<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 ACT OF 1934
For the quarterly period ended December 31, 1998
Commission File number 0-15654
TRANSPIRATOR TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
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 08902
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(Address of Principal Executive Offices)
732-246-5900
- --------------------------------------------------------------------------------
(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 January 15, 1998 the Registrant had 2,525,950 shares of common stock,
$.0001 par value, outstanding.
Transitional Small Business Disclosure format: ( ) Yes (X) No
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INDEX
Part I: Financial Information
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
Item 1. Financial Statements:
Balance Sheets as of December 31, 1998 (Unaudited) 3
Statements of Operations, Three Months Ended
December 31, 1998 (Unaudited) and Three Months
Ended December 31, 1997 (Unaudited) 4
Statements of Operations, Nine Months Ended
December 31, 1998 (Unaudited) and Nine Months
Ended December 31, 1997 (Unaudited) 5
Statements of Cash Flows. Three Months Ended
December 31, 1998 (Unaudited) and Three Months
Ended December 31, 1997 (Unaudited) 6
Notes to Financial Statements 7
Item 2. Management's Plan of Operation 8
Part II: Other Information 9
Item 1. Legal Proceedings 9
Item 2. Change in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote
of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
</TABLE>
2
<PAGE> 3
TRANSPIRATOR TECHNOLOGIES, INC.
BALANCE SHEETS
AS OF
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1998
----------- -----------
UNAUDITED
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 20,701 $ 46,615
Receivables 20,833
Prepaid Expenses 4,666
----------- -----------
Total Current Assets: 46,200 46,615
Patents, Net 13,144 17,143
----------- -----------
Total Assets $ 59,344 $ 63,758
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses $ 6,740 $ 5,122
Deferred royalty income 2,083
Notes payable related parties 29,750 29,750
----------- -----------
Total Current Liabilities 36,490 36,955
----------- -----------
Related party transactions (notes 2 and 3)
Stockholders' Equity:
Preferred stock, $.10 par value - 1,000,000 shares
authorized, none outstanding
Common Stock, $.10 par value - 3,500,000 shares authorized,
2,625,950 issued and outstanding in 1998 26,260 26,260
Additional paid-in capital 3,569,097 3,569,097
Retained Earnings (3,572,503) (3,568,554)
----------- -----------
Total Stockholders Equity 22,854 26,803
----------- -----------
Total Liabilities and Stockholders Equity $ 59,344 $ 63,758
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
TRANSPIRATOR TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
----------------------------
1998 1997
----------- ----------
<S> <C> <C>
Revenue $ 12,500 $ 6,249
General and administrative expenses 14,260 714
----------- ----------
Income (loss) from operations (1,760) 5,535
Interest income (1,215) 213
----------- ----------
Net earnings (loss) $ (2,975) $ 5,748
=========== ==========
Basic and diluted earnings (loss) loss per share $ (0.001) $ 0.002
=========== ==========
Weighted average number of shares outstanding for
basic and diluted earnings per share 2,625,950 2,525,950
=========== ==========
</TABLE>
The accompanying notes are an intergral part of these financial statements.
4
<PAGE> 5
TRANSPIRATOR TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
----------------------------
1998 1997
----------- ----------
<S> <C> <C>
Revenue $ 35,416 $ 16,665
General and administrative expenses 38,287 2,142
----------- ----------
Income (loss) from operations (2,871) 14,523
Interest-net (1,078) 639
----------- ----------
Net earnings (loss) $ (3,949) $ 15,162
=========== ==========
Basic and diluted earnings (loss) loss per share $ (0.002) $ 0.006
=========== ==========
Weighted average number of shares outstanding for
basic and diluted earnings per share 2,625,950 2,525,950
=========== ==========
</TABLE>
The accompanying notes are an intergral part of these financial statements.
5
<PAGE> 6
TRANSPIRATOR TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
Cash Flows from operating activities:
Net earnings (loss) $ (3,949) $ 15,162
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:
Amortization 3,999 2,142
Increase in accounts receivable (20,833) (16,665)
Increase in prepaid expenses (4,666) 0
Decrease in accounts payable 1,618
Decrease in deferred royalty income (2,083)
Net cash provided by (used in)
operations -------- --------
(21,965) (14,523)
-------- --------
Net increase (decrease) in cash (25,914) 639
Cash at beginning of the year 46,615 30,831
-------- --------
Cash at December 31, 1998 and 1997 $ 20,701 $ 31,470
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE> 7
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 necessary 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.
7
<PAGE> 8
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 DECEMBER 31, 1998 VERSUS THREE MONTHS ENDED DECEMBER 31, 1997
Revenues for the three months ended December 31, 1998 amounted to $12,500 and
represented an accrual of three months minimum 1998 royalties of $50,000. This
compares to $6,249 or three months accrual of the 1997 minimum royalty of
$25,000. 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 were $14,260 for the three months ended
December 31, 1998 versus $714 for the same period in 1997. The increase in
expenses was a result 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.
NINE MONTHS ENDED DECEMBER 31, 1998 VERSUS NINE MONTHS ENDED DECEMBER 31, 1997
Revenues for the nine months ended December 31, 1998 amounted to $35,416 and
represented an accrual of eight months minimum 1998 royalties of $50,000 and 1
of the 1997 minimum royalty of $25,000. This compares to $16,665 or eight months
accrual of the 1997 minimum royalty of $25,000.
General and administrative expenses were $38,287 for the nine months ended
December 31, 1998 versus $2,142 for the same period in 1997. The increase in
expenses was a result 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 $25,914 for the nine months ended December 31,
1998 was the result of expenses incurred for legal, printing 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 $12,000 per year. 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.
8
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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
27 Financial Data Schedule (For SEC use only).
9
<PAGE> 10
Signaturers
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.
By: /s Raymond J. Romano
------------------------
Date: February 12, 1999 Raymond J. Romano
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF TRANSPIRATOR TECHNOLOGIES FOR THE NINE MONTHS ENDED
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 20,701
<SECURITIES> 0
<RECEIVABLES> 20,833
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 46,200
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 59,344
<CURRENT-LIABILITIES> 36,955
<BONDS> 0
0
0
<COMMON> 26,260
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 59,344
<SALES> 12,500
<TOTAL-REVENUES> 12,500
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,260
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,215
<INCOME-PRETAX> (2,975)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,975)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,975)
<EPS-PRIMARY> (.001)
<EPS-DILUTED> (.001)
</TABLE>
