-----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, FYI3XhEh2srYq/9Y0vVyvuqzQWSVwmO3YKYAZ/02w+PNp5yVU4FcGAH/VbUDcmy2 QdNt9ryQOk/buy47lRP5Iw== 0001128778-01-500075.txt : 20010821 0001128778-01-500075.hdr.sgml : 20010821 ACCESSION NUMBER: 0001128778-01-500075 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010820 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENVIRO VORAXIAL TECHNOLOGY INC CENTRAL INDEX KEY: 0001043894 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 830266517 STATE OF INCORPORATION: ID FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-30454 FILM NUMBER: 1719497 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 10QSB 1 june302001-10qsb.txt 10QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2001 [ ] 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 83-0266517 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 98 SE 7th Street, Deerfield Beach, Florida 33441 (Address of principal executive offices) (954) 421-6141 (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 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: 7,447,438 Common Stock as of July 26, 2001. INDEX PART 1. CONSOLIDATED FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Basis of Presentation 3 Consolidated Balance Sheet (unaudited) - June 30, 2001 4 Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2001 and 2000 5 Consolidated Statements of Cash Flows (unaudited) Six Months Ended June 30, 2001 and 2000 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis and Plan of Operation 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 12 5. Other Information Item 12 6. Exhibits and reports on Form 8-K 12 Signatures 13 2 PART I. CONSOLIDATED FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (unaudited) Basis of Presentation The accompanying unaudited consolidated financial statements of Enviro Voraxial Technology, Inc. (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the three-month period ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. For further information, refer to the consolidated financial statements and footnotes for the year ended December 31, 2000 found in the Company's Form 10-KSB. We may be unable to continue as a going concern, given our limited operations and revenues and our significant losses to date. Revenues from Precision Engineering services have declined substantially from prior comparative periods, as the company continues to focus our efforts in marketing and sale of Voraxial Separator. Since 2000 we have encountered greater expenses in the development of our Voraxial Separators and have had limited rental income for pilot programs 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 continue as a going concern. 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. To the extent revenues do not materialize we will require an infusion of capital to continue operations. 3 ENVIRO VORAXIAL TECHNOLOGY, INC CONSOLIDATED BALANCE SHEET (Unaudited) ASSETS June 30, 2001 Current Assets: Cash and cash equivalents $ 91,000 Accounts Receivable 1,000 Inventory 75,000 ------------ Total current assets 167,000 Property, plant and equipment, net 327,000 Asset held for sale, net 558,000 Other assets 2,000 ------------ $ 1,054,000 ============ LIABILITIES Current Liabilities: Current portion of mortgage note payable $ 11,000 Current portion of obligations under capital leases 27,000 Accounts payable and accrued expenses 175,000 Notes Payable 30,000 Advances 100,000 Due to Stockholder 288,000 ------------ Total current liabilities 631,000 Noncurrent liabilities: Mortgage note payable 393,000 Obligations under capital leases 63,000 ------------ 456,000 Stockholders' Equity: Capital stock, par value $.001 par value; Preferred stock, voting, 8% noncumulative, convertible, 7,250,000 authorized shares 6,000,000 shares issued and outstanding (at liquidating value) 6,000 Common stock, authorized 42,750,000 shares, 7,447,438 shares issued and outstanding 7,000 Additional paid-in capital 1,311,000 Accumulated deficit (1,357,000) ------------ (33,000) ------------ $ 1,054,000 ============ 4
ENVIRO VORAXIAL TECHNOLOGY, INC CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, 2001 2000 2001 2000 ----------- --------- ----------- ----------- Net sales $ 1,000 $ 62,000 $ 3,000 $ 140,000 Cost of goods sold 0 20,000 1,000 57,000 ----------- --------- ----------- ----------- Gross profit 1,000 42,000 2,000 83,000 ----------- --------- ----------- ----------- Other (income) and expenses: Research and development 64,000 7,000 102,000 21,000 General and administrative 133,000 121,000 186,000 253,000 Interest expense 17,000 13,000 34,000 26,000 Other income (8,000) (16,000) (21,000) (31,000) ----------- --------- ----------- ----------- Total costs and expenses 206,000 125,000 301,000 269,000 ----------- --------- ----------- ----------- Net Loss $ (205,000) $ (83,000) $ (299,000) $ (186,000) =========== ========== =========== =========== Basic and diluted (loss) per common share $ (.03) $ (.01) $ (.04) $ (.03) =========== ========== =========== =========== Weighted average number of common shares Outstanding 7,414,207 7,307,118 7,410,702 7,358,084 =========== ========== =========== ===========
5
ENVIRO VORAXIAL TECHNOLOGY, INC CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30 2001 2000 ------------ ------------ Cash flows from operating activities: Net Loss $ (299,000) $ (186,000) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation 54,000 58,000 Bad debts - 24,000 Stock issued for services rendered 35,000 - Changes in: Accounts receivable (1,000) (6,000) Inventory - (17,000) Accounts payable and accrued expenses 41,000 15,000 ------------ ------------ Net cash used in operating activities (170,000) (112,000) ------------ ------------ Cash flows from investing activities: Acquisition of property and equipment - (4,000) ------------ ------------ Cash flows from financing activities: Proceeds from sale of common stock - 352,000 Notes Payable 30,000 - Advances from Investors 100,000 - Increase in note payable - stockholder 13,000 - Repayment of mortgage note payable (5,000) (4,000) Capital lease repayments (10,000) (24,000) ------------ ------------ Net cash provided by financing activities 128,000 324,000 ------------ ------------ Increase (decrease) in cash and Cash equivalents (42,000) 208,000 Cash and cash equivalents, beginning 133,000 68,000 ------------ ------------ Cash and cash, equivalents, end $ 91,000 $ 276,000 ============ ============
6 ENVIRO VORAXIAL TECHNOLOGY, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A - ORGANIZATION AND OPERATIONS Enviro Voraxial Technology, Inc. (the "Company") is the owner and manufacturer of the patented Voraxial Separator. The Voraxial Separator is a continuous flow turbo machine that efficiently separates mixture of fluids or fluids and solids at extremely high flow rates while achieving very high levels of purity through the utilization of a strong centrifugal force or vortex. The scaleability, efficiency and effectiveness of the Voraxial Separator make the technology universal to any industry requiring the separation of liquids and/or liquids and solids, regardless of the quantity needed to be processed. Prior to 1999, the Company performed contract-manufacturing services to the aerospace and automotive industries through the operation of its high precision engineering machine shop, which designed, manufactured and assembled specialized parts and components. Since 1999, the Company has been focusing its efforts on developing and marketing the Voraxial Separator. Potential commercial applications include ballast water exchange, oil/water separation, sewage separation, environmental cleanup and the separation of industrial chemicals. We may be unable to continue as a going concern, given our limited operations, lack of revenues and our significant losses to date. Revenues from Precision Engineering services have declined substantially from prior comparative periods, as we continue to focus efforts in the marketing and sale of our Voraxial Separator. Since 2000 we have encountered greater expenses in the development of our Voraxial Separator and have had limited rental income for pilot programs from this development. Consequently, our working capital may not be sufficient and our operating costs may exceed historical operating costs. 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. The Company is currently working with various clients that have a significant interest in utilizing the Voraxial Separator for the treatment of their wastewater. To the extent revenues do not materialize we will require an infusion of capital to continue operations. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [1] Principles of consolidation: The consolidated financial statements as of June 30, 2001 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. [2] 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. [3] Property, plant and equipment: Property, plant and equipment are stated at cost. The cost of maintenance and repairs is charged against results of operations as incurred. Depreciation is computed by the straight-line method over the estimated economic useful life of the assets (5 -20 years). [4] 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 convertible preferred stock has been excluded from the calculation since it would be anti-dilutive. 7 ENVIRO VORAXIAL TECHNOLOGY, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [5] Inventory: Inventory, which consists primarily of parts, is priced at lower of first-in, first-out cost or market. [6] Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amount of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ. [7] 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 at year end 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. [8] Research and development expenses: Research and development costs are expensed as incurred. [9] Revenue recognition: The Company recognizes revenue from product sales when the products are shipped to customers. [10] Fair value of financial instruments: The carrying amounts of the Company's cash and cash equivalents, accounts receivable, accounts payable, and amounts due to stockholders approximate fair value due to their short maturities. Mortgage payable, note payable and obligations under capital leases approximate fair value as the interest rates applicable to these debt instruments are comparable to quoted market prices for similar issues. [11] Interim financial statements Financial statements as of June 30, 2001 are unaudited but in the opinion of management the financial statements include all adjustments consisting of normal recurring accruals necessary for a fair presentation of the comparative financial position and results of operations. Results of operations for interim periods are not necessarily indicative of those to be achieved or expected for the entire year. Note C - ASSET HELD FOR SALE On June 13, 2001 the Company accepted a sales contract for the land and buildings at 98 SE 7thStreet, Deerfield Beach, Florida. The sale price is $1,200,000 and company adjusted basis is $558,000. NOTE D - SUBSEQUENT EVENT In July, 2001, the Company received $20,000 from a third party investor for purchase of common stock. The Company issued restricted common stock at $.85 per share. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operations General Management's discussion and analysis contains various forward-looking statements. These statements consist of any statement other than a recitation of historical fact and can be identified by the use of forward-looking terminology such as "may," "expect," "anticipate," "estimate" or "continue" or use of negative or other variations or comparable terminology. We caution that these statements are further qualified by important factors that could cause actual results to differ materially from those contained in the forward-looking statements, that these forward-looking statements are necessarily speculative, and there are certain risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. Three Months ended June 30, 2001 and 2000 Net Sales. Our net sales decreased by approximately 98% to $1,000 as compared to $62,000 for the comparative three months ended June 30, 2000. This sales decrease is because no shipments to New Venture Gear were made in the second quarter of 2001. The Company has not pursued new customer orders of machine work as efforts were focused on marketing the Voraxial Separator. We anticipate that the marketing efforts for the Voraxial Separator from this past year will begin to generate revenues in 2001, which will compensate for the loss of revenues experienced from the high precision manufacturing business. We do not expect to generate as much revenue in 2001 as we did in 2000 from high precision machining as most of our efforts will continue to focused on building, assembling, marketing and selling the Voraxial Separator. Our gross profit was $1,000 for the three months ended June 30, 2001 as compared to $42,000 for the previous three months ended June 30, 2000. This decrease in gross profit was because no shipments to New Venture Gear were made in the second quarter of 2001 and no new customers have been pursued in the high precision manufacturing business. Research and Development Expenses Research and Development expenses increased by 814% to $64,000, for the three months ended June 30, 2001 up from $7,000 for the previous three months ended June 30, 2000. Expenditures consisted of salaries and wages, along with materials and supplies. Areas of concentration included various industrial applications including ballast water, sewage treatment and oil/ water separation. General and Administrative Expenses General and Administrative expenses increased by 10% to $133,000 for the three months ended June 30, 2001 up from $121,000 for the previous three months ended June 30, 2000. We focused a majority of our efforts on marketing of the Voraxial Separator. As such, the general and administrative overhead was consolidated with activities supporting the Voraxial Separator. Further, additional resources were allocated to assist and inform potential customers of the Voraxial Separator. We have rented excess space in our operating facility. Income amounted to $8,000 in the three months ended June 30, 2001, as compared to $16,000 for the previous three months ended June 30, 2000. Decrease in rental income 2001 over 2000 was due to vacancies. Six Months ended June 30, 2001 and 2000 Net Sales. Our net sales decreased by approximately 98% to $3,000 as compared to $140,000 for the previous six months ended June 30, 2000. This sales decrease is because no shipments to New Venture Gear were made in the first half of 2001. The Company has not pursued new customer orders of machine work as efforts were focused on marketing the Voraxial Separator. We anticipate that the marketing 9 efforts for the Voraxial Separator from this past year will begin to generate revenues in 2001, which will reduce our need on revenues generated from high precision manufacturing. We do not expect to generate as much revenue in 2001 as we did in 2000 from high precision machining as most of our efforts will continue to be focused on building, assembling, marketing and selling the Voraxial Separator. Our gross profit was $2,000 for the six months ended June 30, 2001 as compared to $83,000 for the previous six months ended June 30, 2000. This decrease in profit was because no shipments to New Venture Gear were made this year. Research and Development Expenses Research and Development expenses increased by 386% to $102,000, for the six months ended June 30, 2001 up from $21,000 for the previous six months ended June 30, 2000. Expenditures consisted of Salaries and wages, along with materials and supplies. Areas of concentration included various industrial applications including ballast water, sewage treatment and oil/ water separation. General and Administrative expenses decreased by 26% to $186,000 for the six months ended June 30, 2001 down from $253,000 for the previous six months ended June 30, 2000. We are reducing the expense allocated towards high precision machining and focusing a majority of our efforts on marketing of the Voraxial Separator. As such, the general and administrative overhead typically experienced with high precision machining was reduced and consolidated with activities supporting the Voraxial Separator. We have rented excess space in our operating facility. Income amounted to $21,000 in the six months ended June 30, 2001, as compared to $31,000 for the previous six months ended June 30, 2000. Decrease in rental income 2001 over 2000 was due to vacancies. Liquidity and capital resources For the six months ended June 30, 2001 our working capital deficiency increased by $225,000 from December 31, 2000. This increase was represented primarily by an decrease in cash of $42,000, increase in payables and loans of $183,000. Operating at a loss for the six months negatively impacted our cash position. We anticipate that we will begin generating revenues and positive cash flow from the Voraxial Separator in the second half of 2001. 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 the level of revenues will be self sustaining or that required capital will be able to be obtained or if terms of such required capital may be acceptable to us. On June 13, 2001 the Company accepted a sales contract for the property at 98 SE 7thStreet, Deerfield Beach, Florida. The sale price is $1,200,000 and company adjusted basis is approximately $558,000. The Company will utilize the funds for working capital, including hiring additional employees, building more inventory, and expanding its sales & marketing efforts. The Company is in the process of locating to a new operating facility. Due to the lack of funds received by the Company from grants, which were issued by NOAA and Maryland Port Administration, the Company is no longer associated with the Ballast Water Program in Maryland. Management decided it was not in the best interest of the Company to continue working with the NOAA and Maryland Port Administration after the financial assistance that was agreed upon by Maritime Solutions, Inc.(the managing company) was not received. The Company is still pursuing the Ballast Water program independently. Furthermore, the Company has terminated its exclusivity agreement with Maritime Solutions Inc. and is now engaging other firms in the marine industry. Subsequent event In July 2001, the Company received $20,000 from a third party investor for purchase of common stock. The Company issued restricted common stock at $.85 per share. 10 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 2000 we have encountered greater expenses in the development of our Voraxial Separators and have had limited rental income for pilot programs 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 continue as a going concern. 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. The Company is currently working with various clients that have a significant interest in utilizing the Voraxial Separator for the treatment of their wastewater. Cautionary Statement Regarding Forward-Looking Statements: Certain statements contained in this Section and elsewhere in this report regarding matters that are not, historical facts are forward-looking statements. Because such forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. All statements, which address operating performance, events or developments that management expects or anticipates to incur in the future, including statements relating to sales and earnings growth or statements expressing general optimism about future operating results, are forward-looking statements. The forward-looking statements are based on management's current views and assumptions regarding future events and operating performance. Many factors could cause actual results to differ materially from estimates contained in management's forward-looking statements. The differences may be caused by a variety of factors, including, but not limited to, adverse economic conditions, competitive pressures, inadequate capital, unexpected costs, lower revenues, net income and forecasts, the possibility of fluctuation and volatility of the Company's operating results and financial condition, inability to carry out marketing and sales plans and loss of key executives, among other things. 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits required by Item 601 of Regulation S-B None. (b) Reports on Form 8-K None. 12 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 duly authorized officers of the Registrant. Enviro Voraxial Technology, Inc. By: /s/ Alberto DiBella Alberto DiBella, Chairman and President DATED: August 20, 2001. 13 -----END PRIVACY-ENHANCED MESSAGE-----