<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, 1999 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 Identification No.)
incorporation or organization)
324 New Brooklyn Road, Berlin, NJ 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 June 30, 1999.
Common Stock, Par Value $.001 11,699,772
- ----------------------------- -------------------------
(Class) (Outstanding)
Transitional small business disclosure format (check one): Yes No X
<PAGE>
EFTEK CORPORATION
INDEX
Page(s)
-------
PART I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet - June 30, 1999
(Unaudited) 3
Consolidated Statements of Operations
(Unaudited) - Six Months and Three Months Ended
June 30, 1999 and 1998 4
Consolidated Statements of Cash Flows
(Unaudited) - Six Months Ended June 30, 1999
and 1998 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>
PART I - FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------
EFTEK CORPORATION
CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(Unaudited)
Assets
------
Current Assets
- --------------
Cash $ 16,873
Receivables 83,335
Prepaid expenses 4,539
---------
Total Current Assets 104,747
-------------------- ---------
Property and Equipment, Net (Note 2) 4,137,335
- --------------------------- ---------
Other Assets
- ------------
Intangible assets, net (Note 2) 222,491
---------
Total Other Assets 222,491
------------------ ---------
Total Assets 4,464,573
------------ =========
Liabilities and Shareholders' Equity
------------------------------------
Current Liabilities
- -------------------
Current portion of long term debt 270,337
Current portion of obligations
under capital leases 194,378
Accounts payable and accrued
liabilities 1,789,722
Income taxes payable 1,650
---------
Total Current Liabilities 2,256,087
-------------------------
Long Term Debt, Less Current Portion 235,629
- ------------------------------------
Obligations Under Capital Leases,
Less Current Portion 198,018
- ------------------------------- ---------
Total Liabilities 2,689,734
----------------- ---------
Stockholders' Equity
- ---------------------
Common stock, $.001 par; authorized
25,000,000 shares; issued and
outstanding 11,699,772 shares 11,700
Additional paid in capital 6,957,208
Deficit (5,193,823)
----------
1,775,085
Common stock held in treasury
(14,434 shares), at cost 246
---------
Total Stockholders' Equity 1,774,839
-------------------------- ---------
Total Liabilities and Stockholders'
Equity $ 4,464,573
----------------------------------- =========
See accompanying notes to financial statements.
<PAGE>
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues (Note 2) $ 354,424 $ 443,375 $ 696,683 $ 826,378
- -------- ------- ------- -------- -------
Costs and Expenses
- ------------------
Costs of revenues 305,174 171,622 587,696 458,231
Depreciation and
amortization 127,156 128,994 255,635 257,988
Selling, general and
administrative 134,133 362,009 280,007 753,873
------- ------- --------- ------
Total Costs and Expenses 566,463 662,625 1,123,338 1,470,092
- ------------------------ ------- ------- --------- ---------
Loss From Operations (212,039) (219,250) ( 426,655) (643,714)
- -------------------- ------- -------- ---------- --------
Other Income (Expenses)
- -----------------------
Miscellaneous income 5,000 5,000 5,000
Interest expense ( 15,374) ( 15,218) ( 43,211) (30,502)
Miscellaneous expense ( 3,063) ( 6,497)
------- -------- ---------- ---------
Total Other Income
(Expenses) ( 13,437) ( 15,218) ( 44,708) ( 25,502)
------------------ -------- -------- ---------- ---------
Net Loss $(225,476)$(234,468)$( 471,363) $(669,216)
- -------- ======== ========= ========= =========
Net Loss Per Common
and Common
Equivalent Share (Note 2) $( .02)$( .02) $( .04)$( .06)
- -------------- ======== ======== ======== ========
Weighted Average Common
Shares Outstanding 10,699,772 10,829,155 11,699,772 11,420,205
- ----------------------- ============ ========== ========== ==========
See accompanying notes to financial statements.
<PAGE>
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
1999 1998
---- ----
Cash Flows From Operating Activities
- ------------------------------------
Net loss for the period $(471,363) $(669,216)
Adjustments to Reconcile Net Loss To
Net Cash Used In Operating Activities
- --------------------------------------
Depreciation and amortization 255,635 257,988
Changes In Operating Assets
and Liabilities
- ---------------------------
(Increase) decrease in receivables 78,268 ( 63,638)
(Increase) decrease in prepaid expenses 26,345 ( 553)
Increase in intangible assets ( 14,244) ( 1,313)
Increase in accounts
payable and accrued liabilities 222,751 373,887
Increase in income taxes payable 750 150
------- --------
Net Cash Used In Operating Activities 98,142 (102,695)
- ------------------------------------- ------- -------
Cash Flows Used In Investing Activities
- ---------------------------------------
Purchases of equipment ( 36,752) (100,201)
------- -------
Cash Flows From Financing Activities
- ------------------------------------
Proceeds from long term debt, net 10,000
Reduction of long term debt ( 44,613) ( 52,180)
Proceeds from issuances of common stock 227,868
------- -------
Net Cash Provided By Financing Activities ( 44,613) 185,688
- ----------------------------------------- ------- -------
Net (Decrease) Increase In Cash 16,777 ( 17,208)
- -------------------------------
Beginning Cash 96 32,002
- -------------- -------- -------
Ending Cash $ 16,873 $ 14,794
- ----------- ======== =======
See accompanying notes to financial statements.
<PAGE>
EFTEK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 (known as "glass flour") for use in
the fiberglass manufacturing industry.
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 and six months ended
June 30, 1999 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 June 30, 1999 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, 1998.
Operating results for the six months ended June 30, 1999 are not
necessarily indicative of the results for the year ending December
31, 1999.
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 June 30, 1999:
Land $ 338,073
Building 317,081
Building improvements 896,079
Equipment 3,477,270
Furniture and fixtures 22,648
----------
5,051,151
Less accumulated depreciation and
amortization 913,816
---------
Net property and equipment $ 4,137,335
=========
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
The company uses Statement of Financial Accounting Standards No. 128
"Earnings Per Share" (SFAS No. 128) to compute its net loss per
common and common equivalent share. SFAS No. 128 requires basic
earnings per share which is computed by dividing reported earnings
available to common shareholders by the weighted average shares
outstanding and diluted earnings per share which reflects the
dilutive effect of common stock equivalents such as stock options
and warrants. The computation of diluted net loss per common and
common equivalent share was antidilutive in each of the periods
presented.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth and discussed below for the six
months ended June 30, 1999 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
SIX MONTHS ENDED JUNE 30, 1999 COMPARED WITH SIX MONTHS ENDED
JUNE 30, 1998
Revenue for the six months ended June 30, 1999 decreased 16% to
$696,683 as compared to $826,378 in the six-month period ended June
30, 1998. The decrease in revenues is attributable to the reduction
in sales of the Company's wholly owned subsidiary, CFC, Inc.
Cost of revenues for the six months ended June 30, 1999
increased 22% to $587,696 as compared to $458,231 in the six-month
period ended June 30, 1998. The increase in cost of revenues is
attributable to the growth of the operations of the Company's wholly
owned subsidiary, CFC, Inc.
Depreciation and amortization costs for the six months ended
June 30, 1999 and June 30, 1998 were relatively unchanged.
Selling, general and administrative costs for the six months
ended June 30, 1999 decreased 63% to $280,007 as compared to
$753,873 in the six month period ended June 30, 1998. The decrease
in selling, general and administrative costs is attributable
primarily to a reduction in maintenance costs of CFC, Inc. and
professional fees.
Other income (expenses) for the six months ended June 30, 1999
was an expense of $44,708 as compared to an expense of $25,502 for
the six month period ended June 30, 1998.
Net loss for the six months ended June 30, 1999 decreased 30%
to $471,363 as compared to $669,216 in the six-month period ended
June 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Please see Form 10-KSB for the period ended December 31, 1998
and filed with the Securities and Exchange Commission on November
16, 1999.
<PAGE>
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
Exhibits: None
Reports on Form 8-K: None
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.
EFTEK CORPORATION
Dated: November 16, 1999 By: /s/ Frank Whitmore
FRANK WHITMORE
President, Chief Executive
Officer, and Chairman of the
Board of Directors
Dated: November 16, 1999 By: /s/ Gerard T. Wisla
GERALD T. WISLA
Chief Financial Officer,
Secretary,
Treasurer, and Member of the
Board of Directors
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000846476
<NAME> EFTEK Corp.
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Apr-01-1999
<PERIOD-END> Jun-30-1999
<PERIOD-TYPE> 6-MOS
<CASH> 16,873
<SECURITIES> 0
<RECEIVABLES> 83,335
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 104,747
<PP&E> 4,137,335
<DEPRECIATION> 255,635
<TOTAL-ASSETS> 4,464,573
<CURRENT-LIABILITIES> 2,256,087
<BONDS> 0
0
0
<COMMON> 11,700
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,464,573
<SALES> 696,683
<TOTAL-REVENUES> 696,683
<CGS> 587,696
<TOTAL-COSTS> 1,123,338
<OTHER-EXPENSES> (44,708)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (43,211)
<INCOME-PRETAX> (471,363)
<INCOME-TAX> 0
<INCOME-CONTINUING> (471,363)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (471,363)
<EPS-BASIC> (.04)
<EPS-DILUTED> (.04)
</TABLE>
