10QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2000, or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from October 1, 1999 to June 30, 2000.
Commission File Number 000-24877
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
------------------------------
Delaware 77-0096608
-------------- -------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5380 NORTH STERLING CENTER DRIVE
WESTLAKE VILLAGE, CA 91361
(Address of principal executive offices including zip code)
(818) 865-2205
(Registrant's Telephone number, including area code)
NOT APPLICABLE
(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 [ ]
The number of shares outstanding of the issuer's common stock, par value $0.01
per share, as of June 30, 2000, was 9,186,437.
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
Table of Contents
PAGE
====
Item 1 Financial Statements
Balance sheet 1
Statement of stockholders' equity 2
Statement of operations 3
Statement of comprehensive loss 4
Statement of cash flows 5-6
Notes to financial statements 7-9
Item 2 Management's Discussion and Analysis of Plan of Operations 10
General 10
Results of Operations 11
Liquidity and Capital Resources 11
Inflation 13
Year 2000 Compliance 13
Signatures 15
Exhibit 27 (attached to end of document)
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED JUNE 30, 2000
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
NINE MONTHS ENDED JUNE 30, 2000
Page
Financial statements:
Balance sheet 1
Statement of stockholders' equity 2
Statement of operations 3
Statement of comprehensive loss 4
Statement of cash flows 5-6
Notes to financial statements 7-9
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
BALANCE SHEET
THREE AND NINE MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
2000 1999
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 6,108 $ 105,058
Marketable securities 19,794 69,343
Notes receivable 3,056 14,296
Notes receivable, related parties -- 187,401
Interest receivable 45,005 16,575
Other 19,131 19,131
----------- -----------
Total current assets 93,094 411,804
----------- -----------
EQUIPMENT 12,708 43,790
----------- -----------
OTHER ASSETS
Notes receivable -- 1,508
Notes receivable, related parties 24,015 32,798
Investment in related party 186,621 --
Deposits 3,220 3,220
Mining rights 5,000 5,000
----------- -----------
Total other assets 218,856 42,526
----------- -----------
TOTAL ASSETS $ 324,658 $ 498,120
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 301,650 $ 16,297
Due to Officer 8,950 8,950
Accrued salaries 223,000 151,000
----------- -----------
Total current liabilities 533,600 176,247
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, authorized
20,000,000 shares; issued and outstanding
9,186,437 shares 91,863 88,149
Preferred stock, $.01 par value,
authorized 20,000,000 shares; issued
and outstanding 3,000 shares 20 20
Additional paid-in capital 8,568,842 8,568,842
Deficit accumulated during
development stage (8,119,207) (7,584,718)
Accumulated deficit prior to
development stage (695,452) (695,452)
Accumulated other comprehensive income (loss) (54,968) (54,968)
----------- -----------
Total stockholders' equity (208,902) 321,873
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 324,698 $ 498,120
=========== ===========
</TABLE>
See notes to financial statements
1
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
Deficit Accumulated
accumulated deficit
Common stock Preferred stock Additional during the prior to the
# of # of paid-in development development
Shares Amount Shares Amount capital stage stage
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
September 30,
1999 8,814,921 $ 88,149 2,000 $ 20 $ 8,568,842 $(7,584,718) $ (695,452)
Common stockholder
loss for the period -- -- -- -- -- (258,688) --
Stock issued
duirng period 80,038 800 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at
December 31, 1999 8,894,959 88,949 2,000 20 8,568,842 (7,843,406) (695,452)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Common stockholder
loss for the period -- -- -- -- -- (246,396) --
Stock issued in lieu
of services
during period 10,638 106 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at
March 31, 2000 8,905,597 89,055 2,000 20 8,568,842 (8,089,802) (695,452)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Common stockholder
loss for the period -- -- -- -- -- (29,405) --
Stock issued
during period 280,840 2,808 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at
June 30, 2000 9,186,437 $ 91,863 2,000 $ 20 $ 8,568,842 $(8,119,207) $ (695,452)
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements
2
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED JUNE 30, 2000
(CONTINUED)
Accumulated
other Total
comprehensive stockholders'
income (loss) equity
----------- -----------
Balance at
September 30, $ (54,968) $ 321,873
1999
Common stockholder -- (258,688)
loss for the period
Stock issued -- 800
duirng period
----------- -----------
Balance at (54,968) 63,985
December 31, 1999 ----------- -----------
Common stockholder -- (246,396)
loss for the period
Stock issued in lieu
of services -- 106
during period ----------- -----------
Balance at (54,968) (182,305)
March 31, 2000 ----------- -----------
Common stockholder -- (29,405)
loss for the period
Stock issued -- 2,808
during period ----------- -----------
Balance at $ (54,968) $ (208,902)
June 30, 2000 =========== ===========
See notes to financial statements
2A
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE PERIODS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED October 1, 1995
JUNE 30, JUNE 30, to
2000 1999 2000 1999 June 30, 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SALES $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
EXPENSES
Consulting -- 47,455 117,589 105,787 1,175,126
Depreciation 8,694 8,694 26,082 26,082 79,315
Legal and professional -- 90,527 64,294 274,720 824,744
Liability insurance -- 933 -- 933 14,434
Miscellaneous -- (13,135) 115 45 52,390
Office supplies and expenses 3,728 11,596 8,788 77,924 140,088
Other expenses -- 16,263 26,038 26,173 118,435
Rent 9,080 9,010 27,260 28,961 175,784
Repairs and maintenance 95 320 574 2,231 7,805
Research and development -- 33,209 176,044 241,356 986,224
Salaries and payroll taxes 23,998 98,498 112,546 248,301 788,461
Telephone and utilities 3,078 5,127 11,248 14,313 46,641
Travel -- 15,082 21,448 89,067 356,822
Writedown of mining rights -- -- -- -- 35,000
----------- ----------- ----------- ----------- -----------
Total expenses 48,673 323,579 592,026 1,135,893 4,801,269
----------- ----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (48,673) (323,579) (592,026) (1,135,893) (4,801,269)
OTHER INCOME (EXPENSE)
Interest income 19,268 18,960 57,537 63,349 198,538
Interest expense -- -- -- -- (23,313)
Loss on sale of marketable securities -- (178,066) -- (206,924) (28,858)
----------- ----------- ----------- ----------- -----------
Total other income (expenses) 19,268 (159,106) 57,537 (143,575) 146,367
LOSS BEFORE EXTRAORDINARY ITEM (29,405) (482,685) (534,489) (1,279,468) (4,654,902)
EXTRAORDINARY ITEM
Gain on extinguishment of debt -- -- -- -- 64,208
NET LOSS (29,405) (482,685) (534,489) (1,279,468) (4,590,694)
PREFERRED STOCK DIVIDEND -- -- -- -- (3,295,610)
----------- ----------- ----------- ----------- -----------
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS $ (29,405) $ (482,685) $ (534,489) $(1,279,468) $(7,886,304)
=========== =========== =========== =========== ===========
NET LOSS PER COMMON SHARE $ (0.00) $ (0.06) $ (0.06) $ (0.15) $ (1.04)
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements
3
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
STATEMENTS OF COMPREHENSIVE LOSS
FOR THE PERIODS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED October 1, 1995
JUNE 30, JUNE 30, to
2000 1999 2000 1999 June 30, 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net loss $ (29,405) $ (482,685) $ (534,489) $(1,279,468) $(7,886,304)
Other comprehensive loss:
Unrealized holding
gains/(losses) arising (49,535) (161,297) (49,535) 12,705 (22,960)
during the period
Add: Reclassification
adjustment for losses
included in net loss -- -- -- 28,858 28,858
----------- ----------- ----------- ----------- -----------
Net unrealized loss (49,535) (161,297) (49,535) 41,563 5,898
----------- ----------- ----------- ----------- -----------
Comprehensive loss $ (78,940) $ (643,982) $ (584,024) $(1,237,905) $(7,880,406)
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements
4
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE PERIODS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED October 1, 1995
JUNE 30, JUNE 30, to
2000 1999 2000 1999 June 30, 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (29,405) $ (482,685) $ (534,489) $(1,279,468) $(4,590,694)
----------- ----------- ----------- ----------- -----------
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 8,694 8,694 26,082 26,082 79,315
Loss on sale of marketable
securities -- 178,066 -- 206,924 200,961
Loss on abandoned equipment -- -- -- -- 1,093
Write down of mining rights -- -- -- -- 35,000
Write down of notes receivable -- -- -- -- 200,000
Write-down of notes receivable
related party -- -- -- -- 289,753
Writedown of investment -- -- -- -- 58,887
Gain on extinguishment of debt -- -- -- -- (64,208)
Noncash research & development -- -- -- -- 131,250
Noncash consulting fees -- -- -- -- 536,306
Noncash executive compensation -- -- 23,460
(Increase) decrease in operating
assets:
Prepaid expenses -- (40,035) -- (40,035) (40,035)
Interest receivable (8,257) (15,366) (46,526) (47,658) (108,139)
Deposits -- -- -- 10,000 (3,220)
Other -- (1,421) -- (9,821) (8,400)
Increase (decrease) in operating
liabilities:
Accounts payable (6,846) -- 380,269 (11,450) 253,287
Accrued salaries 24,000 24,000 72,000 72,000 279,888
Accrued interest -- -- -- -- 7,320
Settlement payable -- -- -- -- 10,000
----------- ----------- ----------- ----------- -----------
Total adjustments 17,591 153,938 431,825 206,042 1,882,518
NET CASH USED IN
OPERATING ACTIVITIES (11,814) (328,747) (102,664) (1,073,426) (2,708,176)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans to related parties -- -- -- (485,900) (554,631)
Loans to unrelated parties -- -- -- (23,982) (216,800)
Investment in related party (16,077)
Purchase of equipment -- -- -- (25,049) (98,116)
Purchase of mining rights -- -- -- -- (40,000)
Purchase of marketable securities -- -- -- (204,785) (604,785)
Proceeds from loans -- -- -- -- 996
Proceeds from sale of marketable
securities -- 55,791 -- 260,576 279,514
NET CASH USED IN
INVESTING ACTIVITIES -- 55,791 -- (479,140) (1,249,899)
----------- ----------- ----------- ----------- -----------
</TABLE>
See notes to financial statements
5
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(CONTINUED)
FOR THE PERIODS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED October 1, 1995
JUNE 30, JUNE 30, to
2000 1999 2000 1999 June 30, 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 2,808 494,434 3,714 494,434 822,908
Sale of preferred stock -- -- -- -- 3,000,000
Proceeds from execise of warrants 532,812
Costs to raise capital -- 60,000 -- 60,000 (357,023)
Loan payments -- -- -- -- (22,000)
Common stock redeemed -- -- -- -- (5,700)
NET CASH PROVIDED BY FINANCING
ACTIVITIES 2,808 554,434 3,714 554,434 3,970,997
----------- ----------- ----------- ----------- -----------
NET INCREASE/(DECREASE) IN CASH (9,006) 281,478 (98,950) (998,132) 3,916
CASH, BEGINNING 15,114 167,834 105,058 1,447,444 2,192
----------- ----------- ----------- ----------- -----------
CASH, ENDING $ 6,108 $ 449,312 $ 6,108 $ 449,312 $ 6,108
=========== =========== =========== =========== ===========
</TABLE>
6
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED JUNE 30, 2000
(Unaudited)
1. Summary of significant accounting policies
Financial statements
The balance sheet as of June 30, 2000, and the related statements of
stockholders' equity, operations and cash flows for the nine months ended June
30, 2000, and 1999, are unaudited. Such unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and with the instructions to Form 10-QSB. Accordingly, they
do not include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments, consisting of normal recurring accruals
considered necessary for a fair presentation, have been included. Results for
the three and nine months ended June 30, 2000, are not necessarily indicative of
the results that may be achieved for any other interim period or for the fiscal
year ending September 30, 2000. These statements should be read in conjunction
with the financial statements and related notes included in the Company's Annual
Report on Form 10-KSB for the year ended September 30, 1999.
Fair market value of financial instruments
The fair market value of the notes receivable approximate cost based on current
borrowing rates. Equity securities held by the Company include available for
sale securities, which are reported at fair value. Unrealized holding gains and
losses for available for sale securities are excluded from earnings and reported
net of any income tax affect as a component of stockholders' equity. See Note 4
for further discussion.
7
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED JUNE 30, 2000
(Unaudited)
Loss per share
The computations of loss per share of common stock are based on the weighted
average number of shares outstanding of 9,186,437 (2000), 8,567,148 (1999) and
7,699,484 (cumulative period).
1. Summary of significant accounting policies (continued)
Comprehensive net loss
On October 1, 1998, the Company adopted FASB No. 130, Reporting Comprehensive
Income. Statement No. 130 requires the reporting of comprehensive income/loss in
addition to net income/loss from operations. Comprehensive income/loss requires
the inclusion of certain financial information not recognized in the calculation
of net income/loss, including unrealized holding gains and losses on available
for sale of securities.
Concentration of credit risk
The Company primarily transactions its business with two financial institutions
and may maintain deposits in excess of federally insured limits. At March 31,
2000, the Company has not experienced any losses in such accounts and believes
it is not exposed to any significant credit risk on cash and cash equivalents.
8
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED JUNE 30, 2000
(Unaudited)
2. Stock options and warrants outstanding
<TABLE>
<CAPTION>
Options Exercise
Warrants Price Exercise date
--------------- --------- ------------------------
<S> <C> <C> <C>
Options granted 330,000 0.1875 Up to September 30, 2006
Warrants issued 300,000 2.0000 Up to January 21, 2001
Warrants issued 25,000 3.8750 Up to April 2003
---------------
Options/warrants
Outstanding/
Exercisable at
June 30, 2000 655,000
===============
</TABLE>
9
<PAGE>
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The company was incorporated in 1983 as CCRS, III, Inc. In 1989, the
Company changed its name to Central Corporate Reports Services, Inc., merged
with Information Bureau Inc. and operated in the financial public relations
business until March 1990 when the Company became inactive. In 1990 the Company
changed its name back to Combined Assets, Inc. and in 1991 changed its name to
ACP International, Inc. and in 1994 changed its name back to Combined Assets,
Inc. In January 1995, the Company's name was changed to Environmental Products &
Technologies Corporation.
At the end of 1995, the Company commenced development of a waste
management system to control odors and solid stream waste in the farming
industry. In addition, the company is developing organic based insecticides for
agricultural, commercial and residential use.
The Company is currently in the development stage of operations and, to
this time, has devoted its time to rising capital, product and supplier
development and marketing future products. No product has been assembled
manufactured or marketed at this time, except that the Company has assembled a
prototype Closed- Loop Waste Management System or demonstration purpose and
three prototype systems for operation by various universities.
The Company has projected expense of $ 250,000 through June 2000. As of
September 30,1999, the Company had approximately $ 105,000 of cash and cash
equivalents. The Company is in the process of raising additional funds which
will allow the Company to operate even if the Company generates no revenue
during this period.
The Company intends to continue product development with the test of
three full-scale systems to be operated at Utah State University, Cal Poly -
Pomona and the University of Wisconsin. The portable units will be employed for
continued demonstrations and sales activity. The goal of such tests is to refine
the process from a batch load to a continuous feed system. At the same time the
development of an input/ feed conveyor system and a variable discharge rate
screw mechanism to load the bioreactor needs to be completed. In addition, a
solid waste process will also need to be developed.
10
<PAGE>
RESULTS OF OPERATION
COMPARISON OF THREE AND NINE MONTHS ENDED JUNE 30, 2000, AND 1999.
The Company generated no revenue for the three and nine months ended
June 30, 2000, and 1999. During each such quarter, the Company's efforts were
directed at researching, designing, developing and testing its Closed Loop
Management System.
Research and development expenses primarily consist of the cost of
personnel and equipment needed to conduct the Company's research and development
efforts. Research and development expenses for three months ended June 30, 2000,
decreased to nothing from $33,209. This decrease in research and development
expenses reflects the suspension in further testing and development of the
Company's Closed -Loop Waste Management System. For the nine months ended June
30, 2000, research and development expenses decreased by $65,312, or 27%, from
$241,356 to $176,044.
General and administrative expenses for three months ended June 30,
2000, decreased by $ 241,697, or approximately 83% to $48,673, from $290,370 for
the three months ended June 30, 2000. This decrease in general and
administrative expenses was primarily the result of the decrease in salaries,
travel, legal and professional expenses. For the nine months ended June 30,
2000, general and administrative expenses decreased by $478,555, or 53%, from
$894,537 to $415,982.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital needs have been to fund the design and
development of its prototype Closed-Loop Waste Management System. The Company's
primary sources of liquidity have been private placements of equity and debt
securities and loans from officers/ stockholders on an as needed basis.
Between October and December 1995, the Company sold 100,000 shares of
Common Stock for an aggregate of $10,000, or $.10 per share. Between January and
March1996, the Company sold 400,000 shares of Common Stock for an aggregate of
$189,650, or approximately $.47 per share. Between April and June 1996, the
Company sold 40,000 shares of Common Stock for an aggregate of $35,000, or $.87
11
<PAGE>
per share. Between July and September 1996, the Company sold 480,000 shares of
Common Stock for an aggregate of $149,200, or approximately $.31 per share.
Between June and September 1997, the Company sold 550,000 shares of Common Stock
for an aggregate of $337,925, or approximately $.614 per share. The figures in
the paragraph do not give effect to the two-for-one forward stock split that was
effected by the Company in May 1998.
In April 1998, the Company sold 3,000 shares of Series A preferred
Stock together with warrants (the "Private Placement Warrants") to purchase
300,000 shares of Common Stock (the "1998 Private Placement") for gross proceeds
of $3,000,000. The net proceeds to the Company of approximately $2,675,000 will
be used for continue research and development, working capital and general
corporate purpose. The Private Placement Warrants have an initial exercise price
of $3.875 per share. Private Placement Warrants expire on March 31,2003. The
Private Placement Warrants contain provisions for the adjustment of the exercise
price and the aggregate number of shares issuable upon exercise under certain
circumstances, including without limitation, stock dividends, stock splits,
reorganization, reclassification, consolidations, certain dilutive sales of
securities for which the Private Placements Warrants are exercise able below the
then existing Market Price (as defined) and failure to maintain a sufficient
number of authorized shares of Common Stock for issuance and delivery upon
exercise of the Private Placement Warrants.
The Company also has commitments under (I) an employment agreement with
Marvin Mears, the Company's President and Chief Executive Officer; and (ii) an
office lease that expires December 31, 2001.
Based on its current operating plan, the Company anticipates that
additional financing will be required to finance its operations and capital
expenditures. The Company's currently anticipates levels of revenues and cash
flow are subject to any uncertainties and cannot be assured. Further, the
Company's business plan may change, or unforeseen events may occur, requiring
the Company to raise additional funds. The amount of funds required by the
Company will depend upon many factors, including without limitations, the extent
12
<PAGE>
and timing of sales of the Company's waste management system, future product
cost, the timing and cost associated with the establishment and / or expansion,
as appropriate, of the Company's manufacturing, development, engineering and
customer support capabilities, the timing and cost of the Company's product
development and enhancement activities and the Company's operating results.
Until the Company generates cash flow from operations, which will be sufficient
to satisfy its cash requirements, the Company will need to seek alternative
means for financing its operations and capital expenditures and / or postpone or
eliminate certain investments or expenditures. Potential alternative means for
financing may include leasing capital equipment, obtaining a line of credit, or
obtaining additional, or available on acceptable terms. The inability to obtain
additional financing or generate sufficient cash form operations could require
the Company to reduce or eliminate expenditures for capital equipment, research
and development, production or marketing of its product, or otherwise curtail or
discontinue its operations, which could have a material adverse effect on the
Company's business, financial condition and results of operations. Furthermore,
if the Company raises funds through the sale of additional equity securities,
the Common Stock currently outstanding may be further diluted.
INFLATION
Although certain of the Company's expenses increase with general
inflation in the economy, inflation has not had a material impact on the
Company's financial results to date.
YEAR 2000 COMPLIANCE
We have completed a comprehensive review of our computer systems to
identify all software applications that could be affected by the inability of
many existing computer systems to process time-sensitive data accurately beyond
the year 1999 (referred to as the "Year 2000" issue). We are also continuing to
13
<PAGE>
monitor our computer systems and we are monitoring the adequacy of the processes
and progress of third-party vendors of systems that may be affected by the Year
2000 issue. We are dependent on third-party computer systems applications,
particularly with respect to such critical tasks as accounting, billing and
buying. We also rely on our own computer systems. EPTC expects to its complete
its Year 2000 compliance program by mid-1999 and anticipates that its total
expenditures on such programs will not exceed $20,000. However, we may
experience cost overturns or delays, in the future, which could have material
adverse effect on our business, results of operations and financial condition.
While we believe our procedures are designed to be successful, because of the
complexity of the Year 2000 issue and the interdependence of organizations using
computer systems, our efforts, or those of third-parties with whom we interact,
may not be satisfactorily completed in a timely fashion. If we fail to
satisfactorily address the Year 2000 issue, then our business, results of
operations and financial condition could be materially adversely affected.
14
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SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunder duly
authorized.
ENVIRONMENTAL PRODUCTS &
TECHNOLOGIES CORPORATION
Dated: August 10, 2000 By: /s/ Marvin Mears
--------------------
Marvin Mears
Chief Executive Officer
15
