-----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, NGNQKVvI2L5OP9yzgfgx+hDB2QmME362NNL4ljpHmbKJmRXcCqpBPjfXNnz8j0/r zVRxzRSSFDBQMNYXoC3pSw== 0000912057-96-012418.txt : 19960617 0000912057-96-012418.hdr.sgml : 19960617 ACCESSION NUMBER: 0000912057-96-012418 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960430 FILED AS OF DATE: 19960614 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AQUASEARCH INC CENTRAL INDEX KEY: 0000837490 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 330034535 STATE OF INCORPORATION: CO FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-23460 FILM NUMBER: 96581476 BUSINESS ADDRESS: STREET 1: 73-4460 QUEEN KA AHUMANU HWY STREET 2: STE 110 CITY: KAILUA KONA STATE: HI ZIP: 96740 BUSINESS PHONE: 6194580011 MAIL ADDRESS: STREET 1: 73-4460 QUEEN KA AHUMANU HWY STREET 2: STE 110 CITY: KAILUA KONA STATE: HI ZIP: 96740 10QSB 1 10QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB Mark one (X) Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended April 30, 1996 or ( ) Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 33-23460-LA AQUASEARCH, INC. ----------------------------------------------------- Exact Name of Registrant as Specified in its Charter Colorado 33-0034535 - ------------------------------ --------------------- State or Other Jurisdiction of IRS Employer Incorporation or Organization Identification Number 73-4460 Queen Ka'ahumanu Highway Suite 110 Kailua-Kona, Hawaii 96740 ------------------------------------------- -------- Address of Principal Executive Offices Zip Code (808) 326-9301 ------------------------------ Registrant's Telephone Number, Including Area Code Not Applicable --------------------------------------------- Former Name, Former Address and Former Fiscal Year, if Changes 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), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- The number of shares outstanding of Registrant's common stock, $0.0001 par value at April 30, 1996 was 39,419,688 shares. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONTENTS Page BALANCE SHEETS F-2 STATEMENTS OF LOSS AND ACCUMULATED DEFICIT F-3 STATEMENTS OF CASH FLOWS F-4 NOTES TO FINANCIAL STATEMENTS F-5 Aquasearch, Inc. (a development stage enterprise) BALANCE SHEETS April 30 October 31, 1996 1995 ASSETS (Unaudited) (Audited) ----------- ----------- CURRENT ASSETS Cash $ 266,427 $ 27,208 Stock subscriptions receivable - 35,000 Accounts receivable 11,348 - Prepaid expenses 7,449 9,177 Other current assets 4,653 2,535 ---------- ---------- Total current assets 289,877 73,920 PLANT AND EQUIPMENT - AT COST Plant 463,639 408,219 Other equipment 48,634 7,740 Less accumulated depreciation (21,504) (320) ---------- ---------- Net plant equipment 490,769 415,639 OTHER ASSETS Organization costs (net) - - ---------- ---------- Total assets $ 780,646 $ 489,559 ---------- ---------- ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 47,443 $ 233,181 Accounts payable - related parties - - Deposits held - - Accrued payroll - - Accrued interest - - Deposits payable - - ---------- ---------- Total current liabilities 47,443 233,181 STOCKHOLDERS' EQUITY Common stock, $0.0001 par value, 50,000,000 shares authorized 5,063 4,379 Additional paid-in capital 2,639,202 1,704,785 Common stock subscribed - - Accumulated deficit (1,911,062) (1,452,786) ---------- ---------- Total stockholders' equity (deficit) 733,203 256,378 ---------- ---------- Total liabilities and stockholders' equity $ 780,646 $ 489,559 ---------- ---------- ---------- ---------- F-2 Aquasearch, Inc. (a development stage enterprise) STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
For the period For the three For the six For the three For the six From inception months ended months ended months ended months ended to April 30, 1996 April 30, 1996 April 30, 1996 January 31, 1995 April 30, 1995 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) ----------------- -------------- -------------- ---------------- -------------- OPERATIONS Revenues $ 9,984 $ 9,984 $ 9,984 $ - $ - Cost of sales 238,574 137,545 238,574 - - Research and development costs 444,165 - - - - ------------ ------------ ------------ ------------ ------------ Total cost of sales and research costs 682,739 137,545 238,574 - - ------------ ------------ ------------ ------------ ------------ Gross profit (loss) (672,755) (127,561) (228,590) - - General and administrative expenses 1,025,993 132,636 231,498 29,157 43,729 ------------ ------------ ------------ ------------ ------------ Earnings (loss) from operations (1,698,748) (260,197) (460,088) (29,157) (43,729) OTHER INCOME (EXPENSE) Interest (12,244) - - - - Other 1,812 1,812 1,812 - - Investment in joint venture (147,096) - - - - ------------ ------------ ------------ ------------ ------------ Total other income and (expense) (157,528) 1,812 1,812 - - ------------ ------------ ------------ ------------ ------------ Earnings (loss) before income taxes and extraordinary item (1,856,276) (258,385) (458,276) (29,157) (43,729) Extraordinary item - loss on write down of assets to liquidation basis (14,502) - - - - ------------ ------------ ------------ ------------ ------------ Earnings (loss) before income taxes (1,870,778) (258,385) (458,276) (29,157) (43,729) Federal and state income taxes (6,016) - - - - ------------ ------------ ------------ ------------ ------------ Net income (loss) (1,876,794) (258,385) (458,276) (29,157) (43,729) ACCUMULATED DEFICIT BALANCE, BEGINNING OF PERIOD (34,268) (1,652,677) (1,452,786) (1,178,545) (1,163,973) ------------ ------------ ------------ ------------ ------------ Balance, end of period $ (1,911,062) $ (1,911,062) $ (1,911,062) $ (1,207,702) $ (1,207,702) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Loss per share $ (0.09) $ (0.01) $ (0.01) Nil Nil ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Weighted average shares outstanding 22,000,000 38,000,000 35,000,000 23,463,313 23,463,313 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
F-3 Aquasearch, Inc. (a development stage enterprise) STATEMENTS OF CASH FLOWS
For the period For the six For the six From inception months ended months ended to April 30, 1996 April 30, 1996 April 30, 1995 (unaudited) (unaudited) (unaudited) ----------------- -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (1,876,794) $ (458,276) $ (43,729) Adjustments to reconcile net loss to net cash cash provided by operating activities: Amortization 3,527 - - Depreciation 27,211 21,184 - Expenses paid with stock and additional paid in capital 183,365 - - Loss on write down of assets to liquidation basis 5,392 - - Changes in: Accounts receivable (11,348) (11,348) Stock subscriptions receivable - 35,000 Prepaid expenses (8,703) 1,728 Other current assets (4,653) (2,118) 1,207 Accounts payable - (185,738) (4,083) ------------ ------------ ------------ Cash used by operating activities (1,682,003) (599,568) (46,605) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (421,857) (96,314) (7,748) ------------ ------------ ------------ Cash used by investing activities (421,857) (96,314) (7,748) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock 2,438,641 954,048 171,000 Increase in notes payable - - - Offering costs (68,409) (18,947) (4,421) ------------ ------------ ------------ Cash provided by financing activities 2,370,232 935,101 166,579 ------------ ------------ ------------ Net increase in cash 266,372 239,219 112,226 Cash - beginning of period 55 27,208 1,213 ------------ ------------ ------------ Cash - end of period $ 266,427 $ 266,427 $ 113,439 ------------ ------------ ------------ ------------ ------------ ------------ Supplemental disclosure of cash flow information Cash paid during the period for: Interest $ 4,400 $ - $ 500 Income taxes $ 12,244 $ - $ 800
F-4 Aquasearch, Inc. (A development stage enterprise) NOTES TO FINANCIAL STATEMENTS April 30, 1996 (Unaudited) 1. RELATED PARTY TRANSACTIONS The Company uses office space provided by an officer of the Company. Monthly rent expense for this space is $380. 2. COMMON STOCK AND STOCK PURCHASE WARRANTS As of April 30, 1996, there were 3,348,000 Class B warrants issued and outstanding. No Class B warrants were exercised during the three months ended April 30, 1996. The Class B warrants are exercisable at $1 per share. The exercise period for the Class B warrants will expire on September 15, 1996 unless extended by the Board of Directors. An analysis of the changes in stockholders' equity is as follows:
- ----------------------------------------------------------------------------------------------------------------------------- TOTAL SHARES OF ADDITIONAL STOCK- COMMON COMMON PAID-IN ACCUMULATED COMMON STOCK HOLDERS' DESCRIPTION STOCK STOCK CAPITAL DEFICIT SUBSCRIBED EQUITY - ----------------------------------------------------------------------------------------------------------------------------- Balance, January 31, 1996 (unaudited) 37,527,688 $4,874 $2,400,842 $(1,652,677) 236,600 $989,639 Issuance of Common Stock (March, 1996, $.125 per share) 1,852,000 185 231,415 (231,600) - Offering costs (3,051) (3,051) Adjust stock subscribed (5,000) (5,000) Issuance of Common Stock (April, 1996, $.25 per share) 40,000 4 9,996 10,000 Loss for the six months ended April 30, 1996 - - - (258,385) - (258,385) ---------- ---------- ---------- ---------- ---------- ---------- Balance, April 30, 1996 39,419,688 $5,063 $2,639,202 $(1,911,062) - $733,203 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- - -----------------------------------------------------------------------------------------------------------------------------
3. MANAGEMENT'S REPRESENTATIONS OF INTERIM FINANCIAL INFORMATION These financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results of operations for the interim period presented. These adjustments are of a normal and recurring nature. F-5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION PLAN OF OPERATION. The following Plan of Operation contains certain forward-looking information. These statements involve certain risks and uncertainties. The Company's performance could differ materially from the results anticipated in these forward-looking statements as a result of various events and circumstances, some of which may be unanticipated at this time. The Company completed the installation of a prototype process dryer in February and placed the unit in operation in March. Management is currently evaluating the performance of the prototype unit prior to purchasing or leasing a custom-built commercial process dryer to meet the Company's anticipated manufacturing requirements. The Company estimates a six-month lead time for the manufacture and installation of the commercial process dryer at a cost, if purchased rather than leased, of approximately $300,000. Initial results from the use of the prototype unit have been positive. In March and April, the Company made the first commercial shipments of its astaxanthin microalgae product to Svenska Foder AB under the Company's Supply Agreement with Svenska Foder AB. At the end of April, production yields declined due to difficulties in controlling cultivation conditions. The Company believes the cause of these difficulties has been identified and corrected and that this will not impair its ability to meet production schedules under the Svenska Foder AB Supply Agreement. The Company has previously experienced, and expects to continue to experience, fluctuations in its production yields due to the risks inherent in developing and scaling-up its microalgae production technology. Operating expenses in the fiscal quarter ended April 30, 1996 increased primarily due to the hiring of additional production technicians and increased legal and consulting fees. The increase in staff was made in anticipation of the execution of a new distribution and development agreement with Cultor, Ltd. (the "Cultor Agreement"), which was announced on May 14, 1996. The increase in legal expense was primarily due to the first quarter closing of two private placements of equity securities and activity related to the Company's existing patent applications. The increase in consultant fees was primarily attributable to services rendered in production-related research and public relations. The Cultor Agreement will require the Company to significantly increase its manufacturing capacity and processes over the next few years. Management plans to award a design and engineering contract for construction of a new manufacturing facility in the third fiscal quarter, with construction scheduled to commence in calendar 1997. The scale-up of the Company's manufacturing capacity and processes will place significant additional responsibilities upon management; require significant additional capital; and require additional scientific, technical and manufacturing expertise. Although there can be no assurances that the Company will be successful in meeting these challenges, management is in the process of securing the necessary expertise and resources to accomplish them. The Company anticipates increasing its research and development activities in the second half of calendar 1996 in order to develop future microalgae products. In order to sustain operations, acquire necessary capital equipment, expand its manufacturing capacity and fund its research and development activities, it will be necessary for the Company to raise additional capital during the next few months. The Company plans to raise this additional capital through one or more public or private offerings of debt or equity securities, or a combination thereof. PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. None. Item 2. CHANGES IN SECURITIES. None. Item 3. DEFAULTS UPON SENIOR SECURITIES. None. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. Item 5. OTHER INFORMATION. None. Item 6. EXHIBITS AND REPORTS OF FORM 8-K. a) EXHIBITS. None. b) REPORTS ON FORM 8-K. None. SIGNATURE 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. AQUASEARCH, INC. Dated: June 14, 1996 By: /s/ Mark E. Huntley --------------- Mark E. Huntley, President and Chief Executive Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEETS AND STATMENTS OF OPERATIONS OF THE COMPANY'S FORM 10-QSB FOR THE SIX MONTHS ENDED APRIL 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 6-MOS OCT-31-1995 NOV-01-1995 APR-30-1996 266,427 0 11,348 0 0 289,877 512,273 21,504 780,646 47,443 0 0 0 5,063 728,140 780,646 9,984 9,984 238,574 470,072 1,812 0 0 0 0 (458,276) 0 0 0 (458,276) (.01) 0
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