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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commision file number 0-22630
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Seiler Pollution Control Systems, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2448906
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
555 Metro Place North, Suite 100, Dublin, Ohio 43017
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 614/791-3272
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Former Name, Former Address and Former Fiscal Year, if Changes Since Last
Report.
Indicate by [X] whether the registrant (1) has filed all reports 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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes _____ No _____
NOT APPLICABLE
As of June 30, 1997, the Registrant had outstanding 21,142,188 shares of
its Common Stock, par value $.0001 per share.
FORWARD LOOKING STATEMENTS
Certain statements included in this Quarterly Report are not based on
historical facts, but are forward looking statements. These statements can be
identified by the use of forward looking terminology such as "believes",
"expects", "may", "will", "should", or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy. These statements reflect the Company's reasonable judgments with
respect to future events and are subject to risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements. Such risks and uncertainties include, but are not limited to the
completion of an economically viable HTV system and the development and
marketing of additional systems. The Company must also generate additional
resources to enable it to continue the completion of the HTV system. Such
additional resources may be generated through the sale of additional equity
securities, the sale of an existing system, alliances, joint ventures or other
business transactions which would generate sufficient resources. Other factors
such as changes in business conditions and changes in regulations and laws may
also impact the outcome of forward-looking statements.
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Seiler Pollution Control Systems, Inc.
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Form 10-Q
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Item No. Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 3. Defaults upon Senior Securities . . . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security-Holders . . . . . . . . . 9
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . Signature
Page
Financial Data Schedule . . . . . . . . . . . . . . . . .. . . . . . . . . . Last
Page
</TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
1
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SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
30-Jun-97
(Unaudited) 31-Mar-97
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<S> <C> <C>
CURRENT ASSETS
Cash $2,170,877 $4,188,278
Prepaid expenses and sundry receivables 331,956 207,066
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Total Current Assets 2,502,833 4,395,344
HIGH TEMPERATURE VITRIFICATION SYSTEMS 12,482,025 10,518,246
OTHER ASSETS
Licensing agreements, less accumulated amortization of
$1,257,382 and $1,178,048 at June 30, 1997 and
March 31, 1997, respectively 3,502,618 3,581,952
Advances to related party 511,547 516,832
Vetrotherm option 167,920 167,920
Deposits 93,772 27,776
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4,275,857 4,294,480
PROPERTY AND EQUIPMENT - AT COST (net of
accumulated depreciation of $ 2,186 at
June 30, 1997 and March 31, 1997, respectively) 366,788 356,084
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$19,627,503 $19,564,154
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</TABLE>
LIABILITIES
<TABLE>
<CAPTION>
30-Jun-97
(Unaudited) 31-Mar-97
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<S> <C> <C>
CURRENT LIABILITIES
Notes Payable - Bank $788,940 --
Accounts payable 170,322 $1,005,577
Accrued expenses 542,932 637,337
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Total Current Liabilities 1,502,194 1,642,914
LICENSING AGREEMENTS PAYABLE 1,977,250 1,977,250
MINORITY INTEREST 1,880,000 1,880,000
DEFERRED INCOME - GOVERNMENT SUBSIDY 1,269,148 --
LOANS PAYABLE - STOCKHOLDERS 742,717 913,627
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5,869,115 4,770,877
STOCKHOLDERS' EQUITY
COMMON STOCK
Common stock, $.0001 par value; authorized 25,000,000
shares, issued and outstanding 21,142,188
shares at June 30, 1997 and March 31, 1997, respectively 2,115 2,115
ADDITIONAL PAID IN CAPITAL 26,538,439 26,538,439
ACCUMULATED DEFICIT (13,609,902) (12,906,183)
FOREIGN CURRENCY TRANSLATION ADJUSTMENT (674,458) (484,008)
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12,256,194 13,150,363
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$19,627,503 $19,564,154
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</TABLE>
2
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SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
REVENUE $ 116,443 $ 57,873
OPERATING EXPENSES
Professional and other consulting fees 361,355 163,907
Salaries, wages and related fringe benefits 225,044 126,680
General and administrative 139,219 130,857
Depreciation and amortization 79,334 79,586
Research and development - 80,077
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804,952 581,107
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LOSS FROM OPERATIONS (688,509) (523,234)
Interest expense 15,210 14
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NET LOSS $ (703,719) $ (523,248)
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LOSS PER COMMON SHARE $ (0.03) $ (0.03)
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WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 21,142,188 18,717,236
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</TABLE>
3
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SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
Common Stock Additional
--------------------------- Paid-in
Shares Amount Capital
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<S> <C> <C> <C>
BALANCE, MARCH 31, 1996 18,525,569 $ 1,853 $ 17,897,081
Exercise of stock options under the 1993
Non-Statutory Stock Option Plan 50,000 5 180,620
Issuance of common stock for cash 150,000 15 484,673
Foreign currency translation adjustment -- -- --
Net loss -- -- --
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BALANCE, JUNE 30, 1996 (Unaudited) 18,725,569 $ 1,873 $ 18,562,374
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BALANCE, MARCH 31, 1997 21,142,188 $ 2,115 $ 26,538,439
Foreign currency translation adjustment -- -- --
Net loss -- -- --
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BALANCE, JUNE 30, 1997 (Unaudited) 21,142,188 $ 2,115 $ 26,538,439
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</TABLE>
<TABLE>
<CAPTION>
Foreign
Currency
Accumulated Translation
Deficit Adjustment Total
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<S> <C> <C> <C>
BALANCE, MARCH 31, 1996 $ (7,349,683) $ 856,606 $ 11,405,857
Exercise of stock options under the 1993
Non-Statutory Stock Option Plan -- -- 180,625
Issuance of common stock for cash -- -- 484,688
Foreign currency translation adjustment -- (475,582) (475,582)
Net loss (523,248) -- (523,248)
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BALANCE, JUNE 30, 1996 (Unaudited) $ (7,872,931) $ 381,024 $ 11,072,363
=============== ============== =============
BALANCE, MARCH 31, 1997 $ (12,906,183) $ (484,008) $ 13,150,363
Foreign currency translation adjustment -- (190,450) (190,450)
Net loss (703,719) -- (703,719)
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BALANCE, JUNE 30, 1997 (Unaudited) $ (13,609,902) $ (674,458) $ 12,256,194
=============== ============== =============
</TABLE>
4
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SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (703,719) $ (523,248)
Adjustments to reconcile net loss to net
cash used in operating activities:
Foreign currency translation 436,304 (459,359)
Depreciation and amortization 79,334 79,586
Changes in assets and liabilities:
Prepaid expenses and sundry receivables (124,890) (37,702)
Deposits (65,996) 2,113
Accounts payable (835,255) 88,796
Accrued expenses (94,405) 43,383
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Net Cash Used In Operating Activities (1,308,627) (806,431)
CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment (10,704) (1,255)
Advances for High Temperature Vitrification Systems (1,963,779) (197,936)
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Net Cash Used In Investing Activities (1,974,483) (199,191)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Government subsidies 1,269,148 --
Proceeds on loans payable - Bank 788,940 --
Advances to related party 5,285 30,888
(Payments) proceeds on loans payable - stockholder (170,910) 224,999
Proceeds from issuance of common stock -- 665,313
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Net Cash Provided by Financing Activities 1,892,463 921,200
EFFECT OF EXCHANGE RATE CHANGES ON CASH (626,754) (16,223)
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Net Decrease In Cash (2,017,401) (100,645)
CASH - BEGINNING OF PERIOD 4,188,278 200,351
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CASH - END OF PERIOD $ 2,170,877 $ 99,706
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</TABLE>
5
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SEILER POLLUTION CONTROL SYSTEMS, INC.
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NOTES TO FINANCIAL STATEMENTS
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JUNE 30, 1997 AND 1996
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NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements 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-X. 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 (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended June 30, 1997 are
not necessarily indicative of the results that may be expected for the year
ending March 31, 1998. The unaudited consolidated financial statements should
be read in conjunction with the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
March 31, 1997.
6
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Management's Discussion and Analysis of Financial Condition and Results of
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Operations
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Results of Operations June 30, 1997 vs. June 30, 1996
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The Company's net loss for the three months ended June 30, 1997 was
$703,719 as compared to $523,248 for the three months ended June 30, 1996. The
change in the net loss is the result of additional consulting expenses,
salaries, wages and related fringe benefits net of additional consulting revenue
and lower research and development expenses related to the development of High
Temperature Vitrification (HTV) systems.
The Company made payments aggregating $1,963,779 toward completion of
its HTV Systems during the three months ended June 30, 1997. The Company funded
these capital expenditures and operating losses by drawing on the line of credit
provided by the Dresdner Bank and the subsidies provided by the German
government as well as from existing cash reserves.
The Company expects to incur substantial expenditures to complete the
HTV systems, including operational start-up costs, and to develop and market
additional systems. Management's plans to generate additional financial
resources include consideration of the sale of additional equity securities,
alliances or joint venture agreements with entities interested in the Company's
HTV systems, project financing agreements or other business transactions which
would generate sufficient funding to assure continuation of the Company's
operations.
Since the groundbreaking in May, 1997 for the Company's commercial HTV
System in Freiberg, Germany, construction continues on schedule for the $12.7
million US (18.6 DM) project. Site preparation is finished and erection of the
building is continuing. Installation of the HTV System is expected to begin in
late 1997 with operations anticipated to commence early in 1998.
In March, 1997, the Company acquired 60% of N.W. Technology, Inc. that
will utilize Seiler's technology to design and produce a pilot plant to process
low-level nuclear waste (LLNW). Construction of the pilot equipment in
Leibstadt, Germany has advanced and testing begun on the modular units that make
up the system. Scientific research is being conducted on the melting process at
low temperatures. A prototype LLNW pilot system is anticipated to be ready for
tests with non-radioactive materials in late 1997.
The Company announced in July 1997 the formation of a partnership
joining Seiler SEPC AG (a wholly owned subsidiary of Seiler Pollution Control
Systems, Inc.) with Swiss Steel AG, Hydrotest Ingenieurunternehmung AG and
Result Technology AG. The partnership will operate under the name PyRec and
wants to build and operate an auto waste recycling facility in Emmenbrucke,
Switzerland, to provide a safe, environmentally sound method to address the
growing disposal problem created by
7
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automobile wastes. Seiler SEPC AG would use its vitrification technology to
convert toxic auto shredder waste into reusable nonhazardous materials. The
success of this project is largely dependent on support from the Swiss Car
Importers Association Foundation (IGEA) which is evaluating other competing
technologies as well.
In July 1997, the Company also received a $150,000 grant from the Four
County Solid Waste District, including Coshocton, Ohio to build a pilot HTV
System and research laboratory in the city of Coshocton. Construction of the
pilot plant, the first Seiler facility to be built in the United States, is
expected to begin in September 1997. Later plans include building a full-sized
commercial HTV System on the same site.
8
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable
Item 2. Changes in Securities.
Not applicable
Item 3. Defaults upon Senior Securities.
Not applicable
Item 4. Submission of Matters to a Vote of Security-Holders.
Not applicable
Item 5. Other Information.
Not applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibit is filed herewith:
27. Financial Data Schedule.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during
the quarter which ended June 30, 1997.
9
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SIGNATURES
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 thereunto duly authorized.
Date August 14, 1997 Seiler Pollution Control Systems, Inc.
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(Registrant)
By: /s/ Alan B. Sarko
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Vice President and Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,170,877
<SECURITIES> 0
<RECEIVABLES> 331,956
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,502,833
<PP&E> 366,788
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,627,503
<CURRENT-LIABILITIES> 1,502,194
<BONDS> 0
0
0
<COMMON> 2,115
<OTHER-SE> 12,254,079
<TOTAL-LIABILITY-AND-EQUITY> 19,627,503
<SALES> 116,443
<TOTAL-REVENUES> 116,443
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 804,952
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,210
<INCOME-PRETAX> (703,719)
<INCOME-TAX> 0
<INCOME-CONTINUING> (703,719)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (703,719)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
