Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
VRTY > SEC Filings for VRTY > Form 10-Q on 20-Aug-2014All Recent SEC Filings

Show all filings for VERITY CORP.

Form 10-Q for VERITY CORP.


20-Aug-2014

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q and other reports filed by Verity Corp. (the "Company") from time to time with the SEC (collectively, the "Filings") contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company's management. Readers are cautioned not to place undue reliance on these forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and
Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology including "anticipates," "believes," "expects," "can," "continue," "could," "estimates," "intends," "may," "plans," "potential," "predict," "should" or "will" or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our expectations are as of the date this Form 10-Q is filed, and we do not intend to update any of the forward-looking statements after the date this Quarterly Report on Form 10-Q is filed to confirm these statements to actual results, unless required by law.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management's judgment in its application. There are also areas in which management's judgment in selecting any available alternative would produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

Overview

Business

Our Company

OVERVIEW

Verity Corp. (the "Company") is a natural-oriented, technologically sophisticated Agribusiness Services company. The Company's products and services support Crop Production and Animal Production. The Company's Corporate Goal is to provide consumers with safe, high-quality and nutritious food sources and high-quality water for drinking and for agricultural and livestock production. The Company has a portfolio of proprietary natural products and services focused from Soil to Plate Food Production to fulfill its Corporate Goal.

HISTORY AND PRODUCT OVERVIEW

Verity's predecessor company Verity Farms, LLC was incorporated in July 2004. Since then the Company has taken its sustainable crop and livestock production protocols and developed:

a. a portfolio of best-in-market hard products that can be widely used by either conventional or organic/non-GMO farms to:

d) improve the quality of grain, livestock & aquaculture production;

e) reduce growing costs; while

f) maintaining production yields.

b. a fully integrated set of Soil and Plant Health Programs that remove substantial barrier for farmers desiring to convert conventional farms into farms with healthy soil and sustainable, non-GMO crop and livestock production based upon natural practices and limited chemical applications.

These products and programs position Verity as a leader & one-stop farming & food production resource addressing powerful & accelerating trends that are altering production methods in the Agriculture and Food Market.

ORGANIZATION & OPERATIONS

The Company is organized into 3 divisions: Verity Agriculture Products & Soil Preservation; Verity Water Systems; and Verity Consumer Products. These distinct divisions work are interlinked by one sales team, located, across the US, in major agricultural production markets, to provide: farmers, ranchers, food distributors & processors and food manufacturers and grocery retailers a wide spectrum of product & service solutions to address their production and supply issues, and market positioning. Verity has integrated operations at its Corporate Headquarters, in Sioux Falls, South Dakota and in Pelham Georgia, which provides Product Distribution, Sales, and Crop Advisory Services in Georgia for the Southeast U.S. In order to focus the Company's limited resources, Verity's Consumer Products Division remains in test / pre-production mode. The Company's Agriculture Products & Soil Preservation Division and Water Systems Division are moving from a limited "Bottom Up" Sales mode to mass commercialization through the establishment of strategic relationships.

STRATEGY

Verity changed its top management and corporate organization in Q1 FY2014. This change is accompanied by a change in focus and allocation of resources that have gained momentum in preceding years.

From FY 2004 through FY 2013, Verity focused on:

a) Development of a distinctive portfolio of unique and innovative products and services.

b) Development of a sales & distribution network of Verity representatives that:
i) use the Verity Agriculture & Soil Preservation Products and Services in their family farms; and ii) market and sell Verity Products and Services in the farming communities in their regions.

In FY 2014, the Company has: rolled out a distinctive "best-in-market" line of Hard Products for use by farmers of any size, from family farms to large integrated agribusiness companies. The Company has focused management attention & Company resources to implementing a new "Top Down" strategy that will compliment the Company's continuing "Bottom Up" strategy. The "Bottom Up" strategy has created a network of family farmers / salesmen that are Verity's eyes, ears, voice and hands in their regions. This Sales Force provides Verity with: a) regional farming and agribusiness intelligence and has identified prospective Strategic Customer & Distribution opportunities in their regions; and b) active family farmers using, selling and distributing Verity Products & Services to the farmers in their regions.

The Company's new "Top Down" strategy is focusing on:

Part A) Identifying strategic customer & relationship prospects and introducing Verity's easy-to-understand and purchase line of agriculture production "Hard Products" to them; and

Part B) Introducing Verity Corporation and its diverse portfolio of Products and Services to these strategic customers & relationship prospects.

Part A of the Top Down Strategy is expected to result in meaningful increases in near-term sales in FY2014. Part B of the Top Down Strategy is expected to result in customer and business partnership relationships that will strategically expand Verity's network of business relationships and sales of the full line of Verity Products and Services. Part B is expected to result in a meaningful increase in sales in the intermediate term of FY2014 & FY2015.

COMPETITION

Verity Corporation operates in environments of heavy competition. However, the Company's Products & Services have competitive advantages that can propel their growth with proper resources and effective management. Obtaining a small fraction of market share will provide Verity with substantial growth opportunities.

Results of Operations

For the Nine Months Ended June 30, 2014 compared with the Nine Months Ended June 30, 2014.

Revenues

Revenues for the nine months ended June 30, 2014 totaled $2,440,336 as compared to $2,108,885 for the nine months ended June 30, 2014. Revenues increased 15.72% as compared to the nine months ended June 30, 2013.

Revenue Recognition is accounted for as follows: Sales revenue is billed and shipped in the same period each month and service revenue is billed in advance on the first day of the month that service is rendered.

Cost of Goods Sold

Cost of goods sold for the nine months ended June 30, 2014 was $1,347,798 as compared to $1,151,874 for the nine months ended June 30, 2013. The increase in cost of goods sold is due to increased sales. Gross Margin for the nine months ended June 30, 2014 was 45%. And Gross Margin for the nine months ended June 30, 2013 was 45%. Gross Margin percentages have maintained at 45% for the nine months ended June 30.

Operating Expenses

Operating expenses for the nine months ended June 30, 2014 totaled $1,869,235 as compared to $1,980,444 for the nine months ended June 30, 2013. The decrease in operating expenses is directly related to a reduction in consulting and professional fees of $385,737. The reduction in consulting and professional fees is offset by an increase in payroll expenses of $282,677 and in increase in travel of $38,958. Research and Development expenses increased $12,532 during the nine months ended June 30, 2014. Marketing and advertising expenses decreased $18,826, rent decreased $12,795, management fees decreased $41,265 and all other expenses increased $13,247.

Interest Expense

Interest Expense for the nine months ended June 30, 2014 was $34,886 as compared to $82,141 for the nine months ended June 30, 2014. The decrease in interest expense is directly related to the return of land and building to a board member that resulted in a reduction of accrued interest due of $232,000..

Net Loss Before Provision for Income Taxes

The net loss for the nine months ended June 30, 2014 was $803,399 as compared to a net loss of $1,081,217 before loss on goodwill impairment of $5,943,533 for the nine months ended June 30, 2013. The decrease in operating net loss is based on increased revenues at consistent gross margins for product sales and a decrease in operating expenses as mentioned above.

Liquidity and Capital Resources

Cash flows used by operating activities were $492,622 for the nine months ended June 30, 2014 as compared to $1,502,718 for the nine months ended June 30, 2014. Negative cash flow is a direct result of operating expenses exceeding revenues generated during the nine months ended June 30, 2014 and 2013.

Cash Flows used by Investing Activities was $78,571 for purchases of equipment during the nine months ended June 30, 2014. For the nine months ended June 30, 2014, cash flows from investing activities was $4,891,602 for the purchase of land, building and equipment.

Cash Flows provided by financing activities were $606,423 for the nine months ended June 30, 2014 and $6,482,207 for the nine months ended June 30, 2014. The cash provided by financing activities was related to proceeds received from notes payable.

As of June 30, 2014, Verity did not have and continues to not have sufficient cash on hand to pay present obligations as they become due. In addition, there is no assurance that we will be able to raise additional capital on acceptable terms, if at all, to meet our current obligations over the next 12 months. Because of the foregoing, Verity's auditors expressed substantial doubt about our ability to continue as a going concern in the September 30, 2013 Audit report.

If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy. Our estimated working capital requirement for the next 12 months, based on current assumptions and conditions, is approximately $1,500,000.

Management has determined that general expenditures must be reduced unless revenue growth is obtained. Additional capital will be required in the form of equity or debt securities to maintain operations. In addition, if the Company cannot raise additional short term capital, the Company will be forced to continue to further accrue liabilities due to our limited cash reserves. There are no assurances that management will be able to raise capital on terms acceptable to the Company. If the Company is unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. If the Company obtains additional funds by selling any of our equity securities of by issuing common stock to pay current or future obligations, the percentage ownership of our shareholders will be reduced, shareholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us when needed on satisfactory term, the Company may be required to cease operating or otherwise drastically modify the business strategy.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements

  Add VRTY to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for VRTY - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.