UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
MARK ONE
x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period ended September 30,2014; or
o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ________ to ________
COMMISSION FILE NUMBER:000-27783
VISTA INTERNATIONAL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware | 84-1572525 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
4835 Monaco St, Commerce City, Colorado 80022
(Address of principal executive offices, including zip code)
(303) 690-8300
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes Xo No o
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 o Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting companyx.
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x.
As of November 14, 2014, Vista International Technologies, Inc. had outstanding 29,030,914 shares of common stock, par value $0.001 per share.
VISTA INTERNATIONAL TECHNOLOGIES, INC.
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION |
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Item 1. | Condensed Financial Statements - Unaudited |
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| Consolidated Balance Sheets at September 30, 2014 (unaudited) and December 31, 2013 | F-1 |
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| Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013 (unaudited) | F-2 |
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| Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013 (unaudited) | F-3 |
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| Notes to Unaudited Interim Consolidated Financial Statements | F-5 |
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 1 |
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 7 |
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Item 4. | Controls and Procedures | 7 |
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| PART 2 - OTHER INFORMATION |
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Item 1. | Legal Proceedings | 8 |
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Item 2. | Unregistered Sales of Equity Securities And Use of Proceeds | 8 |
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Item 3. | Defaults Upon Senior Securities | 8 |
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Item 4. | Mine Safety Disclosures | 8 |
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Item 5. | Other Information | 8 |
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Item 6. | Exhibits | 8 |
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| Signatures | 12 |
Vista International Technologies Inc. | ||
Condensed Consolidated Balance Sheets | ||
| September 30, 2014 | December 31, 2013 |
(unaudited) | ||
ASSETS |
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Current assets: | ||
Cash | $ 9,393 | $ 7,248 |
Accounts receivable, net | 41,232 | 34,852 |
Total current assets | 50,625 | 42,100 |
Environmental deposit | 170,000 | 170,000 |
Deposits | 1,896 | 1,896 |
Property and equipment, net | 367,865 | 451,207 |
Deferred expenses | 133,646 | 62,380 |
Intangibles, net | 16,943 | 19,895 |
Total assets | $ 740,975 | $ 747,478 |
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LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
Current liabilities | ||
Accounts payable and accrued liabilities | $ 1,692,881 | $ 1,788,603 |
Accrued compensation and payroll liabilities | 504,503 | 503,695 |
Accrued interest | 291,052 | 135,381 |
Accrued interest-related parties | 118,722 | 69,904 |
Notes payables - related parties | 786,225 | 814,841 |
Notes payable - stockholder | 1,108,000 | 1,108,000 |
Notes payable and capital leases, current portion | 102,186 | 110,417 |
Deferred revenue | 199,300 | 154,500 |
Total current liabilities | 4,802,869 | 4,685,341 |
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Other long-term liabilities | - | |
Notes payable and capital leases, less current portion | 18,877 | 10,960 |
Total liabilities | 4,821,746 | 4,696,301 |
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Commitments and contingencies | - | |
Stockholder's deficit: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2014 and December 31,2013 | - | - |
Common stock, $0.001 par value; 200,000,000 shares authorized; 29,030,914 and 25,360,914 shares issued outstanding at September 30, 2014 and December 31,2013, respectively | 29,031 | 25,361 |
Additional paid-in capital | 64,020,059 | 63,867,648 |
Common stock to be issued | 5,000 | 5,000 |
Accumulated deficit | (68,134,861) | (67,846,832) |
Total stockholder's deficit | (4,080,771) | (3,948,823) |
Total liabilities and stockholders' deficit | $ 740,975 | $ 747,478 |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements | ||
Vista International Technologies Inc. |
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Condensed Consolidated Statements of Operations |
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(Unaudited) |
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Three Months Ended | Nine Months Ended |
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| September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |||||||||
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Revenues | $ 231,168 | $ 171,712 | $ 661,130 | $ 598,306 | |||||||||
Cost of revenue | 153,848 | 188,255 | 494,672 | 617,562 | |||||||||
Environmental remediation (income) expenses | (24,361) | 38,705 | (97,775) | (24,653) | |||||||||
Gross profit (loss) | 101,681 | (55,249) | 264,232 | 5,397 | |||||||||
Operating expenses: | |||||||||||||
Depreciation and amortization | 2,354 | 1,986 | 7,063 | 5,155 | |||||||||
Selling, general and administrative expenses | 45,465 | 73,746 | 301,357 | 368,987 | |||||||||
Total operating expenses | 47,820 | 100,738 | 308,419 | 374,142 | |||||||||
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Gain (Loss) from operations | 53,861 | (130,981) | (44,187) | (368,745) | |||||||||
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Other income (expense): | |||||||||||||
Interest expense, net | (74,480) | (53,043) | (243,843) | (153,486) | |||||||||
Gain (Loss) on Settlement of Liability | - | - | (129,070) | ||||||||||
Other Income | - | - | - | ||||||||||
Other expense | - | - | - | - | |||||||||
| (74,480) | (53,043) | (243,843) | (282,556) | |||||||||
Loss before income taxes | (20,619) | (184,024) | (288,029) | (651,302) | |||||||||
Income tax expenses | |||||||||||||
Net loss | $ (20,619) | $ (184,024) | $ (288,029) | $ (651,302) | |||||||||
Net loss per share, basic and diluted | $ - | $ (0.01) | $ (0.01) | $ (0.04) | |||||||||
Weighted average common shares outstanding | 28,943,957 | 22,792,436 | 27,582,563 | 17,068,881 | |||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements |
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Vista International Technologies, Inc. | ||
Condensed Consolidated Statements of Cash Flows | ||
(Unaudited) | ||
| Nine months ended | |
| September 30, 2014 | September 30, 2013 |
Cash flows from operating activities: | ||
Net loss | $ (288,029) | $ (651,302) |
Adjustments to reconcile net loss to net | ||
cash provided by operating activities: | ||
Depreciation and amortization | 86,294 | 80,673 |
Operating expenses incurred by noteholder | 8,319 | 54,326 |
Common stock issued for services provided | 151,130 | 291,000 |
Loss on settlement of liability | - | 129,070 |
Environmental remediation income | (97,775) | (24,653) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (6,380) | 22,226 |
Prepaid expenses | - | 1,499 |
Deferred expenses | (71,266) | |
Deferred revenue | 44,800 | 208,000 |
Accounts payable and accrued expenses | 207,350 | 36,194 |
Net cash provided by operating activities | 34,443 | 147,032 |
Cash flows from investing activities: | ||
Purchase of fixed assets for cash | (44,901) | |
Net cash used in investing activities | - | (44,901) |
Cash flows from financing activities: | ||
Repayments of notes payable and capital lease | (8,632) | (51,486) |
Proceeds from issuance of common stock | 4,950 | - |
Proceeds from notes payable and capital lease | - | 9,661 |
(Repayments) proceeds from related party notes | (28,616) | 1,610 |
Net cash used in financing activities | (32,298) | (40,215) |
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Net increase in cash and cash equivalents | 2,145 | 61,917 |
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Cash and cash equivalents at beginning of period | 7,248 | 16,040 |
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Cash and cash equivalents at end of period | $ 9,393 | $ 77,957 |
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Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | $ - | $ - |
Cash paid during the period for income taxes | $ - | $ - |
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Non-cash investing and financing activities | ||
Issuance of common stock in exchange for settlement of accrued interest on notes payable - related Party | $ - | $ 137,149 |
Issuance of common stock in exchange for settlement of accrued interest on notes payable - stockholder | $ - | $ 222,941 |
Issuance of common stock in exchange for settlement of accrued interest | $ - | $ 11,590 |
Issuance of common stock in exchange for settlement of notes payable – related party and accrued interest | $ - | $ 57,500 |
Accrued liabilities paid by note holder – related party on behalf of Company | $ - | $ 2,500 |
Fixed assets purchased funded by notes payable | $ - | $ 2,500 |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements | ||
Vista International Technologies, Inc
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and nine months ended September 30, 2014 and 2013
(unaudited)
1. Significant Accounting Policies and Nature of Operations
Unaudited Interim Financial Statements
The accompanying unaudited interim financial statements, which include the wholly-owned subsidiaries of Vista International Technologies, Inc. (the “Company”, “we”, “our”), have been prepared by the Company in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission. The financial information has not been audited and should not be relied upon to the same extent as audited financial statements. Certain information and footnote disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Accordingly, these unaudited interim financial statements should be read in conjunction with the Company’s financial statements and related notes contained in the Form 10-K for the year ended December 31, 2013. In the opinion of management, the unaudited interim financial statements reflect all adjustments, including normal recurring adjustments, necessary for fair presentation of the interim periods presented. The results of operations for the nine months ended September 30, 2014 are not necessarily indicative of the results of operations to be expected for the full year.
Description of Business
The Company is in the business of developing, commercializing and operating renewable energy and waste-to-energy (“WTE”) technologies and projects.
The Company is currently conducting its business in the following areas:
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● | Tire processing operation in Hutchins, Texas, and |
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● | Renewable energy and WTE projects utilizing the Company’s Thermal Gasifier™ technology and corporate administration at the Company’s offices in Commerce City, Colorado. |
Discrete financial information is not presently maintained for our WTE business as it has generated limited revenues in the past 5 years. In addition, management makes investing and resource allocation decisions based on the combined results of both the processing and WTE business. Accordingly, we only have one reportable segment.
Going Concern and Management’s Plan
The Company reported a net loss of approximately $288,000 and net cash provided by operating activities of $34,443 for the nine months ended September 30, 2014, has a working capital deficiency of approximately $4.7 million and an accumulated deficit of approximately $68.1 million at September 30, 2014. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recovery of the recorded assets or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow from operations or to obtain equity investment or additional financing to meet obligations on a timely basis and ultimately achieve profitable operations.
During the nine months ended September 30, 2014, the Company did not receive any loans from related parties or shareholders to help with working capital. However, we expect that the Company will continue to rely on loans, including those from related parties and issuances of shares in private placements to meet its working capital needs for the immediate future.
Vista International Technologies, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and nine months ended September 30, 2014 and 2013
(unaudited)
Management plans to focus the Company’s resources in four key areas:
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Thermal Gasifier™ engineering design and deployment
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Maximizing value from the Hutchins, Texas tire processing and storage facility.
● Development of project based opportunities
Attracting strategic investment
1. Significant Accounting Policies and Nature of Operations (Continued)
Management considers the Thermal Gasifier ™ and waste-to-energy segment to be our core business. However, significant focus continues to be placed on the improvement of the tire processing operation at our Hutchins, TX facility to increase production and reduce operating costs, and expand sales to increase revenue and cash flow. In February 2012, the Company began operation of the shredding equipment for its TDF production line
We continue to develop our internal resources and implement business development activities to secure waste-to-energy and biomass-to-energy facility opportunities that will utilize our Thermal Gasifier™ technology through build-own-operate agreements or through joint-venture relationships with strategic partners. We are looking to partner with companies that produce large hydrocarbon-based waste streams and are also in need of thermal and/or electrical energy. We are targeting opportunities where there are high disposal fees and energy rates, where we can use the Thermal Gasifier™ with back end power systems to provide significant cost savings to the end user. We are reviewing the economic viability of a number of opportunities in the northeastern United States and in Colorado and are currently working towards obtaining letters of intent from these entities. We currently have a pilot project being constructed in the northeastern US to showcase the technology and obtain emissions testing data from our current generation of units. Currently, the Company does not have any Thermal Gasifiers in operation.
Management believes that current revenue levels will not be sufficient to meet our operational needs and execute the Company’s complete business plan. The Company is seeking additional funding for the activities described above. The Company is exploring various financing opportunities but does not have a final agreement in place at the present time.
Future funding may be through an equity investment, debt or convertible debt. Current market conditions present uncertainty as to the Company’s ability to secure additional funds, as well as its ability to reach full profitability. There can be no assurance that the Company will be able to secure additional financing, or obtain favorable terms on such financing if it is available. Continued negative cash flow and lack of liquidity create significant uncertainty about the Company’s ability to fully implement its operating plan, and may result in the Company reducing the scope of its planned operations, scale back or discontinue its technology and project development programs, or obtain funds, if available, through strategic alliances that may require the Company to relinquish rights to certain of its technologies or products or to discontinue its operations entirely.
Revenue Recognition
We recognize revenue from our tire fuel processing and storage facility in three ways:
| ● | Disposal fees (“tipping fees”) for waste tires are fully earned when accepted at the facility Tire Derived Fuel and other processed tire revenues are fully earned when the product is accepted at the purchaser’s facility. |
| ● | Sales of unprocessed whole tires are recognized when delivered to the end user |
Revenue from sales of our Thermal Gasifier™ will be recognized upon completion, delivery and customer acceptance, using the completed contract method of accounting. Revenues from other Waste-to-Energy related products or services provided for projects will be recognized when the products are delivered to the end customer, or when services are completed.
Vista International Technologies, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and nine months ended Septmeber 30, 2014 and 2013
(unaudited)
During the quarter ended March 31, 2013 the Company began construction of a pilot waste-to-energy project in the northeastern US. The project is being funded entirely by an outside party. The Company is receiving payments in advance of services being performed and finished products being delivered to the project site. As such, these advance payments are being accounted for as deferred revenue in the Company’s financial statements. When products are purchased or services performed, these transactions will be recorded as deferred expenses in the Company’s financial statements. For period the ended September 30, 2014, the company recorded $44,800 in deferred revenue and $71,266 in deferred expenses for this project.
Concentration of Credit Risk
Our two largest customers comprised approximately 29.5% and 17.7% of revenues for the nine months ended September 30, 2014, and 25.1% and 16.3% of revenues for the three months ended September 30, 2014. Our two largest customers comprised approximately 25.4% and 25.1% of revenues for the nine months ended September 30, 2013, and 46% and 12% of revenues for the three months ended September 30, 2013.
1. Significant Accounting Policies and Nature of Operations (Continued)
Use of Estimates
U.S. generally accepted accounting principles require us to make certain estimates, judgments and assumptions that we believe are reasonable, based on information available at the time they were made. These estimates, judgments and assumptions can affect the amounts reported in our condensed consolidated financial statements
Recent Accounting Pronouncements
The Company has adopted all applicable recently-issued accounting pronouncements. The adoption of the
accounting pronouncements, including any not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
Reclassifications
Certain reclassifications to the 2013 statements of operations and cash flows have been made in order to conform it to the 2014 presentation.
2. Property and Equipment
Following is a summary of property and equipment at September 30, 2014 and December 31, 2013:
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Machinery and equipment |
| $ | 807,033 |
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| $ | 807,033 |
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Buildings |
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| 95,578 |
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| 95,578 |
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Vehicles |
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| 18,985 |
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| 18,985 |
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Land |
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| 51,085 |
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| 51,085 |
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Furniture, fixtures and equipment |
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| 62,322 |
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| 62,322 |
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Land Improvements |
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| 232,269 |
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| 232,269 |
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Totals |
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| 1,267,272 |
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| 1,267,272 |
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Less: accumulated depreciation |
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| (899,407) |
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| (816,065) |
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Property and equipment, net |
| $ | 367,865 |
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| $ | 451,207 |
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Vista International Technologies, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and nine months ended Septmeber 30, 2014 and 2013
(unaudited)
The Company had depreciation expense for the nine months ended September 30, 2014 and 2013 of $83,342 and $77,720, respectively. The Company had depreciation expenses for the three months ended September 30, 2014 and 2013 of $27,764 and $26,009, respectively.
3. Intangible Assets
The Company owns one U.S. patent and one European patent and has two pending U.S. patent applications and one pending European patent application which cover its Thermal Gasifier ™ technology. These patents and patent applications are for utility patents directed to devices and methods of uses. The US patent expires on August 21, 2018. The European patent was granted January 5, 2011 expires in August 2019.
At September 30, 2014 and December 31, 2013 intangible assets are as follows:
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| December 31, 2013 |
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Patents |
| $ | 63,720 |
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| $ | 63,720 |
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Less accumulated amortization |
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| (46,777 | ) |
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| (43,825 | ) |
Intangible assets, net |
| $ | 16,943 |
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| $ | 19,895 |
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The Company had amortization expense for the nine months ended September 30, 2014 and 2013 of $2,952,and 2,952 respectively. The Company had amortization expenses for the three months ended September 30, 2014 and 2013 of $984 and $984, respectively
Estimated future amortization expense as of September 30, 2014:
Years Ended September 30, 2014 | Amount |
2015 | 3,935 |
2016 | 3,935 |
2017 | 3,935 |
2018 | 3,935 |
There after | 1,203 |
Total | $16,943 |
Vista International Technologies, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and nine months ended September 30, 2014 and 2013
(unaudited)
4. Notes Payable and Capital Lease
At September 30, 2014 and December 31, 2013, the Company had the following promissory notes outstanding:
| September 30, 2014 | December 31, 2013 |
23% installment note, secured by equipment, due January 2014, signed personally by a | $ - | $ 1,275 |
related party | ||
12% Line of credit payable, secured by assets of the Company, due on demand after June 30, 2013 | 77,241 | 77,241 |
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12% Line of credit payable, secured by assets of the Company, due on demand after June 30, 2013 | 5,000 | 5,000 |
14% installment note, secured by equipment, due June 2014, signed personally by related party | - | 6,100 |
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13.7% installment note, secured by property, due January 18, 2023 | 18,877 | 10,960 |
15% promissory note payable to individual, due on demand, in default | 17,000 | 17,000 |
1.99% Dell business credit note for purchase of computer | 2,945 | 3,800 |
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Total notes payable, capital lease and convertible note payable | 121,063 | 121,376 |
Less: current maturities | (102,186) | (110,416 |
Notes payable and capital lease–Long-term | $ 18,877 | $ 10,960 |
Maturities of notes payable and capital lease at September 30, 2014 are as follows:
Year ending September 30 , |
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2015 |
| $ | 102,186 |
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2016 and Beyond | 18,877 | ||||
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| $ | 121,063 |
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Issuance of Lines of Credit
On April 18, 2012 the company was issued a line of credit for $5,000 at a rate of 12% interest, secured by the assets of the company. Interest on the Line began to accrue from July 1, 2012, with the balance being due on demand anytime after June 30, 2013. The company drew $5,000 against the line of credit as of September 30, 2014.
On April 26, 2012 the company was issued a line of credit for $80,000 at a rate of 12% interest, secured by the assets of the company. Interest on the Line began to accrue on July 1, 2012, with the balance being due on demand anytime after June 30, 2013. The company drew $77,241 against this line of credit as of September 30, 2014.
Vista International Technologies, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and nine months ended Septmeber 30, 2014 and 2013
(unaudited)
5. Related Party Transactions
At September 30, 2014 and December 31, 2013 notes payable - stockholder and notes payable – related parties consisted of the following:
| September 30, 2014 | December 31, 2013 |
9% Promissory note payable Richard Strain–stockholder, due June 30, 2013, secured by a first priority security interest in Company assets- in default | $ 1,108,000 | $ 1,108,000 |
Notes payable- stockholder | 1,108,000 | 1,108,000 |
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8%promissory notes payable - Timothy Ruddy, due on demand, secured by all of the Company’s assets, security interest is subordinated to the loans extended by Mr. Strain | 736,225 | 764,841 |
10% promissory notes payable to Timothy Ruddy family member, cash interest of 10% | 5,000 | 5,000 |
12% promissory notes payable to Timothy Ruddy family members, cash interest of 10% and Company stock of 2%, secured by all of the Company’s assets, security interest is subordinated to the loans extended by Mr. Strain, interest due quarterly-default waived | 45,000 | 45,000 |
Notes payable-related parties | $ 786,225 | $ 814,841 |
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Notes payable – stockholder
On March 29, 2013, the Company consolidated all of Mr. Strain’s debt into a single consolidated $1,108,000 note with interest rate of 9% per annum and subsequently on April 5, 2013 this was acknowledge by Mr. Strain and loaned $15,000 as additional funds to the Company. This loan is secured by all assets of the company and matured on June 30, 2013. Coincident with the execution of this note, all of the outstanding interest owed to Mr. Strain was converted to common stock. This conversion resulted in the issuance of 2,229,407 shares to Mr. Strain. $222,940 accrued interest was converted at $0.10 per share. The Company recorded gain of $3,930 on consolidation into one single note of $1,108,000. As of September 30, 2014, this note is currently in default, and the Company is working with the shareholder to extend the note.
On June 29, 2013 accrued interest of $16,620 due to the shareholder on the consolidated note he has extended to the Company was converted to stock. The Company issued 154,538 shares of common stock to the shareholder in exchange for conversion of the accrued interest. The Company recorded gain of $5,030 on conversion of this accrued interest.
All other debt of the Company is substantially subordinated to Mr. Strain.
As of September 30, 2014 and December 31, 2013, accrued interest outstanding on the note was approximately $257,600 and $108,000, respectively.
Vista International Technologies, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and nine months ended September 30, 2014 and 2013
(unaudited)
5. Related Party Transactions (Continued)
Interest expense on the loans for the three and nine months ended September 30, 2014 was approximately $49,900 and $149,000, respectively. Interest expense on the loans for the three and nine months ended September 30, 2013 was approximately $24,900 and $72,600, respectively.
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Notes payable – related party
On August 3, 2009, the Company entered into a loan agreement with Mr. Timothy D. Ruddy, a Director of the Company.
The agreement formalized the terms related to working capital funding provided by Mr. Ruddy beginning in the fourth quarter of 2008. Mr. Ruddy has the option, at his discretion, to receive payment as follows:
(a) repayment of principal and interest;
(b) conversion of outstanding amount without accrual of interest into the Company ’ s common stock based on the quoted market price of the stock at the dates loans were made; or
(c) any combination of cash and stock as described in (a) and (b).
In December 2010, Mr. Ruddy provided $150,000 of personal assets as collateral for a letter of credit utilized for part of the Company ’ s required financial assurance to the Texas Commission of Environmental Quality ( “ TCEQ ” ). This letter was called by the TCEQ in December 2011. Subsequently, Mr. Ruddy provided $75,000 in additional funding to partially cover the amount due by the bank which held the letter of credit, and the Company and Mr. Ruddy jointly executed an unsecured loan for the remaining $75,000. This unsecured loan was paid off by Mr. Ruddy in May of 2012.
Effective March 1, 2013, Mr. Ruddy converted all outstanding interest on the loan to the common stock of the company at a rate equal to the average closing price of the company ’ s common stock over the ten days prior to the signing of the agreement . The conversion resulted in the issuance of 3,054,541 shares to Mr. Ruddy.
Accrued interest of $137,149 was converted @$0.0449 per share as per conversion agreement with Mr. Ruddy. However the market rate was $0.10 at the time of the board meeting approving the agreement and issuance, hence the difference of $168,305 was credited to additional paid in capital as a loss on settlement of liability.
As of September 30, 2014 and December 31, 2013, accrued interest outstanding on the loan with Mr. Ruddy was approximately $93,900 and $49,600, respectively.
Interest expense on the loans for the three and nine months ended September 30, 2014 was approximately $14,800 and $44,400, respectively. Interest expense on the loans for the three and nine months ended September 30, 2013 was approximately $14,900 and $44,000 respectively.
Vista International Technologies, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and nine months ended September 30, 2014 and 2013
(unaudited)
5. Related Party Transactions (Continued)
Notes payable – related party family
10%-12% promissory note payable to Timothy Ruddy family member has an outstanding balance of $50,000 as of September 30, 2014.
As of September 30, 2014, no interest payments have been made on these notes. Default has been waived.
As of September 30, 2014 and December 31, 2013, accrued interest outstanding on the loans was approximately $24,700 and $20,300, respectively.
Interest expense on the loans for the three and nine months ended September 30, 2014 was approximately $1,500 and $4,400.
Interest expense on the loans for the three and nine months ended September 30, 2013 was approximately $1,500 and $4,400.
Settlement Payments
The Company was named in a suit in the Colorado District Court for the 18th District (Arapahoe County) by a former employee alleging that the Company did not meet its obligation to issue shares to the employee. On July 12, 2011 the Court granted a motion to enforce a settlement dated September 16, 2010. In accordance with the terms of a court order, the Company was obligated to make payments totaling approximately $104,700, including 6% interest, to a former employee. An initial payment of $15,455 was made in July 2011 and monthly payments of $3,000, including interest were due through December 2013. During the second quarter of 2013, the company renegotiated the settlement to allow for a single lump sum payment of $26,500 as a final payment to settle the matter. Through June 30, 2013, $71,844 has been paid toward the settlement, with no additional payments due. The Company has recorded gain on settlement of liability of $32,856 in the second quarter of 2013.
Vista International Technologies, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and nine months ended September 30, 2014 and 2013
(unaudited)
6. Stockholders’ Equity
Preferred Stock
The Company has 10,000,000 shares of preferred stock, $0.001 par value, authorized for issuance. Our board of directors is vested with the authority to provide for the issuance of and terms of the preferred shares. No preferred shares have been issued and no terms have been provided at September 30, 2014.
Common Stock
The Company has 200,000,000 shares of common stock, $0.001 par value, authorized for issuance. As of September 30, 2014 and December 31, 2013, there were 29,030,914 and 25,360,914 respectively shares of common stock issued and outstanding.
On January 16, 2014 the Company issued 750,000 shares of S-8 stock to a consultant valued at $28,500 involved with European project development.
On April 25, 2014 the Company issued 2,200,000 shares in conjunction with an agreement to develop carbon credit assets for the company. The shares were valued at $107,580.
On June 5, 2014 the Company issued 220,000 shares of restricted stock to an investor. The Company received proceeds of $4,950 in the transaction.
On July 17, 2014 the Company issued 500,000 shares in conjunction with an agreement to complete development of carbon credit assets for the company. The shares were valued at $15,050.
Reverse Stock Split
On September 27, 2012, the Company ’ s Board of Directors approved a 1:10 reverse split of the Company’s common shares. The split was declared effective November 21, 2012. All references in the accompanying unaudited condensed consolidated financial statement and notes thereto have been retroactively adjusted to reflect the stock split.
7. Commitments and Contingencies
Litigation and Claims
Settlement Payments
The Company was named in a suit in the Colorado District Court for the 18th District (Arapahoe County) by a former employee alleging that the Company did not meet its obligation to issue shares to the employee. On July 12, 2011 the Court granted a motion to enforce a settlement dated September 16, 2010. In accordance with the terms of a court order, the Company was obligated to make payments totaling approximately $104,700, including 6% interest, to a former employee. An initial payment of $15,455 was made in July 2011 and monthly payments of $3,000, including interest were due through December 2013. During the second quarter of 2013, the Company renegotiated the settlement to allow for a single lump sum payment of $26,500 as a final payment to settle the matter. Through June 30, 2013, $71,844 had been paid toward the settlement, and the Company recorded a gain on settlement of liability of $32,856 in the second quarter of 2013.
Vista International Technologies, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and nine months ended September 30, 2014 and 2013
(unaudited)
7. Commitments and Contingencies (Continued)
Encumbrances on Company Assets
The following encumbrances exist on the Company’s assets as of September 30, 2014:
Mechanic’s lien filed by a contractor for approximately $86,000 for services provided October, 2007 through April, 2008. Lien expired in August 2011 under statute of limitations for such liens in Texas. The
liability for this judgment is still included in accounts payable and accrued liabilities in the consolidated balance sheets
Environmental Liability
Our tire operations in Texas are subject to regulation by the TCEQ. At September 30, 2014, the Company had approximately 6,650 tons of whole tires, partially shredded tires, tire chips and process waste stored onsite at the tire processing and storage facility. Through January 2011, we were able to dispose of this material at a municipal landfill site with minimal disposal and transportation costs. In February, 2011, the landfill transitioned to a project-based system where tire shreds are requested asneeded, and the Company is now required to pay transportation and disposal costs in order to reduce its tire shred inventory. Consequently, the Company has since installed a tire derived fuel (TDF) line to create additional revenue from disposal of the tires and has been selling TDF since February 2012. Based on these new circumstances, the Company has estimated a disposal cost of approximately $190,300 at September 30, 2014. This amount has been included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets, and reflects a decrease of approximately $97,800 compared to December 31, 2013. This amount has been recorded as environmental remediation income in the accompanying unaudited condensed consolidated statements of operations.
The Company’s registration with the TCEQ requires the Company to provide financial assurance (approximately $170,000 at September 30, 2014) for remediation in the event the Company liquidates and the facility closes. The Company currently has $170,000 on deposit with the TCEQ, Consisting of $20,000 in cash provided by the company, and $150,000 in cash provided by Mr. Ruddy, The Company has no other asset retirement obligations.
8. Subsequent Events
Management evaluated all activities of the Company through the issuance date of the Company’s consolidated financial statements and concluded that no subsequent events have occurred that would require adjustments or disclosures into the consolidated financial statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD LOOKING STATEMENTS
Certain information contained in this report may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and is subject to the safe harbor created by that act. The safe harbor created by the Securities Litigation Reform Act will not apply to certain “forward looking statements” relating to our business or operations because we issued “penny stock” (as defined in Section 3(a)(51) of the Securities Exchange Act of 1934 and Rule 3a51-1 under the Exchange Act) during the three year period preceding the date(s) on which those forward looking statements were first made). We caution readers that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking statements which may be deemed to have been made in this report or which are otherwise made by or on behalf of us. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may”, “will”, “expect”, “believe”, “explore”, “consider”, “anticipate”, “intend”, “could”, “estimate”, “plan”, or “continue” or “hope” or the negative variations of those words or comparable terminology are intended to identify forward-looking statements.
The Management’s Discussion and Analysis is intended to help stockholders and other readers understand the dynamics of the Company’s business and the key factors underlying its financial results. It explains trends in the Company’s financial condition and results of operations for the period ended September 30, 2014, compared with the operating results for the period ended September 30 2013.
Business Overview and Presentation
Our financial results were impacted by several significant trends, which are listed below. We expect that these trends will continue to affect our results of operations, cash flows and financial position.
·
Inability to attract adequate debt or equity funding to implement our business plan
·
Delay in successfully demonstrating our Thermal Gasifier™ technology
·
Ongoing operating losses
Description of Business
The Company is in the business of developing, commercializing and operating renewable energy and waste-to-energy (“WTE”) technologies and projects.
The Company is currently conducting its business in the following areas:
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● | Tire processing operation in Hutchins, Texas, and |
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● | Renewable energy and WTE projects utilizing the Company’s Thermal Gasifier™ technology and corporate administration at the Company’s offices in Commerce City, Colorado. |
Discrete financial information is not presently maintained for our WTE business as it has generated limited revenues in the past 5 years. In addition, management makes investing and resource allocation decisions based on the combined results of both the processing and WTE business. Accordingly, we only have one reportable segment.
Our mission is to provide a clean, dependable, cost-competitive alternative energy to fossil fuels. We plan to develop projects with government, community, industry and financial partners to recover the available carbon based energy from materials previously considered “ waste ” and destined for disposal. The recovery of energy from waste using our Thermal Gasifier ™ is expected to divert large volumes of material from landfills and other disposal sites, while providing clean alternative energy and reducing greenhouse gas emissions. In addition to processing waste into clean energy, our technology has the capability to convert biomass into energy using various plant based materials
Environmental Liability
Our tire processing operations are subject to regulation by the Texas Commission on Environmental Quality (TCEQ). We are registered with the TCEQ, which allows us to receive, store, transport and process waste tires. Our registration was renewed on April 23, 2010 and our permit was granted through April 25, 2015.
At September 30, 2014, the Company had approximately 6,650 tons of whole tires, partially shredded tires, tire chips and process waste stored onsite at the tire processing and storage facility. Through January 2011, we were able to dispose of this material at a municipal landfill site with minimal disposal and transportation costs. In February, 2011, the landfill transitioned to a project based system where tire shreds are requested as needed and the Company is now required to pay transportation and disposal costs in order to reduce its tire shred inventory. Consequently, the Company has since installed a tire derived fuel (TDF) line to create additional revenue from disposal of the tires and has been selling TDF since February 2012, Based on these circumstances, the Company has estimated a disposal cost of approximately $190,300 at September 30, 2014.
Going Concern
The Report of our Independent Registered Public Accounting Firm on the Company’s consolidated financial statements as of and for the year ended December 31, 2013, includes a “going concern” explanatory paragraph which means that the auditors stated that conditions existed that raise substantial doubt about the Company’s ability to continue as a going concern.
The Company reported a net loss of approximately $288,000 and net cash provided by operating activities of $34,443 for the nine months ended September 30, 2014, has a working capital deficiency of approximately $4.7 million and an accumulated deficit of approximately $68.1 million at September 30, 2014. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recovery of the recorded assets or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow from operations or to obtain equity investment or additional financing to meet obligations on a timely basis and ultimately achieve profitable operations.
Management’s Plan
During the nine months ended September 30, 2014, the Company did not receive any proceeds from related parties or shareholders, but does expect that the Company will continue to rely on loans, including those from related parties and issuances of shares in private placements to meet its working capital needs until a significant investment into the company is recognized.
Management plans to focus the Company’s resources in four key areas:
●
Thermal Gasifier™ engineering design and deployment
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Maximizing value from the Hutchins, Texas tire processing and storage facility, including the operation of a tire derived fuel (“TDF”) production facility.
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Development of project based opportunities, and
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Attracting strategic investment
TDF Production
Management considers the Thermal Gasifier ™ and waste-to-energy segment to be our core business. However, significant focus is also being placed on the improvement of the tire processing operation at our Hutchins, TX facility to increase production and reduce operating costs, and expand sales to include TDF to increase revenue and cash flow. In February 2012, the Company began operation of the shredding equipment for its TDF production line. This segment is currently operating with positive cash flow.
Thermal Gasifier™ technology
We continue to develop our internal resources and implement business development activities to secure waste-to-energy and biomass-to-energy facility opportunities that will utilize our Thermal Gasifier™ technology through build-own-operate agreements or through joint-venture relationships with strategic partners. We are looking to partner with companies that produce large hydrocarbon-based waste streams and are also in need of thermal and/or electrical energy. We are targeting opportunities where there are high disposal fees and energy rates, where we can use the Thermal Gasifier™ with back end power systems to provide significant cost savings to the end user. We are reviewing the economic viability of a number of opportunities in the northeastern United States and in Colorado and are currently working towards obtaining letters of intent from these entities. Currently, the company has a pilot Waste-To-Energy project under construction in the northeastern US, but does not have any Thermal Gasifiers in operation.
Summary
Management believes that current revenue levels will not be sufficient to meet our operational needs and execute the Company’s complete business plan. The Company is seeking additional funding for the activities described above, but has not completed this funding as of yet
Future funding may be through an equity investment, debt or convertible debt. Current market conditions present uncertainty as to the Company’s ability to secure additional funds, as well as its ability to reach full profitability. There can be no assurance that the Company will be able to secure additional financing, or obtain favorable terms on such financing if it is available. Continued negative cash flow and lack of liquidity create significant uncertainty about the Company’s ability to fully implement its operating plan, and may result in the Company reducing the scope of its planned operations, scale back or discontinue its technology and project development programs, or obtain funds, if available, through strategic alliances that may require the Company to relinquish rights to certain of its technologies or products or to discontinue its operations entirely
_
Results of Operations
Overview:
The following table summarizes our results of operations for the Three and Nine months ended September 30, 2014 and 2013.
Vista International Technologies, Inc | |||||||||||
Condensed Consolidated Statements of Operations | |||||||||||
For the Three and Nine Months Ended September 30, 2014 and 2013 | |||||||||||
(unaudited) | |||||||||||
Three Months Ended | Increase(Decrease) | Nine Months Ended | Increase(Decrease) | ||||||||
30-Sep-14 | 30-Sep-13 | $ Chg | %Chg | 30-Sep-14 | 30-Sep-13 | $ Chg | %Chg |
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Revenues | $231,168 | $171,712 | $59,456 | 34.60% | $661,130 | $598,306 | $62,824 | 10.50% |
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Cost of revenue | 153,848 | 188,255 | -34,407 | -18.30% | 494,672 | 617,562 | -122,890 | -19.90% |
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Environmental remediation expenses | -24,361 | 38,705 | -63,066 | -162.90% | -97,775 | -24,653 | -73,122 | 296.60% |
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Gross (loss) profit | 101,681 | -55,248 | $156,929 | -284.00% | 264,232 | 5,397 | 258,835 | 4795.90% |
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Operating expenses: |
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Depreciation | 2,354 | 1,986 | 368 | 19% | 7,063 | 5,155 | 1,908 | 37.00% |
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Selling, general and administrative expenses | 45,465 | 73,746 | -28,281 | -38.30% | 301,357 | 368,987 | -67,630 | -18.30% |
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Total operating expenses | 47,820 | 100,738 | -52,918 | -52.50% | 308,419 | 374,142 | -65,723 | -17.60% |
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Gain (Loss) from operations | 53,861 | -130,981 | 184,842 | -141.10% | -44,187 | -368,745 | 324,558 | -88.00% |
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Other income (expense): |
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Interest expense, net | -74,480 | -53,043 | -21,437 | 40.40% | -243,843 | -153,486 | -90,357 | 58.90% |
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Gain on Settlement of Liability | - | - | -129,070 |
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Other Income | - | - | - | - | - | - |
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Other expense | - | - | - | - |
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Loss before income taxes | -20,619 | -184,024 | 163,405 | -88.80% | -288,029 | -651,302 | 363,273 | -55.80% |
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Income tax expenses | - | - | - | - |
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Net loss | ($20,619) | ($184,024) | $163,405 | -88.80% | ($288,029) | ($651,302) | $363,273 | -55.80% |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements | |||||||||||
Results of Operations for the Three Months Ended September 30, 2014 and 2013.
Revenue
Revenue, which consists primarily of tipping fees received for acceptance of whole passenger and truck tires, revenue from sales of TDF (tire derived fuel), and from gasification project revenue, increased 35%, or approximately $59,500 as compared with the three months ended September 30, 2013. The increase was due to increased sales of processed tire material, as well as more incoming tonnage in 2014. The Company’s customer list for its tire operations in 2014 is consistent with its customer list in 2013.
Our two largest customers comprised approximately 25.1% and 16.3% of revenues for the three months ended September 30, 2014. Our two largest customers comprised approximately 46% and 12% of revenues for the three months ended September 30, 2013.
Cost of Revenue
Cost of revenue for the three months ended September 30, 2014 declined 18%, or roughly $34,400. The company’s tire operations saw significantly improved margins in the third quarter of 2014, while gasification segment performance saw costs of revenue similar to previous quarters on a percentage basis. Management expects the cost of revenue to remain roughly consistent for tire processing operations going forward, and to rise and fall with the level of gasification project activity in the gasification segment.
Environmental remediation expense
Our tire operations in Texas are subject to regulation by the TCEQ. At September 30, 2014, the Company had approximately 6,650 tons of whole tires, partially shredded tires, tire chips and process waste stored onsite at the tire processing and storage facility. Through January 2011, we had been able to dispose of this material at a municipal landfill site with minimal disposal and transportation costs. In February 2011, the landfill transitioned to a project based system where tire shreds were requested as needed and the Company was required to pay transportation and disposal costs in order to reduce its tire shred inventory. Consequently, the company installed a tire derived fuel (TDF) production line, starting production in February 2012 to allow the Company to generate revenue from the offtake of material from the site Based on these new circumstances, the Company has estimated a disposal cost of approximately $190,300 at September 30, 2014, resulting in income of $24,400 for the three months ended September 30,
2014 as compared to an expense of approximately $38,700 in the comparable prior period. Management believes that the cost of disposal will decrease as the tire inventory is reduced over future periods due to TDF production exceeding incoming tonnage.
The Company’s registration with the TCEQ requires the Company to provide financial assurance in the form of letters of credit (approximately $170,000 at September 30, 2014) for remediation in the event the Company liquidates and the facility closes. The amount of assurance that would be required (computed utilizing TCEQ regulations) is approximately $151,700 as ofSeptember 30, 2014. Accordingly, our assurance covers our liabilities according to the TCEQ regulations.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses decreased approximately $28,300 for the three months ended September 30, 2014 as compared to the year ago period. The decrease was due primarily to the presence of expenses in 2013 for consulting services related to the Company’s listing in Europe and project development in the region. The Company did have a smaller one-time charge in 2014 related to carbon credit development of approximately $15,000. Management anticipates that SGA expenses will continue to be minimized until liquidity is sufficient to allow the Company to begin expanding the business.
Interest Expense
Interest expense increased approximately $21,400 in the three months ended September 30, 2014 versus the year ago period. Reduced interest expense on equipment finance agreements was less than offset by default interest accrued on a note owed to the company’s largest shareholder.
Results of Operations for the Nine Months Ended September 30, 2014 and 2013
Revenue
Revenue, which consists of tipping fees received for acceptance of whole passenger and truck tires, revenue from the sale of tire derived fuel (TDF), and gasification project revenue, increased by 10.5%, or approximately $62,800 during the nine months ended September 30, 2014 as compared to the nine months ended September 30, 2013. Strength was seen in both components of tire business revenue, while gasification revenue declined due to the stage of construction on the company’s pilot project.
Our two largest customers comprised approximately 29.5% and 17.7% of revenues for the nine months ended September 30, 2014, and 25.4% and 25.1% of revenues for the nine months ended September 30, 2013.
Cost of Revenue
Cost of revenue for the nine months ended September 30, 2014 declined by 19% roughly $122,890 year over year, as management continued to reap the benefits of cost cutting measures enacted over the past two years. Significant reductions in cost of revenue were seen in labor costs, and equipment repair and maintenance charges. Going forward, management expects cost of revenue for the tire segment to remain roughly constant, and to rise and fall with the level of gasification project activity in the gasification segment.
Environmental remediation expense
Our tire operations in Texas are subject to regulation by the TCEQ. At September 30, 2014, the Company had approximately 6,650 tons of whole tires, partially shredded tires, tire chips and process waste stored onsite at the tire processing and storage facility. Through January 2011, we had been able to dispose of this
material at a municipal landfill site with minimal disposal and transportation costs. In February, 2011, the landfill transitioned to a project based system where tire shreds were requested as needed and the Company was now required to pay transportation and disposal costs in order to reduce its tire shred inventory. Consequently, the company installed a tire derived fuel (TDF) production line, starting production in February 2012 to allow the company to generate revenue from the offtake of material from the site Based on these new circumstances, the Company has estimated a disposal cost of approximately $190,300 at September 30, 2014, resulting in income of $97,800 for the most recent nine month period, as compared to income of approximately $24,700 in the comparable prior period. Management believes that the cost of disposal will decrease as tire inventory is reduced over future periods due to TDF production.
The Company’s registration with the TCEQ requires the Company to provide financial assurance in the form of letters of credit (approximately $170,000 at September 30, 2014) for remediation in the event the Company liquidates and the facility closes. The amount of assurance that would be required (computed utilizing TCEQ regulations) is approximately $151,700 as of September 30, 2014. Accordingly, our assurance is adequate according to the TCEQ site remediation calculation formula.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses decreased approximately $67,600 in the nine months ended September 30, 2014 as compare to the year ago period. This was mainly due to the presence of significant expenses for consulting services related to the Company’s listing in Europe and its project development efforts there in the first half of 2013, which were partially offset by a $108,000 charge for carbon credit development in 2014. Excluding these charges, selling general and administrative costs continued to decrease due to reduction in overhead costs at the corporate level. Management anticipates that these expenses will continue to be minimized until liquidity is sufficient to allow the company to begin expanding the business.
Interest Expense
Interest expense increased approximately $90,400 in the period ended September 30, 2014 versus the year ago period due to default interest being accrued on a note due to the Company’s largest shareholder, which was partially offset by reduced interest payments on financed equipment at the Hutchins tire facility.
Liquidity and Capital Resources
The Company had a cash balance of approximately $9,400 as of September 30, 2014. Our cash balance increased approximately $2,100 as compared to December 31, 2013 due primarily to strong processed tire sales in the first and third quarters of 2014.
We expect that our current cash on hand and expected revenues will not be sufficient to sustain our current operations and fully execute our business plan. The Company is exploring all available funding sources, including the sale of its assets, and additional debt and equity funding. Financing has not been completed as of the date of this filing. In the near future we are relying on funding from principal shareholders and related parties to provide cash to fund operations in the foreseeable future as described in more detail under the heading “Management’s Plans” above. If we are unable to obtain additional funding or increase revenues, we may be required to scale back or suspend operations or revise our business plan.
As of September 30, 2014, we had a working capital deficiency of approximately $4.7 million, which includes notes payable to a stockholder of approximately $1.1 million (notes currently in default), notes payable to related parties of approximately $786,200, a liability of approximately $190,300 for waste tire shred removal and cleanup costs at the tire processing and storage facility, and an unpaid payroll liability to former officers of the Company of approximately $482,000.
During the nine months ended September 30, 2014, the Company did not receive any proceeds from related
parties or shareholders to help with working capital.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
None.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Limitations on the Effectiveness of Disclosure Controls. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Evaluation of Disclosure Controls and Procedures. As of September 30, 2014, the end of the fiscal quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Interim Chief Executive Officer, who is our principal executive and principal financial and accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Interim Chief Executive Officer (principal executive officer and principal financial and accounting officer) concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of September 30, 2014. Our disclosure controls and procedures were not effective because of certain “material weaknesses” described in the “Management’s Annual Report on Internal Control over Financial Reporting” section in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013. As of September 30, 2014, we had not completed the remediation of these material weaknesses.
Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2014 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 was named in a suit in the Colorado District Court for the 18th District (Arapahoe County) by a former employee alleging that the Company did not meet its obligation to issue shares to the employee. On July 12, 2011 the Court granted a motion to enforce a settlement dated September 16, 2010.
In accordance with the terms of a court order, the Company was obligated to make payments totaling approximately $104,700, including 6% interest, to a former employee. An initial payment of $15,455 was made in July 2011 and monthly payments of $3,000, including interest were due through December 2013. During the second quarter of 2013, the company renegotiated the settlement to allow for a single lump sum payment of $26,500 as a final payment to settle the matter.
Mechanic’s lien filed by a contractor for approximately $86,000 for services provided October, 2007 through April, 2008. Lien expired in August 2011 under statute of limitations for such liens in Texas. The liability for this judgment is still included in accounts payable and accrued liabilities in the unaudited condensed consolidated balance sheets.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
As of September 30, 2014, the Company has an obligation to issue approximately 10,000 shares of its restricted common stock to an investor. The accompanying unaudited condensed consolidated balance sheets reflect an accrual of approximately $5,000 for these unissued shares as of September 30, 2014.
The above sales were exempt from registration under section 4(2) of the Securities Act of 1933. We did not use any underwriter or placement agent in these transactions and did not pay anyone commission or other compensation in connection with these issuances. These issuances were made directly by use to persons with whom our management had direct contact and a pre-existing relationship.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Mine Safety Disclosures.
None
Item 5. Other Information.
Not Applicable.
Item 15. Exhibits and Financial Statement Schedules
2.1 Industrial Site Purchase and Sale Agreement dated February 14, 2011 by and between Vista International Technologies, Inc. and Brown-Lewisville Railroad Family First Limited Partnership Δ
3(i).1 Certificate of Incorporation*
3(i).2 Articles of Amendment to the Articles of Incorporation, as amended on August 6, 1999*
3(i).3 Certificate of Amendment of Certificate of Incorporation, as amended on April 24, 2002*
3(i).4 Certificate of Amendment of the Certificate of Incorporation, filed on October 12, 2005*
3(i).5 Certificate of Amendment to Certificate of Incorporation, as amended on November 8, 2007**
3(ii).1 Amended and Restated By-Laws***
10.1 Strategic Alliance and Supply Agreement, dated December 29, 2009 by and between Vista International Technologies, Inc. and
Liberty Tire Recycling, LLC ****
10.2 Consulting Agreement dated August 3, 2009 by and between Vista International Technologies, Inc and Ing. Gianfranco
Licursi*****
10.3 Vista International Technologies, Inc. Equity Participation Plan*
10.4 Investment Agreement dated August 3, 2009 between Vista International Technologies, Inc. and Timothy Ruddy ****
10.5 Security Agreement dated August 3, 2009 by and between Vista International Technologies, Inc. and Timothy Ruddy ****
10.6 Promissory Note (Line of Credit) dated August 11, 2009 by and between Vista International Technologies, Inc. and Richard Strain****
10.7 Security Agreement dated August 11, 2009 by and between Vista International Technologies, Inc. and Richard Strain Δ
10.8 Promissory Note dated April 4, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ
10.9 Security Agreement dated April 4, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ
10.10 Promissory Note dated April 16, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ
10.11 Security Agreement dated April 16, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ
10.12 Promissory Note dated May 31, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ
10.13 Security Agreement dated May 31, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ
10.14 Engagement Letter dated April 15, 2010 by and between Vista International Technologies, Inc. and Colebrooke Capital, Inc. +
10.15 Joint Development Agreement dated October 16, 2010 by and between Vista International Technologies, Inc. and Mustang
Consulting, LLC ++
10.16 Amendment to Engagement Agreement dated August 30, 2010 by and between Vista International Technologies, Inc. and
Colebrooke Capital, Inc. ++
10.17 Consulting Agreement dated October 26, 2010 by and between Vista International Technologies, Inc. and Steven R. Kowalsky
and Edward L. Kowalsky. ++
10.18 Consulting and Services Agreement dated June 11, 2009 by and between Vista International Technologies, Inc. and Mustang
Consulting, LLC (“Consulting and Services Agreement”) Δ
10.19 Continuation of Consulting and Services Agreement effective January 4, 2010 Δ
10.20 Exclusive Listing Agreement dated July 1, 2010 by and between Vista International Technologies, Inc. and CCBN Texas
Limited Partnership d/b/a Colliers International Δ
10.21 Alternative Fuel Purchase Agreement, dated January 2nd, 2012, between Vista International Technologies, Inc, And
Geocycle, LLC.++++
10.22 Release of Contract, dated January 18, 2012, between Vista International Technologies, Inc. and Brown-Lewisville Railroad
Family First Limited Partnership++++
10.23 Alternative Fuel Purchase Agreement, dated January 1, 2012, between Vista International Technologies, Inc. and Trident
Environmental Resource Consulting, LLC++++
10.24 Convertible Note dated December 7, 2011 between Vista International Technologies, Inc. and Asher Enterprises, Inc.++++
10.25 Lease Agreement dated March 1, 2012 between Vista International Technologies, Inc, and Electric Power Equipment
Company.++++
10.26 Equipment Financing Agreement, dated February 15, 2012, between Vista International Technologies, Inc (Timothy Ruddy)
and REO Holdings.++++
* Denotes document filed as an exhibit to our Quarterly Report on Form 10-QSB for the period ended September 30, 2005 and incorporated
herein by reference.
** Denotes document filed as an exhibit to our Current Report on Form 8-K for an event dated December 21, 2007 and incorporated herein by
reference.
*** Denotes document filed as an exhibit to our Current Report on Form 8-K for an event dated June 6, 2005.
**** Denotes document filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein
by reference.
***** Denotes document filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended September 30, 2009 and incorporated
herein by reference.
Δ Denotes document filed as an exhibit to our Annual Report on Form 10-K/A Amendment No. 1 for the year ended December 31, 2010 and
incorporated herein by reference.
+ Denotes document filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended June 30, 2010 and incorporated herein by
reference.
++ Denotes document filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended September 30, 2010 and incorporated
herein by reference.
+++ Denotes document filed as an exhibit to our Annual Report on Form 10-KSB for the year ended December 31, 2003 and incorporated herein
by reference.
++++ Denotes document filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein
by reference.
14.1 Code of Business Conduct and Ethics for Officers (Vice President and Senior) and Directors (effective March 8, 2004)+++
14.2 Code of Business Conduct and Ethics for Employees and Officers (other than Vice President and Senior) (effective March 8,
2004)+++
21 Subsidiaries****
31.1 Certification of Interim Chief Executive Officer pursuant to Rule 13a-14(a)or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a)or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Interim Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
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 thereunto duly authorized.
|
| VISTA INTERNATIONAL TECHNOLOGIES, INC. | |
|
|
| |
Date: November 14, 2014 |
| By: | /s/ Timothy D Ruddy |
|
|
| Timothy D Ruddy |
|
|
| Interim Chief Executive Officer (principal executive officer and principal accounting officer) |
Date: November 14, 2014 |
| By: | /s/Thomas P. Pfisterer |
|
|
| Thomas P. Pfisterer |
|
|
| Chief Financial Officer |
