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 quarterly period ended March 31, 1999
Commission File Number 33-3385
EARTH PRODUCTS AND TECHNOLOGIES, INC.
-------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 87-0430816
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(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
525 South 300 East, Salt Lake City, Utah 84111
------------------------------------------------
(Address of principal executive offices) (Zip Code)
(801) 323-2394
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(Issuer's telephone number including area code)
Indicate by check mark whether the 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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of March 31, 1999, the Issuer had issued and outstanding an aggregate
of 24,941,004 common voting shares, par value $0.001
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
The unaudited financial statements of Earth Products and Technologies,
Inc. (the Company) for the quarter ended March 31, 1999 are as follows:
Earth Products and Technologies, Inc.
Financial Statements
March 31, 1999 (unaudited)
and
December 31, 1998
<PAGE>
<Letterhead of Crouch, Bierwolf & Chisholm
Certified Public Accountants
50 West Broadway, Suite 1130
Salt Lake City, Utah 84101
Office (801) 363-1175
Fax (801)363-0615>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Earth Products and Technologies, Inc.
Salt Lake City, Utah
The accompanying balance sheets as of March 31, 1999 and the related
statements of operations, and cash flows for the nine months ended March 31,
1999 and 1998 were not audited by us and, accordingly, we do not express an
opinion on them.
The accompanying balance sheet as of December 31, 1998 was audited by us and
we expressed an unqualified opinion on it in our report dated March 9, 1999.
/s/ Crouch Bierwolf & Chisholm
May 12, 1999
<PAGE>
Earth Products and Technologies, Inc.
Balance Sheets
ASSETS
------
March 31 December 31
1999 1998
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CURRENT ASSETS (unaudited)
Cash and Cash Equivalents $ 871 $ 2,483
Notes Receivable-current portion 840,000 840,000
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Total Current Assets 840,871 842,483
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PROPERTY & EQUIPMENT - -
OTHER ASSETS
Note Receivable 50,482 48,277
Goodwill 26,728 26,728
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Net Other Assets 77,210 75,005
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TOTAL ASSETS $ 918,081 $ 917,488
============= ===============
The accompanying notes are an integral part of these financial statements.
<PAGE>
Earth Products and Technologies, Inc.
Balance Sheets continued
LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------
March 31 December 31
1999 1998
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CURRENT LIABILITIES (unaudited)
Accounts payable $ 1,622 $ 1,622
Accrued expenses 287 287
Notes Payable -related party 32,000 30,000
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Total Current Liabilities 33,909 31,909
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LONG-TERM DEBT
Notes payable - -
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Total Liabilities 33,909 31,909
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STOCKHOLDERS' EQUITY
Common stock, $.001 Par Value,
Authorized 50,000,000 Shares;
issued and outstanding 24,941,004
and 24,941,004 shares, respectively 24,941 24,941
Additional Paid-In Capital 3,800,466 3,800,466
Retained earnings (2,941,235) (2,939,828)
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Total Stockholders' Equity 884,172 885,579
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 918,081 $ 917,488
============= ==============
The accompanying notes are an integral part of these financial statements.
<PAGE>
Earth Products and Technologies, Inc.
Statements of Operations
For the three For the three
months ended months ended
March 31 March 31
1999 1998
----------------- ---------------
SALES $ - $ -
COST OF GOODS SOLD - 1,898
----------------- ---------------
GROSS PROFIT - (1,898)
----------------- ---------------
OPERATING EXPENSES
General And Administrative Expenses 1,407 8,797
----------------- ---------------
TOTAL OPERATING EXPENSES 1,407 8,797
----------------- ---------------
OPERATING INCOME (LOSS) (1,407) (10,695)
----------------- ---------------
OTHER INCOME AND (EXPENSES)
Minority Interest - -
Other Income - 13,543
Interest Expense - (246)
----------------- ---------------
Total Other Income/(Expense) - 13,247
----------------- ---------------
NET LOSS $ (1,407) $ 2,552
================= ===============
The accompanying notes are an integral part of these financial statements.
<PAGE>
Earth Products and Technologies, Inc.
Statements of Cash Flows
For the three For the three
months ended months ended
March 31 March 31
1999 1998
----------------- ---------------
Cash Flows From Operating Activities
Net income (loss) $ (1,407) $ (2,552)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Used in Operating Activities:
Depreciation - -
Amortization - -
Stock issued for services - -
Loss on sales - -
Change in Assets and Liabilities
(Increase) Decrease in:
Accounts Receivable - 16,300
Other Receivables - -
Inventory - 4,808
Increase/(decrease) in:
Accounts Payable - (67,168)
Accrued Expense - (16,861)
Other Payable - (365)
----------------- ---------------
Net Cash Provided (Used) by
Operating Activities (1,407) (60,734)
----------------- ---------------
Cash Flows from Investing Activities
Cash paid for Notes Receivable (2,205) (195,000)
Cash from sale of assets - 4,891
----------------- ---------------
Net Cash Provided (Used) by
Investing Activities (2,205) (190,109)
----------------- ---------------
Cash Flows from Financing Activities
Proceeds from debt financing 2,000 249,664
----------------- ---------------
Net Cash Provided (Used) by
Financing Activities 2,000 249,664
----------------- ---------------
Net Increase (Decrease) in Cash and
Cash Equivalents (1,612) (1,179)
----------------- ---------------
Cash and Cash Equivalents
Beginning 2,483 3,210
----------------- ---------------
Ending $ 871 $ 2,031
================= ===============
Supplemental Disclosures of Cash Flow
Information:
Cash payments for interest $ - $ 296
================= ===============
Cash payments for income taxes $ - $ -
================= ===============
Supplemental Schedule of Noncash
Investing and Financing Activities
Conversion of Debt to equity $ - $ -
================= ===============
The accompanying notes are an integral part of these financial statements.
<PAGE>
Earth Products Technologies, Inc.
Notes to the Financial Statements
March 31, 1999
GENERAL
- --------
Earth Products and Technologies, Inc. (the Company) has elected to omit
substantially all footnotes to the financial statements for the three months
ended March 31, 1999 since there have been no material changes (other than
indicated in other footnotes) to the information previously reported by the
Company in their Annual Report filed on the Form 10-KSB for the fiscal year
ended December 31, 1998.
UNAUDITED INFORMATION
- ----------------------
The information furnished herein was taken from the books and records of the
Company without audit. However, such information reflects all adjustment
which are, in the opinion of management, necessary to properly reflect the
results of the interim period presented. The information presented is not
necessarily indicative of the results from operations expected for the full
fiscal year.
ITEM 2 MANAGEMENTS' DISCUSSION AND ANALYSIS
The following Management's Discussion and Analysis contains forward-
looking statements that involve risks and uncertainties. The Company's actual
results could differ materially from those anticipated in these forward-
looking statements as a result of a number of factors discussed below
Overview. During 1997, the Company shifted its focus of operations from
a research and development company to a holding company by acquisition of two
subsidiaries, EPAT, Inc. and Environmental Water Systems, Inc. ("EWS").
During 1998 the Company divested itself of both subsidiaries. The Company
currently has no commercial operations and has no full time employees. The
Company plans to seek, investigate and, if warranted, acquire one or more
properties or businesses, and to pursue other related activities intended to
enhance shareholder value.
At the present time the Company has not identified any business
opportunity that it plans to pursue, nor has the Company reached any agreement
or definitive understanding with any person concerning an acquisition. In
addition, there can be no assurance that the Company will be successful in
finding a desirable business opportunity. The Company expects to encounter
substantial competition in its efforts to locate attractive opportunities,
primarily from business development companies, venture capital partnerships
and corporations, venture capital affiliates of large industrial and financial
companies, small investments companies, and wealthy individuals.
Potential investors must recognize that, because of the Company's limited
capital available for investigation and management's limited experience in
business analysis, the Company may not discover or adequately evaluate adverse
facts about the business opportunity to be acquired. Also, the Company
intends to concentrate its acquisition efforts on properties or businesses
that it believes to be undervalued or that it believes may realize a
substantial benefit from being publicly owned and investors should expect that
any acquisition candidate may have little or no operating history, or a
history of losses or low profitability.
It is emphasized that management of the Company may effect transactions
having a potentially adverse impact upon the Company's shareholders pursuant
to the authority and discretion of the Company's management to complete
acquisitions without submitting any proposal to the stockholders for their
consideration.
1998 Compared to 1997. As of December 31, 1998 the Company had total
assets of $917,488 with total liabilities of $31,909, as compared to the end
of fiscal year 1997 when the Company showed total assets of $777,274 with
total liabilities of $646,567. During the last half of 1997, the Company's
subsidiary, EWS, posted $83,473 in revenues, however, such revenues were well
below the projections and were insufficient to meet the operating costs of the
Company. The Company failed to generate any revenues during fiscal year 1998.
As a result, the Company posted net operating losses of $454,370 and
$724,470 for 1997 and 1998, respectively.
Liquidity and Capital Resources. Since the Company's inception, it has
funded its cash requirements through debt and equity transactions. These
funds have been used for working capital, subsidiary acquisitions and
development of technology. During 1997 and 1998 the Company conducted
limited offerings pursuant to Regulation D of the Securities Act of 1933 and
raised $90,000 and $204,500, respectively. Such funds were used for business
development.
As of March 31, 1999, the Company has assets of $840,871 and total
liabilities of $33,909, resulting in a positive net worth of $806,962. The
increase is primarily a result of the $840,000 note receivable from EWS
Services, Inc. for EWS shares.
Our operating losses totaled $1,407. These losses were funded primarily
by cash flows from debt financing since notes receivable represent $891,535 of
the $918,981 total assets, the Company has minimal cash available for its
operations and currently has no established source of revenues from
operations.
Results of Operations. During the first fiscal quarter of 1999, the
Company has not engaged in any significant operations. No revenues have been
received by the Company during this period. For the current fiscal year, the
Company anticipates incurring a loss as a result of administrative expenses
and expenses associated with locating and evaluating business opportunities.
The Company is currently exploring several options for its future growth, and
intends to seek out and merge with or acquire a profitable operating company
or companies in order to bring revenues to the Company. However, there can be
no assurance that a merger or acquisition candidate will be found or that the
Company will have sufficient funds to effect such a merger or acquisition.
Year 2000 Compliance. The Company has completed a review of its computer
systems and operations to determine the extent to which its business will be
vulnerable to potential errors and failures as a result of the "year 2000"
problem. The Company has concluded, based on the review of its operations and
computer systems, that its significant computer programs and operations will
not be materially affected by the Year 2000 problem, and that it can modify or
replace the programs that will be affected by the end of 1999 at a cost which
will not be significant. Under a reasonably likely worst case scenario,
however, the Company's computer systems and/or operations could be materially
affected by the Year 2000 problem.
PART II. OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The Company is not a party to any proceedings or threatened proceedings.
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
The following exhibits are attached hereto and incorporated herewith.
Exhibit # Description
- --------- -----------
27 Financial Data Schedule
No Reports on 8-K were filed during the quarter ended March 31, 1999.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report be signed on its behalf by the undersigned, thereunto duly
authorized.
DATED this 14th day of May, 1999.
EARTH PRODUCTS AND TECHNOLOGIES, INC.
/s/ John Peters
By:________________________________________
John W. Peters
President and CEO
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
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<RECEIVABLES> 840,000
<ALLOWANCES> 0
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<PP&E> 0
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<CURRENT-LIABILITIES> 33,909
<BONDS> 0
0
0
<COMMON> 24,941
<OTHER-SE> 859,231
<TOTAL-LIABILITY-AND-EQUITY> 918,081
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<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,407
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,407)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,407)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,407)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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