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 March 31, 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 March 31, 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 March 31, 2000, was 8,905,597.
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
Table of Contents
PAGE
====
Item 1 Financial Statements
Balance sheet at March 31, 2000 (unaudited) F-1
Statements of Operations for the three and six months ended
December 31, 2000 and 1999 (unaudited) F-2
Statement of Stockholders' Equity F-3 - F-4
Statements of Comprehensive Loss F-5
Statements of Cash Flows for the three and six months ended
March 31, 2000 and 1999 (unaudited) F-6 - F-7
Notes to Financial Statements (unaudited) F-8 - F-9
Item 2 Management's Discussion and Analysis of Plan of Operations F-10
Results of Operations F-11
Liquidity and Capital Resources F-11 - F-12
Inflation F-13
Year 2000 Compliance F-13
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED MARCH 31, 2000
<PAGE>
ENVIRONMENTAL PRODUCTS TECHNOLOGIES CORPORATION
(A Development Stage Company)
<TABLE>
<CAPTION>
BALANCE SHEETS
ASSETS
MARCH 31, SEPTEMBER 30,
2000 1999
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 15,114 $ 105,058
Marketable securities 69,329 69,343
Notes receivable 3,962 14,296
Notes receivable, related parties -- 187,401
Interest receivable 36,746 16,575
Other 19,131 19,131
----------- -----------
Total current assets 144,282 411,804
----------- -----------
EQUIPMENT 26,402 43,790
----------- -----------
OTHER ASSETS
Notes receivable -- 1,508
Notes receivable, related parties 24,515 32,798
Investment in related party 186,621 --
Deposits 3,220 3,220
Mining rights 5,000 5,000
----------- -----------
Total other assets 219,356 42,526
----------- -----------
TOTAL ASSETS $ 390,040 $ 498,120
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 364,395 $ 16,297
Due to Officer 8,950 8,950
Accrued salaries 199,000 151,000
----------- -----------
Total current liabilities 572,345 176,247
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, authorized
20,000,000 shares; issued and outstanding
8,905,597 shares 89,055 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 (8,089,802) (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 (182,305) 321,873
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 390,040 $ 498,120
=========== ===========
</TABLE>
See notes to financial statements
F-1
<PAGE>
ENVIRONMENTAL PRODUCTS TECHNOLOGIES CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE PERIODS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED October 1, 1995
MARCH 31, MARCH 31, to
2000 1999 2000 1999 March 31, 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SALES $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
EXPENSES
Consulting 42,937 32,316 117,589 58,332 1,175,126
Depreciation 8,694 8,694 17,388 17,388 70,621
Legal and professional -- 87,268 64,294 184,193 824,744
Liability insurance -- -- -- -- 14,434
Miscellaneous -- -- 115 13,180 52,390
Office supplies and expenses 4,077 57,904 5,060 66,328 136,360
Other expenses 22,630 9,910 26,038 9,910 118,435
Rent 12,011 11,623 18,180 19,951 166,704
Repairs and maintenance 94 1,457 479 1,911 7,710
Research and development 136,688 119,747 176,044 208,147 986,224
Salaries and payroll taxes 25,539 71,647 88,548 149,803 764,463
Telephone and utilities 5,637 4,716 8,170 9,186 43,563
Travel 7,118 36,728 21,448 73,985 356,822
Writedown of mining rights -- -- -- -- 35,000
----------- ----------- ----------- ----------- -----------
Total expenses 265,425 442,010 543,353 812,314 4,752,596
----------- ----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (265,425) (442,010) (543,353) (812,314) (4,752,596)
OTHER INCOME (EXPENSE)
Interest income 19,029 21,721 38,269 44,389 179,270
Interest expense -- -- -- -- (23,313)
Loss on sale of marketable securities -- -- (28,858) (28,858) (229,819)
----------- ----------- ----------- ----------- -----------
Total other income (expense) 19,029 21,721 9,411 15,531 (73,862)
LOSS BEFORE EXTRAORDINARY ITEM (246,396) (420,289) (533,942) (796,783) (4,826,458)
EXTRAORDINARY ITEM
Gain on extinguishment of debt -- -- -- -- 64,208
NET LOSS (246,396) (420,289) (533,942) (796,783) (4,762,250)
PREFERRED STOCK DIVIDEND -- -- -- -- (3,295,610)
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS $ (246,396) $ (420,289) $ (533,942) $ (796,783) $(8,057,860)
=========== =========== =========== =========== ===========
NET LOSS PER COMMON SHARE $ (0.03) $ (0.05) $ (0.06) $ (0.09) $ --
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements
F-2
<PAGE>
ENVIRONMENTAL PRODUCTS TECHNOLOGIES CORPORATION
(A Developmetn Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY
SIX MONTHS ENDED MARCH 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Deficit
accumulated
Common stock Preferred stock Additional during the
# of # of paid-in development
shares Amount shares Amount capital stage
----------- ----------- ----------- ----------- ----------- -----------
<S> <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)
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)
----------- ----------- ----------- ----------- ----------- -----------
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)
=========== =========== =========== =========== =========== ===========
</TABLE>
See Notes to financial Statements
F-3
<PAGE>
ENVIRONMENTAL PRODUCTS TECHNOLOGIES CORPORATION
(A Development Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY (Continued)
SIX MONTHS ENDED MARCH 31, 2000
(Unaudited)
Accumulated
deficit Accumulated
prior to the other Total
development comprehensive stockholders'
stage income (loss) equity
----------- ----------- -----------
Balance at
September 30,
1999 $ (695,452) $ (54,968) $ 321,873
Common stockholder
loss for the period -- -- (258,688)
Stock issued
duirng period -- -- 800
----------- ----------- -----------
Balance at
December 31, 1999 (695,452) (54,968) 63,985
----------- ----------- -----------
Common stockholder
loss for the period -- -- (246,396)
Stock issued in lieu
of services
during period -- -- 106
----------- ----------- -----------
Balance at
March 31, 2000 (695,452) (54,968) (182,305)
=========== =========== ===========
See Notes to financial Statements
F-4
<PAGE>
ENVIRONMENTAL PRODUCTS TECHNOLOGIES CORPORATION
(A Development Stage Company)
<TABLE>
<CAPTION>
STATEMENTS OF COMPREHENSIVE LOSS
FOR THE PERIODS
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED October 1, 1995
MARCH 31, MARCH 31, to
2000 1999 2000 1999 March 31, 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net loss $ (246,396) $ (420,289) $ (533,942) $ (796,783) $(2,508,397)
Other comprehensive loss:
Unrealized holding
gains arising -- 336,756 -- 174,002 --
during the period
Add: Reclassification
adjustment for losses
included in net loss -- -- -- 28,858 --
----------- ----------- ----------- ----------- -----------
Net unrealized loss -- 336,756 -- 202,860 --
----------- ----------- ----------- ----------- -----------
Comprehensive loss $ (246,396) $ (83,533) $ (533,942) $ (593,923) $(2,508,397)
=========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
F-5
<PAGE>
ENVIRONMENTAL PRODUCTS TECHNOLOGIES CORPORATION
(A Development Stage Company)
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
FOR THE PERIODS
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED October 1, 1995
MARCH 31, MARCH 31, to
2000 1999 2000 1999 March 31, 2000
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM
OPERATING ACTIVITIES
<S> <C> <C> <C> <C> <C>
Net loss $ (246,396) $ (420,289) $ (533,942) $ (796,783) $(4,763,050)
----------- ----------- ----------- ----------- -----------
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 8,694 8,694 17,388 17,388 70,623
Loss on sale of marketable securities -- -- -- 28,858 200,961
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
Write-down 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 -- -- -- -- --
Interest receivable (19,029) (21,721) (38,269) (32,292) (99,882)
Deposits -- -- -- 10,000 (3,220)
Other -- -- -- (8,400) (8,400)
Increase (decrease) in operating
liabilities:
Accounts payable 142,787 -- 416,879 (11,450) 412,853
Accrued salaries 24,000 24,000 48,000 48,000 255,888
Accrued interest -- -- -- -- 7,320
Settlement payable -- -- -- -- 10,000
----------- ----------- ----------- ----------- -----------
Total adjustments 156,452 10,973 443,998 52,104 2,057,582
NET CASH USED IN
OPERATING ACTIVITIES (89,944) (409,316) (89,944) (744,679) (2,705,368)
----------- ----------- ----------- ----------- -----------
</TABLE>
See notes to Financial Statements
F-6
<PAGE>
ENVIRONMENTAL PRODUCTS TECHNOLOGIES CORPORATION
(A Development Stage Company)
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
FOR THE PERIODS
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED October 1, 1995
MARCH 31, MARCH 31, to
2000 1999 2000 1999 March 31, 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES
Loans to related parties -- (900) -- (485,900) (554,631)
Loans to unrelated parties -- (23,982) -- (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 -- -- -- 204,785 279,514
NET CASH USED IN
INVESTING ACTIVITIES -- (24,882) -- (534,931) (1,249,899)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock -- -- -- -- 820,100
Sale of preferred stock -- -- -- -- 3,000,000
Proceeds from exercise of warrants -- -- -- -- 532,812
Costs to raise capital -- -- -- -- (357,023)
Loan payments -- -- -- -- (22,000)
Common stock redeemed -- -- -- -- (5,700)
NET CASH PROVIDED BY FINANCING
ACTIVITIES -- -- -- -- 3,968,189
----------- ----------- ----------- ----------- -----------
NET INCREASE/(DECREASE) IN CASH (89,944) (434,198) (89,944) (1,279,610) 12,922
CASH, BEGINNING 105,058 602,032 105,058 1,447,444 2,192
----------- ----------- ----------- ----------- -----------
CASH, ENDING $ 15,114 $ 107,834 $ 15,114 $ 167,834 $ 15,114
=========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
F-7
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED MARCH 31, 2000
(Unaudited)
1. Summary of significant accounting policies
Financial statements
The balance sheet as of March 31, 2000, and the related statements of
stockholders' equity, operations and cash flows for the six months ended March
31, 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 months ended December 31, 1999, 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.
Loss per share
The computations of loss per share of common stock are based on the weighted
average number of shares outstanding of 8,898,505 (2000), 8,567,148 (1999) and
7,699,484 (cumulative period).
F-8
<PAGE>
ENVIRONMENTAL PRODUCTS & TECHNOLOGIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED MARCH 31, 2000
(Unaudited)
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.
2. Stock options and warrants outstanding
Options Exercise
Warrants Price Exercise date
----------- ----------- -------------
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
March 31, 2000 655,000
===========
F-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.
F-10
<PAGE>
RESULTS OF OPERATION
COMPARISON OF THREE AND SIX MONTHS ENDED MARCH 31, 2000, AND 1999.
The Company generated no revenue for the three and six months ended
March 31, 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 March 31,
2000, increased by $16,941, or 14%, from $119,747 to $136,688. This increase in
research and development expenses reflects expenses associated with the
research, design and development of the Company's Closed -Loop Waste Management
System. For the six months ended March 31, 2000, research and development
expenses decreased by $32,103, or 15%, from $208,147 to $176,044.
General and administrative expenses for three months ended March 31,
2000, decreased by $ 193,526, or approximately 60% to $128,737, from $322,263
for the three months ended March 31, 2000. This decrease in general and
administrative expenses was primarily the result of the decrease in salaries,
travel, legal and professional expenses. For the six months ended March 31,
2000, general and administrative expenses decreased by $236,858, or 39%, from
$604,167 to $367,309.
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
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.
F-11
<PAGE>
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
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.
F-12
<PAGE>
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
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.
F-13
<PAGE>
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: May 10, 2000 By: /s/ Marvin Mears
-----------------
Marvin Mears
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 15114
<SECURITIES> 69329
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 144282
<PP&E> 132860
<DEPRECIATION> 106458
<TOTAL-ASSETS> 39040
<CURRENT-LIABILITIES> 572345
<BONDS> 0
0
20
<COMMON> 89055
<OTHER-SE> (271360)
<TOTAL-LIABILITY-AND-EQUITY> 390040
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 543353
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (533942)
<INCOME-TAX> 0
<INCOME-CONTINUING> (533942)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (533942)
<EPS-BASIC> (0.60)
<EPS-DILUTED> (0.60)
</TABLE>
