UNITED STATES
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 Quarter ended June 30, 1998Commission File No. 133-16736
Gulfstar Industries, Inc. (formerly TIER Environmental Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware 23-2442288
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
20505 U.S. 19N. #12-283, Clearwater, FL 34624
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (813) 441-4442
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 shorter period that the registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes: X No:
Transitional Small Business Disclosure Format:
Yes: X No:
The number of shares outstanding of each of the registrant's classes of common
stock as of June 30, 1998 is 9,106,365 shares all of one class of $.032 par
value common stock and 75,000 shares of convertible preferred stock with a
$10.00 par value.
<PAGE>
MEDIA VISION PRODUCTIONS, INC.
(FORMERLY GULFSTAR INDUSTRIES, INC. AND SUBSIDIARIES)
(FORMERLY TIER ENVIRONMENTAL SERVICES, INC.)
INDEX
PAGE
PART I FINANCIAL INFORMATION
Consolidated Balance Sheet - June 30, 1998 1
Consolidated Statements of Operations - Nine Months
Ended June 30, 1998 and Nine Months Ended
June 30, 1997 2
Consolidated Statement of Changes in Stockholders Equity
for Year and the Nine Months Ended June 30, 1998 3-4
Statement of Cash Flows - Nine Months Ended
June 30, 1998 and Nine Months Ended
June 30, 1997 5-6
Notes to Financial Statements 7-8
Management's Discussion and Analysis of financial
conditions and results of operations 9-10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of
Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits on Reports on Form 8-K 11
Signature Page 12
<PAGE>
MEDIA VISION PRODUCTIONS, INC.
FORMERLY GULFSTAR INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
Assets
Current Assets
Cash $ 32
Total Current Assets 32
Total Assets $ 32
Liabilities and Stockholders' Equity
Current Liabilities
Unsecured creditors of subsidiary $ 239,885
Class III Creditors 53,014
Class IV Creditors 812,649
Accrued administrative expenses 25,145
Total Current Liabilities 1,130,693
Stockholders' Equity
Common stock, par value $.032 per share; authorized
10,000,000 shares, issued and outstanding 9,106,365 291,404
Convertible preferred stock, authorized 1,000,000 shares,
par value $10.00; 75,000 shares issued and outstanding
(convertible and subject to reorganization) 750,000
Additional paid in capital 3,166,718
Retained deficit, (October 1, 1993) (59,033)
Retained deficit, subsequent to quasi-reorganization (5,279,750)
Total Stockholders' Deficit (1,130,661)
Total Liabilities and Stockholders' Deficit $ 32
See notes to the consolidated financial statements.
1
<PAGE>
MEDIA VISION PRODUCTIONS, INC.
FORMERLY GULFSTAR INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the
Nine Months Ended
June 30,
1998 1997
(Unaudited)
Contract Revenues Earned $ - $ 967,260
Other Income - -
Total Revenue - 967,260
Cost of contract revenues earned - 823,028
Gross Profit - 144,232
Operating Expenses
Selling and administrative expenses 25,145 174,383
Depreciation and amortization - 28,896
Interest expense - 32,386
Provision for bad debts - 2,000
Loss from operations (25,145) (93,433)
Loss from discontinued operations of Florida
environmental subsidiary including $1,101,929
of impairment of goodwill, $38,946 of bad
debts, $16,403 abandonment of fixed assets,
$196,132 cancellation of indebtedness income
and $213,961 loss from operations during the
phase out period - (1,136,162)
Loss from discontinued operations of Texas
engineering consulting subsidiary including
$492,590 of impairment of goodwill, $113,359
of bad debts, $1,151,092 abandonment of data
base and fixed assets, $28,997 depreciation
and amortization, $1,556,981 cancellation of
indebtedness income and $144,576 loss from
operations during the phase out period - (231,277)
Income (loss) before taxes (25,145) (1,460,872)
Benefit from (provision for) income taxes - -
Net (Loss) $ (25,145) $(1,460,872)
Income (loss) per share $ (.003) $ (.159)
Weighted average shares outstanding 9,181,365 9,181,365
See notes to the consolidated financial statements.
2
<PAGE>
MEDIA VISION PRODUCTIONS, INC.
FORMERLY GULFSTAR INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE
PERIOD FROM OCTOBER 1, 1997 THROUGH JUNE 30, 1998
Common Stock Preferred Stock
Shares Amount Shares Amount
Balance, October 1, 1997 9,509,123 $ 304,292 75,000 $ 750,000
Recision of contingent common
stock from prior acquisition (357,133) (11,428) - -
(Unaudited)
Recision of common stock for
services (Unaudited) (45,625) (1,460) - -
Net loss for year ended
September 30, 1997
(Unaudited) - - - -
Balance, September 30, 1997
(Unaudited) 9,106,365 291,404 75,000 750,000
Net income for the nine months
September 30, 1998 - - - -
Balance, June 30, 1998 9,106,365$ 291,404 $ 75,000 $ 750,000
See notes to the consolidated financial statements.
3
<PAGE>
Retained
Deficit
Subsequent
to Quasi-
Quasi- Reorganization
Additional Reorganization and
Paid In (10-1-93) Reorganization
Capital Adjustment (of 7-22-97 ) Total
$3,314,934 $ (59,033) $(3,793,733) $ 516,460
(131,426) - - (142,854)
(16,790) - - (18,250)
- - (1,460,872) (1,460,872)
3,166,718 (59,033) (5,254,605) (1,105,516)
- - 25,145 25,145
$ (318,436) $ (59,033) $(5,279,750) $(1,130,661)
See notes to the consolidated financial statements.
4
<PAGE>
MEDIA VISION PRODUCTIONS, INC.
FORMERLY GULFSTAR INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the
Nine Months Ended
June 30,
1998 1997
(Unaudited)
OPERATING ACTIVITIES
Cash Flows From (Used In) Operating Activities:
Net loss $ (25,145) $ (93,433)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization - 28,896
Expense reduction via recision of common stock - (18,250)
Provision for bad debts - 2,000
Decrease (increase) in accounts receivable - (60,716)
Increase in accounts payable and accrued
expenses 25,048 160,090
Increase in accrued interest - 32,386
Net cash from (used in) operating activities (97) 50,973
DISCONTINUED OPERATING ACTIVITIES:
Cash Flows (Used In) Discontinued Operating
Activities:
Net loss - (1,367,439)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization - 28,997
Provision for bad debts - 152,305
Loss on assets disposed - 1,167,495
Impairment losses - 1,594,519
Cancellation of indebtedness - 1,616,552
Decrease (increase) in contracts in progress - 1,493,814
Decrease (increase) in accounts receivable - 720,491
(Increase) decrease in other receivables and
escrow deposits - 304,212
(Decrease) increase in contracts payable - (1,493,814)
(Decrease) increase in accounts payable and
accrued expenses - (1,037,529)
Net cash (used in) discontinued operating
activities - (52,501)
Net (decrease) in cash and cash equivalents (97) (1,528)
Cash and cash equivalents, beginning of year 129 1,657
Cash and cash equivalents, end of year $ 32 $ 129
See notes to the consolidated financial statements.
5
<PAGE>
MEDIA VISION PRODUCTIONS, INC.
FORMERLY GULFSTAR INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(For nine months ended June 30, 1998)
A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-QSB 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 a fair presentation have been included.
Operating results for the nine month period ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the year
ended September 30, 1998. Earnings per share are based on weighted
average shares outstanding for all periods presented giving effect to
75,000 convertible preferred shares treated as a common stock equivalent.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Registrant Company and Subsidiaries'
annual report on form 10-KSB for the year ended September 30, 1997.
B. PURCHASE OF AND DISCONTINUATION OF SUBSIDIARIES
Acquisition and Discontinuation (during the quarter ending December 31,
1996) of Tier Environmental Services, Inc.
On September 26, 1994 Gulfstar Industries, Inc. acquired all of the common
stock of Tier Environmental Services, Inc. through an acquisition and
redemption by Tier Environmental Services, Inc. of its common stock
totaling approximately $2,982,400 in value, exclusive of acquisition
costs. Tier's principal business is to provide environmental remediation
services in the State of Florida, at petroleum contaminated sites
designated by the State of Florida as sites subject to authorized
reimbursement under the Inland Protective Trust Fund. The acquisition was
accounted for as a purchase in accordance with Accounting Principles Board
Opinion No. 16. The agreement also called for the additional issuance of
Gulfstar stock to Tier shareholders if the Company spun off a former
subsidiary, which in turn the Company did on September 25, 1995. As such,
the Company was required to issue an additional 357,133 shares which were
valued at $142,855. The excess (approximately $2,845,220) of the total
acquisition cost over the recorded value of assets acquired was allocated
to goodwill and is being amortized over 20 years. The statement of
operations includes Tier's results of operations for the six months ended
March 31, 1996, and for the six month period ended March 31, 1997, the
Tier operating results were included in discontinued operations through
the quarter ending December 31, 1996, which was when the company recorded
the discontinuation of this subsidiary.
6
<PAGE>
MEDIA VISION PRODUCTIONS, INC.
FORMERLY GULFSTAR INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(For nine months ended June 30, 1998)
B. PURCHASE OF AND DISCONTINUATION OF SUBSIDIARIES - (Continued)
Acquisition and Discontinuation (during the quarter ending March 31,
1997) of Plant Technical Services, Inc.
Plant Technical Services, Inc. was engaged in the professional
engineering business, providing consulting, design, start-up support,
operation, maintenance, contract personnel and construction management
service to technical industries throughout the United States.
On September 29, 1995 Gulfstar acquired all of the common stock of Plant
Technical Services, Inc. (PTS) through an acquisition and redemption by
PTS of its stock with the issuance of 750,000 shares of Gulfstar common
stock, 75,000 shares of Gulfstar $10.00 preferred stock and cash and
notes of $1,220,000, exclusive of acquisition costs. The acquisition
was accounted for as a purchase in accordance with Accounting Principles
Board Opinion No. 16. The excess (approximately $1,278,000) of the
total acquisition cost over the recorded value of assets acquired was
allocated $500,000 to a proprietary database PTS developed and was
expected to be amortized over seven years and $571,144 to goodwill which
was being amortized over 20 years. The statement of operations for the
six months ended March 31, 1996 includes the results of operations for
PTS. In fiscal 1997, the statement of operations includes PTS' results
of operations for the first quarter ended December 31, 1996, and
discontinued operations for the second quarter ended March 31, 1997.
C. RELATED PARTY TRANSACTIONS
During the six months ending March 31, 1996, $162,600 was charged to
operations based upon the value ascribed to services of a director and
administrative assistant performed during the period for which they were
issued 242,500 shares.
Included in amounts due to related parties at March 31, 1997 for
expenses advanced by a company affiliated with a stockholder and
director of the company is $724,943 plus accrued interest through March
31, 1997 of $87,705 at 12%, and $9,000 advanced from a corporate
stockholder, which is non-interest bearing.
Note payable to stockholder (the former sole stockholder of PTS) had
included $7,145 of a non-interest bearing instrument. Additionally,
this note had been reduced by amounts reserved for the anticipated loss
on long term contract and $918,944 remains which represents the balance
on the acquisition note after such reduction, bearing interest at 8%.
$54,760 of interest was accrued on this note and is included in interest
expense and accrued expenses for the nine month period ending June 30,,
1996, and the balance including accrued interest of $72,760 was recorded
as cancellation of indebtedness income in connection with the
discontinuation of this subsidiary as reported in the quarter ending
March 31, 1997.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed financial
statements including the Company's Florida operating subsidiary, as well as
information relating to the plans of the Company's current management.
ABOUT THE SUBSIDIARIES WHICH WERE DISCONTINUED DURING THE YEAR ENDED
SEPTEMBER 30, 1997
TIER Environmental Services, Inc.
The primary revenue of this environmental subsidiary came from its work in
direct cooperation with the Florida legislature towards reimbursement for
eligible sites for environmental clean-up. The Governor's executive order
dated March 8, 1995 in reference to the Inland Protection Trust Fund (the
"fund") referendum has caused some confusion over the past few months. For
the purpose of clearing this up and stating the facts, the fund is still very
much in place, claims are still being paid by the State, and the interests of
the contractors as well as those of the investors are still being met.
To be specific, on March 29, 1995 Governor Chiles signed into law 95-2, Laws
of Florida (SB 1290). This law revises Florida Statute 376 as it relates to
continued and future site rehabilitation tasks for eligible sites. Chapter
95-2 does not specifically amend or change the reimbursement regulations set
forth in Chapter 62-773, F.A.C. As of this date, the Legislature has not
finalized the fiscal year 1995-96 budget allocation and accompanying
Legislative intent regarding the IPTF (SB 2800; HB 2585). Therefore, the new
Legislation primarily affects what eligible sites can continue and start site
rehabilitation tasks; does not revise the allowable markups and handling fees
in the Reimbursement Rule; and does not provide any more certainty as to the
actual date when a Reimbursement Claim will be paid.
During the quarter ended December 31, 1996, the Company discontinued
operations in this subsidiary.
Plant Technical Services
The primary revenue sources of this subsidiary comes from utilities in North
America with high demands at peak periods for engineering professionals.
During the fourth quarter 1995 the Company's former president spent a
substantial portion of his time pursuing one acquisition in Mexico, the Hemyc
Group (see form 10-K for the fiscal year ended September 30, 1995) which in
turn, the Company has since rescinded. The Company has also continued to
complete or resolve a joint venture with the Hemyc Group which was
substantially delayed as for the fiscal year ended September 30, 1995. This
subsidiary recorded a loss on the contract to the extent it has accrued costs
associated with the joint venture and charged the same loss to amounts due to
the former president shareholder. During the quarter ended March 31, 1997,
the remaining assets of this joint venture, as well as the other assets of
this subsidiary, including fixed assets, database, and goodwill were recorded
as losses, net of the liabilities directly associated with the purchase of the
subsidiary and the idle equipment, and included in discontinued operations.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Nine Months Ended June 30, 1998 vs. June 30, 1997
The results of operations for the nine months ended June 30, 1997 includes
operations of the PTS subsidiary through December and the parent company through
June 30, 1997 for a loss of $93,433 on revenues of $967,260 and the Tier
environmental subsidiary reported a loss from discontinued operations of
$1,136,162 including an operating loss of $213,961 during the phase out period
effective for the quarter ended December 31, 1996, and the PTS reported a loss
of $231,277 from the discontinuation of its operations including an operating
loss of $144,576 during the phase out period effective for the quarter ended
March 31, 1997. The results of operations for the nine months ended June 30,
1998 consisted of a loss of $25,145 which included administrative expenses of
the same amount.
Liquidity and Working Capital
The Company's working capital continued to remain negative during the quarter
ended June 30, 1998. Despite the discontinuation of both subsidiaries and the
reversal of liabilities associated with the operating assets of these
subsidiaries. At September 30, 1996 the Company had a deficit of $1,959,320 as
compared to a deficit of $1,105,516 at June 30, 1997.
At September 30, 1997 the Company had a deficit of $ 1,105,516 as compared to a
deficit $1,130,661 at June 30, 1998.
As a result of the above management believes that filing of the plan of
reorganization under Chapter 1, offers the best opportunity to restore
shareholder value to the Company's stockholders in light of the results of
operations and the financial condition of the Company.
INFLATION
The rate of inflation has had little impact on the Company's results of
operations and is not expected to have significant impact on continuing
operations.
Forward looking and other statements
Forward looking statements above and elsewhere in this report that suggest that
the company will increase revenues, become profitable and achieve significant
growth through acquisitions are subject to risks and uncertainties.
Forward-looking statements include the information concerning possible or
assumed future results of operations and cash flows. These statements are
identified by words such as "believes," "expects," "anticipates" or
similar expressions. Such forward looking statements are based on the beliefs
of Gulfstar Industries Inc. and its Board of Directors in which they attempt
to analyze the Company's competitive position in its industry and the factors
affecting its business. Stockholders should understand that each of the
foregoing risk factors, in addition to those discussed elsewhere in this
document and in the documents which are incorporated by reference herein,
could affect the future results Gulfstar Industries Inc. and could cause
those results to differ materially from those expressed in the forward-
looking statements contained or incorporated by reference herein. In addition
there can be no assurance that Gulfstar Industries Inc. and its Board have
correctly identified and assessed all of the factors affecting the Company's
business.
9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On May 15, 1996 the Company terminated and initiated legal action
against the former president and shareholder of its PTS subsidiary.
Both subsidiaries are defendants in various litigations with
debtors, over contract obligations and performance clauses.
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 and Reports on Form 8-K
NONE
11<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant, caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GULFSTAR INDUSTRIES, INC.
FORMERLY TIER ENVIRONMENTAL SERVICES, INC.
Dated: December 31, 1998, By:/s/William O'Callaghan
and submitted with William O'Callaghan, Acting President
re-assigned access codes
February 19, 1999
12
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