SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(b)
of the Securities Exchange Act of 1934
For Quarter Ended: September 30, 2000
Commission File Number: O-13670
Teletrak Environmental Systems, Inc. 13-3187778
Delaware IRS Employer
State or other jurisdiction of Ident. No.
Incorporation or organization
2 SUTTON RD
WEBSTER, MA 01570
Tel: (508) 949-2430
Fax: (508) 949-2473
Indicates by check mark whether the registrants(1) has filed
all reports required to be filed by section 13 of 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 ____
At September 30, 2000, there were 7,713,182 shares of the
Company's common stock outstanding.
Page 1 of 13
PART 1 INDEX
FINANCIAL INFORMATION
Item 1.
Consolidated Financial Statements
Consolidated Balance Sheet as of
June 30, 2000 & September 30, 2000 3
Consolidated Financial Statements
Consolidated Balance Sheet as of
December 31, 1999 & September 30, 2000 4
Unaudited Consolidated Statement of Operations
For the Three Months Ended
September 30, 2000 and September 30, 1999 5
Unaudited Consolidated Statements of Cash Flows
for the Three Months Ended
September 30, 2000 and September 20, 1999 6
Unaudited Consolidated Statements of Operations
for the Nine Months Ended
Septener 30, 2000, and September 30, 1999 7
Unaudited Consolidated Statements of Cash Flows
for the Nine Months Ended
September 30, 2000 and September 30, 1999 8
Notes to Consolidated Financial Statements 9
Item 2.
Management's Discussion and
Analysis of Financial Condition and
Results of Operations 11
Part II
Other Information 13
Page 2 of 13
[CAPTION]
TELETRAK
ENVIRONMENTAL SYSTEMS INC & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
2ND QTR TO 3RD QTR
2000
UNAUDITED UNAUDITED
ASSETS 06/30/00 09/30/00
CURRENT ASSETS:
CASH 159,508 54,927
ACCOUNTS RECEIVABLE 471,445 396,551
ALLOWANCE FOR DOUBTFUL ACCOUNTS (50,000) (50,000)
INVENTORY 430,149 479,426
OTHER CURRENT ASSETS 40,383 17,394
_____________ ______________
TOTAL CURRENT ASSETS 1,051,485 898,298
PROPERTY AND EQUIPMENT 324,510 325,354
LESS: ACCUM. DEPRECIATION (150,228) (176,735)
_____________ ______________
NET 174,282 148,619
OTHER ASSETS 368,653 387,528
_____________ ______________
TOTAL ASSETS 1,594,420 1,434,445
LIABILITIES AND STOCKHOLDERS EQUITY
NOTES PAYABLE 599,221 566,061
LONG TERM DEBT 95,884 108,598
A/P & ACCRUED EXPENSES 398,034 306,432
DUE TO RELATED PARTIES 150,000 130,000
_____________ ______________
TOTAL LIABILITIES 1,243,139 1,111,091
STOCKHOLDERS' EQUITY
PREFERRED STOCK - $001 PAR VALUE,
5,000,000 SHARES AUTHORIZED, NONE
ISSUED
COMMON STOCK - $.001 PAR VALUE
25,000,000 SHARES AUTHORIZED 7,694 7,694
7,713,182 AT 12/31/99, 7,713,182 AT
9/30/00 SHARES ISSUED AND OUTSTANDING
ADDITIONAL PAID IN CAPITAL 1,516,434 1,516,434
RETAINED EARNINGS -1,308,929 -1,308,929
CURRENT YEAR EARNINGS(LOSS) 136,082 108,155
_____________ ______________
TOTAL STOCKHOLDERS EQUITY 351,281 323,354
_____________ ______________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 1,594,420 1,434,445
_____________ ______________
PAGE 3 OF 13
TELETRAK
ENVIRONMENTAL SYSTEMS, INC & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
NINE MONTHS ENDED SEPT 30,2000
UNAUDITED UNAUDITED
ASSETS: 09/30/00 12/31/99
CURRENT ASSETS:
CASH 54,927 22,919
ACCOUNTS RECEIVABLE 396,551 447,477
ALLOWANCE FOR DOUBTFUL ACCOUNTS (50,000) (50,000)
INVENTORY 479,426 443,991
OTHER CURRENT ASSETS 17,394 16,021
_____________ ______________
TOTAL CURRENT ASSETS 898,298 880,408
PROPERTY AND EQUIPMENT 325,354 347,782
LESS: ACCUM. DEPRECIATION - 174,478 -129,164
_____________ ______________
NET 150,876 218,618
OTHER ASSETS 385,272 380,646
_____________ ______________
TOTAL ASSETS 1,434,446 1,479,672
LIABILITIES AND STOCKHOLDERS EQUITY
NOTES PAYABLE 566,061 550,000
LONG TERM DEBTS 108,598 98,621
A/P AND ACCRUED EXPENSES 306,432 414,266
DUE TO RELATED PARTIES 130,000 201,562
____________ ______________
TOTAL LIABILITIES 1,111,091 1,264,449
STOCKHOLDERS' EQUITY
PREFERRED STOCK-$.001 PAR VALUE
5,000,000 SHARES AUTHORIZED,
NONE ISSUED
COMMON STOCK -$.001 PAR VALUE, 7,694 7,694
25,000,000 SHARES AUTHORIZED,
7,713,182 AT 12/31/99 7,713,182
AT 9/30/00 SHARES ISSUED AND
OUTSTANDING
ADDITIONAL PAID IN CAPITAL 1,516,434 1,516,434
RETAINED EARNINGS (1,308,929) ( 637,867)
CURRENT YEAR EARNINGS(lOSS) 108,155 ( 671,038)
_____________ ______________
TOTAL STOCKHOLDERS' EQUITY 323,354 215,223
_____________ ______________
TOTAL LIABILITIES AND
STOCKHOLDERS'S EQUITY 1,434,446 1,479,672
PAGE 4 OF 13
TELETRAK ENVIRONMENTAL SYSTEMS, INC & SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED
SEPT 30, 2000
UNAUDITED UNAUDITED
2000 1999
NET SALES 474,206 435,803
COST OF GOODS SOLD 374,005 314,243
_____________ ______________
GROSS PROFIT 120,101 121,560
OPERATING EXPENSES:
SELLING, G&A EXPENSES 117,920 237,994
ADVERTISING EXPENSES 21,966 25,636
BAD DEBT EXPENSES 0 0
_____________ ______________
TOTAL OPERATING EXPENSES 128,995 267,412
PROFIT(LOSS) FROM OPERATIONS ( 8,894) (145,852)
INTEREST EXPENSES 19,033 13,078
OTHER INCOME/EXPENSES 0 223
_____________ ______________
PROFIT(LOSS) BEFORE PROVISION
FOR INCOME TAXES (27,927) (159,153)
PROVISION FOR INCOME TAXES 0 19
_____________ ______________
NET PROFIT(LOSS) (27,927) (159,172)
NET GAIN(LOSS) PER SHARE 0.00 (0.02)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 7,396,109 7,396,109
PAGE 5 OF 13
TELETRAK ENVIRONMENTAL SYSTEMS, INC & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW
THREE MONTHS ENDED SEPT 30, 2000
UNAUDITED
2000 1999
CASH FLOW FROM OPERATING ACTIVITIES:
NET INCOME(LOSS) 30,661 (159,172)
ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH USED IN OPERATING ACTIVITIES:
PROVISION FOR DOUBTFUL ACCOUNTS 0 0
DEPRECIATION & AMORTIZATION 9,841 13,656
WRITE OFF OF FIXED ASSETS 0 0
GAIN/LOSS ON WRITE-OFF OF INVESTMENT 0 0
CHANGES INC:
ACCOUNTS RECEIVABLE 85,064 (43,656)
INVENTORY (49,277) 12,497
PREPAID EXPENSES & OTHER ASSETS ( 7,076) ( 7,427)
A/P AND ACCRUED EXPENSES (128,097) 64,161
DUE TO/FROM RELATED PARTY (19,819) 135,535
_____________ _____________
NET CASH USED IN OPERATING
ACTIVITIES: (78,703) 15,594
CASH FLOW FROM INVESTING ACTIVITIES:
ACQUISITIONS OF PROPERTY &
EQUIPMENT 844 (10,193)
CASH FLOW FROM FINANCING ACTIVITIES:
PROCEEDS FROM SALES OF COMMON STOCK 0 12,500
PRINCIPAL PAYMENTS ON NOTES &
LOANS PAYABLE (26,722) (36,668)
_____________ _____________
NET CASH PROVIDED BY
FINANCING ACTIVITIES (26,722) (24,168)
NET INCREASE(DECREASE) IN CASH (104,581) (18,767)
CASH AT THE BEGINNING OF PERIOD 159,508 130,590
_____________ _____________
CASH AT THE END OF PERIOD 54,927 111,823
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
CASH PAID DURING THE QUARTER FOR:
INTEREST 19,033 13,078
TAXES 0 19
SUPPLEMENTAL DISCLOSURES OF NON-CASH
OPERATING AND FINANCING ACTIVITIES:
COMMON STOCK SUBSCRIPTIONS RECEIVABLE
INVENTORY
FIXED ASSETS
COMMON STOCK
PAGE 6 OF 13
TELETRAK ENVIRONMENTAL SYSTEMS, INC & SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPT 30, 2000
UNAUDITED UNAUDITED
2000 1999
NET SALES 1,872,301 1,473,424
COST OF GOODS SOLD 1,151,211 1,012,556
______________ ______________
GROSS PROFIT 721,090 460,868
OPERATING EXPENSES:
SELLING, G&A EXPENSES 543,628 670,280
ADVERTISING EXPENSES 29,083 53,945
BAD DEBT EXPENSES (10,891) 3,782
______________ ______________
TOTAL OPERATING EXPENSES 561,820 728,007
PROFIT(LOSS) FROM OPERATIONS 159,270 (267,139)
INTEREST EXPENSE 51,115 31,638
OTHER INCOME/EXPENSES 0 4,947
______________ ______________
PROFIT(LOSS) BEFORE PROVISION
FOR INCOME TAXES 108,155 (293,830)
PROVISION FOR INCOME TAXES 0 (1,079)
______________ ______________
NET PROFIT(LOSS) 108,155 (292,751)
NET GAIN(LOSS) PER SHARE 0.01 (0.04)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 7,396,109 7,396,109
PAGE 7 OF 13
TELETRAK ENVIRONMENTAL SYSTEMS, INC & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
NINE MONTHS ENDED SEPT 30, 2000
UNAUDITED
2000 1999
CASH FLOW FROM OPERATING ACTIVITIES:
NET INCOME(LOSS) 108,155 (292,751)
ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH USED IN OPERATING ACTIVITIES:
PROVISION FOR DOUBTFUL ACCOUNTS 0 0
DEPRECIATION & AMORTIZATION 37,981 38,606
WRITE OFF OF FIXED ASSETS 0 0
GAIN/LOSS IN WRITE OFF OF INVESTMENT 0 0
CHANGES IN:
ACCOUNTS RECEIVABLE 58,236 (230,617)
INVENTORY (35,435) ( 17,316)
PREPAID EXPENSES &
OTHER ASSETS ( 5,999) 2,335
A/P AND ACCRUED EXPENSES (107,834) 158,025
DUE TO/FROM RELATED PARTY (71,562) 148,344
_____________ ______________
NET CASH USED IN OPERATING
ACTIVITIES: (16,458) (193,374)
CASH FLOWS FROM INVESTING ACTIVITIES:
ACQUISITIONS OF PROPERTY
& EQUIPMENT 22,428 (246,056)
CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM SALES OF
COMMON STOCK 0 122,500
PRINCIPAL PAYMENTS ON NOTES
AND LOANS PAYABLE 26,038 132,044
_____________ ______________
NET CASH PROVIDED BY
FINANCING ACTIVITIES 26,038 254,544
_____________ ______________
NET INCREASE(DECREASE) IN CASH 32,008 (184,886)
CASH AT THE BEGINNING OF PERIOD 22,919 296,709
_____________ ______________
CASH AT THE END OF PERIOD 54,927 111,823
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
CASH PAID DURING THE QUARTER FOR:
INTEREST 51,115 31,638
TAXES 0 (1,079)
SUPPLEMENTAL DISCLOSURES OF NON-CASH
OPERATING AND FINANCING ACTIVITIES:
COMMON STOCK SUBSCRIPTIONS
RECEIVABLE 80,000
INVENTORY (80,000)
FIXED ASSETS (209,000)
COMMON STOCK 209,000
PAGE 8 OF 13
Item 1
NOTES TO CONDENSED FINANCIAL STATEMENTS
(NOTE A) BASIS OF PRESENTATION:
The accompanying unaudited condensed financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and
with the instructions to form 10 QSB and regulations S-B.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting princ-
iples for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentation have
been included. Operating results of the three month period
ended September 30, 2000 are not necessarily indicative of
the results that may be expected for the year ending
December 31.
(NOTE B)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
[1] Basic profit/loss per share of common sotck:
The company adopted Statement of Financial Account-
ing Standards No. 128 (SFAS No. 128). The basic
profit/loss per share of common stock is based on
weighted average number of shares outstanding.
Stock options did not have an effect on the comp-
utation of the gain/loss per share. The adoption
of SFAS No. 128, which requires a retroactive adj-
ustment did not have a material effect on the
company's financial statements.
[2] Research and Engineering Costs:
All costs incurred in the research and engineering
of new and existing products are expensed in the
period incurred.
[3] Notes Payable:
At June 30, 2000 the company had a line of credit with
a financial institution in the amount of $400,000.
Available borrowings are based on a formula of eligible
accounts receivable and inventory. The line scheduled
to expire June 30,2000 was extended to December 31, 2000.
PAGE 9 OF 13
Outstanding borrowing under the line are payable on
demand and bear interest at 1.5% above bank's base rate.
On August 19, 1999 the Company entered into a promissory
note to borrow $150,000 from a stockholder who is a director
and officer of the Company. Under the note, the principal
sum and interest at the interest rate of 10% per annum on
a monthly basis was due August 20, 2000. In September the
Company made a partial payment of $20,000 and the terms
of the note were changed to be payable upon demand.
Part of the acquisition price of LTC Americas, Inc completed
in February, 1999 included an $80,000 promissory note bear-
ing an interest rate of 10% per annum, payable in 36 equal
monthly installments of which at Sept 30, 2000 $42,982 is
remaining.
[4] Due to related parties:
Due to related parties as of Sept 30, 2000 includes accrued
rent and supplies of $106,608 due to a company owned by a
stockholder, officer and director of the company and $23,392
for supplies due a company owned by another stockholder who
is also a director of the company.
(NOTE C) THE COMPANY
TAES was formed in 1998 after the merger of Advanced
Environmental Systems, a privately held company, with
Teletrak Advanced Systems, Inc.
The Company specializes in the manufacture, distribution
and licensing of industrial jet pumps and related equipment.
The design of these pumps based on jet pump technology,
with no movable parts, makes this equipment a highly
effective portable tool for the removal of granular wet or
dry material (including sludge, scale, slurries, sands and
heavy shot blasting materials), for a wide range of applic-
ations across many industries including environmental
clean-up of hazardous matter such as lead and other heavy
metals and nuclear contaminants and as general maintenance
tools in the marine, transportation, chemical and waste water
industries. The motive power, compressed gases such as
Page 10 of 13
air or steam or pressurized liquids such as water, oils, or
pulps, provides operating flexibility for hopper loading,
cleaning and submersible application, as well as the ability
to collect and transport materials over long distances.
The jet pump technology is also included in the Company's
vacuums marketed under the trade names HAZVAC and
ENVIROVAC and the newly acquired line of abrasive blasting
and recycling equipment marketed under the trade name
"SURFACE DECON".
In addition, the Company manufactures and distributes a
full line of shrouded, hand operated tools that attach to the
Company's vacuum filtering equipment and can be used with
the Company's abrasive blasting and recycling equipment.
These tools have been designed to work on all surfaces and
all types of construction material, both hazardous and non-
hazardous.
AES offers the most complete line of equipment for remedia-
tion and surface preparation where dust and waste generation
give problems. All AES equipment is designed to provide
POINT OF GENERATION DUST CONTROL AND WASTE CONTAINMENT.
Dust control is achieved by providing negative air pressure
and shrouds around tools or blast nozzles. The operator
is not exposed in any way to unhealthy lead levels or dust.
Item 2
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in
conjunction with the financial statements included in this
report and in conjunction with the description of the Company's
form 10-KSB for the year ended December 31, 1999. It is
intended to assist the reader in understanding and evaluating
the financial positon of the Company.
This discussion contains, in addition to historical information,
forward looking statements that involve risks and uncertainties.
The Company's actual results could differ materially from the
PAGE 11 OF 13
results discussed in the forward looking statements.
The financial statements included in these statements is
condensed and consolidated for Teletrak and Advanced Envir-
onmental Systems, Inc. Also the statements are unaudited.
Highlights of Financial Condition
As of Sept 30, 2000 the company had $54,927 in cash.
Trade receivables, net of allowance for bad debts in the
amount of $50,000 are $346,551. The inventory was valued at
$479,426.
The total assets amount to $1,434,446.
For the quarter ended Sept 30, 2000, the company shows a
loss in the amount of $27,927 as compared to a loss of
$159,153 for the same period last year. This translates to
a loss per common share of $.00 as compared to a loss of
$.02 for the same period last year.
For the first nine months of 2000, the company shows a profit
of $108,155, or $.01 profit per common share. For the same
period last year the company showed a loss of $292,751, or
$.04 loss per common share.
The company recognized sales in the amount of $494,106 for
the third quarter of 2000 as compared to $435,803 for the
same period last year.
For the nine months ended Sept 30, 2000 the Company recognized
$1,872,301 in sales as compared to $1,473,424 for the same
nine month period last year. The net increase in sales of
27% is attributable to the expanded distribution system.
Management is actively trying to expand its sales force to
assure effective penetration in the various markets. It is
estimated that it will take several months before the sales
department is brought to the ideal structure.
Page 12 of 13
Part II - OTHER INFORMATION
As of September 6, 2000 Mr. William S. McPhee was elected to
the Company's board of directors. Mr. McPhee is known world-
wide as an expert in the field of vacuum blasting with numerous
patents and published papers in this highly specialized area
of application, particularly low level nuclear remediation.
SIGNATURES
In accordance with the requirements of the Securities and
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Teletrak Environmental Systems, Inc.
[S] GERD REINIG
BY: Gerd Reinig, Chairman of the Board
[S] GERALD MCNAMARA
BY: Gerald McNamara, President
Dated: October 23, 2000