SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10QSB
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter ended: September 30, 1999
Commission File Number 0-13670
Teletrak Environmental Systems, Inc.
Delaware 13-3187778
State or other jurisdiction of IRS Employer
Incorporation or organization Identification No.
2 SUTTON RD WEBSTER, MA 01570
Tel: (508)-949-2430 Fax: (508) 949-2473
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 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 |_|
At September 30, 1999, there were 706,927 shares of the Company's common stock,
$.001 par value per share, outstanding.
<PAGE>
TELETRAK ENVIRONMENTAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
Unaudited Audited
9/30/99 12/31/98
---------- ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash 111,824 296,709
Accounts Receivable, less allowance for doubtful accounts 436,648 206,031
$ 30,000 and $ 30,000 respectively
Inventory 462,414 365,098
Subscription Receivable 0 80,000
Other Current assets 28,175 50,752
---------- ----------
Total Current Assets 1,039,061 998,590
---------- ----------
Property and Equipment, net of accumulated depreciation of 598,230 181,780
$119,256 and $ 80,650 respectively
Other Assets 21,242 1,000
---------- ----------
TOTAL ASSETS 1,658,533 1,181,370
========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Notes Payable 358,917 250,000
Current Portion of Long term debts 44,275 61,906
Accounts Payable and accrued expenses 411,932 253,907
Due to related parties 221,641 73,296
---------- ----------
Total Current Liabilities 1,036,765 639,109
---------- ----------
Long Term Debts
Note payable - Dunedin 40,758
---------- ----------
TOTAL LIABILITIES 1,077,523 639,109
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock - $.001 par value. 5,000,000 shares authorized
none issued
Common Stock -$.001 par value. 25,000,000 shares authorized, 7,681 7,253
7,706,927 and 7,252,927respectively issued and outstanding
Additional paid in capital 1,503,947 1,172,875
Accumulated deficit (930,618) (637,867)
---------- ----------
Total Stockholders' Equity 581,010 542,261
---------- ----------
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 1,658,533 1,181,370
========== ==========
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
TELETRAK ENVIRONMENTAL SYSTEMS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Unaudited Unaudited
Three months Nine months
1999 1998 1999 1998
-------------------------- -------------------------
<S> <C> <C> <C> <C>
Net Sales 435,803 481,902 1,473,424 1,318,588
Cost of Goods Sold 314,243 364,085 1,012,556 824,006
-------------------------- -------------------------
Gross Profit 121,560 117,817 460,868 494,582
-------------------------- -------------------------
Operating Expenses:
Selling, general and administrative expenses 241,776 145,017 674,062 430,600
Advertising expenses 25,636 22,393 53,945 32,843
-------------------------- -------------------------
Total Operating Expenses 267,412 167,410 728,007 463,443
-------------------------- -------------------------
( Loss ) Profit from operations (145,852) (49,593) (267,139) 31,139
Interest Expense 13,078 9,642 31,638 30,284
Other Income (Expenses) (242) 0 6,026
-------------------------- -------------------------
(Loss) Profit before provision for income taxes (159,172) (59,235) (292,751) 855
-------------------------- -------------------------
Provision for income taxes 250
-------------------------- -------------------------
Net (Loss) Profit (159,172) (59,235) (292,751) 605
========================== =========================
-------------------------- -------------------------
Net(loss) Profit per share - basic and diluted (0.02) (0.02) (0.04) 0.00
========================== =========================
Weighted average number of common shares outstanding 7,684,101 3,022,927 7,537,191 3,022,927
========================== =========================
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
TELETRAK ENVIRONMENTAL SYSTEMS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
September 30, 1999
<TABLE>
<CAPTION>
Unaudited Unaudited
Three months Nine months
1999 1998 1999 1998
-------------------------- -----------------------
<S> <C> <C> <C> <C>
Cash Flow from Operating Activities:
Net ( Loss ) Profit (159,172) (59,235) (292,751) 605
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation & Amortization 13,656 10,257 38,606 29,408
Changes In:
Accounts receivable (43,655) 15,119 (230,617) (42,010)
Inventory 12,497 73,743 (17,316) 113,408
Prepaid expenses and other assets (7,427) 3,262 2,335 17,046
Accounts payable and accrued expenses 64,161 33,357 158,025 (26,746)
Due to/from related party 135,535 148,344
-------------------------- -----------------------
Net Cash used in operating activities: 15,595 76,503 (193,374) 91,711
-------------------------- -----------------------
Cash flows from investing activities:
Net acquisitions of property and equipment (10,193) 552 (246,055) 1,320
-------------------------- -----------------------
Cash flows from from financing activities:
Proceeds from sale of common stock 12,500 122,500
Proceeds from notes payable - Bank 106,258
Proceeds from note payable - Dunedin 80,000
Principal payments on notes payable (36,668) (10,877) (54,214) (24,144)
-------------------------- -----------------------
Net Cash provided by financing activities: (24,168) (10,877) 254,544 (24,144)
-------------------------- -----------------------
Net Increase (decrease) in Cash (18,766) 66,178 (184,885) 68,887
Cash at the beginning of period 130,590 8,486 296,709 5,777
-------------------------- -----------------------
Cash at the end of period 111,824 74,664 111,824 74,664
========================== =======================
Supplemental disclosure of cash flow information:
Cash paid during the quarter for:
Interest 13,078 9,642 31,638 30,284
Taxes 250
Supplemental disclosures of non cash operating
and financing activities:
Notes payable 80,000
Acquisition of fixed assets (289,000)
Issuance of common stock 209,000
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS ( UNAUDITED )
( NOTE A ) BASIS OF PRESENTATION AND THE COMPANY:
Basis of presentation
The accompanying unaudited condensed 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 regulations S-B.
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 fair presentation have been included.
Operating results of the three months period ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999.
THE COMPANY:
Advanced Environmental Systems, Inc. ("AES") was a privately held company prior
to the merger with Teletrak Environmental Systems, Inc. (the "Company"). It
specializes in the manufacture, distribution and licensing of industrial
products. One of the products is the Universal Jet Pump also known as the
"Mucking Pump". This mucking pump is unique in its design and engineering in
that it has no moving parts, making our mucking pump highly effective for the
removal of granular, wet or dry, material, including sludge, scale, slurries,
sand and heavy shot blasting material. The mucking pump is versatile and has a
wide range of applications across many industries, including environmental
clean up. The mucking pump is also used as a maintenance tool in the marine,
chemical, and waste water industries.
The mucking pump technology has been applied to a variety of other vacuum and
filtering systems where governmental standards and laws demand that all surface
preparation and removal take place in a dust free environment.
Although AES originally based its business on the mucking pump, AES now
manufactures and distribute other industrial products used in surface
preparation activities. The product line includes the following:
Rotary Peening tool. This is a vacuum shrouded power tool that provides dust
free, high production in the surface preparation and coating removal from
virtually any surface.
Needle Scalers. This is a vacuum shrouded surface preparation tool used to reach
difficult areas.
Sanders. This line of products, also vacuum shrouded are effectively used in the
surface treatment and rust removal.
Spindle tools. A lightweight, flexible and shrouded peening tool.
HEPA Vacuums. Tools used mainly in the recovery of lead dust and paint chips.
The HAZ-VAC.The most productive vacuum and HEPA filtration system. This tool is
self contained and is mainly used for the removal of lead paint and asbestos. It
can work by itself or it can be used to support up to six different power tools.
The Paintblitzer. This cost effective coating removal tool is effectively used
for the removal of paint from flat surfaces. It is used in the interior
restoration of structures as well as for light duty paint removal.
Vacuum blasting equipment. These products are the most versatile and productive
tools offered by the Company, useful for heavy duty jobs, as well as, project
with light coatings.
With the addition of new power tools lines, as well as, the vacuum blasting
equipment, the Company is now beginning to effectively penetrate the surface
preparation market. Also, the Company is beginning spare parts, as well as,
maintaining special systems. This may spur the Company to establish a service
department and operate it as a separate profit center.
<PAGE>
( NOTE B ) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[ 1 ] Basic loss per share of common stock
The Company adopted Statement of Financial Accounting Standards No. 128 (SFAS
No. 128 ). The basic loss per share of common stock is based on weighted average
number of shares outstanding. Stock options did not have an effect on the
computation of the loss per share. The adoption of SFAS No. 128, which requires
a retroactive adjustment did not have a material effect on the Company's
financial statements.
[ 2 ] Research and engineering costs
All costs related to the research and engineering of new and existing products
are expensed in the period incurred.
[ 3 ] Note payable
At September 30, 1999, the Company had a line of credit with a financial
institution in the amount of $ 400,000. Available borrowings are based on a
formula of eligible accounts receivable and inventory. The line expires on June
30, 2000; however, borrowings under the line are payable on demand and bear
interest at 1.50% above the bank's base rate. At September 30, 1999, the Company
had approximately $ 75,000 available for future borrowings.
[ 4 ] Capital
In the third quarter 1999, the Company issued an additional 25,000 shares of
common stock at $ .50 per share.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
financial statements included in this reports and in conjunction with the
description of the Company's business included in the Company's Form 10-KSB for
the year ended December 31, 1998. It is intended to assist the reader in
understanding and evaluating the financial position of the Company.
This discussion contains, in addition to historical information, forward looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from the results discussed in the forward looking
statements.
The financial statements included in this statements are condensed and
consolidated for the Company and AES. Also, the statements are unaudited.
Financial Conditions
As of September 30, 1999, the Company had $ 111,824 in cash and current assets
in the amount of $ 1,039,061.
The Company recognized sales in the amount of $ 435,803 for the third quarter of
1999 as compared with $ 481,902 for the same period last year. This represents
an approximate decline of 9.6%.
For the nine months, the Company recognized sales in the amount of $ 1,473,424
compared to $ 1,318,588 for the same period last year. This increase of 11.8%,
is mainly due to the expansion of the Company's product lines.
For the quarter ended September 30, 1999, the Company shows a loss in the amount
of $ 159,172 as compared to a loss of $ 59,235 for the same period last year.
This translates to a loss per common share of $ .02, which is the same as the
comparable period last year.
For the nine months of 1999, the Company shows a loss of 292,751 or $ .04 loss
per common share. For the same period last year, the Company showed a profit of
$ 605 or $ .00 per common share.
At the end of September 1999, the Company's resources were not adequate to
finance the activities for the rest of the year. As a result, management has
began negotiations with a European company who is interested in manufacturing
certain products in Europe under license. These negotiations are in the
preliminary stages and may not come to fruition.
The gross profit of $ 121,560 for the third quarter shows an increase of $ 3,743
as compared with the same period last year. The gross profit percentage has
increased from 24.4% to 27.9% in 1999. This increase can be attributed to
expanded product mix.
The gross profit for the nine months of 1999 amount to $ 460,868 compared to
$ 494,582 for the same period last year. The percentage of gross profit declined
from 37.5% for 1998 to 31.2% for the same period in 1999. This is due in part to
an increase in raw materials cost on some products and subcontracting costs.
The operating expenses for the nine months show a total of $ 728,007 compared to
$ 463,443 for the same period last year. This is due to the added staff of LTC
Americas, Inc. as a result of the acquisition that has taken place in the first
quarter of this year. This expense will be reduced in the fourth quarter.
Also, the Company expanded its advertising campaign in an effort to secure its
share of the market for the newly acquired product lines.
<PAGE>
SIGNATURES
In accordance with 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.
Teletrak Environmental Systems, Inc.
By: /s/ Gerd Reinig
Name: Gerd Reinig
Title: Chairman of the Board
By: /s/ Gerald McNamara
Name: Gerald McNamara
Title: President
Dated:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from 10QSB -
Third Quarter and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 111,824
<SECURITIES> 0
<RECEIVABLES> 466,648
<ALLOWANCES> (30,000)
<INVENTORY> 462,414
<CURRENT-ASSETS> 1,039,061
<PP&E> 717,486
<DEPRECIATION> (119,256)
<TOTAL-ASSETS> 1,658,533
<CURRENT-LIABILITIES> 1,036,765
<BONDS> 0
0
0
<COMMON> 7,681
<OTHER-SE> 573,329
<TOTAL-LIABILITY-AND-EQUITY> 1,658,533
<SALES> 1,473,424
<TOTAL-REVENUES> 1,473,424
<CGS> 1,012,556
<TOTAL-COSTS> 1,012,556
<OTHER-EXPENSES> 728,007
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,638
<INCOME-PRETAX> (292,751)
<INCOME-TAX> 0
<INCOME-CONTINUING> (292,751)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (292,751)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
