FORM 10-QSB
SECURITY AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OR THE
SECURITY EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _________________ to _________________
Commission file number: 33-90696
ANDEAN DEVELOPMENT CORPORATION
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(Exact name of registrant as specified in its charter)
Florida 65-0648697
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1900 Glades Road, Suite 351, Boca Raton, Florida 33431
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(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 ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of March 31, 1997, 2,820,000
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
<PAGE>
<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1997 AND DECEMBER 31, 1996
ASSETS
1997 1996
--------------- ---------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 254,835 $ 168,156
Invested cash 2,727,762 3,598,760
Accounts receivable, net 3,716,633 2,912,723
Due from related parties 36,934 17,072
Deferred income taxes 4,589 4,589
Other current assets 218,485 140,010
------------ -----------
TOTAL CURRENT ASSETS 6,959,238 6,841,310
FURNITURE AND EQUIPMENT, net 216,729 165,557
OTHER ASSETS:
Undeveloped real estate, held for investment 789,447 789,447
Note receivable from related party 606,031 606,031
Deferred income taxes 5,501 5,501
Investment in affiliated companies 437,770 425,250
Other investments 42,712 6,901
------------ ------------
1,881,461 1,833,130
------------ ------------
$ 9,057,428 $ 8,839,997
============ ============
</TABLE>
Please read the accompanying notes to the supplemental consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS (CONTINUED)
AS OF MARCH 31, 1997 AND DECEMBER 31, 1996
LIABILITIES AND SHAREHOLDERS' EQUITY
1997 1996
---------------- ----------------
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 33,470 $ 39,578
Accounts payable 15,084 262,671
Due to related parties 51,651 7,562
Income taxes payable 199,861 143,451
Accrued expenses and withholdings 26,270 26,978
Current portion and staff severance indemnities 28,623 17,977
---------- ----------
TOTAL CURRENT LIABILITIES 354,959 498,217
---------- ----------
LONG-TERM LIABILITIES:
Long-term debt, excluding current portion 143,589 145,344
Staff severance indemnities, long-term portion 36,674 36,674
---------- ----------
180,263 182,018
---------- ----------
SHAREHOLDERS' EQUITY:
Common stock, $.0001 par value, 20,000,000 shares authorized, 2,820,100
shares issued and outstanding at December 31,
1997 and 1996 282 282
Additional paid-in capital 5,653,066 5,724,320
Retained earnings 2,913,508 2,479,810
Cumulative translation adjustment (44,650) (44,650)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 8,522,206 8,159,762
---------- ----------
$9,057,428 $8,839,997
========== ==========
</TABLE>
Please read the accompanying notes to the supplemental consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
---------------- -----------------
<S> <C> <C>
REVENUES FROM OPERATIONS:
Revenues $ 909,261 $ 727,800
Cost of operations (221,248) (166,435)
------------ -------------
GROSS PROFIT 688,013 561,365
SELLING AND ADMINISTRATIVE EXPENSES (232,440) (133,808)
------------ -------------
INCOME FROM OPERATIONS 455,573 427,557
OTHER INCOME (EXPENSES); NET 28,381 (46,702)
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INCOME BEFORE INCOME TAXES 483,954 380,855
------------ -------------
INCOME TAXES 50,254 57,128
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NET INCOME 433,700 323,727
============ =============
NET INCOME PER COMMON SHARE $ 0.22 $ 0.22
WEIGHTED AVERAGE SHARES OUTSTANDING 1,995,574 1,500,100
============ =============
</TABLE>
Please read the accompanying notes to the supplemental consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
---------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 433,699 $ 323,727
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation - 12,543
Deferred taxes - -
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (803,910) (97,255)
Other receivable (78,475) -
Other assets (35,811) (208)
Increase (decrease) in:
Accounts payable (247,588) 81,978
Provision for vacations - 7,182
Provision for severance indemnity 10,645 (11,870)
Accrued expenses and withholdings (708) (16,036)
Income taxes payable 56,410 56,355
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
(665,738) 356,416
============ ============
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (51,173) -
Payments for purchase of property under construction or land
for sale - (8,153)
Investments in affiliated company (ITL) - 230,579
Investment in subsidiary (A & E) (12,520) -
Invested cash 870,998 (201)
------------ -------------
Net Cash Provided by Investing Activities $ 807,305 $ 222,225
============ =============
</TABLE>
Please read the accompanying notes to the supplemental consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
---------------- -----------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Cost of public offering (71,256) (139,010)
(Advances to) repayments from related parties (19,862) (92,596)
Proceeds from (payments on) notes payable to
banks - (74,591)
Principal payments on long-term debt (7,863) -
Dividends paid - (300,000)
Borrowing from related parties 44,093 -
----------- ----------
NET CASH USED FOR FINANCING ACTIVITIES (54,888) (606,197)
EFFECT OF EXCHANGE RATE CHANGES - (9,706)
NET INCREASE (DECREASE) IN CASH 86,679 (37,262)
CASH AT BEGINNING OF YEAR 168,156 52,574
----------- -----------
CASH AT END OF YEAR $ 254,835 $ 15,312
============= ===========
</TABLE>
SUPPLEMENTAL DISCLOSURE:
The Company paid $4,409 and $43,865 for interest and $0 and $0 for income taxes
in March 31, 1997 and 1996 respectively.
Please read the accompanying notes to the supplemental consolidated
financial statements.
<PAGE>
ITEM 2: Management's Discussion and Analysis or Plan of Operations
GENERAL
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 was
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 December 31, 1996, the Company has
charged 65,000 to operations.
During this period, the Company invested in a wine processing and
bottling facility in Chile, which it is scheduled to begin distributing up to
two million bottles of wine commencing in March, 1998. The Company is currently
reviewing other equity investments in South America and Europe.
RESULTS OF OPERATIONS
The Company's core operations have traditionally been focused on three
areas (i) engineering services and the sale of equipment and parts for projects
throughout Chile; (ii) project management and the sale, as agent, of major
equipment for three to five large turn-key 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 receipt for those goods and services described in (ii) and (iii) above.
Often the interval between payments by the Company for equipment and services is
spread 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).
MARCH 31, 1997 COMPARED TO MARCH 31, 1996
Gross revenues for the quarter ended March 31, 1997 increased $181,461
over the period ended March 31, 1996 from $727,800 to $909,261 an increase of
approximately 25%. This increase is due primarily to being awarded bids on
behalf of certain manufacturers during the period and the increased amount of
commissions earned by the Company relating to these projects.
Cost of operations for the fiscal period ended March 31, 1997 increased
$54,813 over the fiscal period ended March 31, 1996 from $166,435 to $221,248 or
33%. This increase is attributable to the increased utilization of outside
consultants relating to certain projects during the period.
Selling and Administrative expenses for the fiscal period ended March
31, 1997 increased $98,632 from $133,808 at March 31, 1996 to $232,440 at March
31, 1997 or 74%. This increase
<PAGE>
is attributable to an increase in travel expenses relating to the preparation of
a bid for a utility in Peru.
Other (expenses-net) as of March 31, 1997 decreased $75,083 from
($46,702) at March 31, 1996 to $28,381 at September 31, 1997 or 160%. This
decrease is attributable to reduction of debt and related interest expenses of
$44,000 and earnings reflected from unconsolidated subsidiaries of approximately
$12,000.
Net income for the period ended March 31, 1997 increased $109,973 from
$323,727 at March 31, 1996 to $433,700 as of March 31, 1997 or 34 %. This
increase is attributable to projects awarded to various manufacturers
represented by the Company during the quarter and the increased commission
associated with these projects.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997 accounts receivable increased $803,910 from
$2,912,723 as of year end December 1996 to $3,716,632 as of March 31, 1997 or
28%. The amount of the 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, when
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 may be 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.
Generally, payment terms conform to the contractual payment schedule between the
buyer and the seller. The increase in accounts receivable is attributable to
increased revenues during the three month period and the terms of payments
associated with these contracts.
Accounts payable decreased $247,587 from $262,671 as of December 31,
1996 to $15,084 as of March 31, 1997 or 94%. This decrease is attributable to
the increased cash position of the Company, which allowed for accelerated
payment of the Company's current operating costs.
Other current assets increased $78,475 from $140,010 as of December 31,
1996 to $218,485 as of March 31, 1997 or 56%. This increase is attributable to
advance payments to suppliers relating to certain projects.
Except for ordinary operating expenses and commitments, the Company has
no significant capital commitments. In addition, at March 31, 1997 as compared
to December 31, 1996, its working capital increased by $259,486 from $6,343,093
to $6,604,279 or 4%.
<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
None
<PAGE>
INDEX TO EXHIBIT
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,982,597
<SECURITIES> 0
<RECEIVABLES> 3,716,633
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 260,008
<PP&E> 303,849
<DEPRECIATION> (87,120)
<TOTAL-ASSETS> 9,057,428
<CURRENT-LIABILITIES> 354,959
<BONDS> 0
0
0
<COMMON> 282
<OTHER-SE> 8,522,206
<TOTAL-LIABILITY-AND-EQUITY> 9,057,428
<SALES> 909,261
<TOTAL-REVENUES> 943,025
<CGS> 221,248
<TOTAL-COSTS> 232,440
<OTHER-EXPENSES> 974
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,409
<INCOME-PRETAX> 483,954
<INCOME-TAX> 50,254
<INCOME-CONTINUING> 433,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 433,700
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
