United States Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB/A
Amendment No. 1
(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, 2001.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from ____________ to ___________
Commission file number : 0-29509
Environmental Oil Processing Technology Corporation
----------------------------------------------------
(Exact name of business issuer in its charter)
Utah 82-0520055
- ------------------------------ ------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2801 Brandt Avenue, Nampa, Idaho 83687
- ---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (208)-463-0063 Fax: (208) 463-7601
- ------------------------------------------------------ --------------------
- --------------------------------------------------------------------------------
(Former Address)
The number of shares of common stock outstanding as of September 30, 2001, is
73,520,116.
Transitional Small Business Disclosure Format. Yes , No X .
--- ---
1
The following items were the subject of a
Form 12b-25 and are included herein: Item 1.,
"Financial Statements" and Item 2., "Manage-
ment's Discussion and Plan of Operation".
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The following financial statements are filed as part of this report:
The Consolidated Financial Statements of the Company for the three
months and nine months ended September 30, 2001, reviewed by HJ & Associates,
certified public accountants.
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001 and December 31, 2000
2
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
ASSETS
------
September 30, December 31,
2001 2000
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash $ 18,654 $ 273,215
Trade accounts receivable, less allowance for
doubtful accounts of $10,000 and $23,000,
respectively 161,393 403,998
Inventories 119,266 13,548
Loan proceeds 4,500,000 --
Other current assets 75,836 105,264
------------ ------------
Total Current Assets 4,875,149 796,025
------------ ------------
PROPERTY, PLANT AND EQUIPMENT 2,735,700 2,332,146
Less accumulated depreciation (208,556) (293,439)
------------ ------------
Property, Plant and Equipment, Net 2,527,144 2,038,707
------------ ------------
OTHER ASSETS
Construction in progress 5,416,839 --
Deposits 40 40
Goodwill, net -- 2,929,786
Net assets in excess of liabilities
of discontinued operations (Note 3) -- --
------------ ------------
Total Other Assets 5,416,879 2,929,826
------------ ------------
TOTAL ASSETS $ 12,819,172 $ 5,764,558
============ ============
The accompanying notes are an integral part of
these consolidated financial statements.
3
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
September 30, December 31,
2001 2000
------------ ------------
(Unaudited)
CURRENT LIABILITIES
Current portion of notes payable $ 10,500,000 $ 81,731
Accounts payable 1,180,077 136,544
Accrued expenses 828,276 534,740
Line of credit -- 387,367
Notes payable - related parties 237,490 239,838
Deferred revenue -- 135
Total Current Liabilities 12,745,843 1,380,355
------------ ------------
LONG-TERM DEBT
Notes payable - related parties -- 632,000
Notes payable -- 64,108
------------ ------------
Total Long-Term Debt -- 696,108
------------ ------------
Total Liabilities 12,745,843 2,076,463
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, no par value; 200,000,000
shares authorized; 73,520,116 and 72,020,116
shares issued and outstanding, respectively 22,420,211 12,943,211
Accumulated deficit (22,346,882) (9,255,116)
Total Stockholders' Equity 73,329 3,688,095
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 12,819,172 $ 5,764,558
============ ============
The accompanying notes are an integral part of
these consolidated financial statements.
4
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
For the For the
Nine Months Ended Three Months Ended
September 30, September 30,
2001 2000 2001 2000
---------- ---------- ---------- ----------
NET SALES $ 877,564 $ 844,096 $ 427,983 $ 291,568
COST OF GOODS SOLD 166,805 -- 50,138 --
---------- ---------- ---------- ----------
GROSS MARGIN 710,759 844,096 377,845 291,568
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 11,191,065 2,167,079 499,182 924,787
---------- ---------- ---------- ----------
LOSS FROM OPERATIONS 10,480,306 (1,322,983) (121,337) (633,219)
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE)
Interest expense (41,254) (29,246) (7,212) --
Interest income 9,394 11,146 850 10
---------- ---------- ---------- ----------
Total Other Income (Expense) (31,860) (18,100) (6,362) 10
---------- ---------- ---------- ----------
INCOME TAX EXPENSE -- -- -- --
---------- ---------- ---------- ----------
LOSS FROM CONTINUING
OPERATIONS (10,512,166) (1,341,083) (127,699) (633,209)
LOSS FROM DISCONTINUED
OPERATIONS (Note 3) (2,579,600) (742,432) (3,046,968) (285,376)
---------- ---------- ---------- ----------
NET LOSS $(13,091,766) $ (2,083,515) $ (3,174,667) $ (918,585)
BASIC LOSS PER SHARE
Loss from continuing operations $ (0.14) $ (0.02) $ (0.00) $ (0.01)
Loss from discontinued operations (0.04) (0.01) (0.04) (0.00)
---------- ---------- ---------- ----------
Basic loss per share $ (0.18) $ (0.03) $ (0.04) $ (0.01)
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 73,404,731 70,518,670 73,520,116 70,518,670
========== ========== ========== ==========
The accompanying notes are an integral part of
these consolidated financial statements.
5
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Additional Total
Common Stock Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Equity
----------- ----------- ----------- ------------ -----------
Balance,
December 31, 1999 69,683,870 $11,443,277 $ (400,000) $( 7,296,319) $ 3,746,958
Performance on stock
subscription -- -- 400,000 -- 400,000
Fractional shares issued 116 -- -- -- --
Common stock issued for cash 2,106,130 1,090,000 -- -- 1,090,000
Common stock issued for services 230,000 230,000 -- -- 230,000
Forgiveness of note payable as
contribution of capital -- 179,934 -- -- 179,934
Net loss for the year ended
December 31, 2000 -- -- -- (1,958,797) (1,958,797)
----------- ----------- ----------- ------------ -----------
Balance, December 31, 2000 72,020,116 12,943,211 -- (9,255,116) 3,688,095
Common stock issued for services
(unaudited) 1,500,000 9,477,000 -- -- 9,477,000
Net loss for the nine months ended
September 30, 2001 (unaudited) -- -- -- (13,091,766) (13,091,766)
----------- ----------- ----------- ------------ -----------
Balance, September 30, 2001
(unaudited) 73,520,116 $22,420,211 $ -- $(22,346,882) $ 73,329
=========== =========== =========== ============ ===========
The accompanying notes are an integral part of
these consolidated financial statements.
6
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
For the
Nine Months Ended
September 30,
2001 2000
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (13,091,766) $ (2,083,515)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 244,260 596,225
Loss on impairment of goodwill 2,752,222 --
Loss on impairment of net assets in excess
of liabilities of Project Development Industries 294,746 --
Common stock issued for services 9,477,000 --
Changes in operating assets and liabilities:
Accounts receivable (388,229) 152,177
Inventories (105,718) (4,035)
Other assets 8,611 (2,253)
Accounts payable and accrued expenses 1,526,773 13,115
------------- -------------
Net Cash Provided (Used) by Operating Activities 717,899 (1,328,286)
------------- -------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Cash forfeited in disposal of Project Development Industries (37,932) --
Construction in progress (5,416,839) --
Capital expenditures (587,973) (133,028)
------------- -------------
Net Cash (Used) by Investing Activities (6,042,744) (133,028)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock -- 1,103,999
Borrowings from notes payable - related parties 94,990 797,435
Payments on notes payable - related parties (491,500) --
Proceeds from notes payable 6,000,000 --
Payments on notes payable (533,206) (23,464)
------------- -------------
Net Cash Provided by Financing Activities 5,070,284 1,877,970
------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS (254,561) 416,656
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 273,215 193,007
------------- -------------
CASH AND EQUIVALENTS, END OF PERIOD $ 18,654 $ 609,663
============= =============
The accompanying notes are an integral part of
these consolidated financial statements.
7
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the
Nine Months Ended
September 30,
2001 2000
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ n41,254 $ 43,869
Cash paid for taxes $ - - $ --
SUPPLEMENTAL DISCLOSURE OF
NON-CASH FINANCING ACTIVITIES:
Year ended December 31, 2000:
The President of the Company forgave a $179,934 note payable to him as a
contribution of capital to the Company.
The accompanying notes are an integral part of
these consolidated financial statements.
8
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2001 and December 31, 2000
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared by the Company without audit. In the opinion of
management, all adjustments which include only normal recurring
adjustments necessary to present fairly the financial position,
results of operations and cash flows at September 30, 2001 and
2000 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. It is suggested that these condensed consolidated
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December
31, 200 audited consolidated financial statements. The results of
operations for the periods ended September 30, 2001 and 2000 are
not necessarily indicative of the operating results for the full
years.
NOTE 2 - MATERIAL EVENTS
On September 14, 2001, Project Development Industries, L.L.C.
(PDI), the Company's wholly-owned subsidiary, and several
individuals filed a federal district court complaint against the
Company, in the United States District Court of Colorado, Case No.
EDCV 01WM-1714. PDI seeks declaratory judgment, injunction, breach
of Services Contract and unjust enrichment. In particular, in
August 1999, the Company and PDI entered into a certain Share
Purchase Agreement that was subsequently amended. PDI seeks the
Court to declare the legal meaning and effect of certain
provisions of that Agreement, more particularly, whether PDI can
rescind the Agreement, receive its Membership Interest Certificate
back and retain 7 million shares of the Company's stock. As to the
other claims, PDI seeks an unstated amount of money damages for
damages it allegedly incurred by the Company's alleged breach of a
Services Contract Agreement. The Company has until December 7,
2001, to answer or otherwise plead to the complaint. The Company
has defenses and counterclaims available to it against PDI, which
the Company will actively pursue and which will be presented when
it files its Answer and Counterclaim in this case. PDI has sought
a jury trial. In addition to the underlying causes of action, PDI
is seeking attorneys' fees and costs of litigation. The amounts
sought are uncertain.
On September 24, 2001, the Company filed a federal district court
complaint against LM Alternative, Inc., ("LMA"), in the United
States District Court, Central District of California, Eastern
Division, Case No. EDCV 01-0699 VAP (SGLx). The Company seeks a
money judgment against LMA as prayed for in the Compliant. The
Complaint was served on LMA on Friday, September 28, 2001. At the
request of the attorney for LMA, LMA was granted an enlargement of
time within which to file its Answer to the Complaint. It is
anticipated that in addition to filing an Answer denying the
Company's claims, LMA will file a Counterclaim seeking money
damages against the Company for breach of contract. Most recently,
the parties began a process of establishing a mediation schedule
and informal exchange of discovery with a view towards a mutual
settlement of their opposing claims. The Company is unable to
comment on the probability of a mutual settlement. If the parties
are unable to settle this matter, then LMA will file its Answer to
the Complaint and any Counterclaim it may have against the Company
and the case will proceed to trial. The respective claims of the
Company against LMA and the amount of damages sought are set forth
in the Company's Complaint.
9
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2001 and December 31, 2000
NOTE 3 - DISCONTINUED OPERATIONS
On September 14, 2001, Project Development Industries, LLC (PDI),
the Company's wholly- owned subsidiary, and several individuals
filed a complaint in a federal district court (see Note 2).
Because it is not possible to evaluate the likelihood of an
unfavorable outcome or estimate the extent of potential loss, the
Company has accounted for the operations of PDI as discontinued
and has used PDI's financial statements as of the previous quarter
at June 30, 2001. At June 30, 2001, PDI had net assets in excess
of liabilities of $294,746. An allowance has been established for
the net assets in excess of liabilities of PDI, thus, the value of
the net assets of PDI at September 30, 2001 was $-0-. The
following is a summary of loss from discontinued operations
resulting from the litigation between PDI and the Company. The
consolidated financial statements have been retroactively restated
to reflect this event. However, if the outcome of the litigation
is favorable to the Company and the discontinued operations of PDI
are subsequently retained, the Company will reverse the loss
previously accrued in connection with the accounting for PDI as
discontinued operations.
For the For the
Nine Months Ended Three Months Ended
September 30, September 30,
2001 2000 2001 2000
---------------- --------------- --------------- ----------------
NET SALES $ 2,026,190 $ 2,213,818 $ - $ 373,084
COST OF SALES - - - -
---------------- --------------- --------------- ----------------
GROSS MARGIN 2,026,190 2,213,818 - 373,084
SELLING, GENERAL AND
ADMINISTRATIVE 1,532,538 2,956,266 - 658,466
---------------- --------------- --------------- ----------------
LOSS FROM OPERATIONS 493,652 (742,448) - (285,382)
OTHER INCOME (EXPENSE)
Interest expense (26,287) - - -
Interest income 3 16 - 6
Loss on impairment of goodwill (2,752,222) - (2,752,222) -
Loss on impairment of net assets
in excess of liabilities of Project
Development Industries (294,746) - (294,746) -
---------------- --------------- --------------- ----------------
Total Other Income (Expense) (3,073,252) 16 (3,046,968) 6
---------------- --------------- --------------- ----------------
INCOME TAX EXPENSE - - - -
---------------- --------------- --------------- ----------------
LOSS FROM DISCONTINUED
OPERATIONS $ (2,579,600) $ (742,432) $ (3,046,968) $ (285,376)
================ =============== ================ ===============
10
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2001 and December 31, 2000
NOTE 4 - SUBSEQUENT EVENTS
Subsequent to September 30, 2001, the Company received the last of
the required Federal and State permits and approvals for
construction and operation of an electrical production facility on
the Reno Project. The Company has decided to not pursue the
production of electricity at this time on the Reno Project, and is
presently considering the sale of that portion of the Reno Project
real property allocated to the production of electricity, which
consists of approximately five acres.
On October 3, 2001, the Company entered into a contract with PC&E
as a division of Emerson (formerly Emerson Electric) for the
design, fabrication, installation and start up of two oil
processing plants for the Reno Project. The total amount of the
contract shall not exceed $300,000 with monthly payments made as
work is performed.
On October 16, 2001, the Company entered into a contract with REDD
Engineering for the engineering and fabrication of three new
columns designed for the production of diesel and naptha which are
to be used in the Nampa plant and the two Reno Project plants, and
for the redesign of the Nampa plant existing column for processing
trans-mix as well as for a new column for processing trans-mix in
one of the Reno Project Plants.
On November 9, 2001, the Company received the remaining $4,500,000
of the $10,500,000 loan from a trust fund for proceeding with the
Reno Project. A portion of the proceeds was used to close the
escrow account for the purchase of approximately 20.6 acres in the
Reno Project.
11
Item 2. Management's Discussion and Plan of Operation:
Results of Operations:
During the first nine months of 2001 the Company focused its activities
on developing its used oil refinery operations through its Reno Project which
will be operated by its wholly owned subsidiary EOPT Power Group - Nevada, Inc.
The Company has acquired a 20 acre industrial site with plans to construct two
refining plants. Originally EOPT had planned to enter the business of
co-generation of electrical power. The economics of co-generation of electrical
power have substantially changed therefor the Company has decided to abandon
this area of business. Fabrication of the refining plants is tentatively
scheduled for completion in the latter part of 2002. To facilitate the gathering
of used oil for the Reno Project, the Company acquired the assets of Artesian
Oil Recovery, Inc. in Oakland, California during the second quarter of 2001 for
the sum of $485,000. Pending the completion of the refineries in the Reno
Project, the used oil is being trucked to Nampa for processing.
The pilot refining plant in Nampa became fully operational in the
second quarter of 2001. The plant production meets specifications for diesel,
naphtha and residuum for asphalt and the Company is selling all of its
production to local wholesalers. With the oil gathered by Artesian Oil Recovery,
the Company has sources for sufficient feed oil to supply the Nampa plant
requirements.
During August the officers of PDI elected to withdraw from their merger
with the Company. At the present time the Company is in litigation with PDI over
the settlement of this matter. Accordingly, for the present time, the financial
statements have been restated for PDI's discontinued operations pending the
resolution of the litigation.
Operations in the third quarter of 2001 resulted in consolidated
revenues of $427,983 compared to $291,568 in the third quarter of 2000.
Consolidated revenues increased by $136,415 from the third quarter of 2000. The
Company had costs of sales of $50,138 during the three months ended September
30, 2001. These costs are for the used oil purchased, processed and sold at the
Nampa, Idaho and Artesian facilities beginning in 2001. EOPT's gross margin was
88% of sales. During 2000 the Company was not buying used oil therefore there
was no related cost of sales. During this time the Company was gathering waste
oil at minimal cost.
Selling, general administrative expense for the three months ended
September 30, 2001, was $499,182 compared to $924,787 for the same period last
12
year The decrease is due to the reduction in labor cost due to the completion of
the refinery in Nampa.
EOPT refines used oil into diesel fuel, and other petroleum
products. These products have a higher sales price than used oil alone, which
can only be used as burner fuel or road base.
Consolidated revenues in the first nine months of 2001 were $877,564
compared to $844,096 in the first nine months of 2000.
The Company's business is labor intensive and its largest expense is
payroll. Included in selling, general administrative expenses for the nine
months ended September 30, 2001, is $9,477,000 which is the value of the
1,500,000 shares of common stock issued for services during January 2001.
6,564,999 shares were originally issued to a consultant for services to be
rendered to the Company, however, the Company cancelled 5,364,999 shares by
agreement with the consultant. The balance of the shares were left with the
consultant for services rendered to that point. Without the value of the shares
issued to the consultant, selling, general administrative expense fo the nine
months of 2001 would have decreased by $453,014 compared to the same nine months
of 2000. The decrease is due to the completion of the development of the Nampa,
Idaho facility.
The Company's cost cutting efforts and the Nampa facility going into
production have combined to decrease its net loss from operations from $633,209
in the three months ended September 30, 2000, to $127, 699 in the same period of
2001. Excluding the value of the shares issued to the consultant in January
2001, the Company's loss for the first nine months of 2001 would have been
$1,035,166 compared to $1,341,083 for the first nine months of 2000. The Company
expects its loss to decline even further in the fourth quarter of 2001 with a
full six months of operations in Nampa and the Artesian Oil Recovery Company.
The Reno facility is not expected to contribute to operations results until the
fourth quarter of 2002.
Liquidity and Capital Resources.
The Company entered into a funding agreement with a trust fund to
borrow $10,500,000 for the development and expansion of the Company business.
Some of these funds were expended for the electrical production facility in the
Reno Project, which is currently in litigation for recovery of unused funds.
Some of the loan funds have been used to purchase the real property for the Reno
Project, and the permitting of some of the property for electrical production.
The Company received net loan proceeds of $6,000,000 in the first nine months of
2001, $500,000 in October, and the remaining $4,000,000 was received in
November. Through September 30, 2001, the Company has incurred $5,416,839 for
the cost of the Reno Project. The terms of the funding require the Company to
repay the full amount borrowed in one year from the date funds were first
received. The Company will need to consider other financing to repay the
obligation in a timely manner.
As reported above, the Company issued a net of 1,500,000 shares of its
common stock for services rendered to consultants. The shares were valued at the
trading price of the shares of the date of issue. The total value of the shares
issued for the consulting services was $9,477,000.
The Company generated cash from operations of $717,899 during the nine
months ended September 30, 2001, compared to using cash in operations of
$1,328,286 for the corresponding period in the prior year.
It is management's intent to raise additional capital, through debt
and/or equity financing. There is no assurance that such funds will be available
or that the terms for such funds will be acceptable to the Company.
The Company's accounts receivable increased by $388,229 from December
31, 2000, to September 30, 2001. The increase was the result of the Company's
expanded oil gathering business with the purchase of Artesian Oil Recovery. The
13
Company has also begun to accumulate used oil for processing in the Nampa
facility therefore inventory levels increased by $105,718 in the same period.
The Company paid $533,206 of debt to banks. Accrued expenses increased
by $293,536 primarily due to the interest accrued on the trust fund loans in the
amount of $181,479. This interest has been capitalized in the cost of the Reno
Project. Accounts payable increased by $1,043,533 due to the construction of the
Reno facility.
The Company has recorded a loss from discontinued operations in the
amount of $2,579,600 related to the PDI separation. $2,752,222 of the loss
relates to the write-off of PDI goodwill.
The Company is presently investigating, reviewing and considering
additional used oil gathering facilities as well as seeking additional financing
to acquire same. No agreements have been formalized as of this time.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Project Development Industries, L.L.C., ("PDI") and several individuals
(prior owners of PDI) filed a federal district court complaint against EOPT on
September 14, 2001, in the United States District Court of Colorado, Case No.
EDCV 01 WM-1714 in which Plaintiffs seek declaratory judgement, injunction,
breach of Services Contract and unjust Enrichment. In particular, in August of
1999, EOPT and Plaintiffs entered into a certain Share Purchase Agreement that
was subsequently amended. Plaintiffs seek the Court to declare the legal meaning
and effect of certain provisions of that Agreement, more particularly, whether
Plaintiffs can rescind the Agreement, receive back the ownership of PDI and
retain 7 million shares of EOPT stock issued for the purchase of PDI. As to
other claims, Plaintiffs seek (a) an unstated amount of money for damages they
allegedly incurred by EOPT's alleged breach of Services Contract Agreement and
(b) attorney fees and costs of litigation. EOPT has defenses and counterclaims
which EOPT intends to actively pursue. EOPT has until December 7, 2001, to
answer or otherwise plead to the complaint.
On September 24, 2001, EOPT filed a complaint against LM Alternative,
Inc. ("LMA") in the United States District Curt, Central District of California,
Eastern Division, Case No. EDCV 01-0699 VAP (SGLx). EOPT seeks a money judgement
against LMA. EOPT anticipates that in addition to filing an Answer denying
EOPT's claims, LMA will file a Counterclaim seeking money damages against EOPT
for breach of contract. The case arises as a result of orders placed by EOPT for
electrical generators, and the alleged default by LMA. The parties have
commenced a mediation schedule and informal exchange of discovery with a view
towards a mutual settlement of their opposing claims. If the mediation is
unsuccessful, LMA will file its responsive pleadings and the case will proceed
to trial.
Item 2. Changes in Securities. None
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None
14
Item 5. Other Information.
On October 3, 2001, EOPT entered into a contract with PC&E as a
division of Emerson (formerly Emerson Electric) for the design, fabrication,
installation and start up of two oil processing plants for the Reno Project. The
engineering of the plants is currently in progress and EOPT is currently
negotiating with different sources for the funding of the fabrication of the
plants. In addition on October 16, 2001, EOPT signed a contract with REDD
Engineering for the engineering and fabrication of three new columns designed
for production of diesel and naphtha which are to be used in the Nampa plant and
the two Reno Project plants, and for a redesign of the Nampa plant's existing
column for processing trans-mix as well as for a new column for processing
trans-mix in one of the Reno Project plants. .
EOPT recently received the last of the required Federal and State
permits and approvals for construction and operation of an electrical production
facility on the Reno Project. These permits are the Federal Energy Regulatory
Commission's ("FERC") authorization to sell energy at market based rates, the
Nevada Public Utility Commission Utility Environmental Planning Act Permit, the
State of Nevada Department of Conservation and Natural Resources Air Quality
operating Permit, and the Storey County Special Use Permit. EVOP has decided to
not pursue the production of electricity at this time on the Reno Project, and
is presently considering the sale of that portion of the Reno Project real
property allocated to the production of electricity, which consists of
approximately 5 acres of the project. The EOPT property is near the entrance to
the Tahoe-Reno Industrial Center, one of the largest industrial zoned
developments in the United States.
On Friday November 9, 2001, EOPT received the remaining $4.5 Million
dollars of the $10.5 Million dollar loan from a trust fund for the proceeding
with the Reno Project. With some of the funding, EOPT closed the escrow for the
purchase of approximately 20.6 acres of property in the Tahoe-Reno Industrial
Park. The development and completion of the two oil processing plants for the
Reno Project is scheduled for completion in the latter part of 2002.
Statements in this report that are not strictly historical are
forward-looking statements. The Company makes these statements based on
information available to it as of the date of this report and it assumes no
responsibility to update or revise such forward-looking statements. Editors and
investors are cautioned that such forward-looking statements involve risk and
uncertainties that may cause the Company's actual results to differ materially
from such forward- looking statements.
Item 6. Exhibits and Reports on form 8-K.
(a) No exhibits except as attached to the 8K/A report following.
(b) Exhibit 99.1: Form 8-K-A dated August 28, 01 together with
Exhibit 99.1 attached thereto, both of which are attached
hereto.
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SIGNATURES
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In accordance with requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Environmental Oil Processing Technology Corporation
(Registrant)
Date: November 19, 2001 By /s/ N. Tod Tripple
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N. Tod Tripple, President and CEO
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