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: March 31, 2001
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 __ No X__
At March 31, 2001, there were 7,731,932 shares of the Company's
common stock outstanding.
TELETRAK ENVIRONMENTAL SYSTEMS, INC.
FORM 10QSB TABLE OF CONTENTS
Part I Financial Information
Item 1 Financial Statements
March 31, 2001 and December 31, 2000
Consolidated Balance Sheets
Consolidated Statements of Operations
for the three months ended March 31, 2001
and 2000
Consolidated Statements of Cash Flows
for the three months ended March 31, 2001
and 2000.
Item 2 Management Discussion and Analysis of
Financial Condition and Results of Operations
Part II Other Information
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
Signature(s)
Part 1
Item 1 - Financial Statements
TELETRAK ENVIRONMENTAL SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
Unaudited Audited
March 31, 2001 December 31, 2000
Current assets
Cash 24,041 4,600
Accounts receivable,
net of allowance for
doubtful accounts
of $41,836 269,168 181,733
Inventory, net
of reserves
of $32,800 408,858 471,865
Prepaid expenses
and other
current assets 17,374 4,918
======== =========
719,441 663,116
Property and equipment,
net 130,395 143,361
Other assets
Intellectual property,
patents and goodwill,
net of accumulated
amortization of $26,098
and $22,973 in 2000 355,677 358,802
Cash surrender value
of life insurance,
net of loans 14,935 26,453
======= =======
370,612 385,255
Total assets 1,220,448 1,191,732
Liabilities and
Stockholders' Equity
Current liabilities
Bank line of credit 400,000 400,000
Current portion
of long-term debt 29,209 43,530
Note payable,
stockholder 130,000 130,000
Accounts payable 285,876 234,995
Due to related
parties 262,880 226,645
Accrued expenses
and other current
liabilities 97,641 76,549
========== ===========
1,205,606 1,111,719
Long-term debt, net
of current portion 7,617 7,641
1,213,223 1,119,360
Commitments and contingencies
Stockholders' equity 7,225 72,372
Total liabilities
and stockholders'equity 1,220,448 1,191,732
See accompanying "Notes to Financial Statements (Unaudited)"
Item 1 - Financial Statements
TELETRAK ENVIRONMENTAL SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Three Months Ended March 31
Unaudited Unaudited
2001 2000
Net sales $ 388,125 $ 610,826
Cost of goods sold 239,210 314,326
Gross profit 148,915 296,500
Operating expenses
Advertising 1,179 0
Selling, general,
and administrative 194,375 222,502
=========== ==========
195,554 222,502
Profit (Loss) from
operations (46,639) 75,998
Other income (expense)
Interest expense 18,508 14,836
Net Income (Loss) $ (65,147) $ 61,162
Earnings(Loss) per
common share $ (0.01) $ 0.01
Weighted average number
of shares outstanding 7,731,932 7,731,932
See accompanying "Notes to Financial Statements (Unaudited)"
Item 1 - Financial Statements
TELETRAK ENVIRONMENTAL SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31
Unaudited Unaudited
2001 2000
Cash flows from operating activities
Net income (loss) $(65,147) $ 77,494
Adjustments to reconcile net
income (loss)
to net cash provided by (used for)
operating activities:
Depreciation and amortization 16,091 24,073
(Increase) decrease in:
Accounts receivable (87,435) (87,219)
Inventory 63,007 (21,599)
Prepaid expenses and other
current assets (12,456) (7,693)
Increase (decrease) in:
Accounts payable and accrued
Liabilities 71,973 20,248
Due to related parties 36,235 (51,743)
Net cash provided by (used for)
operating activities 22,268 (46,439)
Cash flows from investing activities
Purchases of property and equipment 0 10,623
Change in cash surrender value of
life insurance 11,518 0
Net cash provided by investing
activities 11,518 10,623
Cash flows from financing
activities
Proceeds from long-term debt 0 52,760
Repayments of long-term debt (14,345) 0
Net cash provided by (used for)
financing activities (14,345) 52,760
Increase in cash 19,441 16,944
Cash-beginning 4,600 22,919
Cash-ending $ 24,041 $ 39,863
Supplemental disclosure of
cash flows information
Cash paid for interest $ 18,483 $ 14,836
See accompanying "Notes to Financial Statements (Unaudited)"
Item 1 - Financial Statements
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 principles 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 March
31,2001 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2001.
(NOTE B) NATURE OF OPERATIONS
LTC Teletrak, Inc. is engaged principally in the manufacturing,
selling and renting of vacuum blasting equipment throughout North
America. AES is engaged in the marketing, distribution and licensing
of industrial pumps and related equipment used primarily in
environmental remediation, also throughout North America.
Management is continuing to develop a plan to improve its cash
position by focusing its sales on profitable product lines of
environmental remediation equipment, as well as, vacuum blasting
equipment.Thus, the ultimate success of the Companies is dependent
upon their ability to increase sales and to secure financing adequate
to meet their working capital and product development needs.
Management is seeking to enhance the Companies' financial position
by obtaining permanent additional financing. Management believes
that the revenues being generated from operations, short-term lines
of credit and proceeds from the sales of common stock in anticipated
private placements will provide sufficient liquidity to meet the
Company's working capital needs for the remainder of the fiscal year
ending December 31, 2001.There can be no assurance, however,that
the Companies' operations will be sustained or be profitable in
the future, that adequate sources of financing will be available
at all, when needed or on commercially acceptable terms, or that
the Companies' product development and marketing efforts will be
successful.
(NOTE C) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
[1] Earnings (loss) per common share:
In 2001 and 2000, earnings(loss) per common share is computed using
the weighted average number of shares of common stock outstanding
during the period.Diluted per share computations are not presented
since the effect would be antidilutive.
[2] Research and Development Costs:
The Companies charge costs of research and development activities
to operations as incurred.
[3] Stockholders' Equity
March 31 December 31
Preferred Stock 2001 2000
There are 5,000,000 authorized shares
of cumulative preferred stock with a par
value of $.001. There are no shares
issued or outstanding at March 31, 2001
or December 31, 2000. The preferred
stock has a liquidation value at par plus
accrued dividends, if any,
and is non-voting stock.
Common Stock
Common stock consists of voting stock with
a par value of $.001. There are 25,000,000
shares authorized with 7,731,932 shares
issued and outstanding at March 31, 2001
and December 31, 2000 $ 7,694 $7,694
Additional Paid-In Capital 1,516,434 1,516,434
Accumulated Deficit (1,516,903) (1,451,756)
Total Stockholders' Equity $7,225 $72,372
Item 2
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Overview
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 applications 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 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 remediation
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.
Three months ended March 31, 2001 vs. three months ended March 31,2000
For the quarter ended March 31, 2001, the company shows a loss in the
amount of ($65,147) as compared to income of $61,162 for the same
period last year.This translates to a loss per common share of $.01
as compared to income of $.01 for the same period last year.
The decrease in revenues and earnings for the period ended March 31,
2001 were the result of two significant orders which were originally
scheduled for shipment in the first quarter of 2001 being, delayed at
the customers request, and shipped in the second quarterof 2001.
This would have increased revenue by approximately $140,000 in the
March 31, 2001 quarter.
The Company recognized sales in the amount of $388,125 for the three
months ended March 31, 2001 as compared to $610,826 for the same
period last year.
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.
Liquidity & Capital Resources
Advanced Environmental Systems, Inc. (AES) was privately held until
the Merger.
The Company presently has outstanding publicly held Warrants to
purchase shares of common stock which, if all were exercised, could
result in gross proceeds to the Company of approximately $4,500,000.
All Warrants, including the 625,000 Private Placement Warrants will
expire October 31, 2001, however, there is no assurance that the
Warrants will be exercised and that Company will receive the proceeds
therefrom.
The Company has a $400,000 revolving line of credit with a major
bank, secured by substantially all of the assets of the Company.
Management believes that the revenues being generated from operations,
short-term lines of credit and the proceeds from the sale of common
stock in anticipated Private Placements will provide sufficient
liquidity to meet the Company's working capital needs for the
remainder of this fiscal year ending December 31, 2001.
Seasonality
The Company's products are a primarily used for outdoors projects
and such demand for these products is significantly reduced during
the winter season for those parts of the country that experience bad
weather.
Revenue Recognition
Revenue from equipment sales is recognized when equipment is shipped.
Shipments on a consignment or demonstration basis are carried in
inventory until such items are sold.
Inflation
Inflation has not had a significant impact on the Company's operations
to date.
Forward Looking Statements
This Form 10-QSB contains statements, which are not historical facts.
These statements may constitute "forward-looking statements" within
the meaning of the Securities Act of 1933 and the Securities and
Exchange Act of 1934 as amended. Certain, but not necessarily all,
of such forward looking statements can be identified by the use of
such words as "believes", "expects", "may", "will", "should", or
"anticipates" or the negative thereof or other variations thereon of
similar terminology, and/or which include, without limitation,
statements regarding the following: adequacy of the funding to
operate the Company; plans for raising capital; market expectation
for the Company's products and the related anticipated sales growth;
changes in the marketplace including mergers, acquisitions and
partnerships; implementation of the sales and marketing plan;
economic and competitive factors affecting market growth; and
discussions of strategies involving risk and uncertainties that
reflect management's current views These statements are based on
many assumptions and factors and may involve risks and
uncertainties. The actual results of the Company
or industry results may be materially different from any future
results expressed or implied by such forward looking statements
because of factors such as insufficient capital resources to operate
the Company; inability to successfully market and sell the Company's
products; changes in the marketplace including variations in the
demand for the Company's products and consolidation via
partnership; mergers, and acquisitions,' and changes in the economic
and competitive environment.These factors and other information
contained in this Form 10 Q could cause such views, assumptions
and factors and the Company's results of operations to be materially
different.
Part II - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
C. Sales of Securities
None
Item 3 - Defaults Upon Senior Securities
Not applicable
Item 4 - Submission of Matters to a vote of Security Holders
None
Item 5 - Other Information
Not applicable
Item 6 - Exhibits and Reports on Form 8-K
a. Exhibits
None
b. Reports on form 8-K
None
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.
GERD REINIG
BY: Gerd Reinig, Chairman of the Board
GERALD MCNAMARA
BY: Gerald McNamara, President
Dated: