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: March 31, 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
March 31, 1996:
Common stock, $.00001 par value - 42,432,213 shares outstanding.
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KBF POLLUTION MANAGEMENT, INC.
FORM 10-Q
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MARCH 31, 1996
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INDEX
PART I - FINANCIAL INFORMATION
Item I - FINANCIAL STATEMENTS (Unaudited)
Balance Sheets -
March 31, 1996 and December 31, 1995 3-4
Statement of Income -
Three Months Ended March 31, 1996 and 1995 5
Statement of Cash Flows -
Three Months Ended March 31, 1996 and 1995 6-7
Notes to Financial Statements 8
Item II - MANAGEMENT'S DISCUSSION AND ANALYSIS 9
PART II - OTHER INFORMATION 10
SIGNATURES 10
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10 - Q
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MARCH 31, 1996
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BALANCE SHEET
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ASSETS
------
3/31/96 12/31/95
------- --------
Unaudited Audited
--------- -------
CURRENT ASSETS:
- ---------------
Cash $ 20,694 $ 11,025
Cash - Restricted 27,500 27,500
Trade Accounts Receivable (Net of
allowance for doubtful accounts
of $25,283 & $26,657) 227,544 186,648
Inventories 12,765 13,369
Prepaid Expendable Supplies 18,995 18,993
Other Prepaid Expenses 10,366 29,697
-------- --------
Total Current Assets 317,864 287,232
FIXED ASSETS:
- -------------
Property, Equipment & Improvements
(Net of Accumulated Depreciation &
Amortization of $1,302,889 & $1,248,829) 1,182,316 1,205,621
Leased Property under Capital Leases
(Amortization of $386,439 & $369,881) 145,439 175,968
Non Expendable Stock, Parts & Drums 139,368 139,368
Total Fixed Assets, Net 1,467,123 1,520,957
OTHER ASSETS:
- -------------
Cash Surrender Value - OLI 0 8,957
Security Deposits 9,381 9,381
Patent (Net of Accumulated Amortization
of $9,071 & $8,772) 22,465 22,764
Capitalized Permit Costs 95,400 91,655
-------- --------
Total Other Assets 127,246 132,757
-------- --------
TOTAL ASSETS $1,912,233 $1,940,946
========== ==========
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10 - Q
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MARCH 31, 1996
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BALANCE SHEET
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LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
--------------------------------------------
3/31/96 12/31/95
------- --------
Unaudited Audited
--------- -------
CURRENT LIABILITIES:
- --------------------
Accounts Payable - Trade $ 376,113 $335,419
Accrued Expenses 70,786 76,062
Taxes Withheld & Accrued 12,403 13,259
Current Portion of Long - Term
Debt 21,637 21,637
Current Portion of Capital Lease
Obligations 78,882 70,736
--------- --------
Total Current Liabilities 559,821 517,113
LONG-TERM LIABILITIES:
- ----------------------
Long - Term Lease Obligations 265,967 290,157
------- -------
Total Long - Term Liabilities 265,967 290,157
STOCKHOLDERS' EQUITY (DEFICIT) :
- --------------------------------
Com. Stock par value .00001 per sh.
Authorized - 500,000,000 shares
Issued & Outstanding
March 31, 1996 - 42,432,213 425 423
Dec. 31, 1995 - 42,216,213
Capital in Excess of Par Value 4,228,059 4,201,061
Retained Earnings (Deficit) (3,142,039) (3,067,808)
Total Stockholders' Equity (Deficit) 1,086,445 1,133,676
TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY (DEFICIT) $ 1,912,233 $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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MARCH 31, 1996
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STATEMENT OF INCOME
-------------------
(Unaudited)
THREE MONTHS ENDED
3/31/96 3/31/95
------- -------
REVENUES $ 485,212 $ 443,553
- --------
LESS: Cost of Operations 339,507 337,313
- ---- ---------- ----------
Gross Profit 145,705 106,240
LESS: General & Admin. Expenses 213,987 217,684
- ----
Advertising 1,261 4,506
---------- ----------
Operating Income (Loss) (69,543) (115,950)
OTHER INCOME (EXPENSES):
Interest Income 207 350
Interest Expense (3,520) (18,249)
Income Tax Provision (1,378) (583)
----------- -----------
NET INCOME (LOSS) $ (74,234) $ (134,432)
- ----------------- =========== ==========
Number of Shares Outstanding 42,432,213 40,918,757
Earnings Per Share from Operations $ (.0016) $ (.0028)
========== ==========
Earnings Per Share - Net Income (Loss) $ (.0017) $ (.0033)
========== ==========
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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MARCH 31, 1996
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STATEMENT OF CASH FLOWS
-----------------------
(Unaudited)
THREE MONTHS ENDED
3/31/96 3/31/95
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Cash Received from Customers $ 498,956 $ 440,600
Cash Paid to Suppliers & Employees (482,046) (451,167)
Interest & Dividends Received 207 350
Interest Paid (3,237) (8,966)
Income Taxes Paid (3,595) (4,215)
------------ ------------
Net Cash Provided (Used) by
Operating Activities 10,285 (23,398)
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Cash Purchases of Equipment (16,784) (2,208)
Cash Purchases of Intangible &
Other Assets (3,745) (481)
Cash Provided by Surrender of Life Insurance 8,957 0
------------ -----------
Net Cash Provided (Used) in Investing
Activities (11,572) (2,689)
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Proceeds from Sale of Stock &
Warrants 27,000 26,998
Repayment of Long-Term Debt &
Capital Lease Obligations (16,044) (6,274)
------------ -----------
Net Cash Provided (Used) by Financing
Activities 10,956 20,724
------------ -----------
NET INCREASE (DECREASE) IN CASH 9,669 (5,363)
CASH at Beginning of Year 11,025 39,418
------------ -----------
CASH at End of Year $ 20,694 $ 34,055
============ ===========
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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MARCH 31, 1996
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STATEMENT OF CASH FLOWS
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(Unaudited)
THREE MONTHS ENDED
3/31/96 3/31/95
------- -------
RECONCILIATION OF NET INCOME TO NET
CASH FROM OPERATING ACTIVITIES:
- -------------------------------
NET INCOME (LOSS) $ (74,234) $ (134,432)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation 70,618 73,833
Amortization 299 299
Consulting Fees Paid in Stock 0 10,464
Bad Debts (1,374) 295
(Increase) Decrease in:
Trade Accounts Receivable (39,522) (2,953)
Inventories 604 3,964
Prepaid Expenses & Deposits 19,329 17,984
Increase (Decrease) in:
Accounts Payable 40,694 (3,362)
Withholding Taxes Payable (856) 183
Accrued Expenses (5,273) 10,327
--------- ------------
$ 10,285 $ (23,398)
========= ============
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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MARCH 31, 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
three months ended March 31, 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:
3/31/96 12/31/95
------- --------
Shipping Supplies $ 4,598 $ 4,770
Reagents 8,167 8,599
----- -----
$ 12,765 $ 13,369
======== ========
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10-Q
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MARCH 31, 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 - THREE MONTHS ENDED MARCH 31, 1996
AS COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1995
Total revenues for the three months ended March 31, 1996 increased to $485,212
as compared to $443,553 for the same period in 1995, an increase of 9%. 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 three months ended March 31, 1996 decreased to 70% of
revenues from 76% of revenues for the same period in 1995. Such decreases are
due to the changes in the mix and constitution of the waste streams treated by
the Company and the related costs of their treatment. Along with this change,
the decrease is also reflective of management's aggressive cost reduction plans.
General and administrative expenses decreased by 2% to $213,987 for the first
quarter of 1996 from $217,684 for 1995. This decrease is due to the previously
implemented steps taken by management to reduce costs.
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 -$74,234 for the first quarter of 1996, a 45%
decrease from the net loss of -$134,432 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, but warrants are currently being exercised. As of March 31, 1996
$107,000 was raised in conjunction with the Class A warrants.
-9-
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KBF POLLUTION MANAGEMENT, INC.
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FORM 10-Q
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MARCH 31, 1996
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PART II - OTHER INFORMATION
Item VI - Exhibits and Reports on Form 8-K
Exhibit No. Description
---------- -----------
27 Financial Data Schedule
Reports on Form 8-K for the three months ended March 31, 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.
Dated: May 11, 1996 /s/ LARRY KREISLER
----------------------------
LARRY KREISLER - PRESIDENT
Dated: May 11, 1996 /s/ KATHI KREISLER
----------------------------
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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MARCH 31, 1996
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FINANCIAL DATA SCHEDULE
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This schedule contains summary financial information extracted from the
unaudited financial statements dated March 31, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 48,194
<SECURITIES> 0
<RECEIVABLES> 252,827
<ALLOWANCES> (25,283)
<INVENTORY> 12,765
<CURRENT-ASSETS> 29,361
<PP&E> 3,156,451
<DEPRECIATION> (1,689,328)
<TOTAL-ASSETS> 1,912,233
<CURRENT-LIABILITIES> 559,821
<BONDS> 0
0
0
<COMMON> 425
<OTHER-SE> 1,086,020
<TOTAL-LIABILITY-AND-EQUITY> 1,912,233
<SALES> 485,212
<TOTAL-REVENUES> 485,212
<CGS> 339,507
<TOTAL-COSTS> 339,507
<OTHER-EXPENSES> 215,041
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,520
<INCOME-PRETAX> (72,856)
<INCOME-TAX> 1,378
<INCOME-CONTINUING> (74,234)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74,234)
<EPS-PRIMARY> (.002)
<EPS-DILUTED> (.002)
</TABLE>
