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, 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 September 30, 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
September 30, 2001 and December 31, 2000
Consolidated Balance Sheets
Consolidated Statements of Operations
for the six and nine months ended September
30, 2001 and 2000
Consolidated Statements of Cash Flows
for the nine months ended September 30,
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
Sep 30, 2001 Dec 31,2000
Current assets
Cash $ 2,206 $4,600
Accounts receivable, net of allowance for
doubtful accounts of $25, 635 and $41,836 225,919 181,733
Inventory, net of reserves of $32,800 352,004 471,865
Prepaid expenses and other current assets 3,062 4,918
583,191 663,116
Property and equipment, net 104,467 143,361
Other assets
Intellectual property, patents and goodwill,
net of accumulated amortization of $27,139
and $22,973 in 2000 350,469 358,802
Cash surrender value of life insurance,
net of loans 530 26,453
350,999 385,255
Total assets $1,038,656 $1,191,732
Liabilities and Stockholders' Equity
Current liabilities
Bank line of credit $400,000 $400,000
Current portion of long-term debt 15,714 43,530
Note payable, stockholder 130,000 130,000
Accounts payable 271,090 234,995
Due to related parties 295,005 226,645
Accrued expenses and other current
liabilities 121,920 76,549
1,233,728 1,111,719
Long-term debt, net of current portion 7,641 7,641
1,241,369 1,119,360
Commitments and contingencies
Stockholders' equity (202,713) 72,372
Total liabilities and stockholders'
equity $1,038,656 $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 For the six months
ended Sep 30 ended Sep 30
Unaudited Unaudited Unaudited Unaudited
2001 2000 2001 2000
Net sales $407,907 $494,106 $1,157,051 $1,872,301
Cost of goods sold 260,510 374,005 761,066 1,151,211
Gross profit 147,397 120,101 395,985 721,090
Operating expenses
Advertising 641 21,966 (214) 29,083
Selling, general, and
administrative 246,845 107,029 626,533 532,737
247,486 128,995 626,319 561,820
Income(loss) from
operations (100,089) (8,894) (230,334) 159,270
Other income (expense)
Interest expense (12,045) (19,033) ( 44,726) (51,115)
Miscellaneous income 0 0 0 0
(2,045) ( 19,033) (44,726) (51,115)
Net Income (loss) $(88,044) $ (27,927) $(275,060) $108,155
Loss per common share $ (0.01) $ (0.00) $ (0.04) $0.01
Weighted average number
of shares outstanding 7,731,932 7,731,932 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 Nine Months Ended Sep 30
Unaudited Unaudited
2001 2000
Cash flows from operating activities
Net income (loss) $(275,060) $108,155
Adjustments to reconcile net income (loss)
to net cash provided by (used for)
operating activities:
Depreciation and amortization 47,227 37,981
(Increase) decrease in:
Accounts receivable (44,186) 58,236
Inventory 119,861 (35,435)
Prepaid expenses and other
current assets 1,831 (5,999)
Increase (decrease) in:
Accounts payable and accrued
Liabilities 81,466 (107,834)
Due to related parties 68,360 (71,562)
Net cash provided by (used for)
operating activities (501) (16,458)
Cash flows from investing activities
Purchases of property and equipment 0 22,428
Change in cash surrender value of
life insurance 25,923 0
Net cash provided by investing activities 25,923 23,272
Cash flows from financing activities
Proceeds from long-term debt
Repayments of long-term debt 27,816 26,038
Net cash provided by(used for)
financing activities 27,816 26,038
Increase (decrease) in cash (2,394) 32,008
Cash-beginning 4,600 22,919
Cash-ending $ 2,206 $ 54,927
Supplemental disclosure of
cash flows information
Cash paid for interest $ 44,726 $ 51,115
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 presen-
- -tation have been included. Operating results of the three and six
month periods ended September 30, 2001 are not necessarily indicative
of the results that may be expected for the year ending December 31,
2001.
The accompanying interim financial statements for the period ended
September 30, 2001 have not been reviewed by an independent public
accountant in accordance with Statement on Auditing Standards No.71.
(NOTE B) NATURE OF OPERATIONS
Teletrak Advanced Environmental Systems, 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
September 30 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 September 30, 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 September 30, 2001
and December 31, 2000 $ 7,694 $ 7,694
Additional Paid-In Capital 1,516,434 1,516,434
Accumulated Deficit (1,638,798) (1,451,756)
Total Stockholders' Equity $ (114,670) $ 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 September 30, 2001 vs. three months ended September
30,2000.
For the quarter ended September 30, 2001, the company shows a loss in the
amount of($88,044) as compared to income of $27,927 for the same
period last year.This translates to a loss per common share of $(.01)
as compared to income of $.00 for the same period last year.
The Company recognized sales in the amount of $407,907 for the three
months ended September 30, 2001 as compared to $494,106 for the same
period last year.
The decrease in revenues and the resulting increase in net loss was
caused by lack of sales.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.
Six months ended September 30, 2001 vs. six months ended September
30,2000.
For the nine months ended September 30, 2001, the company shows a
loss in the amount of (275,060) as compared to income of $108,155
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 years.
The company recognized sales in the amount of $1,157,051 for nine
months ended September 30,2001 as compared to $1,872,301 for the
same period last year.
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,
shortterm 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 QSB 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: