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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter period ended June 30, 2000
Commission file number 000-27859
Rad Source Technologies, Inc.
(Name of Small Business Issuer in its charter)
Florida 65-0882844
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
475 Ramblewood Drive, Coral Springs, Florida 33071
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(954) 755-1827
(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 AUGUST 9, 2000, THE REGISTRANT HAD 2,410,040 SHARES OF COMMON STOCK, $.001
PAR VALUE PER SHARE, OUTSTANDING.
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INDEX
Page
Number
------
Part I. Financial Information
Item I. Financial Statements
Consolidated Balance Sheet - June 30,
2000 (Unaudited) 3
Consolidated Statements of Operations - Three Months
Ended June 30, 2000 and June 30, 1999; and Nine
Months Ended June 30, 2000 and 1999 (Unaudited) 4
Consolidated Statements of Cash Flows - Nine Months
Ended June 30, 2000 and 1999 (Unaudited) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Conditions and Results of
Operations 7
Part II. Other Information 9
Signatures 9
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RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30,
2000
-----------
ASSETS
Current assets:
Cash $ 6,962
Accounts receivable 30,551
Inventory 92,035
Prepaid expense 4,561
-----------
Total current assets 134,109
Computer equipment, net 4,475
Long-term receivable 2,686
Security deposit 500
-----------
$ 141,770
-----------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 362,182
Accounts payable - shareholders 65,899
Notes payable 10,000
Due to shareholders 31,800
-----------
Total current liabilities 469,881
-----------
Shareholders' deficit
Common stock, par value $.001; 50,000,000 shares
authorized; 2,410,040 issued and outstanding 2,410
Additional paid-in capital 4,414,652
Deficit (4,745,173)
-----------
Total shareholders' deficit (328,111)
-----------
$ 141,770
===========
The accompanying notes are an integral part of these financial statements.
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RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30, June 30,
----------------------------- -----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 199,800 $ -- $ 448,375 $ --
Cost of sales 111,919 -- 266,786 --
----------- ----------- ----------- -----------
Gross profit 87,881 -- 181,589 --
----------- ----------- ----------- -----------
Expenses:
Research and development 2,208 115,979 43,566 179,024
Selling, general and administrative 132,779 38,370 304,263 157,929
Issuance of stock for services -- -- -- 3,560,496
----------- ----------- ----------- -----------
Total expenses 134,987 154,349 347,829 3,897,449
----------- ----------- ----------- -----------
Loss before other expense (47,106) (154,349) (166,240) (3,897,449)
Interest expense 250 2,595 750 8,025
----------- ----------- ----------- -----------
Net income $ (47,356) $ (156,944) $ (166,990) $(3,905,474)
=========== =========== =========== ===========
Loss per share - basic and diluted $ (0.02) $ (0.13) $ (0.07) $ (3.65)
Weighted average shares outstanding 2,410,040 1,226,667 2,410,040 1,069,872
</TABLE>
The accompanying notes are an integral part of these financial statements.
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RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
-------------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flow provided (used) by operating activities:
Net loss $ (166,990) $(3,905,474)
Adjustments to reconcile net loss to net cash provided
(used) by operating activities 948 3,561,075
Change in operating assets and liabilities 147,496 12,556
----------- -----------
Net cash provided (used) by operating activities (18,546) (331,843)
Cash flows from investing activities (2,536) (3,468)
Cash flows from financing activities -- 418,060
----------- -----------
Net increase (decrease) in cash (21,082) 82,749
Cash, beginning of period 28,044 2,237
----------- -----------
Cash, end of period $ 6,962 $ 84,986
=========== ===========
Supplemental disclosure:
Cash paid for interest $ -- $ 2,684
Cash paid for Income taxes $ -- $ --
Payment of unsecured advances through issuance of stock $ -- $ 54,500
</TABLE>
The accompanying notes are an integral part of these financial statements.
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RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - UNAUDITED INTERIM INFORMATION
The accompanying interim consolidated financial data are unaudited; however, in
the opinion of management, the interim data include all adjustments necessary
for a fair presentation of the results for interim periods. 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 at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
The results of operations for the three months and nine months ended June 30,
2000 are not necessarily indicative of the results to be expected for the year
ended September 30, 2000.
The interim unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto for the
year ended September 30, 1999 filed as part of the Company's form 10-KSB.
NOTE 2 UNCERTAINTY - GOING CONCERN
The Company's continued existence is dependent upon its ability to resolve its
liquidity problems, principally by obtaining equity and commencing profitable
operations. While pursuing capital, the Company must continue to operate on cash
flow generated from working capital and loans and contributions from
stockholders, if necessary. Although, the Company's losses are declining,
falling from $3,905,474 in the prior comparative nine months ended June 30, to
$166,990 in the current nine month period ended June 30, 2000, it has yet to
generate a profit. The shareholders' deficit is $328,111. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to this matter are to increase its marketing
efforts and sales of units in an effort to generate positive cash flow. The
financial statements do not include any adjustment that might result from the
outcome of this uncertainty.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis of the Company's consolidated financial
condition and consolidated results of operations should be read in conjunction
with the financial statements and notes contained herein as well as the
Company's September 30, 1999 form 10-KSB.
Statements which are not historical facts, including statements about the
Company's confidence and strategies and its expectations about new and existing
products, technologies and opportunities, market and industry segment growth,
demand and acceptance of new and existing products are forward looking
statements that involve risks and uncertainties. These include, but are not
limited to, product demand and market acceptance risks, the impact of
competitive products and pricing, the results of financing efforts, the effects
of economic conditions and trade, legal, social, and economic risks, such as
licensing, and, trade restrictions; and the results of the Company's business
plan. Such forward-looking statements are subject to risks and uncertainties.
Consequently, our actual results could materially differ from those anticipated
in these forward-looking statements.
THIRD QUARTER ENDED JUNE 30, 2000 COMPARED TO THIRD QUARTER ENDED JUNE 30, 1999
The Company sold two RS 3000 Blood Irradiators in the most recent quarter
compared to none in the same period in the prior year. In the prior year
quarter, the Company was involved in capital raising activities and refining
components to be used in its products and did not produce any units for
commercial use.
Research and development fell to $2,208 in the current quarter as compared to
$115,979 in the prior year comparative quarter due to the fact that the RS3000
and RS2000 are developed and being produced. Management's efforts have been in
creating awareness of these products in their marketplace to provide a basis for
revenue growth for the Company and a platform from which to develop similar
technology applications for other markets. Selling, general and administrative
expense rose by $94,409. There being no sales in the prior comparative quarter,
commissions account for $16,000 of the increase, while payroll increased
approximately $59,000 primarily due to the addition of three employees involved
in administration, sales support, and operations. The remaining increase is
attributable to costs associated with the Company's increased marketing efforts
and heightened operations. There was no issuance of the Company's stock for
services in the current quarter. In the prior year comparative quarter, the
Company's stock was issued primarily for financial consulting and legal
services. The Company's average outstanding balance of interest bearing debt has
been reduced, thereby causing the reduction in interest expense.
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FIRST NINE MONTHS ENDED JUNE 30, 2000 COMPARED TO FIRST NINE MONTHS ENDED
JUNE 30, 1999
The Company sold four RS 3000's and one RS 2000 in the most recent nine months
compared to none in the same period in the prior year. In the prior year nine
months, the Company was involved in capital raising activities and refining
components to be used in its products and did not produce any units for
commercial use.
Research and development fell 76% in the current nine months as compared to the
prior year comparative nine months due to reduced expenditures being required on
the same projects, the RS 3000 and the RS 2000 as they approached completion. In
the current period, management's efforts have been in creating awareness of
these products in their marketplace to provide a basis for revenue growth for
the Company and a platform from which to develop similar technology applications
for other markets. Selling, general and administrative expense rose $146,334.
This increase is generally attributable to the Company's commencement of sales
and general operations as opposed to development. Commissions and marketing
expenses account for approximately $40,000, while payroll and professional fees
accounts for an additional $31,000 of this increase. Travel and related expenses
rose $49,000 as a result of marketing efforts. The remaining increase is
attributable to increased insurance, telephone, and other general expenses as a
result of increased operational activity. There was no issuance of the Company's
stock for services in the current nine months. In the prior year comparative
nine months, the Company's stock was issued primarily for financial consulting
and legal services. The Company's average outstanding balance of interest
bearing debt has been reduced, thereby causing the reduction in interest
expense.
Management intends to continue pursuing the marketing and servicing of its
existing products, the RS 3000 and the RS 2000. In addition, the Company
continues pursuing development of products which penetrate its existing blood
market and pursue applications in larger markets. This may require the Company
to increase operations, administrative capacity and marketing functions, and
cause Selling, General and Administrative expenses to grow in the future.
However, even with additions to all of these functions, no assurances can be
made that they will result in creating revenues at a level profitable to the
Company from the sale of the above noted products.
The Company currently has a backlog of one RS 3000 and one RS 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has been generating operating losses from its inception and has a
stockholders' deficit as of June 30, 2000 of $328,111. The Company's net loss
for the three months and the nine months ended June 30, 2000 have declined to
$47,356 and $166,990, respectively, from $156,944 and $3,905,474, respectively,
in the prior comparative period. The Company's sales have grown on a quarterly
basis and
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management expects sales of its existing products to increase as its marketing
efforts continue to take effect and that this increase will improve the
Company's liquidity. However, the Company's ability to continue operations as a
going concern remains dependent on the success of the Company's existing
products in the marketplace and the resulting order deposits and sales
collections, as well as continued cooperation of its subcontractors and the
ability of the Company to raise additional capital. Although, Management
anticipates the above items can be accomplished, no assurances can be given. In
that event, operations of the Company will be significantly unfavorably
affected.
PART II OTHER INFORMATION
ITEM 1 through ITEM 5
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit
Number Description Location
------- ----------- --------
27 Financial Data Schedule Filed herewith electronically
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter
ended June 30, 2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Rad Source Technologies, Inc.
Dated: August 9, 2000 By: /s/ Randol Kirk
------------------------------------
Randol Kirk, Chief Executive Officer
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