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 Quarter Ended March 31, 2000 Commission File No. 0-12746
HART INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Nevada 33-0661675
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
4695 MacArthur Court, Suite 530, Newport Beach, CA 92660
(Address of principal executive offices) (Zip Code)
(949) 833-2094
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of April 30, 2000, there were 1,730,960 shares of the Registrant's $ .01
par value common stock issued and outstanding.
<PAGE>
HART INDUSTRIES, INC.
INDEX
Page
PART I
Item 1. Financial Statements
Balance Sheet - March 31, 2000 (unaudited)........................ 1
Statements of Operations - Three Months Ended
March 31, 2000 and 1999 (unaudited)............................ 2
Statements of Cash Flows - Three Months Ended
March 31, 2000 and 1999 (unaudited)............................ 3
Notes to Financial Statements..................................... 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..................... 7
PART II
Item 1. Legal Proceedings................................................. 8
Item 2. Changes In Securities............................................. 8
Item 3. Defaults Upon Senior Securities................................... 8
Item 4. Submission of Matters to a Vote of Security Holders............... 8
Item 5. Other Information................................................. 8
Item 6. Exhibits and Reports on Form 8-K.................................. 8
Signatures........................................................ 9
I
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
Balance Sheet
As of March 31, 2000
(Unaudited)
ASSETS
Current assets:
Cash $ 445
Total current assets 445
$ 445
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 608
Accrued professional fees 2,000
Income taxes payable 8,280
Total current liabilities 10,888
Due to affiliates 676,589
Total liabilities 687,677
Stockholders' equity (deficit):
Common stock, $ .01 par value; 50,000,000 shares authorized;
1,730,960 shares issued and outstanding 17,310
Additional paid-in capital 5,946,548
Deficit accumulated during development stage (6,651,090)
Total stockholders' equity (deficit) (687,232)
$ 445
See accompanying notes to these financial statements
1
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
Statements of Operations
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
2000 1999
(Unaudited) (Unaudited)
<S> <C> <C>
Net Sales $ - $ -
Cost of Sales - -
Gross Profit - -
Costs and expenses:
General and administrative 29,045 25,545
Totals 29,045 25,545
Net income (loss) $ (29,045) $ (25,545)
Net income (loss) per common share $ (.02) $ (.01)
Weighted average common
shares outstanding 1,730,960 1,730,960
</TABLE>
See accompanying notes to these financial statements
2
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
Statements of Cash Flows
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (29,045) $ (25,545)
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable and
accrued expenses (8,731) -
Increase in other liabilities 38,000 25,500
Net cash provided by (used in) operating activities 224 (45)
Net increase (decrease) in cash 224 (45)
Cash at beginning of period $ 221 $ 197
Cash at end of period $ 445 $ 152
</TABLE>
See accompanying notes to these financial statements
3
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
NOTE 1. ORGANIZATION AND HISTORY
Organization
Hart Industries, Inc. (the "Company") was originally incorporated on October 29,
1982 ("Inception") in the state of Utah. The Company was involved in certain
research and development activities from Inception through September 1990. From
1983 to 1986, the Company was involved in the development of a non-electric,
water-powered dishwasher ("Dishwasher Assets"). The Dishwasher Assets did not
develop beyond the prototype stage and, in 1993, they were sold. In 1988, the
Company pursued operations of an Underground Storage Tank Leak Detection System
("Detection System") for use in petroleum storage applications through its newly
created Environmental Services Division ("ESD"). The ESD was also involved in
sludge de-watering through its Transportable Treatment Unit ("TTU"), which the
Company obtained in 1990. The TTU commenced operations in 1990, however, poor
market conditions forced the cessation of its operations later that year. In
July 1992, the Company acquired all the outstanding stock of Medilife Holdings
Limited ("Medilife"), which owned nursing homes in the United Kingdom. In July
1993, upon ensuing litigation, the Company assigned its contractual rights to
the shares of Medilife and the underlying assets and certain causes of action
against the Medilife shareholders to a third party in exchange for investment
securities. In 1993, the Company acquired sign fabrication assets and commenced
equipment leasing activities. Difficulties in securing viable leases terminated
these activities and in 1995, the assets were sold. Beginning December 1992, the
Company has had no operations and, accordingly, is a company in the development
stage. Management has been pursuing business opportunities in the equipment
leasing industry and other industries.
Reorganization
Effective March 8, 1994, the Company reorganized via a merger with a newly
formed Nevada corporation whose name became Hart Industries, Inc. at the
effective date. The merger agreement was approved by the Company's stockholders
at the annual meeting held on January 18, 1994. Under the merger agreement each
shareholder received one (1) share in the Nevada corporation for every 20 shares
held in the Company. As a result of the merger, the number of authorized shares
of common stock increased from 10,000,000 to 50,000,000 while retaining the same
$.01 par value. All share and per share amounts have been restated to give
effect to the merger. The merger was accounted for at historical bases in a
manner similar to a pooling-of-interests.
Note 2. SIGNIFICANT ACCOUNTING POLICIES
Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has incurred net losses
from operating activities since Inception. This is a direct result of the
Company having no operating revenues to cover fees for professional services and
other overhead that the Company has incurred. The Company has received financial
support from NuVen Advisors, Inc. ("NuVen"), an affiliate as discussed in Note
3, since 1994 and is dependent upon NuVen for future working capital. The
Company's plan is to continue searching for additional sources of equity and
working capital and new operating opportunities. In the interim, the Company's
existence is dependent upon continuing financial support from NuVen for at least
the next 12 months. Such conditions raise substantial doubt about the Company's
ability to continue as a going concern.
4
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
March 31, 2000
(Unaudited)
Note 2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Principles of Management 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.
Earnings (Loss) Per Common Share
Net income (loss) per common share is calculated by dividing net income (loss)
by the weighted average number of shares outstanding during the period. Common
stock equivalents were not considered in the loss per share calculations as the
effect would have been anti dilutive.
Issuance of Common Stock
From time to time and in the ordinary course of business, the Company issues
common stock for assets, services and to reduce debt. These issuances have been
recorded in accordance with APB 16 at the fair market value of the stock issued,
or the fair market value of the assets acquired, services provided, or debt
forgiven, whichever value is more clearly evident.
Note 3. RELATED PARTY AND OTHER TRANSACTIONS
Effective October 1, 1999, as amended, the Company had a advisory and management
agreement with NuVen to perform administrative, human resource and
merger/acquisition services. Pursuant to such agreement, the Company agreed to
pay NuVen $42,000 annually, payable monthly in $3,500 increments in arrears, and
granted NuVen an option to purchase 250,000 shares of the Company's common stock
exercisable at a price of $.10 per share. The Company expensed $10,500 and
$9,000 during the three-month periods ended March 31, 2000 and 1999,
respectively, and had $260,000 due to NuVen as of March 31, 2000.
In January 1995, the Company entered into an employment agreement with Mr. Luke,
pursuant to which Mr. Luke is to hold the office of President through December
2000. Pursuant to the agreement, the Company agreed to pay Mr. Luke $54,000 per
annum in cash or in the Company's common stock payable monthly in arrears, and
granted him an option to purchase 1,000,000 shares of the Company's common stock
at an exercise price per share of $.01 (Note 5). No cash payments were made to
Mr. Luke by the Company during the three-month period ended March 31, 2000 and
1999 for services provided. The Company expensed $13,500 during the three-month
period ended March 31, 2000 and 1999, each, and had $2283,500 due to Mr. Luke as
of March 31, 2000. Mr. Luke expects to satisfy such obligation through the
issuance of common stock.
5
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
March 31, 2000
(Unaudited)
Note 3. RELATED PARTY AND OTHER TRANSACTIONS (continued)
Effective April 24, 1996, the Company entered into a consulting agreement with
Mr. Steven Dong, pursuant to which Mr. Dong is to perform accounting services
and to hold the office of Chief Financial Officer. Pursuant to the agreement the
Company agreed to pay Mr. Dong $12,000 per year in cash or in the Company's
common stock payable in arrears, and granted him an option to purchase 166,000
shares of the Company's common stock at an exercise price of $.01 per share
(Note 5). Effective July 1, 1997, Mr. Dong resigned as Chief Financial Officer
and continues for a period of time to perform services as an advisor on a month
to month basis. No cash payments were made to Mr. Dong by the Company during the
three-month period ended March 31, 2000 and 1999 and had $40,000 due to Mr. Dong
as of March 31, 2000.
On January 1, 1997, the Company entered into a consulting agreement with Mr.
J.L. Lawver, pursuant to which Mr. Lawver is to perform advisory services.
Pursuant to the agreement the Company agreed to pay Mr. Lawver $12,000 per year
in cash or in the Company's common stock payable in arrears, and granted him an
option to purchase 166,000 shares of the Company's common stock at an exercise
price of $.01 per share. No cash payments were made to Mr. Lawver by the Company
during the three-month period ended March 31, 2000 and 1999. The Company
expensed $3,000 during the three-month period ended March 31, 2000 and 1999,
each, and had $43,000 due to Mr. Lawver as of March 31, 2000.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
There were no operations during the three months ended March 31, 2000. As a
result, there were no operating revenues or cost of revenues recorded during the
three months ended March 31, 2000.
The Registrant's general and administrative expenses were $29,045 for the
three months ended March 31, 2000, as compared to $25,545 for the same period
last year. The change is primarily attributable to continued services provided
by professional consultants and other advisors.
Liquidity and Capital Resources
The Registrant has continued to incur net losses and negative cash flows from
operating activities. The Registrant had minimal cash and cash equivalents at
March 31, 2000, and December 31, 1999, respectively, and working capital
deficiency of $10,554 and $38,398 as of March 31, 2000, and December 31, 1999,
respectively. The working capital deficiency is a direct result of the
Registrant incurring professional, consulting and advisory services and other
overhead during the periods. As of the date of this Report, the Registrant has
no material commitments for capital expenditures and no commitments for
additional equity or debt financing, and no assurances can be made that its
working capital needs can be met out of future operations or borrowing.
Going Concern
As a result of the Registrant having no revenue producing activities, the
Registrant has limited cash and cash equivalents remaining as of March 31, 2000,
to finance future operations. The Registrant has received financial support from
NuVen and is dependent upon NuVen for future working capital. The Registrant's
plan is to continue searching for additional sources of equity and working
capital and new operating opportunities. In the interim, the Registrant's
existence is dependent upon continuing financial support from NuVen for the
remainder of fiscal year 2000. Such conditions raise substantial doubt about the
Registrant's ability to continue as a going concern.
7
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes In Securities
None
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 On Form 8-K
(a) Exhibits - None
(b) Form 8-K - None
8
<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.
HART INDUSTRIES, INC.
(Registrant)
Date: May 15, 2000 By:/s/ Fred G. Luke
Fred G. Luke,
President
9
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 445
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 445
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 445
<CURRENT-LIABILITIES> 10,888
<BONDS> 0
0
0
<COMMON> 17,310
<OTHER-SE> (704,542)
<TOTAL-LIABILITY-AND-EQUITY> 445
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 29,045
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (29,045)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,045)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,045)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
