<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 MARCH 31, 1998 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 CORPORATION
(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.)
324 New Brooklyn Road
Berlin, New Jersey 08009
(Address of principal executive offices) (Zip Code)
(609)753-4344
(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 March 31, 1998 was 11,556,910 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, 1998
(Unaudited) 3
Consolidated Statements of Operations
(Unaudited) - Three Months Ended March 31, 1998
and 1997 4
Consolidated Statements of Cash Flows
(Unaudited) - Three Months Ended March 31, 1998
and 1997 5
Notes to Consolidated Financial Statements
(Unaudited) 6 - 7
Item 2. Management's Discussion and Analysis 8
PART II. Other Information 9
Signature Page 10
<PAGE>
FORM 10-QSB
PART I - FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
EFTEK CORPORATION
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(Unaudited)
Assets
Current Assets
Cash $ 52,787
Receivables 94,706
Prepaid expenses 38,356
----------
Total Current Assets 185,849
----------
Property and Equipment, Net (Note 2) 4,842,594
----------
Other Assets
Intangible assets, net (Note 2) 84,592
Deposits 3,900
----------
Total Other Assets 88,492
----------
Total Assets 5,116,935
==========
Liabilities and Shareholders' Equity
Current Liabilities
Current portion of long term debt 205,528
Current portion of obligations under
capital leases 139,561
Accounts payable and accrued
liabilities 950,851
Income taxes payable 750
---------
Total Current Liabilities 1,296,690
Long Term Debt, Less Current Portion 235,694
Obligations Under Capital Leases
(Less Current Portion) 388,110
----------
Total Liabilities 1,920,494
----------
Stockholders' Equity
Common stock, $.001 par; authorized
25,000,000 shares; issued and
outstanding 11,556,910 shares 11,557
Additional paid in capital 6,946,915
Deficit (3,761,785)
----------
3,196,687
Common stock held in treasury
(14,434 shares), at cost 246
----------
Total Stockholders' Equity 3,196,441
----------
Total Liabilities and Stockholders'
Equity $ 5,116,935
===========
<PAGE>
FORM 10-QSB
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Revenues (Note 1) $ 383,003 $ 62,286
-------- -------
Cost and Expenses
Costs of revenues 286,609 52,813
Selling, general and administrative 423,858 223,585
-------- -------
Total Costs and Expenses 710,467 276,398
-------- -------
Loss From Operations (327,464) (214,112)
-------- -------
Other Income (Expenses)
Miscellaneous income 5,000 73
Interest expense ( 15,284) ( 1,128)
Miscellaneous expense 0 ( 35)
-------- -------
Total Other Income (Expenses) ( 10,284) ( 1,090)
-------- -------
Net Loss $(337,748) $(215,202)
-------- --------
Net Loss Per Common and Common
Equivalent Share $( .03) $( .02)
======== =======
Weighted Average
Common Shares
Outstanding 11,281,980 9,540,908
========== ==========
<PAGE>
FORM 10-QSB
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
---- ----
Cash Flows From Operating Activities
Net loss for the period $(337,748) $(215,202)
Adjustments to Reconcile Net Loss To
Net Cash Used In Operating Activities
Depreciation and amortization 31,994 1,991
Changes In Operating Assets
and Liabilities
(Increase) decrease in receivables ( 29,108) 54,304
Decrease (increase) in prepaid expenses 1,678 ( 1,531)
Increase in intangible assets ( 1,314) ( 633)
Increase in accounts payable and
accrued liabilities 187,160 7,680
Increase in income taxes payable 150 150
--------- ----------
Net Cash Used In Operating Activities (147,188) (154,241)
--------- ----------
Cash Flows Used In Investing Activities
Purchases of property and equipment ( 43,191) (573,985)
--------- ----------
Cash Flows From Financing Activities
Proceeds from long term debt 47,889
Reduction of long term debt ( 16,704) ( 14,282)
Proceeds from issuances of common stock 227,868 829,925
-------- ----------
Net Cash Provided By Financing Activities 211,164 863,532
-------- ----------
Net Increase In Cash 20,785 135,306
Beginning Cash 32,002 172,919
-------- ----------
Ending Cash $ 52,787 $ 308,225
======== ==========
<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, 1998 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, 1998 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, 1997.
Operating results for the three months ended March 31, 1998 are not
necessarily indicative of the results for the year ending December 31,
1998.
<PAGE>
FORM 10-QSB
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.
Property and equipment consisted of the following at March 31, 1998:
Land $ 338,073
Building 317,081
Building improvements 890,795
Equipment 3,447,699
Furniture and fixtures 22,108
--------
5,015,756
Less accumulated depreciation 173,162
--------
Net property and equipment $ 4,842,594
=========
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 diluted net loss per common and common equivalent share was
antidilutive in each of the periods presented.
<PAGE>
FORM 10-QSB
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth and discussed below for the three months
ended March 31, 1998 is derived from the Consolidated Financial
Statements included elsewhere herein. The financial information set
forth and discussed below is unaudited but, in the opinion of
management, reflects all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of such information.
The Company's results of operations for a particular quarter may not
be indicative of results expected during the other quarters or for
the entire year.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH THREE MONTHS ENDED
MARCH 31, 1997
Revenue for the three months ended March 31, 1998 increased 515% to
$383,003 as compared to $62,286 in the three month period ended March
31, 1997. The increase in revenues is attributable to the growth of
the operations of the Company's wholly owned subsidiary, CFC, Inc.
Cost of revenues for the three months ended March 31, 1998 increased
443% to $286,609 as compared to $52,813 in the three month period
ended March 31, 1997. The increase in cost of revenues is attributable'
to the growth of the operations of the Company's wholly owned
subsidiary, CFC, Inc.
Selling, general and administrative costs for the three months ended
March 31, 1998 increased 90% to $423,858 as compared to $223,585 in
the three month period ended March 31, 1997. The increase in selling,
general and administrative costs is attributable to payroll and
related operating costs of CFC, Inc.
Other income (expenses) for the three months ended March 31, 1998 was
an expense of $10,284 as compared to an expense of $1,090 in the
three month period ended March 31, 1997. The increase in other
income (expenses) is attributable to interest expense of $15,284.
Net loss for the three months ended March 31, 1998 increased 57% to
$337,748 as compared to $215,202 in the three month period ended
March 31, 1997.
<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: May 20, 1998 By:/S/Frank Whitmore
FRANK WHITMORE
President, Chief Executive
Officer, and Chairman of the
Board of Directors
Dated: May 20, 1998 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<PERIOD-TYPE> 3-MOS
<CASH> 52,781
<SECURITIES> 0
<RECEIVABLES> 94,706
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 185,849
<PP&E> 5,015,256
<DEPRECIATION> 173,162
<TOTAL-ASSETS> 5,116,935
<CURRENT-LIABILITIES> 1,296,690
<BONDS> 0
0
0
<COMMON> 11,557
<OTHER-SE> 3,185,130
<TOTAL-LIABILITY-AND-EQUITY> 5,116,935
<SALES> 383,003
<TOTAL-REVENUES> 383,003
<CGS> 286,609
<TOTAL-COSTS> 710,407
<OTHER-EXPENSES> 10,284
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (337,748)
<INCOME-TAX> 0
<INCOME-CONTINUING> (337,748)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (337,748)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
