<PAGE>
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 JUNE 30,
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 July 22, 1996 was 18,015,288 shares.
Transitional small business disclosure format (check one):
Yes No X <PAGE>
FORM 10-QSB
EFTEK CORP.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet - June 30, 1996
(Unaudited) 2
Consolidated Statements of Operations
(Unaudited) - Six Months Ended June 30, 1996
and 1995 3
Consolidated Statements of Cash Flows
(Unaudited) Six Months Ended June 30, 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
(Unaudited)
<TABLE>
<CAPTION>
June 30,
1996
<S> <C> <C>
Assets
Current Assets
Cash $ 115,370
Accounts receivable 1,521
Due from officer 253,459
Prepaid expenses 17,505
Total Current Assets 387,855
Property and Equipment, Net (Note 1) 402,020
Other Assets
Patent costs, net (Note 1) 53,252
Organization costs, net (Note 1) 30,348
Deposits 3,300
Total Other Assets 86,900
Total Assets 876,775
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued
liabilities 46,462
Total Liabilities 46,462
Stockholders' Equity
Common stock, $.001 par; authorized
25,000,000 shares; issued 17,348,734
shares 17,349
Additional paid in capital 2,386,872
Deficit (1,573,662)
830,559
Common stock held in treasury
(14,434 shares), at cost 246
Total Stockholders' Equity 830,313
Total Liabilities and Stockholders'
Equity $ 876,775
/TABLE
<PAGE>
FORM 10-QSB
EFTEK CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue (Note 1) $ 1,774 $ 0 $ 1,774 $ 0
Cost and Expenses
Cost of revenue 5,506 5,506 9,328
Selling, general and
administrative 210,419 101,664 273,126 190,952
Research and development 107,906 181,355
Total Cost
and Expenses 323,831 101,664 459,987 200,280
Loss From Operations (322,057) (101,664) (458,213) (200,280)
Other Income
Interest and miscellaneous
income 20,843 24,411
Net Loss $(301,214) $(101,664) $(433,802) $(200,280)
Net Loss Per Share(Note 1) $( .02) $( .01) $( .03) $( .02)
Weighted Average
Number of Shares
Outstanding 14,225,694 11,842,754 13,069,527 11,802,319
</TABLE>
<PAGE>
FORM 10-QSB
EFTEK CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash Flows From Operating Activities
Net loss for the period $(433,802) $(200,280)
Adjustments to Reconcile
Net Loss to Net Cash Used
In Operating Activities
Amortization and depreciation 3,964 3,481
Changes In Operating Assets
and Liabilities
Decrease (increase) in accounts receivable ( 1,521) 11,066
Decrease (increase) in prepaid expenses ( 17,505) 7,488
Increase in intangible assets ( 5,744) ( 9,710)
Increase in deposits ( 400)
Decrease in accounts payable and
accrued liabilities ( 74,126) ( 8,161)
Net Cash Used In Operating
Activities (528,734) (196,516)
Cash Flows From Investing Activities
Cash from acquisition 30,247
Purchase of equipment (385,339)
Net Cash Used In Investing Activities (355,092)
Cash Flows From Financing
Activities
Payments from related parties 4,776
Payments from officer 4,879
Proceeds from issuances of common stock 989,150 100,000
Net Cash Provided By
Financing Activities 998,805 100,000
Net Increase (Decrease) In Cash 114,979 ( 96,516)
Beginning Cash 391 210,645
Ending Cash $ 115,370 $ 114,129
</TABLE>
Supplemental Disclosure (Note 2)
<PAGE>
FORM 10-QSB
EFTEK CORP.
(Unaudited)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The financial statements for the three months and six months ended
June 30, 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 June 30, 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 and six months ended June 30,
1996 are not necessarily indicative of the results for the year
ending December 31, 1996.
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 six months ended June 30, 1996 was $2,432.
Property and equipment consisted of the following at June 30, 1996:
<TABLE>
<S> <C>
Equipment $ 62,422
Furniture and fixtures 12,003
Building and leasehold improvements 336,246
410,671
Less accumulated amortization
and depreciation 8,651
Net property and equipment $ 402,020
/TABLE
<PAGE>
FORM 10-QSB
EFTEK CORP.
(Unaudited)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
Revenue Recognition
Revenue is recognized upon receipt of royalty fees from the
licensing of the Company's patents and technologies to other
companies. Revenue from tipping fees is recognized upon receiving
delivery of mixed cullet.
Loss Per Common Share
Loss per common share is based upon the weighted average number of
common shares outstanding.
2. Supplemental Disclosure of Noncash Investing Activity
During the three months ended June 30, 1996, the Company acquired
Fire Doctor, Inc., a company engaged in the development of fire
retardant products. In addition, the Company transferred all
assets and liabilities of its recycling division to a newly formed
corporation called C.F.C., Inc. In conjunction with the
acquisition, assets and liabilities were recorded as follows:
<TABLE>
<S> <C>
Assets acquired $ 57,890
Liabilities assumed 38,733
Excess of Assets Acquired
Over Liabilities Assumed $ 19,157
</TABLE>
<PAGE>
FORM 10-QSB
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Six and Three Month Periods Ended June 30, 1996 Compared To The Six and
Three Month Periods Ended June 30, 1995.
Revenue of $1,774 has been realized for the six and three months
ended June 30, 1996. Operating expenses for the six months ended
June 30, 1996 were $459,987 as compared to $200,280 for the six months
ended June 30, 1995. Operating expenses for the three months ended June
30, 1996 were $323,831 as compared to $101,664 for the three months
ended June 30, 1995. During the three months ended June 30, 1996, the
Company acquired Fire Doctor, Inc., a company engaged in the development
of a chemical that substantially retards the spread of flame. In
addition, the Company transferred all assets and liabilities of its
recycling division to a newly formed corporation called C.F.C., Inc.
The Company anticipates substantial revenue from C.F.C., Inc. 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 increase in operating expenses is primarily due to the operations of
the above subsidiaries. Fire Doctor and C.F.C. had operating expenses
of $93,046 and $113,506, respectively, for the three months ended June
30, 1996.
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.
Liquidity & Capital Resources
The Company's primary source of funds to date has been the sale of its
securities. During the six months ended June 30, 1996, the
Company's working capital increased by $250,387 due to four private
placements of 2,611,633 shares of its common stock for an aggregate
purchase price of $989,150.
The Company is continuing to obtain additional financing through
private placements and negotiate agreements for the purpose of
future operations relating to the processing of recycled glass and
fire retardant products.
<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
None
Item 6. Exhibits and Reports on Forms 8-K
(a) Exhibits: None
(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: July 25, 1996 By:/s/Frank Whitmore
_______________________________
FRANK WHITMORE
President, Chief Executive
Officer, and Chairman of the
Board of Directors
Dated: July 25, 1996 By:/s/Shawn Pringle
_______________________________
SHAWN PRINGLE,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary information
extracted from the Consolidated Statements of
Operations and Consolidated Balance Shees 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> Jun-30-1996
<PERIOD-TYPE> 6-MOS
<CASH> 115,370
<SECURITIES> 0
<RECEIVABLES> 254,980
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 387,855
<PP&E> 410,671
<DEPRECIATION> (8,651)
<TOTAL-ASSETS> 876,775
<CURRENT-LIABILITIES> 46,462
<BONDS> 0
0
0
<COMMON> 17,349
<OTHER-SE> 813,210
<TOTAL-LIABILITY-AND-EQUITY> 876,775
<SALES> 1,774
<TOTAL-REVENUES> 1,774
<CGS> 5,506
<TOTAL-COSTS> 459,987
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (458,213)
<INCOME-TAX> 0
<INCOME-CONTINUING> (433,802)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (433,802)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
