-----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, TfbLlePwZRPENqmEM7J57q+EgurUWtLHG0bhAf7D/15tisnAfVWoURr9cBa1op5q lTM7S0F6sSRlEXYCHYtbdQ== 0001012895-96-000029.txt : 19960924 0001012895-96-000029.hdr.sgml : 19960924 ACCESSION NUMBER: 0001012895-96-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 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: 96633095 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 SEC000URITIES 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, 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 --------------------------------------------------- (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, 1996 --------------------- ------------------------------ Common Stock, No Par Value 11,338,741 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, 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 month period ended March 31, 1996 and 1995, and the unaudited statement of stockholders' equity for the three month periods ended March 31, 1995 and 1996, are attached hereto and incorporated herein by this reference. Operating results for the quarter ended March 31, 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., (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 associated with the Company's prior name. Ability of the Company to Continue as a Going Concern For the three-month period ended March 31, 1996, the Company has incurred a consolidated net loss of $145,893. In addition, at March 31, 1996, current liabilities exceeded current assets by $1,713,504. During the first three months of 1996, the Company converted $29,500 in miscellaneous liabilities to equity by issuing 533,333 shares of common stock. In the future, management believes that there is an additional $600,000 in debt (principally notes payable and accruals) that it may be able to convert 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 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. The Company must meet monthly operational expenses of approximately $85,000. Currently, the Company has average revenues from operations of approximately $63,000 which creates an operational shortfall of approximately $22,000 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. Results from Operations During the first three months of fiscal year 1996, the Company had revenues of $193,174, cost of sales of $86,588, operating expenses of $274,178, other income of $4,580 and an income tax benefit of $17,119. These yielded a net loss of $145,893, compared to a loss of $341,868 for the same period of 1995. The substantial portion of the first quarter 1996 loss was due to three factors: professional fees/consulting fees ($72,443), and depreciation and amortization ($62,702), and interest expense ($31,799). 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, 1996, the Company's working capital deficit totaled $1,713,504 compared with $1,502,455 at December 31, 1995. The Company has current liabilities totaling $1,850,899 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 first quarter of 1996, total liabilities decreased $37,398. 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. With Enviro-Guard's products in the marketplace 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 its 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. APPLIED EARTH TECHNOLOGIES, INC. Consolidated Statement of Financial Position As of March 31, 1996 and December 31, 1995 - ----------------------------------------------------------------- ASSETS ------- (Unaudited) March 31, 1996 December 31, 1995 -------------- ----------------- CURRENT ASSETS Cash $ 19,445 $ 64,970 Accounts Receivable 25,047 25,036 Inventories 88,336 95,836 Prepaid expenses 4,557 - ------------- ----------------- Total Current Assets 137,385 185,842 ------------- ----------------- PROPERTY, PLANT AND EQUIPMENT Buildings Lease Hold Improvements 127,119 127,119 Mining property 4,352,852 4,370,390 Equipment 260,277 261,185 ------------- ----------------- Total Property, Plant and Equipment 4,740,248 4,758,694 Less accumulated depreciation 202,002 195,672 ------------- ----------------- Net Property, Plant and Equipment 4,538,246 4,563,022 ------------- ----------------- OTHER ASSETS Investment in EPA labels, Net of amortization 3,436,167 3,509,807 Notes receivable 243,699 250,000 Deposits 1,117 967 Other assets 4,500 57,200 ------------- ----------------- Total Other Assets 3,685,483 3,817,974 ------------- ----------------- TOTAL ASSETS $ 8,361,114 $ 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 March 31, 1996 and December 31, 1995 - ----------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------- (Unaudited) March 31, 1996 December 31, 1995 -------------- ----------------- CURRENT LIABILITIES Accounts payable $ 253,492 $ 242,714 Interest payable 219,135 203,762 Income taxes payable 20,489 20,489 Other accrued liabilities 48,126 26,296 Notes payable 997,062 665,514 Current portion of long-term debt 312,585 529,522 -------------- ----------------- Total Current Liabilities 1,850,889 1,688,297 -------------- ----------------- LONG-TERM DEBT, LESS CURRENT PORTION - 200,000 -------------- ----------------- DEFERRED TAX LIABILITY 1,186,928 1,238,851 -------------- ----------------- COMMITMENTS MINORITY INTEREST 339,397 339,397 -------------- ----------------- STOCKHOLDERS' EQUITY Common stock, no - par value; 20,000,000 shares authorized; 11,338,741 and 10,805,408 shares issued and outstanding, respectively 9,088,650 9,059,150 Common stock subscribed 376,746 376,746 Accumulated deficit (4,481,496) (4,335,603) -------------- ----------------- Total Stockholders' Equity 4,983,900 5,100,293 -------------- ----------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,361,114 $ 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- Month periods ended March 31, 1996 and 1995 - ----------------------------------------------------------------- Three Months Ended --------------------------------- March 31, 1996 March 31, 1995 -------------- -------------- REVENUES $ 193,174 $ 109,322 COST OF SALES 86,588 51,522 -------------- -------------- GROSS PROFIT 106,586 57,800 -------------- -------------- OPERATING EXPENSES Salaries, wages and benefits 57,501 73,743 Consulting 37,300 18,004 Business development 8,105 - Travel 6,959 15,436 Rent 9,779 4,441 Interest 31,799 20,177 Utilities 5,134 3,589 Depreciation and amortization 62,702 62,623 Advertising 4,174 49,399 Office 5,610 9,266 Taxes and licenses 3,328 2,693 Professional fees 35,143 69,103 Insurance 5,595 6,294 Repairs and maintenance 488 775 Miscellaneous 561 16,528 -------------- -------------- Total Operating Expenses 274,178 352,071 -------------- -------------- (LOSS) FROM OPERATIONS (167,592) (294,271) -------------- -------------- OTHER INCOME (LOSS) Interest 4,036 2,150 Royalties 544 490 (Loss) on sale of property - (109,332) Miscellaneous - 2,400 -------------- -------------- Total Other Income (Loss) 4,580 (104,292) -------------- -------------- (LOSS) BEFORE INCOME TAX BENEFIT (163,012) (398,563) INCOME TAX BENEFIT 17,119 56,695 -------------- -------------- NET (LOSS) $ (145,893) $ (341,868) ============== ============== NET (LOSS) PER SHARE (Primary) $ (.01) $ (.04) NET (LOSS) PER SHARE (Fully Diluted) $ (.01) $ (.04) Applied Earth Technologies, Inc. Consolidated Statement of Changes in Stockholders' Equity for the Three Month Periods ended March 31, 1995 and March 31, 1996 - -----------------------------------------------------------------
Common Stock ------------ Common Stock Accumulated Shares Amount Subscribed Deficit Total ------------ ------------ ------------ ------------ ------------ 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) - - 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 ============ ============ ============ ============ ============ Balance as of December 31, 1995 10,805,408 $ 9,059,150 $ 376,746 $ (4,335,603) $ 5,100,293 Common Stock issued for reduction of notes payable at $.06 per share 533,333 29,500 - - 29,500 Net (Loss) - - - (145,893) (145,893) ------------ ------------ ------------ ------------ ------------ Balance as of March 31, 1996 11,338,741 $ 9,088,650 $ 376,746 $ (4,481,496) $ 4,983,900
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 --------------------------------- March 31, 1996 March 31, 1995 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) $ (145,893) $ (341,868) Add items not requiring the use of cash: Depreciation, amortization and non-cash expenses 62,702 176,847 (Increase) in accounts receivable (11) (30,970) Decrease in inventories 7,500 - (Increase) decrease in deposits (150) 3,289 Decrease in notes receivable 6,301 - (Increase) in prepaid expenses (4,557) (520) Increase (decrease) in accounts payable 10,778 (2,831) (Decrease) in deferred tax credit (51,923) (91,502) Increase (decrease) in interest payable 15,373 (13,324) Increase in other accrued liabilities 23,830 52,376 -------------- -------------- NET CASH FLOWS USED FROM OPERATING ACTIVITIES (76,050) (248,503) -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES (Acquisition) reduction in property, plant and equipment 18,450 304,365 Decrease in other assets 52,700 - (Increase) reduction of intangibles 17,264 17,538 -------------- -------------- NET CASH FLOWS PROVIDED FROM INVESTING ACTIVITIES 88,414 321,903 -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES Capital contributions 29,500 - Net proceeds from notes payable 15,026 444,865 Reduction of long term debt (102,415) (522,560) -------------- -------------- NET CASH FLOWS (USED) FROM FINANCING ACTIVITIES (57,889) (77,695) -------------- -------------- TOTAL (DECREASE) IN CASH (45,525) (4,295) CASH AT BEGINNING OF PERIOD 64,970 (1,847) -------------- -------------- CASH AT END OF PERIOD $ 19,445 $ (6,142) ============== ============== 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 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 19,445 0 25,047 0 88,336 137,385 4,720,403 202,002 8,361,114 1,850,889 0 0 0 9,088,650 (4,140,750) 8,361,114 193,174 197,754 86,588 242,379 0 0 31,799 (163,012) (17,119) 0 0 0 0 (145,893) (0.01) (0.01)
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