SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE
30, 1998 OR
- ---TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO .
Commission file number 33-26789-NY
EFTEK CORPORATION
-----------------
(Name of small business issuer in its charter)
Nevada 93-0996501
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
324 New Brooklyn Road, Berlin, NJ 08009
--------------------------------- -------
(Address of principal executive offices) (Zip Code)
(609)753-4344
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(Registrant's telephone number, including area code)
Check whether the issuer (1) 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 report), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Applicable only to corporate issuers:
The number of shares outstanding of each of the issuer's classes of
common stock, as of June 30, 1998.
Common Stock, Par Value $.001 11,556,910
- ----------------------------- ------------
(Class) (Outstanding)
Transitional small business disclosure format (check one): Yes No X
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FORM 10-QSB/A
EFTEK CORPORATION
INDEX
Page(s)
-------
PART I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet - June 30, 1998
(Unaudited) 3
Consolidated Statements of Operations
(Unaudited) - Six Months and Three Months Ended
June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows
(Unaudited) - Six Months Ended June 30, 1998
and 1997 5
Notes to Consolidated Financial Statements
(Unaudited) 6 & 7
Item 2. Management's Discussion and Analysis 8
PART II. Other Information 9
Signature Page 10
FORM 10-QSB/A
PART I - FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
EFTEK CORPORATION
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(Unaudited)
Assets
Current Assets
Cash $ 14,794
Receivables 129,236
Prepaid expenses 40,587
-----------
Total Current Assets 184,617
-----------
Property and Equipment, Net (Note 2) 4,764,378
-----------
Other Assets
Intangible assets, net (Note 2) 83,823
Deposits 3,900
-----------
Total Other Assets 87,723
-----------
Total Assets 4,946,718
===========
Liabilities and Shareholders' Equity
Current Liabilities
Current portion of long term debt 215,528
Current portion of obligations
under capital leases 139,561
Accounts payable and accrued
liabilities 1,137,578
Income taxes payable 750
----------
Total Current Liabilities 1,493,417
Long Term Debt, Less Current Portion 234,797
Obligations Under Capital Leases,
Less Current Portion 353,531
----------
Total Liabilities 2,081,745
----------
Stockholders' Equity
Common stock, $.001 par; authorized
25,000,000 shares; issued and
outstanding 11,556,910 shares 11,557
Additional paid in capital 6,946,915
Deficit (4,093,253)
----------
2,865,219
Common stock held in treasury
(14,434 shares), at cost ( 246)
----------
Total Stockholders' Equity 2,864,973
----------
Total Liabilities and Stockholders'
Equity $4,946,718
===========
See accompanying Notes to Financial Statements.
FORM 10-QSB/A
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
------ ------ ------ ------
Revenues (Note 2) $ 443,375 $ 8,831 $ 826,378 $ 71,117
--------- --------- ----------- ---------
Costs and Expenses
Costs of revenues 171,622 44,158 458,231 96,971
Depreciation and
amortization 128,994 1,991 257,988 3,982
Selling, general and
administrative 362,009 203,063 753,873 424,657
--------- --------- ----------- ---------
Total Costs and Expenses 662,625 249,212 1,470,092 525,610
--------- --------- ----------- ---------
Loss From Operations (219,250) (240,381) ( 643,714) (454,493)
--------- --------- ----------- ---------
Other Income (Expenses)
Miscellaneous income 5,772 5,000 5,845
Interest expense ( 15,218) ( 25,709) ( 30,502) ( 26,837)
Miscellaneous expense ( 3,746) ( 3,781)
--------- --------- ----------- ---------
Total Other Income
(Expenses) ( 15,218) ( 23,683) ( 25,502) ( 24,773)
--------- --------- ----------- ---------
Net Loss $(234,468) $(264,064) $( 669,216)$(479,266)
--------- --------- ----------- ---------
Net Loss Per Common
and Common
Equivalent Share (Note 2) $( .02) $( .03) $( .06)$( .05)
========= ========= ========== =========
Weighted Average Common
Shares Outstanding 10,829,155 10,038,629 11,420,205 9,564,050
========== ========== ========== =========
See accompanying Notes to Financial Statements.
FORM 10-QSB/A
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
1998 1997
---- ----
Cash Flows From Operating Activities
Net loss for the period $(669,216) $( 479,266)
Adjustments to Reconcile Net Loss To
Net Cash Used In Operating Activities
Depreciation and amortization 257,988 3,982
Changes In Operating Assets
and Liabilities
(Increase) decrease in receivables ( 63,638) 80,318
Increase in prepaid expenses ( 553) ( 5,418)
Increase in intangible assets ( 1,313) ( 2,634)
Increase in accounts
payable and accrued liabilities 373,887 70,555
Increase in income taxes payable 150
--------- ----------
Net Cash Used In Operating Activities (102,695) ( 334,587)
--------- ----------
Cash Flows Used In Investing Activities
Purchases of equipment (100,201) (1,313,075)
---------- ----------
Cash Flows From Financing Activities
Proceeds from long term debt, net 10,000 21,129
Reduction of long term debt ( 52,180)
Proceeds from issuances of common stock 227,868 1,846,259
---------- ---------
Net Cash Provided By Financing Activities 185,688 1,867,388
---------- ---------
Net (Decrease) Increase In Cash ( 17,208) 219,726
Beginning Cash 32,002 172,919
---------- ---------
Ending Cash $ 14,794 $392,645
========== ===========
See accompanying Notes to Financial Statements.
FORM 10-QSB/A
EFTEK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Description of Business
EFTEK Corporation (the Company), incorporated in the state of
Nevada, is engaged in processing mixed cullet (broken glass) into a
recycled, uncontaminated product (known as "glass flour") for use in
the fiberglass manufacturing industry. The Company also develops and sells
various fire retardant chemicals.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the period. Actual results could differ from those
estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Basis of Presentation
The financial statements for the three months and six months ended
June 30, 1998 have been prepared without audit and, in the opinion of
management, reflect all adjustments necessary (consisting only of normal
recurring adjustments) to present fairly the Company's financial
position at June 30, 1998 and the results of its operations and its cash
flows for the interim and cumulative periods presented. Such financial
statements do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial
statements. For further information, refer to the financial statements
and footnotes thereto included in the Company's annual report on Form
10-KSB for the year ended December 31, 1997.
Operating results for the six months ended June 30, 1998 are not
necessarily indicative of the results for the year ending December 31, 1998.
FORM 10-QSB/A
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided
using the straight-line method over the estimated useful lives of the
assets. Expenditures for maintenance and repairs are charged against
income as incurred. When assets are sold or retired, the cost and
accumulated depreciation are removed from the accounts and any gain or
loss is included in income.
Property and equipment consisted of the following at June 30, 1998:
Land $ 338,073
Building 317,081
Building improvements 891,784
Equipment 3,503,180
Furniture and fixtures 22,648
-----------
5,072,766
Less accumulated depreciation and
amortization 398,388
-----------
Net property and equipment $ 4,674,378
===========
Intangible Assets
Certain intangible assets have been capitalized and are amortized
over the estimated useful lives of the assets using the straight-line
method. Patent costs are amortized over a period of 17 years.
Organization costs are amortized over a period of 5 years.
Net Loss Per Common and Common Equivalent Share
The company uses Statement of Financial Accounting Standards No.
128 "Earnings Per Share" (SFAS No. 128) to compute its net loss per
common and common equivalent share. SFAS No. 128 requires basic
earnings per share which is computed by dividing reported earnings
available to common shareholders by the weighted average shares
outstanding and diluted earnings per share which reflects the dilutive
effect of common stock equivalents such as stock options and warrants.
The computation of diluted net loss per common and common equivalent
share was antidilutive in each of the periods presented.
FORM 10-QSB/A
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information set forth and discussed below for the six months ended
June 30, 1998 is derived from the consolidated financial statements
included elsewhere herein. The financial information set forth and
discussed below is unaudited but, in the opinion of management, reflects
all adjustments (consisting of normal recurring accruals) necessary for
a fair presentation of such information. The Company's results of
operations for a particular quarter may not be indicative of results
expected during the other quarters or for the entire year.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1997
Revenue for the six months ended June 30, 1998 increased 1162% to $826,378
as compared to $71,117 in the six-month period ended June 30,
1997. The increase in revenues is attributable to the growth of the
operations of the Company's wholly owned subsidiary, CFC, Inc.
Cost of revenues for the six months ended June 30, 1998 increased 473%
to $458,231 as compared to $96,971 in the six-month period ended June
30, 1997. The increase in cost of revenues is attributable to the
growth of the operations of the Company's wholly owned subsidiary, CFC, Inc.
Depreciation and amortization costs for the six months ended June 30, 1998
increased 6,479% to $257,988 as compared to $3,982 in the six
month period ended June 30, 1997. The increase is attributable to
property and equipment placed in service in October 1997 relating to
the operations of CFC, Inc.
Selling, general and administrative costs for the six months ended June
30, 1998 increased 78% to $753,873 as compared to $424,657 in the six
month period ended June 30, 1997. The increase in selling, general and
administrative costs is attributable to payroll and related operating
costs of CFC, Inc.
Other income (expenses) for the six months ended June 30, 1998 was an
expense of $25,502 as compared to an expense of $24,773 for the six
month period ended June 30, 1997.
Net loss for the six months ended June 30, 1998 increased 40% to
$668,216 as compared to $479,266 in the six-month period ended June 30, 1997.
FORM 10-QSB/A
EFTEK CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no additional material legal actions proceeding
or litigation pending or threatened to the knowledge of the Company
other than those other than those set forth in previous filings.
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
Item 5. Other Information
On July 23, 1998 the Board of Directors in order to provide
continuing incentive for its officers, directors, employees and
consultants, authorized the exchange of all outstanding stock options
issued under the Company's 1996 Stock Incentive Plan (approximately
850,000 options) for new options at an exchange rate of 80% (.80 new
option in exchange for each old option). The new options' exercise
prices would be 15% of the original options' prices, with a floor of
$.15 per share. Option holders have been forwarded election agreements
to indicate their interest in participating in the program. The bid
price of the Company's common stock as traded on the OTC Bulletin Board
on July 23, 1998 was $.09 per share.
Item 6. Exhibits and Reports on Forms 8-K
Exhibits: None
Reports on Form 8-K: None
FORM 10-QSB/A
SIGNATURES
Pursuant to the requirements 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.
EFTEK CORPORATION
Dated: November 13, 1998 By: /s/ Frank Whitmore
-------------------------
FRANK WHITMORE
President, Chief Executive
Officer, and Chairman of the
Board of Directors
Dated: November 13, 1998 By: /s/ Gerard T. Wisla
-------------------------
GERALD T. WISLA
Chief Financial Officer,
Secretary, and Treasurer