Back to GetFilings.com
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 Act of 1934
For the quarter ended Commission File No. 0-13403
September 30, 2002
________________________________________________________________________________
AMISTAR CORPORATION
(Exact name of registrant as specified in its Charter)
________________________________________________________________________________
STATE OF CALIFORNIA 95-2747332
(State or other jurisdiction of Incorporation (I.R.S. Employer Identification
or organization) No.)
237 VIA VERA CRUZ
SAN MARCOS, CALIFORNIA 92069
(Address of principle executive offices) (Zip Code)
(760) 471-1700
(Registrant's telephone number, including area code)
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 [ ]
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]
CLASS OUTSTANDING AT OCTOBER 31, 2002
Common Stock $.01 Par Value 3,083,349 shares
1
PART I
ITEM 1. FINANCIAL STATEMENTS
AMISTAR CORPORATION
Condensed Balance Sheets
(in thousands)
Sep. 30, Dec. 31,
2002 2001
-------- --------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,669 $ 3,626
Trade accounts receivable, net 1,415 1,064
Inventories 2,740 2,724
Demonstration equipment 49 153
Prepaid expenses 88 188
Restricted cash 70 --
-------- --------
Total current assets 7,031 7,755
Property and equipment, net 4,101 4,386
Restricted cash -- 1,452
Other assets 60 73
-------- --------
$11,192 $13,666
======== ========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 432 $ 285
Accrued liabilities 412 599
Industrial development bonds 3,000 4,500
-------- --------
Total current liabilities 3,844 5,384
-------- --------
Shareholders' equity:
Common stock 31 31
Additional paid-in capital 4,535 4,536
Retained earnings 2,782 3,715
-------- --------
Total shareholders' equity 7,348 8,282
-------- --------
$11,192 $13,666
======== ========
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.
2
AMISTAR CORPORATION
Condensed Statements of Operations
(Unaudited and in thousands, except per share data)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2002 2001 2002 2001
--------- --------- --------- ---------
Net sales $ 2,844 $ 3,890 $ 8,312 $ 10,968
Cost of sales 2,505 3,878 7,644 10,466
--------- --------- --------- ---------
Gross profit 339 12 668 502
--------- --------- --------- ---------
Operating expenses:
Selling 339 388 922 1,346
General and administrative 268 394 735 987
Engineering, research and development 123 140 366 745
--------- --------- --------- ---------
730 922 2,023 3,078
--------- --------- --------- ---------
Operating loss (391) (910) (1,355) (2,576)
Other income, net 16 7 28 45
--------- --------- --------- ---------
Loss before income taxes (375) (903) (1,327) (2,531)
Income tax expense (benefit) 2 2 (394) 6
--------- --------- --------- ---------
Net loss $ (377) $ (905) $ (933) $ (2,537)
========= ========= ========= =========
Net loss per common share,
basic and diluted $ (0.12) $ (0.29) $ (0.30) $ (0.81)
========= ========= ========= =========
Weighted average shares outstanding,
basic and diluted 3,085 3,139 3,086 3,139
========= ========= ========= =========
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS.
3
AMISTAR CORPORATION
Condensed Statements of Cash Flows
(Unaudited and in thousands)
Nine months ended September 30, 2002 2001
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $ (933) $(2,537)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 429 532
Changes in assets and liabilities:
Trade accounts receivable, net (351) 732
Inventories (16) 217
Demonstration equipment 104 (76)
Prepaid expenses and other assets 113 94
Accounts payable and accrued liabilities (40) (92)
-------- --------
Net cash used in operating activities (694) (1,130)
-------- --------
Net cash used in investing activities-
Purchases of property and equipment (144) (175)
-------- --------
Cash flows from financing activities:
Redemption of industrial development bonds (1,500) --
Decrease (increase) in restricted cash, net 1,382 (123)
Exercise of stock options -- 4
Repurchase of common stock (1) (3)
-------- --------
Net cash used in financing activities (119) (122)
-------- --------
Net decrease in cash and cash equivalents (957) (1,427)
-------- --------
Cash and cash equivalents, beginning of period 3,626 4,519
-------- --------
Cash and cash equivalents, end of period $ 2,669 $ 3,092
======== ========
Supplemental disclosure of cash flow information-
Cash paid during the period for:
Interest $ 32 $ 117
Income taxes $ 5 $ 9
SEE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS
4
AMISTAR CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
- ---------------------
The Interim Condensed Financial Statements of Amistar Corporation, a
California corporation (the "Company") have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been omitted
pursuant to such rules and regulations. The results of operations for the
nine-month period ended September 30, 2002 are not necessarily indicative of the
results to be expected for the full year. These Interim Condensed Financial
Statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company's 2001 annual report on Form 10-K as
filed with the Securities and Exchange Commission on March 28, 2002, as well as
in conjunction with the Company's other current filings. Certain prior period
balances have been reclassified to conform to the current period presentation.
Inventories
- -----------
Inventories are stated at the lower of cost (first-in, first-out) or market
and include material, labor and manufacturing overhead costs. Inventories
consist of the following (in thousands):
Sept. 30 Dec. 31,
2002 2001
------------------------------- -------------------------------
AIA AMS Total AIA AMS Total
--- --- ----- --- --- -----
Raw Material $ 238 $ 971 $1,209 $ 207 $ 607 $ 814
Work In Process 327 158 485 390 633 1,023
Finished Goods 1,046 -- 1,046 887 -- 887
------------------------------- -------------------------------
Total $1,611 $1,129 $2,740 $1,484 $1,240 $2,724
=============================== ===============================
At September 30, 2002, the Company had 13 completed DataPlace machines
included in the AIA finished goods carrying inventory value. The AIA work in
process and raw material inventories also consist primarily of the DataPlace
machine product line. During the nine months ended September 30, 2002, the
Company sold one DataPlace machine and rented one DataPlace machine for a
three-month term pending evaluation to purchase.
5
AMISTAR CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
Loss Per Common Share
- ---------------------
The Company calculates net loss per share in accordance with SFAS No. 128,
Earnings Per Share. Under SFAS No. 128, basic and diluted net loss per common
share is calculated by dividing net loss by the weighted-average number of
common shares outstanding during the reporting period.
Options to purchase 5,000 shares of potentially dilutive common stock were
excluded from the calculation of diluted net earnings (loss) per share for the
nine months ended September 30, 2002, because the effects of these instruments
were anti-dilutive. There were no potentially dilutive stock options outstanding
during the three months ended September 30, 2002.
Industrial Development Bonds
- ----------------------------
The Company maintains a letter of credit from its bank in support of the
$3,000,000 Industrial Development Bonds (Bonds). On February 1, 2002, the
Company paid $1,500,000 to redeem a portion of the Bonds using restricted cash
of $1,452,000, plus an additional $48,000 of unrestricted cash.
The Company's stand-by letter of credit reimbursement agreement with its
bank contains certain affirmative financial covenants. At March 31, June 30, and
September 30, 2002, the Company was not in compliance with a covenant to
maintain a minimum tangible net worth of $8,200,000. Two other covenants
contained in the stand-by letter of credit reimbursement agreement are measured
on an annual, calendar basis and the Company believes it will likely not be in
compliance with these covenants at December 31, 2002. These covenants require a)
a ratio of cash flow to debt service to exceed 1:1; and b) net losses after
taxes for fiscal year 2002 not to exceed $350,000. The Company has received a
waiver from its bank effective through December 31, 2002 related to its
violation of the tangible net worth covenant at September 30, 2002.
The entire Industrial Development Bonds balance has been classified as a
current liability in the accompanying balance sheets as it is unlikely that the
Company will be able to meet the tangible net worth covenant after the waiver
period expires, and based on the potential for additional covenant violations at
December 31, 2002. A covenant violation constitutes an event of default and
allows the bank to call the debt prior to maturity. The Company has made all
debt service payments on the Bonds, including its current requirement to pay
$10,000 per month into a restricted cash fund for future payments against the
Bonds.
6
AMISTAR CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
The inability of the Company to return to profitability will result in a
continued failure to comply with the terms of the Union Bank of California
reimbursement agreement, which supports the stand-by letter of credit
guaranteeing the Company's performance on the industrial development bonds. In
the event the Company continues its covenant violation, and is unable to present
a viable turn-around plan satisfactory to its Bank, such event could cause the
bank to require the Company to set aside restricted cash as collateral, seek a
substitute guarantor, re-finance the building with alternative financing or to
sell the San Marcos, California facility. The inability of the Company to
successfully substitute a guarantor or to re-finance the building could have a
material adverse effect on the Company's cash position and results of
operations. The Company will continue to negotiate with its bank for continued
waivers relating to future expected covenant violations. There can be no
assurance that the bank will continue to provide such waivers or that the bank
will not call the debt prior to maturity.
Notice from Stock Exchange
- --------------------------
The Company received notice on October 4, 2002 that it is subject to
de-listing from the NASDAQ Small Cap Market for failure to meet the minimum
closing bid price of $1.00 for the prior 30 days. The Company has 180 days to
comply with the minimum closing bid price requirement or possibly face
de-listing. In the event the Company fails to comply with the minimum bid price
requirement at the end of the 180 day period, the Company believes it will
receive an 180 day extension based on the initial inclusion requirements.
7
AMISTAR CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
Industry Segments and Geographic Information
- --------------------------------------------
The following table summarizes the Company's two operating segments:
Amistar Industrial Automation (AIA), which encompasses the manufacture and
distribution of assembly machines and related accessories, and Amistar
Manufacturing Services (AMS). The Company identifies reportable segments based
on the unique nature of operating activities, customer base and marketing
channels. Information is also provided by major geographical area (dollars in
thousands).
(AIA) MACHINE SALES AND SERVICE
--------------------------------- (AMS)
UNITED MFG.
STATES FOREIGN TOTAL SERVICES CORPORATE TOTAL
- ------------------------------------------------------------------------------------------------- -----------
THREE MONTHS ENDED SEPTEMBER 30, 2002
Net sales $ 491 $ 2 $ 493 $ 2,351 $ -- $ 2,844
======== ======== ======== ========= ======== =========
Depreciation and amortization 49 -- 49 84 -- 133
======== ======== ======== ========= ======== =========
Loss from operations (246) (2) (248) (143) -- (391)
======== ======== ======== ========= ======== =========
Total assets 4,798 47 4,845 1,975 4,372 11,192
======== ======== ======== ========= ======== =========
Additions to long-lived assets 12 -- 12 15 31 58
======== ======== ======== ========= ======== =========
THREE MONTHS ENDED SEPTEMBER 30, 2001
Net sales $ 1,053 $ 55 $ 1,108 $ 2,782 $ -- $ 3,890
======== ======== ======== ========= ======== =========
Depreciation and amortization 59 -- 59 113 -- 172
======== ======== ======== ========= ======== =========
Loss from operations (606) (31) (637) (273) -- (910)
======== ======== ======== ========= ======== =========
Total assets 5,170 -- 5,170 4,782 4,526 14,478
======== ======== ======== ========= ======== =========
Additions to long-lived assets -- -- -- 1 -- 1
======== ======== ======== ========= ======== =========
NINE MONTHS ENDED SEPTEMBER 30, 2002
Net sales $ 1,175 $ 90 $ 1,265 $ 7,047 $ -- $ 8,312
======== ======== ======== ========= ======== =========
Depreciation and amortization 159 -- 159 270 -- 429
======== ======== ======== ========= ======== =========
Loss from operations (789) (72) (861) (494) -- (1,355)
======== ======== ======== ========= ======== =========
Additions to long-lived assets 14 -- 14 92 38 144
======== ======== ======== ========= ======== =========
NINE MONTHS ENDED SEPTEMBER 30, 2001
Net sales $ 2,293 $ 121 $ 2,414 $ 8,554 $ -- $ 10,968
======== ======== ======== ========= ======== =========
Depreciation and amortization 198 -- 198 334 -- 532
======== ======== ======== ========= ======== =========
Loss from operations (1,534) (80) (1,614) (962) -- (2,576)
======== ======== ======== ========= ======== =========
Additions to long-lived assets -- -- -- 175 -- 175
======== ======== ======== ========= ======== =========
8
AMISTAR CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward Looking Statements
- --------------------------
This Quarterly Report contains forward-looking statements within the
meaning of the Private Securities Reform Act of 1995, particularly statements
regarding market opportunities, customer acceptance of products, gross margin
and marketing expenses. Statements that are predictive, that depend upon or
refer to future events or conditions, or that include words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates," "hopes," and similar
expressions constitute forward-looking statements. In addition, any statements
concerning future financial performance (including future revenues, earnings or
growth rates), ongoing business strategies or prospects, and possible future
Company actions are also forward-looking statements. These forward-looking
statements involve risks and uncertainties, and the cautionary statements set
forth below identify important factors that could cause actual results to differ
materially from those in any such forward-looking statements. Such factors
include, but are not limited to, adverse changes in general economic conditions,
including changes in the specific markets for the Company's products, product
availability, decreased or lack of growth in the electronics industry, adverse
changes in customer order patterns, increased competition, lack of acceptance of
new products, pricing pressures, lack of success in technological advancements,
risks associated with foreign trade and other factors.
RESULTS OF OPERATIONS
Overview
- --------
Beginning in 2001, and continuing through the first nine months of 2002,
the Company has been severely affected by the overall economic slow down. The
contraction in product volumes compared to manufacturing capacity among the
Company's machine customer base has resulted in a lack of sales of the Company's
DataPlace machine for the first two quarters of 2002. During the quarter ended
September 30, 2002, the Company was able to sell one DataPlace machine and
rented another for a three-month term to a customer that is evaluating the
machine for purchase. Many of the Company's machine customers are continuing to
substantially limit their capital spending. In the event that general economic
conditions do not improve, or if the Company's AMS base of customers and
potential customers fails to grow or add new products or moves production
offshore, the Company's financial position and results of operation could be
materially adversely affected.
The Company continues to take steps to minimize costs and inventory levels
in response to the decline in demand for its label identification automation
equipment and manufacturing services. At September 30, 2002, the Company had 13
completed DataPlace machines included in finished goods inventory with a
carrying value of $1,046,000. The AIA work in process and raw material
inventories of $327,000 and $238,000, respectively, consists primarily of the
DataPlace machine product line. The Company has considered the current and
projected state of the machine's technology, its expected future competitive
position and has made estimates of anticipated Dataplace demand upon economic
recovery. Estimates of future demand are highly subjective and subject to
material change. As a result, the Company recorded an inventory write-down of
DataPlace machines totaling $75,000 in the second quarter of 2002. Protracted
insufficient demand for the DataPlace machines could require additional charges
for excess quantities or obsolescence in the future.
9
AMISTAR CORPORATION
Three Months Ended September 30, 2002 vs. Three Months Ended September 30, 2001
- -------------------------------------------------------------------------------
Net Sales
- ---------
Net sales for the three months ended September 30, 2002 were $2,844,000
compared to $3,890,000 for the same period in the prior year, a decline of 27%.
During the current quarter, AIA division sales consisted of $493,000 of
custom automation, machine parts and services sales as compared to $1,108,000 in
the prior year quarter. DataPlace sales for the current quarter totaled $81,000
vs. $108,000 for the same quarter in 2001. During the third quarter of 2001, the
AIA division had a surge in sales when it shipped eight custom machines totaling
$642,000 to a golf industry customer.
The AIA division received new orders for customized factory automation from
customers in the luggage tagging industry and golf equipment industries during
the third quarter of 2002. The revenue generated included engineering design,
turnkey fabrication and turnkey assembly services.
AMS sales during the current quarter were $2,351,000 as compared to
$2,782,000 for the same quarter in the prior year, a decline of 15%. The decline
in AMS sales is primarily due to reduced orders from a previous major customer
that transferred production overseas.
Gross Profit
- ------------
Gross profit increased during the quarter ended September 30, 2002 from the
same period in 2001 primarily due to a $408,000 charge taken in the third
quarter of 2001 to increase inventory reserves for the Company's assembly
machine products. The gross profit percentage of sales improved in the quarter
ended September 2002 from the same period in 2001 primarily due to the lower
cost of AMS components and improved contract manufacturing labor efficiencies.
Selling Expenses
- ----------------
Selling expenses decreased in the current quarter from the third quarter of
2001 primarily due to reductions in AIA division personnel.
General and Administrative expenses
- -----------------------------------
General and administrative expenses decreased in the current quarter over
the same period in 2001 primarily due to a $121,000 plant closing restructuring
charge recorded in the third quarter of 2001.
10
AMISTAR CORPORATION
Engineering, Research and Development Expenses
- ----------------------------------------------
Engineering, research and development expenses decreased in the current
quarter over the same period in 2001 due to personnel reductions and the change
in focus from proprietary machine products to include custom factory automation
support. During the third quarter of 2002, development efforts continued to be
focused on a proprietary next generation product identification technology and a
sports equipment automation application.
Nine months ended September 30, 2002 vs. Nine months ended September 30, 2001
- -----------------------------------------------------------------------------
Net Sales
- ---------
Net sales for the nine months ended September 30, 2002 were $8,312,000
compared to $10,968,000 for the same period in the prior year, a decline of 24%.
During the current period, AIA division sales consisted of $1,265,000 of
custom automation, machine, machine parts and services sales as compared to
$2,414,000 in the same period of 2001. DataPlace machine and spare parts sales
for the nine months ended September 30, 2002 totaled $169,000 vs. $350,000 for
the same period in 2001.
AMS sales during the current period were $7,047,000 as compared to
$8,554,000 for the same period in the prior year. The decline in AMS sales is
primarily due to reduced orders from a previous major customer that transferred
production overseas and to a customer that chose to produce previously
out-sourced products in-house.
Gross Profit
- ------------
Gross profit increased during the current period from the same period in
2001 primarily due to a $408,000 charge taken in the third quarter of 2001 to
increase inventory reserves for assembly machine products. The gross profit
percentage of sales improved in the current period from the same period in 2001
due to the lower cost of AMS components and improved contract manufacturing
labor efficiencies. The gross profit increases were partially offset by the
effect of the overall decrease in net sales.
Selling Expenses
- ----------------
Selling expenses decreased in the nine months ended September 30, 2002 from
the same period of 2001 primarily due to reductions in AIA division personnel
and the closure of the Midwest sales and service office during the second
quarter of 2001.
General and Administrative expenses
- -----------------------------------
General and administrative expenses decreased in the current period over
the same period in 2001 due to a $121,000 plant closing restructuring charge
recorded in the third quarter of 2001 and due to reductions in administrative
personnel.
11
AMISTAR CORPORATION
Engineering, Research and Development Expenses
- ----------------------------------------------
Engineering, research and development expenses decreased in the current
period over the same period in 2001 due to personnel reductions and the change
in focus from proprietary machine products to include custom factory automation
support. During the first three quarters of 2002, development efforts were
focused on a proprietary next generation product identification technology and a
sports equipment automation application.
Income Taxes
- ------------
On March 9, 2002, the "Job Creation and Worker Assistance Act of 2002" (the
Act) was signed into law. The Act extends the period in which a net operating
loss may be carried back. As a result, the Company recognized and received a
$400,000 carry-back refund benefit during the nine months ended September 30,
2002, which is partially offset by a $6,000 provision for the minimum tax
liability to various states.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash used in operating activities was $694,000 for the nine
months ended September 30, 2002. Major uses of cash included our net loss after
adjustment for an increase in trade accounts receivable from a seasonally low
December 31, 2001 balance.
Cash used in investing activities represented capital expenditures,
including $144,000 for a second optical inspection machine in the AMS division
and improvements to the heating and air conditioning system at the Company's
facility. The Company has not planned for any significant capital expenditures
for the fourth quarter of 2002 or for fiscal 2003.
The Company maintains a letter of credit from its bank in support of the
$3,000,000 Industrial Development Bonds. On February 1, 2002, the Company paid
$1,500,000 to redeem a portion of the industrial development bonds utilizing
restricted cash of $1,452,000 plus an additional $48,000 of unrestricted cash.
The Company's stand-by letter of credit reimbursement agreement with its
bank contains certain affirmative financial covenants. At March 31, June 30, and
September 30, 2002, the Company was not in compliance with a covenant to
maintain a minimum tangible net worth of $8,200,000. Two other covenants
contained in the stand-by letter of credit reimbursement agreement are measured
on an annual, calendar basis and the Company believes it will likely not be in
compliance with these covenants at December 31, 2002. These covenants require a)
a ratio of cash flow to debt service to exceed 1:1; and b) net losses after
taxes for the fiscal year 2002 not to exceed $350,000. The Company has received
a waiver from its bank effective through December 31, 2002 related to its
violation of the tangible net worth covenant at September 30, 2002.
12
AMISTAR CORPORATION
The entire Industrial Development Bonds balance has been classified as a
current liability in the accompanying balance sheets as it is unlikely that the
Company will be able to meet the tangible net worth covenant after the waiver
period expires, and based on the potential for additional covenant violations at
December 31, 2002. A covenant violation constitutes an event of default and
allows the bank to call the debt prior to maturity. The Company has made all
debt service payments on the Bonds, including its current requirement to pay
$10,000 per month into a restricted cash fund for future payments against the
Bonds.
The inability of the Company to return to profitability will result in a
continued failure to comply with the terms of the Union Bank of California
reimbursement agreement, which supports the stand-by letter of credit
guaranteeing the Company's performance on the industrial development bonds. In
the event the Company continues its covenant violation, and is unable to present
a viable turn-around plan satisfactory to its Bank, such event could cause the
bank to require the Company to seek a substitute guarantor, re-finance the
building with alternative financing or sell the San Marcos, California facility.
The inability of the Company to successfully substitute a guarantor or to
re-finance the building could have a material adverse effect on the Company's
financial position and results of operations. The Company will continue to
negotiate with its bank for continued waivers relating to future expected
covenant violations. There can be no assurance that the bank will continue to
provide such waivers or that the bank will not call the debt prior to maturity.
The Company believes that cash provided from operations and cash balances
at September 30, 2002 will be adequate to support its operating, investing and
debt requirements through 2002 and 2003.
New Accounting Pronouncements
- -----------------------------
In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for
Asset Retirement Obligations," which addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and for the associated asset retirement costs. The standard applies to
tangible long-lived assets that have a legal obligation associated with their
retirement that results from the acquisition, construction or development or
normal use of the asset. SFAS No. 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
fair value of the liability is added to the carrying amount of the associated
asset and this additional carrying amount is depreciated over the remaining life
of the asset. The liability is accreted at the end of each period through
charges to operating expense. The provisions of SFAS No. 143 are required to be
applied during the quarter ending March 31, 2003. To accomplish this, the
Company must identify all legal obligations for asset retirement obligations, if
any, and determine the fair value of these obligations on the date of adoption.
The determination of fair value is complex and will require the Company to
gather market information and develop cash flow models. Additionally, the
Company will be required to develop processes to track and monitor these
obligations. Because of the effort necessary to comply with the adoption of SFAS
No. 143, it is not practicable for the Company to estimate the impact of
adopting this statement at the date of this quarterly report.
13
AMISTAR CORPORATION
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to a variety of risks, including changes in interest
rates affecting the cost of its debt. The Company's debt at September 30, 2002
is comprised of $3,000,000 Industrial Development bonds. The bonds mature in
December 2005, and accrue interest at a variable monthly rate. Interest was paid
at a weighted-average variable rate of 1.1% during the quarter ending September
30, 2002. An immediate 10% increase in the weighted-average interest rate to
1.21% would not have a material impact on the Company's financial position or
results of operations.
ITEM 4. CONTROLS AND PROCEDURES
On November 5, 2002, management conducted an evaluation, under the
supervision of and with the participation of the Company's Chief Executive
Officer and Chief Financial Officer of the effectiveness of the Company's
disclosure controls and procedures. Based on this evaluation, management
believes the disclosure controls and procedures in place are adequate to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms.
Since the date of management's evaluation of its internal disclosure
controls there have been no significant changes in the Company's internal
disclosure controls or in other factors that could significantly affect internal
disclosure controls subsequent to the date the Company completed its evaluation.
PART II OTHER INFORMATION
ITEMS 1-5: Non-Applicable
NOTICE FROM STOCK EXCHANGE
The Company received notice on October 4, 2002 that it is subject to de-listing
from the NASDAQ Small Cap Market for failure to meet the minimum closing bid
price of $1.00 for the prior 30 days. The Company has 180 days to comply with
the minimum closing bid price requirement or possibly face de-listing. In the
event the Company fails to comply with the minimum bid price requirement at the
end of the 180 day period, the Company believes it will receive an 180 day
extension based on the initial inclusion requirements.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
99.1 Certification of Chief Executive Officer and Chief Financial
Officer
99.2 Certification of Chief Executive Officer and Chief Financial
Officer
(b) Reports on form 8-K:
None
14
AMISTAR CORPORATION
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.
AMISTAR CORPORATION
Date: November 13, 2002 By: /s/ Gregory D. Leiser
--------------------------------
Gregory D. Leiser
Vice President Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)