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, 1997 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
West Berlin, New Jersey 08091
(Address of principal executive offices) (Zip Code)
(609)767-2300
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report)
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 March 31, 1997 was 29,189,485 shares.
Transitional small business disclosure format (check one): Yes No X
--- ---
<PAGE>
FORM 10-QSB
EFTEK CORPORATION
INDEX
Page(s)
PART I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet - March 31, 1997
(Unaudited) 2
Consolidated Statements of Operations
(Unaudited) - Three Months Ended March 31, 1997
and 1996 3
Consolidated Statements of Cash Flows
(Unaudited) - Three Months Ended March 31, 1997
and 1996 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
<PAGE>
FORM 10-QSB PART I - FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
EFTEK CORPORATION
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
------
Current Assets
- --------------
Cash $ 308,225
Receivables:
Trade 4,812
Related party 266,018
Other 1,387
Prepaid expenses 45,651
---------
Total Current Assets 626,093
-------------------- ---------
Property and Equipment, Net (Note 2) 3,445,784
- --------------------------- ---------
Other Assets
- ------------
Patent costs, net (Note 2) 55,318
Organization costs, net (Note 2) 675
Deposits 7,300
---------
Total Other Assets 63,293
------------------ ---------
Total Assets 4,135,170
------------ =========
Liabilities and Shareholders' Equity
------------------------------------
Current Liabilities
- -------------------
Current portion of long term debt 44,306
Accounts payable and accrued
liabilities 199,009
Income taxes payable 450
---------
Total Current Liabilities 243,765
-------------------------
Long Term Debt, Less Current Portion 165,948
- ------------------------------------ ---------
Total Liabilities 409,713
----------------- ---------
Stockholders' Equity
- --------------------
Common stock, $.001 par; authorized
25,000,000 shares; issued and
outstanding 29,129,919 shares 29,130
Additional paid in capital 5,647,232
Deficit (1,950,659)
---------
3,725,703
Common stock held in treasury
(14,434 shares), at cost 246
---------
Total Stockholders' Equity 3,725,457
-------------------------- ---------
Total Liabilities and Stockholders'
Equity $ 4,135,170
----------------------------------- =========
/TABLE
<PAGE>
FORM 10-QSB
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------
1997 1996
---- ----
<S> <C> <C>
Revenues (Note 2) $ 62,286 $
- -------- ------- -------
Cost and Expenses
- -----------------
Costs of revenues 52,813
Selling, general and administrative 223,585 62,707
Research and development 73,449
------- -------
Total Costs and Expenses 276,398 136,156
------- -------
Loss From Operations (214,112) (136,156)
- -------------------- ------- --------
Other Income (Expenses)
- -----------------------
Miscellaneous income 73 3,568
Interest expense ( 1,128)
Miscellaneous expense ( 35)
------- -------
Total Other Income (Expenses) ( 1,090) 3,568
----------------------------- ------- -------
Net Loss $(215,202) $(132,588)
- -------- ======= =======
Net Loss Per Common and Common
Equivalent Share $( .01) $( .01)
- ------------------------------ ======= =======
Weighted Average
Common Shares
Outstanding 27,256,184 11,913,360
- ----------------- ========== ==========
/TABLE
<PAGE>
FORM 10-QSB
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Cash Flows From Operating Activities
- ------------------------------------ ---- ----
Net loss for the period $(215,202) $(132,588)
Adjustments to Reconcile Net Loss To
Net Cash Used In Operating Activities
- --------------------------------------
Depreciation and amortization 1,991 1,982
Changes In Operating Assets
and Liabilities
- ---------------------------
Decrease (increase) in receivables 54,304 ( 45,068)
Increase in prepaid expenses ( 1,531)
Increase in intangible assets ( 633) ( 1,165)
Increase in accounts payable and
accrued liabilities 7,680 6,411
Increase in income taxes payable 150
------- -------
Net Cash Used In Operating Activities (154,241) (170,428)
- ------------------------------------- ------- -------
Cash Flows Used In Investing Activities
- ---------------------------------------
Purchases of property and equipment (573,985) ( 3,588)
------- -------
Cash Flows From Financing Activities
- ------------------------------------
Proceeds from long term debt 47,889
Repayment of long term debt ( 14,282)
Proceeds from issuances of common stock 829,925 198,797
------- -------
Net Cash Provided By Financing Activities 863,532 198,797
- ----------------------------------------- ------- -------
Net Increase In Cash 135,306 24,781
- --------------------
Beginning Cash 172,919 391
- -------------- ------- -------
Ending Cash $ 308,225 $ 25,172
- ----------- ======= =======
</TABLE>
<PAGE>
FORM 10-QSB
EFTEK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
EFTEK Corporation (the Company), incorporated in the state of Nevada,
is engaged in processing mixed cullet (broken glass) into a recycled,
uncontaminated product for use in fiberglass and glass container
manufacturing industries. The Company also develops and sell various
fire retardant chemicals.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the period. Actual results could differ from those
estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Basis of Presentation
The financial statements for the three months ended March 31, 1997 have
been prepared without audit and, in the opinion of management, reflect
all adjustments necessary (consisting only of normal recurring
adjustments) to present fairly the Company's financial position at
March 31, 1997 and the results of its operations and its cash flows
from 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, 1996.
Operating results for the three months ended March 31, 1997 are not
necessarily indicative of the results for the year ending December 31,
1997.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided
using the straight line method over the estimated useful lives of the
assets. Expenditures for maintenance and repairs are charged against
income as incurred. When assets are sold or retired, the cost and
accumulated depreciation are removed from the accounts and any gain or
loss is included in income.
FORM 10-QSB
Property and equipment consisted of the following at March 31, 1997:
Land $ 338,073
Building 312,068
Building improvements 728,200
Equipment 2,059,741
Furniture and fixtures 17,511
Leasehold improvements 2,500
---------
3,458,093
Less accumulated depreciation 12,309
---------
Net property and equipment $ 3,445,784
=========
Intangible Assets
Certain intangible assets have been capitalized and are amortized over
the estimated useful lives of the assets using the straight-line
method. Patent costs are amortized over a period of 17 years.
Organization costs are amortized over a period of 5 years.
Net Loss Per Common and Common Equivalent Share
Net loss per common and common equivalent share is based upon the
weighted average number of common and common equivalent shares (stock
options and warrants) outstanding in each period. The computation of
fully diluted net loss per common and common equivalent share was
antidilutive in each of the periods presented.
3. Subsequent Event
The Company anticipates either a reverse stock split approved only by
the Board of Directors or an increase in the authorized number of
common shares during the second quarter of 1997 subject to stockholder
approval at the annual meeting of stockholders. In either event, the
authorized common shares would be sufficient to cover, the increased
issuance. The financial statements have not been adjusted to reflect
the impact of the proposed actions.
<PAGE>
FORM 10-QSB
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company's primary source of funds and liquidity to date has been
through the sale of its securities. The Company also received $59,910 in
tipping fees for the delivery and acceptance of 3 mix cullet (see below).
The Company believes there is a substantial and lucrative market for clean,
non-contaminated cullet. In an effort to tap this market, the Company
purchased in June of 1996 a 137 acre industrial compound including an
80,000 square foot industrial building as the site of the first processing
facility. The property was purchased for $650,000 with an additional
$728,341; of improvements made to date, of which $1,555 was made in the
current period. There is also additional offices and other buildings
totaling 48,000 square feet as well as land available to rent to third
parties.
In addition to the building improvements, approximately $2,056,142 of
equipment and machinery, labor and supplies were incurred through March 31,
1997 ($573,985 in the current period) in developing and processing line.
The line is expected to be completed by June 5, 1997.
Management decided during January, 1997, to cease accepting 3 mix cullet
due to price discrepancies with suppliers and waiting for end user
qualification. However, it continues to receive and process "flint" glass
which has immediate end use. It is anticipated that the Company will
resume accepting cullet at an increased fee schedule, immediately upon
being "qualified" by certain of its end users.
In April, 1996, the Company acquired, as a diversification hedge, 100% of
the stock of Fire Doctor, Inc. The wholly owned subsidiary markets and
sells a chemical which substantially retards the spread of flame. Fire
Doctor has successfully sold its product as an "added value" item to a
major paint manufacturer for inclusion in its line of "kid proof" paint.
This potential market, combined with the obvious customer use with
Christmas trees, decks, etc. has been the basis for the Company's continued
support despite slow sales performance.
Throughout the first quarter of 1997, management continued to review,
revise and address it overhead costs in order to maximize efficiencies
during the processing line construction and development. These efforts
will continue throughout 1997 and beyond as the line becomes operational
and future sites are identified and pursued.
The Company sold at various times in the first quarter, additional shares
of its common stock in a Private Placement to mainly institutional foreign
investors for a consideration of $829,925. Although there is no assurance,
the Company believes that additional financing through Private Placement
is available and such funds, in addition to tipping fees and, eventually,
the sale of premium cullet to end users should provide enough financing for
the Company for the next year.
<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:
i. Notification of Private Placements filed February 27, 1997.
ii. Notification of Private Placements filed March 25, 1997.
iii. Notification of Private Placements filed April 11, 1997.
iv. Notification of Private Placements filed April 29, 1997.
v. Notification of Private Placements filed May 20, 1997.
<PAGE>
FORM 10-QSB
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
EFTEK Corporation has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
EFTEK CORPORATION
Dated: May 20, 1997 By:/s/Frank Whitmore
---------------------------
FRANK WHITMORE
President, Chief Executive
Officer, and Chairman of the
Board of Directors
Dated: May 20, 1997 By:/s/Gerard T. Wisla
----------------------------
GERARD T. WISLA
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000846476
<NAME> EFTEK CORP.
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<PERIOD-TYPE> 3-MOS
<CASH> 308,225
<SECURITIES> 0
<RECEIVABLES> 272,217
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 626,093
<PP&E> 3,458,093
<DEPRECIATION> 12,309
<TOTAL-ASSETS> 4,135,170
<CURRENT-LIABILITIES> 243,765
<BONDS> 0
0
0
<COMMON> 29,130
<OTHER-SE> 3,696,573
<TOTAL-LIABILITY-AND-EQUITY> 4,135,170
<SALES> 62,286
<TOTAL-REVENUES> 62,286
<CGS> 52,813
<TOTAL-COSTS> 276,398
<OTHER-EXPENSES> 1,090
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (215,202)
<INCOME-TAX> 0
<INCOME-CONTINUING> (215,202)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (215,202)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
