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 June 30, 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 of (I.R.S. Employer
incorporation or organization) Identification Number)
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 July 31, 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 - June 30, 2000 (unaudited).........................1
Statements of Operations - Three and Six Months Ended
June 30, 2000 and 1999 (unaudited) and the period from
October 29, 1982 (inception) to June 30, 2000 (unaudited)......2
Statements of Cash Flows - Six Months Ended
June 30, 2000 and 1999 (unaudited) and the period from
October 29, 1982 (inception) to June 30, 2000 (unaudited)......3
Notes to Financial Statements.....................................5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.....................8
PART II
Item 1. Legal Proceedings...................................................9
Item 2. Changes In Securities.............................................9
Item 3. Defaults Upon Senior Securities...................................9
Item 4. Submission of Matters to a Vote of Security Holders...............9
Item 5. Other Information.................................................9
Item 6. Exhibits and Reports on Form 8-K..................................9
Signatures........................................................10
I
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
Balance Sheet
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash $ 197
Total current assets 197
$ 197
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 608
Accrued professional fees 3,500
Income taxes payable 8,280
Total current liabilities 12,388
Due to affiliates 693,589
Total liabilities 705,977
Stockholders' 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 (6,669,638)
Total stockholders' deficit (705,780)
$ 197
</TABLE>
See accompanying notes to these financial statements.
1
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
Statements of Operations
For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited)
and the Period from October 29, 1982 (Inception) to June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Period from
October 29,
1982
For the Three Months Ended For the Six Months Ended (Inception)
June 30, June 30, to
June 30,
2000 1999 2000 1999 2000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Net revenues $ - $ - $ - $ - $ -
Cost of revenues - - - - -
- - - - -
Costs and expenses:
General and administrative expenses 28,548 25,641 57,593 51,186 973,897
Provision for write-down of property
and equipment - - - - 251,564
Impairment of Dishwasher Assets - - - - 2,500,000
Total costs and expenses 28,548 25,641 57,593 51,186 3,725,461
Operating loss (28,548) (25,641) (57,593) (51,186) (3,725,461)
Other income (expense):
Interest income - - - - 96,750
Gain on sale of assets - - - - 10,800
Loss on sale of assets - - - - (500,000)
Impairment of investments - - - - (750,000)
Total other income (expense) - - - - (1,142,450)
Loss from continuing operations (28,548) (25,641) (57,593) (51,186) (4,867,911)
Loss from discontinued operations,
net of tax of $0 - - - - (1,801,727)
Net loss $ (28,548) $ (25,641) $ (57,593) $ (51,186) $ (6,669,638)
Basic and diluted loss per share:
Continuing operations $ (.02) $ (.01) $ (.03) $ (.03)
Discontinued operations - - - -
Net loss $ (.02) $ (.01) $ (.03) $ (.03)
Weighted average common shares
outstanding 1,730,960 1,730,960 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 Six Months Ended June 30, 2000 and 1999 (Unaudited)
and the Period from October 29, 1982 (Inception) to June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Period
From October
29, 1982
(Inception) to
June 30,
2000
(Unaudited)
Six Months Ended June 30,
2000 1999
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (57,593) $ (51,186) $(6,669,638)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization - - 224,503
Loss from return of defective products - - 241,996
Loss on sale of assets - - 500,000
Gain on sale of assets - - (10,800)
Interest expense on note payable to affiliate - - 229,724
Capital contributed for services - - 103,500
Common stock issued for services - - 53,750
Gain on liquidation of subsidiary - - (108,861)
Impairment of Dishwasher Assets - - 2,500,000
Provision for write-down of property and equipment - - 251,564
Impairment of investments - - 750,000
Changes in operating assets and liabilities:
(Decrease) increase in accounts payable 519 - 608
(Decrease) increase in accrued professional fees (7,750) - 3,500
Increase in income taxes payable - - 8,280
Net cash used in operating activities (64,824) (51,186) (1,921,874)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment - - (858,592)
Acquisition of patents and trademarks - - (122,778)
Disposal of assets - - 112,647
Net cash used in investing activities - - (868,723)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in due to affiliates 64,800 51,100 693,589
Net proceeds from issuance of common stock - - 180,116
Net borrowings on note payable - - 1,848,489
Contribution from shareholder - 68,600
Net cash provided by financing activities 64,800 51,100 2,790,794
Net increase (decrease) in cash (24) (86) 197
Cash at beginning of period 221 197 -
Cash at end of period $ 197 $ 111 $ 197
</TABLE>
See accompanying notes to these financial statements.
3
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
Statements of Cash Flows
(Continued)
<TABLE>
<CAPTION>
Period
From October
29, 1982
(Inception) to
Six Months Ended June 30, June 30,
2000 1999 2000
(Unaudited) (Unaudited) (Unaudited)
<S> <C>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Acquisition of Transmeridian Gas and Oil Company in exchange
for common stock $ 679,139
Acquisition of Hart (UK) in exchange for common stock $ 46,100
Common stock issued in dissolution of subsidiary $ 6,868
Common stock issued for assets $ 2,266,474
Common stock issued for services $ 53,750
Common stock issued for satisfaction of note payable to affiliate $ 2,332,025
Common stock issued for forgiveness of long-term note payable $ 656,250
Equipment acquired by long-term note payable and capital leases $ 1,969,817
Long-term liabilities assumed on liquidation of subsidiary $ 944,016
Assets acquired on liquidation of subsidiary $ 1,374,853
Assets issued for payments of note payable $ 469,042
</TABLE>
See accompanying notes to these financial statements.
4
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30,2000
(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.
5
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 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 $21,000 and
$18,000 during the six-month periods ended June 30, 2000 and 1999, respectively,
and had $270,500 due to NuVen as of June 30, 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. No cash payments were made
to Mr. Luke by the Company during the six-month periods ended June 30, 2000 and
1999 for services provided. The Company expensed $27,000 during the six-month
periods ended June 30, 2000 and 1999, each, and had $297,000 due to Mr. Luke as
of June 30, 2000. Mr. Luke expects to satisfy such obligation through the
issuance of common stock.
6
<PAGE>
HART INDUSTRIES, INC.
(A Development-Stage Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
June 30, 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. Effective July 1, 1997, Mr. Dong resigned as Chief Financial Officer. No
cash payments were made to Mr. Dong by the Company during the six-month periods
ended June 30, 2000 and 1999 and had $40,000 due to Mr. Dong as of June 30,
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 six-month periods ended June 30, 2000 and 1999. The Company expensed
$6,000 during the six- month periods ended June 30, 2000 and 1999, each, and had
$46,000 due to Mr. Lawver as of June 30, 2000.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30,
1999
There were no operations during the three months ended June 30, 2000 or
1999. As a result, there were no operating revenues or cost of revenues recorded
during the three months ended June 30, 2000 or 1999.
The Registrant's general and administrative expenses were $28,548 for the
three months ended June 30, 2000, as compared to $25,641 for the same period
last year. The change is primarily attributable to continued services provided
by professional consultants and other advisors.
Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999
The Registrant had no operations for the six months ended June 30, 2000 or
1999.
The Registrant's total general and administrative expenses were $57,593 for
the six months ended June 30, 2000, as compared to $51,186 for the same period
last year. The expense 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 June 30, 2000 and working capital deficiency of $12,191 as of June 30, 2000.
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 June 30, 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.
8
<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
9
<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: August 14, 2000 By: /s/ Fred G. Luke
Fred G. Luke,
President and Principal Accounting Person
10
