<PAGE> 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 March 31, 1999.
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION FROM _______ TO ________.
COMMISSION FILE NUMBER 0-26856
---------
QUADRATECH, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 95-4396848
- ----------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 North Baldwin Park Boulevard
City of Industry, California 91746
- ------------------------------------------ -----------------
(Address of principal executive offices) (Zip Code)
126 West Maple Avenue
Monrovia, California 91016
----------------------------------------------
(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), and (2) has been subject to such filing
requirements for the past 90 days. Yes / / No /X/
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: At March 31, 1999,
there were outstanding 21,513,301 shares of the Registrant's Common
Stock, $.001 par value.
Transitional Small Business Disclosure Format: Yes / / No /X/
<PAGE> 2
PART I
FINANCIAL INFORMATION
Item I. Financial Statements
Item II. Management's Discussion and Analysis or Plan of Operation
Results of Operation.
For the quarter ended March 31, 1999, the Company had continued to
focus on marketing its oil absorbent products.
The Company has continued to maintain its reduced selling, general and
administrative costs decreased substantially as a result of a reduction in
personnel and decreased marketing costs associated with the sale of products to
its customers.
Liquidity and Capital Resources.
The liquidity of the Company and its available capital resources have
not improved.
The Company believes that internally generated funds and the sale and
issuance of stock for cash or in cancellation of indebted may provide minimum
capital resources to finance operations and fund capital expenditures. The
Company's need for funds has been reduced predicated upon the significant
reduction in property rental and maintenance expenses and the reduction of
marketing costs and research activities.
For the quarter ended March 31, 1999, the Company had no material
commitments to acquire additional assets.
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings ................................................None
Item 2 - Changes in the Rights of the Company's
Security Holders .................................................None
Item 3 - Defaults by the Company on its
Senior Securities ................................................None
Item 4 - Submission of Matter to Vote of Security
Holders ..........................................................None
<PAGE> 3
Item 5 - Other Information.
(a) On February 23, 1999, Maria Comfort resigned as the
President and as a Director of the Company. Perry
Cope, Chairman of the Board was selected President.
(a) As at March 31, 1999, the Company had commenced
initial negotiations with Accu Chem Conversion, Inc.
and its shareholders concerning a potential business
combination.
Item 6 - Exhibits and 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.
Dated: October 26, 1999 QUADRATECH, INC.
(Company)
By: /s/ Craig G. Robitaille
---------------------------
Craig G. Robitaille,
President
<PAGE> 4
To the Board of Directors
Quadratech, Inc.
Monrovia, California
I have compiled the accompanying consolidated balance sheets of Quadratech, Inc.
(a Nevada corporation) and its wholly-owned subsidiary, Oil Scavenger Absorbent,
Inc.(a California corporation), as of March 31, 1999 and 1998, and the related
consolidated statements of operations and accumulated deficit, and cash flows
for the three months then ended, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in the Note 7 to
the consolidated financial statements, the Company's significant operating
losses, working capital deficiency and deficit in stockholders' equity raise
substantial doubt about their abilities to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Pasadena, California
April 30, 1999
<PAGE> 5
QUADRATECH, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31, 1999 and 1998
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Current Assets
Cash $ 62,717 $ 7,658
Account Receivables 15,533 2,309
Other Receivables -- 2,000
Inventories 3,838 3,838
---------- ----------
Total Current Assets 82,088 15,805
---------- ----------
Property and Equipment
Furniture and Equipment 85,435 82,702
Plant and Equipment 66,900 66,900
Motor Vehicles 8,818 20,818
---------- ----------
161,153 170,420
Less: Accumulated Depreciation (111,495) (90,616)
---------- ----------
Total Property and Equipment 49,658 79,804
---------- ----------
Other Assets
Patents, Marks and Copyrights, net of
accumulated amortization of $3,100
and $2,234, respectively 12,914 13,311
Deposits 6,825 5,325
---------- ----------
Total Other Assets 19,739 18,636
---------- ----------
TOTAL ASSETS $ 151,485 $ 114,245
========== ==========
</TABLE>
See accompanying notes and accountant's report
2
<PAGE> 6
QUADRATECH, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31, 1999 and 1998
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Current Liabilities
Accounts Payable $ 12,864 $ 55,824
Accrued Expenses 2,986 68,735
Notes Payable, current portion 336,500 547,441
----------- -----------
Total Current Liabilities 352,350 672,000
----------- -----------
Long-Term Debt, net of current 50,500 50,500
----------- -----------
Total Liabilities 402,850 722,500
----------- -----------
Stockholders' Equity
Common Stock, $.001 par value,
50,000,000 shares authorized;
21,513,301 shares issued and
outstanding in 1999, and 14,472,699
shares in 1998 21,513 14,473
Paid-in Capital 2,978,805 2,315,302
Accumulated Deficit (3,251,683) (2,938,030)
----------- -----------
Total Stockholders' Equity (Deficit) (251,365) (608,255)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 151,485 $ 114,245
=========== ===========
</TABLE>
See accompanying notes and accountant's report
3
<PAGE> 7
QUADRATECH, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICITS
For Three Months ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
SALES $ 18,704 $ 15,789
Less: Discount Taken -- (400)
------------ ------------
NET SALES 18,704 15,389
COST OF SALES - SCHEDULE A 20,224 14,356
------------ ------------
GROSS PROFIT (DEFICIT) (1,520) 1,033
OPERATING EXPENSES - SCHEDULE B 59,799 66,811
------------ ------------
INCOME (LOSS) FROM OPERATIONS (61,319) (65,778)
------------ ------------
OTHER INCOME (EXPENSES)
Interest Income -- 19
Other Income 23 --
Depreciation and Amortization (6,267) (7,308)
Interest Expenses (1,260) (5,462)
Penalties and Late Charges (1,816) --
Sales Tax - Prior years (2,000) --
Cash Embezzlement -- (900)
Officer's Salaries (10,000) (6,000)
------------ ------------
Total Other Income (Expenses) (21,320) (19,651)
------------ ------------
NET INCOME (LOSS) BEFORE TAXES (82,639) (85,429)
PROVISION FOR INCOME TAXES 800 800
------------ ------------
NET INCOME (LOSS) (83,439) (86,229)
ACCUMULATED DEFICITS
Beginning Balance (3,168,244) (2,850,622)
Prior year adjustments -- (1,179)
------------ ------------
Ending Balance $ (3,251,683) $ (2,938,030)
============ ============
NET (LOSS) PER SHARE $ (.004) $ (.006)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 20,062,265 14,472,699
============ ============
</TABLE>
See accompanying notes and accountant's report
4
<PAGE> 8
QUADRATECH, INC. & SUBSIDIARY
COST OF SALES
For Three Months ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
SCHEDULE A
1999 1998
-------- ----------
<S> <C> <C>
COST OF SALES
Beginning Inventory $ 3,838 $ 3,838
Purchases 6,825 5,915
Production Salaries 10,042 7,613
Warehouse Supplies 3,357 828
-------- --------
24,062 18,194
Less: Ending Inventory (3,838) (3,838)
-------- --------
Total Cost of Sales $ 20,224 $ 14,356
======== ========
</TABLE>
See accompanying notes and accountant's report
5
<PAGE> 9
QUADRATECH, INC. & SUBSIDIARY
OPERATING EXPENSES
For Three Months ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
SCHEDULE A
1999 1998
-------- ----------
<S> <C> <C>
OPERATING EXPENSES
Accounting $ 9,200 $ 12,000
Advertising 195 1,600
Bank and Finance Charges 144 523
Car Allowances and Expenses 2,331 1,895
Commissions 1,200 1,100
Consulting 8,000 10,950
Directors' Meetings -- 190
Entertainment 607 436
Equipment Rental 77 121
Freight and Postage 302 49
Insurance 4,757 5,436
Legal and Professional 2,868 2,169
Legal Settlement 5,136 --
Licenses & Permits 85 255
Maintenance 105 1,851
Office Supplies 750 1,540
Other Expenses -- 540
Outside Services -- 910
Parking 48 --
Payroll Taxes 3,187 2,651
Rent 2,184 2,800
Research and Development -- 600
Salaries and Wages 8,260 8,756
Selling Expenses -- 90
Shipping 1,575 1,980
Taxes - Property 1,478 --
Telephone 3,317 5,499
Trade Shows 57 880
Travel 2,946 482
Utilities 990 1,508
-------- --------
Total Operating Expenses $ 59,799 $ 66,811
======== ========
</TABLE>
See accompanying notes and accountant's report
6
<PAGE> 10
QUADRATECH, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (83,439) $ (86,229)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation and amortization 6,267 7,308
Prior year adjustments -- (1,179)
(Increase) Decrease in:
Accounts Receivable 20,995 2,468
Other Receivables -- (2,000)
Deposits -- (1,200)
Increase (Decrease) in:
Accounts Payable (1,384) (21,836)
Accrued Expenses (581) (7,274)
---------- ----------
NET CASH (USED) BY OPERATING ACTIVITIES (58,142) (109,942)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in Intangible assets (469) --
Purchase of Property and Equipment (933) --
---------- ----------
NET CASH (USED) BY INVESTING ACTIVITIES (1,402) --
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in Paid-in Capital 90,000 --
Net Proceeds from Notes Payable 20,000 68,000
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 110,000 68,000
---------- ----------
NET INCREASE (DECREASE) IN CASH 50,456 (41,942)
BEGINNING OF YEAR 12,261 49,600
---------- ----------
END OF YEAR $ 62,717 $ 7,658
========== ==========
SUPPLEMENTAL DISCLOSURES:
Cash Paid During the Year for:
Interest $ 1,260 $ 420
========== ==========
Income Tax $ -- $ --
========== ==========
</TABLE>
See accompanying notes and accountant's report
7
<PAGE> 11
QUADRATECH, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months ended March 31, 1999 and 1998
NOTE 1 - GENERAL
Quadratech, Inc. ("the Company") was formed under the laws of Nevada on
February 4, 1994.
Quadratech, Inc., and its wholly-owned subsidiary, Oil Scavenger Absorbent, Inc.
("OSA", a California corporation formed in August, 1993), was established to
offer significant solutions for certain major environmental problems from the
development and manufacturing a range of environmentally safe biodegradable
products.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company uses the accrual basis of accounting in accordance with generally
accepted accounting principles.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, OSA, after elimination of all material
intercompany accounts and transactions.
Use of estimates
The preparation of the accompanying consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make certain estimates and assumptions that directly affect the results of
reported assets, liabilities, revenue, and expenses.
Actual results may differ from these estimates.
Cash Equivalents
The Company considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents. As of March 31, 1999
and 1998, there were no cash equivalents.
The Company prepares its consolidated statements of cash flows using the
indirect method as defined under Financial Accounting Standards Board Statement
No. 95.
Revenue Recognition
Revenue from sales is recognized when products are shipped and accepted by the
customer.
Accounts Receivable
No allowance for uncollectible accounts has been provided. Management has
evaluation the accounts and believes they are all collectible. There was no bad
debt expense neither for 1999 nor 1998.
8
<PAGE> 12
QUADRATECH, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months ended March 31, 1999 and 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventories
Costs incurred for materials, technology and shipping are capitalized as
inventories and charged to cost of sales when revenue is recognized.
Inventories consist of finished goods and are stated at the lower of cost or
market, using the first-in, first-out method.
Property and Equipment
Property and Equipment are valued at cost. Maintenance and repair costs are
charged to expenses as incurred. Depreciation is computed on the straight-line
and accelerated methods based on the estimated useful lives of the assets.
Depreciation expense was $6,045 and $7,093 for 1999 and 1998, respectively.
Intangible Assets
Patents, marks and copyrights are capitalized and amortized over five years
using the straight-line method.
Research and Development
Research and development costs are expensed as incurred.
Income Taxes
The Company accounts income taxes in accordance with Financial Accounting
standards Board Statement No. 109.
Reclassification
Certain reclassification have been made to the 1998 consolidated financial
statements to conform with the 1999 consolidated financial statement
presentation. Such reclassification had no effect on net loss as previously
reported.
NOTE 3 - NOTES PAYABLE
<TABLE>
<CAPTION>
1999 1998
---- --------
<S> <C> <C>
a.) Notes to Caprice Engine, interest
at 6% to 8% per annum, due on
demand; unsecured $ -- $165,657
b.) Notes to Bill Synder, including
$100,000 LOC, interest at 6.75%
to 10.5% per annum, due on
demand; unsecured -- 121,000
</TABLE>
9
<PAGE> 13
QUADRATECH, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months ended March 31, 1999 and 1998
NOTE 3 - NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
c.) Note to David Comfort, interest
at 8 1/2% commencing 8/1/98;
unsecured; due on demand $ -- 19,784
d.) Note to William Kroes, interest at
10% per annum due monthly from
4/15/98; due on demand; unsecured 50,500 50,500
e.) Note to Frances Rigney, interest
only at 8 1/2% commencing 8/1/98;
unsecured; due on demand 336,500 241,000
-------- --------
Total $387,000 $597,941
Less current maturities 336,500 547,441
-------- --------
Long-term debt, net $ 50,500 $ 50,500
======== ========
Maturities on notes payable are as
follows:
December 31,
-----------
1999 $336,500
2000 50,500
--------
$387,000
========
</TABLE>
NOTE 4 - INCOME TAXES
The Company files consolidated federal and state income tax returns with its
subsidiary.
Provision for income taxes in the consolidated statements of operations for
three months ended March 31, 1999 and 1998 consist of $800 minimum state income
taxes in each year.
As of December 31, 1998, the Company has approximately federal net operating
loss carryforwards of $2,938,581, and California NOL of $3,014,868 to reduce
future taxable income. To the extent not utilized, both carryforwards will begin
to expire beginning 2000 and 1998 respectively.
NOTE 5 - RELATED PARTY TRANSACTIONS
As described in Note 3, the Company had various unsecured borrowings from the
stockholders.
10
<PAGE> 14
QUADRATECH, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months ended March 31, 1999 and 1998
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company leases its office facilities for $728 per month on a month-to-month
basis. Rent expense totaled $2,184 and $2,800 for 1999 and 1998, respectively.
In addition, the Company is responsible for its pro rata share of property
taxes.
NOTE 7 - GOING CONCERN
The accompanying consolidated financial statements are presented on the basis
that the Companies are going concerns. Going concern contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business over a reasonable length of time. As shown in the accompanying
consolidated financial statements, the Company incurred a net loss of $83,439
and $86,229 for three months ended March 31, 1999 and 1998, respectively, and as
of March 31, 1999, the Company has an accumulated deficit of $3,251,683, a
deficit in stockholders' equity of $251,365 and current liabilities exceed
current assets by $270,262.
Management is currently involved in active negotiations to obtain additional
financing and actively increasing marketing efforts to increase revenues. The
Company continued existence depends on its ability to meet its financing
requirements and the success of its future operations. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
11
<PAGE> 15
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings.............................................. None
Item 2 - Changes in the Rights of the Company's Security Holders........ None
Item 3 - Defaults by the Company on its Senior Securities............... None
Item 4 - Results of Votes of Security Holders........................... None
Item 5 - Other Information.............................................. None
Item 6 - Exhibits and 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.
Dated: October 21, 1999 QUADRATECH, INC.
(Company)
By: /s/ PERRY COPLE
------------------------------
Perry Cople
President
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 13,863
<SECURITIES> 0
<RECEIVABLES> 14,760
<ALLOWANCES> 0
<INVENTORY> 3,838
<CURRENT-ASSETS> 32,461
<PP&E> 158,871
<DEPRECIATION> 97,789
<TOTAL-ASSETS> 111,749
<CURRENT-LIABILITIES> 261,898
<BONDS> 0
0
0
<COMMON> 18,611
<OTHER-SE> 2,884,207
<TOTAL-LIABILITY-AND-EQUITY> 111,749
<SALES> 46,427
<TOTAL-REVENUES> 47,835
<CGS> 38,272
<TOTAL-COSTS> 38,272
<OTHER-EXPENSES> 252,511
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,855
<INCOME-PRETAX> (257,803)
<INCOME-TAX> 800
<INCOME-CONTINUING> (258,603)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (258,603)
<EPS-BASIC> (0.016)
<EPS-DILUTED> (0.016)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 13,863
<SECURITIES> 0
<RECEIVABLES> 14,760
<ALLOWANCES> 0
<INVENTORY> 3,838
<CURRENT-ASSETS> 32,461
<PP&E> 158,871
<DEPRECIATION> 97,789
<TOTAL-ASSETS> 111,749
<CURRENT-LIABILITIES> 261,898
<BONDS> 0
0
0
<COMMON> 18,611
<OTHER-SE> 2,884,207
<TOTAL-LIABILITY-AND-EQUITY> 111,749
<SALES> 46,427
<TOTAL-REVENUES> 47,835
<CGS> 38,272
<TOTAL-COSTS> 38,272
<OTHER-EXPENSES> 252,511
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,855
<INCOME-PRETAX> (257,803)
<INCOME-TAX> 800
<INCOME-CONTINUING> (258,603)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (258,603)
<EPS-BASIC> (0.016)
<EPS-DILUTED> (0.016)
</TABLE>
