UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM l0-QSB
(Mark One)
(X) QUARTERLY REPORT UNDER SECTlON 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from______ to_____
Commission File Number 33-18582
ITRONICS INC.
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(Exact name of small business issuer as specified in its charter)
TEXAS 75-2198369
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
6490 S. McCarran Blvd., Bldg C-23, Reno, Nevada 89509
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(Address of principal executive offices)
Issuer's telephone number, including area code: (775)689-7696
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NO CHANGE
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Former name, former address and former fiscal, if changes since last report.
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 during the
past 90 days. Yes (x) No ( ).
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of April 30, 1999, 65,842,438 shares of common stock were
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes ( ) No (X)
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ITRONICS INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - March 31, 1999
and December 31, 1998 4
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1999 and 1998. 6
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998. 7
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis or Plan of
Operation 9
PART II- OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 6. Exhibits and Reports on Form 8-K 15
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PART I - FINANCIAL INFORMATIONON
Item 1. Financial Statements
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ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
ASSETS
March 31, 1999 Dec. 31, 1998
-------------- -------------
CURRENT ASSETS
Cash $ 644,676 $ 348,829
Accounts receivable 81,073 117,397
Notes receivable, subscriptions of stock 60,604 66,325
Inventories 41,597 41,107
Prepaid expenses 65,715 46,945
--------- ---------
Total Current Assets 893,665 620,603
--------- ---------
PROPERTY AND EQUIPMENT
Land 215,000 -
Building 787,526 -
Plant design/construction in progress 159,943 98,358
Leasehold improvements 14,212 14,212
Equipment and furniture 414,498 394,746
Vehicles 69,155 68,273
Equipment under capital lease 295,689 35,189
--------- ---------
1,956,023 610,778
Less: Accumulated depreciation and amortization 293,205 281,433
--------- ---------
1,662,818 329,345
--------- ---------
OTHER ASSETS
Intangibles 66,234 53,379
Note receivable, subscription of stock 31,948 42,340
Investment in American Gold & Silver Ltd. 9,250 9,250
Deposits 11,349 7,612
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118,781 112,581
--------- ---------
$2,675,264 $1,062,529
========= =========
See Notes to Condensed Consolidated Financial Statements
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ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, 1999 Dec. 31, 1998
-------------- -------------
CURRENT LIABILITIES
Accounts payable $ 129,014 $ 152,682
Accrued management salaries 67,498 80,914
Accrued expenses 72,370 103,136
Contracts payable 26,922 19,279
Interest payable 8,104 15,084
Current maturities of long-term debt and leases 40,953 4,951
Current maturities of advances and leases from
stockholders 107,597 122,282
Other 10,126 6,326
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Total Current Liabilities 462,584 504,654
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LONG-TERM LIABILITIES
Long-term debt and leases, less current
maturities 243,332 24,786
Advances and leases from stockholders, less
current maturities 36,055 50,196
Accrued salary due stockholder 37,200 37,200
Deferred gain, less current maturities 30,226 16,111
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Total Long-Term Liabilities 346,813 128,293
--------- ---------
809,397 632,947
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STOCKHOLDERS' EQUITY
Preferred stock (-0- shares outstanding) - -
Common stock ( 64,336,160 shares outstanding at
March 31, 1999 and 56,059,727 outstanding at
December 31, 1998) 64,336 56,060
Additional paid-in capital 6,367,688 4,625,194
Accumulated deficit (4,811,775) (4,375,283)
Common stock to be issued 245,618 123,611
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1,865,867 429,582
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$2,675,264 $1,062,529
========= =========
See Notes to Condensed Consolidated Financial Statements
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ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,1999 AND 1998
(UNAUDITED)
Three Months Ended March 31,
----------------------------
1999 1998
---------- ----------
REVENUES
Fertilizer $ 12,181 $ 10,083
Photobyproduct recycling 27,955 31,897
Silver 21,034 53,454
Mining technical services 70,313 82,712
-------- --------
Total Revenues 131,483 178,146
COST OF SALES 204,813 204,503
-------- --------
Gross Profit (73,330) (26,357)
-------- --------
OPERATING EXPENSES
Depreciation and amortization 14,649 7,638
Research and development 13,037 20,168
Sales and marketing 184,806 46,187
Plant start-up costs 22,821 -
General and administration 113,396 93,225
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348,709 167,218
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Operating Income (Loss) (422,039) (193,575)
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OTHER INCOME (EXPENSE)
Interest expense (15,635) (10,844)
Interest income 1,182 170
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Total Other Income
(Expense) (14,453) (10,674)
-------- --------
Income (Loss) before provision
for income taxes (436,492) (204,249)
Provision for income taxes - -
-------- --------
Net Income (loss) $(436,492) $(204,249)
======== ========
Weighted average number of
shares outstanding (1,000's) 57,771 43,366
======== ========
Earnings (loss) per share $(0.0076) $(0.0047)
======== ========
See Notes to Condensed Consolidated Financial Statements
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ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,1999 AND 1998
(UNAUDITED)
Three Months Ended March 31,
1999 1998
---------- ----------
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES
Net income (loss) $(436,492) $(204,249)
Adjustments to reconcile net income (loss)
to cash used by operations
Depreciation and amortization 14,649 7,638
Expenses paid with issuance of common stock 53,441 25,638
(Increase) decrease:
Trade receivables 36,324 20,414
Inventories (490) 2,598
Prepaids and other assets (27,295) 7,477
Increase (decrease):
Accounts payable (23,668) 61,499
Accrued expenses and contracts (36,539) 21,826
Accrued interest ( 6,980) 1,616
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Net Cash Used by Operating Activities (427,050) (55,543)
--------- --------
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES
Acquisition of property and equipment
and intangibles (417,448) (22,496)
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CASH FLOWS FROM (FOR) FINANCING ACTIVITIES
Proceeds from sale of common stock 1,138,070 37,978
Proceeds from debt 40,000 35,000
Payments on debt (37,725) (10,455)
--------- --------
Net Cash Provided by Financing Activities 1,140,345 62,523
--------- --------
Net Increase (Decrease) in Cash 295,847 (15,516)
Cash, beginning of period 348,829 29,213
--------- --------
Cash, end of period $ 644,676 13,697
========= ========
See Notes to Condensed Consolidated Financial Statements
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ITRONICS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
1. The unaudited condensed consolidated financial statements printed
herein have been prepared in accordance with the instructions to Form 10-QSB
and do not include all of the information and disclosures required by
generally accepted accounting principles. Therefore, these financial
statements should be read in conjunction with the consolidated financial
statements and related footnotes included in the Company's Form 1O-KSB for
the year ended December 31, 1998. These financial statements reflect all
adjustments that are, in the opinion of management, necessary to fairly
state the results for the interim periods reported.
2. The results of operations for the three months ended March 31, 1999
are not necessarily indicative of the results to be expected for the full
year.
3. 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. In addition, a total of $223,447 of equipment was
acquired through financing leases during the quarter and $40,000 was financed
from a sale/leaseback of computer equipment. Subsequent to March 31, 1999,
additional financing for approximately $150,000 of equipment is in the lender
approval process.
4. Following is financial information for each of the Company's segments.
No changes have occurred in the basis of segmentation or in the basis of
measurement of segment profit or loss since December 31, 1998.
Reconciliation of segment revenues and operating income (loss) to the
respective consolidated amounts and to consolidated income (loss) before
taxes:
Three Months Ended March 31,
1999 1998
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Revenues:
Photobyproduct Fertilizer $ 61,170 $ 95,434
Mining Technical Services 70,313 $ 82,712
--------- -------
Consolidated Revenues $ 131,483 $ 178,146
========= =======
Operating Income (Loss):
Photobyproduct Fertilizer $ (323,730) $(158,542)
Mining Technical Services ( 98,309) ( 35,033)
----------- ---------
Consolidated Operating Income (Loss) (422,039) (193,575)
Other Income (Expense) ( 14,453) ( 10,674)
----------- ---------
Consolidated Net Income (Loss) before
taxes $( 436,492) $(204,249)
=========== =========
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Identifiable assets by business segment for the major asset
classifications and reconciliation to total consolidated assets:
March 31, December 31,
1999 1998
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Current Assets:
Photobyproduct Fertilizer $ 112,211 $ 103,692
Mining Technical Services 148,036 121,171
--------- ---------
260,247 224,863
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Property and Equipment, net:
Photobyproduct Fertilizer 1,584,491 276,920
Mining Technical Services 78,327 52,425
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1,662,818 329,345
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Other Assets, net:
Photobyproduct Fertilizer 14,691 13,943
Mining Technical Services 3,108,214 3,107,185
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3,122,905 3,121,128
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Total Assets:
Photobyproduct Fertilizer 1,711,393 394,555
Mining Technical Services 3,334,577 3,280,781
--------- ---------
Total Segment Assets 5,045,970 3,675,336
Itronics Inc. assets 8,494,558 6,746,058
Less: intercompany elimination (10,865,264) (9,358,865)
--------- ---------
Consolidated Assets $2,675,264 $1,062,529
========= =========
Item 2. Management's Discussion and Analysis or Plan of Operations
I. Results of Operations
The Company reported a net loss of $436,492 or $(0.0076) per share for
the quarter ended March 31, 1999, compared to a net loss of $204,249 or
$(0.0047) per share for the comparable 1998 period. Two primary factors
contributed to the increased loss for the first quarter of 1999. First,
sales decreased by approximately $46,700 while cost of sales remained
unchanged, resulting in an increase in gross loss of $47,000. Second, total
operating costs increased by $181,500. The increased operating costs are due
primarily to increased corporate and product marketing. The purpose of the
substantial change in cost structure is to convert the photobyproduct
fertilizer segment from a small scale semi-works operation to full commercial
scale operation. Management focus has been on raising the capital required
to complete the move to the new facility and on making both the investing
public and potential customers aware of the Company and its products and
services. The result of this effort was a substantial increase in the market
price of the Company's stock, which led directly to the receipt of more than
$1.1 million in private placement and warrant exercise funds and the
subsequent purchase of the Reno/Stead manufacturing facility. Management
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focus is now on completing the move to the new plant, completion of the
Private Placement, and completing the corporate management team and computer
systems infrastructure needed to obtain, and manage, substantial sales
growth. In that regard, the Company added two experienced people to the
management team during the quarter. One recently retired as Manager, Product
Development for Western Farm Services, Inc. He has more than 40 years
experience as an executive in the fertilizer industry and will assist in
fertilizer product development, with an emphasis on developing new markets.
He will also assist in diversifying to other raw material sources, including
used phosphoric acid, which was the purpose behind the first quarter
acquisition of P.D. West, Inc. The other new member of the management team
has more than 25 years experience in the photo industry, and recently owned
his own photo specialty and lab business. He will lead the Company's
expansion in the consumer photography market.
To provide a more complete understanding of the factors contributing
to the changes in sales, operating expenses and the resultant operating loss,
the discussion presented below is separated into the Company's two operating
segments.
PHOTOBYPRODUCT FERTILIZER
This segment, known as Itronics Metallurgical, Inc., operates a semi-
works photobyproduct recycling plant, which includes related silver recovery.
As part of the recycling process, the Company is manufacturing and marketing
a line of liquid turf fertilizer products which are being introduced into
the market in California and Nevada. Revenues are generated from
photobyproduct management services and silver sales. Fertilizer sales are in
the start-up phase and are expected to expand to a commercial level once the
plant is relocated to the new facility which was recently acquired.
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Three Months Ended March 31,
----------------------------
1999 1998
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Sales revenue $ 61,170 $ 95,434
Operating income (loss) $(323,730) $(158,542)
- -----------------------------------------------------------------------------
Total segment sales for the first quarter of 1999 were approximately
$61,200, compared to $95,400 for the comparable quarter of 1998, a decrease
of $34,300, or 36%. Fertilizer sales for the quarter were approximately
$12,200, compared to $10,100 for the 1998 first quarter, an increase of 21%.
Photobyproduct recycling revenue for the quarter decreased by $3,900 on an
increased volume of 10%, compared to the first quarter of 1998. Silver sales
decreased $32,400 from the first quarter of 1998. Silver ounces sold
decreased 57% and the average silver price decreased 17% for the quarter.
The decline in sales of photobyproduct services and silver is due primarily
to the timing of processing distilled concentrated photobyproducts and the
completion of a film shipment. These occurred during the first quarter of
1998 and are anticipated to occur during the second quarter of 1999. Future
quarterly silver production will be dependent on the nature of photobyproducts
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processed during any particular quarter, and to the timing of film shipments.
Consequently, there may be significant quarter to quarter fluctuations,
either up or down, in silver sales. Cost of sales for the first quarter of
1999 decreased $6,100 from the 1998 first quarter. The decrease is due to a
reduction of $20,500 in direct material costs resulting from decreased sales,
which was partially offset by increases of $6,100 in payroll costs due to
the addition of a plant position late in the first quarter of 1998 and
$5,100 in repairs and maintenance related primarily to readying a tanker
truck for local fertilizer deliveries. The increased payroll costs reflects
the limited space conditions in the pilot plant, causing inefficient handling
of materials. Moving to the commercial scale plant, combined with much larger
capacity equipment, is expected to substantially improve labor productivity.
These factors resulted in a gross loss of $70,500 for the first quarter of
1999, compared to a gross loss of $42,300 for the first quarter of 1998.
Segment operating expenses increased approximately $137,000 over the
first quarter of 1998, due primarily to increases of $108,200 in sales and
marketing and $22,800 in plant start-up costs. The increase in sales and
marketing reflects expenditures for corporate marketing, establishment of a
fertilizer sales department, greater participation in industry trade shows,
and the ongoing introduction of Gold'n Gro fertilizer products to the Western
Farm Services sales force in California and introduction of a Gold'n Gro
fertilizer sales program in Northern Nevada.
These factors resulted in a 1999 first quarter segment operating loss
of $323,700, compared to a loss of $158,500 for the first quarter of 1998,
an increased operating loss of $165,200.
MINING TECHNICAL SERVICES
This segment, known as Whitney & Whitney, Inc., provides mining and
materials management, geology, engineering and economics consulting, and
publishes specialized mineral economics and materials financial reports.
It employs technical specialists with expertise in the areas of mining,
geology, mining engineering, mineral economics, materials processing and
technology development. Technical services have been provided to many of the
leading U.S. and foreign mining companies, several public utilities with
mineral interests, to various state agencies, the U.S. and foreign
governments, and the United Nations and the World Bank.
- -----------------------------------------------------------------------------
Three Months Ended March 31,
----------------------------
1999 1998
---------- ----------
Sales revenue $ 70,313 $ 82,712
Operating income (loss) $(98,309) $(35,033)
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Mining technical services revenue was approximately $70,300 for the
quarter ended March 31, 1999, compared to $82,700 for the comparable quarter
of 1998, a decrease of $12,400, or 15%. Cost of sales increased by $6,400,
due to an increase in pass-through costs of $7,600. These factors resulted
in a gross loss for the segment of $2,800, compared to a gross profit of
$16,000 for the prior year first quarter.
Segment operating expenses increased by $44,500 due primarily to
increases of $30,400 in sales and marketing costs and $10,100 in management
salary costs. The increase in sales and marketing expense reflects both the
allocable portion of increased corporate marketing and increased efforts in
marketing technical services.
The combination of these factors resulted in a 1999 first quarter
segment operating loss of $98,300, compared to an operating loss of $35,000
for the first quarter of 1998.
SUMMARY
On a consolidated basis, the various changes in revenues and
operating expenses resulted in a first quarter 1999 operating loss of
$422,000, compared to an operating loss of $193,600 for the first quarter of
1998, an increased loss of $228,500.
II. Changes in Financial Condition; Capitalization
Cash amounted to $644,676 as of March 31, 1999, compared to $13,697
as of March 31, 1998. Net cash used for operating activities was approximately
$427,100 for the first three months of 1999. The cash used for operating
activities during the period was financed primarily by stockholders, which
included $1,138,100 in proceeds from the private placement of common shares.
Total assets increased during the three months ended March 31, 1999
by approximately $1,613,000 to $2,675,000. Current assets increased
approximately $273,100 due to an increase in cash of $295,800, which was
partially offset by a decrease in accounts and notes receivable of $42,000.
Current liabilities decreased by approximately $42,100 and total liabilities
increased by $176,500. The increase to total liabilities is related primarily
to lease financing of $263,400 in equipment, which was partially offset by a
reduction of $67,200 in accounts payable and the various accrued expenses
and debt payments of $37,700.
In February 1999 the Company began the Final tranche of the 1998
Private Placement Offering to raise $780,000 in equity capital. During the
quarter, a combined total of $1,138,100 was received from the Private
Offering and the exercise of warrants from the 1998 and previous offerings.
Subsequent to March 31, 1999, a total of $410,800 has been received from the
Offering and warrant exercises.
III. Working Capital/Liquidity
During the three months ended March 31, 1999, working capital
improved by approximately $315,100 to $431,100. Management has continued the
Company's ongoing program of improving working capital and liquidity through
private placements of common shares and payment of consulting and other labor
services with common shares. During the three months ended March 31, 1999, a
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total of $1,138,100 was received from the private placement of common shares
and approximately $53,400 in various expenses were paid with common shares.
IV. New Developments
As noted above, the Reno/Stead manufacturing plant purchase was
completed on March 31, 1999. Financing for the majority of the manufacturing
equipment is in place and much of the equipment has been delivered to the
plant. Originally, it was planned to move the pilot plant equipment to the
new facility in much the same configuration as the existing plant, with some
additional equipment for increased production capacity. However, market
acceptance of the Gold'n Gro fertilizer products and regulatory changes in
California and Oregon that are tightening liquid photochemical waste disposal
requirements have shown the need for significantly expanded production
capacity. Consequently, the basic concept for the plant configuration has
been redesigned. In addition, it was originally planned that the engineering
drawings would be completed in-house. However, regulatory changes now require
completion of the drawings by outside engineers. The result is that the move
of the production equipment has not progressed as rapidly as anticipated.
However, the engineering is now complete, the Company is working with a
contractor to expedite construction once the building permit is received,
and the Company is working with City of Reno officials to expedite the permit
approval process. Permission has been obtained to move various raw materials,
empty drums, etc. to the new facility and personnel will move in late May.
Pouring of two additional 10" thick concrete pads is being required for
earthquake safety. Pouring the concrete and letting it cure will require
four to six weeks, pushing part of the production equipment move into late
July.
An extended winter season in California hampered first quarter
fertilizer sales efforts. However, the Gold'n Gro products continue to be
used or tested by more than 90 golf courses in California. Sales efforts in
Northern Nevada were initiated during the quarter.
The University of California, Davis has begun a test program to
determine the effectiveness of Gold'n Gro fertilizers on wine grapes. U.C.
Davis is "the" recognized academic authority for research on wine grape
nutrition in the California wine industry. With more than 750,000 acres of
grapes in California, this represents a significant market opportunity,
should the test results prove to be positive.
V. Year 2000 Assessment
The Company is assessing the potential effects of the Year 2000
issue on the Company's operations. The assessment is in two parts. First, an
evaluation of the Company's computer systems and equipment with embedded
computer chips for Year 2000 compliance. The majority of the Company's
computers and software have been acquired within the last year. Therefore,
management anticipates only minor Year 2000 compliance problems with its
computer systems.
The second part of the assessment process involves the Year 2000
readiness of third parties. There are two primary issues related to the
evaluation of the potential impact on the Company.
First, interruption of the services provided by local public
utilities, namely power and telephone service, would have a material
negative impact on the Company's operations. Based on attendance at seminars
and public reports, management believes that the local utility service
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providers are actively working on their Year 2000 compliance issues. At this
time, management believes that no interruption of service will occur.
Second, significant Year 2000 problems with the Company's major
customers and suppliers could have a material negative impact on the
Company's operations. At the present time, there are two major customers in
the photobyproduct fertilizer segment and two major customers in the
Company's mining technical services segment. The Year 2000 assessment
process involves discussing the issue with these customers and evaluating
the impact their operations could have on the Company's operations. No
significant problems with these customers are anticipated at this time.
Based on current information, management does not anticipate the
Year 2000 issue will have a material impact on the Company's operations.
VI. Forward-Looking Statements
The statements in this Form 10-QSB that are not historical facts or
statements of current status are forward-looking statements (as defined in
the Private Securities Litigation Reform Act of 1995) that involve risks and
uncertainties. Actual results may differ materially.
PART II- OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
1. The former president of Seahawk, Inc. (Seahawk) filed suit on June
30, 1995 in the Superior Court of California, County of Orange, against the
Company, W&W, and several W&W employees, alleging libel and slander resulting
from consulting work W&W had done for Seahawk. The suit sought unspecified
damages to be proven at trial, plus punitive or exemplary damages. W&W's
liability insurance carrier defended against the suit, and in March 1997, the
suit was dismissed. The individual has filed an appeal of the dismissal. In
February 1997, this individual served a second suit that includes the Company,
W&W, and a key employee as codefendants, along with several unrelated parties.
The suit alleges breach of contract and other causes of action and seeks in
excess of $5 million plus punitive damages. The Company's liability insurance
carrier has agreed to assume the defense of this action with a reservation of
rights, including the right to disclaim insurance coverage. Management
believes the allegations are without merit and is vigorously defending against
the suit.
In May 1998 agreement was reached with the plaintiff that if the
appeal of the first suit fails, the second suit will be dropped. Due to a
civil court backlog, the appeal hearing has been delayed for at least a year.
As of the date of this report, a hearing date has not been set.
Item 2. Changes in Securities and Use of Proceeds
- -------------------------------------------------
(c) Recent Sales of Unregistered Securities:
Following is a summary of sales of unregistered securities for the
three months ended March 31, 1999. All securities were issued as restricted
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common shares which are subject to Rule 144 of the Securities and Exchange
Commission. Generally, Rule 144 requires shareholders to hold the shares for
a minimum of one year before sale. In addition, officers, directors and more
than 10% shareholders are further restricted in their ability to sell such
shares. There have been no underwriters of these securities and no commissions
or underwriting discounts have been paid.
Shares Value
Issued Received
--------- ----------
Private placement for cash 1,140,750 $ 332,500
Exercise of warrants for cash 4,310,240 660,174
Purchase of the Reno/Stead manufacturing
facility 2,491,103 700,000
Interest on accrued management salaries 27,889 3,896
Labor services of management, directors
and consultants 241,125 33,038
Operational expenses 30,488 7,500
Acquisition of subsidiary and office
equipment 8,838 2,167
--------- ---------
8,250,433 $1,739,275
========= =========
The above transactions qualified for exemption from registration
under Sections 3(b) or 4(2) of the Securities Act of 1933. Private placements
for cash were non-public transactions. The Company believes that all such
investors are either accredited or, either alone or with their purchaser
representative, have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks of the
prospective investment.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibit 27, "Financial Data Schedule", is presented on page 17
of this report.
(b) A report on Form 8-K, dated March 31, 1999, was filed by the
Company. The purpose of the Form 8-K was to report the purchase of the
Reno/Stead manufacturing facility. Pro forma financial statements of the
Company for the year ended December 31, 1998 were included in the report.
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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.
ITRONICS INC.
DATED: May 14, 1999 By: JOHN W. WHITNEY
---------------- ---------------------------------
John W. Whitney
President, Treasurer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated
DATED: May 14, 1999 By: JOHN W. WHITNEY
----------------- ---------------------------------
John W. Whitney
President, Treasurer and Director
(Principal Executive Officer)
DATED: May 14, 1999 By: MICHAEL C. HORSLEY
----------------- ---------------------------------
Michael C. Horsley
Controller
(Principal Accounting Officer)
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 644,676
<SECURITIES> 0
<RECEIVABLES> 82,479
<ALLOWANCES> 1,406
<INVENTORY> 41,597
<CURRENT-ASSETS> 893,665
<PP&E> 1,956,023
<DEPRECIATION> 293,205
<TOTAL-ASSETS> 2,675,264
<CURRENT-LIABILITIES> 462,584
<BONDS> 346,813
0
0
<COMMON> 64,336
<OTHER-SE> 1,801,531
<TOTAL-LIABILITY-AND-EQUITY> 2,675,264
<SALES> 61,170
<TOTAL-REVENUES> 131,483
<CGS> 131,670
<TOTAL-COSTS> 204,813
<OTHER-EXPENSES> 50,507
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,635
<INCOME-PRETAX> (436,492)
<INCOME-TAX> 0
<INCOME-CONTINUING> (436,492)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (436,492)
<EPS-PRIMARY> (.008)
<EPS-DILUTED> (.008)
</TABLE>
