EMISSION CONTROL DEVICES, INC.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2001
( ) 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: 0-30689
EMISSION CONTROL DEVICES, INC.
(Exact name of registrant as specified in charter)
Nevada 84-0989940
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
8632 Wilkinson Blvd., Charlotte. NC 28214
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 704-392-9190
Check whether the Issuer (1 ) filed all reports required to be filed by
section 13 or 15 (d) of the Exchange Act during the past 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.
(1) Yes [X] No [ ] (2) Yes [X] No [ ]
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as os the last practicable date.
Class Outstanding as of March 31, 2001
Common Stock, $0.001 11,486,964
FORWARD-LOOKING INFORMATION
THIS FORM 10QSB AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY
THE COMPANY OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF
1933 AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, 15 U.S.C.A. SECTIONS 77Z-2 AND
78U-5. THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR
CURRENT EXPECTATIONS OF THE COMPANY AND MEMBERS OF ITS MANAGEMENT TEAM AS
WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED.
PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE
RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS
CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE IN FORWARD- LOOKING STATEMENTS ARE SET FORTH HEREIN.
THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING
STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED
EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying balance sheets of Emission Control Devices, Inc. (a
development stage company) at March 31, 2001 and December 31, 2000, and the
statements of operations for the three months ended March 31, 2001 and 2000
and the period from January 1, 1997 to March 31, 2001, and the cash flows
for the three months ended March 31, 2001 and 2000, and the period from
January 1, 1997 to March 31, 2001, have been prepared by the Company's
management and they include all information and notes to the financial
statements necessary for a complete presentation of the financial position,
results of operations, and cash flows in conformity with generally accepted
accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations
and financial position have been included and all such adjustments are of a
normal recurring nature.
Operating results for the quarter ended March 31, 2001 are not necessarily
indicative of the results that can be expected for the year ending December
31, 2001.
EMISSION CONTROL DEVICES, INC. AND SUBSIDIARY
( Development Stage Company )
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2001 2000
------- -------
ASSETS
CURRENT ASSETS
Current Assets $ 2,014 $ 947
-------- --------
Total Current Assets 2,014 947
-------- --------
$ 2,014 $ 947
======== ========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ - $ 2,700
------- --------
Total Current Liabilities - 2,700
------- --------
STOCKHOLDERS' (DEFICIT)
Common stock
100,000,000 shares authorized,
$.001 par value, 11,486,964
shares issued and
outstanding 11,487 11,487
Capital in excess of par value (9,487) (12,187)
Retained earnings (deficit) accumulated
During the development stage 14 (1,053)
-------- --------
Total Stockholders' (Deficit) $ 2,014 $ (1,753)
-------- --------
$ 2,014 $ 947
======== ========
The accompanying notes are an integral part of these unaudited condensed
financial statements.
EMISSION CONTROL DEVICES, INC. AND SUBSIDIARY
(Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Cumulative from
the Re-entering of
Three Months Development Stage
Ended on November 9
March 31, 2000 through
------------- March 31,
2001 2000 2001
------ ------ ---------------
REVENUE $ 1,089 $ - $ 1,089
------- ------ -------
EXPENSES:
General and
administrative 22 1,150 1,075
------- ------ -------
Total Expenses 22 1,150 1,075
------- ------ -------
INCOME (LOSS) FROM OPERATIONS $ 1,067 $(1,150) $ 14
======= ====== =======
NET LOSS PER COMMON SHARE
Basic $ - $ - $ -
------- ------ -------
AVERAGE OUTSTANDING SHARES
Basic 11,486,964 11,486,964
---------- ----------
The accompanying notes are an integral part of these unaudited condensed
financial statements.
EMISSION CONTROL DEVICES, INC. AND SUBSIDIARY
(Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative from
the Re-entering of
Development Stage
For the Three Months on November 9,
Ended March 31, 2000 through
------------------- March 31,
2001 2000 2001
------- ------- -----------------
Cash Flows From
Operating Activities:
Net income (loss) $ 1,067 $(1,150) $ 14
Adjustments to
reconcile net
loss to net cash
used by operating
activities:
Changes in accounts payable - (2,000) -
Issuance of capital stock
for expenses - 2,667 -
------- ------- ------
Net Cash (Used)
by Operating Activities 1,067 (483) 14
------- ------- ------
Cash Flows From
Investing Activities - - -
Net Cash (Used) ------- ------- ------
by Investing Activities - - -
------- ------- ------
Cash Flows From
Financing Activities
Proceeds from issuance of
common capital stock - - 2,000
Net Cash (Used) ------- ------- ------
by Financing Activities - - 2,000
------- ------- ------
Net Increase in Cash 1,067 (483) 2,014
Cash at Beginning of Period 947 483 -
------- ------- ------
Cash at End of Period $ 2,014 $ - $2,014
======= ======= ======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
The accompanying notes are an integral part of these unaudited condensed
financial statements.
EMISSION CONTROL DEVICES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
==========================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the State of Colorado on May
16, 1985 with the name of "Mountain Ashe, Inc." with authorized common stock
of 100,000,000 shares with a par value of $0.0001. On September 23, 1987 the
was name changed to "Holographic Systems, Inc." and on February 7, 2000 the
domicile was changed to the state of Nevada in connection with a change in
par value to $0.001. On January 22, 2001 the Company changed its name to
Emission Control Devices, Inc. as a part of the acquisition of all of the
outstanding stock of Emission Control Devices, Inc. (a North Carolina
corporation). Note 3
On February 7, 2000 the Company completed a reverse common stock split of
one share for 20 outstanding shares. This report has been prepared showing
after stock split shares with a par value of $.001 from inception.
After 1996 the Company is considered to be a development stage company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not adopted a policy regarding payment of dividends.
Income Taxes
At March 31, 2001 the Company had a net operating loss carry forward of
$2,739. The income tax benefit of $826 from the loss carry forward has been
fully offset by a valuation reserve because the use of the future tax benefit
is undeterminable since the Company has no operations. The loss carryover
will expire in 2022.
Earnings (Loss) Per Share
Earnings (loss) per share amounts are computed based on the weighted average
number of common shares actually outstanding, after stock splits.
Financial Instruments
The carrying amounts of financial instruments, including cash and accounts
payable, are considered by management to be their estimated fair values.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements
in accordance with generally accepted accounting principles. Those estimates
and assumptions affect the reported amounts of the assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported
revenues and expenses. Actual results could vary from the estimates that
were assumed in preparing these financial statements.
Principals of Consolidation
The consolidated financial statements shown in this report exclude the
historical operating information of the parent before December 31, 2000, and
include the operating information of the subsidiary from its inception.
All intercompany transactions have been eliminated.
Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No. 130. The
adoption of this standard had no impact on the total stockholder's equity.
Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
3. ACQUISITION OF ALL OUTSTANDING STOCK OF EMISSION CONTROL DEVICES, INC.
On December 31, 2000 the Company (parent) completed the acquisition of all
the outstanding stock of Emission Control Devices, Inc. (subsidiary), by a
stock for stock exchange in which the stockholders of the subsidiary received
10,000,000 shares of the parent representing 91% of the outstanding stock of
the parent. For reporting purposes, the acquisition is treated as an
acquisition of the parent by the subsidiary (reverse acquisition) and a
recapitalization of the subsidiary. The historical operating information
prior to December 31, 2000 is that of the subsidiary. The only asset owned by
the subsidiary is a license agreement described below, therefore, no value
was recognized from the acquisition.
The subsidiary was organized in the state of North Carolina on November 9,
2000 for the purpose of developing and marketing an exclusive licensing
agreement, obtained from a related party, covering an emission control
device.
4. GOING CONCERN
The Company will need additional working capital to service its debt and for
its planned activity.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
equity funding and long term financing which will enable the Company to
operate for the coming year.
5. RELATED PARTY TRANSACTIONS
Related parties have acquired 67% of the outstanding common capital stock.
ITEM 2. PLAN OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
Plan of Operation
We hold two licenses that have been assigned from Unlimited Technologies
International, Inc. covering motorcycle emission control devices and
industrial forklift emission control devices. At this time, the license
covering industrial fork lifts (South Industrial Equipment d/b/a/ Envirolift)
is the only license resulting in sales, and this license is currently being
expanded to cover OEM's of forklifts in addition to retrofits, and is
expected to generate sales of approximately 300 units per month and revenues
in excess of $30,000 per month. To date, however, the sales that have been
generated pursuant to the fork lift application have been booked by Unlimited
Technologies International, Inc., a private company, with which we share
office and manufacturing space, as well as employees. We are presently
working to transition operations and sales from the private company to our
public company, and we expect this process to take up to an additional six
months. Until that time, our sales, as indicated in the attached financial
statements, will be negligible. Conversely, our expenses will continue to be
negligible as well, as Unlimited Technologies International, Inc. is
presently solely responsible for all expenses of operations.
Liquidity, Capital Resources and Need for Additional Financing
We have depleted our cash resources, and do not presently have the funds or
capital resources to fully develop our technology or to sustain our
operations to the point that our operating cash flow is positive, or to pay
for the costs of transitioning our business from Unlimited Technologies
International, Inc. The expected costs to meet these objectives is in
excess of $100,000.00. If we are unable to secure debt or equity financing,
we may be forced to cease operations, or we may continue to have negligible
operations.
Results of Operations
During the period from January 1, 2001 through March 31, 2001, we have
engaged in no significant operations other than maintaining our reporting
status and booking isolated, limited revenues from one of our license
agreements. For the current year, we anticipate incurring a loss as a result
of legal and accounting expenses, and the expenses associated with the
transition from Unlimited Technologies International, Inc.
Need for Additional Financing
Based upon current management's willingness to extend credit to the Company
and/or invest in the Company until a business combination is completed, the
Company believes that its existing capital will be sufficient to meet the
Company's cash needs required for the costs of compliance with the continuing
reporting requirements of the Securities Exchange Act of 1934, as amended,
and for the costs of accomplishing its goal of completing a business
combination, for an indefinite period of time. Accordingly, in the event the
Company is able to complete a business combination during this period, it
anticipates that its existing capital will be sufficient to allow it to
accomplish the goal of completing a business combination. There is no
assurance, however, that the available funds will ultimately prove to be
adequate to allow it to complete a business combination, and once a business
combination is completed, the Company's needs for additional financing are
likely to increase substantially. In addition, as current management is
under no obligation to continue to extend credit to the Company and/or invest
in the Company, there is no assurance that such credit or investment will
continue or that it will continue to be sufficient for future periods.
Part II - Other Information
Item 1. Legal Proceedings
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None; not applicable.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
No other exhibits were filed on Form 8-K.
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.
Emission Control Devices, Inc.
Date: May 15, 2001 By /s/ Russell A. Masters
----------------------
Russell A. Masters, President