth, for the periods indicated, information
derived from the consolidated statements of operations of the Company as a
percentage of net sales:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 75.7 75.3 69.1 65.5
----- ----- ----- -----
Gross profit 24.3 24.7 30.9 34.5
Operating Expenses:
Distribution 8.2 12.9 7.4 10.2
Sales & Marketing 15.2 21.6 10.9 13.1
General & Administrative 7.9 8.9 6.2 5.6
Product Registration & Development 3.7 5.6 2.7 3.9
Amortization of Intangibles 2.3 2.9 1.1 1.6
----- ----- ----- -----
37.3 52.0 28.3 34.4
----- ----- ----- -----
Income (loss) before other expense (13.0) (27.3) 2.6 .1
Other expense, net (4.7) (3.4) (2.5) (2.1)
----- ----- ----- -----
Net income (loss) (17.7)% (30.7)% .1 % (2.0)%
===== ===== ===== =====
</TABLE>
Comparison of the three months ended September 30, 1999 to the three months
ended September 30, 1998
Net Sales. Net sales increased $6,272,810 or 82.9% to $13,837,284 in the
three months ended September 30, 1999 compared to $7,564,474 for the three
months ended September 30, 1998. The increase was due to the addition of
$7,991,169 in 1999 net sales generated from business and product lines added as
a result of the acquisition of Consep in December 1998, offset in part by
reduced contract packaging sales associated with the Company's decision to shut
down its Fort Valley, Georgia manufacturing facility and by decreased sales in
certain consumer and non-pheromone related commercial products.
Gross Margins. Gross margins as a percent of sales decreased to 24.3%
for the three months ended September 30, 1999 compared to 24.7% for the three
months ended September 30, 1998. The decrease was due primarily to the addition
of Consep sales which carry a lower average gross margin than historical sales.
Consep sales shifted the product mix to a higher proportion of commercial dealer
and commercial products which have lower gross margins than some of the
Company's other product lines.
Operating Expenses. Distribution expenses increased in absolute dollars
by $166,449 or 17.1% to $1,139,986 for the three months ended September 30, 1999
from $973,537 for the three months ended September 30, 1998, but decreased as a
percentage of sales to 8.2% for the three months ended September 30, 1999 from
12.9% for the three months ended September 30, 1998. The increase in
distribution expenses in absolute dollars in 1999 compared to 1998 was due to
increased sales. The decrease as a percentage of sales was due primarily to the
costs savings associated with consolidating most of the consumer and commercial
distribution activities from multiple facilities into a single warehouse located
in St. Joseph, Missouri.
Sales and marketing expenses in absolute dollars increased $469,781 or
28.8 % to $2,102,456 for the three months ended September 30, 1999 from
$1,632,675 for the three months ended September 30, 1998, but decreased as a
percentage of sales to 15.2% for the three months ended September 30, 1999
compared to 21.6% for the same period in 1998. The increase in sales and
marketing expenses was largely due to the addition of the Consep sales and
10
<PAGE>
marketing organizations for the three months ended September 30, 1999 and to
variable selling expenses associated with increased sales. The decrease in sales
and marketing expenses as a percentage of sales for the three months ended
September 30, 1999 compared to the same period in 1998 was due primarily to the
1999 addition of Consep commercial and commercial dealer sales which carry
relatively lower sales and marketing costs as a percentage of sales compared to
the Company's consumer business which made up most of the Company's sales prior
to the Consep merger.
General and administrative costs increased $413,929 or 61.2% to
$1,089,883 for the three months ended September 30, 1999 from $675,954 for the
three months ended September 30, 1998. The increase was primarily due to the
addition of Consep general and administrative expenses and to the addition of
administrative and management personnel.
Product registration and development expenses increased $89,512 or 21.0%
to $516,675 for the three months ended September 30, 1999 compared to $427,163
for the three months ended September 30, 1998. The increase was due primarily to
registration and development costs associated with the Consep acquisition.
Amortization of intangible expenses increased $103,305 or 46.8% to
$323,879 for the three months ended September 30, 1999 from $220,574 for the
three months ended September 30, 1998.The increase was due primarily to the
amortization of intangible assets acquired and goodwill recorded in connection
with the Consep acquisition.
Other Expense, Net. Net other expense increased by $396,418 or 153.9% to
$653,987 for the three months ended September 30, 1999 compared to net other
expense of $257,569 for the three months ended September 30, 1998. The increase
in net other expense was mainly due to additional interest expense on increased
borrowings on the Company's lines of credit and increased interest expense
incurred on long and short term debt assumed in the Consep acquisition.
Comparison of the nine months ended September 30, 1999 to the nine months ended
September 30, 1998
Net Sales. Net sales increased $24,118,133 or 61.4% to $63,427,895 in
the nine months ended September 30, 1999 compared to $39,309,762 for the nine
months ended September 30, 1998. The increase was due to the addition of
approximately $27.7 million in 1999 net sales generated from business and
product lines added as a result of the acquisition of Consep in December 1998,
offset in part by reduced contract packaging sales associated with the Company's
decision to shut down its Fort Valley, Georgia manufacturing facility and by
decreased sales in certain consumer and non-pheromone related commercial
products.
Gross Margins. Gross margins as a percent of sales decreased to 30.9%
for the nine months ended September 30, 1999 compared to 34.9% for the nine
months ended September 30, 1998. The decrease was due primarily to the addition
of Consep sales which carry a lower average gross margin than historical sales.
Consep sales shifted the product mix to a higher proportion of commercial dealer
and commercial products which have lower gross margins than some of the
Company's other product lines.
Operating Expenses. Distribution expenses increased in absolute dollars
by $707,816 or 17.6% to $4,730,960 for the nine months ended September 30, 1999
from $4,023,144 for the nine months ended September 30, 1998, but decreased as a
percentage of sales to 7.5% for the nine months ended September 30, 1999 from
10.2% for the nine months ended September 30, 1998. The increase in distribution
expenses in absolute dollars in 1999 compared to 1998 was due to incremental
distribution expenses incurred on higher sales in 1999 compared to 1998. The
decrease as a percentage of sales was due primarily to cost savings associated
with consolidating most of the consumer and commercial distribution activities
in the Company's St. Joseph, Missouri warehouse.
Sales and marketing expenses in absolute dollars increased $1,744,929 or
33.8% to $6,904,586 for the nine months ended September 30, 1999 from $5,159,657
for the nine months ended September 30, 1998, but decreased as
11
<PAGE>
a percentage of sales to 10.9% for the nine months ended September 30, 1999
compared to 13.1% for the same period in 1998. The increase in sales and
marketing expenses was largely due to the addition of the Consep sales and
marketing organizations for the nine months ended September 30, 1999 and to
variable selling expenses associated with increased sales. The decrease in sales
and marketing expenses as a percentage of sales for the nine months ended
September 30, 1999 compared to the same period in 1998 was due primarily to the
1999 addition of Consep commercial and commercial dealer sales which carry
relatively lower sales and marketing costs as a percentage of sales compared to
the Company's consumer business, which made up most of the Company's sales prior
to the Consep merger.
General and administrative costs increased $1,699,179 or 77.0% to
$3,906,218 for the nine months ended September 30, 1999 from $2,207,039 for the
nine months ended September 30, 1998. The increase was primarily due to the
addition of Consep general and administrative expenses and to the addition of
administrative personnel and management.
Product development and registration expenses increased $182,620 or
12.0% to $1,701,215 for the nine months ended September 30, 1999 compared to
$1,518,595 for the nine months ended September 30, 1998. The increase was due
primarily to increased product registration and development costs associated
with the Consep acquisition.
Amortization of intangibles increased $73,515 or 11.9% to $690,583 for
the nine months ended September 30, 1999 from $617,068 for the nine months ended
September 30, 1998. The increase was due primarily to the amortization of
intangible assets acquired and goodwill recorded in connection with the Consep
acquisition.
Other Expense, Net. Net other expense increased by $767,155 to
$1,610,947 for the nine months ended September 30, 1999 compared to net other
expense of $843,792 for the nine months ended September 30, 1998. The increase
in net other expense was mainly due to additional interest expense on increased
borrowings on the Company's lines of credit and interest expense incurred on
long-term and short-term debt assumed in the Consep acquisition.
Liquidity and Capital Resources
- -------------------------------
The Company's operations and cash needs are highly seasonal. During the
three months ended December 31 of each year, the Company usually solicits and
ships early orders and expands production to build inventory needed for its
major selling season. During the three months ended March 31, the Company's
shipments consist of initial sales to direct mass merchant customers and reorder
sales to certain distribution customers. Most of the Company's seasonal
shipments, and therefore most of the billings that result in revenue recognition
and in receivables, occur during the months of December through June of each
year. Accordingly, the Company typically consumes significant cash in operating
activities during the periods from October through June from year to year as it
finances increases in its inventory, primarily during the periods from October
through April, and increases in receivables, primarily during the period from
late December through the end of June. The Company has historically relied upon
bank lines of credit to fund seasonal cash needs.
Cash decreased by $1,705,876 during the nine months ended September 30,
1999. The decrease in cash reflects the following: Cash of $6,929,852 consumed
in operating activities, primarily to finance increased receivables and to pay
down accounts payable; cash of $386,526 consumed in investing activities
consisting of $458,326 used to purchase property and equipment and of $29,400
used to invest in patent and trademark applications, offset in part by $101,200
provided by the sale of assets; and cash provided from financing activities of
$5,617,151 consisting of $3,995,501 in net borrowings against the Company's bank
lines of credit, $2,106,246 borrowings on long-term debt consisting primarily of
a $2,000,000 term note with GE Capital, $144,375 received on a receivable for
the previous sale of common stock, and payments on long-term debt of $628,971.
12
<PAGE>
The Company relies on financing, primarily in the form of lines of
credit, to fund seasonal increases in receivables and inventory and to provide
general working capital. On July 14, 1999, the Company entered into a three-year
Amended and Restated Credit Agreement with GE Capital ("GE") which replaced the
Company's previous $25,000,000 line of credit agreement with GE. The new credit
agreement provides a $35,000,000 line of credit with available borrowings under
the line of credit limited to an aggregate borrowing base calculated using up to
85% of qualified accounts receivable and up to 65% of qualified inventory, plus
$1 million in the form of uncollateralized borrowing availability. The interest
rate on borrowings on the line of credit is prime plus 0.35 percentage points
through May 2, 2000 and prime plus 0.55 percentage points thereafter. The new
credit agreement also includes an additional $2,000,000 term note with interest
at prime plus 0.8% per annum which calls for monthly interest payments with the
principal due when the credit facilities expire on June 13, 2002. In connection
with the Amended and Restated Credit Agreement, the Company issued to GE a stock
purchase warrant granting GE the right to purchase up to 1,673,967 shares
(334,793 shares after giving effect to the one-for-five reverse stock split) of
the Company's common stock for $1.19 per share ($5.95 per share after giving
effect to the one-for-five reverse stock split). The warrant's fair market value
of $327,032 was recorded as additional paid in capital and deferred debt
issuance costs, which will be amortized to interest expense over the life of the
credit agreement. The credit facility funds working capital needs of the parent
Company and its wholly owned subsidiaries, Safer, Inc., Southern Resources, Inc.
(SRI) and Consep. The credit facility is intended to finance the Company's
seasonal working capital needs, to provide general working capital and to
finance the working capital needs for future acquisitions. Also, under terms of
the credit agreement, the Company is required to maintain certain financial
ratios and other financial conditions.
On September 30, 1999, outstanding borrowing under the GE Capital line
of credit totaled $17, 093,748 of which $12,000,000 is classified as long-term
debt. Financial covenants were modified in the new credit facility signed in
July 1999. On that same date, the Company's excess borrowing availability under
the line of credit was approximately $1.2 million. At September 30, 1999, the
Company was in compliance with all covenants under the line of credit.
The Company has no material purchase commitments. Although the Company
continues to evaluate companies and product lines for possible acquisition, no
such agreements are currently in place.
The Company believes that inflation has not had a significant impact on
the results of its operations.
Year 2000 Readiness
- -------------------
General
The Company may be impacted by the inability of its computer software
applications and other business systems (e.g., embedded microchips) to properly
identify the year 2000 due to a commonly used programming convention of only
using two digits to identify a year. Unless modified or replaced, these systems
could fail or create erroneous results when referencing the year 2000.
Management is assessing the extent and impact of this issue and is implementing
a readiness program to mitigate the possibility of business interruption or
other risks. The objective of the program is to have all significant business
systems Year 2000 compliant by the fourth quarter of 1999.
The Company's senior management is overseeing the readiness program. The
Company's information technology personnel regularly update senior management of
the progress being made to achieve Year 2000 readiness. Senior management, in
turn, reports to the Board of Directors regarding the Company's Year 2000
readiness.
Information Technology Systems, State of Readiness and Costs
Currently, the Company's midrange computer operations at the Company's
Bloomington, Minnesota headquarters support the activities of the Company's
administrative headquarters and the Company's operations in Fort Valley,
Georgia; Torrance, California and St. Joseph, Missouri. During 1997, the Company
replaced its midrange computer hardware and upgraded its computer software to
ensure the system was Year 2000 ready. The total project cost was approximately
$350,000.
13
<PAGE>
The Company's wholly owned subsidiary, Consep, Inc., headquartered in Bend,
Oregon, has its own personal computer based system which is used to support a
portion of the Company's commercial products manufacturing and reporting
systems. During the third quarter, the Company implemented a Year 2000 ready
midrange computer system at Consep's headquarters. Implementation of a Year 2000
ready wide area network at Concep will be completed in the fourth quarter of
1999. The estimated cost of implementing the information systems at Consep is
approximately $100,000.
Consep's commercial dealer subsidiaries operate on an information system that is
separate and different than that of either Consep or Verdant Brands. The
commercial dealers' software was upgraded during the third quarter to make them
Year 2000 ready. Upgrading and replacing computer hardware systems to make them
Year 2000 ready will be completed in the fourth quarter. The estimated cost of
the software and hardware upgrades to achieve Year 2000 readiness is expected to
cost approximately $100,000.
The Company's Canadian subsidiary, Safer, Ltd., operates its business on a
personal computer based software system. The Company has upgraded that system
and believes it is now Year 2000 ready.
A confirmation process with respect to third party suppliers is also in
progress. Vendor site visits and testing have and will be done, as deemed
necessary, to determine if alternate sources of supply are needed. An on-site
review of the Company's most critical manufacturing vendor indicated the
supplier's systems were Year 2000 ready.
The Company believes the Year 2000 costs will not have a material impact on its
results of operations, financial condition or cash flows.
Risks
The principal business risks to the Company relating to completion of Year 2000
efforts are:
o Reliance on key business partners to not have disruption in ability to
provide goods and services as a result of Year 2000 issues.
o The ability to retain key staff for the Year 2000 effort.
o The ability to continue to focus on Year 2000 issues by internal and
external resources.
Because the Company's Year 2000 readiness is dependent upon key business
partners also being Year 2000 ready, there can be no guarantee that the
Company's efforts will prevent a materially adverse impact on its results of
operations, financial condition and cash flows.
Contingency Plan
A formal contingency plan has is being developed. The Company will continue to
assess where alternative courses of action are needed as the Company's Year 2000
readiness plans are executed.
Ongoing Process
The Company's readiness program is an ongoing process and the estimates of costs
and completion dates for various components of the program described above are
subject to change.
14
<PAGE>
Forward Looking Information
- ---------------------------
The information contained in this Quarterly Report includes
forward-looking statements as defined in Section 21E of the Securities Exchange
Act of 1934, as amended. These forward-looking statements involve a number of
risks and uncertainties, including: changes in demand from major customers;
effects of competition and competitive responses to the Company; changes in
product mix, product costs, inventory levels and customer mix and its effect on
financial performance; changes in operating expenses; the Company's ability to
raise financing to satisfy its operating needs; the actual achievement of Year
2000 compliance by the Company and its vendors, subcontract manufacturers and
other third parties and the potential impact on the Company; and other factors
disclosed throughout this Quarterly Report and the Company's other filings with
the Securities and Exchange Commission. The actual results that the Company
achieves may differ materially from any forward-looking statements due to such
risks and uncertainties. The Company undertakes no obligation to revise any
forward-looking statement in order to reflect events or circumstances that may
arise after the date of this report. Readers are urged to carefully review and
consider the various disclosures made by the Company in this report and in the
Company's other reports filed with the Securities and Exchange Commission that
attempt to advise interested parties of the risks and uncertainties that may
affect the Company's financial condition and results of operations.
----------
15
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
The Company's wholly-owned subsidiary, SRI, is a party to a governmental
action and certain legal proceedings in Superior Court of Fulton County,
Georgia, brought by or on behalf of property owners in the area of SRI's Fort
Valley, Georgia, manufacturing site, relating to contamination discovered on or
near the site. Management believes that the contamination arose prior to the
purchase of the plant site by SRI from an unaffiliated predecessor owner. The
former owner has been cooperating with governmental authorities and has
initiated remedial activities on the site. Management believes that the
governmental and legal actions relating to the property will not result in
material loss to SRI.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to security holders for a vote during the
three months ended September 30, 1999.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Listing of Exhibits
Exhibit
Number Description
- --------------------------------------------------------------------------------
2.1 Agreement for Purchase and Sale of Assets by and between Ringer
Corporation and Dexol Industries, Inc. (incorporated by
reference to Exhibit 2.1 of the Company's Amended Current Report
on Form 8-K/A filed on June 16, 1997, SEC File No. 0-18921).
2.2 Amended and Restated Agreement and Plan of Merger by and between
Ringer Corporation and Southern Resources, Inc. (incorporated by
reference to Exhibit 2.1 of the Company's Amended Current Report
on Form 8-K/A filed on February 19, 1998, SEC File No. 0-18921).
2.3 Agreement and Plan of Merger, dated September 8, 1998, by and
among Verdant Brands, Inc., Consep Acquisition, Inc. and Consep,
Inc. (incorporated by reference to Appendix A to the Proxy
Statement - Prospectus included in the Company's Amended
Registration Statement on Form S-4/A , dated October 26, 1998).
3.1 Restated Articles of Incorporation of the Company, as amended to
date (incorporated by reference to Exhibit 3.2 of the Company's
Registration Statement on Form S-18, SEC File No. 33-36205-C).
3.2 Amendment to the Company's Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.1 of the Company's
Current Report on Form 8-K, dated July 15, 1998, SEC File No.
0-18921).
3.3 Amendment to the Company's Restated Articles of Incorporation,
dated December 7, 1998 (incorporated by reference to Exhibit 3.3
of the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998, SEC File No. 0-18921).
3.4 Bylaws of the Company, as amended to date (incorporated by
reference to Exhibit 3.4 of the Company's Registration Statement
on Form S-18, SEC File No. 33-36205-C).
4.1 Specimen certificate of Common Stock, $.01 par value
(incorporated by reference to Exhibit 4.1 of the Company's
Annual Report on Form 10-KSB for the year ended December 31,
1998, SEC File No. 0-18921).
*10.1 1986 Employee Incentive Stock Option Plan (incorporated by
reference to Exhibit 4.4 of the Company's Registration Statement
on Form S-8, SEC File No. 33-37806).
*10.2 Amendment No.1 dated January 1, 1988, Amendment No. 2 dated
September 9, 1992 and Amendment No. 3 dated January 4, 1995 to
the Company's 1986 Employee Incentive Stock Option Plan
(incorporated by reference to Exhibit 10.2 of the Company's
Quarterly Report on Form 10-QSB dated March 31, 1998, SEC File
No. 0-18921).
16
<PAGE>
*10.3 Stock Option Plan for Non-Employee Directors (incorporated by
reference to Exhibit 10.2 of the Company's Annual Report on Form
10-KSB for the fiscal year ended September 30, 1993, SEC File
No. 0-18921).
*10.4 Amendment No.1 to the Company's Stock Option Plan for
Non-Employee Directors dated December 8, 1997 (incorporated by
reference to Exhibit 10.4 of the Company's Quarterly Report on
Form 10-QSB dated March 31, 1998, SEC File No. 0-18921).
10.5 Lease Agreement between the Company and 94th Street Associates,
a Minnesota Partnership, dated August 15, 1996 (incorporated by
reference to Exhibit 10.3 of the Company's Annual Report on Form
10-KSB for the fiscal year ended September 30, 1996, SEC File
No. 0-18921.)
10.6 Amendment to Lease Agreement between the Company and 94th Street
Associates, a Minnesota Partnership, dated November 17, 1998
(incorporated by reference to Exhibit 10.6 of the Company's
Annual Report on Form 10-KSB for the year ended December 31,
1998, SEC File No. 0-18921).
*10.7 Employment Agreement between the Company and Stanley Goldberg
dated September 13, 1992 (incorporated by reference to Exhibit
10.6 of the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1992, SEC File No. 0-18921).
*10.8 Amendment of Employment Agreement between the Company and
Stanley Goldberg, dated December 5, 1997 (incorporated by
reference to Exhibit 10.6 of the Company's Amended Annual Report
on Form 10-KSB/A for the fiscal year ended September 30, 1997,
SEC File No. 0-18921).
*10.9 Employment Agreement between the Company and Mark G.
Eisenschenk, dated December 5, 1997 (incorporated by reference
to Exhibit 10.7 of the Company's Amended Annual Report on Form
10-KSB/A for the fiscal year ended September 30, 1997, SEC File
No. 0-18921).
*10.10 Stock purchase agreement, and related documents, between the
Company and Stanley Goldberg, dated April 29, 1997 (incorporated
by reference to Exhibit 10.8 of the Company's Amended Annual
Report on Form 10-KSB/A for the fiscal year ended September 30,
1997, SEC File No. 0-18921).
*10.11 Stock purchase agreement, and related documents, between the
Company and Mark G. Eisenschenk, dated April 29, 1997
(incorporated by reference to Exhibit 10.9 of the Company's
Amended Annual Report on Form 10-KSB/A for the fiscal year ended
September 30, 1997, SEC File No. 0-18921).
10.12 Amended and Restated Credit Agreement between the Company and
General Electric Capital Corporation dated July 14, 1999
(incorporated by reference to Exhibit 10.12 of the Company's
Quarterly Report on Form 10-QSB for the three months ended June
30, 1999, SEC File No. 0-18921).
10.13 Warrant to Purchase Common Stock in connection with the Amended
and Restated Credit Agreement between the Company and General
Electric Capital Corporation dated July 14, 1999
10.14 Cross-Licensing and Joint Licensing/Sale Agreement between the
Company and Mycogen Corporation, dated May 31, 1994
(incorporated by reference to Exhibit 10.1 of the Company's
Quarterly Report on Form 10-QSB for the fiscal quarter ended
June 30, 1994, SEC File No. 0-18921).
10.15 Patent License Agreement between the Company and Mycogen
Corporation and Monsanto Company, dated June 29, 1994
(incorporated by reference to Exhibit 10.2 of the Company's
Quarterly Report on Form 10-QSB for the fiscal quarter ended
June 30, 1994, SEC File No. 0-18921).
17
<PAGE>
*10.16 Ringer Corporation 1996 Employee Stock Option Plan (incorporated
by reference to Exhibit 10.15 of the Company's Annual Report on
Form 10-KSB for the fiscal year ended September 30, 1996.)
27.1 Financial Data Schedule
* Management contract or compensation plan or arrangement.
(b) Reports on Form 8-K
The Company filed no Current Reports on Form 8-K during the three months
ended September 30, 1999.
18
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
VERDANT BRANDS, INC.
Dated: November 9, 1999 By /s/ Stanley Goldberg
----------------------------------
Stanley Goldberg
President and Chief Executive Officer
Dated: November 9, 1999 By /s/ Mark G. Eisenschenk
----------------------------------
Mark G. Eisenschenk
Executive Vice President and Chief
Financial Officer (principal
financial officer)
19
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<PERIOD-START> JUL-01-1999 JAN-01-1999
<PERIOD-END> SEP-30-1999 SEP-30-1999
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