FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 30549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________________ to ______________________
Commission file number: 33-90696
ANDEAN DEVELOPMENT CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 65-0648697
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1900 GLADES ROAD, SUITE 351, BOCA RATON, FLORIDA 33431
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (561) 416-8930
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 (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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUES
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. As of September 30, 1996,
2,500,100 shares of $.0001 par value common stock were outstanding.
<PAGE>
ANDEAN DEVELOPMENT CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS (UNAUDITED).
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
PART II. OTHER INFORMATION
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<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
ASSETS
As of As of
December 31, September 30,
1995 1996
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 52,574 $ 40,915
Time Deposits 18,361 18,101
Accounts receivable, net 1,403,001 2,043,695
Due from related companies - 21,472
Due from related parties 5,696 -
Deferred income taxes 4,148 4,148
Deferred financing charges - 33,600
Other current assets 177,489 96,948
---------- ----------
TOTAL CURRENT ASSETS 1,661,269 2,258,879
---------- ----------
FIXED ASSETS:
Furniture and equipment 163,638 239,409
Less: Accumulated depreciation (69,328) (76,271)
---------- ----------
TOTAL FIXED ASSETS 94,310 163,138
---------- ----------
OTHER ASSETS:
Undeveloped real estate - help for investment 473,125 481,278
Real estate - help for sale 1,222,248 1,191,693
Capitalization of public offering costs - 355,379
Deferred income taxes 30,329 30,329
Investment in affiliated companies 476,859 283,500
Other assets 2,341 2,541
---------- ----------
TOTAL OTHER ASSETS 2,204,902 2,344,720
---------- ----------
TOTAL ASSETS $3,960,481 $4,766,737
========== ==========
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Please read accompanying notes to financial statements.
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<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS (CONTINUE)
As of As of
December 31, September 30,
1995 1996
---------- ----------
<S> <C> <C>
CURRENT LIABILITIES:
Obligations with banks $ 367,658 $ 484,600
Current portion of long-term debt 205,532 155,510
Accounts payable 384,282 346,555
Due to related parties 132,256 71,075
Income taxes payable 36,014 201,727
Accrued expenses and withholdings 39,599 16,643
Current portion of staff severance indemnities 22,599 32,930
Dividends payable 300,000 -
Bridge loan payable - 65,000
---------- ----------
TOTAL CURRENT LIABILITIES 1,487,940 1,374,040
---------- ----------
LONG-TERM LIABILITIES:
Long-term debt, exchanging current portion 688,508 585,817
Staff severance indemnities, long-term portion 18,116 18,116
---------- ----------
706,624 603,933
---------- ----------
TOTAL LIABILITIES 2,194,564 1,977,973
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 20,000,000
shares authorized, 1,500,100 issued and
outstanding at December 31, 1995 and September
30, 1996, respectively 150 150
Additional paid-in capital 674,122 749,722
Retained earnings 1,137,736 2,084,983
Cumulative translation adjustment (46,091) (46,091)
---------- ----------
TOTAL STOCKHOLDER'S EQUITY 1,765,917 2,788,764
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,960,481 $4,766,737
========== ==========
</TABLE>
Please read accompanying notes to financial statements.
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<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
1995 1996
---------- ----------
<S> <C> <C>
REVENUES FROM OPERATIONS:
Revenues $1,987,372 $2,294,541
Cost of operations (434,586) (635,337)
---------- ----------
GROSS PROFIT 1,552,786 1,659,204
SELLING AND ADMINISTRATIVE EXPENSES (401,754) (333,209)
---------- ----------
INCOME FROM OPERATIONS 1,151,032 1,325,995
OTHER (EXPENSES), NET (425,004) (211,587)
---------- ----------
INCOME BEFORE TAXES 726,028 1,114,408
INCOME TAXES (108,904) (167,161)
---------- ----------
NET INCOME $ 617,124 $ 947,247
========== ==========
NET INCOME PER COMMON SHARE $ .41 $ .63
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 1,500,100 1,500,100
========== ==========
</TABLE>
Pease read accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
1995 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 617,124 $ 947,247
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Deferred income taxes (9,650) -
Depreciation (2,382) 37,498
Amortization of financing charges - 42,000
Provision for severance indemnity 12,133 10,331
(Increase) in accounts receivable (823,268) (640,694)
Decrease (Increase) in other assets 66,060 (200)
Increase (Decrease) in accounts payable 227,723 (37,727)
Increase in accrued expenses and withholdings (7,491) (22,956)
Increase in income taxes payable 135,198 165,713
---------- ----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 215,447 501,212
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (Increase) in prepaid expenses (147,373) 80,541
Purchase (sale) of fixed assets 53,468 (75,771)
Payments for purchase of property under
construction or land for sale (42,126) (8,153)
Proceeds from sale of fixed assets (8,909) -
Proceeds from sale of subsidiary (ITL) - 193,359
Investment in affiliated company (ITL) (251,802) -
Investment in subsidiary (A & E) (285,944) -
(Increase) decrease in time deposits (3,166) 260
---------- ----------
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES (685,852) 190,236
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</TABLE>
Pease read accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOW (CONTINUED)
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
1995 1996
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Cost of public offering - (355,379)
Proceeds from related parties 258,795 5,696
Proceeds from (payments on) notes payable to banks 244,359 (35,771)
Capital contributions - -
Proceeds from bridge loan - 65,000
Dividends paid - (300,000)
Payments to related parties - (82,653)
---------- ----------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 503,154 (703,107)
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES (35,545) -
---------- ----------
NET (DECREASE) IN CASH (2,796) (11,659)
CASH AT BEGINNING OF PERIOD $ 67,148 $ 52,574
---------- ----------
CASH AT END OF PERIOD $ 64,352 $ 40,915
========== ==========
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SUPPLEMENTAL DISCLOSURE:
The Company paid $144,923 and $141,933 for interest and $18,617 and $-0- for
income taxes for the nine months ended September 30, 1995 and 1996,
respectively. In April of 1996 the Company capitalized financing costs
associated with the issuance of warrants at a total cost of $75,600. This
resulted in an increase in additional paid-in capital in the same amounts.
Please read accompanying notes to financial statements.
<PAGE>
ITEM 2: Management's Discussion and Analysis or Plan of Operations.
RESULTS OF OPERATIONS
The Company's core operations have traditionally been focused on three
areas (i) engineering services and the sale of minor equipment and parts for
projects throughout Chile; (ii) project management and the sale, as agent, of
major equipment for three to five large projects during any given year and (iii)
the preparation of business for third parties. While the period between the
payment by the Company for the goods and services and the receipt of revenues in
connection with the goods and services described in (i) above is typically
proximate in time, this is not necessarily so with regard to payments and
receipts for those goods and services described in (ii) and (iii) above. Often,
the interval between payments by the Company for equipment and services for
major projects and receipt of revenues in connection with the same equipment and
services is spread out over a longer period of time. Thus, the fluctuation in
the results of operations for each quarter may vary greatly, depending on the
timing of payments for major equipment (both by and to the Company).
SEPTEMBER 30, 1995 COMPARED TO SEPTEMBER 30, 1996
Gross revenues for the fiscal year ended September 30, 1996 increased
$307,169 over the fiscal period ended September 30, 1995 from $1,987,372 to
$2,294,541 an increase of approximately 15%. This increase is due primarily to
being awarded bids on behalf of certain manufactures during the period and the
increased amount of commissions paid to the Company relating to these projects.
Cost of operations for the fiscal period ended September 30, 1996 increased
$200,751 over the fiscal period ended September 30, 1995 from $434,586 to
$635,337 or 46%. This increase is attributable to the utilization of outside
consultants relating to certain projects during the period.
Selling and Administrative expenses for the fiscal period ended September
30, 1996 decreased $68,545 from $401,754 at September 30, 1995 to $333,209 at
September 30, 1996 or 17%. This decrease is attributable to a decrease in office
staff as well as travel and entertainment expenses.
Other expenses as of September 30, 1996 decreased $213,417 from $425,004 at
September 30, 1995 to $211,587 at September 30, 1996 or 50%. This decrease is
attributable to $276,000 in curtailed offering costs being expensed during the
nine months ended September 30, 1995.
Net income for the period ended September 30, 1996 increased $330,123 from
$617,124 at September 30, 1995 to $947,247 as of September 30, 1996 or 54%. This
increase is attributable to the projects of awarded to various manufacturers
represented by the country during this fiscal period and the increase commission
associated with the projects.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1996 accounts receivable increased $640,694 from
$1,403,001 as of year end December 31, 1995 to $2,043,695 as of September 30,
1996 or 45%. The amount of the
<PAGE>
receivable outstanding and the number of days outstanding is attributable
to the timing of recognition of revenues as compared to the date of payment. In
particular, in the case of equipment sales, the Company recognizes revenues on
the sale of the equipment or on a turnkey project, where the contract between
the purchasing company and the manufacturer is signed by both parties or an
"order to proceed" is issued by the buyer. While the schedule of payment is set
by contract, the time of payment is determined by practices of the exporting
country involved in the transaction as well as unanticipated delays caused by
obtaining permits and export licenses and as a result, it is not unusual for a
transfer of funds to take 60-180 days. The Company normally receives its
commission, which are fully earned at the time the award is made, 30 days after
receipt of funds by the manufacturer it represents and generally payment terms
conform to the payment schedule between the buyer and the seller.
The increase in accounts receivable is attributable to increased revenues
during the nine months period and the terms of payment for three contracts.
Accounts payable decreased $37,727 from $384,282 as of December 31, 1995 to
$346,555 as of September 30, 1996 or 10%.
Due from related parties decreased to 0 as of September 30, 1996 from
$5,696 as of December 31, 1995 or 100%.
Debt with banks increased by $66,920 from $573,190 at December 31, 1995 to
$640,110 at September 30, 1996 or 12%. This increase is attributable to an
increase need for working capital. All short term obligations with banks were
current as of September 30, 1996.
Other current assets decreased $80,541 from $177,489 as of December 31,
1995 to $96,948 as of September 30, 1996 or 45%. This decrease is attributable
to amortization of prepaid expenses.
Income taxes expenses increased by $58,257 from $108,904 as of December 31,
1995 to $167,161 as of September 30, 1996 or 54%. This increase is attributable
to increased profit thereby increasing the tax liability.
<PAGE>
Part II Other Information
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Securities
None
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submission of Matters to a vote of Securities Holders
None
ITEM 5. Other Information
Subsequent Events
On November 12, 1996, the Company completed the sale of
1,200,000 shares of its stock to the public in an offering that
raised approximately $6,150,000 for the Company. At September
30, 1996, management capitalized approximately $355,000 of
costs associated with the public offering which will be charged
off to paid-in-capital at December 31, 1996.
The Company granted the bridge loan lenders 21,000 warrants to
purchase common stock of $1.70 as a result. Cost associated
with these warrants in the amount of $75,600 are being charged
against operations during the period of the loan (May 1996
through January 1997). As of September 30, 1996, the Company
has charged $42,000 to operations.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
/s/ PEDRO PABLO ERRAZURIZ
----------------------------------
Pedro Pablo Errazuriz
Chief Executive Officer
Date: December 18, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 40,915
<SECURITIES> 0
<RECEIVABLES> 2,043,695
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,258,879
<PP&E> 239,409
<DEPRECIATION> (76,271)
<TOTAL-ASSETS> 4,766,737
<CURRENT-LIABILITIES> 1,374,040
<BONDS> 0
0
0
<COMMON> 150
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,766,737
<SALES> 2,294,541
<TOTAL-REVENUES> 2,294,541
<CGS> 635,337
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 211,587
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 141,933
<INCOME-PRETAX> 1,114,408
<INCOME-TAX> 167,161
<INCOME-CONTINUING> 947,247
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 947,247
<EPS-PRIMARY> $.063
<EPS-DILUTED> $.063
</TABLE>
