-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PYT33oemeLu4UtH1Y9rcaUT4U/CldUwQX7DQn7jWdlsFJEZt7EhRYgnJtgR2pqMO 1Qh8pY+zJacYdUQILyvp7g== 0001099910-08-000158.txt : 20081006 0001099910-08-000158.hdr.sgml : 20081006 20081006144742 ACCESSION NUMBER: 0001099910-08-000158 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20080331 FILED AS OF DATE: 20081006 DATE AS OF CHANGE: 20081006 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENVIRO VORAXIAL TECHNOLOGY INC CENTRAL INDEX KEY: 0001043894 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 830266517 STATE OF INCORPORATION: ID FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-30454 FILM NUMBER: 081109202 BUSINESS ADDRESS: STREET 1: 98 SE 7TH STREET STREET 2: STE 4-5 CITY: DEERFIELD BEACH STATE: FL ZIP: 33441 BUSINESS PHONE: 9544216141 MAIL ADDRESS: STREET 1: 720 S DEERFIELD AVE STREET 2: STE 4-5 CITY: DEERFIELD BEACH STATE: FL ZIP: 33441 10-Q/A 1 evtn-10q_amend1.txt AMENDMENT NO. 1 TO QUARTERLY REPORT U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 1 to FORM 10-Q (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2008 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT For the transition period from _____________ to ______________ Commission File Number: 0-27445 Enviro Voraxial Technology, Inc. -------------------------------- (Exact name of Small Business Issuer as specified in its Charter) IDAHO 82-0266517 ----- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 821 NW 57th Place, Fort Lauderdale, Florida 33309 ------------------------------------------------- (Address of principal executive offices) (954) 958-9968 -------------- (Issuer's telephone number) --------------------------------------------------------------------- (Former Name, former address and former fiscal year, if changed since last Report.) Check mark whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 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 [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] 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: March 31, 2008, we had 23,549,801 shares of our Common Stock outstanding.
INDEX PART I. CONSOLIDATED CONDENSED FINANCIAL INFORMATION - ------- -------------------------------------------- Item 1. Condensed Consolidated Financial Statements.............................................. 3 Condensed Consolidated Balance Sheet..................................................... 3 Condensed Consolidated Statements of Operations.......................................... 4 Condensed Consolidated Statements of Cash Flows ......................................... 5 Notes to Condensed Consolidated Financial Statements..................................... 6 Item 2. Management's Discussion and Analysis and Plan of Operation.............................................................................. 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk............................... 15 Item 4T. Controls and Procedures.................................................................. 15 PART II. OTHER INFORMATION - -------- ----------------- Item 1. Legal Proceedings........................................................................ 16 Item 1A. Risk Factors............................................................................. 16 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.............................. 16 Item 3. Defaults Upon Senior Securities.......................................................... 16 Item 4. Submission of Matters to a Vote of Security Holders...................................... 16 Item 5. Other Information........................................................................ 16 Item 6. Exhibits................................................................................. 16 Signatures ......................................................................................... 17
2 PART I: CONSOLIDATED FINANCIAL INFORMATION ------------------------------------------ Item 1. Financial Statements.
ENVIRO VORAXIAL TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS March 31, December 31, 2008 2007 ------------ ------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 201,875 $ 201,066 Accounts receivable, net 3,500 -- Inventory, net 295,267 295,267 ----------- ----------- Total current assets 500,642 496,333 FIXED ASSETS, NET 220,580 226,242 OTHER ASSETS 13,695 13,695 ----------- ----------- Total assets $ 734,917 $ 736,270 =========== =========== LIABILITIES AND SHAREHOLDERS' DEFICIENCY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 789,024 $ 656,819 Current portion of note payable 30,836 30,836 ----------- ----------- Total current liabilities 819,860 687,655 LONG TERM NOTE PAYABLE 130,868 141,953 ----------- ----------- Total liabilities 950,728 829,608 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' DEFICIENCY: Common stock, $.001 par value, 42,750,000 shares authorized 23,549,801 and 23,122,135 shares issued and oustanding as of March 31, 2008 and December 31, 2007 23,538 23,121 Additional paid-in capital 8,770,441 8,520,857 Accumulated deficit (9,009,790) (8,637,316) ----------- ----------- Total shareholders' deficiency (215,811) (93,338) ----------- ----------- Total liabilities and shareholders' deficiency $ 734,917 $ 736,270 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 3
ENVIRO VORAXIAL TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended March 31, 2008 2007 (as restated) ------------ ------------ Revenues, net $ 3,500 $ 53,631 Cost of goods sold -- 11,686 ------------ ------------ Gross profit 3,500 41,945 Costs and operating expenses: Research and development 198,975 82,595 General and administrative 176,998 1,086,494 ------------ ------------ Total costs and operating expenses 375,973 1,169,089 ------------ ------------ Loss from operations (372,473) (1,127,144) Provision for income taxes -- -- ------------ ------------ NET LOSS $ (372,473) $ (1,127,144) ============ ============ Weighted average number of common shares outstanding-basic & diluted 21,267,509 21,125,568 ============ ============ Basic and diluted loss per common share $ (0.02) $ (0.05) ============ ============
The accompanying notes are an integral part of the consolidated financial statements. 4
ENVIRO VORAXIAL TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2008 2007 (as restated) --------------- ----------------- Cash Flows From Operating Activities: Net loss $ (372,473) $(1,127,144) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation 5,662 278 Common stock issued for services -- 99 Amortization of deferred compensation -- 13,333 Deferred compensation -- 26,667 Issuance of common stock consulting services -- 446,676 Extension of stock options issued -- 697,500 Changes in assets and liabilities: Accounts receivable (3,500) (123,866) Inventory -- (91,017) Accounts payable and accrued expenses 132,204 (2,390) ----------- ----------- Net cash used in operating activities (238,107) (159,864) ----------- ----------- Cash Flows From Investing Activities: Purchase of equipment -- (5,294) ----------- ----------- Net cash used by investing activities -- (5,294) ----------- ----------- Cash Flows From Financing Activities: Repayments toward notes payable (11,085) -- Proceeds from sales of common stock 250,001 -- ----------- ----------- Net cash provided by financing activities 238,916 -- ----------- ----------- Net increase (decrease) in cash and cash equivalents 809 (165,158) Cash and cash equivalents, beginning of period 201,066 390,393 ----------- ----------- Cash and cash equivalents, end of period $ 201,875 $ 225,235 =========== =========== Supplemental Disclosures Cash paid during the year for interest $ -- $ -- =========== =========== Cash paid during the year for taxes $ -- $ -- =========== =========== Common stock options issued for accrued salaries $ -- $ 360,000 =========== =========== Common stock issued for consulting services $ -- $ 86,676 =========== =========== Common stock issued for consulting services and deferred compensation $ -- $ 40,000 =========== =========== Extension of stock options $ -- $ 697,500 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 5 ENVIRO VORAXIAL TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2008 NOTE A - ORGANIZATION AND OPERATIONS Organization - ------------ Enviro Voraxial Technology, Inc. (the "Company") is a provider of environmental and industrial separation technology. The Company has developed and patented the Voraxial(R) Separator, which is a technology that efficiently separates liquid/liquid, liquid/solid or liquid/liquid/solid fluid streams with distinct specific gravities. Potential commercial applications and markets include oil exploration and production, oil refineries, mining, manufacturing and municipal wastewater industry. The Company currently operates within one segment, which is the manufacture and sale of the Voraxial(R) Separator. Florida Precision Aerospace, Inc. (FPA) is the wholly-owned subsidiary of the Company and is used to manufacture, assemble and test the Voraxial Separator. NOTE B - GOING CONCERN The Company has experienced net losses, has negative cash flows from operating activities, and has to raise capital to sustain operations. There is no assurance that the Company's developmental and marketing efforts will be successful, that the Company will ever have commercially accepted products, or that the Company will achieve a level of revenue sufficient to provide cash inflows to sustain operations. The Company will continue to require the infusion of capital until operations become profitable. During 2008, the Company anticipates seeking additional capital, increasing sales of the Voraxial(R) Separator and continuing to restrict expenditures. As a result of the above, the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Interim Financial Statements - ---------------------------- The interim financial statements presented herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The interim financial statements should be read in conjunction with the Company's annual financial statements, notes and accounting policies included in the Company's annual report on Form 10-KSB for the year ended December 31, 2007 as filed with the SEC. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of financial position as of March 31, 2008 and the related operating results and cash flows for the interim period presented have been made. The results of operations, for the period presented are not necessarily indicative of the results to be expected for the year. 6 ENVIRO VORAXIAL TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2008 Principles of Consolidation - --------------------------- The consolidated financial statements include the accounts of the parent company, Enviro Voraxial Technology, Inc., and its wholly-owned subsidiary, Florida Precision Aerospace, Inc. All significant intercompany accounts and transactions have been eliminated. Estimates - --------- The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ. Revenue Recognition - ------------------- The Company derives its revenue from the sale and short-term rental of the Voraxial (R) Separator. The Company presents revenue in accordance with Staff Accounting Bulletin (SAB) No. 104 "Revenue Recognition in Financial Statements". Under SAB 104, revenue is realized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. Revenues that are generated from sales of equipment are typically recognized upon shipment. Our standard agreements generally do not include customer acceptance or post shipment installation provisions. However, if such provisions have been included or there is an uncertainty about customer acceptance, revenue is deferred until we have evidence of customer acceptance and all terms of the agreement have been complied with. There were no agreements with such provisions as of March 31, 2008. The Company recognizes revenue from the short term rental of equipment, ratably over the life of the agreement, which is usually three to six months. Fair Value of Instruments - ------------------------- The carrying amounts of the Company's financial instruments, including cash and cash equivalents, inventory, accounts payable and accrued expenses at March 31, 2008, approximate their fair value because of their relatively short-term nature. Cash and Cash Equivalents - ------------------------- The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash balances with various financial institutions. Balances at these institutions may at times exceed the Federal Deposit Insurance Corporate limits. 7 ENVIRO VORAXIAL TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2008 Inventory - --------- Inventory consists of components for the Voraxial(R) Separator and is priced at lower of first-in, first-out cost or market. Inventory includes units being rented on a short term basis and components held by third parties in connection with pilot programs as part of the continuing evaluation by such third parties as to the effectiveness and usefulness of the service to be incorporated into their respective operations. Fixed Assets - ------------ Fixed assets are stated at cost less accumulated depreciation. The cost of maintenance and repairs is expensed to operations as incurred. Depreciation is computed by the straight-line method over the estimated economic useful life of the assets (5-10 years). Gains and losses recognized from the sales or disposal of assets is the difference between the sales price and the recorded cost less accumulated depreciation less costs of disposal. Net Loss Per Share - ------------------ Basic and diluted loss per share has been computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding. The warrants and stock options have been excluded from the calculation since they would be anti-dilutive. Such equity instruments may have a dilutive effect in the future and include the following potential common shares: Warrants 5,589,367 Stock options 6,335,666 ---------- 11,925,033 ========== Income Taxes - ------------ Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Research and Development Expenses - --------------------------------- Research and development costs, which consist of travel expenses, consulting fees, subcontractors and salaries are expensed as incurred. Advertising Costs - ----------------- Advertising costs are expensed as incurred and are included in general and administrative expenses. 8 ENVIRO VORAXIAL TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2008 Stock-Based Compensation - ------------------------ The company adopted SFAS No. 123(R) effective January 1, 2006. This statement requires compensation expense relating to share-based payments to be recognized in net income using a fair-value measurement method. Under the fair value method, the estimated fair value of awards is charged to income on a straight-line basis over the requisite service period, which is generally the vesting period. The company elected the modified prospective method as prescribed in SFAS No. 123 (R) and therefore, prior periods were not restated. Under the modified prospective method, this statement was applied to new awards granted after the time of adoption, as well as to the unvested portion of previously granted equity-based awards for which the requisite service has not been rendered as of January 1, 2006. Prior to January 1, 2006, the Company accounted for stock-based employee compensation under Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," and SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," which was released in December 2002 as an amendment of SFAS No. 123. The Company currently accounts for stock-based compensation under the fair value method using the Black-Scholes option pricing model as indicated in Note G. Accounting for the Impairment of Long-Lived Assets - -------------------------------------------------- The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There were no impairments of long-lived assets in 2008 or 2007. Recent accounting pronouncements - -------------------------------- Disclosure about Derivative Instruments and Hedging Activities In March 2008, the FASB issued SFAS No. 161, "Disclosure about Derivative Instruments and Hedging Activities," an amendment of FASB Statement No. 133, (SFAS 161). This statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The Company is required to adopt SFAS 161 on January 1, 2009. The Company is currently evaluating the potential impact of SFAS No. 161 on the Company's consolidated financial statements. 9 ENVIRO VORAXIAL TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2008 Determination of the Useful Life of Intangible Assets - ----------------------------------------------------- In April 2008, the FASB issued FSP FAS 142-3, "Determination of the Useful Life of Intangible Assets,", which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of intangible assets under FASB 142 "Goodwill and Other Intangible Assets". The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of the expected cash flows used to measure the fair value of the asset under FASB 141 (revised 2007) "Business Combinations" and other U.S. generally accepted accounting principles. The Company is currently evaluating the potential impact of FSP FAS 142-3 on its consolidated financial statements. NOTE D - CONCENTRATION OF CREDIT RISK One customer accounted for approximately 100% and 63% of revenue for three months ended March 31, 2008 and 2007. As of March 31, 2008 and 2007, there was $3,500 and $0 in outstanding receivables from this customer. NOTE E - RELATED PARTY TRANSACTIONS For the three months ended March 31, 2008, the Company incurred consulting expenses from the chief executive officer and majority stockholder of the Company of $78,860. Of these amounts, $28,485 has been paid out for the three moths ended March 31, 2008. The unpaid balance has been included in accrued expenses. NOTE F - CAPITAL TRANSACTIONS Common stock - ------------ During the three months ended March 31, 2008 the Company sold 416,666 shares of restricted common stock for $.60 per share in a private placement offering. Total proceeds from the sale were $250,000. The shares contain legends restricting their transferability absent registration or applicable exemption. Warrants - -------- In January 2008, the Company extended the exercisable life of certain warrants issued to investors to purchase an aggregate of 243,200 shares of common stock issued in 2000 for a period of one year. The warrants now expire in February 2009. The purchase price of these warrants ranges from $6.00 - $9.00 per share. The Company calculated the fair value of the extended warrants by using the Black-Scholes option-pricing model with the following weighted average assumptions: no dividend yield for all the years; expected volatility of 55%; risk-free interest rate of 5% and an expected life of five years. No increase in fair value was noted and, therefore, no adjustment has been made to the financial statements as of March 31, 2008. 10 ENVIRO VORAXIAL TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2008 In January 2008, the Company extended the exercisable life of certain warrants issued to investors to purchase an aggregate of 200,000 shares of common stock issued in 2001 for a period of one year. The warrants now expire in April 2009. The purchase price of the stock under these warrants ranges from $3.00-$4.00 per share. The Company calculated the fair value of the extended warrants by using the Black-Scholes option-pricing model with the following weighted average assumptions: no dividend yield for all the years; expected volatility of 55%; risk-free interest rate of 5% and an expected life of five years. No increase in fair value was noted and, therefore, no adjustment has been made to the financial statements as of March 31, 2008. Information with respect to warrants outstanding and exercisable at March 31, 2008 is as follows:
- ----------------------------------------------------------------------------------------------------------- Number Range of Exercise Number Outstanding Price Exercisable - ----------------------------------------------------------------------------------------------------------- Balance, December 31, 2006 5,589,367 $0.75 - $9.00 5,389,367 - ----------------------------------------------------------------------------------------------------------- Issued - - - ----------------------------------------------------------------------------------------------------------- Balance, March 31, 2008 5,589,367 $0.75-$9.00 5,389,367 - -----------------------------------------------------------------------------------------------------------
Information with respect to employee stock options outstanding and employee stock options exercisable at March 31, 2008 is as follows:
- ----------------------------------------------------------------------------------------------------------------- Weighted Average Exercise Price Options Vested Exercise Price Per Per Option Outstanding Shares Common Share Outstanding - ----------------------------------------------------------------------------------------------------------------- Balance, December 31, 2006 3,729,666 3,709,666 $0.15-$1.00 $0.52 - ----------------------------------------------------------------------------------------------------------------- Granted/vested during the year ended December 31,2007 2,981,000 2,981,000 $0.40 $0.40 - ----------------------------------------------------------------------------------------------------------------- Expired during 2007 (375,000) (375,000) ($.80-$1.00) ($.90) - ----------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------- Balance, March 31, 2008 6,335,666 6,315,666 $0.15-$1.00 $0.46 - -----------------------------------------------------------------------------------------------------------------
11 ENVIRO VORAXIAL TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2008 The following table summarizes information about the stock options outstanding at March 31, 2008:
- ---------------------------------------------------------------------------------------------------------------- Weighted Average Number Remaining Weighted Exercise Outstanding at Contractual Average Number Exercisable Weighted Average Price March 31, 2008 Life Exercise Price at March 31, 2008 Exercise Price - ---------------------------------------------------------------------------------------------------------------- 0.30 45,000 3.25 0.30 45,000 0.30 - ---------------------------------------------------------------------------------------------------------------- 0.77 200,000 4.25 0.77 200,000 0.77 - ---------------------------------------------------------------------------------------------------------------- 0.15 2,000,000 4.25 0.15 2,000,000 0.15 - ---------------------------------------------------------------------------------------------------------------- 1.00 10,000 .08 1.00 10,000 1.00 - ---------------------------------------------------------------------------------------------------------------- 0.60 697,333 1.25 0.60 697,333 0.60 - ---------------------------------------------------------------------------------------------------------------- 1.00 697,333 1.25 1.00 697,333 1.00 - ---------------------------------------------------------------------------------------------------------------- 1.00 50,000 3.00 1.00 50,000 1.00 - ---------------------------------------------------------------------------------------------------------------- 0.71 30,000 .25 0.71 30,000 0.71 0.40 2,606,000 4.25 0.40 2,981,000 0.40 --------- --------- 6,335,666 6,335,666 --------- --------- - ----------------------------------------------------------------------------------------------------------------
NOTE G - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS The Company has amended its interim financials for the quarter ended March 31, 2007 to reflect certain adjustments for options issued as repayment for accrued salaries and the extension of previously issued options. 12 ENVIRO VORAXIAL TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2008 NOTE G - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (CONTINUED) The following table reflects the effects of the restatements.
- ------------------------------------------------- --------------------------- -------------------------- Three Months Three Months Ended Ended March 31, 2008 March 31, 2007 - ------------------------------------------------- --------------------------- -------------------------- Common Stock - ------------------------------------------------- --------------------------- -------------------------- As previously reported - 22,191 - ------------------------------------------------- --------------------------- -------------------------- As restated - 22,091 - ------------------------------------------------- --------------------------- -------------------------- Difference - (100) - ------------------------------------------------- --------------------------- -------------------------- - ------------------------------------------------- --------------------------- -------------------------- APIC - ------------------------------------------------- --------------------------- -------------------------- As previously reported - 7,146,287 - ------------------------------------------------- --------------------------- -------------------------- As restated - 7,903,887 - ------------------------------------------------- --------------------------- -------------------------- Difference - 757,600 - ------------------------------------------------- --------------------------- -------------------------- Deferred Compensation - ------------------------------------------------- --------------------------- -------------------------- As previously reported - - - ------------------------------------------------- --------------------------- -------------------------- As restated - - - ------------------------------------------------- --------------------------- -------------------------- Difference - - - ------------------------------------------------- --------------------------- -------------------------- Accumulated Deficit - ------------------------------------------------- --------------------------- -------------------------- As previously reported - (7,085,180) - ------------------------------------------------- --------------------------- -------------------------- As restated - (7,842,680) - ------------------------------------------------- --------------------------- -------------------------- Difference - (757,500) - ------------------------------------------------- --------------------------- -------------------------- General and administrative expense - ------------------------------------------------- --------------------------- -------------------------- As previously reported - 328,994 - ------------------------------------------------- --------------------------- -------------------------- As restated - 1,086,494 - ------------------------------------------------- --------------------------- -------------------------- Difference - 757,500 - ------------------------------------------------- --------------------------- -------------------------- Loss from operations before provision for income taxes - ------------------------------------------------- --------------------------- -------------------------- As previously reported - (369,644) - ------------------------------------------------- --------------------------- -------------------------- As restated - (1,127,144) - ------------------------------------------------- --------------------------- -------------------------- Difference - (757,500) - ------------------------------------------------- --------------------------- -------------------------- Net Income (Loss) - ------------------------------------------------- --------------------------- -------------------------- As previously reported - (369,644) - ------------------------------------------------- --------------------------- -------------------------- As restated - (1,127,144) - ------------------------------------------------- --------------------------- -------------------------- Difference - (757,500) - ------------------------------------------------- --------------------------- -------------------------- Earnings per Share- Basic - ------------------------------------------------- --------------------------- -------------------------- As previously reported - (.01) - ------------------------------------------------- --------------------------- -------------------------- As restated - (.05) - ------------------------------------------------- --------------------------- -------------------------- Difference - (.04) - ------------------------------------------------- --------------------------- --------------------------
13 Management's Discussion and Analysis of Financial Condition and Plan of Operations General Forward-Looking Statements - -------------------------- The following discussion of the financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes thereto. The following discussion contains forward-looking statements. Enviro Voraxial Technology, Inc. is referred to herein as "the Company", "we" or "our." The words or phrases "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements". Such statements include those concerning our expected financial performance, our corporate strategy and operational plans. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. Statements made herein are as of the date of the filing of this Form 10-Q with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement. Application of Critical Accounting Policies - ------------------------------------------- The Company's consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Certain accounting policies have a significant impact on amounts reported in the financial statements. A summary of these significant accounting policies can be found in Note B to the Company's financial statements in the Company's 2007 Annual Report on Form 10-KSB. The Company has not adopted any significant new policies during the quarter ended March 31, 2008. Among the significant judgments made in preparation of the Company's financial statements are the determination of the allowance for doubtful accounts and adjustments of inventory valuations. These adjustments are made each quarter in the ordinary course of accounting. Results of Operations for the Three Months ended March 31, 2008 and 2007: Revenue - ------- Our revenues were $3,500 for the three months ended March 31, 2008 as compared to $53,631 for the three months ended March 31, 2007. The Company is currently working on numerous opportunities with customers for slop-oil treatment, produced water and refinery applications; however sales to these customers have yet to materialize. The Company continues to focus on its sales and marketing program for the Voraxial(R) Separator and management believes such efforts will result in increasing revenues in 2008. 14 Cost of Goods Sold - ------------------ Our cost of goods sold decreased to zero for the three months ended March 31, 2008 as compared to $11,686 for the three months ended March 31, 2007, a decrease of $11,686, which is a directly related to the decrease in revenues reflected above. Research and Development Expenses - --------------------------------- Research and Development expenses increased by approximately 141% to $198,975 for the three months ended March 31, 2008, as compared to $82,595 for the previous three months ended March 31, 2007. Although the Company has finalized the development of the Voraxial(R) Separator, we targeted expenditures for specific applications for the technology within the oil industry during the three months ended March 31, 2008. General and Administrative Expenses - ----------------------------------- General and Administrative expenses decreased approximately 84% to $176,998 for the three months ended March 31, 2008 from $1,086,494 for the three months ended March 31, 2007. The decrease was primarily due to a non-cash expenses relating to the issuance of options to employees and consultants in 2007. We continue to focus our efforts on marketing of the Voraxial(R) Separator. Liquidity and Capital Resources: - -------------------------------- Cash at March 31, 2008 was $201,875. Working capital deficit at March 31, 2008 was $319,218 as compared to a working capital deficit at December 31, 2007 of approximately $191,322. At March 31, 2008 the Company had an accumulated deficit of $9,009,790. We anticipate generating positive cash flow from the Voraxial(R) Separator by the end of 2008. To the extent such revenues and corresponding cash flows do not materialize, we will require infusion of capital to sustain our operations. We cannot be assured that we will generate revenues or that the level of any future revenues will be self-sustaining. The Company has funded working capital requirements and intends to fund current working capital requirements through third party financing, including the private placement of securities. We cannot provide any assurances that required capital will be obtained or that terms of such required capital may be acceptable to us. If the Company is unable to obtain adequate financing, it may reduce its operating activities until sufficient funding is secured or revenues are generated to support operating activities. Continuing Losses - ----------------- We may be unable to continue as a going concern, given our limited operations and revenues and our significant losses to date. Since 2001, we have encountered greater expenses in the development of our Voraxial(R) Separators and have had limited sales income from this development. Consequently, our working capital may not be sufficient and our operating costs may exceed those experienced in our prior years. In light of these recent developments, we may be unable to 15 continue as a going concern. The Company has experienced net losses, has a working capital deficit and sustained cash outflows from operating activities and had to raise capital to sustain operations. There is no assurance that the Company's developmental and marketing efforts will be successful, that the Company will ever have commercially accepted products, or that the Company will achieve significant revenues. However, we believe that the exposure received in the past year for the Voraxial Separator has positioned the Company to begin generating sales and supply us with sufficient working capital. As a result of the above, the accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable to smaller reporting company. Item 4T. Controls and Procedures Evaluation of disclosure controls and procedures - ------------------------------------------------ As of the end of the period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). This evaluation was done under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to satisfy our disclosure obligations under the Exchange Act. Changes in internal controls - ---------------------------- There were no changes in our internal controls or in other factor during the period covered by this report that have materially affected, or is likely to materially affect the Company's internal controls over financial reporting. 16 PART II: OTHER INFORMATION -------------------------- Item 1. Legal Proceedings None. Item 1A. Risk Factors None. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the three month period ended March 31, 2008, the Company received $250,000 from an institution that purchased an aggregate of 416,666 shares of the Company's restricted common stock at $0.60 per share. The institution was deemed to be an accredited investor. The issuances were exempt from registration under Section 4(2) of the Securities Act. The investor received information concerning the Company and had the opportunity to ask questions concerning the viability of the Company. The shares contain legends restricting their transferability absent registration or applicable exemption. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits Exhibits required by Item 601 of Regulation S-K 31.1 Form 302 Certification of Chief Executive Officer 31.2 Form 302 Certification of Principal Financial Officer 32.1 Form 906 Certification of Chief Executive Officer and Principal Financial Officer 17 SIGNATURE 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 as a duly authorized officer of the Registrant. Enviro Voraxial Technology, Inc. By: /s/ Alberto DiBella -------------------- Alberto DiBella Chief Executive Officer and Principal Financial Officer DATED: October 1, 2008 18 EX-31.1 2 ex31-1.txt EXHIBIT 31.1 CERTIFICATION I, Alberto DiBella, certify that: 1. I have reviewed this report on Form 10-Q of Enviro Voraxial Technology, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditor and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 1, 2008 /s/ Alberto DiBella - ------------------- Alberto DiBella Chief Executive Officer EX-31.2 3 ex31-2.txt EXHIBIT 31.2 CERTIFICATION I, Alberto DiBella, certify that: 1. I have reviewed this report on Form 10-Q of Enviro Voraxial Technology, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditor and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 1, 2008 /s/ Alberto DiBella - ------------------- Alberto DiBella Principal Financial Officer EX-32.1 4 ex32-1.txt EXHIBIT 32.1 SECTION 1350 CERTIFICATION CERTIFICATION PURSUANT TO 13 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report of Enviro Voraxial Technology, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Alberto DiBella, Chief Executive Officer and Principal Financial Officer of the Company, certify, pursuant to 13 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: October 1, 2008 /s/ Alberto DiBella - ------------------- Alberto DiBella Chief Executive Officer and Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----