SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-QSB
[ X ] Quarterly report under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
OR
[ ] Transition report under section 13 or 15 (d) of
the Exchange Act
Commission File Number 0-23402
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
(Exact name of registrant as specified in Charter)
DELAWARE
(State or other jurisdiction of incorporation)
11-2863244
(IRS Employer Identification No.)
1335 Greg Street, Unit #104
Sparks, Nevada 89431
(702) 331-5524
(Address and Telephone Number of Principal Executive Offices)
Check whether the issuer (1) filed all reports required
to be filed by section 13 or 15 (d) of the Exchange Act
during the past 12 months (or for such shorter period that
the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days. Yes [ X ] No [ ].
As of May 15, 1996, 12,444,766 shares of the issuer's common
stock were outstanding.
This report contains 9 pages. There are no exhibits.
<PAGE>
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
FORM 10-QSB
INDEX
Page
PART I. Financial Information: No.
Condensed Consolidated Balance Sheet - March 31,1996 3
Condensed Consolidated Statements of Operations -
Three Months And Six Months ended March 31, 1996
and 1995 4
Condensed Consolidated Statements of Cash Flows -
Six Months ended March 31,1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis or Plan of
Operation 7
PART II. Other Information:
Item 6 - Exhibits and Reports on Form 8-K 9
Signatures 9
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheet
March 31, 1996
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 1,998,796
Accounts receivable, net 174,552
Inventories 899,561
Prepaid expenses and other assets 140,313
Total Current Assets 3,213,222
Equipment and Improvements, net 654,869
Other Assets 103,144
Total Assets $ 3,971,235
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 441,948
Due To Related Parties, net 180,998
Stockholders' Equity:
5% Cumulative convertiblepreferred stock,
$.00001 par value; 10,000,000 shares
authorized; 4,000,000 shares issued and
outstanding; liquidation preference
$4,137,500 40
Common stock, $.005 par value; 25,000,000
shares authorized; 12,444,766 shares
issued and outstanding 62,224
Additional paid-in capital 16,249,250
Accumulated deficit ( 12,972,735)
Foreign currency translation adjustment 9,510
Total Stockholders' Equity 3,348,289
Total Liabilities and
Stockholders' Equity $ 3,971,235
See accompanying notes to condensed, consolidated financial statements
<PAGE>
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
For the Three Months and Six Months Ended March 31, 1996 and 1995
(Unaudited)
For the Six Months For the Three Months
Ended March 31, Ended March 31,
1996 1995 1996 1995
Sales $ 554,279 $ 395,795 $ 313,500 $ 289,888
Cost of Goods Sold 409,278 446,820 182,098 366,407
Gross Profit (Loss) 145,001 ( 51,025) 131,402 ( 76,519)
Costs and Expenses:
Selling, general
and administrative
expense 1,590,367 1,129,906 716,217 462,504
Depreciation and
amortization 25,154 14,099 14,772 10,499
Research and
development 135,703 305,708 33,305 101,441
1,751,224 1,449,713 764,294 574,444
Loss From
Operations (1,606,223) (1,500,738) ( 632,892) ( 650,963)
Interest and Other
Income 77,335 988 21,077 492
Loss from Continuing
Operations (1,528,888) (1,499,750) ( 611,815) ( 650,471)
Gain from
Discontinued
Operations - 32,429 - 109,783
Net Loss $(1,528,888) $(1,467,321)$( 611,815) $( 540,688)
Loss Per Common Share:
Net loss from
continuing
operations $(1,528,888) $(1,499,750)$( 611,815) $( 650,471)
Less: undeclared
dividends on
cumulative
preferred stock ( 100,000) - ( 50,000) -
Net loss from
continuing
operations
applicable to
common shares $(1,628,888) $(1,499,750)$( 661,815) $( 650,471)
Loss per common
share from
continuing
operations $ (.13) $ (.14)$ (.05) $ (.06)
Gain per common
share from
discontinued
operations - .01 - .01
Net Loss Per
Common Share $ (.13) $ (.13)$ (.05) $ (.05)
Weighted Average
Common Shares
Outstanding 12,444,766 10,864,067 12,444,766 10,937,850
See accompanying notes to condensed, consolidated financial statements.
<PAGE>
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
Cash flows from operating activities $(2,312,176) $( 787,083)
Cash flows from investing activities ( 523,735) ( -)
Cash flows from financing activities 4,375,000 765,722
Net increase (decrease) in cash
and cash equivalents 1,539,089 ( 21,361)
Cash and cash equivalents,
beginning of period 459,707 28,405
Cash and cash equivalents, end of
period $1,998,796 $ 7,044
Disclosure of Accounting Policy:
For purposes of cash flows, the Company considers all short-
term investments with an original maturity of three months
or less to be cash equivalents.
See accompanying notes to condensed, consolidated financial statements.
<PAGE>
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements
are unaudited; however, in the opinion of management, such
statements include all adjustments (which are of a normal,
recurring nature) necessary for a fair statement of the
results for the interim periods. The financial statements
included herein have been prepared by Vector Environmental
Technologies, Inc. (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures included herein
are adequate to make the information not misleading. The
results for the interim period are not necessarily
indicative of the results that will be realized for the
fiscal year.
The organization and business of the Company, accounting
policies followed by the Company and other information are
contained in the notes to the Company's consolidated
financial statements filed as part of the Company's
September 30, 1995 Form 10-KSB. The Form 10-KSB should be
read in conjunction with this quarterly report.
2. NOTES RECEIVABLE
At March 31, 1996, the Company has notes receivable from an
officer of the Company, and a director of an associated
company arising from the purchase of the Company's stock in
the amount of $75,000 each. These notes are demand notes
bearing interest at a rate of 6% per annum. Such notes have
been offset against additional paid-in capital.
3. PREFERRED STOCK
The Company's Series A preferred stock may be converted at
the option of the holder to common stock on a one-for-one
basis (subject to adjustment pursuant to certain common
stock transactions), has a $.05 per share cumulative
dividend rate, and has a liquidation preference equal to
$1.00 per share plus all unpaid dividends. Undeclared
dividends totaled $137,500 at March 31, 1996. Holders of a
share of Series A preferred stock are entitled to the
equivalent of four (4) common share votes.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Six Months Ended March 31, 1996 Compared to the Six Months
Ended March 31, 1995
Revenues for the six months ended March 31, 1996, were
$554,279 compared to $395,795 for the six months ended March
31, 1995. The $154,484 increase was due to an increase in
sales of water purification systems, principally in Vietnam.
Gross profit for the six months ended March 31, 1996 was 26%
compared to a loss for the six months ended March 31, 1995.
The improvement in gross profit is due to lower component
costs for water purification systems.
Costs and expenses were $1,751,224 for the six months ended
March 31, 1996, compared to $1,449,713 for the six months
ended March 31, 1995, an increase of $301,511. Compensation
and benefits increased $144,638 for the six month period
ended March 31, 1996 compared to the six month period ended
March 31, 1995 due to increased staff levels primarily
related to the Company's operations in Vietnam. Expenses
related to professional services, primarily legal, audit and
marketing increased by $315,823 in the six month period
ended March 31, 1996 compared to the six month period ended
March 31, 1995. Depreciation expense increased a total of
$11,055 in the six month period ended March 31, 1996
compared to the six months ended March 31, 1995. These
increases were offset by a decrease in research and
development related expenses of $170,005.
Other income was $77,335 for the six month period ended
March 31, 1996, compared to $988 for the six months ended
March 31, 1995, an increase of $76,347. This increase was
due to interest income earned on short term investments made
by the Company.
Three Months Ended March 31, 1996 Compared to the Three
Months Ended March 31, 1995
Revenues for the three months ended March 31, 1996 were
$313,500 compared to $289,888 for the three months ended
March 31, 1995. The $23,612 increase is due to an increase
in sales of water purification equipment
Costs and expenses were $764,294 for the three months ended
March 31, 1996 compared to $574,444 for the three months
ended March 31, 1995, an increase of $189,850. Compensation
and benefits increased $96,901 for the three month period
ended March 31, 1996 compared to the three month period
ended March 31, 1995 due to increased staff levels primarily
related to the Company's operations in Vietnam. Expenses
related to professional services, primarily legal, audit and
marketing increased by $156,812 in the three month period
ended March 31, 1996 compared to the three month period
ended March 31, 1995. Depreciation expense increased $4,273
in the three months ended March 31, 1996 compared to the
prior year three month period. These increases were offset
by a decrease in research and development related expenses
of $68,136.
Other income was $21,077 for the three month period ended
March 31, 1996, compared to $492 for the three months ended
March 31, 1995, an increase of $20,585. This increase was
due to interest income earned on short term investments made
by the Company.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
At March 31, 1996, the Company's working capital was
$2,771,274, including $1,998,796 in cash and cash
equivalents. The Company has active sales and marketing
programs underway in various countries, primarily Vietnam,
India, the U.A.E. and Africa. In addition, the Company has
begun an extensive sales and marketing program in North
America.
Management anticipates that the net use of cash by
operations will increase during the foreseeable future due
to expenditures related to the development of various
markets for the Company's water purification technologies.
The Company will use current cash and cash equivalents to
fund the on-going projects in the short term and anticipates
that it will be able to secure additional debt and/or equity
financing, to fund longer term projects. As evidence of the
Company's ability to secure debt and/or equity financing in
the fiscal year ended September 30, 1995 the Company
received $3,700,000, net of commissions and other expenses
related to the transaction, from the issuance of stock in
various exempt private transactions and $2,000,000 from the
sale of preferred stock to Casmyn Corp., a related party.
Net Cash Used in Operating Activities. Net cash used in
operating activities was $2,312,176 for the six months ended
March 31, 1996 compared to $787,083 for the six months ended
March 31, 1995. The increase in the net cash used in
operations in fiscal 1996 was due principally to the
increase in the net loss because of expenses related to
development of the Company's water purification systems.
Net Cash Used in Investing Activities. Net cash used in
investing activities was $523,735 for the six months ended
March 31, 1996 compared to $0 for the six months ended March
31, 1995. The increase in net cash used in investing
activities was due to the purchase of equipment and
improvements, primarily related to a water bottling plant
under construction in Vietnam.
Net Cash Provided by Financing Activities. Net cash
provided by financing activities was $4,375,000 for the six
months ended March 31, 1996 compared to $765,722 for the six
months ended March 31, 1995. The increase is due to the
Company collecting subscriptions receivable of $4,375,000
from private placements of common and preferred stock of the
Company.
The Company is organized with a relatively small, highly
trained staff and anticipates that the overall staff level
will remain low in the foreseeable future. The Company
utilizes third parties to perform research, technical,
manufacturing and assembly services for its products. The
Company believes that these arrangements will not require a
significant investment by the Company in either personnel or
facilities.
<PAGE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
None
B. Forms 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 hereunto duly
authorized.
Vector Environmental Technologies, Inc.
/s/ Dennis E. Welling
May 17, 1996 By_____________________________
Dennis E. Welling, Controller
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