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 quarterly period ended - January 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
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Commission file number 0-25312
STARTECH ENVIRONMENTAL CORPORATION
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(Exact name of registrant as specified in its charter)
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Colorado 84-1286576
79 Old Ridgefield Road
Wilton, Connecticut 06897
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(Address of principal executive offices) Zip Code
(203) 762-2499
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(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
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Securities registered pursuant to Section 12(g) of the Act:
Title of each class Outstanding at March 14, 1997
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Common Stock - No Par 6,859,256
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STARTECH ENVIRONMENTAL CORPORATION
INDEX
PAGE NO.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet - January 31, 1997
and October 31, 1996 3
Statement of Operations for the quarters ended
January 31, 1997 and 1996 4
Statement of Cash Flows for the quarters ended
January 31, 1997 and 1996 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of
Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURE 11
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
STARTECH ENVIRONMENTAL CORPORATION
BALANCE SHEET
January 31, January 31,
ASSETS 1997 1996
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<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 789,462 $ 246,951
Other current assets 16,136
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Total Current Assets 805,598 246,951
Other Assets 100,000
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$ 905,598 $ 246,951
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 39,936 $ 26,966
Investor deposits 958,375
Notes payable - short term 100,000 100,000
Other accrued expenses 39,512 3,750
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Total Current Liabilities 1,137,823 130,716
Stockholders' (deficit) 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:
5,453,000 at January 31, 1996 and
5,453,000 at October 31, 1996 653,834 273,468
Additional paid-in capital 300 300
Accumulated deficit Net Income (loss) (886,359) (152,533)
----------- -----------
Total Stockholders' (deficit) equity (232,225) 116,235
$ 905,598 $ 246,951
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See notes to financial statements.
3
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<CAPTION>
STARTECH ENVIRONMENTAL CORPORATION
STATEMENT OF OPERATIONS
Quarter Ended Quarter Ended
January 31, 1997 January 31, 1996
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<S> <C> <C>
Revenue $ 0 $ 0
Operating expenses
Selling expense 40,448 30,929
General and administrative expense 141,512 86,656
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181,960 117,525
Loss from operations
Other income (expense):
Interest income 5,042 0
Interest expense 2,250 2,250
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Net loss $ 179,168 $ 119,835
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Net loss per share $ (.03) $ (0.02)
=========== ===========
Weighted average common
shares outstanding 6,045,367 5,224,750
=========== ===========
See notes to financial statement.
4
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<CAPTION>
STARTECH ENVIRONMENTAL CORPORATION
STATEMENT OF CASH FLOWS
Quarter Ended Quarter Ended
January 31, 1997 January 31, 1996
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<S> <C> <C>
Cash flows from operating activities:
Net loss $(179,168) $(119,835)
(Increase) in other current assets (5,255)
Increase in accounts payable 12,531 7,043
Increase in accrued expenses 2,250 2,250
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Net cash used in operating activities (169,672) (110,542)
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Cash flows from financing activities:
Proceeds from issuances of
common stock 678,375 272,468
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Increase in cash and cash
equivalents 508,703 161,926
Cash and cash equivalents at beginning
of period 280,759 85,025
Cash and cash equivalents at end of period $ 789,462 $ 246,951
See note to financial statements
5
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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 weighted 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 and warrants, have been excluded from the weighted 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 ending January
31, 1997.
The information furnished is unaudited and reflects all adjustments (consisting
of only normal recurring 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, 1996 which are included in the
Company's annual report on form 10-K. The results of operations for the quarter
ended January 31, 1997 are not necessarily indicated of the results to be
expected for the full year.
Note 2. Equity Transactions
During the quarter ended January 31, 1997, 309,027 shares of common stock were
issued as a result of the company issuing a five percent (5%) stock dividend to
all shareholders of record on November 11, 1996. Another 638,917 shares were
issued from the proceeds received a private placement offering which closed on
December 31, 1996. The equity proceeds received by the company from the private
placement was $958,376. There were also 60,938 "S-8" shares issued to various
vendors as provided by the 1995 Nonqualifying Stock Option Plan.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Results of Operations
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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 Incorporated 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 for the quarter has been provided by previous and current stock sales.
The Registrant is and will continue to be dependent upon loans and/or capital
contributions from shareholders or outside investors. The Registrant's capital
resource requirements for future periods will increase due to increased
manufacturing, marketing and administrative demands. These needs are anticipated
to be met from operations of the Registrant's normal business activity.
Background
- ----------
The Registrant's activities (under its former name - Kapalua Acquisitions, Inc.)
during the two fiscal years (November 1, 1993 to October 31, 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 recovering, recycling, reduction and
remediation of hazardous and nonhazardous waste materials.
7
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General
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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.
8
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PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS.
The company is a defendant in litigation brought in Denver, Colorado District
Court by Delphina, Ltd. in January 1997. The complaint demands the removal of a
restrictive legend on shares purchased by Delphina, Ltd. in 1995 and 1996. The
company has moved the matter to the Federal Courts from the District of Colorado
and Delphina, Ltd. has moved to remand. The proceedings are in their preliminary
stages. The company does not believe there is any merit to the claim and will
vigorously contest the 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 no 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 quarter of the fiscal year covered by
this report to a vote of security holders.
ITEM 5. OTHER INFORMATION.
None.
9
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. - (by reference)
(a) Exhibits.
Exhibit 10.5 Private Placement Memorandum dated August 28,
1996.
(b) Reports.
One report on Form 8-K was filed during the quarter ended
January 31, 1997. The only subject of this report was the
change of accountants from Robert E. Moe and Associates P.C.
(Spokane, WA) to Kostin, Ruffkess & Company, LLC. (West
Hartford, CT). The change was implemented for the convenience
of the registrant. There were no disagreements between the
registrant and Robert E. Moe and Associates P.C.
10
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SIGNATURE
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.
STARTECH ENVIRONMENTAL CORPORATION
Date: March 15, 1997 By: /S/ John D. Watts
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John D. Watts
Vice President, Chief Finance Officer
11
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 789,462
<SECURITIES> 0
<RECEIVABLES> 100,000
<ALLOWANCES> 0
<INVENTORY> 16,136
<CURRENT-ASSETS> 905,598
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 905,589
<CURRENT-LIABILITIES> 1,137,823
<BONDS> 0
0
0
<COMMON> 653,834
<OTHER-SE> 886,359
<TOTAL-LIABILITY-AND-EQUITY> 905,598
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 40,448
<OTHER-EXPENSES> 141,512
<LOSS-PROVISION> 5,042<F1>
<INTEREST-EXPENSE> 2,250
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> (0.03)
<FN>
<F1>Interest Income
</FN>
</TABLE>
