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U.S. SECURITIES & EXCHANGE COMMISSION
WASHINGTON D.C. 20549
Form 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 or (15) D OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31,1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 or 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period ______________ to ______________
Commission file number - 000-25875
EXHAUST TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
Washington 91-1970433
(State or other jurisdiction of (IRS Employer Identification No.)
Incorporation or organization)
230 North Division Street
P.O. Box 2822
Spokane, Washington 99220-2822
(Address of principal executive office)
(509) 838-4401
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15 (D) of the Exchange Act 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 [ ]
As of October 11, 1999 ; there were 4,692,750 shares of the
Registrant's common stock outstanding.
Transitional Small Business Disclosure Format. YES [ ] NO [ x ]
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EXHAUST TECHNOLOGIES, INC.
Form 10-QSB
For the Quarter Ended July 31, 1999
INDEX
PART I - Financial Information
Item 1 Financial Statements:
Balance Sheet - July 31, 1999
Statement of Loss - July 31, 1999
Statement of Cash Flows - July 31, 1999
Notes to Interim Financial Statements
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II - Other Information
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EXHAUST TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JULY 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT:
Cash $ 2,081
Deferred stock offering costs 25,000
Supplies inventory 23,510
Prepaid expenses 1,105
---------
TOTAL CURRENT ASSETS 51,696
OTHER ASSETS:
Licenses, net of accumulated
amortization of $2,849 28,585
---------
$ 80,281
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT:
Accounts payable $ 16,256
Accrued interest 2,017
Line of credit-related party (Note 3) 74,509
---------
TOTAL CURRENT LIABILITIES 92,782
---------
COMMITMENTS AND CONTINGENCIES (Notes 1,3 and 4)
STOCKHOLDERS' DEFICIT:
Common stock, $.00001 par value; 100,000,000
shares authorized; 4,692,750 shares issued
and outstanding 47
Additional paid-in capital 72,088
Deficit accumulated during the development stage (84,636)
---------
TOTAL STOCKHOLDERS' DEFICIT (12,501)
---------
$ 80,281
=========
</TABLE>
1
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EXHAUST TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS
<TABLE>
<CAPTION>
Six months Date of Inception
Ended (July 21, 1998
July 31, 1999 Through
July 31, 1999)
<S> <C> <C>
REVENUES $ - $ -
OPERATING EXPENSES:
Professional services 41,445 41,445
Research and development 1,900 1,900
Advertising 1,300 1,300
Office expense 1,619 2,278
Amortization 1,274 2,858
Travel - 2,838
Director's fees - 30 000
---------- ---------
TOTAL OPERATING EXPENSES 47,538 82,619
---------- ---------
LOSS FROM OPERATIONS (47,538) (82,619)
OTHER EXPENSE:
Interest expense (1,232) (2,017)
---------- ---------
NET LOSS $ (48,770) $ (84,636)
========== =========
NET LOSS PER SHARE -
BASIC AND DILUTED $ (0.01)
==========
WEIGHTED AVERAGE NUMBER OF SHARES-
BASIC AND DILUTED 4,687,405
==========
</TABLE>
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EXHAUST TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
SIX MONTHS ENDED JULY 31, 1999
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ (48,770)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization 1,274
Changes in assets and liabilities:
Deposits (26,105)
Accounts payable 16,256
Inventory and supplies (15,519)
Accrued interest 1,232
---------
Net cash used in operating activities (71,632)
---------
Cash flows from investing activities:
Cash paid for licenses (15,602)
---------
Net cash used in investing activities (15,602)
---------
Cash flows from financing activities:
Borrowings under line of credit-related party 52,000
Net proceeds from sale of common stock 10,050
---------
Net cash provided by financing activities 62,050
---------
Net decrease in cash (25,184)
Cash, beginning of period 27,265
---------
Cash, end of period $ 2,081
=========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ -
=========
Income taxes $ -
=========
</TABLE>
3
<PAGE> 6
EXHAUST TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS
1. Basis of Presentation
The foregoing unaudited interim financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-QSB and Article 10 of Regulation S-X as promulgated by the
Securities and Exchange Commission. Accordingly, these financial
statements do not include all of the disclosures required by
generally accepted accounting principles for complete financial
statements. These unaudited interim financial statements should be
read in conjunction with the audited financial statements for the
period ended January 31, 1999. In the opinion of management, the
unaudited interim financial statements furnished herein include all
adjustments, all of which are of a normal recurring nature, necessary
for a fair statement of the results for the interim period presented.
The preparation of financial statements in accordance with
generally accepted accounting principles requires the use of
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities
known to exist as of the date the financial statements are published,
and the reported amounts of revenues and expenses during the
reporting period. Uncertainties with respect to such estimates and
assumptions are inherent in the preparation of the Company's
financial statements; accordingly, it is possible that the actual
results could differ from these estimates and assumptions which could
have a material effect on the reported amounts of the Company's
financial position and results of operations.
Operating results for the six-month period ended July 31, 1999
are not necessarily indicative of the results that may be expected
for the year ending January 31, 2000.
2. Development Stage Operations and Going Concern
The Company has been in the development stage since its
inception. The Company has no recurring source of revenue and has
incurred losses since inception. These factors raise substantial
doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that may be
necessary if the Company is unable to continue as a going concern.
Management of the Company has undertaken certain actions to
address these conditions. Management currently plans to commence
production in fiscal 2000. To this end, management is currently in
negotiations with manufacturers to produce the Company's products and
with marketing representatives to establish a product channel. Funds
required to carry out management's plans are expected to be derived
from future stock sales or borrowings from the Company's
shareholders. There can be no assurances that the Company will be
successful in executing its plans.
4
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
General
These discussions contain forward-looking statements containing
words such as "will continue to be," "will be," "continue to,"
"anticipates that," "to be," or "can impact." Management cautions
that forward-looking statements are subject to risks and
uncertainties that could cause the Company's actual results to differ
materially from those projected in forward-looking statements.
Six Months Ended July 31, 1999
For the six months ended July 31, 1999 the Company reported a
net loss of $48,770. The Company is in the development stage and has
been since inception. The operating expenses that were incurred were
for professional costs related to Securities and Exchange Commission
filing fees and preliminary costs advanced towards future product
production. The Company is in the process of obtaining manufacturers
for its products and sales outlets. There have been no revenues
received since inception and no revenues are expected until
management receives the necessary funds to begin production.
Financial Condition and Liquidity
At July 31, 1999, the Company had $2,081 of cash. The Company's
sources of cash have been from short-term borrowings from a related
party and from sales of the Company's common stock. Future funds
required to carry out management's plans are expected to be derived
from future stock sales or borrowings from the Company's
shareholders. There can be no assurances that the Company will be
successful in executing its plans.
Impact of Year 2000
The Company is aware of the issues associated with the
programming code in existing computer systems as the millennium (year
2000) approaches. The "year 2000" problem is pervasive and complex
as virtually every computer operation will be affected in some way by
the rollover of the two digit year value to 00. The issue is whether
computer systems will properly recognize date sensitive information
when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a
system to fail. Since the company is not producing or maintaining
time sensitive operations at present, the year 2000 problem is not
anticipated to have a significant impact on the Company's operations.
However, it may have a significant impact on key suppliers and
customers with whom the Company may conduct business in the future.
<PAGE> 8
EXHAUST TECHNOLOGIES, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company knows of no litigation present, threatened or
contemplated or unsatisfied judgment against the Company, its
officers or directors or any proceedings in which the Company, its
officers or directors are a party.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The rights of the holders of the Company's securities have not been
modified nor have the rights evidenced by the securities been limited
or qualified by the issuance or modification of any other class of
securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There are no senior securities issued by the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters presented to the shareholders for vote during
the six months ended July 31, 1999.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed for the quarter ended July 31,
1999.
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SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
EXHAUST TECHNOLOGIES, INC.
October 14, 1999 /s/Robert E. Sterling
(Date) Robert E. Sterling, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at July 31, 1999 (Unaudited)
and the Consolidated Statement of Income for the six months ended July 31,
1999 (Unaudited) and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> JUL-31-1999
<CASH> 2,081
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 23,510
<CURRENT-ASSETS> 26,105
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 80,281
<CURRENT-LIABILITIES> 92,782
<BONDS> 0
0
0
<COMMON> 72,1135
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 80,281
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 47,538
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,232
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (48,770)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,770)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
