U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1996, due on
October 15, 1996, actually filed on January 17, 1997.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
Commission file number 33-76634
ENERGY CONSERVATION INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its
charter)
Florida 59-3223766
(State of Incorporation) (IRS Employer ID No.)
503 Barnes Drive
Brandon, FL 33511
(Address of principal executive offices)
(813) - 662 - 9330
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed
all reports to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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 [ ]
DOCUMENTS INCORPORATED BY REFERENCE
None
Common stock, $0.01 par value per share; 2,540,834 shares
outstanding as of 10/15/96.
Page 1
ENERGY CONSERVATION INTERNATIONAL, INC.
Table of Contents
PART I Financial Information Page No.
Item 1 - Financial Statements
- -Index to Financial Statements F-1
- -Consolidated Balance Sheets F-2
- -Consolidated Statements of Income F-3
- -Consolidated Statements of F-4
Stockholders' Equity
- -Consolidated Statements of Cash F-5
Flows
- -Notes to Consolidated Financial F-6
Statements
Item 2 - Management's' Discussion 9
and Analysis
PART II - Other Information
Item 1 - Legal Proceedings 11
Item 2 - Changes in Securities 11
Item 3 - Defaults Upon Senior 11
Securities
Item 4 - Submission of Matters to a 11
Vote of Security Holders
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on 11
Form 8-K
SIGNATURES 12
Page 2
ENERGY CONSERVATION INTERNATIONAL, INC.
PART I Financial Information
Item 1 Financial Statements
INDEX TO FINANCIAL STATEMENTS
Consolidated Balance Sheets F-2
Consolidated Statements of Income F-3
Consolidated Statements of F-4
Stockholders' Equity
Consolidated Statements of Cash F-5
Flows
Notes to Consolidated Financial F-6
Statements
F-1
Energy Conservation International, Inc.
(f/k/a Vision Marketing Group, Inc.)
Consolidated Balance Sheets
August 31, 1996 May 31, 1996
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
-Cash $ 4,973 $ 0
-Accounts recievable 3,532 0
-Inventory 55,810 0
-Prepaid expenses 18,390 0
Total Current Assets 82,705 0
PROPERTY AND EQUIPMENT
-Property & Equipment 93,245 16,000
-Less - accumulated (2,310) (15,846)
depreciation
Total Property and Equipment 90,935 154
OTHER ASSETS 33,253 13,742
Total Assets $206,893 $13,896
====== =====
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
-Accounts Payable $ 39,374 $13,225
-Accrued Expenses 16,859 5,457
Total Current Liabilities 56,233 18,682
LONG TERM LIABILITIES
-Note Payable 15,049 15,049
DUE TO RELATED PARTIES 12,673 0
Total Liabilities 83,955 33,731
STOCKHOLDERS' EQUITY
-Common stock, $0.01 par
value; Authorized 50,000,000
shares; issued and outstanding
2,505,833 at May 31, 1996 and 25,408 25,058
issued and outstanding
2,540,834 at August 31, 1996
-Preferred stock, no par
value; Authorized 10,000,000 0 0
shares; issued and outstanding
0 (none)
-Additional paid-in-capital 267,219 57,563
-Retained earnings (deficit) (169,689) (102,456)
Total Stockholders' Equity 122,938 (19,835)
Total Liabilities and $206,893 $13,896
Stockholders' Equity ======= ======
See notes to the Consolidated Financial Statements
F-2
Energy Conservation International, Inc.
(f/k/a Vision Marketing Group, Inc.)
Consolidated Statements of Income
August 31, 1996 September 30, 1995
(Unaudited) (Unaudited)
Revenues $ 3,532 $12,241
Cost of sales (3,000) (3,666)
Gross Profit 532 8575
Selling and operating expenses 65,984 16,095
Income (loss) from operations (65,452) (7,520)
Interest expense (592) 0
Other income (expense) (1,189) (1,014)
Income (loss) before taxes (67,233) (8,534)
Provision (benefit) for income 0 0
taxes
Net income (loss) $(67,233) $(8,534)
======= ======
Net income per share $(0.026) $(0.003)
====== ======
Shares outstanding 2,540,234 2,505,833
======= =======
See notes to the Consolidated Financial Statements
F-3
Energy Conservation International, Inc.
(f/k/a Vision Marketing Group, Inc.)
Consolidated Statements of Stockholders' Equity
Common Preferred Additional Retained Total
Stock Stock Paid-In Earnings/ Shareholders'
Capital (Deficit) Equity
BALANCE, May 31, $25,058 0 $57,563 $(102,045) $(19,835)
1996
Issuance of 350 0 209,656 0 210,006
Common Stock
Net Loss 0 0 0 (67,233) (67,233)
BALANCE $25,408 0 $267,219 $(169,689) $122,938
August31,1996 ====== = ======= ======== =======
(Unaudited)
See notes to the Consolidated Financial Statements
F-4
Energy Conservation International, Inc.
(f/k/a Vision Marketing Group, Inc.)
Consolidated Statements of Cash Flows
3 months ended 3 months ended
August 31, 1996 September 30, 1995
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING:
-Net income (loss) $(67,233) $(8,534)
Adjustments to reconcile net
loss to net cash used for
operating activities:
-Depreciation and amortization 2,389 1,014
(Increase) / decrease in
assets:
-Accounts receivable (3,532) (12,240)
-Inventory (55,810) 0
-Prepaid expenses (18,390) 0
Increase / (decrease) in
liabilities:
-Accounts Payable 26,149 3,666
-Accrued expenses 11,402 (3,112)
Net cash provided by (used in) (105,025) (19,206)
operating activities
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property & (93,245) 0
equipment
Proceeds from sale of assets 154 0
Other assets - net (19,436) 0
Loans to related parties & (154) 0
others
Net cash provided by (used in) (112,681) 0
investing activities
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of 210,006 0
common stock
Related party debt - net 12,673 5,585
Borrowings of bank debt 0 15,000
Net cash provided by (used in) 222,679 20,585
financing activities
Net increase (decrease) in cash 4,973 1,379
CASH, beginning of period 0 1,839
CASH, end of period $ 4,973 $ 3,218
==== ====
See notes to the Consolidated financial statements
F-5
Energy Conservation International, Inc.
(f/k/a Vision Marketing Group, Inc.)
Notes to Financial Statements
August 31, 1996 and September 30, 1995
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with the generally accepted
accounting principles for interim financial information and
with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, all adjustments ( consisting of
normal recurring accruals ) considered necessary for a fair
presentation have been included. Operating results for the
three months ended August 31,1996 are not necessarily
indicative of the results that may be expected for the year
ended May 31,1997.
The company changed it's fiscal year end from December 31 to
May 31. These financial statements have a current period
covering June, July and August of 1996. It is not feasible
or cost effective to recast and we are comparing to July,
August and September of 1995.
Note - 2 Principles of Consolidation
The consolidated financial statements include the accounts
of ENERGY CONSERVATION INTERNATIONAL, INC. (f/k/a Vision
Marketing Group, Inc.) and its wholly owned subsidiary, Mor-
Lite of North America, Inc. which was acquired on June 13,
1996. All material intercompany transactions have been
eliminated.
Note - 3 Acquisition of Subsidiary and Assets
On June 12, 1996 the State of Florida approved the Articles
of Incorporation for Mor-Lite of North America, Inc.
("MLNA") a wholly owned subsidiary of the Company, and on
June 13, 1996 the Company acquired certain assets and U.S.
Governmental part numbers from a well established company in
the business of energy-efficient lighting products and
elected to form this wholly owned subsidiary to facilitate
the acquisition and to transact this business on behalf of
the Company.
F-6
Item 2 Management Discussion and Analysis
Results of Operations - First Quarter ended August 31, 1996
compared to quarter ended September 30, 1995
As previously reported, the Company changed its fiscal year
end from December 31 to May 31. This Form 10-Q has a
current period covering June, July and August of 1996. It
is not feasible or cost-effective to recast and we are
comparing it to July, August and September of 1995.
Revenues for the quarter ended August 31, 1996 were $3,532
as compared to $12,240 for the quarter ended September 30,
1995. (However, there was a sales return of $10,240 in
October of 1995, leaving only a net revenue of $2,000)
Operating expenses for the quarter ended August 31, 1996
totaled $65,984 - an increase of 309.97% or $49,889 over the
$16,095 of operating expenses for the 3-month period ended
September 30, 1995. The majority of this increase can be
attributed to the development costs associated with the
Company's new subsidiary (Mor-Lite of North America, Inc. -
MLNA) in the energy conservation field, which is where the
Company is concentrating its efforts. The increase included
payroll and consultant costs associated with the staffing of
MLNA's management and sales team, totaling $37,500.00, as
compared to no payroll costs for the quarter ended September
30, 1995. For the current quarter, Mr. Jose A. Alvarez, the
Chief Executive Officer of the Company, did not draw any
salary.
The Company also had $12,000 of accounting and auditing fees
for the quarter ended August 31, 1996, compared to no costs
in 1995, to bring all the accounting and reporting
requirements up-to-date.
The Company's interest expense was $592, compared to $0 for
1995. Other expenses totaled $1,189 for general
depreciation and amortization, an increase of 17.26% or
$175, compared to $1,014 for 1995. Net loss for the quarter
ended August 31, 1996 was $67,233 or $0.026 per share,
versus a loss of $8,534 or $0.003 per share for the quarter
ended September 30,1995.
Plan of Operation
As disclosed in the U.S. Securities and Exchange Commission
Form 10-KSB for the transition period from January 1, 1996
to May 31, 1996, the Company closed out its escrow on June
7, 1996. On June 12, 1996 the Board of Directors and the
majority shareholders authorized the use of the proceeds of
the offering to transact business in the energy conservation
field; also on this date the state of Florida approved the
Articles of Incorporation for Mor-Lite of North America,
Inc. ("MLNA"), a wholly owned subsidiary of the Company.
Moreover, on June 13, 1996 the Company acquired certain
assets and U.S. Governmental part numbers from a well-
established company in the business of energy efficient
lighting products and elected to form this wholly owned
subsidiary to facilitate the acquisition and transact
business on behalf of the parent company -- Energy
Conservation International, Inc. (ECI).
Page 9
On June 13, 1996 also, MLNA contracted the services of Mr.
Elton R. Guffey under a five (5) year written agreement to
manage and administer the day-to-day business affairs of
MLNA, and to provide for the marketing and sale of MLNA
products and services. Such marketing functions are
primarily planned and overseen by Mr. Dale K. Adams, the
Vice President and Director of Marketing of MLNA. Mr. Adams
has been involved with energy conservation products for the
past 26 years, having acquired broad managerial expertise by
discharging numerous responsibilities associated with sales
and marketing, focusing on product development and
packaging, strategic planning, dealer network development
and new market segment expansion.
On July 8, 1996 the Company changed its name from Vision
Marketing Group, Inc. to Energy Conservation International,
Inc. (ECI), as was reported in the U.S. Securities and
Exchange Commission Form 8-K filed August 29, 1996. The
Company's subsidiary, MLNA, is now operational with the same
directors as ECI, led by Chairman Daniel S. Pena, Sr. and
CEO Jose A. Alvarez. The executives of MLNA, as indicated,
have many years of industry experience in the energy
conservation field, as well as extensive knowledge of
dealing with U.S. Government contracts. The Company had
started preliminary energy audits and prepared bids on both
commercial and Governmental contracts.
The management of the Company intends to pursue other
potential mergers and acquisitions in the energy
conservation field. This will enable the Company to
increase in size and revenues and thus become a more
dominant player in this dynamic field.
Liquidity and Capital Resources
The funds raised by the sale, at the closing of the escrow
mentioned above, of the 35,001 shares of common stock at
$6.00 per share - pursuant to the Offering and Prospectus
dated June 7, 1995 - have been used to start and develop the
operation of MLNA, with the proceeds used to market,
purchase inventory and some equipment, and hire personnel,
as required, for MLNA to become a fully operational company.
Furthermore, equipment needed for this purpose had been
ordered by the end of August, with a delivery date of
September 8, 1996 stipulated for the main machineries to
produce the products. The Company had a $15,049 loan
outstanding, with a bank and certain payables. The Company
is seeking financing for the equipment as well as additional
working capital to fully operate as it has not started to
produce the necessary revenues to fund operations.
Page 10
Energy Conservation International, Inc.
(f/k/a Vision Marketing Group, Inc.)
PART II Other Information
Item 1 Legal Proceedings
The Company is not a party to any legal proceedings
Item 2 Changes in Securities
None
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security
Holders
On June 11, 1996, a special shareholders meeting approved by
majority vote of shareholders and proxy, the use of the
proceeds of the public offering to include the investment of
$75,000 for the purchase of certain assets of Mor-Lite,
Inc.. All 2,223,501 shares represented at the meeting voted
in favor of the action. This is 87.5% of the 2,540,834
shares outstanding at the time. This included approval of
100% (35,001 shares) purchased through the public offering.
Subsequently, on November 8, 1996, by written consent to
action of the shareholders ratified the above, as well as,
the election of the Board of Directors, corporate name
change, authorized shares, amended articles of
incorporation, and actions by the Board of Directors since
June 11, 1996, as previously reported on May 31, 1996 - 10-
KSB filed on August 29, 1996 and on Form 8-K filed on August
29, 1996.
Item 5 Other Information
The Company is filing this report to the Securities and
Exchange Commission late. This report was due to have been
filed on October 15, 1996 and it is actually being filed on
January , 1997.
Item 6 Exhibits and Reports on Form 8-K
Form 8-K was filed on August 29, 1996 which reported changes
in control of registrant and closing escrow; establishing a
subsidiary which acquired assets and U.S. Governmental part
numbers from a company in the business of energy efficient
lighting; change in company name and increase of authorized
shares; election of new Board of Directors; and change in
fiscal year to May 31.
Page 11
Energy Conservation International, Inc.
(f/k/a Vision Marketing Group, Inc.)
SIGNATURES
Pursuant to the registration 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.
ENERGY CONSERVATION INTERNATIONAL, INC.
(Registrant)
BY: /s/ Daniel S. Pena Sr.__________________________________
Daniel S. Pena Sr.
Chairman of the Board
BY: /s/ Jose A. Alvarez,CPA_________________________________
Jose A. Alvarez, CPA
President, Chief Executive Officer, Chief Financial Officer
DATED: January 17, 1997
Page 12
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<ARTICLE> 5
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> AUG-31-1996
<CASH> 4,973
<SECURITIES> 0
<RECEIVABLES> 3,532
<ALLOWANCES> 0
<INVENTORY> 55,810
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<PP&E> 93,245
<DEPRECIATION> (2,310)
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0
0
<COMMON> 25,408
<OTHER-SE> 97,530
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<CGS> 3,000
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<INTEREST-EXPENSE> 592
<INCOME-PRETAX> (67,233)
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<INCOME-CONTINUING> (67,233)
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> (67,233)
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