Attached files
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
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, 2009; or
o 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: 000-27783
VISTA
INTERNATIONAL TECHNOLOGIES, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
84-1572525
|
|
(State or other jurisdiction of incorporation or
organization)
|
(I.R.S. Employer Identification
No.)
|
4704
Harlan Street, Suite 685, Denver, Colorado 80212
(Address
of principal executive offices, including zip code)
(303)
690-8300
(Registrant's
telephone number, including area code)
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
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes [X]
No [_]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer |_| Accelerated filer |_| Non-accelerated filer | | (Do not
check if a smaller reporting company) Smaller reporting company |X|
Indicate
by a check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No x .
As of
November 20, 2009, Vista International Technologies, Inc. had outstanding
105,125,264 shares of common stock, par value $0.001 per share.
TABLE
OF CONTENTS
PART
I – FINANCIAL INFORMATION
|
Item
1.
|
Financial
Statements - Unaudited
|
||
|
Consolidated
Balance Sheets – September 30, 2009 (unaudited) and December 31,
2008
|
F-1
|
||
|
Consolidated
Statements of Operations for the Three and Nine Months ended
September
30, 2009 and 2008 (unaudited)
|
F-2
|
||
|
Consolidated
Statements of Cash Flows for the Nine Months ended September 30, 2009 and
2008 (unaudited)
|
F-3
|
||
|
Notes to Unaudited Interim Consolidated
Financial Statements
|
|||
|
Item
2.
|
Management’s Discussion and
Analysis of
Financial Condition and Results of Operations
|
||
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
||
|
Item
4T.
|
Controls and
Procedures
|
||
|
PART
2 - OTHER INFORMATION
|
|||
|
Item
1.
|
Legal
Proceedings
|
||
|
Item
2.
|
Unregistered Sales of Equity
Securities And Use of Proceeds
|
||
|
Item
3.
|
Defaults Upon Senior
Securities
|
||
|
Item
4.
|
Submission of Matters to a Vote
of Security Holders
|
||
|
Item
5.
|
Other
Information
|
||
|
Item
6.
|
Exhibits
Supplemental
Info
|
||
|
Signatures
|
|||
Vista
International Technologies, Inc.
Condensed
Consolidated Balance Sheets
|
September 30, 2009
(Unaudited)
|
December
31, 2008
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets
|
||||||||
|
Cash
|
$ | 59,076 | $ | 13,698 | ||||
|
Accounts
receivable
|
67,205 | 4,643 | ||||||
|
Prepaid
expenses
|
1,687 | 21,531 | ||||||
|
Total
current assets
|
127,968 | 39,872 | ||||||
|
Restricted
cash
|
23,422 | 23,422 | ||||||
|
Deposits
|
21,167 | 21,167 | ||||||
|
Property
and equipment, net
|
373,406 | 510,865 | ||||||
|
Intangibles,
net
|
31,985 | 35,195 | ||||||
|
Total
assets
|
$ | 577,948 | $ | 630,521 | ||||
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
|
Current
liabilities
|
||||||||
|
Accounts
payable and accrued liabilities
|
$ | 1,491,487 | $ | 1,577,932 | ||||
|
Payable
to related parties
|
158,400 | 66,900 | ||||||
|
Accrued
compensation and payroll liabilities
|
551,216 | 426,823 | ||||||
|
Accrued
interest
|
142,877 | 99,411 | ||||||
|
Notes
payable - stockholder
|
549,983 | 500,000 | ||||||
|
Notes
payable and capital leases
|
179,730 | 194,660 | ||||||
|
Total
current liabilities
|
3,073,693 | 2,865,726 | ||||||
|
Commitments
and contingencies
|
-- | -- | ||||||
|
Stockholders’
deficit
|
||||||||
|
Preferred
stock, $0.001 par value: 10,000,000 shares authorized; none issued or
outstanding
|
-- | -- | ||||||
|
Common
stock, $0.001 par value; 200,000,000 shares authorized;
|
||||||||
|
104,332,748
and 103,002,366 shares issued
outstanding at September 30, 2009 and December 31, 2008,
respectively
|
104,332 | 103,002 | ||||||
|
Additional
paid-in capital
|
62,080,507 | 61,994,691 | ||||||
|
Common
stock to be issued
|
0 | 1,048 | ||||||
|
Accumulated
deficit
|
(64,680,584 | ) | (64,333,946 | ) | ||||
|
Total
stockholders’ deficit
|
(2,495,745 | ) | (2,235,205 | ) | ||||
|
Total
liabilities and stockholders' deficit
|
$ | 577,948 | $ | 630,521 | ||||
The accompanying notes are an integral
part of these condensed consolidated financial statements.
F-1
Vista
International Technologies, Inc.
Condensed
Consolidated Statements of Operations
|
Three
|
Three
|
Nine
|
Nine
|
|||||||||||||
|
Months
Ended
|
Months
Ended
|
Months
Ended
|
Months
Ended
|
|||||||||||||
|
September
30,
|
September
30, 2008
|
September
30,
|
September
30, 2008
|
|||||||||||||
|
2009
Unaudited
|
Unaudited
|
2009
Unaudited
|
Unaudited
|
|||||||||||||
|
Reven
RRevenues
|
$
|
278,314
|
$
|
5,574
|
$
|
503,465
|
$
|
12,211
|
||||||||
|
Cost Cost
of revenue
|
(172,200)
|
90,359
|
345,143
|
284,860
|
||||||||||||
|
Environ Environmental
Remediation
|
(191,063)
|
-
|
(191,063)
|
-
|
||||||||||||
|
Envir
|
||||||||||||||||
|
Gross
p Gross profit (loss)
|
297,177
|
(84,785
|
)
|
349,385
|
(272,649
|
)
|
||||||||||
|
Operati Operating
expenses:
|
||||||||||||||||
|
Sellin Selling,
general and administrative expenses
|
211,841
|
211,767
|
647,752
|
775,062
|
||||||||||||
|
Tot Total
operating expenses
|
211,841
|
211,767
|
647,752
|
775,062
|
||||||||||||
|
Loss
fr L Loss from operations
|
85,336
|
(296,552
|
)
|
(298,367)
|
(1,047,711
|
)
|
||||||||||
|
Other
I Other income (expense):
|
||||||||||||||||
|
Gain
on sale of fixed assets
|
1,000
|
|
1,000
|
|||||||||||||
|
Intere Interest
expense
|
(24,004)
|
(12,543
|
)
|
(48,271)
|
(37,918
|
)
|
||||||||||
|
Net
los Net Income (loss)
|
$
|
61,332
|
$
|
(308,095
|
)
|
$
|
(346,638)
|
$
|
(1,088,852
|
)
|
||||||
|
Net
los Net loss per share, basic and
diluted
|
$
|
*
|
$
|
*
|
$
|
*
|
$
|
*
|
||||||||
|
Weight Weighted
average common shares outstanding
|
103,163,202
|
96,482,963
|
103,163,202
|
93,796,840
|
||||||||||||
* less
than $0.01 per share
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
F-2
Consolidated
Statements of Cash Flows
For
the nine months ended
September
30,2009 and 2008
(unaudited)
|
2009
|
2008
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
(loss)
|
$ | (346,638 | ) | $ | (1,088,852 | ) | ||
|
Adjustments
to reconcile net loss to net
|
||||||||
|
cash
used in operating activities:
|
||||||||
|
Depreciation
and amortization
|
129,265 | 112,873 | ||||||
|
Bad
debt
expense 1,748
Environmental
Remediation
|
191,063 | |||||||
|
Impairment
loss
|
75,000 | |||||||
|
Consulting
Fees
|
35,153 | -- | ||||||
|
Changes
in assets and liabilities:
|
||||||||
|
(Increase)
decrease in assets:
|
63,102 | |||||||
|
Accounts
receivable
|
(64,310 | ) | 335 | |||||
|
Prepaid
expenses
|
19,844 | 14,058 | ||||||
|
Other
assets
|
-- | (372 | ) | |||||
|
Increase
(decrease) in liabilities:
|
||||||||
|
Accounts
payable and accrued liabilities
|
(190,120 | ) | 345,186 | |||||
|
Related
party payables
|
43,466 | -- | ||||||
|
Net
cash provided by (used in) operating activities
|
(117,427 | ) | (540,772 | ) | ||||
|
Cash
flows from investing activities:
|
||||||||
|
Equipment
and intangible asset purchases
|
-- | (64,907 | ) | |||||
|
Net
cash used in investing activities
|
-- | (64,907 | ) | |||||
|
Cash
flows from financing activities:
|
||||||||
|
Payments
on debt
|
(55,578 | ) | (47,589 | ) | ||||
|
Proceeds
from issuance of notes and loans
|
158, 383 | 65,502 | ||||||
|
Proceeds
from common stock to be issued
|
0 | 592,441 | ||||||
|
Net
cash provided by (used in) financing activities
|
162,805 | 610,354 | ||||||
|
Increase
(decrease) in cash and cash equivalents
|
45,378 | 4,675 | ||||||
|
Cash
and cash equivalents at beginning of period
|
13,698 | 9,017 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 59,076 | $ | 13,692 | ||||
|
Supplemental
disclosure of cash flow information:
|
||||||||
|
Cash
paid during the period for:
|
||||||||
|
Interest
|
$ | 2,056 | $ | 1,528 | ||||
|
Taxes
|
$ | -- | $ | 5,000 | ||||
|
Non
cash financing activities:
|
||||||||
|
Common
stock issued for services
|
$ | 24,255 | $ | 75,000 | ||||
Purchase of fixed asset
financed by capital
lease $ 23,748
The accompanying notes are an
integral part of the condensed consolidated financial
statements.
F-3
Vista International
Technologies, Inc.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine
months ended September 30, 2009 and 2008
(unaudited)
1.
Significant Accounting Policies and Nature of Operations:
Unaudited
Interim Financial Statements
The
accompanying unaudited interim financial statements, which include the Company’s
wholly owned subsidiaries, have been prepared by the Company in accordance with
generally accepted accounting principles. The financial information has not been
audited and should not be relied upon to the same extent as audited financial
statements. Certain information and footnote disclosures normally included in
audited financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Accordingly, these interim
financial statements should be read in conjunction with the Company’s financial
statements and related notes as contained in the Form 10-K for the year ended
December 31, 2008. In the opinion of management, the interim financial
statements reflect all adjustments, including normal recurring adjustments,
necessary for fair presentation of the interim periods presented. The results of
operations for the nine months ended September 30, 2009 are not necessarily
indicative of the results of operations to be expected for the full
year.
Description
of Business
Vista
International Technologies, Inc. (the “Company”, “we”, “our”) is in the business
of developing, commercializing and operating renewable energy and
waste-to-energy (WTE) technologies and projects. The Company’s mission is to
provide a clean, dependable, cost-competitive alternative energy to fossil
fuels. We plan to develop projects with government, community, industry and
financial partners to recover the available carbon based energy from materials
previously considered “waste” and destined for disposal. The recovery of energy
from waste using our Thermal Gasifier™ diverts large volumes of material from
landfills and other disposal sites, while providing clean alternative energy and
reducing greenhouse gas emissions.
The
Company is focusing its business on two areas, which are presently conducted in
two separate facilities:
|
●
|
· tire
processing and storage operations in Hutchins, Texas,
and
|
|
●
|
· renewable
energy and waste-to-energy (WTE) utilizing the Company’s Thermal Gasifier™
technology and corporate/administrative offices in Denver,
Colorado
Nathaniel
Energy Oklahoma Holdings Corporation, a majority owned subsidiary of Vista
International Technologies, Inc. was dissolved effective July 23, 2009.
The assets of Nathaniel Energy Oklahoma Holdings Corporation were sold in
April of 2006 and the subsidiary has been inactive since the sale of its
assets.
|
Liquidity,
Going Concern, and Management’s Plan
The
Company’s consolidated financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. The Company had a
net loss of $346,638 for the nine months ended September 30, 2009. At September
30, 2009 the Company had a working capital deficit of $2,945,725, and an
accumulated deficit of $64,689,584.
.
Our
continuation as a going concern is dependent upon the ability to generate
sufficient cash flow or obtain equity investment or additional financing to meet
obligations on a timely basis and ultimately to achieve profitable
operations. There can be no assurance that additional financing will
be available at rates favorable to the Company, or at all.
Management
plans to focus the Company’s resources in four key areas:
|
·
|
Thermal
Gasifier ™ engineering design
|
|
·
|
Improvements
and additional equipment for the Hutchins, TX tire processing
facility
|
|
·
|
Development
of core business opportunities
|
|
·
|
Attracting
strategic investment
|
Management
considers the Thermal Gasifier ™ and waste-to-energy segment to be our core
business. However, significant focus is being placed on the improvement of the
tire processing operation at our Hutchins, TX facility to increase production
and reduce operating costs, so as to continue providing increasing revenues, and
a positive cash flow for the Company. It is management’s belief that by
improving all facets of Company operations, we will be better situated to
attract investors looking to enter the waste-to-energy and renewable energy
marketplace.
Management
believes that current revenue levels will not be sufficient meet our operational
needs to execute our complete business plan. We are seeking additional funding
for the activities described above. The Company is exploring numerous financing
opportunities but has no agreements or commitments for funding at the present
time. Future funding may be through an equity investment, debt or convertible
debt. Current market conditions present uncertainty as to the Company’s ability
to secure additional funds, as well as its ability to reach full profitability.
There can be no assurances that the Company will be able to secure additional
financing, or obtain favorable terms on such financing if it is available, or as
to the Company’s ability to achieve positive earnings and cash flows from
operations. Any continued negative cash flows and lack of liquidity create
significant uncertainty about the Company’s ability to fully implement its
operating plan, as a result of which the Company may have to reduce the scope of
its planned operations. If cash resources are insufficient to satisfy the
Company’s liquidity requirements, the Company would be required to scale back or
discontinue its technology and product development programs, or obtain funds, if
available, through strategic alliances that may require the Company to
relinquish rights to certain of its technologies products, or to discontinue its
operations entirely.
During
the nine months ending September 30, 2009, the Company received $2,050 from
Vista International, Inc., a shareholder, for 20,500 shares of the
Company’s common stock.
On August
3, 2009 the Company entered into an agreement with Ing. Gianfranco Licursi, an
experienced engineer in the waste-to-energy industry, based in Northern Italy,
for the purpose of advancing the Thermal Gasifier™ technology. This
engineer will serve as a consultant in conjunction with Mustang Consulting on
the engineering design, and preparation of an MFG-8, Thermal Gasifier™ for
fabrication. Once the fabrication of this gasifier is completed, it will be
commissioned for demonstration, marketing and testing purposes. The agreement
has a term of six months, with an option for renewal based on the mutual
agreement of the parties.. This consultant along with Mustang
Consulting is working with Extra Group, S.r.l., (“Extra”)a well established
engineering design and fabrication company in Italy for the completion of this
demonstration gasifier unit. As part of the agreement, Extra is
fabricating the demonstration gasifier unit at their own expense. Extra, S.r.l.
will fabricate and co-market the smaller version of the Thermal Gasifier™ to
take advantage of well established markets within Italy. For each
gasifier placed into service, the company will receive a license fee, once it
reaches its Commercial Operations Date.
On August
11, 2009, the Company entered into a Line of Credit Agreement (th “Line”) with
Mr. Richard Strain, a significant shareholder.. The purpose of the Line, which
is up to $375,000 was to allow the Company to consolidate some of its
outstanding debt. The Line bears an interest of 9% and repayment
commenced from monthly operating cash flows on October 1, 2009. The
Company may prepay the funds at any time without penalty. Full repayment of the
Line is required by December 31, 2011. The loan is secured by a first priority
security interest in our assets. As of September 30, 2009, the
Company has drawn $50,000 against the Line. An additional $50,00 was
drawn subsequent to September 30, 2009.
On August
12, 2009 the Company engaged the services of Foster Graham Milstein Calisher LLP
for the purpose of assisting the Company in settling Company liabilities and
performing certain legal services for the Company on a going forward basis.
Significant progress has been made in the settlement of Judgments and other
liabilities through the end of September 2009 and still
continues. Subsequent to September 30, 2009 indebtedness of
approximately $174,000 were settled for approximately $90,000.
Use of Estimates
The
preparation of financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States requires
management to make judgments, assumptions and estimates that affect the amounts
reported in the consolidated financial statements and accompanying notes. Actual
results could vary from these estimates. A material change in these or other
estimates could potentially have a material impact on results of operations. The
following critical accounting policies are impacted significantly by judgments,
assumptions and estimates.
Research
and Development
Research
and development expenditures, all of which relate directly to the design and
development of our Thermal Gasifier™ technology, are expensed as incurred. For
the nine months ended September 30, 2009 and 2008, we had no research and
development expense.
Property,
Plant and Equipment and Related Depreciation
Property,
and equipment purchased or constructed is recorded at cost. Direct costs, such
as labor and materials, and indirect costs, such as overhead used during
construction are capitalized. Major units of property replacements or
improvements are capitalized and minor items are expensed. Gain or loss is
recorded in income for the difference between the net book value relative to
proceeds received, if any, when the asset is sold or retired. Depreciation is
provided for using straight-line and accelerated methods. Estimated useful lives
of the assets used in the computation of depreciation are as
follows:
|
Machinery
and equipment
|
2-5
years
|
|
Buildings
and improvements
|
2-15
years
|
|
Vehicles
|
5
years
|
Depreciation
expense was $129,265and $109,663 for the nine months ended September 30, 2009
and 2008, respectively.
Long-Lived
Assets
The
Company reviews its long-lived assets, including intangible assets, for
impairment whenever events or changes in circumstances indicate that the related
carrying amount may not be recoverable. Recovery of assets to be held and used
is measured by a comparison of the carrying amount of the assets to the future
net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less the cost to sell. Management uses significant
judgments, assumptions and estimates to calculate future cash flows expected to
be generated by the assets under impairment review.
Revenue
Recognition
Our tire
fuel processing facility recognizes revenue in two ways. First when waste tires
are accepted at the facility we receive a disposal fee (“tipping fees”) and
secondly from the sale of processed tire-derived-fuel or unprocessed whole
tires. The revenues from tipping fees are fully earned when the waste tires are
accepted at the facility and the processed tire shred revenues are recognized
when the TDF is delivered to the end user. Internal quality controls are in
place to ensure that the tire-derived-fuel meets the standards required in
contracts for the delivery to our customers. This quality control reduces the
risk of significant returns and allowances of TDF sold. Sales returns are
reprocessed and added back to the existing production of tire derived fuel.
Sales returns estimates are recorded based on the Company’s historical
experience. During 2009, the Company has not been producing any tire derived
fuel due to an economic downturn that has caused the major tire derived fuel
customers to cut back on their alternative fuel usage. The Company
has been working with the City of Dallas landfill to provide partially shredded
tires as a leachate material and for landfill cover. The
landfill allows the Company to dispose of the partially shredded tires at a zero
disposal cost. The only cost associated with this program is the cost
of hauling the material, which is within ten miles of the tire processing
facility. This arrangement with the landfill allows the Company to increase its
throughput due to only partially shredding the waste tires, which enables the
facility to accept more incoming waste tires thereby increasing the tipping fee
revenue. During the nine months ended September 30, 2009 and 2008,
the Company recognized revenue from disposal fees and sales of tire shreds or
whole tires of $ 503,465 and $12,211. respectively. The Company recognized no
revenue from the production or sale of tire derived fuel during the nine months
ended September 30, 2009 and 2008.
We
recognize revenue from the sale of our Thermal Gasifiers™ upon completion,
delivery and customer acceptance, using the completed contract method of
accounting. We recognize revenue for consulting services during the period those
services are provided. There were no revenues from the sale of our Thermal
Gasifiers™ or consulting services during the nine months ended September 30,
2009 and 2008.
Accounts
Receivable/Concentration of Credit Risk
The
Company utilizes the allowance method for accounts receivable valuation,
providing for allowances for estimated uncollectible accounts receivable. As of
September 30, 2009, the Company had no allowance for doubtful accounts. The
Company routinely assesses the financial strength of its customers as part of
its consideration of accounts receivable collectability by performing credit
evaluations of customers. Trade receivables are not collateralized. The Company
generally grants credit terms to certain customers ranging from 20 to 30
days.
The Company’s financial instruments
that are exposed to concentration of credit risk consist primarily of cash, and
cash held at commercial banks and institutions primarily in the United States,
and trade receivables from the Company’s customers. The Company maintains all
cash in bank accounts, which at times may exceed federally insured limits. The
Company has not experienced a loss in such accounts.
Reclassifications
We have
reclassified the statement of operations for the nine months ended September 30,
2008 to correct for immaterial misstatements in the nine month period for
interest and depreciation expense of $3,223 and $9,032 respectively and other
income of $66,667.
Recent
Accounting Pronouncements
The
Company has adopted all recently issued accounting pronouncements. The adoption
of the accounting pronouncements, including those not yet effective is not
anticipated to have a material effect on the financial position or results of
operations of the Company.
2.
Notes Payable
At
September 30, 2009, the Company had the following promissory notes
outstanding:
|
2009
|
||||
|
3.68%
installment note, secured by equipment
|
$
|
62,105
|
||
|
9.09%
capital lease, secured by software
|
|
|
10,017
|
|
|
|
|
|||
|
15%
promissory notes payable to individuals, due on demand
|
|
|
17,000
|
|
|
8.00%
capital lease, secured by Skidsteer
|
20,538
|
|
||
|
Remediation
|
70,000
|
|||
|
Total
debt:
|
$
|
179,730
|
3.
Related Party Transactions
At
September 30, 2009, Note Payable to stockholder consists of notes payable of
$500,000 due to Mr. Richard Strain, together with approximately $50,000 due to
Mr. Strain under the Line (Note 1).
The notes
of $500,000 bear interest at the annual rate of 9%, with interest payable
quarterly and were due on various dates through November 2007. The notes are
secured by a first priority security interest in Company assets. The
notes are in default and a default notice has been received. Mr. Strain has
agreed to defer collection on the notes until January 1, 2010. In addition, in
2007 an asset was sold without payment on these notes to Mr. Strain. The
interest expense on the Notes for the nine month periods to September 30, 2009
and September 30, 2008 was $34,906 and $34,551, respectively.
4.
Stockholders’ Equity
Common
Stock
Nine months ended September
30, 2009
During
the nine months ended September 30, 2009, the Company issued 349,613 shares of
restricted common stock to a consultant pursuant to a consulting agreement dated
June, 11, 2009. The company owes the consultant an additional 218,860 shares of
restricted common stock for services rendered in the period ending September 30,
2009.
During
the nine months ended September 30, 2009, the Company issued 980,769 shares of
common stock to an individual for $60,000 in cash.
Deferred
income taxes result from the temporary differences arising from differences in
the timing of recognition of the state income tax provision for book and tax
reporting purposes, and an accumulation of net operating loss carry-forwards for
income tax purposes with a valuation allowance against the carry-forwards for
book purposes.
On March
20, 2008, the Company received notification from the Internal Revenue Service of
the filing of a federal tax lien in the approximate amount of $120,000 related
to late payment of federal income tax, penalty and interest on the September 30,
2005 corporate income tax return of Nathaniel Energy Oklahoma Holdings
Corporation. Nathaniel Energy Oklahoma Holdings Corporation was required to file
a short period federal income tax return for 2005 as the Company acquired a
majority interest in Nathaniel Energy Oklahoma Holdings Corporation on that date
from Mr. Richard Strain, the Company’s majority shareholder and debt holder at
that time. Nathaniel Energy Oklahoma Holdings Corporation filed a consolidated
return for the remainder of the 2005 tax year with Nathaniel Energy
Corporation. The short period return gave rise to a federal income
tax liability of approximately $200,000. The company made installments against
this tax liability of $120,000 during the fiscal years 2006 through September
30, 2008. The company received notification from the IRS on June 1, 2009 that
the outstanding balance is $162,569, which is included in accrued liabilities at
September 30, 2009.
Included
in fixed assets and capital lease obligations at September 30, 2009 is equipment
leased by Mr. Ruddy on the Company behalf.
6.
Commitments and Contingencies
Commitments
The
Company entered into a termination agreement with a former employee dated
February 10, 2004 for services that were performed prior to termination. The
company is required to issue to the employee 285,000 shares of common stock,
$.001 par value of the Company upon the Company effectuating a stock split. To
date the stock split has not taken place.
Litigation
and Claims
The
Company is subject to a variety of litigation and claims relating to past due
payments for goods and services. The Company is in the process of negotiating
settlement arrangements for these items.
Environmental
Liability
The
Company has approximately 6,350 tons of whole tires, partially shredded tires,
tire chips and process waste stored onsite at the Hutchins tire processing
facility at the end of September 30, 2009. The waste material consists primarily
of steel belting wire with attached tire rubber and will be disposed of in a
permitted landfill. In the past, management has considered the piles of tires
and tire shreds on the facility an asset to be reclaimed and sold to an end
user. However, in order to reclaim the material for resale, we would need to
install additional equipment to screen the material for potential contaminants
in the piles such as rocks, pieces of metal and concrete. In
addition, the BTU value is somewhat degraded by oxidation and weathering of the
tires and tire chips stored in the piles onsite and therefore not good for use
as tire derived fuel. We have chosen not to utilize this tire chip inventory as
feedstock for processing due to the economic benefit of receiving new whole
tires and processing them for landfill use instead. Presently we have been able
to dispose of this material to a municipal landfill site that is using the
material as filter and bedding material. The municipality has expressed a longer
term need for this material in their operation and the Company expects to remove
the majority of the material over the next 9 months.
Management
considers the piles a potential liability if the company were to fail. In such a
case, we would be required to restore the site beginning with transporting the
material to a disposal site (LRPUT or landfill). In management’s opinion at
September 30, 2009, the total upper range estimate for the cost of disposal is
approximately $160,000 which includes labor, equipment, transportation. We have
made an arrangement with the City of Dallas landfill to dispose of the material
at a zero disposal cost, as they can use the material for leachate and landfill
cover. This assumes complete closure of the facility. We have provided financial
assurance in the form of a surety bond and a certificate of deposit (reserved
cash of $23,422) in the approximate amount of $122,000 to the Texas Commission
on Environmental Quality assuming ongoing operation of the facility. There is no
assurance that such a bond will be issued. We have accrued $160,000 for the cost
of disposing of this material. Management has continued to remove material from
the site during the nine months ended September 30, 2009.
7.
Subsequent Events
Subsequent
events have been evaluated through November 23, 2009 which are within the date
that the financial statements were issued.
FORWARD
LOOKING STATEMENTS
Certain
information contained in this report may include “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995, and
is subject to the safe harbor created by that act. The safe harbor created by
the Securities Litigation Reform Act will not apply to certain “forward looking
statements” because we issued “penny stock” (as defined in Section 3(a)(51) of
the Securities Exchange Act of 1934 and Rule 3a51-1 under the Exchange Act)
during the three year period preceding the date(s) on which those forward
looking statements were first made, except to the extent otherwise specifically
provided by rule, regulation or order of the Securities and Exchange Commission.
We caution readers that certain important factors may affect our actual results
and could cause such results to differ materially from any forward-looking
statements which may be deemed to have been made in this Report or which are
otherwise made by or on behalf of us. For this purpose, any statements contained
in this report that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as “may”, “will”, “expect”, “believe”, “explore”, “consider”,
“anticipate”, “intend”, “could”, “estimate”, “plan”, or “continue” or “hope” or
the negative variations of those words or comparable terminology are intended to
identify forward-looking statements. Factors that may affect our results
include, but are not limited to, the risks and uncertainties associated
with:
The
Management’s Discussion and Analysis is intended to help shareholders and other
readers understand the dynamics of Vista International Technologies, Inc.’s
business and the key factors underlying its financial results. It explains
trends in the company’s financial condition and results of operations for the
period ended September 30, 2009 compared with the operating results for the
period ended September 30, 2008.
Company
Overview
Our
mission is to provide a lower cost, clean dependable energy alternative to
fossil fuels worldwide. We plan to focus on two major business models in the
commercialization of our Thermal Gasifier™ technology - building, owning and
operating waste-to-energy plants either on our own or with joint venture
partners, and licensing our technology to appropriate business partners in key
markets. Our tire fuel processing operation generated 100% of revenue
from continuing operations, or $503,465and $12,211 during the nine months ended
September 30, 2009 and 2008, respectively. We recognized no revenue from our
Thermal Gasifier™ business during 2009 or 2008. Our long term goal is to produce
the majority of our revenue and cash flow from the commercialization of our
Thermal Gasifier™ technology. As a result, the majority of our engineering
resources are focused on this business.
Worldwide,
industries and municipalities seek lower cost and clean energy alternatives to
fossil fuels. Demand for these energy alternatives is expected to grow. A key to
our success will be wisely choosing among project opportunities and focusing
resources on projects with the greatest chance of success and returns for
stockholders.
We are
developing our internal resources, business alliances and advancing our business
development activities to secure energy infrastructure and waste-to-energy
facility opportunities that utilize our Thermal Gasifier™ technology. A number
of these opportunities have been discovered and management is endeavoring to
secure the rights to these projects or formulate strategic alliances with
project development partners. We plan to diversify the technology to
several vertical markets that include; the organic fractions from Municipal
Solid Waste (MSW) and Municipal Sewer Sludge (MSS), in addition to Animal Waste
and Agricultural Waste (or Biomass).
Additionally,
we will seek project funding in some cases with joint venture partners that will
be based on the size, configuration and business structure of the
project.
We
anticipate that the timeframe from identification of a project to completion
will be 18 to 24 months, provided we obtain the requisite project financing and
appropriate environmental permits.
Subject
to being able to obtain funding, we plan to invest necessary
capital to improve operations at our tire fuel processing facility in
Hutchins, Texas during 2009 and into 2010. The tire fuel processing facility is
currently the only waste tire storage and processing facility licensed by the
State of Texas to operate in the Dallas Metro area.
During
August 2007, our tire processing equipment accidentally jammed, damaging one
major piece of equipment and causing the processing line and the tire processing
facility to shut down. At that time, management decided to purchase new tire
processing equipment as the cost of new equipment was not significantly more
than the cost of repairing the damaged equipment. New equipment had not been
ordered as of September 30, 2009 due to the current economic climate and the low
demand for tire derived fuel. During 2009, the Company has not been producing
any tire derived fuel due to an economic downturn that has caused the major tire
derived fuel customers to cut back on their alternative fuel
usage. Instead of purchasing new equipment to produce tire derived
fuel, the company has been working with the City of Dallas landfill to provide
partially shredded tires as a leachate material and for landfill
cover. The landfill allows the company to dispose of the
partially shredded tires at a zero disposal cost. The only cost
associated with this program is the cost of hauling the material, which is
within ten miles of the tire processing facility. This arrangement with the
landfill allows the company to increase its throughput due to only partially
shredding the waste tires, which enables the facility to accept more incoming
waste tires thereby increasing the tipping fee revenue
significantly.
Our tire
processing operation in Texas is subject to regulation by the Texas
Commission of Environmental Quality (TCEQ). We are registered with the Texas
Commission on Environmental Quality which allows us to receive, store, transport
and process waste tires. Our registration expired December 20, 2007. A permit
renewal application was submitted after obtaining local Fire Marshall’s approval
and as of November 13, 2009 was in process for approval allowing for continued
operation. The company has through December 31, 2009 to comply with the required
assurance to receive the permit renewal for another five (5) year period. It is
expected that the new permit will be issued in the near future. During the
period December 20, 2007, the date our registration expired, and August 1, 2008,
the date our application was resubmitted, our permit status is in a “pending”
state. And while we continue to operate the facility our storage allotments have
been limited.
We
continue to maintain our tire processing facility to meet the requirements of
the Texas Commission of Environmental Quality’s regulations, however, should we
be unable to continue to fund our assurance to maintain compliance, we could
lose our permit to operate the facility.
We
improved operations and removed stockpile tire shreds, whole tires and waste
material during the first nine months of 2009 that previous management had
allowed to accumulate at the tire processing facility.
We
commenced receiving and partially processing waste tires in August 2008, and
have seen volumes of waste tires that we accept increase monthly up to
approximately 2000 tons per month. Management recognizes that these volumes are
subject to seasonal fluctuations, and will seek to maintain established minimum
volumes, so as to guarantee steady revenue streams going forward.
Results
of Operations for the Three Months Ended September 20, 2009 and
2008
Revenue
For the
three months ended September 30, 2009, revenue was $278,315 compared to $5,574
during the three months ended September 30, 2008, an increase of $272,741 or
approximately 4893.1%. Revenue increased during the three months ended September
30, 2009 compared to the comparative three month period in 2008, as we had
ceased accepting waste tires at the tire processing facility in Hutchins, Texas
during the first 6 months of 2008. During that period, we continued to reduce
tire shreds and other tire related material on site which we either sold as
landscape material or we paid transporters to have removed and disposed. We
re-submitted our permit application to the TCEQ on August 1, 2008 and commenced
operations on a limited basis in August 2008.
Cost
of revenue
Cost of
revenue was $-23,235 for the three months ended September 30, 2009, compared to
$90,359 during the three months ended September 30, 2008, an decrease of
$-113,594 or –125.7%. The decrease was due to a decrease in operations and
related operating expenses at the facility during the three months ended
September 30, 2009. The decrease in cost of revenue is primarily due to a
decrease in environmental expense of approximately $83,883, decrease in
equipment rental of approximately $7, 011,and a decrease in labor related cost
of approximately $12,137,an increase of property taxes $6,556 , an increase in
equipment repair and maintenance of approximately $1,198, a decrease in business
insurance of approximately $14,642, and a decrease in utilities of approximately
$3,675.
Sales,
general, and administrative expenses
Sales,
general, and administrative expenses were $251,482 for the three months ended
September 30, 2009, compared to $211,767 for the three months ended September
30, 2008, a decrease of $39,715 or approximately –18.8%. The decrease is due
primarily to a reduction of approximately $14,093 in health insurance cost, a
decrease in approximately $4,805 in legal expense, a decrease in penalties and
fines of approximately $17,850 and a decrease in office rent of
$11,767.
Interest
expense
Interest
expense, net of interest income, was $23,230, during the three
months ended September 30, 2009, compared to $12,543 during the three months
ended September 30, 2008, a decrease of $10,687 or 46%.
Net
loss
For the
reasons stated above, net loss for the three months ended September 30, 2009 was
$43,164 a decrease of $264,931 or 85.99% compared with the net loss of $308,095
for the three months ended September 30, 2008.
Results
of Operations for the Nine Months Ended September 30, 2009 and
2008.
Revenue
For the
nine months ended September 30, 2009, revenue from continuing operations was
$503,465 compared to $12,211 during the nine months ended September 30, 2008, an
increase of $491,254 or approximately 4023.%. This increase was due to the
restart of operations at the Hutchins, TX tire processing facility in the fall
of 2008. The facility had been shutdown for the first seven months of
2008.
Cost
of revenue
Cost of
revenue was $154,079 for the nine months ended September 30, 2009, compared to
$275,828 during the nine months ended September 30, 2008, a decrease of $121,749
or –44.1%. The decrease was primarily due to reduction environment expense of
$172,755, an increase in salary and employee benefit expense including contract
labor expense of approximately $24,741, a decrease in utilities expenses of
$12,846 and a decrease in business insurance expense of $30,656 offset by
an increase in property taxes, repair and maintenance, operating
supplies and equipment rental of approximately $44,199 and an increase in
depreciation expense of approximately $25,568..
Sales,
general, and administrative expenses
Sales,
general, and administrative expenses were $655,702 for the nine months ended
September 30, 2009, compared to $775,062 for the nine months ended September 30,
2008, a decrease of $119,360 or approximately 15.4%. This decrease was due
primarily to the reduction in personnel and employee related benefits of
approximately $30,635, a reduction in outside services of approximately $20,000,
a decrease in office rent and office expenses of $23,500, a decrease
in business insurance of $13,000, a decrease in license and permits of $12,225,
and a decrease in professional services of approximately
$20,000.
Interest
expense
Interest
expense, net of interest income, was $48,105 during the nine months ended
September 30, 2009, compared to interest expense of $37,918 during the nine
months ended September 30, 2008, a increase of $10,167or 26.8%.
Other
income
Other
income for the nine months ended September 30, 2009 and 2008 was $70,000 and
$-0-, respectively.
Net
Income (Loss)
For the
reasons stated above, net loss for the nine months ended September 30, 2009 was
($284,420), compared with the net loss of ($1,008,930) for
the nine months ended September 30, 2008, a decrease of $724,510 or
71.8%.
Liquidity
and Capital Resources
As of
September 30, 2009, we have a negative working capital of $2,190,567 and a cash
balance of $82,498. The company’s negative working capital balance is due
primarily to the curtailment of its full operation and consequential reduction
in cash flows at our tire fuel processing facility in Hutchins, Texas, inclusion
of a liability of $158,9371- for cleanup costs at the Hutchins facility, and the
current liability classification of our notes payable due to
default.
For the
nine months ended September 30, 2009, net cash provided by operating activities
of $40,958 consists primarily of the net loss of $284,420 and an increase in
accounts receivable of $62,561 and other income of $70,000 offset by non cash
depreciation expense of $129,265, consulting fees of $36,105 for stock, a
decrease in prepaid expenses of $19,844, an increase in accounts payable of
$79,190 and an increase in related party payables of $158,383.
For the
nine months ended September 30, 2008, net cash used in operating activities of
$540,772 consists primarily of the net loss of ($1,008,930) and other non cash
income of $66,667 offset by non cash depreciation expense of $103,841 and an
increase in the components of working capital primarily due to an increase in
accounts payable and accruals of $305,812.
For the
nine months ended September 30, 2009 and September 30, 2008, net cash used in
investing activities was $-0- and $64,907 respectively.
Net cash
used in financing activities was $4,420 for the nine months ended September 30,
2009, is comprised of payments on debt of $55,580 and $60,000 proceeds from
issuance of common stock .
Net cash
provided by financing activities of $610,354 for the nine months ended September
30, 2008 includes proceeds from common stock issued of $592,441 and proceeds
from the issuance of notes and loans of $65,502 and offset by payments on
indebtedness of $47,589.
We
received funding of $2,050 during first quarter 2009, as a capital contribution
from Vista International, Inc ,the majority shareholder at that time in exchange
for 20,500 shares of common stock during the first nine months of 2009. The
$2,050 was paid to a creditor of the Company directly by Vista International,
Inc.We are exploring financing options with investors and lenders that we expect
will provide additional capital either as debt or as an equity contribution to
us during the remainder of 2009 for the purpose of funding ongoing operations,
investing in new equipment for our tire fuel processing operations and advancing
our Thermal Gasifier™ technology. However, we have not reached any
terms for financing and we cannot assume that we will be able to secure
financing at all, and if we are able to do so, we cannot predict what the terms
of financing will be.
We expect
that our current revenue levels would be sufficient to sustain our present level
of operations for the foreseeable future. However, there are current expenses
relating to the settlement of certain past liabilities that may necessitate
additional funding. Furthermore, the company believes it will need to secure
additional investment capital within the next few months to continue development
of the next generation Thermal Gasifier ™ and provide adequate funds to execute
the current business plan.
The
independent auditors report on our December 31, 2008 financial statements states
that our recurring losses raise substantial doubts about our ability to continue
as a going concern.
Item 3. Quantitative and Qualitative
Disclosures About Market Risk
None
Item
4T. Controls and Procedures
The
Company under the supervision and with the participation of the Company 's
management, including Tom P. Pfisterer, the
Company 's Interim Chief Executive Officer (the principal
executive officer and principal accounting officer), performed an evaluation of
the effectiveness of the design and operation of the Company disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the
end of the period covered by this report as of September 30, 2009. Based
on that evaluation, the Interim Chief Executive Officer
and principal accounting officer concluded that, because
of the material weaknesses in internal control over financial reporting
described below, the Company 's disclosure controls and procedures
were not effective as of September 30, 2009 to ensure that information required
to be disclosed by us in reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in Securities and Exchange Commission rules and forms or
to ensure that information required to be disclosed in our Exchange
Act reports is accumulated and communicated to our management, including our
Chief Executive Officer and Principal Accounting Officer, to allow timely
decisions regarding required disclosures.
Management’s
report on internal control over financial reporting
Based on
an evaluation as of December 31, 2009, management concluded that our
internal control over financial reporting was not effective due to a material
weakness in our ability to produce financial statements free from material
misstatements. Management reported a material weakness resulting from the
combination of the following:
|
·
|
The
Company lacks sufficient accounting controls and procedures to ensure
proper timing and recording of non cash transactions and that expenditures
are properly allocated between the Company and its majority
shareholder.
|
|
·
|
We
lack the ability to segregate duties as it relates to recording and
reconciling our accounts, however, management oversight of the approval of
transactions mitigates this issue.
|
There was
no change in our internal control over financial
reporting during the quarter ended September 30, 2009 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
PARTII:
OTHER INFORMATION
Item
1. Legal Proceedings.
.None
other than those disclosed in previous reports.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
The
company issued 349,613 shares of common stock to Mustang Consulting, LLC in
accordance with the consulting agreement dated June 11, 2009. These shares were
issued to the consultant on September 22,
2009.. The company owes the consultant an additional 218,860 shares
of restricted common stock for services rendered in the period ending September
30, 2009.
During
the nine months ended September 30, 2009, the Company received two payments from
a private individual for payment of expenses for our operations. One
payment was for $15,000 and a second payment of $45,000 for the period ending
September 30, 2009. On September 4, 2009 the company issued this
individual 230,769 shares of common stock for the $15,000 of paid in
capital. On September 22, 2009 the Company issued this individual
750,000 shares of common stock for the $45,000 of paid in
capital. These shares are classified as common stock that was issued
on our September 30, 2009 consolidated balance sheet
The
foregoing issuances were made pursuant to an exemption from registration
provided by Section 4(2) of the Securities Act of 1933. The company
did not pay any commissions in connection with these issuances.
Item
3. Defaults Upon Senior Securities.
Not
Applicable
Item
4. Submission of Matters to a Vote of Security Holders.
None
Item
5. Other Information.
None.
Item
6. Exhibits.
(a)
Exhibits.
|
|
|
|
|
|
|
3(i).1
|
Certificate
of Incorporation**
|
|
3(i).2
|
Articles
of Amendment to Articles of Incorporation, as amended on August 6,
1999**
|
|
3(i).3
|
Certificate
of Amendment of Certificate of Incorporation, as amended on April 24,
2002**
|
|
3(i).4
3
(i)
|
Certificate
of Amendment to Certificate of Incorporation filed on October 12,
2005**
Certificate
of Amendment to Certificate of Incorporation filed on November 13,
2007**
|
|
3(ii).1
|
Amended
and Restated By-Laws***
|
|
10.2
|
Stock
Purchase Agreement dated September 29, 2005 between Nathaniel Energy
Oklahoma Holdings, Corporation (“NEHOC”) and Richard
Strain**
|
|
10.3
|
Purchase
and Sale Agreement dated September 30, 2005 between Nathaniel Energy
Corporation, NEOHC, MCNIC Rodeo Gathering, Inc. and Midstream Energy
Services**
|
|
10.4
1
10.3
10.5
|
Nathaniel
Energy Corporation 2005 Equity Participation Plan**
Agreement
dated August 3, 2009 between Vista International Technologies, Inc. and
Ing. Gianfranco Licurzi
Loan
Agreement dated August 3, 2009 between Timothy D. Ruddy and Vista
International, Inc.
Line
of Credit Agreement dated August 11, 2009 between Vista International
Technologies, Inc. and Richard Strain
|
|
10.6
|
Agreement
dated December 5, 2006 between Nathaniel Energy Corporation and
Bailey-Jamar, LLC. ****
|
|
14.1
|
Code
of Business Conduct and Ethics for Officers (Vice President and Senior)
and Directors (effective March 8, 2004)***
|
|
14.2
|
Code
of Business Conduct and Ethics for Employees and Officers(other than Vice
President and Senior)(effective March 8, 2004)***
|
|
31.
|
Certification
of Chief Executive Officer and Principal Accounting Officer pursuant to
Rule 13a-14(a)or Rule 15d-14(a)as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
32.
|
Certification
of Chief Executive Officer and Principal Accounting Officer pursuant to 18
U.S.C. Section 1350, as adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
* Denotes
document filed as an exhibit to our Quarterly Report on Form 10-QSB for the
period ended September 30, 2005 and incorporated herein by
reference.
**
Denotes document filed as an exhibit to our current report on form 8-K for an
event dated November 13, 2007 and incorporated herein by reference.
***Denotes
document filed as an exhibit to our Current Report on Form 8-K for an event
dated December 31, 2002 and incorporated herein by reference.
****Denotes
document filed as an exhibit to our Annual Report on form 10-KSB for the year
ended December 31, 2006 and incorporated herein by reference.
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.
VISTA
INTERNATIONAL TECHNOLOGIES, INC.
(Registrant)
|
Date: November 23,
2009
|
By:
|
/s/ Thomas P. Pfisterer
|
|
Thomas
P. Pfisterer
Interim
Chief Executive Officer and Principal Accounting Officer
Vista
International Technologies, Inc.
|
||