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 June 30, 1997.
( ) 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
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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
- -------------------------------------------------------------------------------
(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 report(s), 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 June 30, 1997, 2,820,000 shares
of $.0001 par value common stock were outstanding.
<PAGE>
ANDEAN DEVELOPMENT CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997 AND DECEMBER 31, 1996
<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
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
A S S E T S
1997 1996
--------------- --------------
Current Assets:
<S> <C> <C>
Cash $ 255,727 $ 168,156
Invested cash 2,316,417 3,598,760
Accounts receivable, net 2,662,884 2,912,723
Note receivable - current portion 409,936 -
Due from related parties 124,641 17,072
Deferred income taxes 4,589 4,589
Other current assets 427,347 140,010
--------------- -------------
Total Current Assets 6,201,541 6,841,310
--------------- -------------
Furniture and equipment, net 213,860 165,557
--------------- -------------
Other Assets:
Undeveloped real estate, held for investment 789,447 789,447
Real estate 768,114 -
Note receivable - long term portion 1,229,807 -
Note receivable from related party 606,032 606,031
Deferred income taxes 5,501 5,501
Investment in affiliated companies 425,250 425,250
Other assets 204,196 6,901
--------------- -------------
4,028,347 1,833,130
--------------- -------------
$ 10,443,748 $ 8,839,997
=============== =============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
Consolidated Balance Sheets (Continued)
June 30, 1997 and December 31, 1996
LIABILITIES AND SHAREHOLDERS' EQUITY
1997 1996
--------------- --------------
<S> <C> <C>
Current Liabilities:
Current portion of long-term debt $ 205,975 $ 39,578
Accounts payable 320,942 262,671
Due to related parties 6,794 7,562
Income taxes payable 168,325 143,451
Accrued expenses and withholdings 32,637 26,978
Current portion of staff severance indemnities 48,019 17,977
--------------- -------------
Total Current Liabilities 782,692 498,217
--------------- -------------
Long-Term Liabilities:
Long-term debt, excluding current portion 661,803 145,344
Staff severance indemnities, long-term portion 23,127 36,674
--------------- -------------
684,930 182,018
--------------- -------------
Shareholders' Equity:
Common stock, $.0001 par value, 20,000,000 shares
authorized, 2,820,100 and 1,500,100 shares
issued and outstanding at June 30, 1997 and
December 31, 1996, respectively 282 282
Additional paid-in capital 5,724,320 5,724,320
Retained earnings 3,296,174 2,479,810
Cumulative translation adjustment (44,650) (44,650)
--------------- -------------
8,976,126 8,159,762
--------------- -------------
$ 10,443,748 $ 8,839,997
=============== =============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
Consolidated Statements of Income
Six Months Ended June 30, 1997 and 1996
1997 1996
--------------- --------------
<S> <C> <C>
Revenues from Operations:
Revenues $ 2,709,739 $ 1,472,037
Cost of operations (1,207,934) (318,167)
--------------- -------------
Gross Profit 1,501,805 1,153,870
Selling and Administrative Expenses 589,091 227,300
--------------- -------------
Income from Operations 912,714 926,570
--------------- -------------
Other Income (Expense), net 24,998 (131,061)
--------------- --------------
Income Before Income Taxes 937,712 795,509
Income Taxes 121,348 119,326
--------------- -------------
Net Income $ 816,364 $ 676,183
=============== =============
Net Income Per Common Share $ .35 $ .45
=============== =============
Weighted Average Shares Outstanding 2,338,894 1,500,100
=============== =============
The accompanying notes are an integral part of
these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996
1997 1996
--------------- --------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 816,364 $ 676,183
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation 8,993 23,061
Profit on sale of fixed assets (6,031) -
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 249,839 (365,522)
Note receivable (1,639,744) -
Other current assets (287,337) -
Other assets (197,295) 104,781
Increase (decrease) in :
Accounts payable 58,271 (136,452)
Provision for vacations - -
Provision for severance indemnity 16,495 8,767
Accrued expenses and withholdings 5,659 (22,744)
Income taxes payable 24,874 119,326
--------------- -------------
Net Cash Provided by (Used in) Operating Activities: (949,912) 407,400
--------------- -------------
Cash Flows from Investing Activities:
Purchase of fixed assets (56,032) (75,772)
Purchase of land held for sale (768,114) -
Payments for purchase of property under construction
or land for sale - (8,153)
Proceeds from sale of fixed assets 4,767 -
Proceeds from sale of subsidiary (ITL) - 193,359
Invested cash 1,282,343 172
--------------- -------------
Net Cash (Used in) Investing Activities 462,964 109,606
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</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ANDEAN DEVELOPMENT CORPORATION
Consolidated Statements of Cash Flows (Continued)
Six Months Ended June 30, 1997 and 1996
1997 1996
--------------- --------------
<S> <C> <C>
Cash Flows from Financing Activities:
Cost of public offering - (244,009)
(Advances to) repayments from related parties (108,337) 26,434
Proceeds from (payments on) notes payable to banks - (67,932)
Principal borrowings (payments) on long-term debt 682,856 -
Dividends paid - (300,000)
Proceeds from bridge loan - 65,000
--------------- -------------
Net Cash Provided by (Used in) Financing Activities 574,519 (520,507)
--------------- -------------
Net Increase (Decrease) in Cash 87,571 (3,501)
Cash at Beginning of Period 168,156 52,574
--------------- -------------
Cash at End of Period $ 255,727 $ 49,073
=============== =============
Supplemental Disclosure:
The Company paid $8,810 and $113,563 for
interest and $98,964 and $0 for income
taxes in 1997 and 1996, respectively.
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
<PAGE>
ANDEAN DEVELOPMENT CORPORATION
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 initiated two new operations intended
to provide continuous cash flow. It has taken a 25% equity
participation, including management responsibilities in a wine bottling
and processing plant in Chile. The wine processing and bottling plant
will commence operations in March 1998 and will produce up to two
million bottles of wine during 1998, increasing to four million
annually over the next five years. The Company is presently studying
the possibility of purchasing a 500 acre vineyard, which in the future
will provide grapes for the wine processing and bottling plant.
Additionally, during this period, the Company purchased 35 acres of
beach front property ("El Peral" project) close to Santiago which has a
summertime population of approximately 500,000. The Company intends to
sell lots and develop this property including the construction of
mid-income vacation homes over a four year period. The Company has sold
approximately 55% of the 35 acres, and in doing so has recouped its
investment on this purchase.
The Company is also presently reviewing a potential investment and/or
acquisition of an electrical manufacturer located in Spain and various
water utility projects in Chile and Peru.
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
<PAGE>
ANDEAN DEVELOPMENT CORPORATION
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).
JUNE 30, 1997 COMPARED TO JUNE 30, 1996
Gross revenues for the quarter ended June 30, 1997 increased $1,237,702
over the period ended June 30, 1996 from $1,472,037 to $2,709,739 an
increase of approximately 84%. This increase is due to the first
successful operations in the selling and developing of the beach
property referred to above.
Costs of operations for the fiscal period ended June 30, 1997 increased
$889,767 over the fiscal period ended June 30, 1996 from $318,167 to
$1,207,934 or 280%. This increase is attributable to the cost of
preparing the beach front property for sale ("El Peral" project) and,
in general, to the policy of the Company entering into business that
will have a lower profit margin in itself but will create a steady cash
flow and obtain a more regular Cost of Operations vs. Gross Revenue
Rate.
Selling and administrative expenses for the fiscal period ended June
30, 1997 increased $361,791 from $227,300 at June 30, 1996 to $589,091
at June 30, 1997 or 159%. This increase is attributable to the sale of
lots in the "El Peral" project and the publicity and preparation costs
related to this project.
Other income (expense-net) as of June 30, 1997 increased from
($131,061) of expenses at June 30, 1996 to $24,998 of income amounting
to a difference of $156,059. This increase is attributable to increased
interest income as a result of the approximately $2,300,000 of invested
cash.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997 accounts receivable decreased $249,839 from
$2,912,723 as of year end December 1996 to $2,662,884 as of June 30,
1997 or 9%. 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
<PAGE>
ANDEAN DEVELOPMENT CORPORATION
contractual payment schedule between the buyer and the seller. The
decrease in accounts receivable is attributable to increased receipts
during the six month period and the terms of payments associated with
these contracts.
Accounts payable increased $58,271 from $262,671 as of December 31,
1996 to $320,942 as of June 30, 1997 or 22%. This increase is
attributable to the increase in use of outside consultants related to
the wine processing and bottling plant.
Other current assets increased $287,337 from $140,010 as of December
31, 1996 to $427,347 as of June 30, 1997 or 205%. This increase is
attributable to works in progress to increase our office space and to a
loan to Consonni USA Inc.
Total other assets increased $2,195,217 from $1,833,130 as of December
31, 1996 to $4,028,347 as of June 30, 1997 or 120%. This increase is
attributable to the purchase of the beach front property and a note
receivable related to the subsequent sale of 55% the property.
<PAGE>
ANDEAN DEVELOPMENT CORPORATION
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
During this period, the Company invested in a wine processing
and bottling facility in Chile, which 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form 10-QSB, and has duly caused this Form
10-QSB to be signed on its behalf by the undersigned, thereunto duly authorized
on the 11th of August, 1997.
ANDEAN DEVELOPMENT CORPORATION
Dated: March 31, 1997
BY: /s/ PEDRO P. ERRAZURIZ
------------------------------
Pedro P. Errazuriz , President
(Principal Executive Officer)
BY: /s/ JOSE LUIS YRARRAZAVAL
--------------------------
Jose Luis Yrarrazaval, Secretary/Treasurer
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Form 10-QSB has been signed by the following persons in the capacity and on
the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/PEDRO P. ERRAZURIZ President August 11, 1997
- --------------------- (Principal Executive
Pedro P. Errazuriz Officer)
/s/JOSE LUIS YRARRAZAVAL Treasurer August 11, 1997
- ------------------------ Director
Jose Luis Yrarraaval (Principal Accounting
Officer)
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,572,144
<SECURITIES> 0
<RECEIVABLES> 2,662,884
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 966,513
<PP&E> 279,451
<DEPRECIATION> (65,591)
<TOTAL-ASSETS> 10,443,748
<CURRENT-LIABILITIES> 782,692
<BONDS> 0
0
0
<COMMON> 282
<OTHER-SE> 8,975,844
<TOTAL-LIABILITY-AND-EQUITY> 10,443,748
<SALES> 2,709,739
<TOTAL-REVENUES> 2,759,967
<CGS> 1,207,934
<TOTAL-COSTS> 589,091
<OTHER-EXPENSES> 16,420
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,810
<INCOME-PRETAX> 937,712
<INCOME-TAX> 121,348
<INCOME-CONTINUING> 816,364
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 816,364
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
