SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 31, 1999
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ITRONICS INC.
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Texas 33-18582 75-2198369
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
6490 So. McCarran Boulevard, Building C, Suite 23 Reno, Nevada 89509
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(Address of Principal Executive Offices) Zip Code
Registrant's telephone number, including area code: (775) 689-7696
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Item 2. Acquisition or Disposition of Assets
On March 31, 1999 the Company's subsidiary, Itronics Metallurgical,
Inc. (IMI), closed escrow on the purchase of a 35,000 square foot
manufacturing facility on approximately three acres of land pursuant to a
lease/option agreement it had entered into in January 1998. The $1,000,000
purchase price was paid with $300,000 cash and $700,000 of the Company's
restricted common stock. The source of proceeds for the cash payment was the
Final Tranche of the 1998 Private Placement. The seller, an unrelated private
individual, received 2,491,103 of the Company's restricted common shares in
the transaction. The seller had previously used the property for specialty
automotive parts manufacturing. IMI will utilize the property for used
photochemical processing, silver refining, and fertilizer manufacturing.
The equipment required for these operations is being acquired separately.
Item 7. Financial Statements and Exhibits
Following are historical and pro forma financial statements showing
a Condensed Consolidated Balance Sheet as of December 31, 1998 and a
Condensed Consolidated Statement of Operations for the year then ended. The
historical financial statements are taken from Form 10-KSB for the year 1998.
The pro forma adjustments and pro forma balance sheet reflect the effects on
the historical balance sheet of purchasing the manufacturing facility
described in Item 2 above. The pro forma assumes that the building was
purchased on December 31, 1998 and that the $300,000 cash payment raised in
the Private Placement was received on December 31, 1998.
For the pro forma Condensed Consolidated Statement of Operations, it
is assumed that the building was acquired on January 1, 1998, that the
related $300,000 cash from the Private Placement was received on January 1,
1998, and that the building was not put into service in 1998. Consequently,
no effect of converting IMI's pilot scale operation to full commercial
production is reflected in the pro forma Condensed Consolidated Statement of
Operations. Only the known operating costs, including taxes, insurance, and
utilities, are included in the pro forma expenses. Other costs, such as
repairs and maintenance, have not been included due to the limited operating
history.
These pro forma financial statements should be read in conjunction
with the Form 10-KSB for 1998, which is the source of the historical
financial statement data used in preparation of the pro forma amounts. The
pro forma information is not necessarily indicative of that which would have
been attained had the transaction actually occurred at an earlier date.
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ITRONICS INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
HISTORICAL PRO FORMA
BALANCE PRO FORMA BALANCE
SHEET ADJUSTMENTS SHEET
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ASSETS
CURRENT ASSETS
Cash (1) $ 348,829 $ 2,812 $ 351,641
Accounts receivable 117,397 117,397
Notes receivable,
shareholders 66,325 66,325
Inventories 41,107 41,107
Prepaid expenses (1) 46,945 5,568 52,513
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Total Current Assets 620,603 8,380 628,983
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PROPERTY AND EQUIPMENT
Land (1) 215,000 215,000
Building (1) 787,526 787,526
Design and construct.
in progress, building
improvements 98,358 98,358
Leasehold improvements 14,212 14,212
Equipment and furniture 394,746 394,746
Vehicles 68,273 68,273
Equipment under lease 35,189 35,189
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610,778 1,002,526 1,613,304
Less: Accum. depreciation
and amortization 281,433 281,433
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329,345 1,002,526 1,331,871
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OTHER ASSETS (1) 112,581 ( 4,789) 107,792
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$1,062,529 $1,006,117 $2,068,646
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ITRONICS INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
HISTORICAL PRO FORMA
BALANCE PRO FORMA BALANCE
SHEET ADJUSTMENTS SHEET
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 152,682 $ 152,682
Accrued management
salaries 80,914 80,914
Accrued expenses 103,136 103,136
Other 40,689 40,689
Current portion of
long-term debt 127,233 127,233
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Total Current
Liabilities 504,654 - 504,654
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LONG-TERM LIABILITIES
Long-term debt,
less current portion 74,982 74,982
Accrued salary due
officer/stockholder 37,200 37,200
Deferred gain, less
current maturities 16,111 16,111
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Total Long-Term
Liabilities 128,293 - 128,293
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632,947 - 632,947
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STOCKHOLDERS' EQUITY
Preferred stock -
Common stock (1) 56,060 1,000 57,060
Additional paid-in
capital (1) 4,625,194 999,000 5,624,194
Accumulated deficit (1) (4,375,283) 6,117 (4,369,166)
Common stock to be
issued 123,611 123,611
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429,582 1,006,117 1,435,699
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$1,062,529 $1,006,117 $2,068,646
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ITRONICS INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
HISTORICAL PRO FORMA
STATEMENT OF PRO FORMA STATEMENT OF
OPERATIONS ADJUSTMENTS OPERATIONS
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REVENUES $ 766,720 $ - $ 766,720
COST OF SALES 923,115 - 923,115
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Gross Profit (Loss) (156,395) - (156,395)
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OPERATING EXPENSES
Depreciation and
amortization (2) 39,941 19,688 59,629
Research and develop. 90,104 90,104
Sales and marketing 278,817 278,817
Plant start-up costs (2) 42,620 (12,620) 30,000
General and
administrative 376,460 376,460
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827,942 7,068 835,010
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Operating (Loss) (984,337) ( 7,068) (991,405)
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OTHER INCOME (EXPENSE) (40,526) - ( 40,526)
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(Loss) before provision
for income tax (1,024,863) ( 7,068) (1,031,931)
Provision for income tax - - -
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Net Income (Loss) $ (1,024,863) $ ( 7,068) $(1,031,931)
=========== ========= =========
Weighted average number of
shares outstanding (3) 45,993,944 3,346,103 49,340,047
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Earnings (loss) per
share (3) $(0.0223) N/A $(0.0209)
========= ========= =========
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ITRONICS INC. AND SUBSIDIARIES
NOTES TO PRO FORMA FINANCIAL STATEMENTS
DECEMBER 31, 1998
Note 1 - Manufacturing Facility Purchase
The pro forma adjustments referenced by (1) relate to recording the
purchase of the manufacturing facility as if the transaction had occurred on
December 31, 1998, and receipt of $300,000 from the Final Tranche of the 1998
Private Placement, which was utilized for the cash payment, had been received
on that date. The purchase price was $1,000,000 plus $2,526 in escrow costs.
Note 2 - Pro Forma Operating Statement Adjustments
The pro forma adjustments referenced by (2) relate to the estimated
operating statement adjustments to reflect the purchase of the manufacturing
facility as if the transaction had occurred on January 1, 1998. The primary
adjustments were to depreciation, which reflects depreciating the building
on the straight line basis over 40 years, and to plant start-up costs for
the estimated known costs of holding the property in pre-operating status.
The net reduction to plant start-up costs reflects reducing the expense in
the amount of $33,524 for the rent expense that would not occur if the
property had been acquired on January 1, 1998. The adjustments that would
occur when commercial operations are achieved, including sales, cost of
sales, and operating expenses, are not included in the pro forma adjustments
and statement of operations.
Note 3 - Pro Forma Earnings Per Share
The weighted average number of shares used in computing pro forma
earnings per share was increased by a total of 3,346,103 shares as of January
1, 1998 to reflect the 2,491,103 shares issued in connection with purchasing
the manufacturing facility and the 855,000 shares issued in connection with
receiving 30 units, or $300,000, from the Final Tranche of the 1998 Private
Placement.
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SIGNATURE
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 hereunto duly authorized.
ITRONICS INC.
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(Registrant)
Date: April 14, 1999 By: /S/ John W. Whitney
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John W. Whitney
President, Treasurer and Director
(Principal Executive and Financial
Officer)
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