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Previous: MICROWAVE FILTER CO INC /NY/, 10-Q, 1999-08-23 |
Next: FIRST MANITOWOC BANCORP INC, S-8, 1999-08-23 |
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1999
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-22630
SEILER POLLUTION CONTROL SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2448906
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
5115 Parkcenter Avenue, Suite 270, Dublin, Ohio 43017
(Address of Principal Executive Office) (Zip Code)
614-792-0400
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required 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 No X
The number of shares of registrant's Common Stock, $.0001 par value, outstanding
as of August 20, 1999 was 11,516,422 shares.
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC AND SUBSIDIARIES
FORM 10-QSB
INDEX
Page
Number
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements F1-F4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 3-4
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings 5
Item 2. Change in Securities and Use of Proceeds 5
Item 3. Defaults upon Senior Securities 6
Item 4. Submission of Matters to a Vote of Security Holders 6
Item 5. Other Information 6
Item 6. Exhibits and Reports on Form 8 - K 6
SIGNATURES 7
2
<PAGE>
<TABLE>
<CAPTION>
SEILLER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30,
1999
---------------------
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 43,190
Accounts receivable 171,336
Inventories 11,804
Prepaid expenses and sundry receivables 390,158
---------------------
TOTAL CURRENT ASSETS 616,488
OTHER ASSETS
Licensing agreements, less accumulated amortization of
$1,892,053 2,867,950
Other assets 148,455
---------------------
3,016,405
---------------------
PROPERTY, PLANT, AND EQUIPMENT, net of accumulated depreciation 10,237,613
---------------------
$ 13,870,506
=====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 906,667
Current portion of long - term debt - bank 4,944,298
Accrued expenses 1,250,086
---------------------
TOTAL CURRENT LIABILITIES 7,101,051
---------------------
LEASES PAYABLE 622,126
LOANS PAYABLE - STOCKHOLDERS 367,789
DEFERRED INCOME - GOVERNMENT SUBSIDIES 3,334,562
CONVERTIBLE NOTES PAYABLE 900,000
MINORITY INTEREST 65,161
STOCKHOLDERS' EQUITY:
Common stock, $0.0001 par value, authorized 35,000,000 shares,
issued and outstanding 9,245,897 924
Additional paid in capital 39,112,093
Accumulated deficit (34,337,145)
Accumulated other comprehensive loss (3,296,055)
---------------------
TOTAL STOCKHOLDERS' EQUITY 1,479,817
---------------------
$ 13,870,506
=====================
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three months ended June 30,
------------------------------------------
1999 1998
------------------- -------------------
<S> <C> <C>
REVENUES $ 287,982 $ -
COST OF SALES 46,306 -
------------------- -------------------
241,676
OPERATING EXPENSES
Research and development - 15,144
Valuation adjustment of loans for HTV Systems - 3,377,591
Salaries, wages and related fringe benefits 276,080 145,627
General and administrative 296,707 77,106
Professional and other consulting fees 35,200 284,651
Depreciation and amortization 290,548 174,200
------------------- -------------------
898,535 4,074,319
------------------- -------------------
LOSS FROM OPERATIONS 656,859 4,074,319
OTHER INCOME AND (EXPENSES)
Interest income 5,855 -
Interest expense (185,479) (101,384)
------------------- -------------------
TOTAL OTHER INCOME AND (EXPENSES) (179,624) (101,384)
------------------- -------------------
LOSS BEFORE MINORITY INTEREST 836,483 4,175,703
Minority interest - (88,098)
------------------- -------------------
NET LOSS $ 836,483 $ 4,087,605
=================== ===================
NET LOSS PER SHARE - BASIC $ (0.09) $ (1.04)
=================== ===================
WEIGHTED SHARES USED IN COMPUTATION - BASIC 9,067,390 3,943,418
=================== ===================
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended June 30,
------------------------------------------
1999 1998
------------------- -------------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ (836,483) $ (4,087,605)
------------------- -------------------
Valuation adjustment of loans for HTV Systems - 3,377,591
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 214,994 174,200
Debentures issued for interest expense 125,392 -
Minority interest in losses of subsidiaries - (88,098)
Changes in operating assets and liabilities:
Increase in accounts receivable (7,613) -
Increase in inventories (6,201) -
(Increase) decrease in prepaid expenses and sundry receivables 417,224 (46,766)
(Increase) decrease in other assets (21,907) 98,228
Decrease in accounts payable (405,141) (145,483)
Increase (decrease) in accrued expenses (78,364) 48,732
Decrease in Government subsidies (848) (10,516)
------------------- -------------------
237,536 3,407,888
------------------- -------------------
CASH USED IN OPERATING ACTIVITIES (598,947) (679,717)
------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - (17,058)
Advances for High Temperature Vitrification Systems - (675,614)
------------------- -------------------
CASH USED IN INVESTING ACTIVITIES - (692,672)
------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of convertible debentures - 195,000
Proceeds of bank loans 150,272 1,473,149
Increases in leases payable 3,177 -
Borrowings (payments) of debt to stockholder (8,601) 297,374
------------------- -------------------
CASH PROVIDED BY FINANCING ACTIVITIES 144,848 1,965,523
------------------- -------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 400,870 (883,683)
------------------- -------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (53,229) (290,549)
CASH AND CASH EQUIVALENTS - beginning of period 96,419 383,234
------------------- -------------------
CASH AND CASH EQUIVALENTS - end of period $ 43,190 $ 92,685
=================== ===================
</TABLE>
F-3
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements
of Seiler Pollution Control Systems, 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-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 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 June 30, 1999 are not necessarily indicative of the
results that may be expected for the year ending March 31, 2000. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form
10-KSB for the year ended March 31, 1999.
F-4
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE-MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE-MONTHS ENDED JUNE
30, 1998
Revenues
The Company commenced operations with the completion of the
recycling facility in Freiberg, Germany by the end of August 1998,
with one vitrification line active. In addition the Company's
subsidiary SABD has been operating a leased chemical/physical
treatment plant which is designed to treat liquid hazardous waste
since July 1, 1998. The Company has generated revenues of $241,676 for
the quarter ended June 30, 1999.
Operating Expenses
Operating expenses decreased to $898,535 for the three months
ended June 30,1999, from $4,074,319 for the three months ended June 30,
1998. The reduction was due to the fact that there was no valuation
adjustments of loans for High Temperature Vitrification Systems while
the three months ended June 30, 1998 had a write-off of $3,377,591.
This decrease was partially offset by increases to salaries, wages and
related fringe benefits of $130,453, general and administrative
expenses of $219,601 and an increase to depreciation and amortization
of $116,348 which corresponds to operations commencing in July and
August of 1998.
Interest expense increased to $185,479 for the three months
ended June 30, 1999 compared to $101,384 for the three months ended
June 30, 1998 due to increased borrowings under the Dresdner Bank
Financing agreements and interest on convertible notes and debentures.
LIQUIDITY AND CAPITAL RESOURCES
The Company funds its capital requirements with a combination
of equity financing, government subsidies and debt financing. The
Company utilizes these sources of capital to construct HTV Systems,
perform research and development related to these systems, and meet the
daily requirements of operating the Company.
3
<PAGE>
EFFECT OF CURRENCY ON RESULTS OF OPERATIONS
The results of operations and the financial position of the
Company's subsidiaries outside the United States is reported in the
relevant foreign currency (primarily Swiss Francs and German Marks) and
then translated into US dollars at the applicable foreign exchange rate
for inclusion in the Company's consolidated financial statements.
Accordingly, the results of operations of such subsidiaries as reported
in US dollars can vary significantly as a result of changes in currency
exchange rates (in particular, the exchange rates between the Swiss
Franc, the German Mark and the US dollar).
4
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Incorporated herewith by reference for summarized information with
respect to this Item is Item 3 to Form 10-KSB for fiscal year ended March 31,
1999 (as filed July 23, 1999) as well as Note 17 to audited financial statements
referred to in such Item 3.
Item 2. Changes in Securities and Use of Proceeds
As previously reported in Item 12 to the Company's Form 10-KSB for
fiscal year ended March 31, 1999, the Company converted certain outstanding debt
into equity. The information appearing directly below is repeated herein exactly
as it previously appeared in aforesaid Item 12, as follows:
" Werner Heim (a former officer and director who resigned from
all positions held in June 1998) has individually loaned funds to the
Company. As of March 31, 1999, the sum of $107,216 (inclusive of
interest of $12,724) was outstanding. In June 1999, the debt was
converted into equity with the Company issuing 142,955 restrictive
shares of its common stock to Werner Heim in cancellation of such
outstanding indebtedness.
Heinz Heim (a brother of the Company's former President, Werner
Heim) has individually loaned funds to the Company. As of March 31,
1999, the sum of $55,525 (inclusive of interest of $5,225) was
outstanding. In June 1999, the debt was converted into equity with the
Company issuing 73,633 restrictivershares of its common stock to Heinz
Heim in cancellation of such outstanding indebtedness.'
Subsequent to June 30, 1999 te Company issued certain restrictive shares
to Apex Holding S.A. as previously reported in the Company's Form 10-KSB for
fiscal year ended March 31, 1999 under the heading Part II, Item 5 (e) "Recent
Sale of Unregistered Securities". Such information appearing directly below is
repeated herein exactly as it previously appeared in aforesaid Item 5 (e), as
follows:
"In November of 1998 and December of 1998 the Company entered
into two separate subscription agreements and debentures with Apex
Holding SA ('Apex'), the first of which was for gross proceeds of
$200,000 while the latter was for gross proceeds of $865,000. In each
instance these agreements were entered into in accordance with
Regulation D and Rule 506 and the debenture holder represented itself
to be an accredited investor.
In July of 1999 and subsequent to negotiations between the
Company and Apex the $200,000 debenture was extinguished in its
entirety in exchange for 417,811 restrictive shares while the $865,000
debenture was similarly extinguished in its entirety in exchange for
1,508,272 restrictive shares.'
5
<PAGE>
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item S. Other Information
As previously indicated in Part III, Item 9 to the Registrant's Form
10-KSB for fiscal year ended March 31, 1999 Mr. Niklaus Seiler, a former officer
of the Company, resigned/was terminated from-all positions held effective June
1999.
Morris D. Jaffe, Jr. tendered his resignation as a director of the
Registrant and the Registrant accepted same on August 10, 1999. To the best of
the Registrant's knowledge Mr. laffe's resignation was not as a result of any
disagreements whatsoever with the Registrant on any matter relating to its
operations, policies or practices as no such disagreements have ever existed or
currently exist.
Item 6. Exhibits and Reports on Form 8-K
None
6
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SEILER POLLUTION CONTROL SYSTEMS, INC.
Dated: August 20, 1999 By:/S/Dr. Gerold Weser
Dr. Gerold Weser, President
Dated: August 20, 1999 By:/S/Alan B. Sarko
Alan B. Sarko, Vice President
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000718827
<NAME> SEILER POLLUTION CONTROL SYSTEMS, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 43,190
<SECURITIES> 0
<RECEIVABLES> 171,336
<ALLOWANCES> 0
<INVENTORY> 11,804
<CURRENT-ASSETS> 616,488
<PP&E> 10,437,613
<DEPRECIATION> 400,000
<TOTAL-ASSETS> 13,870,506
<CURRENT-LIABILITIES> 7,101,051
<BONDS> 5,224,477
0
0
<COMMON> 924
<OTHER-SE> 1,478,893
<TOTAL-LIABILITY-AND-EQUITY> 13,870,506
<SALES> 287,982
<TOTAL-REVENUES> 287,982
<CGS> 46,306
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 898,535
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (179,624)
<INCOME-PRETAX> (836,483)
<INCOME-TAX> 0
<INCOME-CONTINUING> (836,483)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (836,483)
<EPS-BASIC> (.09)
<EPS-DILUTED> (.09)
</TABLE>
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