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: September 30,1997 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 September 30, 1997:
Common stock, $.00001 par value - 43,743,565 shares outstanding.
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10-Q
September 30, 1997
INDEX
PART I - FINANCIAL INFORMATION
Item I - FINANCIAL STATEMENTS (Unaudited)
Balance Sheets - September 30, 1997 and December 31, 1996 3-4
Statement of Income - Nine Months Ended September 30, 1997 and 1996 5
Three Months Ended September 30, 1997 and 1996 6
Statement of Cash Flows - Nine Months Ended September 30, 1997 and 1996 7-8
Notes to Financial Statements 9
Item II - MANAGEMENT'S DISCUSSION AND ANALYSIS 10-11
PART II - OTHER INFORMATION 12
SIGNATURES 12
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1997
BALANCE SHEET
ASSETS
9/30/97 12/31/96
Unaudited Audited
CURRENT ASSETS:
Cash $ 27,572 $ 19,174
Cash - Restricted 27,500 27,500
Trade Accounts Receivable (Net of
allowance for doubtful accounts
of $25,009 & $29,563) 225,087 266,065
Other Receivables 84,300 69,912
Inventories 15,440 17,779
Prepaid Expendable Supplies 14,246 18,993
Other Prepaid Expenses 9,214 12,752
Total Current Assets 403,359 432,175
FIXED ASSETS:
Property, Equipment & Improvements
(Net of Accumulated Depreciation &
Amortization of $1,709,201 & $1,467,315) 871,990 1,027,102
Leased Property under Capital Leases
(Amortization of $370,437 & $345,141) 120,449 141,758
Non Expendable Stock, Parts & Drums 139,368 139,368
Total Fixed Assets, Net 1,131,807 1,308,228
OTHER ASSETS:
Security Deposits 11,906 12,406
Patent (Net of Accumulated Amortization
of $10,865 & $9,968) 9,464 10,361
Capitalized Permit Costs 95,580 95,580
Total Other Assets 116,950 118,347
TOTAL ASSETS $1,652,116 $1,858,750
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KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1997
BALANCE SHEET
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
9/30/97 12/31/96
Unaudited Audited
CURRENT LIABILITIES:
Accounts Payable - Trade $ 478,248 $ 491,156
Accrued Expenses 54,026 157,270
Taxes Withheld & Accrued 13,558 13,127
Current Portion of Long - Term Debt 60,000 81,637
Current Portion of Capital Lease
Obligations 75,531 77,773
Total Current Liabilities 681,363 820,963
LONG-TERM LIABILITIES:
Long - Term Lease Obligations 213,907 228,885
Total Long - Term Liabilities 213,907 228,885
STOCKHOLDERS' EQUITY (DEFICIT) :
Com. Stock par value .00001 per sh.
Authorized - 500,000,000 shares
Issued & Outstanding
September 30, 1997 - 43,743,565 438 434
Dec. 31, 1996 - 43,405,546
Capital in Excess of Par Value 4,448,296 4,344,671
Retained Earnings (Deficit) (3,691,888) (3,536,203)
Total Stockholders' Equity (Deficit) 756,846 808,902
TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY (DEFICIT) $ 1,652,116 $ 1,858,750
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1997
STATEMENT OF INCOME
(Unaudited)
NINE MONTHS ENDED
9/30/97 9/30/96
REVENUES $1,443,271 $1,453,899
LESS: Cost of Operations 992,172 1,031,909
Gross Profit 451,099 421,990
LESS: General & Admin. Expenses 580,745 667,613
Advertising 435 5,769
Operating Income (Loss) (130,081) (251,392)
OTHER INCOME (EXPENSES):
Interest Income 750 786
Interest Expense (23,949) (9,566)
Income Tax Provision (2,404) (2,608)
NET INCOME (LOSS) $ (155,684) $ (262,780)
Number of Shares Outstanding 43,743,565 43,405,546
Earnings Per Share from Operations $ (.0030) $ (.0058)
Earnings Per Share - Net Income (Loss) $ (.0036) $ (.0060)
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KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1997
STATEMENT OF INCOME
(Unaudited)
THREE MONTHS ENDED
9/30/97 9/30/96
REVENUES $ 508,581 $ 523,421
LESS: Cost of Operations 318,280 365,090
Gross Profit 190,301 158,331
LESS: General & Admin. Expenses 167,244 245,209
Advertising 907 3,346
Operating Income (Loss) 22,150 (90,224)
OTHER INCOME (EXPENSES):
Interest Income 250 291
Interest Expense (7,937) (3,088)
Income Tax Provision (730) (600)
NET INCOME (LOSS) $ 13,733 $ (93,621)
Number of Shares Outstanding 43,743,565 43,405,546
Earnings Per Share from Operations $ .0005 $ (.0020)
Earnings Per Share - Net Income (Loss) $ .0003 $ (.0022)
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1997
STATEMENT OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED
9/30/97 9/30/96
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received from Customers $ 1,488,803 $ 1,351,532
Cash Paid to Suppliers & Employees (1,521,646) (1,320,133)
Interest & Dividends Received 750 786
Interest Paid (7,587) (8,151)
Income Taxes Paid (604) (3,595)
Net Cash Provided (Used) by Operating
Activities (40,284) 20,439
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash Purchases of Equipment (758) (18,148)
Cash Purchases of Intangible & Other
Assets 0 (3,925)
Cash Provided by Surrender of Life Insurance 0 8,957
Net Cash Provided (Used) in Investing
Activities (758) (13,116)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Sale of Stock & Warrants 93,298 27,000
Proceeds from Debt 0 45,000
Payment of Underwriting Costs (5,000) (35,315)
Repayment of Long-Term Debt &
Capital Lease Obligations (38,858) (39,647)
Net Cash Provided (Used) by Financing
Activities 49,440 (2,962)
NET INCREASE (DECREASE) IN CASH 8,398 4,361
CASH at Beginning of Period 19,174 11,025
CASH at End of Period $ 27,572 $ 15,386
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1997
STATEMENT OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED
9/30/97 9/30/96
RECONCILIATION OF NET INCOME TO NET
CASH FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ (155,684) $ (262,780)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation 177,180 211,855
Amortization 897 897
Consulting & Professional Fees Paid
in Stock 15,330 140,000
Bad Debts (4,554) 4,910
(Increase) Decrease in:
Trade Accounts Receivable 45,532 (102,368)
Inventories 2,339 (3,404)
Prepaid Expenses & Deposits 8,785 14,888
Other Receivables (14,388) (30,000)
Increase (Decrease) in:
Accounts Payable (12,908) 50,652
Withholding Taxes Payable 431 3,619
Accrued Expenses (103,244) (7,830)
$ (40,284) $ 20,439
Supplemental schedule of non-cash
investing and financing activities:
Common Stock and Options issued
for the payment of accounts payable. $ 15,330 $ 140,000
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10-Q
SEPTEMBER 30, 1997
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 nine months ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997. 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, 1996.
NOTE 2 - INVENTORIES
Inventories are comprised of the following major categories:
9/30/97 12/31/96
Shipping Supplies $ 6,170 $ 7,821
Reagents 9,270 9,958
$ 15,440 $ 17,779
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10-Q
SEPTEMBER 30, 1997
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 - NINE MONTHS ENDED SEPTEMBER 30, 1997
AS COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996
Total revenues for the nine months ended September 30, 1997 decreased by less
than 1% to $1,443,271 as compared to $1,453,899 for the same period in 1996.
While sales appear virtually unchanged, certain significant low profit
revenues, which could only be serviced at a Long Island facility, have been
replaced by higher profit revenues, which will be maintained as the Company
moves to it's new facility.
Cost of sales for the nine months ended September 30, 1997 decreased to 69%
of revenues from 71% of revenues for the same period in 1996. This decrease is
due to the ongoing steps taken by management to reduce costs.
General and administrative expenses decreased by 13% to $580,745 for the nine
months ended September 30, 1997 from $661,613 for 1996. This decrease is due
to management's continued efforts to reduce costs. More specifically, cost
reductions can be seen in the areas of insurance, utilities and payroll.
The Company incurred a net loss of -$155,684 for the first nine months of
1997, a 41% decrease from the net loss of -$262,780 for the same period in
1996, due to the decrease in costs mentioned above.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that current operations will provide adequate cash flow
to meet current obligations. The Company had a positive cash flow of $8,398 at
September 30,1997. The positive cash flow while operating at a net loss of
- -$155,684, is indicative of the substantial excess by which depreciation
charges exceed principle payment for long term debt, stock issued for
services, and increases in accounts payable and accrued expenses.
The Company is continuing to take steps, which were started in March 1994 to
reduce overhead expenses and direct costs in an effort to further improve cash
flow from operations. While this effort was interrupted in 1996, management
believes in 1997 overhead costs will continue to reflect these reductions.
In conjunction with the stipulation entered into with Apple Bank (1996 Financial
Statement Exhibit A, Note 7) the Company is moving to a more advantageous
location (New Jersey). Management believes that this new location will result
in additional business opportunities. In conjunction with this endeavor, the
Company expects to incur material capital expenditures and related costs.
Management is in the process of raising additional capital for this
occurrence. There is no assurance that such funds will be available for either
long term or short term, or if available, on terms which will be acceptable to
the Company.
Total revenues for the three months ended September 30, decreased to $508,581
as compared to $523,421 for the same period in 1996, a decrease of 3%. While
sales appear virtually unchanged, certain significant low profit revenues,
which could only be serviced at a Long Island facility, have been replaced by
higher profit revenues, which will be maintained as the Company moves to it's
new facility.
Cost of sales for the three months ended September 30, 1997 decreased to 63%
of revenues from 70% of revenues for the same period in 1996. The decrease
is due to the ongoing steps taken by management to reduce costs.
General and administrative expenses decreased by 32% to $ 167,244 for the
three months ended September 30, 1997 from $245,209 for 1996. This decrease
is also due to management's continued efforts to minimize costs.
The Company incurred a net profit of $13,733 for the third quarter of 1997, a
115% increase from the net loss of -$93,621 for the same period in 1996, due
to the decrease in costs mentioned above.
KBF POLLUTION MANAGEMENT, INC.
FORM 10-Q
SEPTEMBER 30, 1997
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 - Changes in Registrant's Certifying Accountant
(Filed March 7, 1997)
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: Nov. 12, 1997 LARRY KREISLER
LARRY KREISLER - PRESIDENT
Dated: Nov. 12, 1997 KATHI KREISLER
KATHI KREISLER - SECRETARY /
TREASURER
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements dated September 30, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 55,072
<SECURITIES> 0
<RECEIVABLES> 334,396
<ALLOWANCES> (25,009)
<INVENTORY> 15,440
<CURRENT-ASSETS> 403,359
<PP&E> 2,581,191
<DEPRECIATION> (1,709,201)
<TOTAL-ASSETS> 1,652,116
<CURRENT-LIABILITIES> 681,363
<BONDS> 0
0
0
<COMMON> 438
<OTHER-SE> 756,408
<TOTAL-LIABILITY-AND-EQUITY> 1,652,116
<SALES> 1,443,271
<TOTAL-REVENUES> 1,443,271
<CGS> 992,172
<TOTAL-COSTS> 992,172
<OTHER-EXPENSES> 581,180
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,949
<INCOME-PRETAX> (153,280)
<INCOME-TAX> 2,404
<INCOME-CONTINUING> (155,684)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (155,684)
<EPS-PRIMARY> (.004)
<EPS-DILUTED> (.004)
</TABLE>
