SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Nine Months Ended September 30, 1998
Commission file number : 2 - 85175W
ELECTRO-KINETIC SYSTEMS, INC.
(Name of small business issuer in its charter)
PENNSYLVANIA 22-1954716
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
270 Rocky Run Road, Glen Gardner, New Jersey 08826
(Address of principal executive offices) (Zip code)
Issuer's telephone number 908-537-4378
Securities resistered pursuant to section 12 (b) of the Act: None
Securities resistered pursuant to section 12 (g) of the Act:
Class A common Stock
(Title of class)
Check whether issuer (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 X No
Number of shares of Class A Common Stock, no par value, issued as of
September 30, 1998: 30,166,069 (Common Stock outstanding 20,431,069 and to be
issued 9,375,000)
Transitional Small Business Disclosure Format
Yes No X
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
September 30, December 31,
1998 1997
Current assets:
Cash $ 1,145 1,505
Receivable from merger 45,000 --
Equipment held for sale 4,000 9,000
Total current assets 50,145 10,505
------- -------
Other assets:
Excess of cost over net assets acquired,
less accumulated amortization 14,781 16,176
Investment and advances to 50% owned
affiliate 1 110,939
Organization costs 1 300
------- -------
Total other assets 14,783 127,415
------- -------
Total assets $64,928 137,920
======= =======
F-1
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1998 1997
Current liabilities:
Accounts payable $ 73,283 63,583
Accrued expenses 24,354 21,254
Notes payable 48,614 46,614
Due to officers 72,415 65,781
----------- ----------
Total current liabilities 218,666 197,232
----------- ----------
Stockholders' equity:
Class "A" common shares, no par value;
authorized - 90,000,000 shares; issued
and to be issued - 30,166,069 in 1998
and in 1997 3,441,308 3,441,308
Additional paid-in-capital 52,293 52,293
Deficit (3,647,339) (3,552,913)
----------- ----------
Total stockholders' equity (153,738) (59,312)
----------- ----------
Total liabilities and stockholders' equity $ 64,928 137,920
=========== ==========
F-2
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Equity in earnings of
unconsolidated affiliate $ -- (12,500) (25,000) (37,500)
------------ ----------- ----------- -----------
Selling, general and
administrative expenses 1,331 2,100 6,794 6,100
Depreciation and amortization 465 465 1,395 1,395
------------ ----------- ----------- -----------
1,796 2,565 8,189 7,495
------------ ----------- ----------- -----------
Operating loss (1,796) (15,065) (33,189) (44,995)
------------ ----------- ----------- -----------
Other income (expenses)
Gain on merger of subsidiary 37,000 -- 37,000 --
Interest expense (2,400) (2,500) (7,000) (7,200)
Provision for write down of assets (5,299) -- (91,237) --
------------ ----------- ----------- -----------
29,301 (2,500) (61,237) (7,200)
------------ ----------- ----------- -----------
Net income (loss) $ 27,505 (17,565) (94,426) (52,195)
------------ ----------- ----------- -----------
Income (loss) per common share $ 0.001 (0.001) (0.003) (0.002)
------------ ----------- ----------- -----------
Weighted average number of
common shares outstanding 30,166,069 30,166,069 30,166,069 30,166,069
------------ ----------- ----------- -----------
</TABLE>
F-3
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
Nine Months Ended
September 30,
1998 1997
Cash flows from operating activities:
Net income $ (94,426) (52,195)
------- -------
Adjustments to reconcile net loss to net
cash used in operating activities:
Equity in earnings of unconsolidated subsidiary 25,000 37,500
Depreciation and amortization 1,395 1,395
Provision for write down of assets 91,237 --
Increase in assets and liabilities:
Receivable from merger (45,000) --
Accounts payable 9,700 3,600
Accrued expenses 3,100 2,500
Notes payable 2,000 1,733
Due to officers 6,634 --
------- -------
Total adjustments 94,066 46,728
------- -------
Net cash used in operating activities (360) (5,467)
------- -------
Cash flows from financing activities:
Proceeds from officers' loans -- 5,467
------- -------
Net increase (decrease) in cash (360) --
Cash - beginning of period 1,505 --
------- -------
Cash - end of period $ 1,145 --
F-4
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
SEPTEMBER 30, 1998
Common Shares
and Paid-In
Common Shares Capital Deficit Total
<S> <C> <C> <C> <C>
Balance at January 1, 1998 30,166,069 $3,493,601 (3,552,913) (59,312)
Net loss -- -- (94,426) (94,426)
---------- ---------- ---------- --------
Balance at September 30, 1998 30,166,069 $3,493,601 (3,647,339) (153,738)
========== ========== ========== ========
SEPTEMBER 30, 1997
Balance at January 1, 1997 30,166,069 $3,498,601 (3,489,409) 9,192
Net loss -- -- (52,195) (52,195)
---------- ---------- ---------- --------
Balance at September 30, 1997 30,166,069 $3,498,601 (3,541,604) (43,003)
========== ========== ========== ========
</TABLE>
F-5
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the selected
financial data and the financial statements appearing elsewhere in this report.
Management Report
General
Following the bankruptcy of its principal distributor in March 1995, the Company
suspended all operations related to radon testing and analysis of environmental
hazards. In 1996, the Company abandoned its efforts in the magazine publishing
field. In the fall of 1996, the officers of the Company made available for use
certain systems developed by them which the company attempted to market. No
costs or expenses have been incurred by the Company. Such efforts have been
unsuccessful. Accordingly, the designs for these decision models have been
returned to the officers.
In August, 1998, the Company merged DMA Radtech, Inc.(DMA), its wholly owned
subsidiary, with Advanced Knowledge, Inc.
Results of Operations
A profit of $37,000 has been recorded in connection with the merger transaction.
The Company's 50% owned unconsolidated affiliate Printone Media, Inc. has lost
money since acquisition. Accordingly, during the second quarter of 1998, the
Company wrote down its carrying value of the investment in and advances to this
affiliate. During the third quarter of 1998, other assets were written down by
$5,299.
Liquidity and Capital Resources
The Company plans to distribute as a dividend to its shareholders its remaining
10% interest in Advanced Knowledge, Inc. (name change from DMA).
Working capital deficit declined by approximately $18,000 to a deficit of
$168,500 during the nine months ended September 30, 1998. For the Company to
become a viable entity, it must operate profitably and raise sufficient capital
to fund its operations. Failing this, it must combine with another entity. The
company continues its efforts in these regards, but there is no assurance of
success.
<PAGE>
PART 11 - OTHER INFORMATION
Item 1 Legal Proceedings:
None
Item 2 Changes in Securities:
There have been no instruments defining the rights of any holder of any
class of any registered security which has been materially modified.
Item 3 Defaults Upon Senior Securities:
None
Item 4 Submission of Matters to a Vote of Security Holders:
None
Item 5 Other Information:
None
Item 6 Exhibits and Reports of Form 8-K:
See reports filed on 1/3/96 and 1/11/96.
<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:
ELECTRO-KINETIC SYSTEMS, INC.
Dated: __________________ By:_________________________________
Julius Cherny, PhD., President
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following person(s) on behalf of
the Registrant and in the capacities indicated and on the Dates indicated.
SIGNATURE CAPACITY DATED
______________________________Chairman of the ______________
Julius Cherny, PhD. Board, Director DATE
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000723616
<NAME> Electro-Kinetic Systems, Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,145
<SECURITIES> 0
<RECEIVABLES> 45,000
<ALLOWANCES> 0
<INVENTORY> 4,000
<CURRENT-ASSETS> 50,145
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 64,928
<CURRENT-LIABILITIES> 218,666
<BONDS> 0
0
0
<COMMON> 3,441,306
<OTHER-SE> (3,595,046)
<TOTAL-LIABILITY-AND-EQUITY> 64,928
<SALES> 0
<TOTAL-REVENUES> 12,000
<CGS> 0
<TOTAL-COSTS> 8,189
<OTHER-EXPENSES> 91,237
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,000
<INCOME-PRETAX> (94,426)
<INCOME-TAX> 0
<INCOME-CONTINUING> (94,426)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (94,426)
<EPS-PRIMARY> (.003)
<EPS-DILUTED> (.003)
</TABLE>
