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 September 30, 1999
Commission File Number 33-3385
EARTH PRODUCTS AND TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0430816
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
525 South 300 East
Salt Lake City, Utah 84111
(801) 323-2395
(Address and telephone number of principal executive
officers and principal place of business)
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
As of September 30, 1999, Earth Products and Technologies, Inc. had a
total of 25,781,004 shares of common voting stock issued and outstanding.
<PAGE>
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis or Plan of Operations 3
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports Filed on Form 8-K 4
Signatures 4
In this quarterly report references to "Earth Products," "we," "us," and
"our" refer to Earth Products and Technologies, Inc.
FORWARD LOOKING STATEMENTS
This Form 10-QSB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. For this
purpose any statements contained in this Form 10-QSB that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Earth Products's control. These factors include but are not limited to
economic conditions generally and in the industries in which Earth Products
may participate; competition within Earth Product's chosen industry,
including competition from much larger competitors; technological advances and
failure by Earth Products to successfully develop business relationships.
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
The unaudited financial statements of Earth Products for the nine months
ended September 30, 1999 are as follows:
Earth Products and Technologies, Inc.
Financial Statements
September 30, 1999
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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 September 30, 1999 and the related
statements of operations, and cash flows for the nine months ended September
30, 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
October 28, 1999
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Earth Products and Technologies, Inc.
Balance Sheets
ASSETS
September 30 December 31
1999 1998
------------ -----------
CURRENT ASSETS (unaudited)
Cash and Cash Equivalents $ 3,665 $ 2,483
Notes Receivable-current portion 840,000 840,000
------------ -----------
Total Current Assets 843,665 842,483
------------ -----------
OTHER ASSETS
Note Receivable 64,326 48,277
Goodwill 26,728 26,728
------------ -----------
Net Other Assets 91,054 75,005
------------ -----------
TOTAL ASSETS $ 934,719 $ 917,488
=========== ===========
The accompanying notes are an integral part of these financial statements.
-3-
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Earth Products and Technologies, Inc.
Balance Sheets continued
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30 December 31
CURRENT LIABILITIES 1999 1998
------------ -----------
(unaudited)
Accounts payable $ - $ 1,622
Accrued expenses - 287
Notes Payable -related party 25,000 30,000
------------ -----------
Total Current Liabilities 25,000 31,909
------------ -----------
STOCKHOLDERS' EQUITY
Common stock, $.001 Par Value,
Authorized 50,000,000 Shares;
issued and outstanding 25,541,004
and 24,941,004 shares, respectively 25,541 24,941
Additional Paid-In Capital 3,829,866 3,800,466
Retained earnings (2,945,688) (2,939,828)
------------ -----------
Total Stockholders' Equity 909,719 885,579
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 934,719 $ 917,488
============ ===========
The accompanying notes are an integral part of these financial statements.
-4-
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Earth Products and Technologies, Inc.
Statements of Operations
<TABLE>
<CAPTION>
For the three For the three For the nine For the nine
months ended months ended months ended months ended
September 30 September 30 September 30 September 30
1999 1998 1999 1998
---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
SALES $ - $ 3,473 $ - $ 3,473
COST OF GOODS SOLD - - - -
---------------- ---------------- -------------- --------------
GROSS PROFIT - 3,473 - 3,473
---------------- ---------------- -------------- --------------
OPERATING EXPENSES
General And
Administrative Expenses 561 92,047 5,860 156,794
---------------- ---------------- -------------- --------------
TOTAL OPERATING EXPENSES 561 92,047 5,860 156,794
---------------- ---------------- -------------- --------------
OPERATING INCOME (LOSS) (561) (88,574) (5,860) (153,321)
---------------- ---------------- -------------- --------------
OTHER INCOME AND (EXPENSES)
Other Income (Expense) - (12,173) - (3,118)
Interest Expense - (819) - (2,642)
---------------- ---------------- -------------- --------------
Total Other Income/(Expense) - (12,992) - (5,760)
---------------- ---------------- -------------- --------------
NET INCOME (LOSS) $ (561) $ (101,566) $ (5,860) $ (159,081)
================ ================ ============== ==============
The accompanying notes are an integral part of these financial statements
-5-
</TABLE>
<PAGE>
Earth Products and Technologies, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Nine For the Nine
months ended months ended
September 30 September 30
1999 1998
---------------- ----------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (5,860) $ (159,081)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Used in Operating Activities:
Depreciation - 30,750
Amortization - 8,423
Stock issued for services - 15,000
Loss on sales - 12,043
Change in Assets and Liabilities
(Increase) Decrease in:
Accounts Receivable - 12,827
Inventory - 6,810
Increase/(decrease) in:
Accounts Payable (1,622) (135,570)
Accrued Expenses (287) (19,376)
Other Payable - 72,194
---------------- ----------------
Net Cash Provided (Used) by Operating
Activities (7,769) (155,980)
---------------- ----------------
Cash Flows from Investing Activities
Cash paid for Notes Receivable (16,049) (469,000)
Cash from sale of assets - 4,753
---------------- ----------------
Net Cash Provided (Used) by Investing
Activities (16,049) (464,247)
---------------- ----------------
Cash Flows from Financing Activities
Proceeds from stock issuance 30,000 99,000
Proceeds from debt financing 13,000 626,000
Principal payments of debt financing (18,000) (103,170)
---------------- ----------------
Net Cash Provided (Used) by Financing
Activities 25,000 621,830
---------------- ----------------
Net Increase (Decrease) in Cash and
Cash Equivalents 1,182 1,603
---------------- ----------------
Cash and Cash Equivalents
Beginning 2,483 3,210
---------------- ----------------
Ending $ 3,665 $ 4,813
================ ================
Supplemental Disclosures of Cash Flow Information:
Cash payments for interest $ - $ 2,642
================ ================
Cash payments for income taxes $ - $ 130
================ ================
Supplemental Schedule of Noncash Investing and
Financing Activities
Conversion of Debt to equity $ - $ 660,000
================ ================
The accompanying notes are an integral part of these financial statements.
-6-
</TABLE>
<PAGE>
Earth Products and Technologies, Inc.
Notes to Financial Statements
September 30, 1999
GENERAL
Earth Products and Technologies, Inc. (the Company) has elected to omit
substantially all footnotes to the financial statements for the nine months
ended September 30, 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.
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS
Overview. For the nine months ended September 30, 1999 we have had no
business operations and have no full time employees. For the next twelve
months we plan 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 we have not identified any business opportunity that
we plan to pursue, nor have we reached any agreement or definitive
understanding with any person concerning an acquisition. In addition, there
can be no assurance that we will be successful in finding a desirable business
opportunity. We expect to encounter substantial competition in our 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 our limited capital
available for investigation and management's limited experience in business
analysis, we may not discover or adequately evaluate adverse facts about the
business opportunity to be acquired. Also, we intend to concentrate our
acquisition efforts on properties or businesses that we believe to be
undervalued or that we believe may realize a substantial benefit from being
publicly owned. 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 our management may effect transactions having a
potentially adverse impact upon the our shareholders pursuant to the authority
and discretion of our management to complete acquisitions without submitting
any proposal to the stockholders for their consideration.
Liquidity and Capital Resources. Since our inception, we have funded our
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 we 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.
In June of 1999 we issued 840,000 shares to satisfy promissory notes held
by PHI Mutual Ventures LLC and Mutual Ventures Corporation. Net cash provided
by such financing activities was $25,000 for the period ended September 30,
1999.
As of September 30, 1999, we had cash of $3,665 and total assets of
$934,719. 89.8% of total assets was represented by an account receivable from
the sale of our former subsidiary EWS Services, Inc. We have no material
commitments for the next twelve months. We believe that our current cash
needs can be met with the cash on hand for at least twelve months. However,
should we obtain a business opportunity, it may be necessary to raise
additional capital. This may be accomplished by selling our common stock or
debt financing. If common stock is issued it will be pursuant to available
exemptions provided by federal and state securities laws.
During the nine months ended September 30, 1999 we posted no revenues and
operating losses of $5,860. During the same period in 1998 we had $3,473 in
revenues and $153,321 in operating losses. The decrease in revenues and
losses is due to the divesture of our former subsidiaries in November and
December of 1998.
Results of Operations
We have minimal cash available for our operations and currently have no
established source of revenues from operations. For the current fiscal year,
we anticipate incurring a loss as a result of administrative expenses, which
include expenses associated with locating and evaluating business
opportunities, and those expenses related to filing periodic reports required
by the Securities and Exchange Act of 1934, as amended.
Year 2000 Compliance. We have completed a review of our computer systems
and operations to determine the extent to which our business will be
vulnerable to potential errors and failures as a result of the "Year 2000"
problem. We have concluded, based on the review of our operations and computer
systems, that our significant computer programs and operations will not be
materially affected by the Year 2000 problem. However, there can be no
assurance that the systems of those companies with which we may do business
with will be in compliance and this may have a material adverse effect on our
operations, if any.
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Part I Exhibits.
Exhibit Description
27 Financial Data Schedule
(b) Reports on Form 8-K. None
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 11 day of November 1999.
EARTH PRODUCTS AND TECHNOLOGIES, INC.
By: /s/ John W. Peters
------------------
John W. Peters, President and CEO
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
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0
0
<COMMON> 25,541
<OTHER-SE> 884,178
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<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,860
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,860)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,860)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,860)
<EPS-BASIC> 0
<EPS-DILUTED> 0
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