SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Three Months Ended March 31, 1999
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
incorporation or organization) Identification No.)
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, outstanding as
of March 31, 1999: 30,166,069 (Common Stock issued 20,936,069 and to be issued
9,230,000)
Transitional Small Business Disclosure Format
Yes No X
<PAGE>
INDEX
PART I. FINANCIAL STATEMENTS (UNAUDITED)
Item 1. Financial Statements (Unaudited
Pages
Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998
Assets F-1
Liabilities and Stockholders' Equity F-2
Consolidated Statements of Income for the Three Months Ended March 31,
1999 and 1998 F-3
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1999 and 1998 F-4
Consolidated Statements of Changes in Stockholders' Equity for the Three Months
Ended March 31, 1999 and the Year Ended December 31, 1998 F-5
Notes to Consolidated Financial Statements F-6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Signatures
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
ASSETS
3/31/99 12/31/98
------------------- ------------------
Current assets:
Cash $363 $4,065
Receivable from merger 25,000 25,000
------- ------
Total current assets 25,363 29,065
------- ------
Total assets $25,363 $29,065
-------- -------
F-1
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
3/31/99 12/31/98
------------------- -------------------
Current liabilities:
Accounts payable $41,723 $44,333
Accrued expenses 21,700 19,793
Notes payable 36,428 35,828
Due to officers 80,683 76,183
Deferred income 20,000 20,000
------- ------
Total current liabilities 200,534 196,137
-------- -------
Stockholders' equity:
Class "A" common shares, no par value;
authorized - 90,000,000 shares;
issued and to be issued - 30,166,069 in 1999
and in 1998 3,441,308 3,441,308
Additional paid-in-capital 52,293 52,293
Deficit (3,668,772) (3,660,673)
----------- -----------
Total stockholders' equity (175,171) (167,072)
--------- ---------
Total liabilities and stockholders' equity $25,363 $29,065
-------- -------
F-2
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
------------------ -----------------
Equity in earnings of unconsolidated
affiliate $ 0 (12,500)
Selling, general and
administrative expenses 5,999 4,100
Amortization of excess of cost over
net assets acquired 0 465
-- ---
Net loss from continuing operations (5,999) (17,065)
Other expenses
Interest expense 2,100 2,250
------ -----
Net loss for the period ($8,099) (19,315)
-------- --------
Loss per share (basic and diluted) $ .0003 .0006
------- -----
Weighted average number of
common shares outstanding 30,166,069 30,166,069
----------- ----------
F-3
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
------ ------
Cash flows from operating activities:
Net loss ($8,099) (19,315)
-------- --------
Adjustments to reconcile net loss to net
cash used in operating activities:
Equity in earnings of unconsolidated subsidiary 0 12,500
Depreciation and amortization 0 465
Change in assets and liabilities:
Increase (decrease) in:
Accounts payable (2,610) 3,400
Accrued expenses 1,907 1,350
Notes payable 600 0
---- -
Total adjustments (103) 17,715
---- ------
Net cash used in operating activities (8,202) (1,600)
------- -------
Cash flows from financing activities:
Due to officer 3,000 1,600
Accrued interest due officer 1,500 0
------ -
Net cash provided by financing activities 4,500 1,600
------ -----
Net increase (decrease) in cash (3,702) 0
Cash - beginning of the period 4,065 1,505
------ -----
Cash - end of the period $363 1,505
----- -----
F-4
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C>
Additional
Common Shares Common Shares Paid In Capital Deficit Total
Balance at January 1, 1998 30,166,069 $3,441,308 $52,293 ($3,552,913) ($59,312)
Net loss for the year ended December 31, 1998 0 0 0 (107,760) (107,760)
-- -- -- --------- ---------
Balance at December 31, 1998 30,166,069 3,441,308 52,293 (3,660,673) (167,072)
----------- ---------- ------- ----------- ---------
Net loss for the three months ended March 31, 1999 0 0 0 (8,099) (8,099)
-- -- -- ------- -------
Balance at March 31, 1999 30,166,069 $3,441,308 $52,293 ($3,668,772)($175,171)
</TABLE>
F-5
<PAGE>
ELECTRO-KINETIC SYSTEMS, INC.
MARCH 31, 1999 AND 1998
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.
Earnings per Share
Average common shares outstanding were 30,166,069, which include
9,230,000 to be issued. In addition, there were outstanding common stock options
of 1,000,000 shares at a price of $0.01 per share. The computation of earnings
per share reflecting the exercise of these options is antidilutive.
<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.
General
Electro-Kinetic Systems, Inc. [EKS or the Company] was formed on April
24, 1972, under the laws of the State of Pennsylvania. Its corporate office is
now located in Glen Gardner, New Jersey.
The Company ceased operations in radon testing in March 1995 and failed
in its subsequent efforts: magazine publishing (1996), visual communication
technology (1997), marketing of computer decision models (1997 and 1998), and
desk-top publishing and printing (1998).
Results of Operations
The Company's 50% owned unconsolidated affiliate, Printone Media Inc.,
ceased operations and filed for bankruptcy. As a result of the acquisition of
Israel Investment Technologies, Inc. and two affiliates, in September 1995, the
Company acquired certain preliminary designs for developments of computer models
in the fields of medical compliance and electronic book publishing. The Company
has been unsuccessful in its efforts to exploit these developments.
The consolidated financial statements include the accounts of
Electro-Kinetic Systems, Inc. and its wholly owned subsidiaries. The Company had
no operating income. The transactions with Advance Knowledge, Inc., described in
full in the Company's 10-K for the year 1998, has not been finalized.
Liquidity and Capital Resources
Working capital decreased from ($167,072) as of December 31, 1998, to
($175,171) as of March 31, 1999. Shareholders' equity declined from ($167,072)
to ($175,171) as of the same dates.
The Company's operating losses during the past years have been funded
by the sale of its Common Stock, by loans from shareholders, and by the disposal
of a subsidiary. For the Company to become a viable entity, it must raise
sufficient capital to fund its operations. The Company is making continuing
efforts to negotiate the settlement of liabilities aggregating approximately
$100,000 for shares of its Common Stock. The Company is also seeking merger
opportunities, but there is no assurance of success in these endeavors.
<PAGE>
PART II . 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
NONE
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and 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: 5/10/99 By: /s/
Julius Cherny, Ph.D., 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
/s/ President, Director 5/10/99
Julius Cherny
/s/ Secretary, Treasurer, 5/5/99
Richard J. L. Herson Director
/s/ Director 5/10/99
Daniel Herzka
/s/ Director 5/9/99
Ralph Lanciano
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 363
<SECURITIES> 0
<RECEIVABLES> 25,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25,363
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,363
<CURRENT-LIABILITIES> 200,534
<BONDS> 0
0
0
<COMMON> 3,441,308
<OTHER-SE> (3,616,479)
<TOTAL-LIABILITY-AND-EQUITY> 25,363
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 5,999
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,100
<INCOME-PRETAX> (8,099)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,099)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (8,099)
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
