-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C50oa6/7Q7ByhhzwiVlnSVNQPpQyXGzimiiXf7TaEZ2ZgGm3bS1C2v8G44O0vnBS qvDfOx+8uZNhdrHe7M/NDg== 0001012895-96-000013.txt : 19960812 0001012895-96-000013.hdr.sgml : 19960812 ACCESSION NUMBER: 0001012895-96-000013 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19960809 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAN DIEGO BANCORP CENTRAL INDEX KEY: 0000319124 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 95355578 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-10147 FILM NUMBER: 96606461 BUSINESS ADDRESS: STREET 1: 3335 SOUTH 900 EAST STREET 2: SUITE 230 CITY: SALT LAKE CITY STATE: UT ZIP: 84106 BUSINESS PHONE: 8014675339 MAIL ADDRESS: STREET 1: 3335 SOUTH 900 EAST STREET 2: SUITE 230 CITY: SALT LAKE CITY STATE: UT ZIP: 84106 10QSB 1 1 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 [ ] 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: 0-10147 SAN DIEGO BANCORP (Exact name of registrant as specified in its charter) California 95-355578 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3335 South 900 East, Suite 230, Salt Lake City, Utah 84106 (Address of principal executive offices) (Zip Code) (801) 467-5339 Registrant's telephone number, including area code Not Applicable (Former name, former address, and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (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), Yes [ ] No [X] and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No[ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Class Outstanding as of March 31, 1995 ----- -------------------------------- Common Stock, No Par Value 9,102,908 EXPLANATORY NOTE: THIS REPORT IS BEING FILED ON OR ABOUT AUGUST 5, 1996, WHICH IS BEYOND THE DATE ON WHICH THE REPORT WOULD HAVE BEEN TIMELY FILED AND DOES NOT CONTAIN INFORMATION CONCERNING EVENTS OCCURING SUBSEQUENT TO MARCH 31, 1995. 2 PART I - FINANCIAL INFORMATION - ------------------------------------------------------------------------------ ITEM 1. FINANCIAL STATEMENTS - ------------------------------------------------------------------------------ The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB pursuant to the rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnotes necessary for a complete presentation of the financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. The unaudited balance sheet of the Company as of March 31, 1995, and the related audited balance sheet of the Company as of December 31, 1994, the unaudited related statements of operations and cash flows for the three month period ended March 31, 1995 and 1994, and the unaudited statement of stockholders' equity for the three month periods ended March 31, 1994 and 1995, are attached hereto and incorporated herein by this reference. Operating results for the quarter ended March 31, 1995, are not necessarily indicative of the results that can be expected for the year ending December 31, 1995. - ------------------------------------------------------------------------------ ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ------------------------------------------------------------------------------ General San Diego Bancorp (SDBC) was incorporated under the laws of the State of California on May 19, 1979, for the primary purpose of acting as a bank holding corporation for several subsidiaries, and the principal business was in the industrial loan market conducted through a subsidiary named El Camino Thrift and Loan Association. During several years preceding 1986, SDBC incurred substantial losses and during 1986 management decided to discontinue all operating activities, and liquidate the remaining assets and liabilities. The subsidiaries were either dissolved or sold for nominal amounts, and SDBC became a "shell" corporation by December 31, 1986, and had no material operations until September, 1993. On September 21, 1993, SDBC acquired 100% of the outstanding common stock of Enviro-Guard Corporation (a corporation incorporated in the State of Utah on May 30, 1991) from Enviro-Guard Holding Corporation (a corporation incorporated in the State of Colorado on June 10, 1987). This transaction was accounted for as a reverse acquisition whereby the acquired corporation (Enviro-Guard Corporation) gains controlling stockholder interest in the acquiring corporation 3 (SDBC), and the financial statements of Enviro-Guard Corporation are presented on a continuous basis since inception in May of 1991. Enviro-Guard Corporation has developed a line of organically-based insecticide products made from natural compounds with the objective of achieving environmentally-friendly, yet effective results. In August of 1992, Enviro-Guard acquired 100% of the outstanding common stock of Diatect International, Inc. (Diatect), (incorporated in the State of Kansas in 1989). Diatect has developed and owns the rights to three EPA registered insecticides. Also in August of 1992, Enviro-Guard acquired 100% of the outstanding common stock of D.S.D., Inc. (incorporated in the State of Kansas in 1982). The principal business activity of D.S.D., Inc., is the manufacturing and sale of cattle dusters and mineral feeders as well as the blending and sale of various agricultural related insecticides. On December 18, 1992, Enviro-Guard Corporation completed negotiations to acquire 90.14% of the outstanding common stock (891,250 shares) of White Mountain Mining and Manufacturing, Inc. ("White Mountain") (an Idaho Corporation). White Mountain owns 83 unpatented BLM mining claims located in Malheur County, Oregon. The purpose of this acquisition of the mining property is for Enviro-Guard Corporation to have a source of diatomite, which is an important organic ingredient for its environmentally-safe insecticides. On December 30, 1993, SDBC acquired 100% of the outstanding common stock of Actagro Acquisition, Inc., (formerly Actagro, Inc.). Actagro Acquisition, Inc., is a California corporation which manufactures and sells organic based agricultural fertilizer to customers in the Southern San Joaquin Valley. On December 6, 1994, SDBC divested itself of Actagro. In the divestiture, the shareholders of Actagro returned 715,063 shares of SDBC common stock for cancellation. With the acquisition and subsequent divestiture of Actagro Acquisition, Inc. in 1993 and 1994, respectively, a comparison of prior periods with the three-month period ended March 31, 1995, is of limited benefit in understanding the Company's financial position. Ability of the Company to Continue as a Going Concern For the three-month period ended March 31, 1995, the Company has incurred a consolidated net loss of $341,868. In addition, at March 31, 1995, current liabilities exceeded current assets by $1,237,067. During the first three months of 1995, the Company converted $28,167 in accrued salaries and wages and $79,567 in other liabilities to equity. In the future, management anticipates the conversion of an additional $600,000 in debt (principally notes payable and accruals) to equity during fiscal years 1995 and 1996. The Company also believes that without additional conversions of debt to equity and restructuring the payment terms of short-term debt, substantial doubt remains as to the Company's ability to meet its current obligations and continue in business. The Company has taken steps to address its insolvency problems by working with its creditors to keep them informed of the Company's progress in meeting outstanding liabilities. For the most part, the Company's creditors have been patient, waiting for payment at a future date. 4 The Company is attempting to obtain additional working capital from several sources, including investment banking firms, private investors and state funding agencies interested in assisting growing companies within the agri-environmental sector. Management intends to obtain equity financing through the sale of the Company's securities. The Company must meet monthly operational expenses of approximately $85,000. Currently, the Company is unable to meet this amount. However, management believes that additional revenue generated by the marketing sales of its Enviro-Guard and Diatect product line will ultimately alleviate a substantial portion of the shortfall. Until those revenues eventuate, the Company is dependent upon outside funding to sustain it. Results from Operations During the first three months of fiscal year 1995, the Company had revenues of $109,322, cost of sales of $51,522, operating expenses of $352,071, other losses of $104,292 and an income tax benefit of $56,695. These yielded a net loss of $341,868, compared to a loss of $220,309 (which included Actagro) for the same period of 1994. The substantial portion of the first quarter 1995 loss was due to three factors: a loss on the sale of the building that housed the Company's administrative offices ($109,332), professional fees ($69,103), and depreciation and amortization ($62,623). The Company believes that many of the operating and administrative expenses associated with the first quarter loss were due, in part, to insufficient cash flow and the illiquid nature of the Company's non-current assets. Because of liquidity difficulties, many expenses were paid through the issuance of common stock. Management is hopeful that once its products are in the marketplace, the losses from operations the Company currently suffers will be alleviated by increased sales revenue and profitability. Currently, the Company has not had the working capital to effectively market its products. Liquidity and Capital Resources The Company has a severe working capital deficit. As of March 31, 1995, the Company's working capital deficit totaled $1,237,067 compared with $1,182,199 at December 31, 1994. The Company has current liabilities totaling $1,344,675 and no long term debt. At the end of 1994, current liabilities and long term debt were $1,261,626 and $120,228, respectively. During the first quarter of 1995, total liabilities decreased $37,179. Despite the slight reduction in total debt, the Company's working capital deficit has had a direct correlation to the Company's inability to expand and market its products effectively. If the Company is unable to obtain some funds in the near future, it will not be able to continue in business. The Company, therefore, continues to seek working capital from several sources, including equity markets and private investors. There is no assurance, however, that these efforts will be successful. The Company does feel that it will increase revenues from operations as it moves from the development stage of its products, which has included lengthy and costly time in obtaining EPA approval. 5 With Enviro-Guard's products in the market place and with adequate financial support, the Company anticipates revenues to offset on-going expenses. The Company is uncertain, however, as to whether there will be sufficient revenues to cover prior years' obligations. As previously stated, the Company's lack of cash has affected its ability to effectively market Enviro-Guard's products. The marketing strategy will require funds to be fully effect. Accordingly, although the Company anticipates more revenue from its products then it has received in the past, it will not be as profitable as it could be with additional funding for full implementation of its marketing and promotional plans. Management Changes In February 1995, James Dayley resigned as President of the Company. Both he and Dale Christiansen resigned their positions on the Board of Directors at the same time. Mr. Christiansen continued with the Company as Chief Financial Officer. Mr. George H. Henderson became President of the Company on an interim basis until another Company President could be found. Additions to Mr. Robert Crouch on the Board of Directors included Mr. Henderson, John L. Runft and Elwynn S. Hewlett, Jr. 6 SAN DIEGO BANCORP CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF MARCH 31, 1995 AND DECEMBER 31, 1994
ASSETS (Unaudited) March 31, 1995 December 31, 1994 CURRENT ASSETS ----------------- ----------------- Accounts Receivable $ 48,950 $ 17,980 Advances to Employees 276 276 Inventories 57,882 57,882 Prepaid expenses 500 3,289 ----------------- ----------------- Total Current Assets 107,608 79,427 ----------------- ----------------- PROPERTY, PLANT AND EQUIPMENT Buildings Lease Hold Improvements 27,119 314,218 Mining property 4,423,005 4,440,543 Equipment 270,279 270,279 ----------------- ----------------- Total Property, Plant and Equipment 4,720,403 5,025,040 Less accumulated depreciation 234,075 251,377 ----------------- ----------------- Net Property, Plant and Equipment 4,486,328 4,773,663 ----------------- ----------------- OTHER ASSETS Investment in EPA labels, Net of amortization 3,730,724 3,804,364 Notes receivable 250,000 250,000 Deposits 467 467 Other assets 1,159 1,179 ----------------- ----------------- Total Other Assets 3,982,350 4,056,010 ----------------- ----------------- TOTAL ASSETS $ 8,576,286 $ 8,909,100 ================= ================= /TABLE 7 SAN DIEGO BANCORP CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF MARCH 31, 1995 AND DECEMBER 31, 1994
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) March 31, 1995 December 31, 1994 CURRENT LIABILITIES ----------------- ----------------- Accounts payable $ 162,643 $ 165,474 Bank overdraft 6,142 1,847 Dealer deposits 10,625 10,625 Interest payable 99,766 113,090 Income taxes payable 33,563 33,563 Other accrued liabilities 81,510 29,134 Notes payable 635,904 505,561 Current portion of long-term debt 314,522 402,332 ----------------- ----------------- Total Current Liabilities 1,344,675 1,261,626 ----------------- ----------------- LONG-TERM LIABILITIES Long-Term debt, less current portion -0- 120,228 ----------------- ----------------- DEFERRED TAX LIABILITY 1,367,061 1,458,563 ----------------- ----------------- COMMITMENTS MINORITY INTEREST 340,215 340,215 ----------------- ----------------- STOCKHOLDERS' EQUITY Common stock, no - par value; 20,000,000 shares authorized; 9,102,908 and 8,203,267 shares issued and outstanding, respectively 8,801,825 8,550,140 Common stock subscribed 83,500 197,450 Accumulated deficit (3,360,990) (3,019,122) ----------------- ----------------- Total Stockholder's Equity 5,524,335 5,728,468 ----------------- ----------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,576,286 $ 8,909,100 ================= ================= /TABLE 8 SAN DIEGO BANCORP CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED March 31, 1995 AND 1994
Three Months Ended ------------------ March 31, 1995March 31, 1994 ----------------- ----------------- REVENUES $ 109,322 $ 1,879,950 COST OF SALES 51,522 908,856 ----------------- ----------------- GROSS PROFIT 57,800 971,094 ----------------- ----------------- OPERATING EXPENSES Salaries, wages and benefits 73,743 428,361 Consulting 18,004 86,197 Research and development 77,368 Travel 15,436 80,369 Rent 4,441 46,864 Interest 20,177 95,508 Utilities 3,589 22,415 Depreciation and amortization 62,623 112,639 Advertising 49,399 4,233 Office 9,266 76,905 Taxes and licenses 2,693 9,832 Professional fees 69,103 87,984 Insurance 6,294 37,274 Bad debts 6,355 Repairs and maintenance 775 31,213 Miscellaneous 16,528 3,967 ----------------- ----------------- Total Operating Expenses 352,071 1,207,484 ----------------- ----------------- (LOSS) FROM OPERATIONS (294,271) (236,390) ----------------- ----------------- OTHER INCOME (LOSS) (Loss) on sale of property (109,332) Interest 2,150 5,199 Royalties 490 Miscellaneous 2,400 10,882 ----------------- ----------------- Total Other Income (Loss) (104,292) 16,081 ----------------- ----------------- (LOSS) BEFORE INCOME TAX BENEFIT (398,563) (220,309) INCOME TAX BENEFIT 56,695 ----------------- ----------------- NET (LOSS) $ (341,868) $ (220,309) ================= ================= NET (LOSS) PER SHARE (Primary) $(.039) $(.034) ================= ================= /TABLE 9 SAN DIEGO BANCORP CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1994 AND MARCH 31, 1995
Common Stock Common Stock Accumulated Shares Amount Subscribed Deficit Total ----------- ----------- -------------- -------------- -------------- Balances as of December 31, 1993 6,394,953 $8,432,969 $ 495,268 $ (1,248,759)$7,679,478 Stock Options exercised at prices ranging from $.50 to $2.50 207,000 232,000 232,000 Common Stock Subscribed to be issued for debt reduction 189,150 189,150 Net (Loss) (220,309) (220,309) -------------- ------------ -------------- ------------- ------------ Balances as of March 31, 1994 6,601,953 $8,664,969 $ 684,418 $ (1,469,068) $ 7,880,319 ============== ============ ============== ============= ============ Balances as of December 31, 1994 8,203,267 $8,550,140 $ 197,450 $ (3,019,122) $ 5,728,468 Common Stock issued for services at $.10 to $.35 per share 469,348 79,568 79,568 Common Stock Subscribed to be issued for debt reduction 30,000 30,000 Conversion of Common Stock Subscribed 359,875 143,950 (143,950) 0 Common Stock issued for accrued salaries and wages at $.40 per share 70,418 28,167 28,167 Net (Loss) (341,868) (341,868) Balances as of March 31, 1995 9,102,908$ 8,801,825 $ 83,500 $ (3,360,990) $ 5,524,335
10 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1995 AND 1994
Three Months Ended ------------------ March 31, 1995 March 31, 1994 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) $ (341,868) $ (220,309) Add items not requiring the use of cash: Depreciation, amortization and non-cash expenses 176,847 98,186 (Increase) in accounts receivable (30,970) (572,187) Decrease in advances 31,575 (Increase) in interest receivable (246) Decrease in income tax receivable 54,491 (Increase) in inventories (47,966) Decrease in deposits 3,289 (Increase) in prepaid expenses (520) (221,289) (Decrease) in accounts payable (2,831) (41,628) (Decrease) in deferred tax credit (91,502) Increase in accrued compensation 81,086 Increase (decrease) in interest payable (13,324) 51,464 Increase in other accrued liabilities 52,376 3,096 ----------------- ----------------- NET CASH FLOWS USED FROM OPERATING ACTIVITIES (248,503) (783,727) ----------------- ----------------- CASH FLOWS FROM INVESTING ACTIVITIES (Acquisition) disposal of property, plant and equipment 304,365 (117,287) (Increase) reduction of intangibles 17,538 (4,684) ----------------- ----------------- NET CASH FLOWS PROVIDED (USED) FROM INVESTING ACTIVITIES 321,903 (121,971) ----------------- ----------------- CASH FLOWS FROM FINANCING ACTIVITIES Capital contributions 232,000 Net proceeds from notes payable 444,865 602,604 Reduction of long term debt (522,560) ----------------- ----------------- NET CASH FLOWS PROVIDED (USED) FROM FINANCING ACTIVITIES (77,695) 834,604 ----------------- ----------------- NET INCREASE (DECREASE) IN CASH (4,295) (71,094) CASH BALANCE AT BEGINNING OF PERIOD (1,847) 125,787 ----------------- ----------------- CASH BALANCE AT END OF PERIOD$ (6,142)$ 54,693 ================= ================= /TABLE 11 The condensed consolidated financial statements of San Diego Bancorp included herein have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Although, certain information normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted, San Diego Bancorp believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in San Diego Bancorp's annual report on Form 10-KSB for the fiscal year ended December 31, 1994. The condensed consolidated financial statements included herein reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair representation. The results for interim periods are not necessarily indicative of trends or of results to be expected for a full year. PART II - OTHER INFORMATION - ------------------------------------------------------------------------------ ITEM 1. LEGAL PROCEEDINGS - ------------------------------------------------------------------------------ See San Diego Bancorp's annual report on Form 10-KSB for the fiscal year ended December 31, 1994. - ------------------------------------------------------------------------------ ITEM 2. CHANGES IN SECURITIES - ------------------------------------------------------------------------------ None. - ------------------------------------------------------------------------------ ITEM 3. DEFAULTS UPON SECURITIES - ------------------------------------------------------------------------------ None. - ------------------------------------------------------------------------------ ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------------------------ None. - ------------------------------------------------------------------------------ ITEM 5. OTHER INFORMATION - ------------------------------------------------------------------------------ None. - ------------------------------------------------------------------------------ ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------------------------------------------------------------------------------ (a) Exhibits. Exhibit No. Description 27Financial Data Schedule (b) Reports on Form 8-K. None - ------------------------------------------------------------------------------ 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. SAN DIEGO BANCORP (Registrant) Dated: July 31, 1996 By /s/ DALE H CHRISTIANSEN -------------------------------------------- Dale H Christiansen, Chief Financial Officer EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-QSB FOR THE PERIOD ENDED MARCH 31, 1995. 0000319124 SAN DIEGO BANCORP 3-MOS DEC-31-1995 MAR-31-1995 0 0 49,226 0 57,882 107,608 4,720,403 234,075 8,576,286 1,344,675 0 0 0 8,885,325 (3,360,990) 8,576,286 109,322 114,362 51,522 331,894 109,332 0 20,177 (398,563) (56,695) 0 0 0 0 (341,868) (0.039) (0.039)
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