<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
Commission File Number 0-15654
TRANSPIRATOR TECHNOLOGIES, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
DELAWARE 22-2789408
- --------------------------------- ----------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
850 - 870 U.S. HWY #1, NORTH BRUNSWICK, NEW JERSEY 18902
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(Address of Principal Executive Offices)
732-246-5900
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(Registrants Telephone Number Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the 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 August 15, 1998, the Registrant had 2,525,950 shares of common stock,
$.0001 par value, outstanding.
Transitional Small Business Disclosure format: ( ) Yes ( X ) No
<PAGE> 2
INDEX
Part I: Financial Information
<TABLE>
<CAPTION>
Page No.
<S> <C>
Item 1. Financial Statements:
Balance Sheets as of June 30, 1998 (Unaudited) ...................... 3
Statements of Operations, Three Months Ended
June 30, 1998 (Unaudited) and Three Months
Ended June 30, 1997 (Unaudited) ................................... 4
Statement of Cash Flows, Three Months Ended
June 30, 1998 (Unaudited) and Three Months
Ended June 30, 1997 (Unaudited) ................................... 5
Notes to Financial Statements ....................................... 6
Item 2. Management's Plan of Operation ............................. 7
Part II: Other Information ......................................... 8
Item 1. Legal Proceedings................................... 8
Item 2. Change in Securities ............................... 8
Item 3. Defaults Upon Senior Securities .................... 8
Item 4. Submission of Matters to a Vote
of Security Holders ............................ 8
Item 5. Other Information .................................. 8
Item 6. Exhibits and Reports on Form 8-K ................... 8
Signatures ................................................................... 9
</TABLE>
2
<PAGE> 3
TRANSPIRATOR TECHNOLOGIES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1998 1998
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 18,724 $ 46,615
Receivables 8,333
Prepaid Expenses 16,000
----------- ------------
Total Current Assets: 43,057 46,615
Patents, net 15,810 17,143
----------- ------------
TOTAL ASSETS $ 58,867 $ 63,758
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses 3,885 5,122
Deferred royalty income 2,083
Notes payable-related parties 29,750 29,750
----------- ------------
Total current liabilities 33,635 36,955
Related party transactions (notes 2 and 3)
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.10 par value - 1,000,000
shares authorized, none outstanding
Common stock, $.01 par value, 3,500,000 shares
authorized; 2,625,950 and 2,525,950 shares
issued and outstanding in 1998 and 1997 26,260 26,260
Additional paid-in capital 3,569,097 3,569,097
Accumulated deficit (3,570,125) (3,568,554)
----------- ------------
Total stockholders' equity (deficit) 25,232 26,803
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 58,867 $ 63,758
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
TRANSPIRATOR TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-----------------------
1998 1997
----------- ----------
<S> <C> <C>
REVENUE $ 10,416 $ 4,167
General and administrative expenses 12,124 714
---------- ----------
Income (loss) from operations $ (1,708) $ 3,453
Interest income 137 213
---------- ----------
Net earnings (loss) $ (1,571) $ 3,666
========== ==========
Basic and diluted earnings (loss) per share $ (0.001) $ 0.001
========== ==========
Weighted average number of shares outstanding for
basic and diluted earnings (loss) per share 2,625,950 2,525,950
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
TRANSPIRATOR TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (1,571) $ 3,666
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:
Amortization 1,333 714
Increase in accounts receivable (8,333)
Increase in prepaid expenses (16,000)
Decrease in accounts payable (1,237)
Decrease in deferred royalty income (2,083) (4,167)
---------- ----------
Net cash provided by (used in)
operations (27,891) 213
Net increase in cash (27,891) 213
Cash at the beginning of the year 46,615 30,831
Cash at end of year $ 18,724 $ 31,044
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
TRANSPIRATOR TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The unaudited condensed financial statements have been prepared from the books
and records of Transpirator Technologies, Inc. (the Company) in accordance with
generally accepted accounting principles for interim financial information.
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 and
recurring adjustments) considered necessary for a fair presentation have been
included. It is suggested that the condensed financial statements be read in
conjunction with the audited financial statements and notes thereto for the
year ended March 31, 1998 included in the company's annual report on Form 10-K.
Interim results are not necessarily indicative of the full year.
NOTE 2: EARNINGS (LOSS) PER COMMON SHARE
Earnings (Loss) per common share is based upon the weighted average number of
common shares and common equivalent shares outstanding during each period. When
stock options and warrants are dilutive, they are included as share equivalents
using the treasury stock method.
6
<PAGE> 7
TRANSPIRATOR TECHNOLOGIES, INC.
ITEM 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company has been dormant since 1990 and there is no active trading in the
Company's common stock on a recognized exchange.
THREE MONTHS ENDED JUNE 30, 1998 VERSUS THREE MONTHS ENDED JUNE 30, 1997
Revenues for the three months ended June 30, 1998 include an accrual of two
months minimum 1998 royalties of $50,000 plus one month of the 1997 minimum
royalty income of $25,000 versus only two months of royalty income in 1997. The
royalty agreement signed in May of 1997 provides for minimum royalties for
three years from the signing of the agreement in the amounts of $25,000,
$50,000 and $100,000 respectively. The agreement provides for royalties from
the sale of products developed from use and further enhancements of the
patents. The royalty agreement also provides an option for the patents to be
purchased for $2,000,000.
General and administrative expenses increased $11,410 for the three months
ended June 30, 1998 versus June 30, 1997 because of expenses related to the
filing of the annual report on Form 10-K. It is expected that this trend will
continue for the balance of the year.
STATEMENT OF CASH FLOWS
Net cash used in operations of $27,891 for the three months ended June 30, 1998
was the result of expenses incurred for legal and accounting services to bring
the Company's records current. The expenses are being amortized equally over
the four quarters. The net increase in cash in 1997 was the result of interest
income.
LIQUIDITY
The Company's annual and quarterly operating results will be affected by a
number of factors, the most important of which will be the realization of the
minimum royalties as outlined above. Additionally, future expenses relating to
legal and accounting expenses are expected to decline since the Company has
been brought current in its filings with the SEC. Additionally, the Company has
employment agreements with two officers for salaries of $1,000 per month
beginning in August, 1998. Therefore it is expected that the Company will have
increased liquidity from royalty payments in excess of operating expenses.
NET OPERATING LOSS CARRYFORWARDS
The Company has net operating loss carryforwards for Federal Income Tax
purposes of approximately $3,600,000, which begin to expire in the year 2003.
The ability of the company to utilize the NOL is not probable at June 30, 1998
and therefore, no benefit has been recorded.
7
<PAGE> 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
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
Form 12(b)-25
8
<PAGE> 9
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.
TRANSPIRATOR TECHNOLOGIES, INC.
Date: August 19, 1998 By: /s/ Raymond J. Romano
-----------------------------
Raymond J. Romano
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 18,724
<SECURITIES> 0
<RECEIVABLES> 8,333
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 43,057
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 58,867
<CURRENT-LIABILITIES> 33,635
<BONDS> 0
0
0
<COMMON> 26,260
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 58,867
<SALES> 0
<TOTAL-REVENUES> 10,416
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,571)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,571)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,571)
<EPS-PRIMARY> (.001)
<EPS-DILUTED> (.001)
</TABLE>
