U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
11
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission File Number: 0-27445
Enviro Voraxial Technology, Inc.
(Exact name of Small Business Issuer as specified in its Charter)
IDAHO 83-0266517
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
98 SE 7th Street, Deerfield Beach, Florida 33441
(Address of principal executive offices)
(954) 421-6141
(Issuer's telephone number)
(Former Name, former address and former fiscal year, if changed since
last Report.)
Check mark whether the Issuer (1) has filed all reports required to be filed
by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past
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
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 7,407,118 Common Stock as of
March 31, 2000.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheets as of March 31, 2000
Statements of Operations for the Three Months Ended March 31, 2000 and
March 31, 1999.
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2000 and March 31, 1999.
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis and Plan of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Basis of Presentation
The accompanying unaudited consolidated financial statements of Enviro Voraxial
Technology, Inc. (the Company) have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-B. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation (consisting of normal recurring accruals) have been included.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Operating results for the
three month period ended March 31, 2000 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2000. For
further information, refer to the consolidated financial statements and
footnotes for the year ended December 31, 1999 found in the Company's Form
10-KSB.
ENVIRO VORAXIAL TECHNOLOGY, INC
CONDENSED BALANCE SHEET
(Unaudited)
ASSETS
March 31,
2000
----------
Current Assets:
Cash and cash equivalents $ 355,000
Accounts and other receivable, net 56,000
Inventory 92,000
-----------
Total current assets 503,000
Property, plant and equipment, net 1,065,000
Other assets 7,000
-----------
$1,575,000
===========
LIABILITIES
Current Liabilities:
Current Portion of mortgage note payable $ 10,000
Current Portion of obligations under capital leases 51,000
Accounts payable and accrued expenses 63,000
Due to Stockholders 260,000
----------
384,000
----------
Noncurrent liabilities:
Mortgage note payable 406,000
Obligations under cap 116,000
----------
522,000
-----------
Stockholders' Equity:
Capital stock, par value $.001 par value;
Preferred stock, voting, 8% noncumulative,
convertible, authorized 7,250,000 shares
6,000,000 shares issued and outstanding
(at liquidating value) 6,000
Common stock, authorized 42,750,000 shares,
7,407,118 shares issued and outstanding 7,000
Additional paid-in capita 1,276,000
Accumulated deficit ( 620,000)
----------
669,000
----------
$1,575,000
===========
ENVIRO VORAXIAL TECHNOLOGY, INC
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
------------ ------------
Net sales $ 78,000 $ 59,000
Cost of goods sold 37,000 54,000
----------- ---------
Gross profit 41,000 5,000
----------- ---------
Other (income) and expenses:
Research and development 14,000 -
General and administrative 132,000 43,000
Interest expense 13,000 15,000
Other income ( 15,000) ( 1,000)
Total costs and expenses 144,000 57,000
------------ ----------
Net Loss $( 103,000) $(52,000)
============ ============
Basic and diluted (loss)per common share $( 0.01 ) $( 0.01 )
============ ==========
Weighted average number of common shares
Outstanding 7,309,049 6,764,574
============ ===========
ENVIRO VORAXIAL TECHNOLOGY, INC
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
------------ ------------
Cash flows from operating activities:
Net Loss $( 103,000) $( 52,000)
Adjustments to Reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation 29,000 20,000
Bad debts 24,000 -
Changes in:
Accounts receivable ( 10,000) 25,000
Inventory 8,000 -
Accounts payable and accrued expenses 10,000 -
------------ ------------
Net cash used in operating activities ( 42,000) ( 7,000)
------------ ------------
Cash flows from investing activities:
Acquisition of property and equipment ( 3,000) -
------------ ------------
Cash Flows from Financing Activities:
Proceeds from sale of common stock 352,000 -
Repayment of mortgage note payable ( 2,000) -
Repayments of obligations under capital leases ( 18,000) -
------------ ------------
Net cash provided by financing activities 332,000 -
------------ ------------
Increase (decrease)in cash and
Cash equivalants 287,000 ( 7,000)
Cash and cash equivalents, beginning 68,000 69,000
------------ ----------
Cash and cash, equivalents, end $ 355,000 $ 62,000
============ ===========
ENVIRO VORAXIAL TECHNOLOGY, INC
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND OPERATIONS
Enviro Voraxial Technology, Inc. (the "Company") operates a high precision
engineering machine shop located in Florida which designs, manufactures and
assembles specialized parts and components. Prior to 1999, the Company
performed contract manufacturing services to the aerospace and automotive
industries. Since 1999, the Company has been focusing its efforts on
developing and marketing the voraxial separator. The voraxial separator is
a mechanical device for separating two or more components having different
specific weights. Potential commercial applications include oil/water
separation, environmental cleanup and the separation of industrial chemicals.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[1] Principles of consolidation:
The consolidated financial statements as of March 31, 2000 include the accounts
of the parent company Enviro Voraxial Technology, Inc. and its wholly-owned
subsidiary Florida Precision Aerospace, Inc. All significant intercompany
accounts and transactions have been eliminated.
[2] Cash and cash equivalents:
The Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents.
[3] Property, plant and equipment:
Property, plant and equipment are stated at cost. The cost of maintenance and
repairs is charged against results of operations as incurred. Depreciation is
computed by the straight-line method over the estimated economic useful life
of the assets (5 -20 years).
[4] Net loss per share:
Basic and diluted loss per share has been computed by dividing the net loss
available to common stockholders by the weighted average number of common
shares outstanding. The convertible preferred stock has been excluded from
the calculation since it would be anti-dilutive.
[5] Inventory:
Inventory, which consists primarily of parts, is priced at lower of first-in,
first-out cost or market.
ENVIRO VORAXIAL TECHNOLOGY, INC
NOTES TO FINANCIAL STATEMENTS
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[6] Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amount of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
[7] Income taxes:
Deferred income taxes are recognized for the tax consequences in future years
of differences between the tax bases of assets and liabilities and their
financial reporting amounts at year end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary, to reduce deferred tax assets to the amount expected to be realized.
[8] Research and development expenses:
Research and development costs are expensed as incurred.
[9] Revenue recognition:
The Company recognizes revenue from product sales when the products are
shipped to customers.
[10] Fair value of financial instruments:
The carrying amounts of the Company's cash and cash equivalents, accounts
receivable, accounts payable, and amounts due to stockholders approximate
fair value due to their short maturities. Mortgage note payable and
obligations under capital leases approximate fair value as the interest rates
applicable to these debt instruments are comparable to quoted market prices
for similar issues.
NOTE C: UNAUDITED FINANCIAL STATEMENTS
The financial statements, as of March 31, 2000, and for the periods ended
March 31, 2000 and 1999, included herein are unaudited; however, such
information reflects all adjustments consisting of normal recurring
adjustments, which are, in the opinion of management, necessary for a fair
presentation of the information for such periods. In addition, the results of
operations for the interim periods are not necessarily indicative of results
for the entire year. The accompanying financial statements are in condensed
form and should be read in conjunction with the Company's annual report filed
on Form 10KSB.
Item 2. Managements Discussion and Analysis of Financial Condition and Plan of
Operations
General
Management's discussion and analysis contains various forward looking
statements. These statements consist of any statement other than a recitation
of historical fact and can be identified by the use of forward-looking
terminology such as "may," "expect," "anticipate," "estimate" or "continue"
or use of negative or other variations or comparable terminology.
We caution that these statements are further qualified by important factors
that could cause actual results to differ materially from those contained in
the forward-looking statements, that these forward-looking statements are
necessarily speculative, and there are certain risks and uncertainties that
could cause actual events or results to differ materially from those referred to
in such forward-looking statements.
Three Months ended March 31, 2000 and 1999
Net Sales. Our net sales increased by approximately 32% to $78,000 as compared
to 59,000 for the previous three months ended March 31, 1999
Our gross profit was $41,000 for the three months ended March 31, 2000 as
compared to $5,000 for the previous three months ended March 31, 1999 This
is attributable to our change in business. During the first three months of
1999, new customer orders of machine work were at a minimum and efforts were
focused on marketing of the Voraxial Separator.
General and administrative expenses
General and Administrative expenses increased by 207% to $132,000 for the
three months ended March 31, 2000 up from $43,000 for the previous three
months ended March 31, 1999. Increased marketing activities for the Voraxial
Separator generated additional general and administrative expenses.
We have rented excess space in our operating facility. Income amounted to
$15,000 in the three months ended March 31, 2000. The monthly rental income
amounts to $5,000 per month.
Liquidity and capital resources
For the three months ended March 31, 2000 our working capital increased by
$272,000 from December 31, 1999. This increase was represented by an
increase in cash of $287,000, decrease of accounts receivable of $1,000
inclusive of allowance for doubtful accounts of $24,000, decrease in
inventory of $8,000 and offset by a increase in current liabilities of
$6,000. Operating at a loss for the three months negatively impacted our
cash position, however we feel that we have sufficient sources for needed
capital
Working capital for the next twelve months will be obtained from a number of
sources. The continuing contract for parts supplied to New Venture Gear will
be approximately $120,000. We will continue to take on machining contracts
to supplement working capital, if necessary, from our past customer base.
We believe that we have sufficient liquidity to meet all of our cash
requirements for the remainder of the fiscal year ended December 31, 2000.
We believe, however, that additional funding will eventually be necessary to
expand marketing programs and specific applications for the Voraxial Separator.
We have raised $364,800 in the first quarter of 2000 through the private
placement of our securities pursuant to Regulation D of the Securities Act.
Continuing losses
We may be unable to continue as a going concern, given our limited operations
and revenues and our significant losses to date. Throughout 1999 we have
encountered greater expenses in the development of our Voraxial Separators
and have had limited revenues from this development. Consequently, our
working capital may not be sufficient and our operating costs may exceed
those experienced in our prior years. In light of these recent developments,
we may be unable to continue as a going concern.
Cautionary Statement Regarding Forward-Looking Statements:
Certain statements contained in this Section and elsewhere in this report
regarding matters that are not historical facts are forward-looking
statements. Because such forward-looking statements include risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. All statements which address
operating performance, events or developments that management expects or
anticipates to incur in the future, including statements relating to sales and
earnings growth or statements expressing general optimism about future
operating results, are forward-looking statements. The forward-looking
statements are based on management?s current views and assumptions regarding
future events and operating performance. Many factors could cause actual
results to differ materially from estimates contained in management's
forward-looking statements. The differences may be caused by a variety of
factors, including, but not limited to, adverse economic conditions,
competitive pressures, inadequate capital, unexpected costs, lower revenues,
net income and forecasts, the possibility of fluctuation and volatility of the
Company's operating results and financial condition, inability to carry out
marketing and sales plans and loss of key executives, among other things.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-B
The following exhibits are filed as part of this report:
Exhibits:
(27.1) Financial Data Schedule
(b) Reports on Form 8-K
On March 27, 2000, the Company filed a report on Form 8-K to indicate a change
in the Company's auditors.
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 as duly authorized officers of the Registrant.
Enviro Voraxial Technology, Inc.
By: /s/ Alberto DiBella
Alberto DiBella, Chairman and
President
DATED: May 24, 2000
ATLAS PEARLMAN, P.A.
350 East Las Olas Boulevard, Suite 1700
Fort Lauderdale, Florida 33301
May 24, 2000
Securities and Exchange Commission
Office of Small Business
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Filing Desk
Re: Enviro Voraxial Technology, Inc. (the "Company") Form 10-Q/SB
Dear Sir/Madam:
Enclosed for electronic filing on behalf of the Company is the Form 10-Q/SB.
Should you have any questions or comments regarding the enclosed, please call
the undersigned collect at (954) 763-1200.
Very truly yours,
ATLAS PEARLMAN, P.A.
By: /s/ Brian Pearlman
Brian Pearlman
BAP
