SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 13, 2000
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ENVIRO-CLEAN OF AMERICA, INC.
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(Exact Name of Registrant as Specified in Its Charter)
NEVADA 0-26433 88-0386415
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
211 Park Avenue, Hicksville, NY 11801
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code
(516) 931-4455
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N/A
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(Former Name or Former Address, if Changed Since Last Report.)
EXPLANATORY NOTE
This Form 8-K/A amends Item 7 of the current report on Form 8-K filed by
Enviro-Clean of America, Inc. (the "Company") on October 13, 2000, to include
financial statements that were not available at the time of the filing of the
initial report. The financial statements are required as a result of the
September 29, 2000, divestiture by the Company of the assets of NISSCO/Sunline,
Inc., a former wholly-owned subsidiary of the Company. The financial statements
contained herein have been previously disclosed in the Company's quarterly
filing on Form 10-QSB for the period ending September 30, 2000, which was filed
with the Securities and Exchange Commission on November 14, 2000. Such financial
information fully reflects the sale of the assets of NISSCO/Sunline, Inc.,
therefore further pro forma financial information is not required.
ITEM 7. FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL STATEMENTS
(a) Financial Statements of Business Acquired
None.
(b) Unaudited Pro Forma Consolidated Financial Statements
(1) ENVIRO-CLEAN OF AMERICA, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEET AS OF SEPTEMBER 30, 2000 (UNAUDITED) AND DECEMBER 31,
1999 (AUDITED).
(2) ENVIRO-CLEAN OF AMERICA, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
AND 1999 (UNAUDITED).
(3) NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
ENVIRO-CLEAN OF AMERICA, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
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(unaudited) (audited)
ASSETS
<S> <C> <C>
Current assets
Cash $ 1,136,948 $ 1,833,478
Accounts receivable 1,827,458 1,547,567
Inventory 1,938,080 1,683,220
Marketable securities-available for sale 2,843,750 -
Loan receivable-related party - 835,992
Loans receivable-other 1,024,696 -
Prepaid expenses and other current assets 329,672 78,160
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Total current assets 9,100,604 5,978,417
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Property, plant & equipment - at cost 1,435,809 1,602,505
Less: accumulated depreciation 1,095,437 1,246,793
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Net property, plant & equipment 340,372 355,712
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Goodwill 5,228,460 8,651,571
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TOTAL ASSETS $14,669,436 $14,985,700
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LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 1,493,636 $ 1,543,776
Notes payable-related parties 1,120,707 1,274,306
Current maturities of long-term debt 32,249 8,365
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Total current liabilities 2,646,592 2,826,447
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Long-term liabilities
Notes payable - subordinated 1,441,825 2,461,055
Notes payable-related parties 809,218 1,859,028
Long-term debt, less current maturities 50,749 5,645
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Total liabilities 4,948,384 7,152,175
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Redeemable preferred stock-$.001 par value; authorized 5,000,000
shares 70,000 shares of convertible stock designated as Series E
stock- $2.50 stated value; issued and outstanding 70,000 shares
175,000 175,000
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Stockholder's equity
Preferred stock Series A-$.001 par value; stated value $5.00; - 2,500,000
authorized, issued and outstanding shares -0- and 500,000
Preferred stock Series B-$.001 par value; stated value $100.00; authorized - 2,559,000
80,000 shares; issued and outstanding shares -0- and 25,590
Preferred stock Series D-$.001 par value; stated value $5.00; - 1,600,000
authorized, issued and outstanding shares -0- and 320,000
Common stock-$.001 par value; authorized 20,000,000 shares; issued 6,608 4,451
6,607,682 and 4,451,000; outstanding 6,107,682 and 4,451,000 shares
Less: Treasury stock-500,000 shares at cost (1,000,000)
Additional paid-in capital 10,772,208 3,772,236
Accumulated other comprehensive income 1,840,750 -
Retained earnings (deficit) (2,273,514) (4,852,162)
Common stock to be issued 200,000 2,075,000
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Total stockholders' equity 9,546,052 7,658,525
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,669,436 $14,985,700
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</TABLE>
See Notes to Consolidated Financial Statements
ENVIRO-CLEAN OF AMERICA, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Net Sales $10,942,966 $2,330,624
Cost of sales 6,517,135 1,238,870
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Gross profit 4,425,831 1,091,754
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Operating expenses:
Salaries 2,154,437 511,490
Professional fees 359,847 340,053
Depreciation and amortization 91,927 35,584
Amortization of goodwill 666,910 294,634
Marketing 198,832 52,476
Rent 434,185 96,698
Interest 549,075 252,631
Other 1,126,227 354,303
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Total operating expenses 5,581,440 1,937,869
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Operating loss (1,155,609) (846,115)
Other income 6,900,945 30,113
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Income (loss) before income tax expense 5,745,336 (816,002)
Income tax expense 768,367 27,360
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Net income (loss) from continuing operations 4,976,969 (843,362)
Income from operations of discontinued division 113,310 334,494
Loss on disposal of division (2,389,649) -
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Net income (loss) 2,700,630 (508,868)
Preferred stock dividends (121,983) (102,270)
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Net income (loss) attributable to common stockholders 2,578,647 (611,138)
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Income (loss) per share from continuing operations $ 0.85 $ (0.23)
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Income (loss) per share from discontinued operations $ (0.40) $ 0.08
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Income (loss) per share-basic and diluted $ 0.45 $ (0.15)
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Weighted average number of shares outstanding 5,727,902 4,207,000
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</TABLE>
See Notes to Consolidated Financial Statements
ENVIRO-CLEAN OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL:
The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements, related footnotes and
discussions contained in the Company's Annual Report and Quarterly Report
filed with Form 10-KSB for the year ended December 31, 1999. The financial
information contained herein is unaudited. In the opinion of management,
all adjustments necessary for a fair presentation of such financial
information have been included. All adjustments are of a normal recurring
nature.
The results of operations for the nine months ended September 30, 2000 and
1999, are not necessarily indicative of the results to be expected for
the full year.
2. PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accompanying consolidated financial statements include the accounts of
Enviro-Clean of America, Inc and its Subsidiaries (collectively the
"Company"). All significant intercompany balances and transactions have
been eliminated in consolidation.
The principal business activity of the Company is manufacturing and the
wholesale distribution of sanitary maintenance supplies and paper products.
The Company also provided buying services and group discounts to wholesale
distributors of sanitary maintenance supplies, paper goods and related
products.
The Company considers all highly liquid instruments purchased with a
maturity of three months or less to be cash equivalents.
Property and equipment are recorded at cost. Depreciation is provided for
by the straight-line method over the estimated useful lives of the property
and equipment.
Inventories consisting of raw materials, work in process and finished goods
are valued at the lower of cost or market. Cost is determined using the
first-in, first-out method.
The preparation of financial statements in accordance with generally
accepted accounting principles requires the use of estimates by management.
Actual results could differ from these estimates.
At each balance sheet date, the Company evaluates the period of
amortization of intangible assets. The factors used in evaluating the
period of amortization
include: (i) current operating results, (ii) projected future operating
results, and (iii)any other material factors that effect the continuity of
the business.
Preferred stock dividends in arrears, which represent dividends declared,
but unpaid at September 30, 2000 totals $1,312. Preferred stock dividends
declared for nine months totals $121,983. As of October 1, 2000, all
dividends declared through September 30, 2000 have been paid in full.
Earnings per share ("EPS") is computed by dividing net income or loss by
the weighted-average number of common shares outstanding for the year. Both
basic and diluted net income per share are the same because the effect of
the Company's outstanding warrants and options is anti-dilutive.
Management does not believe that any recently issued, but not yet
effective, accounting standards, if currently adopted, would have a
material effect on the accompanying financial statements.
3. INVESTMENT IN AFFILIATE
The Company and Messrs. Kandel, Davis and Etra have invested in
b2bstores.com,Inc., a California based company which designs Internet-based
electronic commerce programs. b2bstores.com, Inc. has assisted the Company
to develop the Company's eCommerce website. The Company has entered into
an agreement with b2bstores.com, Inc. in which b2bstores.com, Inc. will
host five on-line stores at their website and the Company will receive 2-5%
of the top line revenues on each product sold at such stores. Mr. Kandel,
the Chairman and Chief Executive Officer of the Company, serves as
Chairman of the Board of b2bstores.com, Inc. During the 9 months ended
September 30, 2000, the Company was repaid working capital loans to
b2bstores.com, Inc. totaling $1,399,836 plus interest equal to 8% per
annum.
During March 2000, the Company sold one half of its investment, 1,000,000
shares of b2bstores.com, Inc., netting $6,750,000 in proceeds through a
private sale to ZERO.NET, Inc.
During the quarter ended March 31, 2000, the Company and the sellers of
June Supply, adjusted the purchase price of June by $300,000. As a result,
both the notes payable to the sellers and the corresponding goodwill were
reduced by $300,000 during the quarter.
4. SALE OF ASSETS
Effective September 30, 2000, the Company sold the assets of it's buying
group subsidiary, Nissco/Sunline, Inc. for a total of $100,000. As a
result, a net loss on the sale of $2,389,649 is included in the financial
statements for the nine months ended September 30, 2000.
5. STOCKHOLDERS' EQUITY
In January 2000, the Company began a new private placement of a maximum of
137,500 Units at $8.00 per unit, each consisting of two shares of Common
Stock and one common stock purchase warrant. The warrants have an exercise
price of $4.25 and are exercisable for a three year period which began upon
issuance. On February 29, 2000, the Company sold an aggregate of 122,500
units to approximately 18 accredited investors for aggregate proceeds to
the Company of $980,000. The Company closed the private placement on
February 29, 2000. The Company will use the proceeds from this offering to
continue its acquisitions program as well as for working capital purposes.
In June 2000, the Company began a program to convert it's subordinated
notes payable. Under the program, the notes could be converted into common
shares. As of June 30, 2000, a total of $1,362,000 of debt was converted
into 453,987 common shares and $39 cash in lieu of fractional shares.
In June 2000, the Company issued 281,500 shares of common stock for an
aggregate price of $844,500.
Effective August 15, 2000, Thomas Haines, head of Nissco/Sunline, Inc, a
wholly owned Subsidiary, retired. At that time the Company redeemed his
500,000 shares of stock in the Company for a total of $1,000,000.
6. PREFERRED STOCK
On March 16, 2000, the Company redeemed all of its outstanding shares of
Series D Preferred Stock for a total of $1,600,000 plus unpaid accrued
dividends of $29,071.04.
During March, 2000, the Company began a program to convert all of its
Series B Cumulative Convertible Preferred Stock. Under the program, the
stockholders could either convert their shares plus accrued dividends into
common shares or redeem them for cash. On April 1, 2000, a total of
$480,000 was redeemed for cash and the balance of $2,079,000 was converted
into 426,195 common shares.
On April 1, 2000, with Board approval, all of the outstanding shares of the
Series A Preferred Stock, were redeemed for a total of $2,500,000, plus
unpaid accrued dividends of $25,000.
7. SUBSEQUENT EVENTS
In October 2000, the Company began a new private placement of a minimum of
320,000 and a maximum of 2,000,000 shares of Common Stock at $1.25 per
share. The Company intends to close the private placement during February
2001. The stock will be restricted securities as defined under Rule 144
promulgated by the Commission under the Securities Act (Rule 144).
Accordingly, purchasers of
the Common Stock may only resell or otherwise transfer the Common Stock, or
any dividend thereon pursuant to an effective registration statement, or an
exemption from registration, including a sale in compliance with Rule 144
which, among other restrictions, imposes a holding period of at least one
year before public resales of securities may be made. The Company will use
the proceeds from this offering for working capital purposes.
(c) Exhibits
The following is a list of exhibits filed as part of this Form 8-K.
Exhibit Number Description of Document
2.1 Asset Purchase Agreement between ebuyxpress.com L.L.C.,
NISSCO/Sunline, Inc. and Enviro-Clean of America, Inc., dated
September 29, 2000.*
* Previously filed as an exhibit to Form 8-K, filed on behalf of the Company
with the Securities and Exchange Commission on October 13, 2000.
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 hereunto duly authorized.
ENVIRO-CLEAN OF AMERICA, INC.
Date: December 11, 2000 By: /s/ Randall Davis
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Name: Randall K. Davis
Title: President