<PAGE>
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 SEPTEMBER 30, 2000
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.)
11401 Valley Blvd
El Monte, California 91731
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
[626] 401-2700
----------------------------------------------
(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 /X/ No / /
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: At September 30, 1999, there were
outstanding 36,689,301 shares of the Registrant's Common Stock, $.001 par value.
Transitional Small Business Disclosure Format: Yes / / No /X/
<PAGE>
PART I
FINANCIAL INFORMATION
Item I. Financial Statements
See Financial Statements presented below.
CONSOLIDATED FINANCIAL STATEMENTS
AND
ACCOUNTANT'S COMPILATION REPORT
SEPTEMBER 30, 2000
<PAGE>
ACCOUNTANT'S COMPILATION REPORT
To the Board of Directors and Stockholders of Quadratech, Inc.
I have Compiled the accompanying balance sheet of Quadratech, Inc. (A Nevada
Corporation) and its subsidiaries as of September 30, 2000 and the related
consolidated statement of operations and accumulated deficit, and cash flows for
the three and nine months then ended. In accordance with Statements On Standards
for the 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 Note 11 to
the consolidated financial statements, the Company's operating losses in prior
years and accumulated deficit raise doubts 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.
The December 31, 1999 financial statements were audited by me and I expressed an
unqualified opinion on them in my report dated May 3, 2000. I have not performed
any auditing procedures since that date.
/s/ W. William Cary, CPA
Temecula, CA
November 13, 2000
<PAGE>
QUADRATECH, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
September 30, 2000
(Unaudited)
ASSETS
Current Assets
Cash $ 12,233
Accounts Receivable(Note 1) 722,687
Inventories (Note 1) 114,927
Miscellaneous receivables 19,621
Prepaid expenses 247,319
-----------
Total Current Assets 1,116,787
-----------
Fixed Assets
Equipment & Leasehold improvements, net of -----------
depreciation and amortization (Notes 1,2 & 4) 1,249,210
-----------
Other Assets
Goodwill, net of amortization of $ 23,242 (Note 5) 560,749
Patents, Marks and Copyrights, net of amortization
of $5,976 9,569
Deposits 36,440
-----------
Total other assets 606,758
-----------
Total Assets $2,972,755
===========
See Accountant's Compilation Report
The accompany notes are an Integral part of these financial statements
<PAGE>
QUADRATECH, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
September 30, 2000
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable & accrued expenses $ 455,899
Payroll taxes payable 48,447
Accrued income taxes 800
Accrued interest 120,257
Insurance contracts payable (Note 3) 204,942
Line of Credit (Note 2) 85,000
Subsidiary purchase liability (Note 5) 158,750
Notes Payable, current portions (Note 4) 964,304
------------
Total Current Liabilities 2,038,399
------------
Long-term Debt, net of current portion (Note 4) 827,131
Minority interest in equity of subsidiary (Note 5) 72,097
------------
Total Liabilities 2,937,627
------------
Commitments and Contingencies (Note 9)
Stockholders' Equity
Common Stock, $.001 par value,
50,000,000 shares authorized;
36,963,301 shares issued and outstanding 36,963
Paid-in Capital 3,421,974
Accumulated Deficit (3,423,809)
------------
Total Stockholders' Equity 35,128
------------
Total Liabilities and Stockholders' Equity $ 2,972,755
============
See Accountant's Compilation Report
The accompany notes are an Integral part of these financial statements
<PAGE>
QUADRATECH, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
For the three and nine months ended September 30, 2000
(Unaudited)
SEPTEMBER 30, 2000
Three Months Nine Months
-----------------------------
Sales, net of discounts $ 1,088,154 $ 3,134,868
-----------------------------
Cost of Sales 710,234 1,958,712
-----------------------------
Gross profit 377,920 1,176,156
-----------------------------
Operating expenses 430,054 1,092,414
Income (loss) from operations (52,134) 83,742
Other income (expense):
Rental Income 18,600 54,800
Interest, net (56,142) (127,017)
Less: Minority income of consolidated subsidiary (2,606) (27,397)
-----------------------------
Loss before provision for income taxes (92,282) (15,872)
Provision for income taxes (Note 1 ) - (800)
Net Loss $ (92,282) (16,672)
=============
Accumulated deficit beginning of year (3,407,137)
-------------
Ending Accumulated deficit $ (3,423,809)
=============
Net income per share 0.0005
=============
Weighted average of shares outstanding 36,845,301
=============
See Accountant's Compilation Report
The accompany notes are an Integral part of these financial statements
<PAGE>
QUADRATECH, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three and nine months ended September 30, 2000
(Unaudited)
SEPTEMBER 30, 2000
3 Months 9 Months
-----------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $ (92,282) $ (16,672)
Adjustments to reconcile net loss to net income to
net cash provided by operating activities
Depreciation and amortization 143,779 253,810
Accounts Receivable (60,689) 14,773
Inventory 6,518 (5,522)
Prepaid/other assets 7,016 (187,588)
Accounts payable & accrued expenses 81,932 (1,486)
Accrued litigation liability 0 (11,000)
Payroll taxes payable 14,486 (3,669)
Accrued income taxes (8,200) 800
Insurance contracts payable (13,713) 162,463
Accrued interest 5,189 45,239
Minority interest in subsidiary 18,159 27,397
-----------------------
NET CASH USED BY OPERATING ACTIVITIES 102,195 278,545
-----------------------
CASH FROM INVESTING ACTIVITIES:
Cash used for subsidiary purchase 0 (150,000)
Purchase of leasehold improvements & equipment (6,977) (25,793)
-----------------------
Net cash used in investing activities (6,977) (175,793)
-----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 0 50,187
Proceeds from shareholder loans 0 100,000
Principal payments on long term debt (108,845) (244,692)
-----------------------
Net cash provided by financing activities (108,845) (94,505)
-----------------------
NET INCREASE IN CASH (13,627) 8,247
BEGINNING OF PERIOD 25,860 3,986
-----------------------
CASH - September 30, 2000 $ 12,233 $ 12,233
=======================
Supplemental disclosures:
Cash paid during the year for:
Interest $ 50,953 $ 81,778
Income taxes $ - $ 800
See Accountant's Compilation Report
The accompany notes are an Integral part of these financial statements
<PAGE>
QUADRATECH , INC & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
--------------------
Quadratech, Inc. (The Company) was formed under the laws of Nevada on February
4, 1994. The Company and its wholly owned subsidiary, Oil Scavenger Absorbent,
Inc. (OSA), (a California corporation), were established to offer significant
solutions for certain environmental problems from the development and
manufacturing of a range of environmentally safe bio-degradable products.
The Company acquired 83.33% of Accu Chem Conversion, Inc. (A California
corporation) on October 1, 1999, see Note 5. Accu Chem Conversion, Inc. is
engaged in three business areas: Accu Chem Conversion, Inc. performs quality
analysis and finalizes inspections on requested flight - sensitive materials for
BNA, leases and operates rail unloading spots for hazardous materials, and
provides rail and trucking of in-bond shipments.
On May 5, 2000 The Company acquired all of the outstanding stock of MAG
Transportation, Inc. ( A Utah Corporation). MAG is a Third-Party logistics
company, operating in the 11 western Untied States. MAG owns/leases over 20
tractors and 40 trailers, transporting bulk food grade commodities and dust
control agents for manufactures, distributors and processors. MAG's maintains
its headquarters in Ogden, Utah.
Principles of Consolidation
---------------------------
The accompanying consolidated financial statements include the accounts of The
Company, it's wholly owned subsidiary, OSA, its 83.33% owned subsidiary Accu
Chem Conversion, Inc and it's 100% owned subsidiary MAG Transportation, Inc.
(MAG).
Both the acquisition of Accu Chem Conversion, Inc and MAG Transportation were
accounted using the purchase method of accounting. See Note 5. All material
intercompany accounts and transactions have been eliminated.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Cash
----
Cash equivalents are included in cash. The Company considers all highly liquid
debt instruments with an original maturity of three months or less to be cash
equivalents. As of September 30, 2000, 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.
Trade Accounts Receivable
-------------------------
It is the opinion of management that all accounts receivables are considered to
be fully collectable, accordingly, no allowance for doubtful accounts was
recorded. If amounts are not considered collectable, they will be charged to
operations when determination is made.
See Accountant's Compilation Report
<PAGE>
QUADRATECH , INC & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventories
-----------
Inventories are stated at the lower of costs (first-in, first out) or market.
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.
Equipment and Leasehold Improvements
------------------------------------
Equipment and leasehold improvements are recorded at cost, less accumulated
depreciation and amortization. Depreciation and amortization is computed using
the straight-line method over the estimated useful life of the assets.
Depreciation and amortization expense for the nine months ended September 30,
2000 was $ 253,810.
The Equipment and leasehold improvements as of September 30, 2000 includes the
following -
Equipment $ 3,155,406
Office equipment and furniture 101,623
Leasehold Improvements 261,465
------------
3,518,494
Less accumulated depreciation and amortization (2,269,284)
------------
Net book value $ 1,249,210
============
Maintenance and repairs are charged to operations when incurred. Betterments and
renewals are capitalized. When property and equipment is sold or otherwise
disposed of, the asset account and related accumulated depreciation is relieved,
and any gain or loss is included in operations.
Revenue Recognition
-------------------
Revenue from sales is recognized when products are shipped.
Income taxes
------------
Income taxes are provided for the tax effect of transactions reported in the
consolidated financial statements and consist of taxes currently due plus
deferred taxes related primarily to temporary differences in the recognition of
depreciation expense. Although The Company has not filed its consolidated
Corporate tax return for 1999, management anticipates that the net operating
losses of the parent company will be available to offset the profits of Accu
Chem Conversion, Inc. for 1999. As of December 31, 1999 the Company has net
operating losses for Federal and California of about $ 2,801,813. To the extent
not utilized, the carryforwards begin to expire in the year 2009.
See Accountant's Compilation Report
<PAGE>
QUADRATECH , INC & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 2000
NOTE 2 - LINE OF CREDIT
The Company has a operating line of credit, renewed annually, with interest only
payments due monthly. Interest is 2.35% over the bank's prime rate. The balance
as of September 30, 2000 was $ 85,000, which is the maximum borrowing under the
line of credit.
NOTE 3 - INSURANCE CONTRACT PAYABLE
The Company finances it's Insurance premiums over a nine month period. The
monthly installments are $ 24,430 with interest at 11.0%, through February 2001.
NOTE 4 - NOTES PAYABLE
Notes payable - Quadratech, Inc.:
---------------------------------
Note payable to Frances Rigney, unsecured, interest payable monthly at
10% per annum. The note matures July 2001. $157,030
Note payable to Annetee Kroes, due on demand, interest at 10% per
annum, payable in monthly principal payments of $5,000 per month. The
note is unsecured. 34,073
Related party notes, due on demand, interest only at 10% per annum.
Notes are held by two shareholders and directors. Proceeds from these
notes were used for the purchase of MAG Transportation, Inc. See Note
5. 100,000
Notes payable - Accu Chem Conversions, Inc.:
--------------------------------------------
Note payable to Bank of America dated February 11, 1999 is payable in
monthly payments of $5,395 including interest at 9% per annum. The
note is secured by the fleet assets of the 83.33% owned subsidiary -
Accu Chem Conversion, Inc. and is personally guaranteed by three
officers and shareholders of The Company. Principal and interest are
payable through March 1, 2004. 198,773
Business credit line with Bank of America, dated April 26, 1996
accrues interest at 2 3/4% over the bank's prime rate. Principal
payments of $ 1,389, plus interest are due monthly. The note matures
September 2002. The note is secured by the assets of The Company and
is personally guaranteed by three officers and shareholders. 33,337
Notes payable to related party, dated February 9, 1998, the note
holder is the remaining 16.67 % minority shareholder of Accu Chem
Conversion, Inc. Interest accrues at 7% monthly and compounds, the
accrued and compounded interest is included as a short term liability
on the balance sheet. The notes mature on December 31, 2008, and are
secured by all The Company assets. 172,283
Note payable to related party dated July 1996 is payable in monthly
payments of $ 444.89, including interest at 12%., and is secured by
all Company assets. 3,937
See Accountant's Compilation Report
<PAGE>
QUADRATECH , INC & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 2000
NOTE 4 - NOTES PAYABLE (Continued)
Note payable to Holtrachem is payable in monthly payments of $ 506.91
including interest at 8% per annum. Secured by Automotive equipment,
the note matures October 31, 2000. 18,668
Note payable to a customer, dated October 1, 1999 is payable in
monthly payments of no less than $2,000 plus interest at 8% per annum.
The note matures October 10, 2000. The customer and note holder
reserve the right of offset should this note not be paid timely. 7,117
Note payable to Frances Rigney, dated May 29, 1999 is payable in
monthly payments of $ 3,000, plus interest at 7.5% per annum. This
note is due on demand. 8,751
Note Payable is payable in monthly principal and interest payments of
$ 2,460.19 including interest at 10% per annum. The note matures
December 31, 2000. 14,919
Various notes payable to stockholders are due on demand, bearing
interest at 10% per annum and are secured by all The Company assets.
The notes mature September 2000. 41,992
Notes payable - MAG Transportation, Inc.:
-----------------------------------------
Many of the following notes are personally guaranteed by the prior
Shareholders of MAG. Five notes payable to GE Capital Fleet Services,
payable in total monthly installments of $ 12,993, with annual
interest ranging from 9.3 % - 11.47%, secured by equipment. Maturities
through June 2003. 299,997
Note payable, dated May 21, 1993, payable in monthly installments of
$ 915, with interest at 9.0%, secured by equipment, maturity at July
2001. 14,415
Four notes payable to Associates Leasing, Inc., payable in total
monthly installments of $ 5,529, with annual interest ranging from 9.%
to 14.3%, secured by equipment. maturities through October 2002. 81,058
Seven capital lease agreements to Gold Stone Leasing, payable in total
monthly installments of $ 13,049, with annual interest ranging from
7.0% to 12.0%, secured by equipment. Maturities through April 2003. 221,017
Note payable, dated August 14, 1998, payable in monthly installments
of $2,285, with interest at 10.25%, secured by equipment, maturity at
August 2003. 71,583
Note payable, dated November 5, 1997, payable in monthly installments
of $ 5,346, with interest at 10.0%, secured ny equipment, maturity at
November 2001. 74,457
Note payable, dated February 8, 1999, payable in monthly installments
of $ 1,403, with interest at 8.755, secured by equipment, maturity at
February 2003. 48,832
Two notes payable to Green Tree Financial Servicing Corporation,
payable in total monthly installments of $ 3,700, with interest at
8.75%, secured by equipment, maturaties November 2003. 126,276
See Accountant's Compilation Report
<PAGE>
QUADRATECH , INC & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 2000
NOTE 4 - NOTES PAYABLE (Continued).
Note payable, dated August 30, 1996, payable in monthly installments
of $ 1,009, with interest at 10.9&, secured by equipment, maturity
August 2001. 12,133
Note payable to the prior shareholders of MAG Transportation, Inc.,
payable in monthly installments of $2,257 per month, with interest at
12% per annum. Maturity at Jan 2003. 50,787
------------
Total 1,791,435
Less current portion (964,304)
------------
Long term debt, net of current portion $ 827,131
============
Management is addressing the current debt to be paid over the next twelve
months, The Company is in the process of refinancing the loans to increase
monthly cash flow and liquidity.
Following are matures of long-term debt for each of the next five years:
2000-2001 $ 964,304
2001-2002 427,228
2002-2003 195,482
2003-2004 32,138
Dec 2008 172,283
NOTE 5 - ACQUISITION OF SUBSIDIARIES
On October 1, 1999 The Company acquired 83.33% of Accu Chem Conversion, Inc. (A
California Corporation) in a business combination using the purchase method of
accounting. See note 1 for a description of Accu Chem Conversion Inc.'s business
activities. The Company issued 15,000,000 shares of its stock for the purchase.
The purchase recorded the assets and liabilities at book value. The Company
issued 15,000,000 share of its stock for the purchase.
On May 5, 2000 The Company acquired 100% of MAG Transportation, Inc. (A Utah
Corporation) in a business combination using the purchase method of accounting.
The Company paid $150,000 in cash and delivered 187,000 shares of The Company
Stock on May 5, 2000. In addition, The Company will pay $95,000 within 180 days
from the closing, and on December 31, 2000 will deliver unrestricted Quadratech
stock valued at $63,750, the value date will be December 28, 2000. The purchase
recorded the assets and liabilities at book value, which resulted in recording
Goodwill in the amount of $583,991 this goodwill will be amortized over ten
years. See note 1 for a description of MAG's business activity.
The Subsidiary purchase liability of $ 158,750 consist of the $95,000 due within
90 days of closing, and the $63,750 of stock value to be delivered on December
29,2000.
NOTE 6 - COMMON STOCK TRANSACTIONS
In January 2000, the Company converted $32,000 of notes payable into 200,000
shares of stock. The Company also sold 250,000 share for $50,000 to finance the
MAG acquisition (Note 5).
See Accountant's Compilation Report
<PAGE>
QUADRATECH , INC & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 2000
Note 7 -STOCK OPTIONS
In November 1998, the Company granted 1,600,000 stock options at various
exercise prices and expiration dates. As of June 30, 2000, 900,000 shares had
been exercised and 300,000 shares were expired. The remaining balance of 400,000
shares will expire on August 31, 2001 and are exercisable at $ .50 per share at
August 31, 2001.
NOTE 8 - EARNINGS PER SHARE
Earnings per share is based on the weighted average number of shares of common
stock and common stock outstanding during the period.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Leases
------
The Company leases its office facilities for $1,300 per month, the lease expires
December 31, 2000.
The Company's subsidiary has three leases, the subsidiary leases office and
terminal facilities for $4,000 per month from a related party, on a month to
month basis, the lease is currently under negotiation. This lease is with the
remaining 16.67% shareholder of Accu Chem Conversion, Inc.
The Company leases a warehouse and rail spur facility from three of its
shareholders. This lease calls for monthly lease payments of $6,000 on a
month-to-month basis. The Company subleases its warehouse for about $5,500 per
month.
The Company leases another rail facility and office space for the greater of
$4,000 per month or the product of $ 1.25 multiplied by its shipped weights in
excess of 4,000 tons. This lease expired in March 2000 and The Company is
currently negotiating a renewal of this lease for another 5 years and will be on
a month-to-month until a new lease can be finalized.
The Company leases it's Utah facility from the prior shareholders of MAG
Transportation, Inc. , the amended lease agreement calls for monthly lease
payments of $ 3,500 for three years.
The total rent expense for the nine months ended September 30th was $ 131,572.
The Company also leases fleet equipment from Accu Chem Leasing LL., the members
of the LL. are three shareholders and officers of The Company. The lease calls
for monthly payments of $ 5,555, the lease is on a month-to-month basis. The
Company is responsible for maintenance, taxes and insurance on the fleet
equipment.
See Accountant's Compilation Report
<PAGE>
QUADRATECH , INC & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 2000
NOTE 9 - COMMITMENTS AND CONTINGENCIES(Continued)
Employment Agreements
---------------------
The Company's majority owned subsidiary has employment contracts with three of
it's officers. The contracts are dated March 1, 1996, and call for minimum
salaries between $60,000 - $81,600 per year for the first three years, then
increasing to $80,000 - $93,600 per year for years four and five. The employee
may extend the term for two additional five year terms.
The Company also has an employment agreement with the prior shareholder of MAG
Transportation, Inc. which calls for an annual base salary of $ 45,500 through
May 4, 2001.
Contingencies
-------------
The Company's newly acquired subsidiary MAG Transportation, Inc. entered into a
settlement agreement with a third party for damages incurred by the third party.
The settlement amount is $10,000,000. At the time of the incident that resulted
in the settlement, MAG Transportation, Inc's liability insurance had expired. It
is believed that the insurance broker involved with the liability coverage may
have to cover this settlement via it's errors and omission insurance, however,
this has not occurred as of the date of this balance sheet. For consideration of
the settlement agreement entered into by MAG, the plaintiff has agreed not to
levy or execute the judgement against the assets or property of MAG or its
successors. As a result of the agreement not to enforce this judgement against
MAG, the accompany financial statement does not include any accrual for damages
to be paid on this judgement.
The Company's majority owned subsidiary, Accu Chem Conversion, Inc., is in
dispute with the minority ownership over previous years operating expenses. No
reasonable estimate of the loss can be estimated at this time. Therefore, no
provision for these disputed charges has been recorded. It is the opinion of
management that the issue will be resolved with out financial impact on the
company. The Company also has a note payable and lease arrangement with this
related party, See Notes 4. and lease commitment early in this note.
NOTE 10 - MAJOR CUSTOMERS
The Company's majority owned subsidiary, Accu Chem Conversion, Inc, has five
major customers under contract that accounted for about 70% of The Company's
sales in 1999, of which four of these customers have been under contract since
1996. Three of these contracts expire in 2000, renewal is expected for periods
from one to five years.
The Company's other Subsidiary (MAG) has one customer which represents 80% of
it's business.
See Accountant's Compilation Report
<PAGE>
QUADRATECH , INC & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 2000
NOTE 11 - GONG CONCERN
The accompanying consolidated financial statements are presented on the basis
that The Company is a going concern. Going concern contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business
over a reasonable period of time. The Company incurred significant losses in
prior years, which has caused an accumulated deficit. Management, through the
acquisition of Accu Chem Conversion, Inc has significantly increased sales and
added profitability.
With the acquisition of the majority owned subsidiary, it is management's
opinion that the Company will be profitable in the future. The Company continued
existence depends on its ability to meet its financing requirements and the
success of its future operations. The financial statements do not include any
adjustments that might result from this uncertainty.
See Accountant's Compilation Report
<PAGE>
<PAGE>
Item II. Management's Discussion and Analysis or Plan of Operation
Results of Operation.
For the quarter ended September 30 2000, the Company focused on
providing Third Party Logistics [3PL] support continuing integration of the
newly acquired subsidiary, MAG Transport, Inc. and the continued development of
a marketing plan for its oil absorbent products.
The Company posted 3rd quarter sales of $1,088,154 for a total of
$3,134,868 in year-to-date sales, with a resulting year-to-date net loss
($15,872) or $.0005 per share, as compared to a loss of $.0114/share on gross
sales of $41,932 through the third quarter of 1999.
The increase in sales and profitability, when comparing 3rd quarter
2000 to 3rd quarter 1999 was mainly due to the acquisition of the Company's two
3PL divisions, ACCU CHEM Conversion Inc. and MAG Transport, Inc., completed in
October 1999 and May 2000 respectively.
The Company's EBITDA earnings of $373,923 for the nine months ended
September 2000 were the highest in company history, and reflected continued
increase in short term debt retirement on fleet assets.
<PAGE>
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>
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: November 15, 2000 QUADRATECH, INC.
(Company)
By: /s/ Craig G. Robitaille
--------------------------
Craig G. Robitaille,
President
