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, 1998
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
----- -----
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Outstanding at March 10, 1998
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Common Stock - No Par 6,820,921
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STARTECH ENVIRONMENTAL CORPORATION
INDEX
PAGE NO.
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
Balance Sheet - January 31, 1998
and 1997 3
Statement of Operations for the quarters ended
January 31, 1998 and 1997 4
Statement of Cash Flows for the quarters ended
January 31, 1998 and 1997 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 8
Item 2. Changes in Securities 8
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 9
SIGNATURE 9
2
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<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
STARTECH ENVIRONMENTAL CORPORATION
BALANCE SHEET
January 31, January 31,
ASSETS 1998 1997
----------- -----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 833,547 $ 789,462
Inventory 100,000
Other current assets 71,333 16,136
----------- -----------
Total Current Assets 1,004,880 805,598
Other Assets 48,497 100,000
----------- -----------
$ 1,053,377 $ 905,598
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 93,730 $ 39,936
Investor deposits 958,375
Notes payable - short term 100,000 100,000
Other accrued expenses 23,132 39,512
----------- -----------
Total Current Liabilities 216,862 1,137,823
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:
7,013,552 at January 31, 1998 and
6,142,863 at January 31, 1997 2,598,606 653,834
Additional paid-in capital 300 300
Accumulated deficit Net Income (loss) (1,762,391) (886,359)
----------- -----------
Total Stockholders' (deficit) equity 836,515 (232,225)
$ 1,053,377 $ 905,598
=========== ===========
See notes to financial statements
3
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<TABLE>
<CAPTION>
STARTECH ENVIRONMENTAL CORPORATION
STATEMENT OF OPERATIONS
Quarter Ended Quarter Ended
January 31, 1998 January 31, 1997
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<S> <C> <C>
Revenue $ 0 $ 0
Operating expenses
Selling expense 14,955 40,448
General and administrative expense 169,711 141,512
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184,666 181,960
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Loss from operations (184,666) (181,960)
Other income (expense):
Interest income 9,624 5,042
Interest expense (2,250) (2,250)
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Total other income (expense) 7,374 2,792
----------- -----------
Income tax expense 0 0
Net loss ($ 177,292) ($ 179,168)
=========== ===========
Net loss per share $ (0.03) $ (0.03)
=========== ===========
Weighted average common
shares outstanding 7,013,552 6,045,367
=========== ===========
See notes to financial statements
4
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<TABLE>
<CAPTION>
STARTECH ENVIRONMENTAL CORPORATION
STATEMENT OF CASH FLOWS
Quarter Ended Quarter Ended
January 31, 1998 January 31, 1997
---------------- ----------------
Cash flows from operating activities:
<S> <C> <C>
Net loss ($177,292) ($179,168)
(Increase) in other current assets (6,000) (5,255)
Increase in accounts payable 26,562 12,501
Increase in accrued expenses 2,237 2,250
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Net cash used in operating activities (154,493) (169,672)
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Cash flows from financing activities:
Proceeds from issuances of common stock 0 678,375
---------
Net cash provided from financing activities 0 678,375
Net increase (decrease) in cash (154,493) 508,703
Cash at beginning of period 988,040 280,759
Cash and cash equivalents at end of period $ 833,547 $ 789,462
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 0 $ 0
========= =========
Cash paid during the period for income taxes $ 1,489 $ 0
========= =========
See note to financial statements
5
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STARTECH ENVIRONMENTAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Basis of Presentation
STARTECH Environmental Corporation (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, 1998.
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, 1997 which are included in the
Company's annual report on form 10-K for the period ended October 31, 1997. The
results of operations for the quarter ended January 31, 1998 are not necessarily
indicative of the results to be expected for the full year.
Note 2. Equity Transactions
At the end of the quarter ended January 31, 1998 there were 202,131 shares
of common stock retired as a result of the successful conclusion of litigation
with a major stockholder group. During the quarter being reported there were
9,500 shares of S-8 common shares issued.
6
<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 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 stock sales. The
Registrant is and will continue to be dependent upon sales, contract deposits,
loans and 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.
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS.
The company was not involved in any significant legal proceedings at the end of
the quarter being reported herein. 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.
8
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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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
None were filed for the quarter ended January 31, 1998.
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 10, 1998 By: /S/ John D. Watts
-------------- --------------------------------------
John D. Watts
Vice President, Chief Finance Officer
9
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<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
January 31, 1998 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> JAN-31-1998
<CASH> 833,547
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 100,000
<CURRENT-ASSETS> 71,333
<PP&E> 48,497
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,053,377
<CURRENT-LIABILITIES> 216,862
<BONDS> 0
0
0
<COMMON> 2,598,906
<OTHER-SE> (1,762,391)
<TOTAL-LIABILITY-AND-EQUITY> 1,053,377
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 179,542
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,250
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (177,292)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
