-----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, JHCo5xk3b3PfiJtRXSjEqJ4WDLxrk6NU7MoVXfbJhGRd4/j+ar33AAfGw/iFcT4g E2vkX7/gimbsIzzQly9TyA== 0001091818-05-000210.txt : 20050613 0001091818-05-000210.hdr.sgml : 20050611 20050613163830 ACCESSION NUMBER: 0001091818-05-000210 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050613 DATE AS OF CHANGE: 20050613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RECLAIMATION CONSULTING & APPLICATIONS INC CENTRAL INDEX KEY: 0001100091 STANDARD INDUSTRIAL CLASSIFICATION: REFUSE SYSTEMS [4953] IRS NUMBER: 840703717 STATE OF INCORPORATION: CO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-29881 FILM NUMBER: 05892735 BUSINESS ADDRESS: STREET 1: 23832 ROCKFIELD BLVD SUITE 275 CITY: LAKE FOREST STATE: CA ZIP: 92630 BUSINESS PHONE: 9496090590 MAIL ADDRESS: STREET 1: 23832 ROCKFIELD BOULEVARD STREET 2: SUITE 275 CITY: LAKE FOREST STATE: CA ZIP: 92630 FORMER COMPANY: FORMER CONFORMED NAME: RECYCLING CENTERS OF AMERICA INC DATE OF NAME CHANGE: 20000228 10QSB/A 1 rcaa022205_10qsba.txt AMENDED QTR. REPORT U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB/A [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended: December 31, 2004 [ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number: ________________ RECLAMATION CONSULTING AND APPLICATIONS, INC. (Formerly, Recycling Centers of America, INC.) (Name of Small business Issuer as specified in its Charter) Colorado (State or other jurisdiction of Incorporation or organization 58-2222646 (IRS Employer Identification No.) 23832 Rockfield Boulevard, Suite 275 Lake Forest, California 92630 (Address of Principal Executive Offices) (949) 609-0590 (Issuer's Telephone Number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 [ ] As of December 31, 2004, Reclamation Consulting and Applications, Inc. had 26,650,751 shares of Common Stock Outstanding. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] ====================================================================== RECLAMATION CONSULTING AND APPLICATIONS, INC. (Formerly known as Recycling Centers of America, Inc.) TABLE OF CONTENTS Report on Form 10-QSB For quarter ended December 31, 2004 Page PART I FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheet at December 31, 2004 (Unaudited) F-1 Statements of Operations for the Three Months and Six Months ended December 31, 2004 and 2003 (Unaudited) F-2 Statements of Cash Flows for the Six Months ended December 31, 2004 and 2003 (Unaudited) F-3 Notes to the Consolidated Financial Statements F-4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 2 Item 3. Controls and Procedures. 4 PART II OTHER INFORMATION Item 1. Legal Proceedings 4 Item 2. Changes in Securities 4 Item 3. Defaults upon Senior Securities 4 Item 4. Submission of Matters to Vote of Security Holders 4 Item 5. Other Information 4 Item 6. Exhibits and Reports on Form 8-K 5 Signatures 5 Item 1. Finacials RECLAMATION CONSULTING AND APPLICATIONS, INC. (FORMERLY, RECYCLING CENTERS OF AMERICA, INC.) BALANCE SHEET DECEMBER 31, 2004 (Unaudited) ASSETS CURRENT ASSETS: Accounts receivable, net of doubtful debts of $ 122,334 309,058 Notes recivable, net of allowance of doubtful debts of $256,425 730,336 Inventory 48,769 Prepaid expense 5,039 Employee advances 47,902 --------- Total current assets 1,141,105 PROPERTY AND EQUIPMENT, net 11,739 OTHER ASSETS: Deposits 14,993 --------- $ 1,167,837 ========= LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Accounts payable $ 244,746 Accrued expenses 360,507 Customer deposit 5,490 Note payable 301,000 Note payable - related parties 249,818 Convertible loans 50,104 Convertible debentures 55,850 --------- Total current liabilities $ 1,267,515 COMMIMENTS $ CONTINGENCIES STOCKHOLDERS' DEFICIT Common stock, $.01 par value; Authorized shares 75,000,000, 26,650,751 shares issued and outstanding 266,508 Additional paid in capital 11,295,656 Treasury stock (15,000) Shares to be issued 70,000 Accumulated deficit (11,716,841) ----------- Total stockholders' Deficit $ (99,678) ------------ 1,167,837 ============ The accompanying notes are an integral part of these financial statements. F-1 RECLAMATION CONSULTING AND APPLICATIONS, INC. (FORMERLY, RECYCLING CENTERS OF AMERICA, INC.) STATEMENTS OF OPERATIONS FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED DECEMBER 31, 2004 AND 2003 (Unaudited)
Three Months Six Months Ended December 31, Ended December 31, 2004 2003 2004 2003 ---------- ---------- --------- --------- Net revenue $ 35,357 $ 6,418 $ 162,168 45,530 Cost of revenue 21,232 4,937 76,986 32,067 ---------- ---------- --------- --------- Gross Profit 14,125 1,481 85,182 13,463 Total operating expenses 239,308 907,887 678,907 1,171,829 ---------- ---------- --------- --------- Loss from operations (225,183) (906,406) (593,725) (1,158,366) Non-operating income (expense): Interest Income 21,107 - 40,126 - Interest expense (15,500) (18,489) (49,922) (30,190) Loss on Settlement of debts - (76,800) - (585,224) Loss on disposal of asset - - - (22,692) ---------- ---------- --------- --------- Total non-operating income (expense) 5,607 (95,289) (9,796) (638,106) ---------- ---------- --------- --------- Loss before income tax (219,577) (1,001,695) (603,522) (1,796,472) Provision for income tax - - 800 800 ---------- ---------- ---------- ---------- Net loss $ (219,577) $(1,001,695) $ (604,322) (1,797,272) ========== ========== =========== =========== Basic and diluted weighted average shares outstanding* 26,647,850 20,973,818 26,287,877 19,929,281 ========== ========== ========== ========== Basic and diluted net loss per share $ (0.01) $ (0.05) $ (0.02) (0.09) ========== ========== ============ =========== *Weighted average number of shares used to compute basic and diluted loss per share is the same in these financial statements since the effect of dilutive securities is anti-dilutive. The accompany notes are an integral part of these financial statements.
F-2 RECLAMATION CONSULTING AND APPLICATIONS, INC. (FORMERLY, RECYCLING CENTERS OF AMERICA, INC.) STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED DECEMBER, 31 2004 and 2003 (Unaudited)
2004 2003 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (604,322) $(1,797,272) Adjustments to reconcile net Loss to net cash used in operating activities: Depreciation and amortization 2,802 2,737 Issuance of shares for services and compensation 191,622 486,913 Issuance of shares for interest expense 1,900 - Loss on settlement of debts - 585,224 Options issue for compensation - 31,500 Loss on disposal of fixed assets - 22,692 (Increase)/decrease in current assets: Accounts receivable (59,789) 11,319 Note receivable (169,285) - Inventory (48,769) 2,919 Other Receivable (27,741) (403,795) Employee advances (3,763) - Other assets (20,032) (1,525) Decrease in current liabilities: Accounts payable and accrued expenses 16,931 74,834 Customer deposit (2,052) - ------- ------- Total adjustments (118,176) 812,818 ------- ------- Net cash used in operating activities (722,498) (984,454) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of equipment (2,600) (1,217) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds of note payable 235,500 215,268 Payments on note payable (445) (190,425) Proceeds from loan 194,000 15,000 Payment of loans - (10,000) Receipt of cash for shares to be issued 65,000 443,400 Issuance of common stock for cash 230,000 535,550 --------- ------- Net cash provided by financing activities 724,055 1,008,793 --------- ------- NET INCRASE IN CASH & CASH EQUIVALENTS (1,043) 23,122 CASH & CASH EQUIVALENTS, BEGINNING BALANCE 1,043 300 --------- ------- CASH & CASH EQUIVALENTS, ENDING BALANCE $ 0 $ 23,422 ========= ======= The accompanying notes are an integral part of these financial statements.
F-3 RECLAMATION CONSULTING AND APPLICATIONS, INC. (FORMERLY, RECYCLING CENTERS OF AMERICA, INC.) NOTES TO THE FINANCIAL STATEMENTS 1. ORGANIZATIONS AND DESCRIPTION OF BUSINESS Reclamation Consulting and Applications, Inc. (formerly, Recycling Centers of America, Inc.) (the "Company") is a Colorado corporation, originally formed in 1976 under the name of Vac-Tech Systems, Inc. The Company changed its name to Recycling Centers of America on March 26, 1999. On January 16, 2002, an article of amendment was filed to change the name of corporation to Reclamation Consulting and Applications, Inc. Presently, the Company's primary business is the production and sale of the Alderox line of products including ASA-12 , DCR , KR-7 , TSR , and ASA Cleaners. ASA-12 is an asphalt release agent, DCR is a drag chain lubricant. KR7 is a concrete release agent and TSR was specifically designed as a non- stick coating for the oil sands industry. During the period ended December 31, 2004, the Company sold exclusive license agreements for the sales of the Alderox products in eleven (11) states including Washington, Oregon, California, Nevada, Arizona, Pennsylvania, New Hampshire, Connecticut, New Jersey, Vermont and Rode Island. The Company also has an exclusive distributorship agreement with Topia Energy, Inc. Under the agreement, the Company markets the sale of BioDiesel Driven biodiesel fuel. This agreement appoints the Company as the worldwide exclusive distributor of Topia Energy, Inc.'s biodiesel within the marine industry. The Company also markets Topia Energy, Inc's biodiesel outside of the marine industry under a registered commission protected account basis. There are no geographical or time limitations on this exclusive agreement. 2. BASIS OF PRESENTATION The accompanying unaudited condensed interim financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for the presentation of interim financial information, but do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The audited financial statements for the year ended June 30, 2004 were filed on October 1, 2004 with the Securities and Exchange Commission and is hereby referenced. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the six-month period ended December 31, 2004 are not necessarily indicative of the results that may be expected for the year ended June 30, 2005. F-4 3. USE OF ESTIMATES In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. 4. NEW ACCOUNTING PRONOUNCEMENTS In November 2004, the FASB has issued FASB Statement No. 151, "Inventory Costs, an Amendment of ARB No. 43, Chapter 4" ("FAS No. 151"). The amendments made by FAS No. 151 are intended to improve financial reporting by clarifying that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and by requiring the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. The guidance is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Earlier application is permitted for inventory costs incurred during fiscal years beginning after November 23, 2004. The provisions of FAS No. 151 will be applied prospectively. The Company does not expect the adoption of FAS No. 151 to have a material impact on its consolidated financial position, results of operations or cash flows. In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment, an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires companies to recognize in the statement of operations the grant- date fair value of stock options and other equity-based compensation issued to employees. FAS No. 123R is effective beginning in the Company's second quarter of fiscal 2006. The Company believes that the adoption of this standard will have no material impact on its financial statements. In December 2004, the FASB issued SFAS Statement No. 153, "Exchanges of Nonmonetary Assets." The Statement is an amendment of APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. The Company believes that the adoption of this standard will have no material impact on its financial statements. In March 2004, the Emerging Issues Task Force ("EITF") reached a consensus on Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments." The EITF reached a consensus about the criteria that should be used to determine when an investment is considered impaired, whether that impairment is other-than-temporary, and the measurement of an impairment loss and how that criteria should be applied to investments accounted for under SFAS No. 115, "ACCOUNTING IN CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES." EITF 03-01 also included accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. Additionally, EITF 03-01 includes new disclosure requirements for investments that are deemed to be temporarily impaired. In September 2004, the Financial Accounting Standards Board (FASB) delayed the accounting provisions of EITF 03-01; however the disclosure requirements remain effective for annual reports ending after June 15, 2004. The Company will evaluate the impact of EITF 03-01 once final guidance is issued. F-5 5. NOTES RECEIVABLE The note receivables include an amount of $986,761 due from North American Systems Inc. (NAS), a distributor of the Company's Alderox products, working in California under a revolving loan agreement. The receivable is against the sale of all the assets of the Company in California as well as other amounts transferred to the distributor at various times during the period according to the agreement with NAS and is secured by assets of NAS. Part of the agreement with NAS requires that the Company will provide loan to NAS to be used towards meeting the working capital requirements until such time when NAS is able to start paying the amount owed to the Company through sale of ASA-12 . The receivable bears interest at the rate of 10% per annum. The agreement terminates October 14, 2005. As of December 30, 2004, the Company has recorded an allowance for doubtful debts of $ 256,425 against the notes receivable. NAS also owes $ 431,392 in accounts receivable to the Company. As of December 31, 2004, the Company has recorded an allowance for doubtful debts of $ 122,334 against the accounts receivable. 6. NOTES PAYABLE Notes payable consist of the following at December 31, 2004: Note payable bearing interest rate of 17.6%, unsecured, payable on January 1, 2005 $ 30,000 Note payable bearing interest rate of 15%, Secured by assets of the Company payable on September 17, 2005 125,000 Note payable interest-free, Secured by assets of the Company, payable on September 30, 2005 20,000 Note payable interest-free, unsecured, payable on demand 7,500 Note payable interest-free, unsecured, payable on December 31, 2004 48,500 Note payable bearing interest rate of 15% Secured by assets of the Company, payable on April 30, 2005 70,000 ------------ Total note payable to unrelated parties $ 301,000 ============ Interest expense for the six month periods ended December 31, 2004 and 2003 amounted to $ 6,702 and $0 respectively. F-6 7. NOTES PAYABLE - RELATED PARTIES Note payable to related party - stockholder bearing interest rate of 10%, Secured by the assets of the Company, payable on November 30, 2004 $ 50,000 Note payable to related party - stockholder bearing interest rate of 10%, unsecured, payable on September 8, 2005 5,112 Note payable to related party - stockholder bearing interest rate of 10%, unsecured, payable on December 31, 2005 66,706 Note payable to related party - stockholder bearing interest rate of 15%, unsecured, payable on December 31, 2005 30,000 Note payable to related party - stockholder interest free,unsecured, payable on December 31, 2005 68,000 Note payable to related party - stockholder interest free,unsecured, payable on demand 30,000 ------------- Total note payable to related parties $ 249,818 ============== Interest expense for related parties for the period ended December 31, 2004 and 2003 amounted to $ 8,485 and $17,265 respectively. 8. CONVERTIBLE LOANS-SHAREHOLDERS The Company has convertible loans outstanding at December 31, 2004 totaling $50,104. The loans are convertible to stock at the price of $ 0.40 or $ 0.45. The investor has an option to convert their loan, or any portion, of to the restricted capital stock of the Company at price per the agreement and receiving one share, up front at inception of the loan, for each dollar invested. Interest will accumulate at rate of 10% per annum until conversion date and paid semi annually over the term of the agreement leaving the initial loan until expiration of the agreement convertible to Company's restricted capital stock per the agreement or principal returned with the last interest payment. Loan can be converted at any time within the 3 year loan period. 9. CONVERTIBLE DEBENTURES The Company, through a 506 D Securities Offerings, solicited investment funds. The Convertible Debentures bear interest at ten percent (10%) per annum payable annually and are convertible into restricted common shares of the Company at $0.40 per share. The Company has the right to change the conversion price of the debentures. The Debentures are unsecured and are due and payable by December 31, 2005. F-7 10. COMMITMENTS During the period, the Company entered into eleven Contract Sales Representative agreements to promote, sell, market and provide customer service for products in each of the territories under the agreements. Under the terms of the agreements, the representative agrees to pay the Company a one-time license fee. The license fee will secure the exclusive license for the products within the territory for period of five years. The license fee shall be paid out of the commissioned sales of the products sold instead of a lump sum payment. The total license fees that shall be paid out of sales of product instead of lump sum payments amounts to $ 275,000 based on all of the agreements entered into during the period for all the territories. The Company conducts its operations utilizing leased facilities and equipment under noncancellable operating lease agreements expiring at various dates through the year 2007. Future minimum lease commitments, excluding property taxes and insurance, are approximately as follows: Period ending December 31, ----------------- 2005 72,309 2006 61,806 2007 42,047 - ----------------------------------------------- Total $176,162 =========== Rent expenses for all leased facilities and equipment were $23,794 and $27,283 for the period ended December 31, 2004 and 2003, respectively. The Company entered into employment agreement with individual to act as the President on June 30, 2004. Under the agreement, during the first twelve months of employment, the Company agrees to compensate Employee (from the commencement of this agreement) at the rate of not less than $135,200 per year base compensation for the first year of employment. Thereafter, Employee's annual compensation shall be increased by 20% on each anniversary date of this agreement, provided that the Company reaches a minimum net profit of $250,000. In no event shall Employee's minimum base compensation be reduced below $135,200 per year. Such compensation shall be payable monthly or on such more frequent basis as the Company may establish. The agreement shall have an initial five- year term, which shall be automatically renewed each year thereafter unless the Company, upon thirty (30) days prior notice notifies Employee of its intent not to renew the Agreement. Notwithstanding the foregoing, the Company or the Employee may at any time terminate this Agreement and the employment relationship on thirty (30) days prior notice to the other, with the consequences hereinafter set forth. The option to purchase 1,500,000 shares of common restricted stock in the Company has been granted in Employee's name. All options shall expire 5-years from the vesting date. 1,500,000 of these options have been carried over from Employee's previous Employment Agreement with the Company. Additional stock options shall be granted to Employee each year following the above schedule on the anniversary date of this Agreement, the amount and price of which to be determined solely by the Company. F-8 The Company entered into employment agreement with individual to act as the Chief Financial Officer on June 30, 2004. Under the agreement, during the first twelve months of employment, the Company agrees to compensate Employee (from the commencement of this agreement) at the rate of not less than $135,200 per year base compensation for the first year of employment. Thereafter, Employee's annual compensation shall be increased by 20% on each anniversary date of this agreement, provided that the Company reaches a minimum net profit of $250,000. In no event shall Employee's minimum base compensation be reduced below $135,200 per year. Such compensation shall be payable monthly or on such more frequent basis as the Company may establish. The agreement shall have an initial five- year term, which shall be automatically renewed each year thereafter unless the Company, upon thirty (30) days prior notice notifies Employee of its intent not to renew the Agreement. Notwithstanding the foregoing, the Company or the Employee may at any time terminate this Agreement and the employment relationship on thirty (30) days prior notice to the other, with the consequences hereinafter set forth. The option to purchase 1,500,000 shares of common restricted stock in the Company has been granted in Employee's name. All options shall expire 5-years from the vesting date. 1,500,000 of these options have been carried over from Employee's previous Employment Agreement with the Company. Additional stock options shall be granted to Employee each year following the above schedule on the anniversary date of this Agreement, the amount and price of which to be determined solely by the Company. 11. NET LOSS PER SHARE Net loss per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), "Earnings per share". Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Weighted average number of shares used to compute basic and diluted loss per share is the same in this financial statement since the effect of dilutive securities is anti-dilutive. F-9 12. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK As the result of agreements with North American Systems (NAS) to act as a distributor in selected territories, 97 % and 41% of the sales was to NAS during the six-month ended December 31, 2004 and 2003. Accounts receivable from this customer amounted to $427,337 and $23,420 at December 31, 2004 and 2003. The note receivables include an amount of $ 986,761 due from North American Systems Inc. (NAS), a distributor of the Company's Alderox line of products, working in Santa Ana, California under a revolving loan agreement. The receivable is against the sale of all the assets of the Company in Santa Ana as well as other amounts transferred to the distributor at various times during the period according to the agreement with NAS and is secured by assets of NAS. Part of the agreement with NAS requires that the Company will provide loan to NAS to be used towards meeting the working capital requirements until such time when NAS is able to start paying the amount owed to the Company through sale the Alderox line of products. The receivable bears interest at the rate of 10% per annum. The agreement terminates October 14, 2005. As of December 30, 2004, the Company has recorded an allowance for doubtful debts of $ 256,425 against the notes receivable. NAS also owes $ 431,392 in accounts receivable to the Company. As of December 31, 2004, the Company has recorded an allowance for doubtful debts of $ 122,334 against the accounts receivable. 13. LITIGATION SETTLEMENT A former employee sued the Company for a breach of contract claim arising from an employment agreement entered into between the ex-employee and the Company on April 7, 2003. The original complaint was filed on Feb. 5, 2004 and asserts the following causes of action: breach of contract, breach of covenant of good faith and fair dealing, and fraud. The plaintiff is demanding compensatory and punitive damages as well as attorneys' fees and costs. The Company filed its Cross-Complaint on April 15, 2004 alleging breach of contract, negligence, intentional misrepresentation, rescission, and declaratory relief. An amended Cross-Complaint was filed July 6, 2004. The case was settled during the period and the Company incurred the loss of $1,000 on the case. The company has accrued this amount in the accompanying financial statement. 14. STOCKHOLDERS' DEFICIT Common Stock: During the period ended December 31, 2004, the Company issued 766,663 shares of common stock for cash amounting $230,000. During the period ended December 31, 2004, the Company issued 448,968 shares of common stock for services amounting $191,622. During the period ended December 31, 2004, the Company cancelled 62,500 shares. During the period ended December 31, 2004, the Company issued 5,000 shares of common stock towards payment of interest expense on the notes amounting to $ 1,900. F-10 Shares to be issued: During the period ended December 31, 2004, the Company received $ 65,000 for 216,667 shares to be issued. During the period ended December 31, 2004, the Company settled debt to a related party for $ 30,000 and agreed to issue 100,000 shares towards the settlement. There is not gain or loss on the settlement of debt since the value of shares agreed to be issued is same as the value of debt settled. 15. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS The Company prepares its statements of cash flows using the indirect method as defined under the Financial Accounting Standard No. 95. The Company paid income tax $ 0 for each six month period ended December 31, 2004 and 2003. Interest expenses of $6,463 and $5,527 was paid during the six month period ended December 31, 2004 and 2003, respectively. Supplemental disclosure of non-cash investing and financing activities: The cash flow statements do not include following non-cash investing and financing activities: During the period ended December 31, 2004, the Company issued 448,968 shares of common stock for services amounting $191,622. During the period ended December 31, 2004, the Company cancelled 62,500 shares. During the period ended December 31, 2004, the Company issued 5,000 shares of common stock towards payment of interest expense on the notes amounting to $ 1,900. 16. RELATED PARTY TRANSACTIONS Certain of the Company's major shareholders have loaned money to the Company at various times. The notes payable to the related parties have been presented in Note 7. Interest expense for related parties for the period ended December 31, 2004 and 2003 amounted to $ 8,485 and $17,265 respectively. During the period ended December 31, 2004, the Company settled debt to a related party for $ 30,000 and agreed to issue 100,000 shares towards the settlement. There is not gain or loss on the settlement of debt since the value of shares agreed to be issued is same as the value of debt settled. 17. GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company's assets and the satisfaction of its liabilities in the normal course of business. Through December 31, 2004, the Company had incurred cumulative losses of $11,716,841 including net losses of $ 604,322 for the six month period ended December 31, 2004. The continuing losses have adversely affected the liquidity of the Company. In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. Management devoted considerable effort during the period ended December 31, 2004, towards (i) obtaining additional equity financing and (ii) evaluation and reorganization of its distribution and marketing methods. F-11 PART-II Item 2. Management's Discussion and Analysis Our primary business is production and sale of Alderox ASA-12 , KR-7 , TSR , applicator systems and Alderox cleaners. ASA-12 is an asphalt release agent that was developed by the Company in response to the industry's need for an effective, economical and environmentally friendly product. KR-7 is a concrete release agent that was also developed by the company in response to industry's need for an effective, economical and environmentally friendly product. Alderox TSR- was specifically designed as a non-stick agent for use in the tar sands industry. Alderox Cleaner-7 and Cleaners were specifically developed for the removal of used Alderox ASA-12 and Alderox KR-7 . Additionally, under an exclusive distributorship agreement with Topia Energy, Inc., the Company also markets the sale of BioDiesel Driven biodiesel fuel. This agreement appoints the Company as the worldwide exclusive distributor of Topia Energy, Inc.'s biodiesel within the marine industry. The Company also markets Topia Energy, Inc's biodiesel outside of the marine industry under a registered commission protected account basis. There are no geographical or time limitations on this exclusive agreement. The Company has entered into exclusive Contract Sales Representative Agreements in eleven United States territories for the sales of Alderox products. The Company also has an exclusive distributorship Agreement with Canadian Release Agents, Inc. as the exclusive distributor of Alderox in Canada within the asphalt and concrete industries. The Company also has an exclusive distributorship Agreement with AURTECH as the exclusive distributor of Alderox in India within the asphalt and concrete industries. Current Alderox distributors have also expressed interest in the sale of biodiesel. Many of the Alderox end users are also major diesel fuel consumers. 2 Three Month Statement of Operations: The Company has incurred losses of $ 219,577 for the three months ended December 31, 2004 as compared to a net loss of $906,404 for the three months ended December 31, 2003. These are primarily non cash losses. The Company incurred losses due to seasonal nature of the business. The losses comprises of the cost of running the operations. The Cost of goods sold represents sixty percent (60%) of net revenue for the three months ending December 31, 2004. The cost of sales for the three months ending December 31, 2003 was seventy seven percent (77%) of net revenue. Revenues for both of the three periods were derived from the sales of the Alderox line of products. Operating expenses consist primarily of general and administrative expenses. For the three months ended December 31, 2004 operating expenses totaled $ 239,308 as compared to $907,887 for the three months ended December 31, 2003. The decrease in general and administrative expenses is mainly due to lack of stock issuances for consulting fees. During the six months ended December 31, 2004 the Company recognized a $76,800 loss on the settlement of debts. Interest expense decreased during the three months ended December 31, 2004 by $2,989 over the same period in 2003. Liquidity and Capital Resources As of December 31, 2004 the Company had no cash and cash equivalents as compared to cash and cash equivalents of $23,422 as of December 31, 2003. At December 31, 2004, the Company had a working capital deficit (total current liabilities in excess of total current assets) of $ 126,410 as compared to a working capital deficit of $35,838 as of December 31, 2003. The principal use of cash for the three months ended December 31, 2004 and 2003 was to fund the net loss from operations. The Company received cash from issuance of notes amounting to $ 154,000 during the three month period ending December 31, 2004. The management of the Company is endeavoring to cover operating expenses in excess of revenues of the Company until adequate sales are generated, through private sale of additional shares. There is no assurance of success in such placement. Management projects that the Company may become profitable and begin to generate sufficient cash flow to meet its monthly operating expenses sometime during the third quarter of the current fiscal year, but cannot guarantee this result. 3 Item 3. Controls and Procedures. We maintain controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their evaluation of those controls and procedures performed as the end of the period covered by this report, our chief executive officer and the principal financial officer concluded that our disclosure controls and procedures were adequate. There were no significant changes in our internal control over financial reporting identified in connection with the evaluation that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II --- OTHER INFORMATION Item 1. Legal Proceedings. The company has settled a lawsuit with a former employee for $1,000. Item 2. Changes in Securities. Nothing to Report Item 3. Defaults Upon Senior Securities. Nothing to Report Item 4. Submission of Matters to a Vote of Security Holders. Nothing to Report Item 5. Other Information. Nothing to Report 4 Item 6. Exhibits and Reports on Form 8-K. EXHIBIT NUMBER DESCRIPTION - ------ ------------- 31.1 Amended Rule 13a-14(a) Certification of Gordon W. Davies. 31.2 Amended Rule 13a-14(a) Certification of Michael C. Davies. 32.1 Amended Certification Pursuant to 18 U.S.C. Section 1350 of Gordon W. Davies 32.2 Amended Certification Pursuant to 18 U.S.C. Section 1350 of Michael C. Davies. B).On July 8, 2002, Reclamation Consulting and Applications, Inc. appointed new independent accountants. File No. 000-29881 and Accession Number 0001091818-02-000345, are incorporated herein by reference. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized. RECLAMATION CONSULTING AND APPLICATIONS, INC. Date: June 13, 2005 /s/ Gordon W. Davies --------------------- Gordon W. Davies, President 5 EX-31.1 2 ex31_1.txt AMENDED CERT. Exhibit 31.1 I, Gordon Davies, the Chief Executive Officer of Reclamation Consulting and Applications, Inc., certify that: 1. I have reviewed this Form 10-QSB/A of Reclamation Consulting and Applications, Inc. dated December 31,2004; 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 amended 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 small business issuer as of, and for, the periods presented in this amended report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 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 small business issuer 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 small business issuer, 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 small business issuer'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 small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer'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 small business issuer'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 small business issuer's internal control over financial reporting. Date: June 13, 2005 /s/Gordon Davies ________________________________ Gordon Davies, Chief Executive Officer EX-31.2 3 ex31_2.txt AMENDED CERT. Exhibit 31.2 I, Mike Davies, the Secretary and Chief Financial Officer of Reclamation Consulting and Applications, Inc., certify that: 1. I have reviewed this Form 10-QSB/A of Reclamation Consulting and Applications, Inc. dated December 31, 2004; 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 amended 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 small business issuer as of, and for, the periods presented in this amended report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 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 small business issuer 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 small business issuer, 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 small business issuer'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 small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer'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 small business issuer'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 small business issuer's internal control over financial reporting. Date: June 13, 2005 /s/Mike Davies ________________________________ Mike Davies, Secretary and Chief Financial Officer EX-32.1 4 ex32_1.txt AMENDED CERT. EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Amended Annual Report on Form 10-QSB/A of Reclamation Consulting and Applications, Inc. (the"Company") for the period ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Gordon W. Davies, President of the Company, and Michael C. Davies, Secretary of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, that: (1) The Amended 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 Amended Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Gordon W. Davies - ------------------------------------ Gordon W. Davies President Dated: June 13, 2005 /s/ Michael C. Davies - ------------------------------------ Michael C. Davies Secretary Dated: June 13, 2005 EX-32.2 5 ex32_2.txt AMENDED CERT. EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Amended Annual Report on Form 10-QSB/A of Reclamation Consulting and Applications, Inc. (the"Company") for the period ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Gordon W. Davies, President of the Company, and Michael C. Davies, Secretary of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, that: (1) The Amended 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 Amended Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Gordon W. Davies - ------------------------------------ Gordon W. Davies President Dated: June 13, 2005 /s/ Michael C. Davies - ------------------------------------ Michael C. Davies Secretary Dated: June 13, 2005 -----END PRIVACY-ENHANCED MESSAGE-----