SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 205249
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FORM 10-QSB/A
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the
Quarterly Period Ended September 30, 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 000-27592
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TECH LABORATORIES, INC.
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(Exact name of Small Business issuer in its charter)
New Jersey 22-1436279
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
955 Belmont Avenue, North Haledon, NJ 07508
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (973) 427-5333
Indicate by check mark whether the Registrant (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 [_]
The number of shares of Common Stock, par value $.01 per share,
outstanding as of the latest practicable date: As of December 19, 2001, there
were 5,088,798 shares outstanding.
Tech Laboratories, Inc.
For 10-QSB/A
Purpose of Amendment
An internal control breakdown prevented cash disbursements totaling
$370,507 from being recorded to the general ledger. The Company conducted an
internal review, identified the problem, and has revised its numbers for the
Third Quarter and Nine Months Ended September 30, 2001. The Company's Chief
Financial Officer has reviewed and changed the internal controls of the Company
in order to prevent this breakdown in internal control from happening again.
Tech Laboratories, Inc.
FORM 10-QSB/A
Table of Contents
PART I
FINANCIAL INFORMATION........................................................ 1
Item 1. Financial Statements.............................................. 1
September 30, 2001 and 2000 Balance Sheet (unaudited)...................... 1
Statement of Operations For The Third Quarter and Nine Months Ended
September 30, 2001 and 2000 (unaudited)................................ 3
Statement of Cash Flow For The Nine Months Ended
September 30, 2001 and 2000 (unaudited)................................ 4
Notes to Consolidated Financial Statements................................. 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................. 8
Item 6. Exhibits and Reports on Form 8-K.................................. 8
SIGNATURES ................................................................. 9
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
TECH LABORATORIES, INC.
September 30, 2001 and 2000
Balance Sheet
(unaudited)
ASSETS
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,
2001 2000
---- ----
Current Assets:
Cash $1,293,298* $1,462,319
Marketable Securities at the Lower of Cost or Market 56,103 61,453
Accounts Receivable, Net of Allowance for
Doubtful Accounts of $10,000 144,556 169,251
Inventories 1,731,915* 1,251,010
Prepaid Expenses 6,503 4,055
----------- -----------
Total Current Assets $3,232,375* $2,948,088
Property, Plant, and Equipment, at Cost
Leasehold Improvements 2,247 2,247
Machinery, Equipment, and Instruments 539,771* 410,425
Furniture and Fixtures 92,690 79,161
----------- -----------
Total Property, Plant, and Equipment $ 634,708* $ 491,833
Less: Accumulated Depreciation & Amortization (366,569) (314,162)
----------- -----------
Net Property, Plant, and Equipment $ 268,139* $ 177,671
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Other Assets $ 12,059 $ 11,541
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Total Assets $3,512,573* $3,137,300
=========== ===========
* Revised
The accompanying notes are an integral part of these
financial statements.
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TECH LABORATORIES, INC.
September 30, 2001 and 2000
Balance Sheet
(unaudited)
LIABILITIES AND STOCKHOLDERS' INVESTMENTS
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,
2001 2000
---- ----
Current Liabilities:
Current Portion of Long-Term Debt $ 33,433* $ 25,821
Short-Term Loans Payable 63,593 79,956
Accounts Payable 36,868 34,765
Other Liabilities 26,099 29,047
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Total Current Liabilities $ 159,993* $ 169,599
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Long-Term Convertible Notes $1,221,046 -0-
Stockholders' Investment:
Common Stock, $.01 Par Value;
10,000,000 Shares Authorized:
4,019,039 shares outstanding in 2000 and
4,790,942 shares outstanding in 2001 $ 47,060 $ 39,492
Less: 11,316 Shares Reacquired and
Held in Treasury (113) (113)
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$ 46,947 $ 39,379
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Capital Contributed in Excess of Par Value $4,220,028 $4,060,287
Retained Earnings/(Accum. Deficit) (2,135,441)* (1,131,965)
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2,131,534* 2,967,701
Total Liabilities and Stockholders' Equity $3,512,573* $3,137,300
=========== ===========
* Revised
The accompanying notes are an integral part of these
financial statements.
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TECH LABORATORIES, INC.
Statement of Operations For The
Third Quarter and Nine Months Ended
September 30, 2001 and 2000
(unaudited)
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2001 2000 2001 2000
------------ ------------ ------------ ------------
Sales $ 81,802 $ 265,453 $ 442,280 $ 849,106
------------ ------------ ------------ ------------
Costs and Expenses:
Cost of Sales 37,967 135,840 264,831 372,967
Selling, General, and Administrative Expense 370,933* 241,526 749,968* 507,030
------------ ------------ ------------ ------------
408,900* 377,366 1,014,799- 879,997
------------ ------------ ------------ ------------
Income/(Loss) from Operations $ (327,098)* $ (111,913) $ (573,519)* $ (30,891)
Other Income (Expenses):
Interest Income 12,559 21,010 62,771 34,796
Interest Expense (26,129) -0- (76,633) (5,465)
------------ ------------ ------------ ------------
(13,570) 21,010 (13,862) 29,331
Income/(Loss) Before Income Taxes $ (340,668)* $ (90,903) $ (586,381)* $ (1,560)
Provision for Income Taxes -0- -0- -0- -0-
------------ ------------ ------------ ------------
Net Income/(Loss) $ (340,668)* $ (90,903) $ (586,381)* $ (1,560)
Retained Earnings/(Accum. Deficit), Beg. Year (1,794,773) (1,041,662) (1,549,060) (1,130,405)
------------ ------------ ------------ ------------
Retained Earnings/(Accum. Deficit), End. Quarter $(2,135,441)* $(1,131,965) $(2,135,441)* $(1,131,965)
============ ============ ============ ============
Primary Earnings Per Share $ (0.07)* $ (0.02) $ (0.12)* $ -0-
============ ============ ============ ============
Fully Diluted Earnings Per Share $ (0.04)* $ (0.01) $ (0.07)* $ -0-
============ ============ ============ ============
* Revised
The accompanying notes are an integral part of these
financial statements.
-3-
TECH LABORATORIES, INC.
Statement of Cash Flow For The
Nine Months Ended
September 30, 2001 and 2000
(unaudited)
2001 2000
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Cash Flow From (For) Operating Activities:
Net Income/(Loss) From Operations $ (586,381)* $ (1,560)
Add/(Deduct) Items Not Affecting Cash:
Depreciation/Amortization 24,018 -0-
Unrealized (Gain)/Loss on Valuation of Marketable Securities -0- -0-
Changes in Operating Assets and Liabilities
Marketable Securities 8,320 -0-
Accounts Receivable (50,604) (111,554)
Inventories (445,077)* (434,307)
Accounts Payable 3,907 (225,980)
Other Assets/Liabilities 15,136 23,129
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Net Cash Flow For Operating Activities $(1,030,681)* $ (750,272)
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Cash Flows From (For) Investing Activities
Addition of Machinery and Equipment (84,258)* (33,872)
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Net Cash Flow From Investing Activities (84,258)* (33,872)
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Cash Flow From (For) Financing Activities:
Acquisition/(Payment) of Short/Long-Term Debt (282,517) (163,417)
Issuance of Common Stock 167,308 2,246,956
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Net Cash Flow From (For) Financing Activities (115,209) $2,083,539
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Net Increase/(Decrease) in Cash (1,230,148)* $1,299,395
Cash Balance Beginning of Year 2,523,446 762,924
Cash Balance End of Third Quarter $1,293,298* $1,462,319
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* Revised
The accompanying notes are an integral part of these
financial statements.
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TECH LABORATORIES, INC.
Notes to Consolidated
Financial Statements
For Nine Months Ended
September 30, 2001
(unaudited)
(1) Summary of Significant Accounting Policies.
CASH -- Includes Tech Labs' checking account at Hudson United Bank and
money market accounts at Prudential Securities and Bear Stearns. There are no
Cash Equivalents.
ACCOUNTS RECEIVABLE -- Tech Labs recognizes sales when orders are
shipped to customers. The allowance for bad debts is accrued based on a review
of customer accounts receivables aging.
INVENTORIES -- Inventories are valued at cost or market, whichever is
lower. The FIFO cost method is generally used to determine the cost of the
inventories. At December 31, 1998, 1999, and 2000, physical inventories were
taken and tested. No physical inventory was taken on September 30, 2001.
PROPERTY AND DEPRECIATION -- Additions to property and equipment are
recorded at cost. Depreciation is computed using the straight-line method over
the estimated useful lives of the assets as follows:
ASSETS ESTIMATED USEFUL LIVES
Machinery 5 to 7 years
Furniture & Fixtures 5 to 7 years
Maintenance and repairs are charged to expenses as incurred. The cost of
betterments is capitalized and depreciated at appropriate rates. Upon retirement
or other disposition of property items, cost and accumulated depreciation are
removed from the accounts and any gain or loss is reflected in the statement of
income.
INCOME TAXES -- Income tax expense is based on reported income, and
deferred tax credit is provided for temporary differences between book and
taxable income.
MARKETABLE SECURITIES -- The marketable securities are recorded at the
lower of cost or market. The cost of securities was $64,333 at December 31,
2000, and $56,103 at September 30, 2001.
(2) Inventories.
Inventories at December 31, 2000 and September 30, 2001, were as
follows:
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December 31, September 30,
2000 2001
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Raw Materials & Finished Components $ 912,358 $ 866,207
Work in Process & Finished Goods 374,480 865,708
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$1,286,838 $1,731,915
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(3) Income/(Loss) Per Share.
Preliminary Income/(Loss) per share was calculated on the weighted
average shares outstanding. As of September 30, 2001, weighted average shares
outstanding were 4,790,942.
Fully Diluted Income/(Loss) per share was calculated on the weighted
average shares above plus 3,574,638 shares from the assumed conversion of the
remaining balance of the convertible notes issued in October, 2000.
(4) Income Taxes.
Since the Company has an operating loss carryforward of $2,292,591 as
of December 31, 2000, no interperiod tax allocation was made.
(5) Current Portion of Long-Term Debt.
Loans payable to banks were as follows for the periods indicated:
INTEREST CURRENT NON-CURRENT
PERIOD ENDED PAYEE RATE AMOUNT AMOUNT
------------ ----- ---- ------ ------
September 30, 2000 Hudson United Bank Prime +1.5% $ $25,821
September 30, 2001 Hudson United Bank Prime +1.5% $ $33,983
Certain marketable securities are pledged as collateral on the above loan.
(6) Short-Term Loans Payable.
Demand loans payable include loans from stockholders, officers, members
of the Board of Directors, and third parties. The outstanding loan balances due
as of December 31, 2000 were $73,759, and as of September 30, 2001, were
$63,593. The annual interest rate for these loans ranged between six percent
(6%) and ten percent (10%). One loan in the amount of $8,767 as of September 30,
2001, is secured by the assets of Tech Labs. In October, 1999, three short term
loans for a total of $200,000 at ten percent (10%) annual interest were
completed. Certain contractual revenues were pledged to secure these loans. As
of December 31, 2000, $150,000 of such loans were repaid, and $50,000 presently
remains outstanding and is due December 31, 2001.
(7) Common Stock.
In 1999, Tech Labs commenced a self-underwritten public offering to
raise between $2,000,000 (minimum) and $3,500,000 (maximum). The Company's
registration statement was declared effective February 3, 2000. This offering
was completed on May 3, 2000 and a total of $2,273,723 was raised.
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(8) Long-Term Convertible Debt.
On October 13, 2000, Tech Labs completed a $1.5 million financing of
6.5% convertible promissory notes due October 13, 2002. Interest is payable
quarterly in cash or in shares of common stock at the option of the noteholders.
Tech Labs disclosed all terms of this financing on Form 8-K filed on October 18,
2000. As of September 30, 2001, $278,546 of principal on the convertible notes
has been converted into shares of the Company's common stock.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The information contained in this section should be read in conjunction
with the Consolidated Financial Statements and Notes thereto appearing in this
report Form 10-QSB and the Company's Annual Report for the year ended December
31, 2000.
Quarter ending September 30, 2001, compared to Quarter ending
September 30, 2000.
Sales were $81,802 for the third quarter of 2001 as compared to
$265,453 for the similar period of 2000. This decrease was due to lower sales of
our DynaTraX(TM) products, which we believe is the result of the current
economic downturn in telecommunications capital spending.
Cost of sales of $37,967 for the third quarter of 2001 decreased by
$97,873 compared to the same period of 2000, which is due to lower sales.
Selling, administrative, and general expenses increased by $129,407
compared to the same period of 2000. Due to the economic downturn, the Company
is looking to secure additional financing causing an increase in legal and
consulting fees.
Loss from operations of ($340,668) increased ($249,765) compared to a
loss of $90,903 for the prior period as a direct result of the reasons set forth
above.
Nine months ending September 30, 2001, compared to year ending December
31, 2000.
During the first nine months of 2001, the Company made a significant
operating investment in expanding DynaTraX(TM) markets, improving DynaTraX(TM)
technology, and enhancing our security products.
Cash Flow for the first nine months of 2001 was negative ($1,230,148)
as a result of the operating investment.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.1 Employment Agreement entered into between the Company and Bernard M.
Ciongoli dated as of August 24, 2001.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the fiscal quarter ended
September 30, 2001.
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TECH LABORATORIES, INC.
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.
Date: December 26, 2001
TECH LABORATORIES, INC.
By: /S/ Bernard Ciongoli
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Bernard Ciongoli
Chief Financial Officer
(Principal Financial Officer and
Chief Accounting Officer)
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