UNITED STATES

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, 2013; 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.)

 

5151 E 56^th Ave, Commerce City, Colorado 80022

(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  o

 

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  Xo   No  o

 

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 o Accelerated filer o Non-accelerated filer o (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 14, 2013, Vista International Technologies, Inc. had outstanding 23,210,914 shares of common stock, par value $0.001 per share. 

 

  

VISTA INTERNATIONAL TECHNOLOGIES, INC.

 

TABLE OF CONTENTS

 

 

	PART I – FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements - Unaudited
	Consolidated Balance Sheets at September  30, 2013 (unaudited) and December 31, 2012		F-1
	Consolidated Statements of Operations for the three and nine months ended September 30, 2013 and 2012 (unaudited)		F-2
	Consolidated Statements of Cash Flows for the nine  months ended September 30, 2013 and 2012 (unaudited)		F-3
	Notes to Unaudited Interim Consolidated Financial Statements		F-5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		1
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		7
Item 4.	Controls and Procedures		7
	PART 2 - OTHER INFORMATION
Item 1.	Legal Proceedings		8
Item 2.	Unregistered Sales of Equity Securities And Use of Proceeds		8
Item 3.	Defaults Upon Senior Securities		8
Item 4.	Mine Safety Disclosures		8
Item 5.	Other Information		8
Item 6.	Exhibits		8
	Signatures		12

 

F - 1

 

Vista International Technologies Inc.
Condensed Consolidated Balance Sheets
		September 30,2013	December 31, 2012
		(unaudited)
ASSETS
Current assets:
	Cash	$ 77,957	$ 16,040
	Accounts receivable, net	5,226	27,452
	Other receivables	-
	Prepaid expenses		1,499
Total current assets		83,183	44,991
	Environmental deposit	170,000	170,000
	Deposits	1,896	1,896
	Property and equipment, net	478,859	507,404
	Deferred Expenses	34,970	-
	Intangibles, net	20,878	23,830
Total assets		$ 789,787	$ 748,121
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities		$ 1,814,380	$ 1,918,740
Accrued compensation and payroll liabilities		506,393	522,607
Accrued interest		61,365	227,591
Accrued interest - related parties		53,210	141,882
Notes payables - related parties		797,625	777,893
Notes payable - stockholder		1,108,000	1,096,931
Notes payable and capital leases, current portion		147,741	216,475
Deferred Revenue		208,000	-
Total current liabilities		4,696,714	4,902,119
Notes payable and capital leases, less current portion		11,112	6,223
Total liabilities		4,707,826	4,908,342
Commitments and contingencies			-
Stockholder's deficit:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2013 and December 31, 2012		-	-
Common stock, $0.001 par value; 200,000,000 shares authorized; 23,210,914 and 12,872,428  shares issued outstanding at September 30, 2013 and December 31,2012, respectively		23,211	12,873
Additional paid-in capital		63,724,248	62,841,103
Common stock to be issued		5,000	5,000
Accumulated deficit		(67,670,498)	(67,019,197)
Total stockholder's deficit		(3,918,039)	(4,160,221)
Total liabilities and stockholders' deficit		$ 789,787	$ 748,121

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

F - 2

 

Vista International Technologies Inc.
Condensed Consolidated Statements of Operations
(unaudited)
				Three Months Ended				Nine Months Ended
				September 30, 2013		September 30, 2012		September 30, 2013		September 30, 2012
	Revenues			$ 171,712		$ 184,700		$ 598,306		$ 505,478
	Cost of revenue			163,248		150,285		542,044		518,662
	Environmental remediation expenses			38,705		14,513		(24,653)		(19,122)
	Gross (loss) profit			(30,242)		19,902		80,915		5,938
	Operating expenses:
	Depreciation and amortization			26,993		26,461		80,673		73,182
	Selling, general and administrative expenses			73,746		12,838		368,987		98,878
	Total operating expenses			100,738		39,299		449,660		172,060
	Loss from operations			(130,981)		(19,397)		(368,745)		(166,122)
	Other income (expense):
	Interest expense, net			(53,043)		(66,853)		(153,486)		(190,101)
	Gain on change in the fair value of derivative liability			-		42,069		-		74,192
	Finance charges			-		-		-		(822)
	Loss on settlement of liability			-		-		(129,070)		-
	Other Income			-		-		-		2,890
				(53,043)		(24,784)		(282,556)		(113,841)
	Loss before income taxes			(184,024)		(44,181)		(651,302)		(279,964)
	Income tax expenses			-		-		-		-
	Net loss			$ (184,024)		$ (44,181)		$ (651,302)		$ (279,964)
	Net loss per share, basic and diluted			(0.01)		(0.00)		(0.04)		(0.02)
	Weighted average common shares outstanding			22,792,436		12,192,399		17,068,881		12,104,933
	The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

F - 3

 

Vista International Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
	Nine months ended
	September 30, 2013		September 30, 2012
Cash flows from operating activities:
Net loss	$ (651,302)		$ (279,964)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization	80,673		73,182
Operating expenses incurred by noteholder	54,326		3,392
Common stock issued for services provided	291,000		-
Loss on settlement of liability	129,070		-
Environmental remediation expenses	(24,653)		(19,122)
Gain on sale of property and equipment			(1,100)
Amortization of deferred debt discount			38,791
Gain on change in fair value of derivative liability			(74,192)
Changes in operating assets and liabilities:
Accounts receivable, net	22,226		(6,720)
Prepaid expenses	1,499		50,069
Other current assets	-		1,904
Deferred Revenue	208,000
Accounts payable and accrued expenses	36,194		84,158
Net cash provided by (used in) operating activities	147,033		(129,602)
Cash flows from investing activities:
Property and equipment and intangible asset purchases	-		(1,528)
Proceeds from Sale of Property and Equipment	-		1,100
Purchase of fixed assets for cash	(44,901)		-
Net cash used in investing activities	(44,901)		(428)
Cash flows from financing activities:
Repayments on debt	(51,486)		(22,776)
Proceeds for Common Stock to be Issued	-		5,000
Proceeds from notes payable and capital lease	9,661		32,750
Proceeds from Line of Credit	-		81,213
Proceeds from related party notes	1,610		7,100
Net cash (used in) provided by financing activities	(40,215)		103,287
Net increase (decrease) in cash and cash equivalents	61,917		(26,743)
Cash and cash equivalents at beginning of period	16,040		36,710
Cash and cash equivalents at end of period	77,957		$ 9,967

F - 4

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$ -		$ 5,370
Cash paid during the period for taxes	$ -		$ -
Non-cash investing and financing activities:
Equipment purchases funded by capital lease arrangement	$ -		$ 32,771
Issuance of common stock for in exchange for settlement of convertible notes payable	$ -		$ 12,000
Note payable issued for direct payment made by note holders for repayment of bank loan incurred for environmental deposit	$ -		$ 75,000
Note payable issued for direct payment made by note holders for repayment of convertible note and interest amount	$ -		$ 30,500
Issuance of common stock for in exchange for settlement of accrued interest on notes payable related party	$ 137,149		$ -
Issuance of common stock for in exchange for settlement of accrued interest on notes payable stockholder	$ 222,941		$ -
Issuance of common stock in exchange for settlement of accrued interest	$ 11,590		$ -
Issuance of common stock in exchange for settlement of notes payable- Related party and accrued interest	$ 57,500		$ -
Accrued liabilities paid by note holder on behalf of the Company	$ 2,500		$ -
Fixed assets purchased funded by notes payable	$ 4,275		$ -
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

Vista International Technologies, Inc

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three and nine months ended September 30, 2013 and 2012

(unaudited)

 

1. Significant Accounting Policies and Nature of Operations

 

Unaudited Interim Financial Statements

 

The accompanying unaudited interim financial statements, which include the wholly-owned subsidiaries of Vista International Technologies, Inc. (the “Company”, “we”, “our”), have been prepared by the Company in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission. 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 unaudited interim financial statements should be read in conjunction with the Company’s financial statements and related notes contained in the Form 10-K for the year ended December 31, 2012. In the opinion of management, the unaudited 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, 2013 are not necessarily indicative of the results of operations to be expected for the full year.

 

Description of Business

 

The Company is in the business of developing, commercializing and operating renewable energy and waste-to-energy (“WTE”) technologies and projects.

The Company is currently conducting its business in the following areas:

●	Tire processing operation in Hutchins, Texas, and
●	Renewable energy and WTE projects utilizing the Company’s Thermal Gasifier™ technology and corporate administration at the Company’s offices in Commerce City, Colorado.

Discrete financial information is not presently maintained for our WTE business as it has generated limited revenues.  In addition, management makes investing and resource allocation decisions based on the combined results of both the processing and WTE business.  Accordingly, we only have one reportable segment.

Going Concern and Management’s Plan

 

The Company reported a net loss of approximately $651,300 and net cash provided by operating activities of $147,033 for the nine  months ended September 30, 2013, has a working capital deficiency of approximately $4.6 million and an accumulated deficit of approximately $67.7 million at September 30, 2013.  These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recovery of the recorded assets or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow from operations or to obtain equity investment or additional financing to meet obligations on a timely basis and ultimately achieve profitable operations.

 

During the nine months ended September 30, 2013, the Company received proceeds of $46,598 ($1,610 in cash and balance as non-cash transaction) from a related party, as well as proceeds from a shareholder loan totaling approximately $15,000 ($9,661 in cash and balance as non-cash transaction) to help with working capital.  We expect that the Company will continue to rely on loans, including those  from related parties and issuances of shares in private placements to meet its working capital needs for the immediate future.

Management plans to focus the Company’s resources in four key areas:

 

●

Thermal Gasifier™ engineering design and deployment

●

Maximizing value from the Hutchins, Texas tire processing and storage facility.

●      Development of project based opportunities

        Attracting strategic investment

Vista International Technologies, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three and nine months ended September 30, 2013 and 2012

 (unaudited)

 

1. Significant Accounting Policies and Nature of Operations (Continued) 

Management considers the Thermal Gasifier ™ and waste-to-energy segment to be our core business. However, significant focus continues to be  placed on the improvement of the tire processing operation at our Hutchins, TX facility to increase production and reduce operating costs, and expand sales to increase revenue and cash flow.  In February 2012, the Company began operation of the shredding equipment for its TDF production line

We continue to develop our internal resources and implement business development activities to secure waste-to-energy and biomass-to-energy facility opportunities that will utilize our Thermal Gasifier™ technology through build-own-operate agreements or through joint-venture relationships with strategic partners. We are looking to partner with companies that produce large hydrocarbon-based waste streams and are also in need of thermal and/or electrical energy. We are targeting opportunities where there are high disposal fees and energy rates, where we can use the Thermal Gasifier™ with back end power systems to provide significant cost savings to the end user.  We are reviewing the economic viability of a number of opportunities in the northeastern United States and in Colorado and are currently working towards obtaining letters of intent from these entities.    We currently have a pilot project being constructed in the northeastern US to showcase the technology and obtain emissions testing data from our current generation of units. Currently, the Company does not have any Thermal Gasifiers in operation.

 

Management believes that current revenue levels will not be sufficient to meet our operational needs and execute the Company’s complete business plan. The Company is seeking additional funding for the activities described above. The Company is exploring various financing opportunities and has a commitment for up to $6 million in funding but does not have a final agreement in place  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 assurance that the Company will be able to secure additional financing, or obtain favorable terms on such financing if it is available.  Continued negative cash flow and lack of liquidity create significant uncertainty about the Company’s ability to fully implement its operating plan, and may result in the Company reducing the scope of its planned operations, scale back or discontinue its technology and project development programs, or obtain funds, if available, through strategic alliances that may require the Company to relinquish rights to certain of its technologies or products or to discontinue its operations entirely.

Revenue Recognition

 

We recognize revenue from our tire fuel processing and storage facility in three ways:

 

	●	Disposal fees (“tipping fees”) for waste tires are fully earned when accepted at the facility Tire Derived Fuel and other processed tire revenues are fully earned when the product is accepted at the purchaser’s facility.
	●	Sales of unprocessed whole tires are recognized when delivered to the end user

 

Revenue from sales of our Thermal Gasifier™ will be recognized upon completion, delivery and customer acceptance, using the completed contract method of accounting.   Revenues from other Waste-to-Energy related products or services provided for projects will be recognized when the products are delivered to the end customer, or when services are completed.

During the quarter ended March 31, 2013 the Company began construction of a pilot waste-to-energy project in the northeastern US.  The project is being funded entirely by an outside party.  The Company is receiving payments in advance of services being performed and finished products being delivered to the project site.  As such, these advance payments are being accounted for as deferred revenue in the Company’s financial statements.  When products are purchased or services performed, these transactions will be recorded as deferred expenses in the Company’s financial statements.  For the quarter ended September 30, 2013, the company recorded $208,000 in deferred revenue and $34,970 in deferred expenses for this project.

Concentration of Credit Risk

 

Our two largest customers comprised approximately 25.4% and 25.1% of revenues for the nine months ended September 30, 2013, and 46% and 12% of revenues for the three months ended September 30, 2013. Our two largest customers comprised approximately 29% and 18% of revenues for the nine months ended September 30, 2012, and 29% and 20% of revenues for the three months ended September 30, 2012

Vista International Technologies, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three and nine months ended September 30, 2013 and 2012

 (unaudited)

1. Significant Accounting Policies and Nature of Operations (Continued)

Use of Estimates

 

U.S. generally accepted accounting principles require us to make certain estimates, judgments and assumptions that we believe are reasonable, based on information available at the time they were made.  These estimates, judgments and assumptions can affect the amounts reported in our condensed consolidated financial statements

Recent Accounting Pronouncements

 

The Company has adopted all applicable recently-issued accounting pronouncements.  The adoption of the accounting pronouncements, including any not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.

 Reclassifications

 

Certain reclassifications to the 2012 statements of operations and cash flows have been made in order to conform it to the 2013 presentation.  

2. Notes Payable and Capital Lease

At September 30, 2013 and December 31, 2012, the Company had the following promissory notes outstanding:

	September 30, 2013	December 31, 2012
	(Unaudited)
23% installment note, secured by equipment, due January 2014, signed personally by a related party	$ 4,959	$ -
21% installment note, secured by equipment, due November 2013, signed personally by related party	3,810	19,407
12% promissory note, payable to individual, interest due monthly, secured by the assets of the Company, due on April 22, 2011 **	-	50,000
8.95% installment note, secured by equipment, due October 2013, signed personally by a related party	598	5,667
12% line of credit payable, secured by the assets of the company, due on demand after June 30, 2013	77,241	77,241
12% line of credit payable, secured by the assets of the company, due on demand after June 30, 2013	5,000	5,000
14% installment note, secured by equipment, due June 1, 2014, signed personally by a related party	9,053	17,321
13.7 installment note, secured by property, due January 18, 2023	11,112	-
15% promissory note payable to individual, due on demand, in default	17,000	17,000
10% promissory note payable to individual, due April 2013	26,000	30,000
29.49% Dell business credit note for purchase of computer	4,081	-
20.6% installment note, secured by equipment, due December 2012, signed personally by related party	-	1,062
Total notes payable and capital lease	158,854	222,698
Less: Current maturities	(147,742)	(216,475)
Notes payable and capital lease – Long Term	$ 11,112	$ 6,223

Vista International Technologies, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three and nine months ended September 30, 2013 and 2012

 (unaudited)

Maturities of notes payable and capital lease at September 30, 2013 are as follows:

Period ending September 30,		Amount
2014		$ 47,742
2015 and Beyond		11,112
		$ 8,854

2. Notes Payable and Capital Lease (Continued)

** The 12% promissory note was originally due April 22, 2011 but on May 19, 2011 the repayment of principal was postponed until 5 days after the sale of the Hutchins facility. Interest continued to accrue until January 2013.  On January 11, 2013 the $50,000 note and $7,500 in accrued interest were converted into 1,250,000 shares of common stock of the company.  The conversion price was $0.046 per share.

Issuance of Lines of Credit

On April 18, 2012 the company was issued a line of credit for $5,000 at a rate of 12% interest, secured by the assets of the company.  Interest on the Line began to accrue from July 1, 2012, with the balance being due on demand anytime after June 30, 2013.  The Company drew $5,000 against the line of credit as of September 30, 2013.

On April 26, 2012 the company was issued a line of credit for $80,000 at a rate of 12% interest, secured by the assets of the company.  Interest on the Line began to accrue on July 1, 2012, with the balance being due on demand anytime after June 30, 2013.  The Company drew $77,241 against this line of credit as of September 30, 2013.

3. Related Party Transactions

At September 30, 2013 and December 31, 2012 notes payable - stockholder and notes payable – related parties consisted of the following:

	September 30, 2013	December 31, 2012
	(unaudited)
9% Promissory note payable Richard Strain – stockholder, due June 30, 2013, secured by a first priority security interest in Company assets	$ 1,108,000.00	$ -
9% promissory notes payable – Richard Strain – stockholder, due on demand, secured by a first priority security interest in Company assets	-	500,000.00
9% line of credit - Richard Strain – stockholder, matures December 31, 2011,  principal payments of $8,000 per month, no prepayment penalty, secured by a first priority security interest in the Company’s assets	-	146,931.00
9% note payable-Richard Strain- stockholder, due on demand, secured by a first priority interest in Company assets.	-	450,000.00
Notes payable- stockholder	$ 1,108,000.00	$ 1,096,931.00
8% promissory notes payable - Timothy Ruddy, due on demand, secured by all of the Company’s assets, security interest is subordinated to the loans extended by Mr. Strain	$ 747,625	$ 727,893
10% promissory notes payable to Timothy Ruddy family member, cash interest of 10%	5,000	5,000
12% promissory notes payable to Timothy Ruddy family members, cash interest of 10% and Company stock of 2%, secured by all of the Company’s assets, security interest is subordinated to the loans extended by Mr. Strain, interest due quarterly-default waived	45,000	45,000
Notes payable-related parties	$ 797,124	$ 777,893

Vista International Technologies, Inc

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three and nine months ended September 30, 2013 and 2012

 (unaudited)

Notes payable – stockholder

 

On March 29, 2013, the Company consolidated all of Mr. Strain’s debt into a single consolidated $1,108,000 note with interest rate of 9% per annum and subsequently on April 5, 2013 this was acknowledge by Mr. Strain and loaned $15,000 as additional funds to the Company. This loan is secured by all assets of the company and will mature on June 30, 2013.  Coincident with the execution of this note, all of the outstanding interest owed to Mr. Strain was converted to common stock.   This conversion resulted in the issuance of 2,229, 407 shares to Mr. Strain. $222,940 accrued interest was converted at $0.10 per share.   As of July 1, 2013, this note is currently in default, and the Company is working with the shareholder to extend the note. The Company recorded gain of $3,930 on consolidation into one single note of $1,108,000.

The line of credit provided for certain equity redemption rights to Mr. Strain, on terms and conditions to be agreed upon.  No equity redemption rights had been provided when the line of credit was retired.  The maximum amount to be drawn under the line was $375,000.   The line of credit was retired when the consolidated note was executed by the company.

In September through December 2011, the Company received $450,000 from a promissory note extended by Mr. Strain  to be used for working capital  and to be paid directly to specified vendors for the purchase of shredding equipment to be utilized for the Company’s TDF production line. The note was retired when the consolidated note was executed by the company.

All other debt of the Company is substantially subordinated to Mr. Strain.  

As of September 30, 2013 and December 31, 2012, accrued interest outstanding on the note was approximately $33,240 and $200,200, respectively.

 

Interest expense on the loans for the three and nine months ended September 30, 2013 was approximately $24,900 and $72,600, respectively.  Interest expense on the loans for the three and nine months ended September 30, 2012 was approximately $24,700 and $73,600, respectively.

 

Notes payable – related party

 

The Company has a loan agreement with Mr. Timothy D. Ruddy, a Director and Interim CEO of the Company, in which Mr. Ruddy has the option, at his discretion, to receive payment as follows:

 

	(a)	repayment of principal and interest;
	(b)	conversion of outstanding amount without accrual of interest into the Company’s common stock based on the quoted market price of the stock at the dates loans were made;
	(c)	any combination of cash and stock as described in (a) and (b)

The outstanding balance as of September 30, 2013 is $747,625

Effective March 1, 2013, Mr. Ruddy converted all outstanding interest on the loan to the common stock of the company at a rate equal to the average closing price of the company’s common stock over the ten days prior to the signing of the agreement .  The conversion resulted in the issuance of 3,054,541 shares to Mr Ruddy. Accrued interest of $137,149 was converted @$0.0449 per share as per conversion agreement with Mr. Ruddy.  However the market rate was $0.10 at the time of the board meeting approving the agreement and issuance, hence the difference of $168,305 was credited to additional paid in capital as a loss on settlement of liability.

 As of September 30, 2013 and December 31, 2012, accrued interest outstanding on the loan with Mr. Ruddy was approximately $34,400 and $127,600, respectively.

 

Interest expense on the loans for the three and nine months ended September  30, 2013 was approximately $14,900 and $44,000, respectively.  Interest expense on the loans for the three and nine months ended September 30, 2012 was approximately $13,900 and $39,400 respectively.

 

During the three months ended September 30, 2013, the Company received $1,500  in additional loans from Mr. Ruddy under this agreement.

  

In December 2010, Mr. Ruddy provided $150,000 of personal assets as collateral for a letter of credit utilized for part of the Company’s required financial assurance to the Texas Commission of Environmental Quality (“TCEQ”).  This letter was called by the TCEQ in December 2011.  Subsequently, Mr. Ruddy provided $75,000 in additional funding to partially cover the amount due by the bank which held the letter of credit, and the Company and Mr. Ruddy jointly executed an unsecured loan for the remaining $75,000.   This loan has subsequently been paid off by Mr. Ruddy.Vista International Technologies, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three and nine months ended September 30, 2013 and 2012

 (unaudited)

3. Related Party Transactions (Continued)

.

Notes payable – related party family

 

10%-12% promissory note payable to Timothy Ruddy family member has an outstanding balance of $50,000 as of September 30, 2013.

As of September 30, 2013, no interest payments have been made on these notes. Default has been waived.

As of September 30, 2013 and December 31, 2012, accrued interest outstanding on the loans was approximately $18,800 and $14,400, respectively.

Interest expense on the loans for the three and nine months ended September 30, 2013 was approximately $1,500 and $4,400.

Interest expense on the loans for the three and nine months ended September 30, 2012 was approximately $1,400 and $4,000.  

 

Settlement Payments

The Company was named in a suit in the Colorado District Court for the 18th District (Arapahoe County) by a former employee alleging that the Company did not meet its obligation to issue shares to the employee.  On July 12, 2011 the Court granted a motion to enforce a settlement dated September 16, 2010. In accordance with the terms of a court order, the Company was obligated to make payments totaling approximately $104,700, including 6% interest, to a former employee.  An initial payment of $15,455 was made in July 2011 and monthly payments of $3,000, including interest were due through December 2013.  During the second quarter of 2013, the company renegotiated the settlement to allow for a single lump sum payment of $26,500 as a final payment to settle the matter.  Through June 30, 2013, $71,844 had been paid toward the settlement, and the Company recorded a gain on settlement of liability of $32,856 in the second quarter of 2013.

4. Stockholders’ Equity

 

As of September 30, 2013, the Company has an obligation to issue approximately 10,000 shares of its restricted common stock to an investor. The accompanying unaudited condensed consolidated financial statements reflect an accrual of approximately $5,000 for these unissued shares as of September 30, 2013

As of September 30, 2013 and December 31, 2012, there were 23,210,914 and 12,872,428 shares of common stock issued and outstanding, respectively.

On January 11, 2013 the Company issued 1,250,000 shares of stock to a shareholder in exchange for conversion of a $50,000 promissory note and $7,500 in accrued interest on that note. However the market rate was $0.05 at the time of the board meeting approving the agreement and issuance, hence the difference of $5,000 was credited to additional paid in capital as a loss on settlement of liability.

On March 29, 2013 the Company issued 2,229,407 shares of stock to a shareholder, in exchange for conversion of $222,941 in interest due Mr Strain on the series of notes and a line of credit he has extended to the company

On March 29, 2013 the Company issued 3,054,541 shares of stock to Mr. Timothy Ruddy, Interim CEO and director, in exchange for conversion of $137,149 in interest due Mr Ruddy on the loan he has extended to the company. However the market rate was $0.10 at the time of the board meeting approving the agreement and issuance, hence the difference of $168,305 was credited to additional paid in capital as a loss on settlement of liability.

On April 17, 2013 the Company amended its Employee Stock Ownership Plan (ESOP), updating the plan and allowing for the issuance of up to 12 million shares of S-8 stock.  This amendment was reported in an 8-K on the same date

On April 22, 2013 the Company filed a Form S-8 with the SEC to complete the registration requirements necessary to issue S-8 stock. On April 27, 2013, the Company issued two blocks of S-8 shares (each 575,000 shares) to consultants who are assisting the Company in getting its shares listed on a European stock exchange  and completing  the European funding.

On June 28, 2013 the Company issued 2,000,000 shares of S-8 stock to two consultants valued at $150,000, involved with the Company’s expansion into the European Waste to Energy markets.

On June 29, 2013 the Company issued 154,538 shares of stock to a shareholder, in exchange for conversion of $16,620 in interest due to the shareholder on the consolidated note he has extended to the Company. The Company recorded gain of $5,030 on conversion of accrued interest.

On September 16, 2013 the Company issued 500,000 shares of S-8 stock to a consultant valued at $26,000 involved with European project development

Reverse Stock Split

On September 27, 2012, the company’s Board of Directors approved a 1:10 reverse split of the Company’s common shares.  The split was declared effective November 21, 2012. All references in the accompanying unaudited condensed consolidated financial statement and notes thereto have been retroactively adjusted to reflect the stock split.

Vista International Technologies, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three and nine months ended September 30, 2013 and 2012

 (unaudited)

5. Commitments and Contingencies

   

Encumbrance on Company Assets

 

On September 13, 2011 the Company entered into an agreement with the Internal Revenue Service (“IRS”) to pay a delinquent payroll tax obligation of approximately $88,700, including penalties and interest, at the rate of $5,000 per month.  The IRS has filed a tax lien against the Company in connection with this obligation. Effective January 2013, the monthly installment repayment was reduced to $2,500 from $5,000. The Company expects to use revenues from TDF production at its industrial site in Hutchins Texas to satisfy the remainder of this obligation.

Mechanic’s lien filed by a contractor for approximately $86,000 for services provided October, 2007 through April, 2008.  Lien expired in August 2011 under statute of limitations for such liens in Texas. The liability for this judgment is still included in accounts payable and accrued liabilities in the consolidated balance sheets

Litigation and Claims

The Company was named in a suit in the Colorado District Court for the 18th District (Arapahoe County) by a former employee alleging that the Company did not meet its obligation to issue shares to the employee.  On July 12, 2011 the Court granted a motion to enforce a settlement dated September 16, 2010. In accordance with the terms of the court order, the Company is obligated to make payments totaling approximately $104,700, including annual 6% interest.   An initial payment of $15,455 was made on July 22, 2011 and monthly payments of $3,000, including interest were due through November 2013.  A final payment of approximately $5,200 was to be due in December 2013. The Company had accrued this settlement. The settlement was renegotiated, and a final settlement payment was made in June 2013.  As a result, a gain on settlement of liability of $32,856 was recorded during the period ending September 30, 2013.

Environmental Liability

 

Our tire operations in Texas are subject to regulation by the TCEQ.  At September 30, 2013, the Company had approximately 11,600 tons of whole tires, partially shredded tires, tire chips and process waste stored onsite at the tire processing and storage facility. Through January 2011, we were able to dispose of this material at a municipal landfill site with minimal disposal and transportation costs. In February, 2011, the landfill transitioned to a project-based system where tire shreds are requested as                                                            needed, and the Company is now required to pay transportation and disposal costs in order to reduce its tire shred inventory. Consequently, the Company has since installed a tire derived fuel (TDF) line to create additional revenue from disposal of the tires and has been selling TDF since February 2012.    Based on these new circumstances, the Company has estimated a disposal cost of approximately $307,900 at September 30, 2013.  This amount has been included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets, and reflects a decrease of approximately $24,700 compared to December 31, 2012.  This amount has been recorded as environmental remediation income in the accompanying unaudited condensed consolidated statements of operations.

The Company’s registration with the TCEQ requires the Company to provide financial assurance (approximately $170,000 at June 30, 2012) for remediation in the event the Company liquidates and the facility closes.   The Company currently has $170,000 on deposit with the TCEQ, Consisting of $20,000 in cash provided by the company, and $150,000 in cash provided by Mr. Ruddy. The Company has no other asset retirement obligations. 

6. Subsequent Events

Management evaluated all activities of the Company through the issuance date of the Company’s interim unaudited condensed consolidated financial statements and concluded that no subsequent events have occurred that would require adjustments or disclosures into the interim unaudited condensed consolidated financial statements.

F - 0

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

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” relating to our business or operations 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). 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.

 

The Management’s Discussion and Analysis is intended to help stockholders and other readers understand the dynamics of the Company’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, 2013, compared with the operating results for the period ended September 30, 2012.

 

Business Overview and Presentation

 

Our financial results were impacted by several significant trends, which are listed below.  We expect that these trends will continue to affect our results of operations, cash flows and financial position.

·

Inability to attract adequate debt or equity funding to implement our business plan

·

Delay in successfully demonstrating our Thermal Gasifier™ technology

·

Ongoing operating losses

 

Description of Business

  

The Company is in the business of developing, commercializing and operating renewable energy and waste-to-energy (“WTE”) technologies and projects.

  

The Company is currently conducting its business in the following areas:

●	Tire processing operation in Hutchins, Texas, and
●	Renewable energy and WTE projects utilizing the Company’s Thermal Gasifier™ technology and corporate administration at the Company’s offices in Commerce City, Colorado.

Discrete financial information is not presently maintained for our WTE business as it has generated limited revenues.  In addition, management makes investing and resource allocation decisions based on the combined results of both the processing and WTE business.  Accordingly, we only have one reportable segment.

Our 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™ is expected to divert large volumes of material from landfills and other disposal sites, while providing clean alternative energy and reducing greenhouse gas emissions.  In addition to processing waste into clean energy, our technology has the capability to convert biomass into energy using various plant based materials.   

1

 

Environmental Liability

Our tire processing operations are subject to regulation by the Texas Commission on Environmental Quality (TCEQ). We are registered with the TCEQ, which allows us to receive, store, transport and process waste tires.  Our registration was renewed on April 23, 2010 and our permit was granted through April 25, 2015.

 

At September 30, 2013, the Company had approximately 11,600  tons of whole tires, partially shredded tires, tire chips and process waste stored onsite at the tire processing and storage facility. Through January 2011, we were able to dispose of this material at a municipal landfill site with minimal disposal and transportation costs. In February, 2011, the landfill transitioned to a project based system where tire shreds are requested as needed and the Company is now required to pay transportation and disposal costs in order to reduce its tire shred inventory.  Consequently, the Company has since installed a tire derived fuel (TDF) line to create additional revenue from disposal of the tires and has been selling TDF since February 2012, Based on these circumstances, the Company has estimated a disposal cost of approximately $307,900 at September 30, 2013. 

Going Concern

 

The Report of our Independent Registered Public Accounting Firm on the Company’s consolidated financial statements as of and for the year ended December 31, 2012, includes a “going concern” explanatory paragraph which means that the auditors stated that conditions existed that raise substantial doubt about the Company’s ability to continue as a going concern.

The Company reported a net loss of approximately $651,300 and net cash provided by operating activities of $147,033 for the nine  months ended September 30, 2013, has a working capital deficiency of approximately $4.6 million and an accumulated deficit of approximately $67.7 million at September 30, 2013.  These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recovery of the recorded assets or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow from operations or to obtain equity investment or additional financing to meet obligations on a timely basis and ultimately achieve profitable operations.

Management’s Plan

 

During the nine months ended September 30, 2013, the Company received proceeds of $46,598 ($1,610 in cash and balance as non-cash transaction) from a related party, as well as proceeds from a shareholder loan totaling approximately $15,000 ($9,661 in cash and balance as non-cash transaction)  to help with working capital.  We expect that the Company will continue to rely on loans, including those  from related parties and issuances of shares in private placements to meet its working capital needs for the immediate future.

Management plans to focus the Company’s resources in four key areas:

 

●

Thermal Gasifier™ engineering design and deployment

2

 

 

●

Maximizing value from the Hutchins, Texas tire processing and storage facility, including the operation of a tire derived fuel (“TDF”) production facility.

 

●

Development of project based opportunities, and

 

●

Attracting strategic investment

 

TDF Production

Management considers the Thermal Gasifier ™ and waste-to-energy segment to be our core business. However, significant focus is also being placed on the improvement of the tire processing operation at our Hutchins, TX facility to increase production and reduce operating costs, and expand sales to include TDF to increase revenue and cash flow.  In February 2012, the Company began operation of the shredding equipment for its TDF production line.  Management expects positive cash flow from production in the fourth quarter of 2013.  

 

Thermal Gasifier™ technology

We continue to develop our internal resources and implement business development activities to secure waste-to-energy and biomass-to-energy facility opportunities that will utilize our Thermal Gasifier™ technology through build-own-operate agreements or through joint-venture relationships with strategic partners. We are looking to partner with companies that produce large hydrocarbon-based waste streams and are also in need of thermal and/or electrical energy. We are targeting opportunities where there are high disposal fees and energy rates, where we can use the Thermal Gasifier™ with back end power systems to provide significant cost savings to the end user.  We are reviewing the economic viability of a number of opportunities in the northeastern United States and in Colorado and are currently working towards obtaining letters of intent from these entities. Currently, the company has a pilot Waste-To-Energy project under construction in the northeastern US, but does not have any Thermal Gasifiers in operation.

Summary

Management believes that current revenue levels will not be sufficient to meet our operational needs and execute the Company’s complete business plan. The Company is seeking additional funding for the activities described above, and has a letter of interest from a European investment group for an investment of up to $6 million into the company, but has not completed this funding as of yet

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 assurance that the Company will be able to secure additional financing, or obtain favorable terms on such financing if it is available.  Continued negative cash flow and lack of liquidity create significant uncertainty about the Company’s ability to fully implement its operating plan, and may result in the Company reducing the scope of its planned operations, scale back or discontinue its technology and project development programs, or obtain funds, if available, through strategic alliances that may require the Company to relinquish rights to certain of its technologies or products or to discontinue its operations entirely

_

3

 

Results of Operations

Overview:

The following table summarizes our results of operations for  the Three and Nine Months Ended September 30, 2013  and 2012

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

4

 

 

Revenue

 

Revenue, which consists primarily of tipping fees received for acceptance of whole passenger and truck tires and revenue from sales of TDF (tire derived fuel) declined 7%, or approximately $13,000 as compared with the three months ended September 30, 2012.  The Company saw gasification revenue in 2013 but not 2012, while tire facility revenue decreased in 2013 due to maintenance and repair at the Hutchins facility.  The Company’s customer list for its tire operations in 2013 is consistent with its customer list in 2012.

 

Our two largest customers comprised approximately 46% and 12% of revenues for the three months ended September 30, 2013 and 29% and 20% of revenues for the three months ended September 30, 2012

Cost of Revenue

 

Cost of revenue for our tire processing operations for the three months ended September 30, 2013 increased by 8.6%, or roughly 13,000 from the year ago period. Costs at the Company’s tire processing facility decreased from the year ago period, while cost of revenue from gasification operations were present in 2013 but not 2012. Management expects the cost of revenue to remain roughly constant at this higher level due to continued operation of the TDF production line and continued gasification operations.

Environmental remediation expense

Our tire operations in Texas are subject to regulation by the TCEQ.  At September 30, 2013, the Company had approximately 11,600 tons of whole tires, partially shredded tires, tire chips and process waste stored onsite at the tire processing and storage facility. Through January 2011, we had been able to dispose of this material at a municipal landfill site with minimal disposal and transportation costs. In February 2011, the landfill transitioned to a project based system where tire shreds were requested as needed and the Company was required to pay transportation and disposal costs in order to reduce its tire shred inventory.  Consequently, the company installed a tire derived fuel(TDF) production line, starting production in February 2012 to allow the company to generate revenue from the offtake of material from the site  Based on these new circumstances, the Company has estimated a disposal cost of approximately $307,900 at September 30, 2013, resulting in an expense of $38,705 for the three months ended September 30, 2013 as compared to an expense of $14,513 in the comparable prior period.  Management believes that the cost of disposal will decrease as the tire inventory is reduced over future periods due to TDF production exceeding incoming tonnage.

 

 

The Company’s registration with the TCEQ requires the Company to provide financial assurance in the form of letters of credit (approximately $170,000 at September 30, 2013) for remediation in the event the Company liquidates and the facility closes.  The amount of assurance that would be required (computed utilizing TCEQ regulations) is approximately $162,200 as of September 30, 2013.  Accordingly, our assurance covers our liabilities according to the TCEQ regulations.

 

Selling, General, and Administrative Expenses

 

Selling, general, and administrative expenses increased approximately $60,900 for the three months ended September 30, 2013 as compared to the year ago period.  The increase was due primarily to expenses for consulting services related to the company’s listing in Europe and project development.  Excluding these charges, selling, general and administrative costs actually decreased slightly due to continued overhead reduction measures.    Management expects to keep these expenses minimized until liquidity is sufficient to allow the Company to begin expanding its business.

Interest Expense

 

5

 

Interest expense decreased approximately $13,800 in the three months ended September 30, 2013 versus the year ago period, mainly due to a note conversion in the first quarter of 2013, and reduced interest paid toward equipment financing agreements.

Gain on Change in the Fair Value of Derivative Liability

The company recorded a gain of approximately $42,000 in the period ended September 30, 2012, as a convertible note  neared its maturity.  There was no comparable event in the corresponding period of 2013.

Results of Operations for the Nine Months Ended September 30, 2013 and 2012

 

Revenue

 

Revenue, which consists of tipping fees received for acceptance of whole passenger and truck tires, revenue from the sale of tire derived fuel (TDF), and gasification project revenue, increased by 18%, or approximately $92,800 during the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012. The increase was mainly due to the recognition of gasification revenue in 2013 versus the absence of this revenue in 2012.

 

Our two largest customers comprised approximately 25% and 25% of revenues for the nine months ended September 30, 2013.  Our two largest customers comprised approximately 29% and 18% of revenues for the nine months ended September 30, 2012.

Cost of Revenue

 

Cost of revenue increased 4.5%, or $23,400 for the nine months ended September 30, 2013.  The increase was mainly due to costs associated with our gasification business, which were not present in 2012.  Cost of revenue for our tire processing operations decreased year over year.  Management expects the cost of revenue to remain roughly constant at this higher level due to continued operation of the TDF production line along with costs associated with gasification operations.

Environmental remediation expense

Our tire operations in Texas are subject to regulation by the TCEQ.  At September 30, 2013, the Company had approximately 11,600 tons of whole tires, partially shredded tires, tire chips and process waste stored onsite at the tire processing and storage facility. Through January 2011, we had been able to dispose of this material at a municipal landfill site with minimal disposal and transportation costs. In February, 2011, the landfill transitioned to a project based system where tire shreds were requested as needed and the Company was now required to pay transportation and disposal costs in order to reduce its tire shred inventory.   Consequently, the company installed a tire derived fuel(TDF) production line, starting production in February 2012 to allow the company to generate revenue from the offtake of material from the site    Based on these new circumstances, the Company has estimated a disposal cost of approximately $307,900 at September 30, 2013, resulting in income of approximately $24,700 for the most recent nine month period, as compared to income of approximately $19,100  in the comparable prior period. Management believes that the cost of disposal will continue to decrease as tire inventory is reduced over future periods due to TDF production.

 

The Company’s registration with the TCEQ requires the Company to provide financial assurance in the form of letters of credit (approximately $170,000 at September 30, 2013) for remediation in the event the Company liquidates and the facility closes.  The amount of assurance that would be required (computed utilizing TCEQ regulations) is approximately $162,200 as of September 30, 2013.  Accordingly, our assurance is adequate according to the TCEQ site remediation calculation formula.

Selling, General, and Administrative Expenses

6

 

 

Selling, general, and administrative expenses increased approximately $270,000 in the nine months ended September 30, 2013.  This large increase was due to large expense for consulting services related to the Company’s listing in Europe and its project development efforts.  Excluding these charges, selling general and administrative costs actually decreased, due to reduction in overhead costs at the corporate level.   Management anticipates that these expenses will continue to be minimized until liquidity is sufficient to allow the company to begin expanding the business.

Interest Expense

 

Interest expense decreased approximately $36,600, or 19.3%  in the period ended September 30, 2013 versus the year ago period due to a note conversion in the first quarter of 2013, and reduced interest payments on financed equipment at the Hutchins tire facility.

Loss on Settlement of Liability 

During the nine months ended September 30, 2013, the company recorded a loss of approximately $129,000.  A loss of $173,305 resulting from a difference in share price between the time of the execution of an interest conversion agreement and the approval of that agreement by the board of directors, was partially offset by gains arising from negotiated settlement with a number of the company’s creditors. There were no comparable events in 2012.

Liquidity and Capital Resources

 

The Company had a cash balance of approximately $78,000 as of September 30, 2013.  Our cash balance increased approximately $63,600 as compared to December 31, 2012 due primarily to funds received as advance payment for the company’s waste to energy pilot project.  These advance payment funds are recorded as deferred revenue until recognized according to the policies described in the notes to the financial statements

We expect that our current cash on hand and expected revenues will not be sufficient to sustain our current operations and fully execute our business plan.  The Company is exploring all available funding sources, including the sale of its assets, and additional debt and equity funding, and has secured a letter of interest from an investor who is looking to invest up to $6 million into the company.  The financing has not been completed as of the date of this filing. In the near future we are relying on funding from principal shareholders and related parties to provide cash to fund operations in the foreseeable future as described in more detail under the heading “Management’s Plans” above.  If we are unable to obtain additional funding or increase revenues, we may be required to scale back or suspend operations or revise our business plan.

As of September 30, 2013, we had a working capital deficiency of approximately $4.6 million, which includes notes payable to a stockholder of approximately $1.108 million (notes currently in default), notes payable to related parties of approximately $797,000, a liability of approximately $307,900 for waste tire shred removal and cleanup costs at the tire processing and storage facility, and an unpaid payroll liability to former officers of the Company of approximately $482,000.

 

As of September 30, 2013, we owed approximately $5,100 to the Internal Revenue Service in delinquent payroll taxes and penalties.  Monthly payments of either $5,000 (through December 2012) or $2,500 (January 2013-present) have been made to the Internal Revenue Service since December 28, 2010.  

 

During the nine months ended September 30, 2013, the Company received proceeds of $46,598 ($1,610 in cash and balance as non-cash transaction) from a related party, as well as proceeds from a shareholder loan totaling approximately $15,000 ($9,661 in cash and balance as non-cash transaction) to help with working capital.

7

 

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

None.

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures.

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Limitations on the Effectiveness of Disclosure Controls. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

Evaluation of Disclosure Controls and Procedures. As of September 30, 2013, the end of the fiscal quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Interim Chief Executive Officer, who is our principal executive and principal financial and accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Interim Chief Executive Officer (principal executive officer and principal financial and accounting officer) concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of June 30, 2013. Our disclosure controls and procedures were not effective because of certain “material weaknesses” described in the “Management’s Annual Report on Internal Control over Financial Reporting” section in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. As of September 30, 2013, we had not completed the remediation of these material weaknesses.

Changes in Internal Control over Financial Reporting.

 

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2013  that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

The Company was named in a suit in the Colorado District Court for the 18th District (Arapahoe County) by a former employee alleging that the Company did not meet its obligation to issue shares to the employee.  On July 12, 2011 the Court granted a motion to enforce a settlement dated September 16, 2010. In accordance with the terms of a court order, the Company was obligated to make payments totaling

8

 

approximately $104,700, including 6% interest, to a former employee.  An initial payment of $15,455 was made in July 2011 and monthly payments of $3,000, including interest were due through December 2013.  During the second quarter of 2013, the Company renegotiated the settlement to allow for a single lump sum payment of $26,500 as a final payment to settle the matter.  

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

As of September 30, 2013, the Company has an obligation to issue approximately 10,000 shares of its restricted common stock to an investor.  The accompanying unaudited condensed consolidated balance sheets reflect an accrual of approximately $5,000 for these unissued shares as of September 30, 2013.

.

 

The above sales were exempt from registration under Section 4(2) of the Securities Act of 1933.  We did not use any underwriter or placement agent in these transactions and did not pay anyone commission or other compensation in connection with these issuances.  These issuances were made directly by us to persons with whom our management had direct contact and a pre-existing relationship.

 

Item 3. Defaults Upon Senior Securities.

 

Not Applicable.

 

Item 4. Mine Safety Disclosures.

 

None

Item 5. Other Information.

 

Not Applicable.

Item 15. Exhibits and Financial Statement Schedules

2.1 Industrial Site Purchase and Sale Agreement dated February 14, 2011 by and between Vista International Technologies, Inc. and Brown-Lewisville Railroad Family First Limited Partnership Δ

3(i).1 Certificate of Incorporation*

3(i).2 Articles of Amendment to the 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 Certificate of Amendment of the Certificate of Incorporation, filed on October 12, 2005*

3(i).5 Certificate of Amendment to Certificate of Incorporation, as amended on November 8, 2007**

3(ii).1 Amended and Restated By-Laws***

10.1 Strategic Alliance and Supply Agreement, dated December 29, 2009 by and between Vista International Technologies, Inc. and

Liberty Tire Recycling, LLC ****

10.2 Consulting Agreement dated August 3, 2009 by and between Vista International Technologies, Inc and Ing. Gianfranco

Licursi*****

10.3 Vista International Technologies, Inc. Equity Participation Plan*

9

 

10.4 Investment Agreement dated August 3, 2009 between Vista International Technologies, Inc. and Timothy Ruddy ****

10.5 Security Agreement dated August 3, 2009 by and between Vista International Technologies, Inc. and Timothy Ruddy ****

10.6 Promissory Note (Line of Credit) dated August 11, 2009 by and between Vista International Technologies, Inc. and Richard Strain****

10.7 Security Agreement dated August 11, 2009 by and between Vista International Technologies, Inc. and Richard Strain Δ

10.8 Promissory Note dated April 4, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ

10.9 Security Agreement dated April 4, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ

10.10 Promissory Note dated April 16, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ

10.11 Security Agreement dated April 16, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ

10.12 Promissory Note dated May 31, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ

10.13 Security Agreement dated May 31, 2007 by and between Nathaniel Energy Corporation and Richard Strain Δ

10.14 Engagement Letter dated April 15, 2010 by and between Vista International Technologies, Inc. and Colebrooke Capital, Inc. +

10.15 Joint Development Agreement dated October 16, 2010 by and between Vista International Technologies, Inc. and Mustang

Consulting, LLC ++

10.16 Amendment to Engagement Agreement dated August 30, 2010 by and between Vista International Technologies, Inc. and

Colebrooke Capital, Inc. ++

10.17 Consulting Agreement dated October 26, 2010 by and between Vista International Technologies, Inc. and Steven R. Kowalsky

and Edward L. Kowalsky. ++

10.18 Consulting and Services Agreement dated June 11, 2009 by and between Vista International Technologies, Inc. and Mustang

Consulting, LLC (“Consulting and Services Agreement”) Δ

10.19 Continuation of Consulting and Services Agreement effective January 4, 2010 Δ

10.20 Exclusive Listing Agreement dated July 1, 2010 by and between Vista International Technologies, Inc. and CCBN Texas

Limited Partnership d/b/a Colliers International Δ

10

 

10.21 Alternative Fuel Purchase Agreement, dated January 2nd, 2012, between Vista International Technologies, Inc, And

Geocycle, LLC.++++

10.22 Release of Contract, dated January 18, 2012, between Vista International Technologies, Inc. and Brown-Lewisville Railroad

Family First Limited Partnership++++

10.23 Alternative Fuel Purchase Agreement, dated January 1, 2012, between Vista International Technologies, Inc. and Trident

Environmental Resource Consulting, LLC++++

10.24 Convertible Note dated December 7, 2011 between Vista International Technologies, Inc. and Asher Enterprises, Inc.++++

10.25 Lease Agreement dated March 1, 2012 between Vista International Technologies, Inc, and Electric Power Equipment

Company.++++

10.26 Equipment Financing Agreement, dated February 15, 2012, between Vista International Technologies, Inc (Timothy Ruddy)

and REO Holdings.++++

* 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 December 21, 2007 and incorporated herein by

reference.

*** Denotes document filed as an exhibit to our Current Report on Form 8-K for an event dated June 6, 2005.

**** Denotes document filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein

by reference.

***** Denotes document filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended September 30, 2009 and incorporated

herein by reference.

Δ Denotes document filed as an exhibit to our Annual Report on Form 10-K/A Amendment No. 1 for the year ended December 31, 2010 and

incorporated herein by reference.

+ Denotes document filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended June 30, 2010 and incorporated herein by

reference.

++ Denotes document filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended September 30, 2010 and incorporated

herein by reference.

11

 

+++ Denotes document filed as an exhibit to our Annual Report on Form 10-KSB for the year ended December 31, 2003 and incorporated herein

by reference.

++++ Denotes document filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein

by reference.

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)+++

21 Subsidiaries****

31.1  Certification of Interim Chief Executive 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.

31.2  Certification of Chief Financial 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.

32.1 Certification of Interim Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.

 

 

12