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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Fiscal Year Ended December 31, 1999 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-13670
TELETRAK ENVIRONMENTAL SYSTEMS, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 13-3187778
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification Number
2 Sutton Road, Webster, MA 01570
(Address of principal executive offices) (Zip Code)
(508) 949-2430
Registrant's Telephone Number, Including Area Code
-------------------
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $.001
(Title of Class)
Check whether the registrant (1) has filed all reports required to be Section 13
or 15(d) of the Exchange Act during the 12 months (or such shorter period that
the registrant was required to reports), and (2) has been subject to such filing
requirements for the days. Yes No X
Check if there is no disclosure of delinquent filers pursuant to Item Regulation
S-B contained herein, and no disclosure will be contained, to the best of the
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form l0-KSB. [X]
The aggregate market value of the voting stock held by non-affiliates the
registrant at October 8, 1999 was approximately $1,672,237 based on the average
bid and asked prices as reported by the NASD Electronic Bulletin Board. For
these purposes, the term "affiliates" is deemed to mean the officers and
directors of the registrant.
The registrant's revenues for the year ended December 31, 1999 were $1,949,743.
At December 31, 1999 there were 7,713,182 shares of common stock outstanding.
Documents Incorporated by Reference: None
Transitional Small Business Format: Yes No X
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TABLE OF CONTENTS
FORM 10-KSB
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PAGE
PART I
Item 1. Business.........................................................................1
Item 2. Properties.......................................................................4
Item 3. Legal Proceedings................................................................4
Item 4. Submission of Matters to a Vote..................................................4
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder.....................5
Item 6. Management's Discussion and Analysis or Plan of Operations.......................5
Item 7. Financial Statements............................................................ 10
Item 8. Changes in and Disagreements With Accountants or Accounting and
Financial Disclosure.............................................................10
PART III
Item 9. Directors & Executive Officers; Compliance With Section 16(a) of the
Exchange Act.....................................................................11
Item 10. Executive Compensation...........................................................12
Item 11 Security Ownership of Certain Beneficial Owners and Management...................12
Item 12 Certain Relationships and Related Transactions...................................13
Item 13 Exhibits, List and Reports on Form 8-K...........................................13
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PART I
ITEM 1. BUSINESS
Background
Teletrak Environmental Systems, Inc. (the "Company") a Delaware
corporation, was organized as Teletrak Advanced Technology, Inc. in January 1983
as a wholly-owned subsidiary of Helm Capital Group, Inc. ("Helm") to develop and
market software products. Until November 1998, however, the Company had been an
inactive public company for several years.
On July 24, 1998, the Company entered into a merger agreement (the
"Merger Agreement") with Advanced Environmental Systems, Inc., a Massachusetts
corporation ("AES"), having a principal place of business at 2 Sutton Road,
Webster, Massachusetts 01570. Under the terms of the Merger Agreement, a
newly-formed wholly-owned Massachusetts subsidiary of the Company merged with
and into AES with AES surviving as a wholly-owned subsidiary of the Company (the
"Merger"). Pursuant to the Merger and the Merger Agreement the former AES
stockholders received an aggregate of 3,750,000 shares of the Company's common
stock in exchange for their AES stock.
As a condition to the Merger, the Company effected a one for ten
reverse split of the Company's outstanding common stock (the "Reverse Split").
Under the Reverse Split, the authorized number shares of the Company's common
stock was reduced to 8,000,000 shares (the "Common Stock") and the number of
authorized shares of preferred stock was reduced to 2,000,000. Subsequently, the
certificate of incorporation was amended to authorize 25,000,000 shares of
Common Stock and 5,000,000 shares of preferred stock. There are no shares of
preferred stock outstanding at this time.
Immediately prior to the effectiveness of the Merger on November 18,
1998, the Company distributed to the pre-Merger stockholders of the Company,
one-half Warrant (as hereafter described) for each share of Common Stock held by
them upon the effectiveness of the Merger, and 500,000 additional Warrants were
issued to Helm and the Company's former management for pro rata distribution in
exchange for previously issued warrants held by Helm which were canceled in the
Merger. In addition, Helm contributed 5,000,000 shares of the Company's common
stock to the Company which were canceled and the holders of all outstanding
warrants to purchase the Company's common stock waived and surrendered all
rights with respect to such warrants, which were canceled. Simultaneous with the
effectiveness of the Merger, the Company sold in a private placement (the
"Private Placement") to certain former AES stockholders and affiliates 1,000,000
shares of Common Stock plus warrants (the "Warrants") to purchase up to 500,000
shares of Common Stock at an exercise price of $2.00 per share for a period of
three years, redeemable at $.05 per Warrant, at the option of the Company, if
the Common Stock trades for three consecutive days at $3.00 per share on any
national securities exchange, or the average of the bid and asked prices of the
Common Stock in the over the counter markets is over $3.00 for three consecutive
trading days. The purchase price (the "Purchase Price") in the Private Placement
was $.50 for a unit comprised of one share of Common Stock and one Warrant. As
part of the Private Placement, the Company agreed to sell to certain other Helm
affiliates (the "Helm Affiliates"), up to 250,000 shares of Common Stock and up
to 125,000 Warrants at the Purchase Price. The private placement has been
completed in 1999 with all 1,250,000 share of common stock and 625,000 warrants
sold.
The Company
AES, a privately-held company prior to the Merger, specializes in the
manufacture, distribution and licensing of industrial jet pumps and related
equipment. The design of these pumps based on jet pump technology, with no
movable parts, makes this equipment a highly effective portable tool for the
removal of granular wet or dry material (including sludge, scale, slurries,
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sands and heavy shot blasting material), for a wide range of applications across
many industries including environmental clean-up of hazardous matter such as
lead and other heavy metals and nuclear contaminants and as general maintenance
tools in the marine, transportation, chemical and waste water industries. The
motive power, compressed gases such as air or steam or pressurized liquids such
as water, oils or pulps, provides operating flexibility for hopper loading,
cleaning and submersible application, as well as the ability to collect and
transport materials over long distances. With no moving parts, the AES pump is
designed to be virtually maintenance free and to require no skilled labor to
operate. There are more than 1,000 pumps in use today in a wide range of
industries, including power plants, steel mills, foundries, oil refineries,
chemical and petrochemical operations, food processing facilities, shipyards and
marine vessel applications and water treatment plants. This same pump technology
has been adapted into an entire manufacturing line of vacuum filtering equipment
for use in hazardous sites where strict governmental standards and laws demand
that all surface preparation and removal take place in a dust free environment.
The jet pump technology is also included in the Company's vacuums
marketed under the tradenames HAZVAC and ENVIROVAC and the newly aquired line of
abrasive blasting and recycling equipment.
In addition, the Company manufactures and distributes a full line of
shrouded, hand operated tools that attach to the Company's vacuum filtering
equipment and can be used with the Company's abrasive blasting and recycling
equipment. These tools have been designed to work on all surfaces and all types
of construction material, both hazardous and non-hazardous.
AES today offers the most complete line of equipment for remediation
and surface preparation where dust and waste generation give problems. All AES
equipment is designed to provide POINT OF GENERATION DUST CONTAINMENT AND WASTE
CONTROL. Dust control is achieved by providing negative air pressure and shrouds
around tools or blast nozzles. The operator is not exposed in any way to
unhealthy lead levels or dust.
Research and Development
It is the Company's policy to expense all research and development
costs as they are incurred. Management estimates that the Company spent
approximately $150,000 each year on research and development during 1998 and
1997. These amounts are included in the cost of goods sold and are not
segregated in the financial statements. These expenditures were in the further
development of new heads for the shrouded hand held tool line and completing the
design of the Company's abrasive blasting and recycling equipment with special
emphasis given to Point of Generation dust Containment With regular frequency,
the Company is asked to develop new applications for specific situations. After
development, the Company retains the manufacturing rights to produce similar
equipment for other customers. In addition, the Company has a research and
development contract with the Dept. of Energy. The Company will retain ownership
of all intellectual property resulting from this contract.
Marketing and Distribution
The Company has a sales staff of five people. The sales process
typically involves mailing of literature, follow-up communications, technical
meetings with customers, requests for proposals and estimating and submittal of
proposals for specific projects. The Company has developed ongoing relations
with a broad range of customers in various industries and geographical sites.
Products are distributed directly to customers by the Company's sales staff or
through regional distribution networks. The Company participates in four to six
special trade shows and advertisers on a regular basis in the established trade
publications.
Dependence on Third Party Suppliers and Manufacturers
The Company purchases supplies from a variety of regional sources. The
Company is not dependent on a single supplier for parts or fabrication and
maintains a minimum of two sources of all critical parts.
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Dependence on Major Customers
The Company sells to a wide-range of industries, including power
plants, steel mills, foundries, oil refineries, chemical and petrochemical
plants, food processing facilities, shipyards and marine vessel manufacturers
and water treatment plants and therefore is not dependent on any one major
customer.
Competition
The industrial maintenance equipment and environmental remediation
equipment supplier industry in the United States are highly fragmented, with
numerous small and medium-sized companies serving niche markets based upon
geography, industry, media (air, water, soil, etc.) and technological
specialization. Because the Company sells to a wide range of industries, the
Company can adapt to changes in the marketplace by allocating its resources to
the industry segment providing the most business opportunities. Management
believes that its key to success in the industry is the unique design of its
products which is regarded as proprietary and is based on proven principles of
physics and air/fluid dynamics creating a vacuum/ cyclone in a pumping device
that has no moving parts. The Company believes that this creates several
advantages over most competitive pumps by permitting applications that involve
particle sizes up to 3/4 inches in diameter, material that can cause plugging,
and transportation of pumped material for distances up to 500 feet vertical and
1,000 feet horizontal. The pump creates a miniature cyclone effect and removes
the desired material from one location to another in a manner similar to a
directed cyclone. In addition, the pump's relative small size and ease of
cleaning and maintenance are also unique and competitive attributes. The base
core technology is also used in the Company's vacuum and filtering products in
such a manner as to remove hazardous and non-hazardous substances in a safe and
efficient manner. The Company will continue to focus on the application of new
technology as well as innovative applications of existing technologies to solve
complex surface preparation problems.
Management believes that the primary factors of competition are price,
technological capabilities, reputation for quality and safety, relevant
experience, availability of machinery and equipment, financial strength and
knowledge of local markets and conditions. Management believes that with its
recent acquisitions, the Company will compete favorably on the basis of the
foregoing factors. However, many of the Company's competitors have financial
resources and facilities far greater than that of the Company. Additionally,
from time to time, the Company may face competition from new entrants into the
industry. The Company may also face competition from technologies that may be
introduced in the future, and there can be no assurance that the Company will be
successful in meeting the challenges which will be posed by its competition in
the future.
Proprietary Rights
The Company and its subsidiaries seek proprietary protection for its
products so as to prevent others from commercializing equivalent products in
substantially less time and at substantially lower expense. The Company's
success will depend in part on the ability of the Company to obtain effective
patent protection for the Company's proprietary technologies and products,
defend such patents, preserve its trade secrets and operate without infringing
upon the proprietary rights of others. The Company and its subsidiaries own the
following patents and licenses:
Patents
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Title Applications or Status
Patent Number
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Sealed Waste Transfer System for Vacuum Blasting 5,529,530 Patented
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Sealed Waste Transfer System for Vacuum Blasting 5,591,067 Patented
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Bolt Head Blaster 5,667,430 Patented
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Pressure Balanced Vacuum Blasthead 5,709,590 Patented
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Pressure Balanced Vacuum Blasthead European Patent Appln. 96936393.6 Pending
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Pressure Balanced Vacuum Blasthead Japanese Patent Application Pending
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Air Cushioned Vacuum Blast Head 5,833,521 Patented
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Unique Power Tool Vacuum Tube Shutoff 5,524,663 Patented
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Licenses
Abrasive Blasting System 5,107,630 Patented
Employees
The Company currently has 10-12 full and part-time employees. Major
management decisions are reviewed by the Company's Board of Directors.
ITEM 2. PROPERTIES
Massachusetts Lease
The Company's wholly-owned Massachusetts subsidiary, AES, leases office
space at 2 Sutton Road, Webster, Massachusetts from an entity that is owned by
Gerd Reinig, Chairman of the Company's Board of Directors, officer and
substantial stockholder of the Company. Under the terms of the lease, AES pays
$2,000 per month in rent. The term of the lease is month-to-month.
ITEM 3. LEGAL PROCEEDINGS:
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Market Information
The following table sets forth the bid and ask prices for the Company'
stock for the prior two year period:
Ask Bid
--- ---
1999 First Quarter 0.875 0.0375
Second Quarter 0.6875 0.25
Third Quarter 0.5 0.28125
Fourth Quarter 0.625 0.1375
1998 First Quarter $ .01 $ .015
Second Quarter .01 .015
Third Quarter .04 .02
Fourth Quarter .07 .03125
1997 First Quarter .01 .015
Second Quarter .01 .015
Third Quarter .04 .02
Fourth Quarter .07 .03125
The ask and bid prices cited herein for 1998 and 1997 have been
obtained from the Electronic Bulletin Board quotation system of the NASD prior
to the Merger.
At October 8, 1999 the bid and ask prices for the Company's common
stock obtained from the Electronic Bulletin Board of the NASD, were $0.375 and
$0.4375 respectively.
Holders
The Company is advised by American Stock Transfer & Trust Company, its
agent, that there were approximately 304 holders of record of the Company Common
Stock at October 8, 1999.
Dividend Policy
The Company has never paid any dividends. The Company does not plan to
pay any cash dividends in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS OF
OPERATIONS
AES was initially organized as a Massachusetts corporation January 2,
1996 for the purpose of manufacturing and marketing of jet pumps for pumping or
vacuuming of liquids, sludges and slurries in the waste water field that may be
contaminated . Even though the sales of these jet pumps proved successful, it
soon became apparent that the sale of the pumps as stand-alone units would limit
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the applications and sales. By late 1997 AES had developed complete systems with
the jet pump as the core product, comprising the driving sources, vacuum and
holding tanks and the control cabinets all mounted on skids or trailers as
self-contained packages. These systems marketed as HazVac(TM) and Envirovacs(TM)
and combine advanced jet pump, vacuum and filtration technology. The systems can
be transported for diverse applications including removal of hazardous material.
With no moving parts the equipment requires extremely little maintenance and can
be used for vacuuming a large variety of liquid or solid material, wet or dry.
The purpose of the merger with Teletrak, a public company, was to
create a means to raise the required capital to build a solid, financially
strong company which will be a dominant supplier of equipment for industrial
plant maintenance and the environmental clean-up industry on a global basis.
This aim is to be accomplished through acquisitions of companies manufacturing
similar and complementary equipment and through further development of the
existing product lines.
Subsequent Events
During the first quarter of 2000, the Company had sales of
approximately $611,000. Unaudited profits were approximately $62,000. The
Company forecasts annualized revenues of approximately $2.4 million dollars and
with reduced overhead as a result of consolidation of manufacturing activities,
the Company expects to be profitable in the year 2000.
Approximately 15% of the Company's revenues the first quarter of 2000
were a result of a Private labeling Agreement for the Company's power tools,
with the largest distributor of surface preparation equipment and supplies in
North America.
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Comparison of Revenues of Advanced Environmental Systems After Giving Effect to
Merger.
Fiscal Year 1999 1998 1997
----------- ---- ---- ----
Advanced Environmental Systems 1,949,743 1,579,293 1,216,886
(AES)
For the three years prior, after giving effect to the Merger, the Company
(Teletrak) had no revenues.
The Company completed its first acquisition in February 1999 with the
purchase of substantially all of the non-cash assets of LTC Americas and its
wholly-owned subsidiary Surface Decon Ltd. LTC and Surface Decon are leading
suppliers of vacuum blasting equipment to the nuclear and chemical industries.
Management believes that the acquisition of the LTC line of vacuum blasting
equipment greatly compliments the Company's existing equipment line and gives
the Company product offering in the surface preparation industry.
Liquidity & Capital Resources
Advanced Environmental Systems, Inc. (AES) was privately held until the
Merger. Selected financial data for AES, adjusted for accounting to meet SEC
reporting standards shows the following comparisons to prior fiscal years since
its inception January 1, 1996:
The Company presently has outstanding publicly held Warrants to
purchase shares of common stock which, if all were exercised, could result in
gross proceeds to the Company of approximately $4,500,000.
All Warrants, including the 625,000 Private Placement Warrants will
expire October 31,2001, however, there is no assurance that the Warrants will be
exercised and that Company will receive the proceeds therefrom.
The Company has a $400,000 revolving line of credit with a major bank,
secured by substantially all of the assets of the Company.
The Company does not have any material commitments for capital
expenditures as of the filing of this report.
Management believes that the revenues being generated from operations,
short-term lines of credit and the proceeds from the sale of common stock in the
Private Placement will provide sufficient liquidity to meet the Company's
working capital needs for the remainder of this fiscal year ending December 31,
2000.
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Statement of Operations Data for AES (after giving effect to the Merger):
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Years ended
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Dec 31, 1999 Dec 31, 1998 Dec 31, 1997
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Product Sales 1,949,743 1,579,293 1,216,886
Cost of Sales 1,310,486 947,040 808,891
---------- ---------- ----------
Gross Margins 639,257 632,253 407,995
SGA&A, Eng. R&D 1,136,585 749,318 876,264
---------- ---------- ----------
Gain/loss before taxes (672,050) (167,112 (468,369)
---------- ---------- ----------
Net Gain/Loss (671,038) (168,646) (468,369)
Balance Sheet Data
Current Assets 880,408 1,007,105 754,228
Current Liabilities 1,215,228 604,121 661,299
---------- ---------- ----------
Working capital (334,820) 402,984 92,929
Total assets 1,479,672 1,208,286 1,006,851
Long term obligations 49,221 61,906 124,648
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Shareholders Equity 215,223 542,259 220,904
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Analysis of Operations for Fiscal 1999 & 1998
Fiscal 1999
The operating loss of $129,847 for 1998 increased to a net operating
loss of $671,038 for fiscal year 1999. The loss was a result of investments in
the acquisition of LTC, management and staff, the costs of the Merger and
becoming a public company, and the investment for developing an abrasive vacuum
blasting and recovery/recyling system.
In 1999, a chief financial officer was added to the Company's
management team. In management's opinion, this position was needed to insure
proper financial reporting.
During 1999, AES successfully developed, designed, and tested equipment
capable of vacuuming, and recycling Bar Shot blasting abrasive. This abrasive is
becoming more widely used by the shipbuilding industry because of its increased
productivity over conventional abrasives. The equipment is capable of recycling
the abrasive four times, thus substantially reducing abrasive consumption,
acquisition cost for the abrasive and, more importantly, drastically reducing
solid waste disposal costs. Testing was completed on the technology at Ingalls
Shipyard, a Division of Litton Industries, a large shipbuilding facility in
Pascagoula, MS. Ingalls subsequently placed a $131,000 order for a system that
was delivered and successfully started up in the first quarter of 1999. This was
the first system developed to recycle this special abrasive. The Company
received substantial subsequent orders from Ingalls at the end of fiscal year
1999, amounting to over $321,000 for some of its' rental equipment as well as
ancillary products.
Continued strong demand for the Company's technologies increased sales
by approximately 23% to $1,949,743. Management believes that improved
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manufacturing efficiencies and better cost controls should position the Company
to achieve close to a 40% margin in fiscal 2000. The Company's tools and jet
pump vacuum technology is being used extensively in the decontamination of
Yankee Atomic Facility in Rowe, MA. Such facility is the first commercial
nuclear plant in the U.S. to be decommissioned and decontaminated. Based on the
success at Yankee, the Company is expecting significant business in other
commercial nuclear plants slated for decommissioning by the Nuclear Regulatory
Commission.
Steps have been taken in early 2000 to bring the Company's SG&A costs
into line with revenues. The first quarter 2000 shows the results of the
restructuring with sales of $611,000 and a net profit of approximately $62,000,
a substantial improvement and a reversal of last year's trend.
Fiscal 1998
AES reduced the net operating loss of $469,974 for 1997 to a net
operating loss of $129,847, a substantial decrease of $330,127 for fiscal year
1998. The loss was a result of investments in management and staff, the costs of
the Merger and becoming a public company, and the investment for developing an
abrasive vacuum blasting and recovery/recyling system.
Two regional sales managers were added to the Company's sales staff.
This was done to assure sales coverage along the eastern seaboard. The training
costs and all expenses associated with this transaction were expensed as
incurred. Furthermore, in 1998, a corporate controller was also added to the
Company's management team. In management's opinion, the controller was needed to
insure proper financial reporting.
AES successfully developed, designed, and tested equipment capable of
vacuuming, and recycling Bar Shot blasting abrasive. This abrasive is becoming
widely used by the shipbuilding industry because of its increased productivity
over conventional abrasives. The equipment is capable of recycling the abrasive
four times, thus substantially reducing abrasive consumption, acquisition cost
for the abrasive and, more importantly, drastically reducing solid waste
disposal costs. Testing was completed on the technology at Ingalls Shipyard, a
Division of Litton Industries, a large shipbuilding facility in Pascagoula, MS.
Ingalls subsequently placed a $131,000 order for a system that was delivered and
successfully started up in the first quarter of 1999. This was the first system
developed to recycle this special abrasive. The Company anticipates additional
orders from Ingalls, and has quoted other major shipbuilders. The cost of
engineering and testing of this new unit was expensed as incurred.
Continued strong demand for the Company's technologies increased sales
by 30% to $1,580,155. The gross margin increased to 36.5% from 33.5% in the
prior year. Management believes that improved manufacturing efficiencies and
better cost controls should position the Company to achieve close to a 40%
margin in fiscal 1999. The Company's tools and jet pump vacuum technology is
being used extensively in the decontamination of Yankee Atomic Facility in Rowe,
MA. Such facility is the first commercial nuclear plant in the U.S. to be
decommissioned and decontaminated. Based on the success at Yankee, the Company
is expecting significant business in other commercial nuclear plants slated for
decommissioning by the Nuclear Regulatory Commission.
State of Readiness
The Company's IT systems are largely centralized, with substantially
all systems maintained in the Company's corporate headquarters in Webster,
Massachusetts. The Company has developed its own standards for systems which
include both purchased and internally-developed software. The Company's IT
hardware infrastructure is built mainly around mid-range computers and IBM
PC-compatible servers and desktop systems. The Company's internally-developed
software was designed to be year 2000 ready from inception All of the Company's
mid-range IT hardware has been remedied to a state of year 2000 readiness.
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ITEM 7. FINANCIAL STATEMENTS
The financial statements required by Regulation S-B are included in
this Annual Report on Form 10-KSB commencing on page 16.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING A FINANCIAL
DISCLOSURE
Richard A. Eisner & Company, LLP audited the Company's financial
statements for the year ended December 31, 1998. No independent audits were
performed and the Company did not include audited financial statements in its
Form 10-KSB for 1995, 1996 and 1997 because the Company qualified as an inactive
registrant under the provisions of Rule 3-11 of Regulation S-X.
On January 14, 2000 Carlin, Charron & Rosen, LLP was appointed as the
Company's independent certified public accountants.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT
The directors and nominees serve, if and when elected, until the next
annual shareholders meeting and until their successors are elected and
qualified.
The following table sets forth regarding the Company's directors,
executive officers and control persons:
Name Age Position
---- --- --------
Gerd E. Reinig 61 Chairman of the Board
Gerald P. McNamara 51 Director, President and Chief
Executive Officer
Heinz Buhr 49 Director
William P. Gagnon 54 Director
Glen Wegner 61 Director
Gerald P. McNamara. Mr. McNamara is the President and Chief Executive
Officer of the Company and is a founder and director of AES. He has served as
its president and chief executive officer since its inception in 1996. Mr.
McNamara has worked in a variety of executive positions at companies in the
environmental and remediation industry for more than 20 years. He served as
president of IPEC Advanced Systems, a manufacturer of surface preparation and
remediation equipment from 1983 to 1993. From 1993 to 1996, he was a consultant
to environmental equipment manufacturers.
Gerd E. Reinig. Mr. Reinig is the Chairman of the Board and is a
co-founder of AES. He has served as Director and Treasurer of AES since its
inception in 1996 and, since 1975, as President and Chief Executive Officer of
Gould & Eberhardt Corp., a prominent manufacturer or machine tools and large
gear cutting machinery. Prior to this, he held executive and engineering
positions at Orban Company and Lurgi Inc. Mr. Reinig has a masters degree in
mechanical engineering from the Institute of Engineering, Frankfurt, Germany.
Heinz Buhr. Mr. Buhr is a Director of the Company and a private
investor. He has served as Director and Treasurer of AES since its inception in
1996. Mr. Buhr, a resident and citizen of Germany, is an investor and active
partner in several real estate partnerships and industrial development
companies. Prior to 1994, Mr. Buhr served as president and chief executive
officer of Metek GmbH, a major supplier of brake shoes for the automotive
industry.
William P. Gagnon. Mr. Gagnon is a Director of the Company and is the
president and chief executive officer of Arland Tool & Manufacturing, Inc., a
large manufacturing concern involved in Computer Numerically Controlled
machining and assembly of electrical power generation parts. He started with
Arland in 1970 to develop numerically controlled operations. In 1980, he was
appointed chief executive officer. Prior to this he was a laser engineer at the
American Optical Company.
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Glen Wegner. Dr. Wegner is a Director of the Company and has served as
an advisor and director of AES since 1996. He is also a private investor and
director of Hobie Cat, Inc. and Basic Telepresence, Inc. He served as president
and vice chairman of Optical Corporation of America from 1990-1997. Dr. Wegner
is trained and licensed in both law and medicine and prior to 1990 served in an
executive capacity with several successful ventures utilizing advanced
technologies in the health and environmental industries.
ITEM 10. EXECUTIVE COMPENSATION
For the fiscal years ended December 31, 1999, no cash compensation was
paid to the Company's Chairman to any other executive officer with the exception
of Gerald McNamara, President and Chief Executive Officer, who draws an annual
salary of $80,000 from AES. Mr. McNamara also receives the following perquisites
on an annual basis: (1) $5,899 in health insurance premiums; (2) $636 in dental
insurance premiums and (3) $14,495 in life insurance premiums. The Company's
outside directors received no cash fees during 1999.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information as of December 31, 1999, of
each person known by the Company to be the beneficial owner of five percent or
more of the Company's Common, by each current officer and director and all
current officers and directors as a group. Except as otherwise indicated, each
named holder has, to the best of the Company knowledge, sole voting and
investment power with respect to the shares indicated.
<TABLE>
<CAPTION>
Name And Address Of Beneficial Owner Common Stock Beneficially Percentage Of
Owned Outstanding
<S> <C> <C>
Helm Capital Group, Inc. 1,176,507(1) 13.6%
537 Steamboat Road
Greenwich, CT 06830
Gerd Reinig 1,599,263(2) 21.2%
c/o Teletrak Environmental Systems, Inc.
2 Sutton Road
Webster, MA 01570
Heinz Buhr 762,750(3) 10.3%
Am Hambuch 18
D53340 Meckenheim
Germany
William Gagnon 600,000(4) 7.9%
C/o Teletrak Environmental Systems, Inc.
2 Sutton Road
Webster, MA 01570
Dr. Glen Wegner 412,500(5) 5.5%
C/o Teletrak Environmental Systems, Inc.
2 Sutton Road
Webster, MA 01570
Gerald McNamara 399,750(6) 5.4%
C/o Teletrak Environmental Systems, Inc.
2 Sutton Road
Webster, MA 01570
All Officers and Directors as a group (6 3,774,263 51%
persons)
</TABLE>
* less than 1%
12
<PAGE>
(1) Includes 1,176,507 Warrants owned by Helm Capital Group, Inc. to purchase
shares of Common Stock at $2.00 per share, expiring November 18, 2001.
(2) Includes 966,250 shares of Common Stock owned by Gerd Reinig, 300,000 shares
of Common Stock owned by his wife, Karola Reinig and 80,000 Warrants owned by
Mr. Reinig to purchase Common Stock at $2.00 per share, expiring November 18,
2001.
(3) Owned by Buhr GmbH, a German corporation, of which Mr. Buhr is a Partner and
the Chief Executive Officer.
(4) Owned by Arland Tool & MFG, Inc., a Massachusetts corporation, of which Mr.
Gagnon is the Chief Executive Officer. Also includes 200,000 Warrants owned by
Arland Tool and MFG, Inc. to purchase shares of Common Stock at $2.00 per share.
The Warrants expire on November 18, 2001.
(5) Includes 187,500 shares of Common Stock owned by Dr. Wegner, 150,000 shares
of Common Stock owed by his wife, Lynn Wegner, and 75,000 Warrants owned by Dr.
Wegner to purchase shares of Common Stock at $2.00 per share. The Warrants
expire on November 18, 2001.
(6) Includes 200,000 shares of Common Stock owned by Mr. McNamara and 199,750
shares of Common Stock owned by his wife, Tomi McNamara.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's wholly-owned subsidiary, AES, lease office space at 2
Sutton Road, Webster, Massachusetts from Gould & Eberhardt, a corporation which
is 90% percent owned by Gerd Reinig, the Company's Chairman of the Board.
On August 19, 1999, the Company borrowed $150,000 from Gerd Reinig, it
Chairmen, and issued a 10% promissory note representing the $150,000 loan
amount. Under the note, interest at the rate of 10% per annum is payable on a
monthly basis and the principal is due August 20, 2000.
On August 23, 1999, the Company's Chairman, Gerd Reinig purchased
253,013 shares of Common Stock from Helm increasing his percentage ownership of
the Company to approximately 21.2%.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description Location
- -------------- ----------- --------
<S> <C> <C>
3.1 Certificate of Incorporation Incorporated by reference to Exhibit
3(a) to the Company's Registration
Statement on Form S-1 (No. 2-84930)
3.2 Certificate of Amendment to Incorporated by reference to Exhibit
Certificate of Incorporation 3(a) to the Company's Registration
Statement on Form S-1 (No. 2-84930)
3.3 Certificate of Amendment to Incorporated by reference to Exhibit
Certificate of Incorporation 3.2(A) to the Company's Registration
Statement on Form S-2 (No. 2-30374)
3.4 Certificate of Amendment to Incorporated by reference to Exhibit
Certificate of Incorporation 3.4 to the Company's Annual Report
on Form 10-KSB for 1991
3.5 Certificate of Amendment to the Incorporated by reference to Exhibit
Certificate of Incorporation B to the Company's Information
Statement filed on September 4, 1998
4.1 Form of Common Stock Warrant Incorporated by reference to Exhibit
10.2 of the Company's Form 8-K filed
on February 19, 1999.
Agreement and Plan of Merger by and Incorporated by reference to Exhibit
10.1 among AES, the Company, Helm and the 10.1 of the Company's Form 8-K filed
Merger Sub, dated July 24, 1998 on February 19, 1999.
4.2 Consent of Carlin, Charron & Rosen **
LLP
</TABLE>
** Filed herewith
13
<PAGE>
TELETRAK ENVIRONMENTAL SYSTEMS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
F1
<PAGE>
TELETRAK ENVIRONMENTAL SYSTEMS, INC.
TABLE OF CONTENTS
PAGE NUMBER
Independent Auditor's Report 17
Financial Statements:
Consolidated Balance Sheet 18
Consolidated Statements of Operations 19
Consolidated Statement of Changes in Stockholders' Equity 20
Consolidated Statements of Cash Flows 21
Notes to Financial Statements 22 - 28
F2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Teletrak Environmental Systems, Inc.
Webster, Massachusetts
We have audited the accompanying consolidated balance sheet of Teletrak
Environmental Systems, Inc. and Subsidiaries as of December 31, 1999 and the
related statements of operations, changes in stockholders' equity and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly, in all
material respects, the consolidated financial position of Teletrak Environmental
Systems, Inc. and subsidiaries as of December 31, 1999 and the consolidated
results of its operations and its consolidated cash flows for the year then
ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As disclosed in the financial
statements, the Company has an accumulated deficit at December 31, 1999, has
suffered a substantial net loss during 1999 and obtained a waiver from its
creditor regarding noncompliance with debt covenants that raises substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also disclosed in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
CARLIN, CHARRON & ROSEN LLP
April 26, 2000
New York, New York
March 11, 1999
With respect to Note I[1]
March 23, 1999
With respect to Note July 23, 1999 and August 27, 1999
With respect to Note J [2]
August 19, 1999
F3
<PAGE>
TELETRAK ENVIRONMENTAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
1999
CURRENT ASSETS
Cash $ 22,919
Accounts receivable - trade 397,477
Inventory 443,991
Other current assets 16,021
TOTAL CURRENT ASSETS 880,408
PROPERTY, PLANT AND EQUIPMENT 218,618
OTHER ASSETS 380,646
TOTAL ASSETS $ 1,479,672
CURRENT LIABILITIES
Notes payable $ 550,000
Accounts payable 319,036
Accrued liabilities 95,230
Due to related parties 201,562
Current portion of long-term debt 62,339
TOTAL CURRENT LIABILITIES 1,228,167
LONG-TERM DEBT NET OF CURRENT PORTION 36,282
TOTAL LIABILITIES 1,264,449
STOCKHOLDERS' EQUITY
Common stock 7,694
Additional paid-in capital 1,516,434
Retained earnings (1,308,905)
TOTAL STOCKHOLDERS' EQUITY 215,223
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,479,672
F4
<PAGE>
TELETRAK ENVIRONMENTAL SYSTEMS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
NET SALES $ 1,949,743 $ 1,579,293
COST OF GOODS SOLD 1,310,486 947,040
GROSS PROFIT 639,257 632,253
OPERATING EXPENSES
Advertising 55,234 29,649
Selling, General & Administrative expenses 1,136,585 749,318
Bad debts 72,082 15,000
TOTAL OPERATING EXPENSES 1,263,901 793,967
OPERATING INCOME (624,644) (161,714)
OTHER INCOME (EXPENSE))
Other income 4,947 19,288
Other expenses (52,353)
TOTAL OTHER EXPENSE (47,406)
INCOME BEFORE PROVISION FOR
INCOME TAXES (672,050) (167,112)
PROVISION FOR INCOME TAXES (1,012) 1,534
NET INCOME ($671,038) ($168,646)
LOSS PER SHARE $(.09) $(.04)
WEIGHTED AVERAGE SHARES OUTSTANDING 7,552,850 3,969,037
F5
<PAGE>
TELETRAK ENVIRONMENTAL SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common Stock Additional
Par Value $.001 Paid-In
Accumulated
Shares Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C>
January 1, 1999 7,252,927 $ 7,253 $ 1,172,875 $ (637,867) $ 542,261
Issuance of common stock and
warrants 460,225 441 343,559 (646,038) 344,000
Net loss -- -- -- -- (646,038)
----------- ----------- ----------- ----------- -----------
December 31, 1999 7,713,152 $ 7,694 $ 1,516,434 $ 1,283,905 $ 240,223
=========== =========== =========== =========== ===========
</TABLE>
F6
<PAGE>
TELETRAK ENVIRONMENTAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(671,038) $(168,644)
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for doubtful accounts 20,000 15,000
Reserve for obsolete inventory 25,000 --
Depreciation and amortization 61,138 41,192
Write-off of fixed assets -- 8,351
Loss on write-off of investments -- 3,330
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (196,184) 14,186
Inventories (103,893) 126,882
Prepaid expenses and other assets 27,984 (29,498)
Increase (decrease) in:
Accounts payable and accrued liabilities 134,349 (60,721)
Due to related party 128,266 (2,280)
--------- ---------
NET CASH USED FOR OPERATING ACTIVITIES (574,378) (52,202)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (87,561) (1,700)
Purchase of other assets (82,655) --
--------- ---------
NET CASH USED FOR INVESTING ACTIVITIES (170,216) (1,700)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on line of credit 150,000 --
Proceeds from shareholder note payable 150,000 --
Proceeds from the sale of stock 232 410,000
Subscription receivable 80,000 --
Repayment of long-term debt (44,193) (65,166)
Additional paid-in capital 134,765 --
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 470,804 344,834
--------- ---------
INCREASE (DECREASE) IN CASH (273,790) 290,932
CASH - BEGINNING 296,709 5,777
--------- ---------
CASH - ENDING $ 22,919 $ 296,709
========= =========
</TABLE>
F7
<PAGE>
TELETRAK ENVIRONMENTAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The Company was incorporated on January 5, 1983 as Helm Advanced Technology
Center, Inc. On April 25, 1983, the Company changed its name to Teletrak
Advanced Technology Systems, Inc. and on November 18, 1998, the Company
changed its name to Teletrak Environmental Systems, Inc. when the Company,
an inactive entity, effected a merger with Advanced Environmental Systems,
Inc. ("AES"). The merger was consummated through an exchange of shares that
resulted in the former AES shareholders receiving control of Teletrak. The
merger is accounted for as a recapitalization and has been treated as a
capital transaction for accounting purposes. In accordance with the merger,
Teletrak issued 3,750,000 shares of its common stock to the shareholders of
AES in exchange for the outstanding common stock of AES. In connection
therewith, AES's historic capital accounts were retroactively adjusted to
reflect the equivalent number of shares issued by Teletrak in the
transaction while AES's historical accumulated deficit was carried forward.
AES is an operating company that is engaged in the marketing, distribution
and licensing or industrial pumps and related equipment used primarily in
environmental remediation. All significant intercompany balances and
transactions were eliminated in consolidation.
Management is developing a plan to improve cash position including focusing
its sales in profitable product lines, as well as introducing new LTC
products (see Note ).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market value.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the
respective assets ranging from 3 to 7 years. Expenditures for
maintenance and repairs are charged to operations as incurred.
Revenue Recognition
Shipments on a consignment basis are carried in inventory until such
items are sold.
F8
<PAGE>
Cash Equivalents
The Company considers all cash accounts, which are not subject to
withdrawal restrictions or penalties, and all highly liquid instruments
purchased with a maturity of three months or less to be cash
equivalents.
Income Taxes
The Company accounts for income taxes according to the liability
method. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and income
tax bases of assets and liabilities and are measure using enacted tax
rates and laws that will be in effect when the differences are expected
to reverse. The primary components of the Company's deferred tax assets
are net operating losses.
Use of Estimates
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.
Loss Per Common Share
The Company calculates net loss per share pursuant to Statement of
Financial Accounting Standards No. 128 "Earnings Per Share", which
requires the presentation of basic and diluted earnings per share
information. Basic and diluted loss per share exclude any dilutive
effects of options, warrants and convertible securities.
Research and Development
The Company expenses costs of research and development activities as
incurred.
3. INVENTORIES
Inventories consist of the following at December 31, 1999:
Finished goods $ 235,000
Components and replacement parts 233,991
----------
468,991
Reserve for obsolescence (25,000)
----------
$ 443,991
==========
F9
<PAGE>
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1999:
Machinery and equipment $ 273,534
Office equipment 74,248
---------
347,782
Less - accumulated depreciation 129,164
---------
$ 218,618
=========
5. NOTES PAYABLE - BANK
At December 31, 1999, the Company had a $400,000 line of credit with a bank
which expires on June 30, 2000. Available borrowings are based on a formula
of eligible accounts receivable and inventory. Outstanding borrowings under
the line are payable on demand and bear interest at 1.50% above the bank's
base rate (8.50% at December 31, 1999).
At December 31, 1999, the Company was not in compliance with required
financial covenants.
6. LONG-TERM DEBT
<TABLE>
<CAPTION>
<S> <C>
Loan with a bank, payable in monthly installments of $1,959 plus
interest at the bank's base rate plus 2.00% through August 2001.
However, such periodic payments are deemed accelerated and may be
payable during 2000. Both loan facilities are secured by
substantially all of the Company's assets. $ 36,439
Note payable to a stockholder, payable in monthly
principal and interest installments of $2,581 through
March 2002. Interest is calculated at 10% per annum. 62,182
----------
98,621
Less - current maturities 62,339
----------
Long-term debt, net of current maturities $ 36,282
==========
</TABLE>
F10
<PAGE>
Principal repayments on long-term debt are due as follows:
2000 $ 49,400
2001 41,600
2002 7,621
---------
$ 98,621
=========
7. RELATED PARTY TRANSACTIONS
The Company rents its premises from an entity owned by a stockholder who is
a director and officer of the Company. Rent is $2,000 per month. To date,
the Company has not paid rent and $72,000 of accrued rent is recorded as a
liability in the financial statements. Rent expense of $24,000 has been
charged to operations during 1999. In addition, the Company purchases
supplies from this entity. At December 31, 1999, amounts payable to the
related party aggregated $95,022.
The Company also purchased supplies from another related party during the
year ended December 31, 1999 in the amount of $49,452. This amount is
payable at December 31, 1999.
8. TAXES ON INCOME
The Company's deferred tax asset at December 31, 1999 represented a benefit
from a net operating loss carryforward of $520,000 which is reduced by a
valuation allowance of $520,000. The Company's ability to generate future
taxable income to utilize these net operating loss carryforwards is not
presently determinable. The Company's provision for income taxes for the
period ended December 31, 1999 are comprised of the deferred tax items. The
Company's ability to utilize its net operating loss carryforwards may be
subject to an annual limitation in future periods pursuant to Section 382
of the Internal Revenue Code of 1986, as amended, if additional
transactions and/or ownership changes take place. Net operating losses of
the pre-merger public entity, old Teletrak, are subject to a Section 382
limitation and any potential benefit is considered de minimis.
The difference between the statutory federal income tax rate on the
Company's net loss and the Company's effective income tax rate for the year
ended December 31, 1999 is summarized as follows:
Statutory federal income tax benefit rate (34.0)%
State income tax benefit, net of federal benefit (6.0)
Increase in valuation allowance 40.0
-----
0.0%
=====
At December 31, 1999, the Company had available for federal income tax
purposes a net operating loss carryforward of approximately $1,300,000
expiring through the year 2019 that may be used to offset future taxable
income.
F11
<PAGE>
9. STOCKHOLDERS' EQUITY
Private Placement
Pursuant to the merger agreement between Teletrak and AES, the Company
was authorized to sell certain AES stockholders or affiliates up to
500,000 units, consisting of two post-merger shares of Teletrak common
stock ("New Common Share") and one warrant to purchase an additional
New Common Share for $2.00 for a period of three years ("Warrant"),
(collectively a "Unit"), at a purchased price of $1.00 per Unit. The
Company was also authorized to sell up to 125,000 Units to holders of
Teletrak's post merger common stock or their affiliates.
As of December 31, 1999, all 625,000 Units had been sold to AES
stockholders and affiliates and 100,000 Units sold to former Teletrak
stockholders and affilaites.
Shares have not been reserved for the exercise of warrants.
Warrants
Immediately preceding the merger, each of Teletrak's shareholders
received one-half of a warrant for each post-split common share held by
them upon the effectiveness of the merger, for a total of 1,261,463
warrants. In addition, 493,000 warrants were issued to pre-merger
warrant holders in exchange for warrants canceled pursuant to the
merger and 7,000 additional warrants were issued.
At December 31, 1999, the Company has outstanding 2,461,466 warrants,
each to purchase one share of common stock at $2.00 per share. The
warrants are exercisable through September 27, 2001. The warrants are
redeemable at $.05 per warrant at the Company's option if the common
shares trade for three consecutive days at $3.00 per share on any
national securities exchange or if the average bid and asked price of
the common shares in the over the counter markets is over $3.00 per
share for three consecutive trading days.
10. ASSET PURCHASE
In February 1999, the Company purchased designated assets (including
inventory, fixed assets and certain intangible assets) of a company and its
subsidiary that manufactures, sells and rents vacuum blasting equipment.
The transaction is accounted for as a purchase. The total purchase price
was $500,000 and consists of $211,000 in cash, $80,000 in promissory notes
bearing interest at 10% per annum and payable in 36 equal monthly
installments and 209,000 shares of common stock. The purchase price was
allocated among the tangible and intangible assets acquired based on their
fair values. In addition, the Company is assuming the seller's operating
leases including premises, photocopier and telephone services, related
services contracts and a supply contract.
On August 19, 1999, the Company entered into a promissory note to borrow
$150,000 from a stockholder who is a director and officer. Under the note,
the principal sum and interest at the interest rate of 10% per annum on a
monthly basis is due August 20, 2000.
F12
<PAGE>
TELETRAK ENVIRONMENTAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the registrant has duly caused this report to be signed on behalf of the
undersigned, thereunto duly authorized.
Signature Title Date
______________________ Chairman of the Board
Gerd E. Reinig
______________________ Director, President and
Gerald P. McNamara Chief Executive Officer
______________________ Director
Heinz Buhr
______________________ Director
Glen Wegner
______________________ Director
William P. Gagnon
28
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the use of our report dated March 11, 1999, including
Note I[1] which is dated March 23, 1999, Note E which is dated July 23, 1999 and
August 27, 1999 and Note J[2] which is dated August 19, 1999, and the financial
statements for the period ended December 31, 1998 in the Annual Report on Form
10-KSB for the year ended December 31, 1998 of Teletrak Environmental Systems,
Inc.
Richard A. Eisner & Company, LLP
/s/ Richard A. Eisner & Company, LLP
New York, New York
October 13, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 22,919
<SECURITIES> 0
<RECEIVABLES> 397,477
<ALLOWANCES> 50,000
<INVENTORY> 443,991
<CURRENT-ASSETS> 880,408
<PP&E> 476,946
<DEPRECIATION> 129,164
<TOTAL-ASSETS> 1,479,672
<CURRENT-LIABILITIES> 1,228,167
<BONDS> 648,621
0
0
<COMMON> 7,694
<OTHER-SE> 1,516,434
<TOTAL-LIABILITY-AND-EQUITY> 1,479,672
<SALES> 1,949,743
<TOTAL-REVENUES> 1,949,743
<CGS> 1,310,486
<TOTAL-COSTS> 2,574,387
<OTHER-EXPENSES> 52,353
<LOSS-PROVISION> 20,000
<INTEREST-EXPENSE> 43,800
<INCOME-PRETAX> (671,038)
<INCOME-TAX> 0
<INCOME-CONTINUING> (671,038)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (671,038)
<EPS-BASIC> (0)
<EPS-DILUTED> (0)
</TABLE>
