SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
AMENDMENT TO
FORM 10-QSB
[ X ] Quarterly report under Section 13 or 15 (d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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 August 15, 1996, 12,444,766 shares of the issuer's common stock were
outstanding.
This report contains 10 pages. There are no exhibits.
<PAGE>
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
FORM 10-QSB
INDEX
Page
PART I. Financial Information: No.
---
Condensed Consolidated Balance Sheet - June 30, 1996 3
Condensed Consolidated Statements of Operations - Three
Months and Nine Months ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows - Nine
Months ended June 30,1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. Other Information:
Item 6 - Exhibits and Reports on Form 8-K 10
Signatures
Financial Data Schedule 11
<PAGE>
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
ASSETS
CURRENT ASSETS:
<TABLE>
<CAPTION>
<S> <C>
Cash and cash equivalents $ 441,103
Accounts receivable, net 167,541
Inventories 1,280,842
Prepaid expenses and other assets 80,920
----------
Total Current Assets 1,970,406
----------
EQUIPMENT AND IMPROVEMENTS, NET 1,013,663
OTHER ASSETS 72,650
----------
TOTAL ASSETS $3,056,719
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 501,236
----------
DUE TO RELATED PARTIES, NET 136,362
----------
STOCKHOLDERS' EQUITY:
5% Cumulative convertible preferred stock,
$.00001 par value; 10,000,000 shares
authorized; 4,000,000 shares issued
and outstanding; liquidation preference
$4,187,500 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 ( 13,901,903)
Foreign currency translation adjustment 9,510
-----------
Total Stockholders' Equity 2,419,121
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,056,719
===========
See accompanying notes to condensed, consolidated financial statements
</TABLE)
<PAGE>
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
</TABLE>
<TABLE>
<CAPTION>
FOR THE NINE MONTHS FOR THE THREE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1996 1995 1996 1995
------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $ 692,782 $ 286,619 $ 138,503 $ 95,540
COST OF GOODS SOLD 471,091 367,192 61,813 122,397
--------- --------- ---------- ---------
GROSS PROFIT (LOSS) 221,691 ( 80,573) 76,690 ( 26,857)
--------- --------- ---------- ---------
COSTS AND EXPENSES:
Selling, general and
administrative expense 2,552,912 2,208,502 962,545 552,126
Depreciation and amortization 60,498 24,204 35,344 8,068
Research and development 179,578 138,790 43,875 46,263
--------- --------- --------- ---------
2,792,988 2,371,496 1,041,764 606,457
--------- --------- --------- ---------
LOSS FROM OPERATIONS (2,571,297) (2,452,069) ( 965,074) ( 633,314)
--------- --------- --------- ---------
INTEREST AND OTHER
INCOME (EXPENSE) 113,241 ( 96,604) 35,906 ( 32,201)
--------- --------- --------- ---------
LOSS FROM CONTINUING
OPERATIONS (2,458,056) (2,548,673) ( 929,168) ( 665,515)
GAIN FROM DISCONTINUED
OPERATIONS - 32,429 - -
--------- --------- --------- ---------
NET LOSS $(2,458,056)$(2,516,244) $( 929,168) $( 665,515)
========= ========= ========= =========
LOSS PER COMMON SHARE:
Net loss from continuing
operations $(2,458,056)$(2,548,673) $( 929,168) $( 665,515)
Less: undeclared dividends
on cumulative
preferred stock ( 150,000) - ( 50,000) -
---------- --------- --------- ---------
Net loss from continuing
operations applicable to
common shares $(2,608,056) (2,548,673) $( 979,168) $( 665,515)
========== ========= ========= ========
Loss per common share
from continuing operations $ (.21) $ (.23) $ (.08) $ (.06)
Gain per common share from
discontinued operations - - - -
---------- --------- --------- --------
NET LOSS PER COMMON SHARE $ (.21) $ (.23) $ (.08) $ (.06)
========== ========= ========= ========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 12,444,766 10,808,126 12,444,766 10,944,766
========== ========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ ( 3,475,378) $ ( 1,913,475)
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES ( 918,226) 45,223
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES 4,375,000 1,079,470
-------------- ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS ( 18,604) ( 788,782)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 459,707 792,447
-------------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 441,103 $ 3,665
============== ===============
</TABLE>
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 June 30, 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 $187,500 at June 30, 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
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 1996 COMPARED TO THE NINE MONTHS ENDED JUNE 30,
1995
Revenues for the nine months ended June 30, 1996, were $692,782 compared to
$286,619 for the nine months ended June 30, 1995. The $406,163 increase was
due to an increase in sales of water purification systems and bottled water,
principally in Vietnam. Gross profit for the nine months ended June 30, 1996
was 32% compared to a loss for the nine months ended June 30, 1995. The
improvement in gross profit is due to lower component costs for water
purification systems.
Costs and expenses were $2,792,988 for the nine months ended June 30, 1996,
compared to $2,371,496 for the nine months ended June 30, 1995, an increase of
$421,492. Compensation and benefits increased $203,276 for the nine month
period ended June 30, 1996 compared to the nine month period ended June 30,
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 $238,768 in the nine month period
ended June 30, 1996 compared to the nine month period ended June 30, 1995.
Other general and administrative expenses decreased $97,634 in the nine month
period ended June 30, 1996 compared to 1995. Depreciation expense increased a
total of $36,294 in the nine month period ended June 30, 1996 compared to the
nine months ended June 30, 1995 due to an increase in fixed assets in the water
bottling plant in Vietnam. Research and development related expenses of
increased $40,788 in the nine month period ended June 30, 1996 compared to
1995 due to continued research on new water purification products.
Interest and other income was $113,241 for the nine month period ended
June 30, 1996, compared other expense of $96,604 for the nine months ended
June 30, 1995. The income in the nine month period ended June 30, 1996 was
due to interest earned on short term investments made by the Company. The
expense in the nine month period ended June 30, 1995 was due to the
Company accruing interest expense on a loan payable to Casmyn Corp., this
loan was exchanged for equity and not in place in the nine month period ended
June 30, 1996.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1995
Revenues for the three months ended June 30, 1996 were $138,503 compared to
$95,540 for the three months ended June 30, 1995. The $42,963 increase is due
to an increase in sales of water purification equipment and sales of bottled
water in the newly opened water bottling plant located in Vietnam.
Costs and expenses were $1,041,764 for the three months ended June 30, 1996
compared to $606,457 for the three months ended June 30, 1995, an increase of
$435,307. Compensation and benefits increased $302,527, for the three month
period ended June 30, 1996 compared to the three month period ended June 30,
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 $107,892, in the three month period
ended June 30, 1996 compared to the three month period ended June 30, 1995.
Depreciation expense increased $27,276 in the three months ended June 30, 1996
compared to the prior year three month period due to an increase in fixed assets
in the water bottling plant in Vietnam. These increases were offset by
a decrease in research and development related expenses of $2,388.
<PAGE>
Interest and other income was $35,906 for the three month period ended
June 30, 1996, compared to other expense of $32,201 for the three months ended
June 30, 1995. This income in the three month period ended June 30, 1996 was
due to interest earned on short term investments made by the Company.
The expense in the three month period ended June 30, 1995 was due to
the Company accruing interest expense on a loan payable to Casmyn Corp.,
this loan was exchangedfor equity and not in place in the three month period
ended June 30, 1996.
CAPITAL RESOURCES AND LIQUIDITY
At June 30, 1996, the Company's working capital was $1,469,170, including
$441,103 in cash and cash equivalents. However, working capital also
included $1,280,842 in inventory which resulted from the Company's plan to
build inventory in anticipation of sales. 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 products and
technologies. The Company will use current cash and cash equivalents to fund
current operations and to fund on-going projects. The Company has obtained a
commitment from Casmyn Corp., a related party, to fund up to $400,000 to
support, through short-term loans, the Company's near term operations. It is
management's opinion that this interim funding will be sufficient to provide
necessary operating funds until the Company is able to convert its inventory to
cash. Longer term projects will necessitate the Company identifying funding
sources to support those projects. The Company is currently in discussions with
a variety of debt and equity financing sources to help fund both current
operations and future projects. The timing of future projects will depend
significantly on the availability of such funding, however success of
obtaining adequate funding is not assured.
As evidence of the Company's ability to secure debt and/or financing, in the
fiscal year ended September 30, 1995, the Company received $3,700,000, net of
commissions and other expenses related to the transactions, 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 $3,475,378 for the nine months ended June 30, 1996 compared to $1,913,475
for the nine months ended June 30, 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 (Provided by) Investing Activities. Net cash used in
investing activities was $918,226 for the nine months ended June 30, 1996
compared to net cash provided by investing activities of $45,223 for the nine
months ended June 30, 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.
<PAGE>
Net Cash Provided by Financing Activities. Net cash provided by financing
activities was $4,375,000 for the nine months ended June 30, 1996 compared to
$1,079,470 for the nine months ended June 30, 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
October 8, 1996 By _____________________________
Dennis E. Welling, Controller
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000918997
<NAME> VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 77
<SECURITIES> 364
<RECEIVABLES> 168
<ALLOWANCES> 0
<INVENTORY> 1280
<CURRENT-ASSETS> 1970
<PP&E> 1101
<DEPRECIATION> (87)
<TOTAL-ASSETS> 3057
<CURRENT-LIABILITIES> 501
<BONDS> 0
0
1
<COMMON> 62
<OTHER-SE> 2357
<TOTAL-LIABILITY-AND-EQUITY> 3057
<SALES> 692
<TOTAL-REVENUES> 692
<CGS> 471
<TOTAL-COSTS> 471
<OTHER-EXPENSES> 2793
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (113)
<INCOME-PRETAX> (2458)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2458)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2458)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
