United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999.
Commission file number 0-19352
---------------------------
AGRIBIOTECH, INC.
(Exact name of registrant as specified in its charter)
Nevada 85-0325742
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
120 Corporate Park Drive, Henderson, Nevada 89014
(Address of principal executive offices)
(702) 566-2440
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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______.
As of November 10, 1999, the registrant had 49,878,281 shares of Common
Stock, par value $.001 per share, issued and outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AGRIBIOTECH, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,399,680 $ 4,604,739
Accounts receivable, less allowance for doubtful accounts
of $6,844,060 at September 30, 1999 and $6,489,753 at June 30, 1999 57,998,831 45,684,024
Inventories 77,291,252 66,917,763
Deferred income taxes 1,560,522 1,696,161
Other 2,626,001 1,748,157
------------ ------------
Total current assets 140,876,286 120,650,844
Property, plant and equipment, net 62,301,501 62,212,326
Intangible assets, net of accumulated amortization 151,017,594 152,949,334
Investment in associated entity 930,813 936,901
Other assets 5,233,694 5,379,306
------------ ------------
Total assets $360,359,888 $342,128,711
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
AGRIBIOTECH, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
------------- -------------
<S> <C> <C>
Current liabilities:
Short-term debt $ 70,785,777 $ 71,909,061
Current installments of long-term obligations 3,888,099 5,977,852
Accounts payable 30,912,412 20,124,901
Accrued liabilities 29,688,345 21,140,753
------------- -------------
Total current liabilities 135,274,633 119,152,567
Long-term obligations, excluding current installments 11,354,519 12,198,297
Deferred income taxes 1,560,522 1,696,161
------------- -------------
Total liabilities 148,189,674 133,047,025
------------- -------------
Stockholders' equity:
Preferred stock, $.001 par value; authorized 10,000,000
shares; none issued and outstanding -- --
Common stock, $.001 par value; authorized 100,000,000
shares; issued and outstanding 49,678,281 shares at
September 30, 1999 and 47,498,061 shares at June 30, 1999 49,678 47,498
Capital in excess of par value 277,520,594 270,832,335
Accumulated (deficit) (65,400,058) (61,798,147)
------------- -------------
Total stockholders' equity 212,170,214 209,081,686
------------- -------------
Contingencies and subsequent events (notes C, D, and G)
Total liabilities and stockholders' equity $ 360,359,888 $ 342,128,711
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
AGRIBIOTECH, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three-month period
ended September 30,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net sales $ 73,506,152 $ 89,601,608
Cost of sales 50,683,615 64,134,023
------------ ------------
Gross profit 22,822,537 25,467,585
Operating expenses 24,679,261 22,921,375
Restructuring and special charges 41,584 --
------------ ------------
Earnings (loss) from operations (1,898,308) 2,546,210
------------ ------------
Other income (expense):
Interest expense (1,796,016) (2,245,235)
Interest income 52,459 134,729
Earnings of associated entity 43,912 102,658
Other 6,192 136,499
------------ ------------
Total other income (expense) (1,693,453) (1,871,349)
------------ ------------
Earnings (loss) before income taxes (3,591,761) 674,861
Income tax expense 10,150 341,634
------------ ------------
Net earnings (loss) $ (3,601,911) $ 333,227
============ ============
Shares of common stock used in computing earnings (loss)
per common share:
Basic 48,382,464 38,086,413
Diluted 48,382,464 41,328,601
============ ============
Net earnings (loss) per common share:
Basic $ (0.07) $ 0.01
Diluted (0.07) 0.01
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
AGRIBIOTECH, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Common stock
----------------------------- Capital in
excess of Accumulated
Shares Amount par value (deficit) Total
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1999 47,498,061 $ 47,498 $ 270,832,335 $ (61,798,147) $ 209,081,686
Common stock issued for:
Cash 700,000 700 3,499,300 -- 3,500,000
Exercise of options 447,400 447 1,258,265 -- 1,258,712
Reduction of indebtedness 500,000 500 1,874,500 -- 1,875,000
Adjustment to prior issuances of common stock
due to stock price guarantees 532,820 533 (533) -- --
Options issued for services -- -- 112,683 -- 112,683
Expenses of stock issuances -- -- (55,956) -- (55,956)
Net loss -- -- -- (3,601,911) (3,601,911)
------------- ------------- ------------- ------------- -------------
Balance at September 30, 1999 49,678,281 $ 49,678 $ 277,520,594 $ (65,400,058) $ 212,170,214
============= ============= ============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
AGRIBIOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three-month period
ended September 30,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (3,601,911) $ 333,227
Adjustments to reconcile net earnings (loss) to net cash
flows from operating activities:
Amortization 1,955,640 1,320,415
Depreciation 1,363,705 1,038,815
Equity in earnings of associated entity (43,912) (102,658)
Deferred income taxes -- 247,180
Options issued for services 112,683 245,137
Changes in assets and liabilities excluding
effects of acquisitions:
Accounts receivable (12,314,807) (22,625,571)
Inventories (10,373,489) (6,837,372)
Other assets (732,232) 145,342
Accounts payable 10,787,511 21,289,584
Accrued liabilities 9,925,298 (1,790,555)
------------ ------------
Net cash flows from operating activities (2,921,514) (6,736,456)
------------ ------------
Cash flows from investing activities:
Additions to property, plant and equipment (1,452,879) (2,638,699)
Additions to intangible assets (23,900) (65,298)
Distributions from associated entity 50,000 63,958
Amounts received (paid) pursuant to stock price
guarantees and proceed sharing (1,377,707) 523,758
Acquisitions -- (47,780,999)
Change in net assets held for sale -- (1,271,225)
------------ ------------
Net cash flows from investing activities (2,804,486) (51,168,505)
------------ ------------
Cash flows from financing activities:
Net proceeds (repayments) of short-term debt (1,123,284) 38,673,478
Reductions of long-term debt (1,058,531) (376,923)
Sale of common stock 3,500,000 17,438,648
Exercise of options 1,258,712 741,634
Expenses of stock issuances (55,956) (150,162)
------------ ------------
Net cash flows from financing activities 2,520,941 56,326,675
------------ ------------
Net increase (decrease) in cash and cash equivalents (3,205,059) (1,578,286)
Cash and cash equivalents at beginning of period 4,604,739 2,700,846
------------ ------------
Cash and cash equivalents at end of period $ 1,399,680 $ 1,122,560
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
AGRIBIOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three-month period
ended September 30,
--------------------------
1999 1998
----------- ------------
<S> <C> <C>
Supplemental Cash Flow Information:
Interest paid $ 1,872,868 $ 2,143,898
=========== ============
Non cash investing and financing activities:
Accrued costs of acquisitions $ -- $ 549,825
Common stock issued to reduce indebtedness 1,875,000 --
Common stock issued in acquisitions -- 4,963,826
Debt incurred in connection with acquisitions -- 2,300,000
=========== ============
Summary of assets and liabilities acquired through acquisitions:
Cash $ -- $ 1,083,820
Accounts receivable -- 12,673,740
Inventories -- 16,340,066
Net assets held for sale -- 9,345,034
Property, plant and equipment -- 11,714,502
Intangible assets -- 40,401,233
Other assets -- 583,948
Accounts payable and accrued expenses -- (14,952,272)
Long-term and short-term debt -- (19,252,283)
Deferred income taxes -- (1,809,143)
----------- ------------
Net assets acquired $ -- $ 56,128,645
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
AGRIBIOTECH, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1999 and 1998
(Unaudited)
===========================================================================
(A) Presentation of Unaudited Financial Statements
AgriBioTech, Inc. ("ABT") is a vertically integrated developer, producer,
marketer, and distributor of forage and cool-season turfgrass seed. Since early
1995, ABT has implemented a business strategy designed to first, acquire leading
North American companies active in each step (research, production,
distribution, and sales) in the forage and cool-season turfgrass seed sector;
second, combine the acquired businesses into a single, customer-focused,
vertically integrated entity; and third, shift the focus of the acquired
businesses from public, non-proprietary seed varieties toward proprietary
varieties with a long-term objective of developing biotechnologically enhanced
varieties. ABT's vertically integrated forage and cool-season turfgrass seed
operations include traditional-genetic-breeding research and development
programs, seed conditioning plants that clean, condition and package seed grown
under contract for ABT, and national and international sales and distribution
networks.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The unaudited consolidated financial statements included herein have been
prepared in accordance with the rules of the Securities and Exchange Commission
and, therefore, do not include all information and footnotes necessary for a
fair presentation of financial position, results of operations and cash flows,
in conformity with generally accepted accounting principles. The information
furnished, in the opinion of management reflects all adjustments (consisting
primarily of normal recurring accruals) necessary to present fairly the
financial position, results of operations and cash flows for the three-month
periods ended September 30, 1999 and 1998. ABT's business is subject to wide
seasonal fluctuations and, therefore, the results of operations for periods less
than one year are not necessarily indicative of results which may be expected
for any other interim period or for the year as a whole.
(B) Acquisitions
Since July 1 1998, ABT completed the acquisitions discussed in Note 1b of Notes
to Consolidated Financial Statements in ABT's June 30, 1999 Form 10-K. Since no
acquisitions have been consummated since July 1 1999, pro forma results for the
three-month period ended September 30, 1999 are the same as actual. Pro forma
results of operations (unaudited) for the three-month period ended September 30,
1998 assuming the acquisitions had occurred at July 1, 1998, including the
effect of refinancing certain indebtedness incurred in acquisitions with
subsequent issuances of equity securities, are as follows:
<TABLE>
<CAPTION>
Three-month period
ended June 30,
1998
------------
<S> <C>
Net sales $ 96,732,488
Net earnings (loss) (1,015,540)
Net earnings (loss) per share - basic and diluted (0.03)
</TABLE>
In certain acquisitions, ABT has guaranteed the sellers will receive an amount
equal to the value assigned to the common stock in the acquisition if the stock
is sold pursuant to a schedule provided in a lock-up agreement. The status of
these guarantees is discussed in Note D. In addition, ABT will receive a portion
of proceeds from the sale of ABT's common stock by the former owners of certain
of such acquired businesses at prices in excess of certain amounts stated in the
agreements.
8
<PAGE>
(C) Short-Term Debt
ABT has a $90 million revolving line of credit with Bank of America Business
Credit and other lenders expiring in June 2001. Borrowings under the revolving
line of credit were $68.1 million at September 30, 1999, including items in
process of collection. Interest is payable monthly based on a variable rate that
averaged 8.45% at September 30, 1999. At November 10, 1999, approximately $68
million was outstanding and $16 million was available to be borrowed under the
revolving line of credit based on the borrowing base computation at that date.
In October 1999, ABT signed a commitment letter with GE Capital to arrange a
syndicate of lenders to provide ABT with a revolving line of credit in the
amount of up to $115 million and five-year term financing of up to $20 million.
The revolving line would replace the above revolving credit facility. The new
revolving debt will be subject to a borrowing base computation based on levels
of eligible accounts receivable and inventory. The term debt will be based on
the appraised values of certain items of ABT's property, plant and equipment.
The new debt will be secured by substantially all of ABT's assets. ABT is
required to obtain additional equity capital or unsecured debt of approximately
$5 million. It is anticipated that this financing will be completed in late
November or early December 1999, although there can be no assurance this
financing will be completed. In the event this financing is not completed, ABT
will continue to explore other alternatives to supplement or replace its
existing credit facility, including obtaining long-term debt secured by ABT's
property, plant and equipment. In addition, it is possible ABT may seek to raise
additional equity capital.
(D) Capital Stock
Since June 30, 1999, ABT has increased its outstanding stock options through
grants to new employees and consultants. These option grants, which are outside
of ABT's Employee Stock Option Plan, were for an aggregate of 0.6 million shares
of ABT's common stock at exercise prices ranging from $4 to $6.125.
In July 1999, ABT sold 700,000 shares of common stock for cash of $3.5 million.
In September 1999, ABT issued 500,000 shares of common stock to extinguish an
obligation of $1.9 million under an agreement that cancelled a long-term
obligation to an individual related to certain intellectual property rights.
These shares can be sold pursuant to a lock-up agreement and if the proceeds
from such sale do not equal the amount of the obligation being extinguished, ABT
will make up the shortfall in cash. If the proceeds exceed the obligation prior
to all shares being sold, the remaining shares, or excess net proceeds, will be
returned to ABT. Subsequent to September 30, 1999, all of these shares were sold
with the proceeds exceeding the amount of the obligation by approximately
$60,000, which was paid to ABT.
As discussed in Note 7 of Notes to Consolidated Financial Statements in ABT's
June 30, 1999 Form 10-K, in connection with acquisitions of businesses and
intellectual property rights where the owners received ABT common stock as part
of the purchase price, "lock-up agreements" were executed that limit the amount
of ABT common stock that the recipients can sell within specified time periods.
In addition, ABT guaranteed the proceeds to be received by certain of the
recipients from the sale of the common stock if sold in accordance with the
lock-up agreements. In the three-month period ended September 30, 1999, ABT paid
$1.4 million in cash and issued 532,820 additional shares of its common stock
pursuant to these agreements. If the shares remaining to be sold pursuant to
these agreements at September 30, 1999 are sold at an average of $3.50 per
share, the total proceeds received would be approximately $2.85 million less
than the amounts guaranteed to be received for such shares. Of this amount,
approximately $1.85 million would be paid in cash, including $1.7 million to be
paid in July 2000, with the remaining $1.0 million to be satisfied through the
issuance of additional shares of ABT's common stock or the payment of cash, at
ABT's option. Subsequent to September 30, 1999, ABT issued an additional 200,000
shares under one of these agreements, approximately $155,000 was paid in cash,
and sales of shares under one of the agreements was completed, which resulted in
excess proceeds of approximately $70,000 that was paid to ABT. As of November
10, 1999, the total guaranteed proceeds to be received upon sale of
approximately 465,000 shares of ABT common stock under these agreements was
approximately $3.8 million.
9
<PAGE>
On November 10, 1999, ABT's Board of Directors adopted a Shareholder Rights Plan
under which all shareholders of record as of November 24, 1999 will receive
rights to purchase shares of a new series of preferred stock. The Rights Plan is
designed to enable all ABT shareholders to realize the full value of their
investment and to provide for fair and equal treatment for shareholders in the
event that an unsolicited attempt is made to acquire ABT. The adoption of the
Rights Plan is intended as a means to guard against abusive takeover tactics and
is not in response to any particular proposal. The rights will be distributed as
a non-taxable dividend and will expire in ten years. The rights will be
exercisable only if a person or group acquires 15% or more of the ABT common
stock or announces a tender offer for 15% or more of the common stock. If a
person or group acquires 15% or more of ABT's common stock, all shareholders
except the purchaser will be entitled to acquire ABT common stock at a 50%
discount. The effect will be to discourage acquisitions of more than 15% of ABT
common stock without negotiations with the Board. The rights will trade with
ABT's common stock, unless and until they are separated upon the occurrence of
certain future events. ABT's Board of Directors may redeem the rights prior to
the expiration of a specified period following the acquisition of more than 15%
of ABT's common stock. The terms of the Rights Plan allow The State of Wisconsin
Investment Board, which owns approximately 18.9% of ABT's common stock, to
maintain its investment in ABT, as well as to acquire up to 20% of ABT's common
stock, without triggering the rights. Continuation of the Rights Plan will be
subject to shareholder approval no later than the third annual meeting of
stockholders following the Board's adoption and periodically thereafter. The
Board of Directors has reserved and designated 1,000,000 shares of ABT's
preferred stock for possible issuance in connection with the Rights Plan.
(E) Earnings per Share
The components of shares of common stock used in computing earnings (loss) per
common share are as follows:
<TABLE>
<CAPTION>
Three-month period
ended September 30,
-------------------------
1999 1998
---------- ----------
<S> <C> <C>
Basic (weighted average shares outstanding) 48,382,464 38,086,413
Options and warrants -- 3,242,188
---------- ----------
Diluted 48,382,464 41,328,601
========== ==========
</TABLE>
The above table does not reflect contingently issuable securities that are
anti-dilutive due to losses or where underlying prices exceeded the average
market price of ABT common stock, which consisted of approximately 8.6 million
options and 3.2 million warrants at September 30, 1999 and 0.9 million options
and 0.6 million warrants at September 30, 1998. See Note (D) for potential
contingently issuable shares under guarantee agreements entered into in
connection with acquisitions.
(F) Income Taxes
ABT provides income taxes for interim periods based on its estimate of its
effective income tax rate for the corresponding fiscal year. ABT anticipates its
effective income tax rate for the year ending June 30, 2000 will be
approximately zero.
10
<PAGE>
(G) Contingencies
Between January 14, 1999 and March 19, 1999, a number of securities class action
complaints were filed against ABT and certain of its former directors and
current and former officers in federal courts in New Mexico, New York and
Nevada. All cases have been transferred to the United States District Court for
the District of Nevada and consolidated into one action. On July 6, 1999, a
consolidated amended complaint was filed by plaintiffs purporting to represent a
class of purchasers of ABT common stock from September 24, 1997 through February
16, 1999. The complaint alleges, among other things, that ABT's financial
statements, including the accounting treatment for acquisitions completed in
1997 and 1998, and certain statements made by ABT concerning its efforts to find
a strategic equity investor in late 1998 and early 1999 and other topics were
false and misleading and caused an artificial rise in ABT's common stock price
in violation of federal securities law. On August 18, 1999, ABT filed a motion
to dismiss the complaint. The plaintiffs have filed a brief in response to ABT's
motion and ABT has responded to that brief. ABT believes it has meritorious
defenses to this action and intends to defend itself vigorously. However, due to
the risks of litigation, a prediction of the final outcome of these proceedings
cannot be made with certainty, and an unfavorable result in this action could
have a material adverse impact.
In the ordinary course of business, ABT is also a party to certain other claims,
actions and proceedings incidental to its business, none of which is expected to
have a material adverse effect on the business, financial position or results of
operations of ABT.
(H) Restructuring and Special Charges
In June 1999, ABT's Board of Directors approved the restructuring plan to
integrate the acquired businesses. The plan includes the closure of 33
facilities that were determined to be either redundant or inconsistent with
ABT's overall strategic plan and an associated reduction in workforce of
approximately 300 full-time employees related to facility closures, elimination
of duplicate positions, and streamlining ABT operations related to cost
reduction initiatives. In the year ended June 30, 1999, ABT recorded $9.8
million of restructuring and other integration related costs that are
non-recurring or infrequent in occurrence. In the three-month period ended
September 30, 1999, ABT recorded additional costs of $41,584. The restructuring
and special charges are summarized as follows:
<TABLE>
<CAPTION>
Non-cash Cash
----------------------- -----------------------
Realized To be Paid To be paid
through realized after through after
Total September September September September
charges 30, 1999 30, 1999 30, 1999 30, 1999
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Facility closure $3,361,596 $ 28,498 $3,333,098 $ -- $ --
Employee termination 3,181,960 -- -- 1,828,089 1,353,871
Disposal of equipment 897,660 82,322 815,338 -- --
Other 2,351,999 -- -- 2,112,918 239,081
---------- ---------- ---------- ---------- ----------
Total $9,793,215 $ 110,820 $4,148,436 $3,941,007 $1,592,952
========== ========== ========== ========== ==========
</TABLE>
The restructuring charges are based on estimates and, therefore, are subject to
change. ABT does not believe any revisions to these estimates will be material.
(I) Segment Information
ABT operates and manages its business by business units focused on the nature of
the customers served by each business unit. ABT has segregated its customers
into three basic categories: (1) those that are primarily retail focused or are
end-use consumers; (2) those that are primarily wholesale focused; and (3) those
characterized by ABT as Specialty Distribution. The retail operations serve
customers throughout North America using four geographical areas. These
customers include mass merchandisers, independent lawn and garden or
agricultural retailers, golf courses, sports fields, sod farms, landscapers,
dairies, cattle ranchers, commercial hay growers, farmers, land reclamation
projects, hydroseeders, highway departments, and airports. Three of the retail
areas have similar economic characteristics and have been aggregated as "retail"
in the table below. The fourth retail area is quantitatively insignificant for
disclosure purposes and is included in "other/corporate" below. The wholesale
operations serve domestic customers that generally are larger entities with
their own sales forces and distribution channels that re-sell ABT's products to
others and international users of forage and cool-season turfgrass seed.
Wholesale operations also include seeds sold through private labels of others.
Specialty Distribution serves customers formerly served by three acquired
businesses that provide a full range of seed, chemicals, fertilizers, lawn and
garden supplies, and ancillary products to a wide range of customers, including
golf course, landscapers and hardware-type retail stores in certain markets in
the United States.
11
<PAGE>
The following table presents revenues from external customers, intersegment
revenues, and segment earnings (loss) for the three-month period ended September
30, 1999 and segment assets as of September 30, 1999:
<TABLE>
<CAPTION>
Specialty Other/
Retail Wholesale Distribution Corporate Total
------------- ------------- ------------- ------------- -------------
(In millions)
<S> <C> <C> <C> <C> <C>
Revenues from
external customers $ 35.6 $ 22.0 $ 13.3 $ 2.6 $ 73.5
Intersegment revenues 0.1 4.4 0.1 0.4 5.0
Segment earnings (loss) 1.6 0.4 0.1 (5.7) (3.6)
Segment assets 58.4 96.3 19.7 186.0 360.4
</TABLE>
The above table includes corporate expenses aggregating $5.9 million that
primarily consist of general and administrative expenses of ABT's corporate
headquarters (including officer and administrative employee compensation),
research and development expenses, amortization of intangibles, and interest
expense. Budgeted corporate general and administrative expenses and research and
development expenses are allocated to the operating segments based on a
percentage of budgeted revenue. Variances to budget or absorption rates are not
reallocated. Segment earnings (loss) for the operating segments is determined
from revenues, cost of sales, operating expenses, and other income (expense)
directly attributable to each segment plus the allocation of budgeted corporate
costs. Corporate assets reflected in the above table amount to $178.6 million
and primarily include cash, property, plant and equipment (including ABT's
enterprise resource planning system and corporate headquarters), intangible
assets (including goodwill), deferred tax assets, and other assets (including
investments in other entities). The assets of the operating segments primarily
consist of accounts receivable, inventory, and property, plant and equipment
attributable to each segment.
The accounting policies of the reported segments are the same as those described
within Note 2 of Notes to Consolidated Financial Statements in ABT's June 30,
1999 Form 10-K. Sales between segments are accounted for at cost.
Due to the number of acquisitions completed by ABT and the different methods and
systems of accumulating data in the acquired businesses, similar information is
not available for prior years. Prior to the June 1999 restructuring, ABT
assessed performance of its operations and made decisions about allocation of
resources as one combined business, consisting of all the acquired entities and,
therefore, operated as a single segment.
(J) Reclassifications
Certain amounts in the prior year financial statements have been reclassified to
be comparable to the current year presentation.
--------------------------------------------------------------------
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and notes thereto of ABT included elsewhere herein. ABT is the
largest developer, producer, marketer, and distributor of forage and cool-season
turfgrass seed in North America. Since early 1995, ABT has implemented a
business strategy designed to first, acquire leading North America companies
active in each step (research, production, distribution, and sales) in the
forage and cool-season turfgrass seed sector; second, combine the acquired
businesses into a single, customer-focused, vertically integrated entity; and
third, shift the focus of the acquired businesses from public, non-proprietary
seed varieties toward proprietary varieties with a long-term objective of
developing biotechnologically enhanced varieties. ABT has acquired a number of
seed businesses since January 1, 1995 (the "Acquisition Program") to accomplish
its business strategy. These acquisitions are summarized in Note 1 of Notes to
Consolidated Financial Statements in ABT's June 30, 1999 Form 10-K.
Historically, the results of operations of the acquired companies had been
included in ABT's consolidated results beginning with the effective date of the
acquisition in accordance with the purchase method of accounting. As discussed
in Note 1(b) of Notes to Consolidated Financial Statements in the June 30, 1999
Form 10-K, ABT had taken effective control of acquired businesses as of a
mutually agreed upon effective date that preceded the closing date when
consideration was transferred to the sellers. ABT had reflected the acquired
businesses in its Consolidated Financial Statements as of the effective date.
Due to the size of ABT and the internal focus on integration of acquired
businesses, ABT changed its acquisition practices, to operate and acquire
businesses at the closing date, instead of the effective date, for acquired
businesses not included in ABT's March 31, 1998 consolidated financial
statements.
The acquisitions and other operations being included in ABT's consolidated
financial statements beginning with each of their acquisition dates
significantly affects the meaningfulness of comparisons drawn between periods.
Furthermore, the seed business is subject to wide seasonal fluctuations and,
therefore, the results of periods less than twelve months, such as the three
month periods presented herein (each a "Three-Month Period"), are not
necessarily indicative of results which may be expected for an entire year.
ABT's fiscal year ("Fiscal") ends on June 30. The significant number of
acquisitions and the period for which each is included in ABT's consolidated
financial statements in relation to the seasonality of the business cycle of
each acquisition significantly affects the meaningfulness of comparisons drawn
between periods.
In this report and elsewhere (Annual Report, other SEC filings, press releases,
investor and analyst conference calls), ABT has made and will make
forward-looking statements relating to matters such as anticipated financial and
operational performance; management plans; revenue, cost and profit projections;
research and development of new products; acquisition and integration of
companies; performance of the seed industry and ABT's competitors, and
management's underlying assumptions about the above.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements in order to encourage companies to make such
statements in order to provide additional information to investors. ABT wishes
to make such statements and to avail itself of the "safe-harbor". In order to do
so, ABT states that any forward-looking statement involves risks and
uncertainties, is not a guarantee of future performance, and the actual
financial and economic performance and condition of ABT may differ materially
from that expressed in the forward-looking statement, due to a variety of
factors, such as those set forth in Item 1 of ABT's Form 10-K for the year ended
June 30, 1999 under the heading "General - Forward Looking Statements" and other
filings with the Securities and Exchange Commission.
The above factors have significant impacts on the following discussion and
analysis and should be considered as part of it.
13
<PAGE>
Results of Operation
Selected information concerning the results of operations is summarized as
follows:
<TABLE>
<CAPTION>
Three-month period
ended September 30,
--------------------------
1999 1998
----------- ----------
<S> <C> <C>
Net sales $73,506,152 89,601,608
Gross profit 22,822,537 25,467,585
Percentage of net sales 31.0% 28.4%
Operating expenses 24,679,261 22,921,375
Percentage of net sales 33.6% 25.6%
Restructuring and special charges 41,584 --
Percentage of net sales 0.1% --
</TABLE>
ABT has essentially completed the first phase of its business strategy. The
first phase was the Acquisition Program that enabled ABT to accumulate the
critical mass it believes is necessary to lead the transformation of the forage
and turfgrass sector of the seed industry. Changes in the items in the above
table are in part due to the Acquisition Program, which results in certain
operations not being included for the entire Fiscal 1999 Three-Month Period.
The second phase of ABT's business strategy to integrate the acquired
businesses, which have generally been operating as they were prior to being
acquired, into a single, customer-driven business entity centered around the ABT
name and logo (the "Integration Process") was initiated in late Fiscal 1999. In
the Integration Process, ABT's objectives include raising margins through the
introduction of proprietary products and reducing expenses by gaining economies
of scale. The integration process has progressed to the point that ABT believes
that operating expenses will be reduced by at least $14 million, on an
annualized basis, for Fiscal 2000. Since ABT did not initiate the Integration
Process until near the end of Fiscal 1999, only a small portion of the
efficiencies and cost reductions associated with the Integration Process
impacted the Fiscal 2000 Three-Month Period. ABT is still in the process of
integrating its various production operations and to a lesser extent its
distribution operations.
Management believes EBITDA (earnings before interest, income taxes, depreciation
and amortization) is an important indicator of ABT's operating performance
particularly during the first and second phases of its business strategy. EBITDA
is widely used as a measure of a company's operating performance and its ability
to service its indebtedness. EBITDA is not a measurement of financial
performance under generally accepted accounting principles and should not be
construed as a substitute for net earnings (loss) as a measure of performance,
or cash flow from operations as a measure of liquidity. Adjusted EBITDA, defined
by ABT as EBITDA before restructuring and special charges, was $1.6 million in
the Fiscal 2000 Three-Month Period and $5.3 million in the Fiscal 1999
Three-Month Period.
An integral part of ABT's business strategy is to become vertically integrated
with production operations producing seed varieties developed by ABT's research
operations and then providing those seeds to ABT's distribution operations. This
results in sales made by production operations that formerly were made to third
parties being made as intercompany sales within ABT owned operations and also
results in less purchases of inventory from outside suppliers. Sales between ABT
operations are eliminated in the consolidated results of operations. The cost of
product shipped between ABT operations, amounting to $26.3 million (52% of
reported cost of sales) in the Fiscal 2000 Three-Month Period and $20.4 million
(32% of reported cost of sales) in the Fiscal 1999 Three-Month Period, was not
recorded as cost of sales, nor are these shipments reflected in net sales. This
has two impacts on the financial statements. First, the time certain sales are
recorded is delayed in that shipments to third parties are recorded when shipped
to the third party, but when shipped to other ABT operations are not recorded as
sales until that operation ships the product to its customers. Second, as more
production is used internally rather than sold to third parties, sales revenue
is reduced since both the internal sales and the related cost of sales are
eliminated in the financial statements. However, since the internal costs are
lower, the dollar amount of gross profit ultimately realized on these sales is
equal to that which would have been recognized prior to the vertical
integration. This results in gross profit increasing as a percentage of net
sales.
14
<PAGE>
During the Fiscal 2000 Three-Month Period, ABT had net sales of $73.5 million as
compared to $89.6 million during the Fiscal 1999 Three-Month Period. The
decrease is primarily due to three reasons. As mentioned above, as ABT becomes
more vertically integrated the percentage of its products that are produced
internally increases, which reduces the amount recorded as sales. The average
sales price for certain seed products decreased substantially from the Fiscal
1999 Three-Month Period to the Fiscal 2000 Three-Month Period. Of the seven
major species sold during this period, six decreased in price. The percentage
change in the prices of these products ranged from 10% to 45%. This decrease in
sales prices negatively impacted net sales. In addition, adverse weather
conditions caused the harvest of seed grown for ABT in Oregon, where a
significant amount of turfgrass seed is grown, to be approximately three weeks
later in the fall of 1999 than in the fall of 1998, which resulted in a reduced
amount of seed being available to be sold in the Fiscal 2000 Three-Month Period
compared to the prior year. These factors significantly reduced the time
available to bring product to market and resulted in unfilled demand, which
negatively impacted net sales.
Cost of sales, primarily seed costs, were $50.7 million or 69.0% of net sales
for the Fiscal 2000 Three-Month Period compared to $64.1 million or 71.6% of net
sales for the Fiscal 1999 Three-Month Period. Gross profit was $22.8 million or
31.0% of net sales for the Fiscal 2000 Three-Month Period compared to $25.5
million or 28.4% of net sales for the Fiscal 1999 Three-Month Period. The
decrease in the dollar amount is primarily due to reduced sales dollars,
described above, partially offset by an increase in transportation costs to move
product from the production facilities to the distribution facilities. The
increased freight was the result of an increased demand curve brought on by the
compressed selling season. The increase in the gross profit percentage is due to
a combination of factors, including the increase resulting from more product
produced internally. This was partially offset by a compressed selling season
which caused difficulty in getting proprietary products to market, an excess
supply of seed for most turfgrass species, which created downward pricing
pressure, the continuing pressure on farmers because of falling prices for their
products which creates downward pressure on the price of products they purchase,
and the higher production costs associated with the availability of
transportation.
There is worldwide oversupply of turfgrass and forage seed except for bluegrass,
fine fescues, creeping red fescue, timothy and reed canarygrass. This oversupply
situation was caused by higher than average seed harvests in the U.S., Canada
and Europe and significant carryover from the prior crop year. The dormant and
non-dormant alfalfa harvest was the largest since 1991. Because of this
situation, compared to a year ago, tall fescue prices have fallen by 10 to 35
percent, ryegrass prices have fallen by 15 to 45 percent, and prices for common
varieties of alfalfa have fallen by 40 percent. The industry is following a
trend towards consolidation in the U.S. and in Europe. Smaller independent
companies facing this trend have responded with aggressive pricing programs to
move their excess inventories and retain their market share. These conditions
are expected to continue to cause downward pressure on prices and margins
through the current year.
ABT's goal is to raise gross margins over the next several years as a result of
ABT's attempt to vertically integrate its operations and shift its product mix,
reducing the proportion of public (commodity or common) products and increasing
the proportion of proprietary (value added) products.
Operating expenses increased from $22.9 million, or 25.6%, of net sales in the
Fiscal 1999 Three-Month Period to $24.7 million, or 33.6%, of net sales in the
Fiscal 2000 Three-Month Period. ABT completed nine acquisitions between July 1,
1998 and June 30, 1999. Total depreciation and amortization increased by $1.0
million in the Fiscal 2000 Three-Month Period compared to the prior year,
primarily due to these acquisitions and depreciation on ABT's new information
system. On a pro forma basis, as if those acquisitions had occurred on July 1,
1998, operating expenses would have been $25.2 million for the Fiscal 1999
Three-Month Period. The levels of operating expenses were impacted by the items
discussed below and by the implementation of the Integration Process that was
started late in Fiscal 1999. The Integration Process is expected to be completed
by June 30, 2000 and to achieve savings, on an annualized basis, of $14 million.
However, many of the cost savings and efficiencies of the Integration Process
were only partially realized during the Fiscal 2000 Three-Month Period due to
the timing of its implementation. At September 30, 1999, ABT has initiated
action with respect to approximately 70% of its integration plan. The percentage
increase is attributable to the decrease in the dollar amount of sales due to
the factors mentioned above combined with the fact that many operating expenses
are fixed and are therefore impacted by a shortfall in sales. The major
components of operating expenses are personnel costs, occupancy expense, vehicle
and shipping expenses, outside services, travel, advertising and promotion, and
amortization. These components amounted to:
15
<PAGE>
<TABLE>
<CAPTION>
Three-month period
ended September 30,
-----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Personnel costs $11,622,359 $10,331,239
Occupancy expenses 3,881,676 3,616,746
Vehicle and shipping 2,755,464 2,309,591
Outside services 1,339,509 1,242,011
Travel 689,824 803,514
Advertising and promotion 946,825 1,480,191
Amortization 1,955,640 1,320,415
</TABLE>
In addition to the impacts of the Acquisition Program and the Integration
Process, personnel costs increased in the Fiscal 2000 Three-Month Period
compared to the same period in the prior year due to additional part-time and
temporary workers hired to assist in the final phase of the ERP implementation
and to assist in the compressed fall selling season. Furthermore, the timing of
the implementation of the Integration Process, particularly with respect to
ABT's turfgrass production facilities, resulted in ABT not realizing all of the
anticipated benefits from reductions in personnel during the Fiscal 2000
Three-Month Period.
Occupancy expenses increased in the Fiscal 2000 Three-Month Period compared to
the prior year resulting from additional facilities added since September 30,
1998 due to acquisitions, construction of a new alfalfa production facility, and
expansion of ABT's corporate headquarters, partially offset by the closing of
certain facilities as part of the Integration Process. At September 30, 1999,
ABT had closed 29 of the 33 facilities scheduled to close. However, until closed
facilities are disposed of, ABT continues to incur costs for utilities,
maintenance, property taxes, and other operating costs. These costs were not
accruable as part of the restructuring and special charges recorded at June 30,
1999.
Vehicle and shipping expenses increased in the Fiscal 2000 Three-Month Period
compared to the prior year. The increase was caused by a shortage of available
transportation, which resulted in higher shipping prices. Outside services
increased in the Fiscal 2000 Three-Month Period, primarily due to expenses in
connection with research and development aspects of ABT's arrangement with
Kimeragen, Inc. Travel costs decreased in the Fiscal 2000 Three-Month Period
compared to the prior year resulting from an increased emphasis by management to
reduce travel costs. Advertising and promotion costs decreased in the Fiscal
2000 Three-Month Period compared to the same period due to the consolidation of
programs that reduced redundant projects.
Amortization increased in the Fiscal 2000 Three-Month Period due to acquisitions
completed since July 1, 1998. At September 30, 1999, ABT has unamortized
intangible assets, including goodwill, of $151.0 million. ABT's ability to
recover the carrying amount of goodwill through undiscounted cash flows assumes
that results of operations and cash flows in future periods will improve from
historical levels. If ABT is unable to achieve its business objectives, some
portion of goodwill could be impaired in subsequent periods.
Research and development expenses, which are included within the various
components of operating expenses described above, were $1.4 million in the
Fiscal 2000 Three-Month Period compared to $0.8 million in the Fiscal 1999
Three-Month Period. The increase was due to increased expenditures on ABT's
traditional genetic breeding programs for alfalfa and turfgrasses, as well as
the establishment of ABT's research facility at The University of Rhode Island
and expenses, including amortization of intangibles, related to the technology
of Hybrigene, Inc. and Kimergen, Inc., which were not incurred in the Fiscal
1999 Three-Month Period. As ABT attempts to transform its forage and turfgrass
seed businesses to proprietary products with higher gross margins, ABT expects
research and development expenses as a percentage of sales will continue to
increase and to eventually be similar to public companies in the other
proprietary seed sectors.
Interest expense decreased to $1.8 million in the Fiscal 2000 Three-Month period
compared to $2.2 million in the Fiscal 1999 Three-Month Period. This was
primarily due to reduced borrowings under ABT's revolving line of credit. In
addition, during the Fiscal 1999 Three-Month Period, ABT had up to $30 million
in borrowings under two short-term bridge financing facilities, which had higher
interest rates than the revolving credit facility. These bridge facilities did
not exist in the Fiscal 2000 Three-Month Period.
16
<PAGE>
ABT's net loss was $3,601,911 for the Fiscal 2000 Three-Month Period compared to
net earnings of $333,227 for the Fiscal 1999 Three-Month Period as a result of
the items discussed above. For the Fiscal 2000 Three-Month Period, average
common shares outstanding used in computing earnings per common share increased
due to additional shares issued, primarily for cash, acquisitions, options and
warrants. For purposes of computing diluted earnings per share in Fiscal 1999,
average shares outstanding were increased by the dilutive effects of options and
warrants.
Liquidity and Capital Resources
Net earnings (loss) adjusted for non-cash impacts of depreciation, amortization,
equity in earnings of associated entity, deferred taxes, and options for
services was a negative $0.2 million in the Fiscal 2000 Three-Month Period
compared to a positive $3.1 million in the Fiscal 1999 Three-Month Period.
However, ABT's inventory and accounts receivable increased more than the
increase in accounts payable and accrued liabilities by approximately $2.0
million during the Fiscal 2000 Three-Month Period and $10.0 million during the
Fiscal 1999 Three-Month Period. This was a primary cause of ABT having net
negative cash flows from operating activities of $2.9 million during the Fiscal
2000 Three-Month Period compared to net negative cash flows from operating
activities of $6.7 million during the Fiscal 1999 Three-Month Period. The
increases in accounts payable and inventories are primarily attributable to the
delivery of seed harvested during the fall season. The increases in accounts
receivable are attributable to the sales activity during the periods. During the
Fiscal 2000 Three-Month Period, ABT had net negative cash flows from investing
activities of $2.8 million compared to $51.2 million in the prior year,
primarily from investments in property, plant and equipment and acquisitions.
During the Fiscal 2000 Three-Month Period, ABT had net cash flows from financing
activities of $2.5 million, primarily due to the sale of common stock and
exercise of options, partially offset by a reduction of long and short term
debt. During the Fiscal 1999 Three-Month Period, ABT had net cash flows from
financing activities of $56.3 million, primarily due to additional short-term
debt of $38.7 million and proceeds from the issuance of common stock of $18.2
million.
ABT has a $90 million revolving credit facility with Bank America Business
Credit and other lenders expiring in June 2001, under which borrowings were
$68.1 million at September 30, 1999, including items in the process of
collection. Total short-term debt at September 30, 1999, was $70.8 million
compared to $104.8 million at September 30, 1998. At November 10, 1999,
approximately $68 million was outstanding and $16 million was available to be
borrowed under the revolving line of credit based on the borrowing base
computation at that date. In the prior year, ABT had borrowed $96 million at
November 6, 1998 and $2 million was available to be borrowed.
ABT has borrowed approximately $3 million from a special purpose entity
controlled by officers of ABT the proceeds of which were used for working
capital. This debt is secured by certain real estate and provides for interest
at 10% per annum. The debt is due on demand or, if no demand is made, ninety
days from the borrowing, and is repayable upon any refinancing by ABT.
In October 1999, ABT signed a commitment letter with GE Capital to arrange a
syndicate of lenders to provide ABT with a revolving line of credit in the
amount of up to $115 million and five-year term financing of up to $20 million.
The revolving line would replace the above revolving credit facility. The new
revolving debt will be subject to a borrowing base computation based on levels
of eligible accounts receivable and inventory. The term debt will be based on
the appraised values of certain items of ABT's property, plant and equipment.
The new debt will be secured by substantially all of ABT's assets. ABT is
required to obtain additional equity capital or unsecured debt of approximately
$5 million. It is anticipated that this financing will be completed in early to
mid December 1999, although there can be no assurance this financing will be
completed. In the event this financing is not completed, ABT will continue to
explore other alternatives to supplement or replace its existing credit
facility, including obtaining long-term debt secured by ABT's property, plant
and equipment. In addition, it is possible ABT may seek to raise additional
equity capital.
17
<PAGE>
The Company had working capital of $5,601,653 at September 30, 1999 as compared
to $1,498,277 at June 30, 1999. The increase in working capital was primarily
caused by an increase in inventories and accounts receivable partially offset by
an increase in accounts payable and accrued liabilities.
Management Information System and Year 2000
ABT's Form 10-K for the year ended June 30, 1999 contains a discussion of ABT's
process to address the consequences of reaching the Year 2000 and the
implementation of a company-wide enterprise resource planning system to meet its
information system requirements. No significant changes have occurred since the
June 30, 1999 Form 10-K was filed.
Inflation
Management does not consider that inflation has had a significant effect on
ABT's operations to date. The cost of seed products is largely affected by seed
yields and alternative crop prices, which have not generally been greatly
impacted by inflation. The costs which are normally impacted by inflation, such
as wages, transportation and energy, are a relatively small part of ABT's total
operations. However, ABT remains subject to possible significant inflation in
Mexico, Argentina and other foreign countries.
Impacts of Accounting Standards not yet Adopted
The impacts of recently adopted accounting standards is discussed in Note 2 of
Notes to Consolidated Financial Statements in ABT's Form 10-K for the year ended
June 30, 1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No significant changes in the quantitative and qualitative disclosures about
market risk have occurred from the discussion contained in ABT's Form 10-K for
the year ended June 30, 1999.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Between January 14, 1999 and March 19, 1999, a number of securities class action
complaints were filed against ABT and certain of its former directors and
current and former officers in federal courts in New Mexico, New York and
Nevada. All cases have been transferred to the United States District Court for
the District of Nevada and consolidated into one action, captioned In re:
AgriBioTech, Inc. Securities Litigation, Base File No. CV-S-99-144-PMP (LRL). On
July 6, 1999, a Consolidated Amended Complaint was filed by plaintiffs
purporting to represent a class of purchasers of ABT common stock from September
24, 1997 through February 16, 1999. The complaint alleges, among other things,
that ABT's financial statements, including the accounting treatment for
acquisitions completed in 1997 and 1998, and certain statements made by ABT
concerning its efforts to find a strategic equity investor in late 1998 and
early 1999 and other topics were false and misleading and caused an artificial
rise in ABT's common stock price in violation of Section 10(b) of the Securities
Exchange Act of 1934, as amended, Rule 10b-5 promulgated thereunder, and Section
20 of the Exchange Act. On August 18, 1999, ABT filed a motion to dismiss the
complaint. The plaintiffs have filed a brief in response to ABT's motion and ABT
has responded to that brief. ABT believes it has meritorious defenses to this
action and intends to defend itself vigorously. However, due to the risks of
litigation, a prediction of the final outcome of these proceedings cannot be
made with certainty, and an unfavorable result in this action could have a
material adverse impact.
In the ordinary course of business, ABT is also a party to certain other claims,
actions and proceedings incidental to its business, none of which is expected to
have a material adverse effect on the business, financial position or results of
operations of ABT.
18
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
During the quarter ended September 30, 1999 and through November 17,
1999, the following Form 8-K filing was made by ABT:
Dated November 10, 1999 and filed November 16, 1999 - To report under
Item 5 the adoption of a shareholder rights plan.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AGRIBIOTECH, INC.,
Date: November 18, 1999 By: /s/ Randy Ingram
----------------
Randy Ingram,
Executive Vice-President/CFO
20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,399,680
<SECURITIES> 0
<RECEIVABLES> 64,842,891
<ALLOWANCES> 6,844,060
<INVENTORY> 77,291,252
<CURRENT-ASSETS> 140,876,286
<PP&E> 62,301,501
<DEPRECIATION> 0
<TOTAL-ASSETS> 360,359,888
<CURRENT-LIABILITIES> 135,274,633
<BONDS> 11,354,519
0
0
<COMMON> 49,678
<OTHER-SE> 212,120,536
<TOTAL-LIABILITY-AND-EQUITY> 360,359,888
<SALES> 73,506,152
<TOTAL-REVENUES> 73,506,152
<CGS> 50,683,615
<TOTAL-COSTS> 50,683,615
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,796,016
<INCOME-PRETAX> (3,591,761)
<INCOME-TAX> 10,150
<INCOME-CONTINUING> (3,601,911)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,601,911)
<EPS-BASIC> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
