SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(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,
1999 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, West Berlin, NJ 08009
- ----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(609)767-2300
(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 No x
Applicable only to corporate issuers:
The number of shares outstanding of each of the issuer's classes of
common stock, as of November 14, 1999.
Common Stock, Par Value $.001 11,974,772
- ----------------------------- --------------------------
(Class) (Outstanding)
Transitional small business disclosure format (check one): Yes No X
EFTEK CORPORATION
INDEX
Page(s)
-------
PART I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet - September 30, 1999
(Unaudited) 3
Consolidated Statements of Operations
(Unaudited) - Nine Months and Three Months
Ended September 30, 1999 and 1998 4
Consolidated Statements of Cash Flows
(Unaudited) - Nine Months Ended September 30, 1999
and 1998 5
Notes to Consolidated Financial Statements
(Unaudited) 6 & 7
Item 2. Management's Discussion and Analysis 8 & 9
PART II. Other Information 10
Signature Page 11
PART I - FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------
EFTEK CORPORATION
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(Unaudited)
Assets
------
Current Assets
- --------------
Cash $ 24,217
Receivables 85,647
Prepaid expenses 4,539
---------
Total Current Assets 114,403
-------------------- ---------
Property and Equipment, Net (Note 2) 4,027,529
- -------------------------- ---------
Other Assets
- ------------
Intangible assets, net (Note 2) 222,139
---------
Total Other Assets 222,139
------------------ ---------
Total Assets 4,364,071
------------ =========
Liabilities and Stockholders' Equity
------------------------------------
Current Liabilities
- -------------------
Current portion of long term debt 287,540
Current portion of obligations
under capital leases 194,378
Accounts payable and accrued
liabilities 1,912,842
Income taxes payable 1,650
---------
Total Current Liabilities 2,396,410
-------------------------
Long Term Debt, Less Current Portion 234,578
- ------------------------------------
Obligations Under Capital Leases,
Less Current Portion 158,546
- --------------------------------- ---------
Total Liabilities 2,789,534
----------------- ---------
Stockholders' Equity
- --------------------
Common stock, $.001 par; authorized
25,000,000 shares; issued and
outstanding 11,724,772 shares 11,724
Additional paid in capital 6,957,184
Deficit (5,394,125)
---------
1,574,783
Common stock held in treasury
(14,434 shares), at cost ( 246)
---------
Total Stockholders' Equity 1,574,537
-------------------------- ---------
Total Liabilities and Stockholders'
Equity $ 4,364,071
----------------------------------- ==========
See accompanying notes to financial statements.
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
Revenues (Note 2) $ 324,749 $ 379,406 $ 1,021,432 $1,205,784
- -------- ------- ------- --------- ---------
Costs and Expenses
- ------------------
Costs of revenues 257,109 81,419 844,805 539,650
Depreciation and
amortization 127,155 129,316 382,790 387,304
Selling, general and
administrative 123,753 401,550 403,760 1,155,423
------- ------- --------- ---------
Total Costs and Expenses 508,017 612,285 1,631,355 2,082,377
- ------------------------ ------- -------- --------- ---------
Loss From Operations (183,268) (232,879) ( 609,923) (876,593)
- -------------------- -------- ------- --------- -------
Other Income (Expenses)
- ----------------------
Miscellaneous income 1,206 4,341 6,206 9,341
Miscellaneous expense ( 3,058) ( 9,555)
Interest expense ( 15,182) ( 30,863) ( 58,393) ( 61,365)
------- ------- --------- -------
Total Other Income
(Expenses) ( 17,034) ( 26,522) ( 61,742) ( 52,024)
------------------ ------- ------- --------- -------
Net Loss $(200,302) $(259,401)$( 671,665)$(928,617)
- -------- ======= ======= ========= =======
Net Loss Per Common
and Common
Equivalent Share (Note 2) $( .02) $( .02)$( .06)$( .08)
- ------------------- ======= ======= ========= =======
Weighted Average Common
and Common Equivalent
Shares Outstanding 11,703,848 11,598,835 11,707,101 11,480,403
- ------------------------ ========== ========== ========== ==========
See accompanying notes to financial statements.
EFTEK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
1999 1998
Cash Flows From Operating Activities ---- ----
- ------------------------------------
Net loss for the period $(671,665) $( 928,617)
Adjustments to Reconcile Net Loss To
Net Cash Provided By(Used In)
- -------------------------------
Operating Activities
--------------------
Depreciation and amortization 382,790 387,304
Changes In Operating Assets
and Liabilities
- ---------------------------
Decrease(increase) in receivables 75,956 ( 90,749)
Decrease (increase) in prepaid expenses 26,345 ( 553)
Increase in intangible assets ( 13,892) ( 1,312)
Increase in accounts payable and
accrued liabilities 346,271 561,666
Increase in income taxes payable 750
-------- ----------
Net Cash Provided by (Used In)
- ------------------------------
Operating Activities 146,555 ( 72,261)
-------------------- -------- ---------
Cash Flows Used In Investing Activities
- ---------------------------------------
Purchases of equipment ( 16,997) ( 178,023)
------- ---------
Cash Flows From Financing Activities
- ------------------------------------
(payoff) Proceeds long term debt, net (109,559) 5,679
Proceeds from issuances of common stock 4,122 227,868
------- --------
Net Cash(used in)Provided By
- ----------------------------
Financing Activities (105,437) 233,547
-------------------- --------- ---------
Net increase (decrease) In Cash 24,121 ( 16,737)
- -------------------------------
Beginning Cash 96 32,002
- -------------- ------- ---------
Ending Cash $ 24,217 $ 15,265
- ---------- ======== =========
See accompanying notes to financial statements.
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 "GlassFlour") for use in the
fiberglass manufacturing industry.
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 nine months ended
September 30, 1999 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 September 30, 1999 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, 1998.
Operating results for the nine months ended September 30, 1999 are not
necessarily indicative of the results for the year ending December 31,
1999.
FORM 10-QSB
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 September 30,
1999:
Land $ 338,073
Building 317,081
Building improvements 896,078
Equipment 3,494,268
Furniture and fixtures 22,648
---------
5,068,148
Less accumulated depreciation and
amortization 1,040,619
---------
Net property and equipment $ 4,027,529
=========
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.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth and discussed below for the three months and
nine months ended September 30, 1999 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
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1998
Revenue for the three months ended September 30, 1999 decreased $54,657
(14%) below the three months ended September 30, 1998. This decrease
in revenue is attributed to a reduction in sales by the Company's
wholly owned subsidiary, CFC, Inc.
Costs of revenues increased $175,690 (216%) over the previous year's
three months attributable predominately to costs associated with the
operations of the Company's wholly owned subsidiary, CFC, Inc.
Depreciation and amortization costs for the three months ended
September 30, 1999 and September 30, 1998 were relatively unchanged.
Selling, General and Administrative costs decreased $277,797 (69%)
below the previous year's three months and is attributable primarily
to a reduction in maintenance costs of CFC, Inc. and professional fees.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1998
Revenue for the nine months ended September 30, 1999 decreased $184,352
(15%) below the nine months ended September 30, 1998. The decrease is
directly attributable to the reduction in sales of the Company's wholly
owned subsidiary, CFC, Inc.
Costs of revenues for the nine months ended September 30, 1999,
comprised principally of labor, freight and waste removal, increased
$305,155 (57%) compared to 1998. The increase is attributable
predominately to costs associated with the operations of the Company's
wholly owned subsidiary, CFC, Inc.
Depreciation and amortization costs for the nine months ended September
30, 1999 and September 30, 1998 were relatively unchanged.
Selling, General and Administrative expenses decreased $751,663 (65%)
compared to 1998. The decrease is attributable predominately to costs
associated with the operations of the Company's wholly owned
subsidiary, CFC, Inc.
LIQUIDITY AND CAPITAL RESOURCES
See Management's Discussion and Analysis in Form 10-KSB for the period
ended December 31, 1998 filed with the Securities and Exchange
Commission on November 16, 1999.
FORM 10-QSB
EFTEK CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal actions proceeding or litigation
pending or threatened to the knowledge of the Company.
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
None
Item 6. Exhibits and Reports on Forms 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: None
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 16, 1999 By: /s/Frank Whitmore
FRANK WHITMORE
President, Chief Executive
Officer, and Chairman of the
Board of Directors
Dated: November 16, 1999 By:/s/Gerard T. Wisla
GERARD T. WISLA
Chief Financial Officer, Secretary,
Treasurer, and Member of the
Board of Directors