SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-QSB/A
Quarterly Report Under Section 13 or 15(b)
of the Securities Exchange Act of 1934
For Quarter Ended: March 31, 2002
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 March 31, 2002, there were 7,713,182 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, 2002 and December 31, 2001
Consolidated Balance Sheets
Consolidated Statements of Operations
for the three months ended March 31, 2002
and 2001
Consolidated Statements of Cash Flows
for the three months ended March 31, 2002
and 2001.
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 Sheets
Unaudited Audited
March 31, December 31,
2002 2001
Current assets
Cash 7,600 7,994
Accounts receivable,
net of allowance for
doubtful accounts of $14,084 134,291 153,225
Inventory,
net of reserves of $148,708 151,710 173,860
Prepaid expenses and
other current assets 16,718 10,242
------- -------
310,319 345,321
------- -------
Property and equipment, net 76,078 90,043
------ ------
Other assets
Cash surrender value of life
insurance, net of loans 7,944 16,059
Goodwill, net of accumulated
amortization of $35,473
and $35,473 in 2001 346,302 346,302
------- -------
Total assets 740,643 797,725
======= =======
Liabilities and Stockholders' Deficit
Current liabilities
Bank line of credit 370,000 400,000
Note payable, stockholder 130,000 130,000
Accounts payable 291,687 273,438
Due to related parties 470,174 397,040
Accrued expenses and
other current liabilities 78,640 80,459
--------- ---------
1,340,501 1,280,937
Commitments and contingencies
Stockholders' deficit (599,858) (483,212)
--------- ---------
Total liabilities and
stockholders' deficit $740,643 $797,725
======== ========
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
2002 2001
Net sales $207,638 $388,125
Cost of goods sold 147,150 239,210
------- -------
Gross profit 60,488 148,915
------- -------
Operating expenses
Selling, general,
and administrative 167,898 195,554
------- -------
167,898 195,554
------- -------
Loss from operations (107,410) (46,639)
------- -------
Other income (expense)
Gain on sale of fixed asset 1,000 -
Interest expense (10,236) (18,508)
------- -------
Net Loss $(116,646) $(65,147)
------- -------
Loss per common share $(0.02) $(0.01)
------ ------
Weighted average number
of shares outstanding 7,713,182 7,713,182
========= =========
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
2002 2001
Cash flows from operating
activities
Net loss $(116,646) $(65,147)
Adjustments to reconcile
net loss to net cash
provided by (used for)
operating activities:
Depreciation and amortization 12,965 16,091
Gain on sale of fixed asset 1,000 -
(Increase) decrease in:
Accounts receivable 18,934 (87,435)
Inventory 22,150 63,007
Prepaid expenses
and other current assets (6,476) (12,456)
Increase (decrease) in:
Accounts payable
and accrued liabilities 16,430 71,973
Due to related parties 73,134 36,235
Net cash provided by ------ ------
operating activities 21,491 22,268
Cash flows from investing activities
Change in cash surrender value
of life insurance 8,115 11,518
Net cash provided by ------ ------
investing activities 8,115 11,518
------ ------
Cash flows from financing activities
Repayments of long-term debt (30,000) (14,345)
Net cash used for ------ ------
financing activities (30,000) (14,345)
------ ------
(Decrease) Increase in cash (394) 19,441
Cash-beginning 7,994 4,600
------ ------
Cash-ending $7,600 $24,041
====== =======
Supplemental disclosure of
cash flows information
Cash paid for interest $6,336 $18,483
====== ======
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 generallyaccepted
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, 2002 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2002.
(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, 2002. 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 2002 and 2001, 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 anti-dilutive.
[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 2002 2001
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, 2002
or December 31, 2001. 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 7,713,182 shares
issued and outstanding at March 31,
2002 and December 31, 2001 $7,694 $7,694
Additional Paid-In Capital 1,516,434 1,516,434
Accumulated Deficit ( 2,123,986) (2,007,340)
Total Stockholders' Equity $ (599,858) $ (483,212)
[4] Recent Accounting Pronouncements
In July 2001, the Financial Acounting Standards Board ("FASB") issued
SFAS No. 141, "Accounting for Business Combinations," and SFAS
No. 142, "Goodwill and Other Intangible Assets." These statements
modify accounting for business combinations after June 30, 2001 and
will affect the Company's treatment of goodwill and other intangible
assets during 2002. The statements require that goodwill be reviewed
for possible impairment. The Company does not expect the adoption of
this statement to result in significant impairment changes or to have
a material impact on its results of operations.
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The
Company does not expect the adoption of this statement to have a
material impact on its results of operations.
In August 2001, the FASB issued SFAS No. 144,"Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS 144 addresses
financial accounting and reporting for the impairment or disposal of
long-lived assets. The Company does not expect the adoption of this
statement to have a material impact on its results of operations.
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, 2002 vs. three months ended March 31,
2001. For the quarter ended March 31, 2002, the company shows a
loss in the amount of ($116,646) as compared to a loss of $(65,147)
for the same period last year. This translates to a loss per common
share of $.02 as compared to a loss of $.01 for the same period last
year.
The decrease in revenues and earnings for the period ended March 31,
2002 were the result of decreased demand for remediation equipment
since September 2001, as work on bridges and nuclear power plants was
largely halted for several months.
The Company recognized sales in the amount of $207,638 for the three
months ended March 31, 2002 as compared to $388,125 for the same period
last year.
Liquidity & Capital Resources
The Company has a working capital deficit of $(1,030,182) at March 31,
2002 compared to $(935,616) at December 31, 2001.
The Company has a $370,000 revolving line of credit with a major bank,
secured by substantially all of the assets of the Company. At December
31, 2000, the line of credit expired and was not renewed. The Company
is in the process of obtaining a forbearance on this line until September
30, 2002.
The Company does not have any material commitments for capital
expenditures as of the filing of this report.
Management believes that the revenues being generated from operations
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, 2002.
...
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. Revenue from equipment rental
is recognized as the services are rendered.
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
The Company has a total of 8 court actions against it's wholly-owned
subsidiary, AES, for non-payment of debts totaling $38,051.The
Company is currently negotiating settlement of these debts with the
creditors involved.
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: