-----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, GzaDw8EOLOffwBfbkRsa86D1wN/mfBzlWKe+3jMAhJPEpAa7iPvypIqfS7xTrinQ iIUSCfhw7+xA1mOa9tGlPg== 0001012895-96-000028.txt : 19960924 0001012895-96-000028.hdr.sgml : 19960924 ACCESSION NUMBER: 0001012895-96-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960923 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10147 FILM NUMBER: 96633093 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 10-Q 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 June 30, 1996 [ ] 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 APPLIED EARTH TECHNOLOGIES, INC. -------------------------------- (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 [X] No [ ] 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 June 30, 1996 - -------------------------- ------------------------------- Common Stock, No Par Value 14,135,164 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 June 30, 1996, and the related audited balance sheet of the Company as of December 31, 1995, the unaudited related statements of operations and cash flows for the three and six month periods ended June 30, 1996 and 1995, and the unaudited statement of stockholders' equity for the three month periods ended June 30, 1996 and 1995, are attached hereto and incorporated herein by this reference. Operating results for the quarter ended June 30, 1996, are not necessarily indicative of the results that can be expected for the year ending December 31, 1996. - ----------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ----------------------------------------------------------------- General Applied Earth Technologies, Inc. (the "Company") (formerly San Diego Bancorp), 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, the Company 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 the Company became a "shell" corporation by December 31, 1986, and had no material operations until September, 1993. On September 21, 1993, the Company 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 (the Company), 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, the Company acquired 100% of the outstanding common stock of Actagro Acquisition, Inc., ("Actagro") (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, the Company divested itself of Actagro. In the divestiture, the shareholders of Actagro returned 715,063 shares of the Company's common stock for cancellation. On August 22, 1996, the Company changed its name from San Diego Bancorp to Applied Earth Technologies, Inc. to more accurately reflect the Company's business operations and to eliminate confusion as to the Company's business that was associated with the Company's prior name. Ability of the Company to Continue as a Going Concern For the six-month period ended June 30, 1996, the Company has incurred a consolidated net loss of $280,594. In addition, at June 30, 1996, current liabilities exceeded current assets by $1,564,017. During the first six months of 1996, the Company converted $198,164 in accrued salaries, marketing expenses and other liabilities to equity by issuing 2,544,928 shares of common stock. In the future, management believes there is an additional $600,000 in debt (principally notes payable and accruals) that may be converted to equity during fiscal year 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. The Company must meet monthly operational expenses of approximately $85,000. Currently, the Company has average revenues from operations of approximately $75,000 which creates an operational shortfall of approximately $10,000 per month. However, management believes that additional revenue generated by increased marketing efforts will result in increased sales of the Company's products and ultimately alleviate a substantial portion of the shortfall. Until those revenues eventuate, the Company will be dependent upon outside funding to meet operating requirements. 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 seek equity financing through the sale of the Company's securities. Results from Operations During the fiscal quarter ended June 30, 1996, the Company had revenues of $259,624, cost of sales of $134,045, operating expenses of $309,461, other income of $12,376 and an income tax benefit of $36,805. These yielded a net loss of $134,701, compared to a net loss of $117,353 for the same period of 1995. The substantial portion of the second quarter 1996 loss was due to two factors: professional and consulting fees ($102,796), and depreciation and amortization ($62,706). The Company believes the resolution of its legal difficulties in Kansas and the completion of its tardy financial reporting in 1996 will reduce future professional fees. In addition, many of the other operating, administrative and interest expenses associated with the second quarter loss continue to be 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. For the six month periods ended June 30, 1996 and June 30, 1995, the company had consolidated revenues of $452,798 and $372,386, respectively. The net losses for the periods totaled $280,594 in 1996 and $459,220 in 1995. 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 June 30, 1996, the Company's working capital deficit totaled $1,564,017 compared with $1,502,455 at December 31, 1995. The Company reports current liabilities totaling $1,774,977 and no long term debt. At the end of 1995, current liabilities and long term debt were $1,688,297 and $200,000, respectively. During the second quarter of 1996, total liabilities decreased $113,320. The Company's working capital deficit continues to have a direct correlation with 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. With the Company's products in the marketplace and with adequate financial support, the Company anticipates revenues to offset on-gong 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 dramatically affected its ability to effectively market the Company's products. The marketing strategy require funds to be fully implemented. Accordingly, while the Company anticipates more revenue from its products than 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. APPLIED EARTH TECHNOLOGIES, INC. Consolidated Statement of Financial Position As of June 30, 1996 and December 31, 1995 - ----------------------------------------------------------------- ASSETS ------- (Unaudited) June 30, 1996 December 31, 1995 ------------- ----------------- CURRENT ASSETS Cash $ - $ 64,970 Accounts receivable 116,445 25,036 Inventories 94,515 95,836 ------------- ----------------- Total Current Assets 210,960 185,842 ------------- ----------------- PROPERTY, PLANT AND EQUIPMENT Buildings 127,119 127,119 Mining property 4,335,314 4,370,390 Equipment 260,277 261,185 ------------- ----------------- Total Property, Plant and Equipment 4,722,710 4,758,694 Less accumulated depreciation 201,582 195,672 ------------- ----------------- Net Property, Plant and Equipment 4,521,128 4,563,022 ------------- ----------------- OTHER ASSETS Investment in EPA labels, net of accumulated amortization 3,362,527 3,509,807 Notes Receivable 243,699 250,000 Deposits 1,117 967 Other Assets 4,500 57,200 ------------- ----------------- Total Other Assets 3,611,843 3,817,974 ------------- ----------------- TOTAL ASSETS $ 8,343,931 $ 8,566,838 ============= ================= The accompanying notes are an integral part of these financial statements. APPLIED EARTH TECHNOLOGIES, INC. Consolidated Statement of Financial Position As of June 30, 1996 and December 31, 1995 - ----------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------- (Unaudited) June 30, 1996 December 31, 1995 ------------- ----------------- CURRENT LIABILITIES Accounts payable $ 286,758 $ 242,714 Bank overdraft 465 - Interest payable 241,358 203,762 Income taxes payable 20,489 20,487 Other accrued liabilities 43,035 26,298 Notes payable 1,182,872 665,514 Current portion of long-term debt - 529,522 ------------- ----------------- Total Current Liabilities 1,774,977 1,688,297 ------------- ----------------- LONG-TERM DEBT, LESS CURRENT PORTION - 200,000 ------------- ----------------- DEFERRED TAX LIABILITY 1,115,319 1,238,851 ------------- ----------------- COMMITMENTS MINORITY INTEREST 339,397 339,397 ------------- ----------------- STOCKHOLDERS' EQUITY Common stock, no - par value; 20,000,000 shares authorized; 14,135,164 and 10,805,408 shares issued and outstanding, respectively 9,422,396 9,059,150 Common stock subscribed 308,039 376,746 Accumulated deficit (4,616,197) (4,335,603) ------------- ----------------- Total Stockholders' Equity 5,114,238 5,100,293 ------------- ----------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,343,931 $ 8,566,838 ============= ================= The accompanying notes are an integral part of these financial statements. APPLIED EARTH TECHNOLOGIES, INC. Consolidated Statement of Operations for the Three and Six Month Periods Ended June 30, 1996 and 1995 - -----------------------------------------------------------------
Three Months Ended Six Months Ended ------------------ ---------------- June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995 ------------- ------------- ------------- ------------- REVENUES $ 259,624 $ 263,064 $ 452,798 $ 372,386 COST OF SALES 134,045 121,716 220,633 173,238 ------------- ------------- ------------- ------------- GROSS PROFIT 125,579 141,348 232,165 199,148 ------------- ------------- ------------- ------------- OPERATING EXPENSES Salaries, wages and benefits 63,536 73,254 121,037 146,997 Consulting 18,506 23,155 55,806 41,159 Travel 14,206 8,154 21,165 23,590 Rent 2,899 9,100 12,678 13,541 Interest 34,677 12,065 66,476 32,242 Utilities 2,237 2,433 7,371 6,022 Depreciation and amortization 62,706 60,754 125,408 123,377 Business Development and Promotion 11,988 37,454 24,267 86,853 Office 6,440 9,057 12,050 18,323 Taxes and licenses 1,778 1,750 5,106 4,443 Professional fees 84,290 46,454 119,433 115,557 Bad debts - 9,891 - 9,891 Repairs and maintenance 545 3,715 1,033 4,490 Miscellaneous 5,653 4,936 11,809 21,464 ------------- ------------- ------------- ------------- Total Operating Expenses 309,461 302,172 583,639 647,949 ------------- ------------- ------------- ------------- INCOME (LOSS) FROM OPERATIONS (183,882) (160,824) (351,474) (448,801) OTHER INCOME (LOSS) Loss on sale of property - - - (109,332) Interest Income 3,936 6,314 7,972 8,464 Royalties 769 629 1,313 1,119 Miscellaneous 7,671 5,994 7,671 2,101 ------------- ------------- ------------- ------------- Total Other Income (Loss) 12,376 12,937 16,956 (97,648) ------------- ------------- ------------- ------------- (LOSS) BEFORE INCOME TAX BENEFIT (171,506) (147,887) (334,518) (546,449) INCOME TAX BENEFIT 36,805 30,534 53,924 87,229 ------------- ------------- ------------- ------------- NET INCOME (LOSS) $ (134,701) $ (117,353) $ (280,594) $ (459,220) ============= ============= ============= ============= NET (LOSS) PER SHARE (Primary) $ (.010) $ (.013) $ (.022) $ (.045) ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. Applied Earth Technologies, Inc. Consolidated Statement of Changes in Stockholders' Equity for the Three Month Periods ended June 30, 1995 and 1996 - -----------------------------------------------------------------
Common Stock ------------ Common Stock Accumulated Shares Amount Subscribed Deficit Total ------------ ------------ ------------ ------------ ------------ Balances as of March 31, 1995 9,102,908 $ 8,801,825 $ 83,500 $ (3,360,989) $ 5,524,336 Common Stock issued for Debt reduction at $.35 per share 97,500 34,125 - - 34,125 Common Stock issued for services at $.06 to $.40 per share 1,080,000 90,000 - - 90,000 Net (Loss) - - - (117,353) (117,353) ------------ ------------ ------------ ------------ ------------ Balances as of June 30, 1995 10,280,408 $ 8,925,950 $ 83,500 $ (3,478,342) $ 5,531,108 ============ ============ ============ ============ ============ Balances as of March 31, 1996 11,338,741 $ 9,088,650 $ 376,746 $ (4,481,496) $ 4,983,900 Common Stock issued for cash at $.20 per share 500,000 100,000 - - 100,000 Common Stock issued for cash at $.10 per share 10,000 1,000 - - 1,000 Common Stock issued for services at $.06 per share 1,800,000 108,000 - - 108,000 Conversion of Common Stock Subscribed 274,828 68,707 (68,707) - - Common Stock issued for Debt Conversion at $.26 per share 211,595 56,039 - - 56,039 Net (Loss) - - - (134,701) (134,701) ------------ ------------ ------------ ------------ ------------ Balances as of June 30, 1996 14,135,164 $ 9,422,396 $ 308,039 $ (4,616,197) $ 5,114,238 ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. APPLIED EARTH TECHNOLOGIES, INC. Consolidated Statement of Cash Flows for the Three and Six Month Periods Ended June 30, 1996 and 1995 - -----------------------------------------------------------------
Three Months Ended Six Months Ended ------------------------------- ------------------------------- June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995 ------------- ------------- ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (134,701) $ (117,352) $ (280,594) $ (459,220) Add items not requiring the use of cash: Depreciation, amortization and non-cash expenses 55,954 60,754 118,660 99,826 (Increase) in accounts receivable (91,398) (60,232) (91,409) (91,202) (Increase) in advances - (120) - (120) (Increase) decrease in inventories (6,179) (20,000) 1,321 (20,000) (Increase) decrease in deposits - (150) (150) 3,159 (Increase) decrease in prepaid expenses 4,557 (6,000) - (6,500) Increase in accounts payable 33,266 14,232 44,044 10,772 (Decrease) in deferred tax liability (71,609) (65,338) (123,532) (156,840) Increase (decrease) in interest payable 22,223 2,940 37,596 (10,384) Increase (decrease) in other accrued liabilities (5,091) 54,590 18,739 107,595 ------------- ------------- ------------- ------------- NET CASH FLOWS USED FROM OPERATING ACTIVITIES (192,978) (136,676) (275,325) (522,914) ------------- ------------- ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES Reduction in property, plant and equipment 17,538 17,538 35,984 322,175 Decrease in other assets - - 52,700 _ Decrease in notes receivable - 150 6,301 150 Reduction of intangibles 17,266 17,266 34,530 34,532 ------------- ------------- ------------- ------------- NET CASH FLOWS PROVIDED FROM INVESTING ACTIVITIES 34,804 34,954 129,515 356,857 ------------- ------------- ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES Capital contributions 265,039 124,125 294,539 261,860 Net proceeds from notes payable - - 200,836 130,343 Reduction of long term debt (126,775) - (415,000) (208,038) ------------- ------------- ------------- ------------- NET CASH FLOWS PROVIDED FROM FINANCING ACTIVITIES 138,264 124,125 80,375 184,165 ------------- ------------- ------------- ------------- NET INCREASE (DECREASE) IN CASH (19,910) 22,403 (65,435) 18,108 CASH AT BEGINNING OF PERIOD 19,445 (6,142) 64,970 (1,847) ------------- ------------- ------------- ------------- CASH AT END OF PERIOD $ (465) $ 16,261 $ (465) $ 16,261 ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. Applied Technologies, INC. Notes to Consolidated Financial Statements - ----------------------------------------------------------------- The condensed consolidated financial statements of Applied Earth Technologies, Inc. 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, the Company 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 Applied Earth Technologies, Inc.'s annual report on Form 10-KSB for the fiscal year ended December 31, 1995. 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 Applied Earth Technologies, Inc.'s annual report on Form 10-KSB for the fiscal year ended December 31, 1995. - ----------------------------------------------------------------- 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. None (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. APPLIED EARTH TECHNOLOGIES, INC. (Registrant) Dated: September 18, 1996 By /s/ -------------------------- Dale H Christiansen, Chief Financial Officer EX-27 2
5 0000319124 APPLIED EARTH TECHNOLOGIES, INC. (FORMERLY SAN DIEGO BANCORP 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 0 0 116,445 0 94,515 210,960 4,722,710 201,582 8,343,931 1,774,977 0 0 0 9,422,396 (4,308,158) 8,343,931 452,798 469,754 220,633 517,163 0 0 66,476 (334,518) (30,534) 0 0 0 0 (280,594) (0.022) (0.022)
-----END PRIVACY-ENHANCED MESSAGE-----