FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Qtr. Ended: June 30,1996 File No.: 2-20954-NY
KBF POLLUTION MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 11-2687588
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1110 FARMINGDALE ROAD NORTH LINDENHURST NEW YORK 11757
(Address of principal executive offices)
(516) 225-0007
(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 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 registrant's classes of
stock as of
June 30, 1996:
Common stock, $.00001 par value - 42,672,213 shares outstanding.
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10-Q
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June 30, 1996
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INDEX
PART I - FINANCIAL INFORMATION
Item I - FINANCIAL STATEMENTS (Unaudited)
Balance Sheets -
June 30, 1996 and December 31, 1995 3-4
Statement of Income -
Six Months Ended June 30, 1996 and 1995 5
Three Months Ended June 30, 1996 and 1995 6
Statement of Cash Flows -
Six Months Ended June 30, 1996 and 1995 7-8
Notes to Financial Statements 9
Item II - MANAGEMENT'S DISCUSSION AND ANALYSIS 10-11
PART II - OTHER INFORMATION 12
SIGNATURES 12
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10 - Q
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JUNE 30, 1996
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BALANCE SHEET
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ASSETS
------
6/30/96 12/31/95
------- --------
Unaudited Audited
--------- -------
CURRENT ASSETS:
- ---------------
Cash $ (37) $ 11,025
Cash - Restricted 27,500 27,500
Trade Accounts Receivable (Net of
allowance for doubtful accounts
of $27,511 & $26,657) 247,605 186,648
Inventories 14,853 13,369
Prepaid Expendable Supplies 18,933 18,993
Other Prepaid Expenses 20,033 29,697
------------ ------------
Total Current Assets 328,887 287,232
FIXED ASSETS:
- -------------
Property, Equipment & Improvements
(Net of Accumulated Depreciation &
Amortization of $1,356,949 & $1,248,829) 1,129,619 1,205,621
Leased Property under Capital Leases
(Amortization of $402,997 & $369,881) 128,881 175,968
Non Expendable Stock, Parts & Drums 139,368 139,368
------------ ------------
Total Fixed Assets, Net 1,397,868 1,520,957
OTHER ASSETS:
- -------------
Cash Surrender Value - OLI 0 8,957
Security Deposits 9,381 9,381
Patent (Net of Accumulated Amortization
of $9,370 & $8,772) 22,166 22,764
Capitalized Permit Costs 95,400 91,655
----------- -----------
Total Other Assets 126,947 132,757
----------- -----------
TOTAL ASSETS $1,853,702 $1,940,946
=========== ===========
See accompanying notes to financial statements.
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10 - Q
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JUNE 30, 1996
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BALANCE SHEET
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LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
--------------------------------------------
6/30/96 12/31/95
------- --------
Unaudited Audited
CURRENT LIABILITIES: --------- -------
- --------------------
Accounts Payable - Trade $ 398,200 $ 335,419
Accrued Expenses 65,025 76,062
Taxes Withheld & Accrued 12,306 13,259
Current Portion of Long - Term
Debt 21,637 21,637
Current Portion of Capital Lease
Obligations 78,762 70,736
------------- ------------
Total Current Liabilities 575,930 517,113
LONG-TERM LIABILITIES:
- ---------------------
Long - Term Lease Obligations 256,255 290,157
---------- ----------
Total Long - Term Liabilities 256,255 290,157
STOCKHOLDERS' EQUITY (DEFICIT):
- ------------------------------
Com. Stock par value .00001 per sh.
Authorized - 500,000,000 shares
Issued & Outstanding
June 30, 1996 - 42,672,213 427 423
Dec. 31, 1995 - 42,216,213
Capital in Excess of Par Value 4,258,056 4,201,061
Retained Earnings (Deficit) (3,236,966) (3,067,808)
------------ ----------
Total Stockholders' Equity (Deficit) 1,021,517 1,133,676
------------ ----------
TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY (DEFICIT) $ 1,853,702 $ 1,940,946
============ =============
See accompanying notes to financial statements.
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10 - Q
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JUNE 30, 1996
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STATEMENT OF INCOME
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(Unaudited)
SIX MONTHS ENDED
6/30/96 6/30/95
------- -------
REVENUES $ 930,480 $ 903,058
- --------
LESS: Cost of Operations 666,820 647,007
- ---- -------------- --------------
Gross Profit 263,660 256,051
LESS: General & Admin. Expenses 422,407 418,676
- ----
Advertising 2,423 5,703
-------------- --------------
Operating Income (Loss) (161,170) (168,328)
OTHER INCOME (EXPENSES):
Interest Income 495 527
Interest Expense (6,478) (30,891)
Income Tax Provision (2,008) (1,265)
--------------- ---------------
NET INCOME (LOSS) $ (169,161) $ (199,957)
- ----------------- =============== ==============
Number of Shares Outstanding 42,672,213 40,950,757
Earnings Per Share from Operations $ (.0037) $ (.0041)
============== =============
Earnings Per Share - Net
Income (Loss) $ (.0040) $ (.0049)
============== =============
See accompanying notes to financial statements.
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10 - Q
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JUNE 30, 1996
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STATEMENT OF INCOME
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(Unaudited)
THREE MONTHS ENDED
6/30/96 6/30/95
------- -------
REVENUES $ 445,268 $ 459,506
- --------
LESS: Cost of Operations 327,312 309,695
- ---- -------------- --------------
Gross Profit 117,956 149,811
LESS: General & Admin. Expenses 208,418 201,211
- ----
Advertising 1,162 1,197
-------------- --------------
Operating Income (Loss) (91,624) (52,597)
OTHER INCOME (EXPENSES):
- -----------------------
Interest Income 288 178
Interest Expense (2,957) (12,642)
Income Tax Provision (630) (682)
-------------- --------------
NET INCOME (LOSS) $ (94,923) $ (65,743)
- ----------------- ============== ==============
Number of Shares Outstanding 42,672,213 40,950,757
Earnings Per Share from Operations $ (.0021) $ (.0013)
============== =============
Earnings Per Share - Net Income (Loss) $ (.0022) $ (.0016)
============== =============
See accompanying notes to financial statements.
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10 - Q
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JUNE 30, 1996
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STATEMENT OF CASH FLOWS
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(Unaudited)
SIX MONTHS ENDED
6/30/96 6/30/95
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
- ------------------------------------
Cash Received from Customers $ 921,935 $ 866,439
Cash Paid to Suppliers & Employees (912,815) (866,672)
Interest & Dividends Received 495 527
Interest Paid (5,272) (17,230)
Income Taxes Paid (3,595) (4,215)
----------------- ---------------
Net Cash Provided (Used) by
Operating Activities 748 (21,151)
CASH FLOWS FROM INVESTING ACTIVITIES:
- ------------------------------------
Cash Purchases of Equipment (18,148) (5,191)
Cash Purchases of Intangible &
Other Assets (3,745) (983)
Cash Provided by Surrender of
Life Insurance 8,957 0
----------------- ---------------
Net Cash Provided (Used) in
Investing Activities (12,936) (6,174)
CASH FLOWS FROM FINANCING ACTIVITIES:
- ------------------------------------
Proceeds from Sale of Stock &
Warrants 27,000 30,997
Repayment of Long-Term Debt &
Capital Lease Obligations (25,874) (13,828)
----------------- ---------------
Net Cash Provided (Used) by Financing
Activities 1,126 17,169
----------------- ---------------
NET INCREASE (DECREASE) IN CASH (11,062) (10,156)
CASH at Beginning of Period 11,025 39,418
----------------- ---------------
CASH at End of Period $ (37) $ 29,262
================= ===============
See accompanying notes to financial statements.
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10 - Q
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JUNE 30, 1996
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STATEMENT OF CASH FLOWS
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(Unaudited)
SIX MONTHS ENDED
6/30/96 6/30/95
RECONCILIATION OF NET INCOME TO NET ------- -------
CASH FROM OPERATING ACTIVITIES:
- -------------------------------
NET INCOME (LOSS) $ (169,161) $ (199,957)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation 141,237 148,183
Amortization 598 598
Consulting & Professional Fees
Paid in Stock 30,000 10,464
Bad Debts 854 3,662
(Increase) Decrease in:
Trade Accounts Receivable (61,811) (36,619)
Inventories (1,484) (5,815)
Prepaid Expenses & Deposits 9,724 36,023
Increase (Decrease) in:
Accounts Payable 62,781 15,814
Withholding Taxes Payable (953) 772
Accrued Expenses (11,037) 5,724
------------- -------------
$ 748 $ (21,151)
============= =============
See accompanying notes to financial statements.
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10-Q
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JUNE 30, 1996
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 -BASIS OF PRESENTATION
- -----------------------------
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions and Article 10 of Regulation S-X. 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 fair presentation have been included. Operating results for the
six months ended June 30, 1996 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996. For further
information, refer to the financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended December 31, 1995.
NOTE 2 - INVENTORIES
- --------------------
Inventories are comprised of the following major categories:
6/30/96 12/31/95
------- --------
Shipping Supplies $ 4,598 $ 4,770
Reagents 10,255 8,599
------ -----
$ 14,853 $ 13,369
======== ========
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10-Q
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JUNE 30, 1996
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES SET FORTH ELSEWHERE IN THIS REPORT.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1996
AS COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1995
Total revenues for the six months ended June 30, 1996 increased to $930,480 as
compared to $903,058 for the same period in 1995, an increase of 3%. The Company
attributes such increase in revenues to the increased customer base utilizing
the Company's services. However, this increase is dependent on the economic
conditions under which the Company's customers must exist.
Cost of sales for the six months ended June 30, 1996 and 1995 were identical for
both periods at 72%.
General and administrative expenses increased by 1% to $422,407 for the six
months ended June 30, 1996 from $418,676 for 1995. This increase is due to the
slight changes in overhead incurred by the Company.
In June 1995, the Company filed for its patent on the "Selective Separation
Technology" which is used in the resource recovery of waste streams. This patent
is currently pending.
The Company incurred a net loss of -$169,161 for the first six months of 1996, a
15% decrease from the net loss of -$199,957 for the same period in 1995, due to
the increase in sales volume along with the existing cost reduction plan
utilized by management.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that current operations will provide adequate cash flow to
meet current obligations. Previous types of financing and capital resources are
defined as follows:
In order to finance the costs incurred as the Company prepared for the issuance
of the 373(b) storage permit (required to store additional waste streams), the
Company initiated a private placement of 5,600,000 shares of common stock in May
1994, for an aggregate purchase price of $700,000, with a par value of $.00001
at $.125 per share. Attached to each of these units is one redeemable Class A
warrant. Each Class A warrant entitles the holder to purchase one share of
common stock and one redeemable Class B warrant during the one year period,
commencing with the offering date, with an exercise price of $.125. Each Class B
warrant entitles the holder to purchase one share of common stock during the two
year period commencing with the offering date, at a price of $.18. This offering
is closed. As of June 30, 1996 $107,000 was raised in conjunction with the Class
A warrants.
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10-Q
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JUNE 30, 1996
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30,1996
AS COMPARED TO THE THREE MONTHS ENDED JUNE 30,1995
Total revenues for the three months ended June 30, decreased to $445,268 as
compared to $459,506 for the same period in 1995, a decrease of 4%. The Company
attributes such decrease in revenues due to the economic conditions under which
the Company must exist. Recovered metals were not sold during the second quarter
of 1996 due to poor market conditions.
Cost of sales for the three months ended June 30, 1996 increased to 73% of
revenues from 67% of revenues for the same period in 1995. Such an increase is
due to the additional personnel hired in anticipation of increased volume and to
operate in compliance with permit requirements. The Company has also incurred
increased transportation costs. Management is currently preparing a
transportation cost reduction plan.
General and administrative expenses increased by 3% to $ 208,418 for the three
months ended June 30, 1996 from $201,211 for 1995. This increase is due to the
slight changes in overhead incurred by the Company.
The Company incurred a net loss of -$94,923 for the second quarter of 1996, a
44% increase from the net loss of -$65,743 for the same period in 1995, due to
the increase in costs mentioned above.
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10-Q
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JUNE 30, 1996
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PART II - OTHER INFORMATION
Item VI - Exhibits and Reports on Form 8-K
Exhibits No. Description
------------- -----------
27 Financial Data Schedule
Reports on Form 8-K for the six months ended
June 30,1996, there were no reports filed on
Form 8-K.
SIGNATURES
Pursuant to the requirements 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.
KBF POLLUTION MANAGEMENT, INC.
/s/ LARRY KREISLER
--------------------------------
Dated: Aug 9, 1996 LARRY KREISLER - PRESIDENT
/s/ KATHI KREISLER
-------------------------------
Dated: Aug 9, 1996 KATHI KREISLER SECRETARY /
TREASURER
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
KBF POLLUTION MANAGEMENT, INC.
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FORM 10 - Q
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JUNE 30, 1996
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EXHIBIT 27
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FINANCIAL DATA SCHEDULE
-----------------------
This schedule contains summary financial information extracted from the
unaudited financial statements dated June 30, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 27,463
<SECURITIES> 0
<RECEIVABLES> 275,116
<ALLOWANCES> (27,511)
<INVENTORY> 14,853
<CURRENT-ASSETS> 38,966
<PP&E> 3,157,814
<DEPRECIATION> (1,759,946)
<TOTAL-ASSETS> 1,853,702
<CURRENT-LIABILITIES> 575,930
<BONDS> 0
0
0
<COMMON> 427
<OTHER-SE> 1,021,090
<TOTAL-LIABILITY-AND-EQUITY> 1,853,702
<SALES> 930,480
<TOTAL-REVENUES> 930,480
<CGS> 666,820
<TOTAL-COSTS> 668,820
<OTHER-EXPENSES> 424,830
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,478
<INCOME-PRETAX> (167,153)
<INCOME-TAX> 2,008
<INCOME-CONTINUING> (169,161)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (169,161)
<EPS-PRIMARY> (.00)
<EPS-DILUTED> (.00)
</TABLE>
