SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Six Months Ended June 30, 1998
Commission file number : 2 - 85175W
ELECTRO-KINETIC SYSTEMS, INC.
(Name of small business issuer in its charter)
PENNSYLVANIA 22-1954716
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
270 Rocky Run Road, Glen Gardner, New Jersey 08826
(Address of principal executive offices) (Zip code)
Issuer's telephone number 908-537-4378
Securities resistered pursuant to section 12 (b) of the Act: None
Securities resistered pursuant to section 12 (g) of the Act:
Class A common Stock
(Title of class)
Check whether issuer (1) has filed all reports required to be filed by
Section 13 or 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
Number of shares of Class A Common Stock, no par value, issued as of
June 30, 1998: 30,166,069 (Common Stock outstanding 20,431,069 and to be issued
9,375,000)
Transitional Small Business Disclosure Format
Yes No X
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
June 30, December 31,
1998 1997
Current assets:
Cash $ 487 1,505
Equipment held for sale 9,000 9,000
Total current assets 9,487 10,505
Other assets:
Excess of cost over net assets acquired,
less accumulated amortization 15,246 16,176
Investment and advances to 50% owned
affiliate 1 110,939
Organization costs 300 300
Total other assets 15,547 127,415
Total assets $25,034 137,920
F-1
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
LIABILITIES AND STOCKHOLDER'S EQUITY
June 30, December 31,
1998 1997
Current liabilities:
Accounts payable $ 64,794 63,583
Accrued expenses 22,654 21,254
Notes payable 47,914 46,614
Due to officers 70,915 65,781
Total current liabilities 206,277 197,232
Stockholders' equity:
Class "A" common shares, no par value;
authorized - 90,000,000 shares; issued
and to be issued - 30,166,069 in 1997
and 28,086,098 in 1996 3,441,308 3,441,308
Additional paid-in-capital 52,293 52,293
Deficit (3,674,844) (3,552,913)
Total stockholders' equity (181,243) (59,312)
Total liabilities and stockholders' equity $ 25,034 137,920
F-2
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Equity in earnings of
unconsolidated affiliate $ (12,500) (12,500) (25,000) (25,000)
Selling, general and
administrative expenses 1,363 2,000 5,463 4,000
Depreciation and amortization 465 465 930 920
1,828 2,465 6,393 4,920
Operating loss (14,328) (14,965) (31,393) (29,920)
Other expenses
Interest expense 2,350 2,400 4,600 4,700
Provision for loss in affiliate 85,938 -- 85,938 --
88,288 2,400 90,538 4,700
Net loss $ (102,616) (17,365) (121,931) (34,620)
Loss per common share $ 0.003 0.001 0.004 0.001
Weighted average number of
common shares outstanding 30,166,069 29,126,069 30,166,069 29,126,069
F-3
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
Six Months Ended
June 30,
1998 1997
Cash flows from operating activities:
Net income $(121,931) (34,620)
Adjustments to reconcile net loss to net
cash used in operating activities:
Equity in earnings of unconsolidated subsidiary 25,000 25,000
Depreciation and amortization 930 930
Provision for loss in affiliate 85,938 --
Increase (decrease) in liabilities
Accounts payable 1,211 2,000
Accrued expenses 1,400 2,001
Notes payable 1,300 1,733
Due to officers 5,134 2,956
Total adjustments 120,913 34,620
Net cash used in operating activities (1,018) --
Net increase (decrease) in cash (1,018) --
Cash - beginning of period 1,505 --
Cash - end of period $ 487 --
F-4
ELECTRO-KINETIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
JUNE 30, 1998
Common Shares
and Paid-In
Common Shares Capital Deficit Total
Balance at January 1, 1998 30,166,069 $3,493,601 (3,552,913) (59,312)
Net loss -- -- (121,931) (121,931)
Balance at June 30, 1998 30,166,069 $3,493,601 (3,674,844) (181,243)
JUNE 30, 1997
Balance at January 1, 1997 30,166,069 $3,498,601 (3,489,409) 9,192
Net loss -- -- (34,620) (34,620)
Balance at June 30, 1997 30,166,069 $3,498,601 (3,524,029) (25,428)
F-5
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized:
ELECTRO-KINETIC SYSTEMS, INC.
Dated: __________________ By: ___________________________________
Julius Cherny, PhD., President
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following person(s) on behalf of
the Registrant and in the capacities indicated and on the Dates indicated.
SIGNATURE CAPACITY DATED
Chairman of the
Julius Cherny, PhD. Board, Director DATE
PART 11 - OTHER INFORMATION
Item 1 Legal Proceedings:
None
Item 2 Changes in Securities: There have been no instruments defining
the rights of any holder of any class of any registered security
which has been materially modified.
Item 3 Defaults Upon Senior Securities:
None
Item 4 Submission of Matters to a Vote of Security Holders:
None
Item 5 Other Information:
None
Item 6 Exhibits and Reports of Form 8-K: See reports filed on 1/3/96
and 1/11/96.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the
selected financial data and the financial statements appearing elsewhere in this
report.
Management Report
General
Following the bankruptcy of its principal distributor in March 1995,
the Company suspended all operations related to radon testing and analysis of
environmental hazards. In 1996, the Company abandoned its efforts in the
magazing publishing field. In the fall of 1996, the officers of the Company made
available for use certain systems developed by them which the Company attempted
to market. No costs or expenses have been incurred by the Company. Such efforts
have been unsuccessful. Accordingly, the designs for these decision models have
been returned to the officers.
During the third quarter of 1998, the Company anticipates the sale of
90% of DMA Radtech, Inc., its wholly owned subsidiary at a profit of
approximately $40,000. This agreement includes the sale of certain proprietary
know-how.
Results of Operations
The only recurring item of income is the Company's equity in its 50%
owned subsidiary, Printone Media, Inc. The Company's unconsolidated affiliate
has lost money since acquisition. Accordingly, during the second quarter of
1998, the Company has established a reserve of $85,000 or about $.003 per share
against the carrying value of the investment in and advances to this affiliate.
Liquidity and Capital Resources
Working capital declined as a result of operating expenses for the six
months ended June 30, 1998 in the amount of $10,000. For the Company to become a
viable entity, it must operate profitably and raise sufficient capital to fund
its operations. Failing this, it must combine with another entity. The Company
continues its efforts in these regards, but there is no assurance of success.