U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 August 31, 1999
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ________ to _________
Commission FILE NO. 0-29834
ENVIRONMENTAL PRODUCTS GROUP, INC.
(Exact name of Small Business Issuer as specified in its charter)
DELAWARE 22-3639092
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
3325 North Service Road, Unit 105
Burlington, Ontario L7N 3G2 Canada
(Address of Principal Executive Offices)
(905) 332-3110
(Issuer's Telephone Number, including area code)
State 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
other 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 ____ No X
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 11,782,586
Transitional Small Business Disclosure Format (check one):
Yes ____ No X
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
ENVIRONMENTAL PRODUCTS GROUP, INC.
(Formerly VERSATECH ENVIRONMENT GROUP, INC.
and ENVIRONMENTAL SATELLITE CORPORATION)
A DEVELOPMENT STAGE COMPANY
UNAUDITED
FINANCIAL STATEMENTS
AUGUST 31, 2000
TABLE OF CONTENTS Page
Number
FINANCIAL STATEMENTS
STATEMENT 1 - BALANCE SHEET 1
2 - STATEMENTS OF OPERATIONS 2
3 - STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY 3
4 - STATEMENTS OF CASH FLOWS 4
NOTES TO FINANCIAL STATEMENTS 5-7
ENVIRONMENTAL PRODUCTS GROUP, INC.
(Formerly VERSATECH ENVIRONMENT GROUP, INC.
and ENVIRONMENTAL SATELLITE CORPORATION)
A DEVELOPMENT STAGE COMPANY
UNAUDITED
BALANCE SHEET
AUGUST 31, 2000
Info Only
AUG. 31, MAY 31,
ASSETS 2000 2000
CURRENT ASSETS
Cash in Bank $ 154,279 $ 203,298
OTHER ASSETS
Organization Costs (Note 3) $1,140,444 $1,008,700
TOTAL ASSETS $1,294,723 $1,221,998
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable/Accruals (Note 4) $ -0- $ -0-
OTHER LIABILITIES
Loans/Advances due Shareholders (Note 5) $ 82,725 $ -0-
TOTAL LIABILITIES $ 82,725 $ -0-
STOCKHOLDERS' EQUITY
CAPITAL STOCK
Preferred Stock - None, Authorization
of preferred stock rescinded on
October 21, 1998 (Note 1) $ -0- $ -0-
Common Stock - 20,000,000 Shares authorized at
$.001 per share; 12,357,623 shares issued and
outstanding at $.001 per share at May 31, 1999,
and May 31, 2000. (SEE NOTE 1) $ 12,357 $ 12,357
ADDITIONAL PAID-IN CAPITAL (SEE NOTE 1) $1,199,641 $1,199,641
TOTAL STOCKHOLDERS' EQUITY $1,211,998 $1,211,998
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,294,723 $1,211,998
"SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS"
-1-
ENVIRONMENTAL PRODUCTS GROUP, INC.
(Formerly VERSATECH ENVIRONMENT GROUP, INC.
and
ENVIRONMENTAL SATELLITE CORPORATION)
A DEVELOPMENT STAGE COMPANY
UNAUDITED
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDING AUGUST 31, 2000 and 1999
ACCUMULATED EARNINGS (DEFICIT)
SINCE INCEPTION AUG. 31, 2000 AUG. 31, 1999
REVENUES $ -0- $-0-
EXPENSES $ -0- $-0-
NET INCOME (LOSS) $ -0- $-0-
EARNINGS (LOSS)
PER SHARE $ -0- $-0-
"SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS"
-2-
ENVIRONMENTAL PRODUCTS GROUP, INC.
(FORMERLY VERSATECH ENVIRONMENT GROUP, INC.
and
ENVIRONMENTAL SATELLITE CORPORATION)
A DEVELOPMENT STAGE COMPANY
UNAUDITED
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTH PERIOD ENDING AUGUST 31, 2000
PREFERRED STOCK - No (0) Shares issued and outstanding as preferred
stock was rescinded on October 21, 1998 (See Note 1)
COMMON Common Stock Additional
STOCK No. of Paid-In
ONLY Shares Amount Capital Total
Totals as of
May 31, 1999 11,782,586 $ 11,782 $ 625,179 $ 636,961
SHAREHOLDER LOANS
CONVERTED TO
COMMON SHARES 575,037 575 574,462 575,037
Totals as of
May 31, 2000 12,357,623 $ 12,357 $1,199,641 $1,211,998
No Changes for the period
6/1/2000 to 8/31/2000
-0- -0- -0- -0-
Totals as of
August 31, 2000 12,357,623 $ 12,357 $1,199,641 $1,211,998
"SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS"
-3-
ENVIRONMENTAL PRODUCTS GROUP, INC.
(FORMERLY VERSATECH ENVIRONMENT GROUP, INC.
and
ENVIRONMENTAL SATELLITE CORPORATION)
A DEVELOPMENT STAGE COMPANY
UNAUDITED
STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIOD ENDING AUGUST 31, 2000 and 1999
AUG. 31, 2000 AUG. 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ -0- $-0-
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES $ -0- $-0-
CASH FLOWS FROM
INVESTING ACTIVITIES
Increase in organization
costs $(131,744) $(162,424)
Decrease in Accounts Payable -0- -0-
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES $(131,744) $(162,424)
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from:
Shareholder $ 82,725 $182,000
NET CASH PROVIDED (USED)
FROM FINANCING ACTIVITIES $ 82,725 $182,000
NET INCREASE
(DECREASE) IN CASH $ (49,019) $19,576
CASH - BEGINNING OF YEAR $ 203,298 $1,912
CASH - END OF PERIOD $ 154,279 $21,488
"SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS"
-4-
ENVIRONMENTAL PRODUCTS GROUP, INC.
(Formerly VERSATECH ENVIRONMENT GROUP, INC.
and
ENVIRONMENTAL SATELLITE CORPORATION
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000
NOTE 1. ORGANIZATION
The Company was incorporated on September 26, 1990 under the laws
of the State of Delaware. On November 19, 1990, the Company merged
with District
Corporation, a company incorporated under the laws of the State of Nevada,
in a share
for share stock exchange wherein the shareholders of District Corporation,
exchanged their shares of stock for those of Environmental Satellite
Corporation, leaving
Environmental Satellite Corporation as the surviving corporation.
This exchange
was accounted for as a tax-free reorganization under Section
368 (a) (1) (c), or 338H-10,
the Internal Revenue Service Code, 1986, as amended. This method
provides for a
tax-free exchange of assets, subject to liabilities, for common stock.
District Corporation
originally merged with Axelsen Advertising and Research, Inc., a
Utah corporation
incorporated on December 1, 1976, on November 14, 1990.
On June 12, 1993, the shareholders consented to changing the
Company's name
to VERSATECH ENVIRONMENT GROUP, INC. The Company also
decided that it will be
in the business of the manufacture and sales of more environmentally
friendly products
for the construction and automobile industries.
On October 21, 1998, the Company changed its name to ENVIRONMENTAL
PRODUCTS GROUP, INC. On the same date, the Company amended its
Certificate of Incorporation to rescind the authorization to issue preferred
shares and to
reduce the number of authorized common shares it could issue from
200,000,000 with par
value of $0.001 per share to 20,000,000 shares with a par value of
$0.001 per share.
On November 20, 1998, the Company acquired all the outstanding shares
of Formulated
Mouldings (Canada), Inc. (FMCI), Environmental Shelter Corporation (ESC)
and Environmental
Fuel Technology, Inc. (EFT). These companies were purchased by issuing
11,249,804 shares of
the Company's common stock. The foregoing shares issued by the
Company were issued
pursuant to an exemption from registration (Section 4(2) under the
Securities Act of 1933, as
amended ("Act") and Rule 504 promulgated under the Act.
The shares cannot be sold or otherwise transferred without a registration
under the Act or
an exemption from registration. Rule 144 promulgated under the Act
requires among other things, a
holding period of one year from the date of receiving full consideration
for the shares.
On May 28, 1999, the Company sold the operations of FMCI for
$100.00. The sale did not
include any of the right, title and interest in and to the proprietary
information and technology concerning
production of extruded plastic mouldings from scrap diaper and
other material.
The Company is considered a development stage company, as defined
in Statement of
Financial Accounting Standards No. 7, "Accounting and Reporting
by Development Stage Enterprises."
-5-
ENVIRONMENTAL PRODUCTS GROUP, INC.
(FORMERLY VERSATECH ENVIRONMENT GROUP, INC.
and
ENVIRONMENTAL SATELLITE CORPORATION)
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. The accrual method of accounting is employed to meet generally accepted
accounting principles (GAAP).
B. Organization Costs (See Note 3) - Organization costs will be amortized
over sixty
(60) months using the straight line method of amortization, upon
commencement of operations.
The Company is presently considered a "Development Stage Company",
per SFAS No. 7.
C. Income Taxes - No provision for income taxes has been made
because the Company
had not commenced operations as of this report date.
D. Accounts Payable/Accruals (See Note 4)
E. Loans/Advances due Shareholders (See Note 5)
F. Capital Stock/Additional Paid-In Capital (See Statement of
Changes in Stockholders' Equity)
G. Contingencies (See Note 6)
H. Commitments (See Note 7)
I. Litigation - There is no pending litigation as represented by the
corporation's
management.
NOTE 3. ORGANIZATION COSTS
Organization costs are made up of the following items:
Info
Only
Aug. 31, May 31,
2000 2000
Incorporation, filings, etc. $ 20,800 $ 20,800
FCN Financial Services, Inc. - Merger Fees 36,000 36,000
United Stock Transfer - Transfer Agent 3,585 3,585
Audit and accounting fees 40,125 21,500
Standard and Poor's - Listing Fees 2,080 2,080
2,750 2,750
Miscellaneous Costs 722 722
Technology and information rights 602,997 602,997
Research and Development Costs 431,385 -0-
Total - Organization Costs $1,140,444 $1,008,700
-6-
ENVIRONMENTAL PRODUCTS GROUP, INC.
(FORMERLY VERSATECH ENVIRONMENT GROUP, INC.
and
ENVIRONMENTAL SATELLITE CORPORATION)
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000
NOTE 4. ACCOUNTS PAYABLE/ACCRUALS
Accounts payable/accruals are made up of the following items:
Info
Only
Aug. 31, May 31,
2000 2000
Accounting/Audit Fees $ -0- $ -0-
Legal Fees -0- -0-
Filing Fees -0- -0-
Stock Transfer Agent Fees -0- -0-
Total - Accounts Payable/Accruals $ -0- $ -0-
NOTE 5. LOANS/ADVANCES DUE SHAREHOLDERS
A shareholder has advanced a series of loans to the Company from
1993 through this reporting period, totaling $82,725.
NOTE 6. CONTINGENCIES
These financial statements have been prepared on the basis of
accounting principles applicable to a going concern. The ability of the
Company
to continue is dependent on its ability to raise working capital and
realize profitable
operations.
NOTE 7. COMMITMENTS
The Company had no commitments as of the report date.
-7-
Item 2. Management's Discussion and Analysis or Plan of Operation.
Having successfully completed the research and development of a
complete line of new trim products that can and will be made
from reclaimed scrap plastics, the Company is seeking potential
candidates for the licensing of the manufacturing and
distribution of this line.
The past year has been used in preparation of materials required
to successfully promote and put in place potential licensees.
A concentrated effort can now begin in this area of corporate
activity.
During this period and for the ensuing year the Company anticipates
that it will
need to raise some additional capital primarily through debt. A major
shareholder and
officer has agreed to lend the necessary operational funds required
during the ensuing
year. If any funds are received as a result of the license program,
such funds will be
used to either repay the debt or used for working capital. The
Company believes that
the funds available to it from the officer will be sufficient to allow
it to operate over the
next twelve months.
A base staff will be required to handle operations and this will
be limited to a
maximum of five people which will include executive staff.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not involved and has not been involved in any litigation and, to
the best of its knowledge, is not aware of any facts that would likely lead to
litigation. Further, management is not aware of any threatened litigation.
Item 2. Changes in Securities and Use of Proceeds.
The Company has not changed any of the terms or rights associated with any
class of registered securities.
In November 1998 the Company, through a number of transactions, acquired
Formulated Mouldings (Canada) Inc. ("FMCI"), Environmental Shelter Corporation
Inc. ("ESC") and Environmental Fuel Technology, Inc. ("EFT"). In addition, the
Company also purchased a promissory note of FMCI from The Reclamation (US)
Corporation and also issued common stock to FMCI employees. The terms and
conditions of these transactions are as set forth below.
EFT owned all right, title and interest in and to proprietary information
concerning the production of fuel from scrap containerboard waste and other
material. The Company acquired that know-how by way of an agreement and plan of
reorganization (the "EFT Plan"). Under the terms of the EFT Plan, the Company
issued 544,500 shares of its voting common stock to the shareholders of EFT in
exchange for all of the outstanding shares of EFT common stock. The book value
of EFT was $544.50. The shares were issued based upon Rule 504 promulgated
under the Securities Act of 1933 as amended as well as Section 4(2) of said act.
ESC owned all right, title and interest in and to proprietary technology and
know-how regarding the production of extruded plastic sheeting from scrap
diaper
and other materials. These materials were then designed to be used in
connection
with plastic shelters. The Company acquired this technology by way of an
agreement and plan of reorganization (the "ESC Plan"). Under the ESC Plan, the
Company issued 665,000 voting common shares in exchange for all of the
outstanding common stock of ESC. The book value of ESC was $665.00. The shares
were issued based upon Rule 504 promulgated under the Securities Act of 1933 as
amended as well as Section 4(2) of said act.
FMCI owned all right, title and interest in and to proprietary information
concerning the production of extruded plastic moldings from scrap diaper and
other material. The Company acquired that know-how by way of an agreement and
plan of reorganization (the "FMCI Plan"). Under the terms of the FMCI Plan, the
Company issued 7,180,426 shares of its voting common stock to the shareholders
of FMCI in exchange for all of the outstanding shares of FMCI common stock. The
book value of FMCI was $324,281.25 Canadian or $214,025.63 (US). The shares
were
issued based upon Rule 504 promulgated under the Securities Act of 1933 as
amended as well as Section 4(2) of said act.
The Company also purchased a promissory note made by FMCI in the principal
amount of $885,636.12 (Canadian) ($584,519.76 (US)). FMCI borrowed this money
from The Reclamation (US) Corporation for a variety of purposes, including
without limitation, working capital and research and development of its
extruded
plastic molding products. The Company issued 2,859,878 shares of its voting
common stock to purchase the promissory note and later extinguished the note in
exchange for the transfer of technology from FMCI as security for the note. The
shares were issued based upon Rule 504 promulgated under the Securities Act of
1933 as amended as well as Section 4(2) of said act.
The Company issued 472,000 shares of common stock to employees
of FMCI. These shares were issued to acknowledge loyal, good and faithful
service on the part of those employees. The shares were issued based upon Rule
504 promulgated under the Securities Act of 1933 as amended as well as Section
4(2) of said act.
Finally, Blaine Froats had advanced a series of loans to the Company from 1993
through 2000 totaling $575,037. On May 31, 2000, the Company offered, and Mr.
Froats agreed to accept, 575,037 shares of common stock of the Company in full
payment of the indebtedness. The shares were issued based upon Rule 504
promulgated under the Securities Act of 1933 as amended as well as Section 4(2)
of said act.
Item 3. Defaults Upon Senior Securities.
There has been no default in the payment of debt service or any other material
default on any indebtedness of the Company exceeding 5% of the total assets
of the
Company.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no items submitted to a vote of security holders during the three
months ended August 31, 2000.
Item 5. Other Information.
The Company has no other information to report.
Item 6. Exhibits and Reports on Form 8-K.
There were no reports filed on Form 8-K during the quarter ended August
31, 2000.
INDEX TO EXHIBITS
The exhibits to be filed with this Form 10-QSB are hereby incorporated by
reference from the exhibits filed with issuer's filing on Form 10-SB, as
follows:
2 (i)
A. Certificate of Incorporation of the Company, as amended
B. Certificate of Incorporation of FMCI, as amended
C. Certificate of Incorporation of EFT, as amended
D. Certificate of Incorporation of ESC, as amended
2. (ii)
E. Bylaws of the Company
F. Bylaws of FMCI
G. Bylaws of EFT
H. Bylaws of ESC
3.
I. Specimen Common Stock Certificate
6.
J. Lease Agreement dated May 1997 by and between Fairgate Centre Ltd. and The
Reclamation (US) Corporation.
K. Agreement and Plan of Reorganization between the Company and FMCI dated
November 20, 1998
L. Agreement and Plan of Reorganization between the Company and EFT dated
November 20, 1998
M. Agreement and Plan of Reorganization between the Company and ESC dated
November 20, 1998
SIGNATURES
In accordance with the Securities Exchange Act of 1934, the registrant
caused this registration statement to be signed on its behalf by the
undersigned,
thereunto duly authorized.
ENVIRONMENTAL PRODUCTS GROUP, INC.
By:BLAINE C. FROATS
Blaine C. Froats, Chairman/CEO
