SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the nine months period ended - July 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
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Commission file number 0-25312
STARTECH ENVIRONMENTAL CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 84-1286576
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
79 Old Ridgefield Road
Wilton, Connecticut 06897
(Address of principal executive offices) Zip Code
203/ 762-2499
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has 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, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
----- -----
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Outstanding at September 13, 1996
------------------- ---------------------------------
Common Stock - No Par 5,903,374
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STARTECH ENVIRONMENTAL CORPORATION
INDEX
PAGE NO.
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PART I - FINANCIAL INFORMATION
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Item 1. Unaudited Financial Statements
Balance Sheet - July 31, 1996 (unaudited)
and October 31, 1995 (audited) 3
Statement of Operations for the quarters and nine months
ended July 31, 1996 and 1995 ( unaudited) 4
Statement of Cash Flows for the nine months ended
July 31, 1996 and 1995 (unaudited) 5
Statement of Cash Flows for the three months ended
July 31, 1996 and 1995 (unaudited) 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of
Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURE 11
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2
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PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
STARTECH ENVIRONMENTAL CORPORATION
BALANCE SHEET
July 31, October 31,
ASSETS 1996 1995
--------- -----------
Current Assets:
Cash and cash equivalents $ 125,714 $ 85,025
Accounts receivable 16,000 0
Other current assets 8,071 0
--------- -----------
Total Current Assets 149,785 85,025
Other Assets 100,000 0
--------- ----------
$ 249,785 $ 85,025
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 21,176 $ 19,923
Accrued interest 8,250 1,500
Notes payable - short term 100,000 100,000
--------- ---------
Total Current Liabilities 129,426 121,423
Stockholders' equity:
Preferred stock, no par value
10,000,000 shares authorized,
no shares issued or outstanding
Common stock, no par value,
800,000,000 shares authorized;
shares issued and outstanding:
5,903,374 at July 31, 1996 and
996,500 at October 31, 1995 517,512 1,000
Additional paid-in capital 300 300
Retained earnings (36,398) (1,000)
Accumulated deficit Net Income (loss) (361,055) (36,698)
--------- ---------
Total Stockholders' Equity 120,359 (36,398)
$ 249,785 $ 85,025
========= ========
See notes to financial statements
3
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<TABLE>
<CAPTION>
STARTECH ENVIRONMENTAL CORPORATION
STATEMENT OF OPERATIONS (unaudited)
Quarter Ended Quarter Ended Nine Months Ended Nine Months Ended
July 31,1996 July 31,1995 July 31,1996 July 31,1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $16,000 $ 0 $26,000 $ 0
LESS: Operating expenses
Selling expense 8,057 0 54,381 0
General and Admin. exp. 113,174 0 328,351 0
-------- -------- -------- -------
Total S,G&A 121,231 0 382,732 0
Loss from operations (105,231) (356,732)
Other income (expense):
Interest income 2,037 0 2,427 0
Interest expense (2,250) 0 (6,750) 0
Net loss $(105,444) $ 0 $(361,055) $ 0
========= ------- ========= =====
Net loss per share $ (.02) $ N/A $ (.07) $ N/A
========= ======= ========= =====
Average common
shares outstanding 5,794,700 996,500 5,345,650 996,500
========= ======== ========= =======
See notes to financial statement.
4
</TABLE>
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<TABLE>
<CAPTION>
STARTECH ENVIRONMENTAL CORPORATION
STATEMENT OF CASH FLOWS (unaudited)
Nine Months Ended Nine Months Ended
July 31, 1996 July 31, 1995
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(361,055) $ 0
(Increase) decrease in current assets:
Accounts receivable (16,000) 0
Employee advances (8,071) 0
Increase (decrease) in current liabilities:
Accounts payable 1,253 0
Accrued interest 6,750 0
-------- -------
Net cash used in operating activities (377,123) 0
Cash Flows from financing activities:
Proceeds from issuances of
common stock, net 417,812 0
-------- --------
Net decrease in cash and cash equivalents 40,689 0
Cash and cash equivalents at beginning
of period 85,025 0
Cash and cash equivalents at end of period $125,714 0
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 0
Issuance of common stock for vendor advance $100,000
See note to financial statements
5
</TABLE>
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<TABLE>
<CAPTION>
STARTECH ENVIRONMENTAL CORPORATION
STATEMENT OF CASH FLOWS (unaudited)
Three Months Ended Three Months Ended
July 31, 1996 July 31, 1995
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(105,444) $ 0
(Increase) decrease in current assets:
Accounts receivable (16,000) 0
Employee advances (3,350) 0
Increase (decrease) in current liabilities:
Accounts payable 133 0
Accrued interest 2,250 0
--------- ---------
Net cash used in operating activities (122,411) 0
Cash Flows from financing activities:
Proceeds from issuances of
common stock, net 8,347 0
--------- ---------
Net decrease in cash and cash equivalents 114,064 0
Cash and cash equivalents at beginning
of period 239,778 0
Cash and cash equivalents at end of period $ 125,714 0
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 0
Issuance of common stock for vendor advance $ 100,000
See note to financial statements
6
</TABLE>
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STARTECH ENVIRONMENTAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Basis of Presentation
STARTECH Environmental Coloration (the "Company") is engaged in the
commercialization and continued development of an innovative processing
technology for recycling industrial wastes.
Net loss per share is determined by dividing net loss by the average number of
common shares outstanding during the period. Common share equivalents, which
consist of stock which may be issuable upon exercise of outstanding stock
options or warrants, have been excluded from the average number of common shares
since their effect is anti-dilutive.
Certain reclassifications have been made for consistent presentation. The
reclassifications have no effect on the net loss for the period ended July 31,
1996.
The information furnished is unaudited and reflects all adjustments (consisting
of only normal recurring and insignificant adjustments) which, in the opinion of
management, are necessary for a fair presentation of the financial position and
results of operations for the interim periods. The accompanying financial
statements should be read in conjunction with the Company's financial statements
and related footnotes for the year ended October 31, 1995 which are included in
the Company's annual report on form 10-K. The results of operations for the nine
months ended July 31, 1996 are not necessarily indicated of the results to be
expected for the full year.
Note 2. Equity Transactions
During the nine months ended July 31, 1996, 392,700 shares of common stock were
issued upon the exercise of options and an additional 514,174 common shares were
sold to investors. These shares are in addition to the shares issued to the
founding shareholders and investors as disclosed in the FORM 8-K filed with the
Securities and Exchange Commission on November 29, 1995.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Results of Operations
- ---------------------
The Registrant was incorporated under the laws of the State of Colorado in May
1991 and has been dormant since 1991. During fiscal 1995, the Registrant entered
into negotiations with Startech Corporation ("Startech")which culminated in the
acquisition of Startech on November 17, 1995.
Due to the prior dormancy of the Registrant, no revenues were realized and only
nominal operating expenses, principally filing fees, bank service charges and
legal services, and some minor start up costs have been incurred through October
31, 1995. These trends have changed due to the Startech acquisition. On January
16, 1996 the name of the registrant was changed from Kapalua Acquisitions
Incorporated to Startech Environmental Corporation.
Liquidity and Capital Resources
- -------------------------------
Liquidity has been provided by sales, stock sales, advances from investors and
majority shareholders or notes payable to other third parties. The Registrant is
and will continue to be dependent upon sales, loans and/or capital contributions
from shareholders or outside investors. The Registrant's capital resource
requirements for future periods will increase due to the Startech acquisition
and future needs are anticipated to be met from operations of the Registrant's
new business activity.
Background
- ----------
The Registrant's activities during the past three fiscal years (November 1, 1992
to November 16, 1995) consisted primarily of investigating possible business
opportunities.
On November 17, 1995, the Company completed the acquisition of all of the issued
and outstanding shares of common stock of Startech Corporation, a corporation
organized under the laws of the State of Connecticut which engineers,
manufacturers and markets Plasma Waste ConverterTM ("PWC") systems to recover,
recycle, reduce and remediate hazardous and nonhazardous waste materials.
On November 18, 1995, the Board of Directors of the Company unanimously approved
a change of business purpose of the Company from one seeking an acquisition
candidate to one engaged in the business of manufacturing equipment that
recovers, recycles, reduces and remediates hazardous and nonhazardous waste
materials.
8
<PAGE>
General
- -------
Startech is an environmental technology corporation engaged in the
commercialization and continued development of its Plasma Waste ConverterTM
("PWC") systems for the recycling, resource recovery, reduction and remediation
of hazardous and nonhazardous organic and inorganic materials and wastes
including radioactive wastes.
The Startech Plasma Waste Converter is a closed-loop recycling system that
converts materials formerly regarded as hazardous wastes into useful commodity
products. The hazardous waste can be organic and inorganic, in the form of a
gas, liquid, and solids or any combination thereof. Waste volume reductions
higher than 300 to 1 have been demonstrated. Depending on the waste processed,
the principal commodities produced by the system are a synthetic gas called PCG
(Plasma Converted Gas)TM, metals, and an obsidian-like inert silicate stone. The
PCG can be used as a chemical feed stock to produce polymers and other common
industrial products, as a fuel to produce electricity, as a fuel source for fuel
cells, as a heating plant fuel to reduce the cost and reliance on fossil fuels,
and in desalinization applications to produce fresh water for irrigation and
drinking. The metals can be employed in the metallurgical industry. The stone
silicates can be employed in the abrasives industry, and as an aggregate
material for construction industry applications.
9
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PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS.
No legal proceedings are pending to which the Registrant is a party or of which
any of Registrant's property is the subject matter. No legal proceedings are
known to be contemplated by governmental authorities.
ITEM 2. CHANGE IN SECURITIES.
No constituent instruments defining the rights of the holders of any class of
registered securities of the Registrant have been materially modified. No rights
evidenced by any class of registered securities have been materially limited or
qualified by the issuance or modification of any other class of securities.
There are no working capital restrictions or other limitations upon the payment
of dividends except as reported in the Registrant's FORM 10.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
There have been no defaults in the payment of principal interest, a sinking or
purchase fund installments, or any other default not cured within thirty days,
with respect to any indebtedness of the Registrant or any of its significant
subsidiaries exceeding five percent (5%) of the total assets of the Registrant
and its consolidated subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted during the first nine months of the fiscal year
covered by this report to a vote of security holders.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
None
(b) Reports.
No reports on Form 8-K were filed for the quarter ended July 31,
1996.
10
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1933, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STARTECH ENVIRONMENTAL CORPORATION
Date: September 13, 1996 By: /S/ John D. Watts
------------------ -----------------
John D. Watts
Executive Vice President of Finance
and Administration
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JUL-31-1996
<CASH> 133,785
<SECURITIES> 100,000
<RECEIVABLES> 16,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 249,785
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 249,785
<CURRENT-LIABILITIES> 129,426
<BONDS> 0
0
0
<COMMON> 517,512
<OTHER-SE> (397,153)
<TOTAL-LIABILITY-AND-EQUITY> 249,785
<SALES> 26,000
<TOTAL-REVENUES> 26,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 380,305
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,750
<INCOME-PRETAX> (361,055)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
