SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31,
1996 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
Commission file number 33-26789-NY
EFTEK CORP.
(Name of small business issuer in its charter)
Nevada 93-0996501
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Bloomfield Business Park
408 Bloomfield Drive
Berlin, New Jersey 08009
(Address of principal executive offices) (Zip Code)
(609)767-2300
(Registrant's 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 Securities Exchange Act of 1934 during the
preceding 12 months (or for such 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
Applicable only to corporate issuers:
The number of shares outstanding of each of the issuer's classes of
common stock, as of JUNE 17, 1996 was 16,033,639 shares.
Transitional small business disclosure format (check one):
Yes No X <PAGE>
FORM 10-QSB
EFTEK CORP.
INDEX
<TABLE>
Page
<S> <C>
PART I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - March 31, 1996
(Unaudited) and December 31, 1995 (Audited) 2
Consolidated Statements of Operations
(Unaudited) - Three Months Ended March 31, 1996
and 1995 3
Consolidated Statements of Cash Flows
(Unaudited) Three Months Ended March 31, 1996
and 1995 4
Notes to Consolidated Financial Statements
(Unaudited) 5 & 6
Item 2. Management's Discussion and Analysis 7
PART II. Other Information 8
Signature Page 9
</TABLE>
<PAGE>
FORM 10-QSB PART I - FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
EFTEK CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited) (Audited)
<S> <C> <C>
Assets
Current Assets
Cash $ 25,172 $ 391
Due from related parties 29,000
Due from officer 274,406 258,338
________ _______
Total Current Assets 328,578 258,729
________ _______
Property and Equipment, Net (Note 1) 21,485 19,113
______ ________
Other Assets
Patent costs, net (Note 1) 50,014 49,540
Organization costs, net (Note 1) 975 1,050
Deposits 3,300 3,300
______ ______
Total Other Assets 54,289 53,890
_______ _______
Total Assets 404,352 331,732
======= =======
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued
liabilities 76,432 70,023
Due to related party 4,776 4,776
______ ______
Total Liabilities 81,208 74,799
______ ______
Stockholders' Equity
Common stock, $.001 par; authorized
25,000,000 shares; issued 12,366,401 and
11,861,435 shares at March 31, 1996 and
December 31, 1995, respectively 12,366 11,861
Additional paid-in capital (Note 6) 1,829,309 1,385,178
Deficit (1,518,285) (1,139,860)
___________ ___________
323,390 257,179
Common stock held in treasury
(14,434 shares), at cost 246 246
_______ _______
Total Stockholders' Equity 323,144 256,933
_______ _______
Total Liabilities and Stockholders'
Equity $ 404,352 $ 331,732
======= =======
/TABLE
<PAGE>
FORM 10-QSB
EFTEK CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1996 1995
<S> <C> <C>
Revenue (Note 1) $ 0 $ 0
_________ ________
Cost and Expenses
Cost of revenue 9,328
Selling, general and
administrative 62,707 89,288
Research and development 73,449
______ ______
Total Cost
and Expenses 136,156 98,616
_______ ______
Loss From Operations (136,156) (98,616)
_________ ________
Other Income
Interest income 3,568
_____ _______
Net Loss $(132,588) $(98,616)
======== =========
Net Loss Per Share (Note 1) $( .01) $( .01)
======== =========
Weighted Average
Number of Shares
Outstanding 11,913,360 11,761,435
========== ==========
/TABLE
<PAGE>
FORM 10-QSB
EFTEK CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash Flows From Operating Activities
Net loss for the period $(132,588) $( 98,616)
Adjustments to Reconcile
Net Loss to Net Cash Used
In Operating Activities
Amortization and depreciation 1,982 1,732
Changes In Operating Assets
and Liabilities
Decrease in accounts receivable 11,066
Increase in prepaid expenses ( 6,256)
Increase in intangible assets ( 1,165) ( 9,910)
Increase in deposits ( 400)
Increase in accounts payable and
accrued liabilities 6,411 11,587
______ ______
Net Cash Used In Operating
Activities (125,360) ( 90,797)
_________ _________
Net Cash Used In Investing Activities
Purchase of equipment ( 3,588)
_________
Cash Flows From Financing
Activities
Advances to related parties ( 29,000)
Advances to officer ( 16,068)
Proceeds from issuances of common stock 198,797
_______ ________
Net Cash Provided By
Financing Activities 153,729
_______ _________
Net Increase (Decrease) In Cash 24,781 ( 90,797)
Beginning Cash 391 210,645
______ _______
Ending Cash $ 25,172 $ 119,848
========= ========
/TABLE
<PAGE>
FORM 10-QSB
EFTEK CORP.
(Unaudited)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The financial statements for the three months ended March 31, 1996
and 1995 have been prepared without audit and, in the opinion of
management, reflect all adjustments necessary (consisting only of
normal recurring adjustments) to present fairly EFTEK Corp.'s (the
Company's) financial position at March 31, 1996 and the results of
its operations and its cash flows for the interim and cumulative
periods presented. Such financial statements do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. For
further information refer to the financial statements and
footnotes thereto included in the Company's annual report on Form
10-KSB for the year ended December 31, 1995.
Operating results for the three months ended March 31, 1996 are
not necessarily indicative of the results for the year ending
December 31, 1996. The balance sheet at December 31, 1995 has
been derived from the audited financial statements of the Company
at that date.
2. Property and Equipment
Property and equipment are stated at cost. Depreciation is
provided over the estimated useful lives of the respective assets
using the straight line method. Expenditures for additions, major
repairs and replacements are capitalized and expenditures for
maintenance and minor repairs are charged to operations as
incurred. When property and equipment are retired or otherwise
disposed of, the costs thereof and the applicable accumulated
depreciation are removed from the respective accounts and the
resulting gain or loss is reflected in earnings. Depreciation
expense for the three months ended March 31, 1996 and 1995 was
$1,291 and $1,037, respectively.
Property and equipment consisted of the following at:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
<S> <C> <C>
Equipment $ 12,003 $ 12,003
Furniture and fixtures 14,417 10,829
Leasehold improvements 2,500 2,500
_______ ______
28,920 25,332
Less accumulated amortization
and depreciation 7,435 6,219
_______ _____
Net property and equipment $ 21,485 $ 19,113
======== ========
/TABLE
<PAGE>
FORM 10-QSB
EFTEK CORP.
(Unaudited)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Patent and Organization Costs
Certain patent and organization costs have been capitalized and
are amortized over the estimated useful lives of the assets using
the straight-line method. Patent costs are being amortized over a
period of 17 years. Organization costs are being amortized over a
period of 5 years.
4. Revenue Recognition
Revenue is recognized upon receipt of royalty fees from the
licensing of the Company's patents and technologies to other
companies, if any, and upon receipt of mixed cullet. Upon
commencement of cullet processing, revenue will be recognized based
upon signed contracts or sale of processed cullet.
5. Loss Per Common Share
Loss per common share is based upon the weighted average number of
common shares outstanding.
6. Subsequent Event
In April and May, 1996, the Company received $790,000 from Arista
High Technology Growth Fund Ltd. for Private Placements of 2,107,333
shares of the Company's common stock.
<PAGE>
FORM 10-QSB
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
LIQUIDITY & CAPITAL RESOURCES
The Company's primary source of funds and liquidity to date has been the
sale of its securities. During the three months ended March 31,
1996, the Company's working capital increased by $66,211 due to two
private placements of 504,966 shares of its common stock for an
aggregate purchase price of $198,797.
The Company anticipates substantial revenue through the payment of
tipping fees for delivery and acceptance by the Company of mixed cullet
and the sale of processed premium cullet to the fiberglass and glass
bottling industries. In order to process the cullet, the Company
intends to make substantial capital expenditures of over $2,000,000 (by
lease, purchase, or development) for machinery, equipment and leasehold
improvements. The Company believes, although there is no assurance,
that it has commitments to raise such capital through additional equity
investments as well as tipping fees. To a significant extent, the
Company is dependent on the operational success of its (patent applied
for) ceramic detector technology.
Such successful operation of processing and reselling the cullet should
result in expansion plants which would need additional funding or the
Company could, without assurance, depend on joint ventures to supply
such expansion funding.
Although the Company believes that there is a substantial and lucrative
market for clean, non-contaminated cullet, the Company recognizes that
there are risks of delays, mechanical proof of concept, and additional
costs which may adversely affect the Company's operations.
Also as a subsequent event, in April 1996, as a diversification and
hedge, the Company acquired 100% of the stock of Fire Doctor, Inc. to
market as a wholly owned independent subsidiary, a chemical that
substantially retards the spread of flame. The initial funding to be
$500,000, which was a condition of the Company's overall funding, has
been dedicated to Fire Doctor, Inc. Additional funding will only be
granted subject to the belief of the Company's Board that its sales
progress justifies same. Although Fire Doctor has recently employed a
new President and a new Sales Manager, both with retail sales experience
and to be compensated on a highly weighted performance basis, it is
unlikely that this subsidiary would need any additional funding in the
near future, especially in the event of the receipt of anticipated sales
revenue, of which there is no assurance.
As additional subsequent events, in April and May, 1996, the Company
sold 2,107,333 shares of its common stock in Private Placements for an
aggregate purchase price of $790,000. The Company anticipates that,
during the next twelve months, revenue will commence that should be
sufficient to meet operating expenses. To the extent that the
Company experiences a shortfall, additional funds will be sought
through loans or issuances of the Company's debt or equity securities.
Inflation has had no significant effect on the Company's financial
condition.<PAGE>
FORM 10-QSB
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal actions proceeding or litigation
pending or threatened to the knowledge of the Company.
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
See Registrant's Subsequent Events, including the description of the
Fire Doctor, Inc. acquisition in the Registrant's Form 10KSB for the
Fiscal Year ended December 31, 1995 (filed June 28, 1996).
Item 6. Exhibits and Reports on Forms 8-K
(a) Exhibits: Incorporated by reference from the Form 10KSB
report as set forth in Item 5 above.
(b) Reports on Form 8-K: None
<PAGE>
FORM 10-QSB
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
EFTEK Corp. has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
EFTEK CORP.
Dated: June 28, 1996 By:/S/ FRANK WHITMORE
_______________________________
FRANK WHITMORE
President, Chief Executive
Officer
Dated: June 28, 1996 By:/S/ SHAWN PRINGLE
_______________________________
SHAWN PRINGLE,
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary information extracted from
the Consolidated Statements of Operations and
Consolidated Balance Sheets of EFTEK Corp. and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000846476
<NAME> EFTEK Corp.
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Mar-31-1996
<PERIOD-TYPE> 3-MOS
<CASH> 25,172
<SECURITIES> 0
<RECEIVABLES> 303,406
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 328,578
<PP&E> 28,920
<DEPRECIATION> (7,435)
<TOTAL-ASSETS> 404,352
<CURRENT-LIABILITIES> 81,208
<BONDS> 0
0
0
<COMMON> 12,366
<OTHER-SE> 311,024
<TOTAL-LIABILITY-AND-EQUITY> 404,352
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 136,156
<OTHER-EXPENSES>0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (132,588)
<INCOME-TAX> 0
<INCOME-CONTINUING> (132,588)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (132,588)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
