UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
-------------
|X| Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended April 30, 2005
|_| Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____ to ____
Commission File No. 0-25312
STARTECH ENVIRONMENTAL CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1286576
(State of incorporation) (I.R.S. Employer
Identification Number)
15 Old Danbury Road, Suite 203
Wilton, CT 06897
----------------------------------------------------------
(Address of principal executive offices, including zip code)
(203) 762-2499 (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, and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act). Yes |_| No |X|
As of June 17, 2005, the registrant had outstanding 17,970,762 shares of
Common Stock.
STARTECH ENVIRONMENTAL CORPORATION
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
- ------------------------------ ----
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets - April 30, 2005
and October 31, 2004 3
Consolidated statements of operations for the three and
six months ended April 30, 2005 and 2004 4
Consolidated statements of cash flows for the six months
ended April 30, 2005 and 2004 5
Notes to consolidated financial statements 6-13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14-20
Item 3. Quantitative and Qualitative Disclosure about Market Risk 20
Item 4. Controls and Procedures 21
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 22
Item 2. Changes in Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits 23
Signatures 24
2
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
STARTECH ENVIRONMENTAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
April 30, October 31,
2005 2004
---- ----
Current assets:
Cash and cash equivalents ......................................... $ 1,152,977 $ 2,401,061
Notes receivable .................................................. 450,000 50,000
Inventories ....................................................... 324,766 584,226
Prepaid expenses .................................................. 15,000 15,000
Other current assets .............................................. 7,008 5,508
------------ ------------
Total current assets ..................................... 1,949,751 3,055,795
Property and equipment, net ....................................... 2,000,127 1,625,053
Other assets ...................................................... 276,420 276,420
------------ ------------
Total assets ............................................. $ 4,226,298 $ 4,957,268
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................................. $ 162,793 $ 223,817
Capital lease - short-term ........................................ 1,054 4,073
Customer deposits and deferred revenue ............................ 1,205,807 771,777
Other accrued expenses ............................................ 268,423 335,725
------------ ------------
Total current liabilities ................................ 1,638,077 1,335,392
Long-term liability:
Capital lease payable net of current portion ..................... 0 242
------------ ------------
Total liabilities ........................................ $ 1,638,077 $ 1,335,634
------------ ------------
Commitments:
Stockholders' equity:
Preferred stock, no par value, 10,000,000 shares .................. 0 0
authorized; none issued and outstanding
Common stock, no par value, 800,000,000 shares authorized;
Shares issued and outstanding: 17,869,752 at April 30, 2005
and 17,560,887 at October 31, 2004 ................................ 23,362,921 22,442,333
Additional paid-in capital ........................................ 1,742,745 1,742,745
Accumulated deficit ............................................... (22,517,445) (20,563,444)
------------ ------------
Total stockholders' equity ........................................ 2,588,221 3,621,634
------------ ------------
Total liabilities and stockholders' equity ............... $ 4,226,298 $ 4,957,268
============ ============
See accompanying notes to consolidated financial statements.
3
STARTECH ENVIRONMENTAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
April 30, 2005 April 30, 2004 April 30, 2005 April 30, 2004
-------------- -------------- -------------- --------------
Revenue ...................................... $ 32,985 $ 1,517,240 $ 65,970 $ 1,560,620
Cost of sales ................................ 0 546,756 0 573,256
------------ ------------ ------------ ------------
Gross profit ................................. 32,985 970,484 65,970 987,364
------------ ------------ ------------ ------------
Operating expenses
Selling expenses ...................... 199,702 250,838 437,154 439,634
Research and development .............. 84,980 82,615 170,190 159,466
General and administrative expenses ... 867,990 536,003 1,612,798 1,157,223
------------ ------------ ------------ ------------
Total operating expenses ..................... $ 1,152,672 $ 869,456 $ 2,220,142 $ 1,756,323
------------ ------------ ------------ ------------
Income/(loss) from operations ................ (1,119,687) 101,028 (2,154,172) (768,959)
------------ ------------ ------------ ------------
Other income (expense):
Other income ................................. 154,196 0 203,992 0
Interest income .............................. 5,054 8,809 11,366 14,522
Interest expense ............................. (59) (452) (189) (1,176)
------------ ------------ ------------ ------------
Total other income ........................... 159,191 8,357 215,169 13,346
------------ ------------ ------------ ------------
Income/(loss) before income taxes ............ (960,496) 109,385 (1,939,003) (755,613)
------------ ------------ ------------ ------------
Income tax expense ........................... 4,919 361 14,995 2,778
------------ ------------ ------------ ------------
Net income/ (loss) ........................... $ (965,415) $ 109,024 $ (1,953,998) $ (758,391)
============ ============ ============ ============
Basic and diluted net loss per share ......... $ (0.05) $ 0.01 $ (0.11) $ (0.05)
============ ============ ============ ============
Weighted average common
shares outstanding ........................... 17,856,833 17,152,557 17,846,712 16,466,564
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
4
STARTECH ENVIRONMENTAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended Six Months Ended
April 30, 2005 April 30, 2004
-------------- --------------
Cash flows from operating activities:
Net loss ........................................................ $(1,953,998) $ (758,391)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation .................................................... 106,619 103,430
401K plan match made by the issuance of shares .................. 33,849 27,200
Common stock issued for services ................................ 0 24,000
(Increase) in notes receivable .................................. (400,000) 0
(Increase) decrease in inventory ................................ 259,460 0
(Increase) decrease in prepaid and other current assets ......... (1,500) (3,488)
Increase (decrease) in accounts payable ......................... (61,024) 17,307
Increase (decrease) in customer deposits ........................ 434,030 (870,000)
Increase (decrease) in accrued expense .......................... (67,302) (81,508)
----------- -----------
Net cash used in operating activities ........................... (1,649,866) (1,541,450)
----------- -----------
Cash flows used in investing activities:
Capital expenditures ............................................ (481,693) (94,223)
----------- -----------
Net cash used in investing activities ........................... (481,693) (94,223)
----------- -----------
Cash flows from financing activities:
Payment for capital leases ...................................... (3,261) (9,958)
Proceeds from options, warrants and common stock issuance ....... 886,736 2,605,410
----------- -----------
Net cash provided by financing activities ....................... 883,475 2,595,452
----------- -----------
Net (decrease) increase in cash and cash equivalents ............ (1,248,084) 959,779
Cash and cash equivalents at beginning of period ................ 2,401,061 2,601,558
----------- -----------
Cash and cash equivalents at end of period ...................... $ 1,152,977 $ 3,561,337
=========== ===========
Supplemental disclosure- taxes paid ............................. $ 14,995 $ 2,778
=========== ===========
See accompanying notes to consolidated financial statements.
5
STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Basis of Presentation and Management Liquidity Plans
- ------------------------------------------------------------
Basis of Presentation - The accompanying unaudited consolidated financial
statements of Startech Environmental Corporation (the "Company" or "Startech")
have been prepared in accordance with accounting principles generally accepted
in the United States of America ("GAAP") for interim financial information which
contemplate continuation of the Company as a going concern. In the opinion of
management, such statements include all adjustments (consisting only of normal
recurring adjustments) necessary for the fair presentation of the Company's
financial position, results of operations and cash flows at the dates and for
the periods indicated. Pursuant to the requirements of the Securities and
Exchange Commission (the "SEC") applicable to quarterly reports on Form 10-Q,
the accompanying financial statements do not include all the disclosures
required by GAAP for annual financial statements. While the Company believes
that the disclosures presented are adequate to make the information not
misleading, these unaudited interim consolidated financial statements should be
read in conjunction with the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-K for the year ended October
31, 2004. Operating results for the six months period ended April 30, 2005 are
not necessarily indicative of the results that may be expected for the fiscal
year ending October 31, 2005.
Management's Liquidity Plans - As of April 30, 2005, we had cash and cash
equivalents of $1,152,977 and working capital of $311,674. During the six months
ended April 30, 2005, our cash decreased by $1,248,084. The decrease in cash
resulted primarily from the operations of the Company.
The Company has suffered significant recurring operating losses, used
substantial funds in its operations, and needs to raise additional funds in
order to be able to accomplish its objectives. These circumstances, if not
rectified in the near future, raise substantial doubt about the Company's
ability to continue as a going concern.
The Company has historically satisfied its capital needs primarily by the sale
of equity securities. We are currently in discussions with several funding
sources to raise additional capital through the issuance of additional equity
securities (See Note 10). In addition to the proceeds from equity securities,
management plans to narrow its cash outflows during 2005 by implementing
reductions of administrative overhead expenses where necessary and feasible
while continuing to emphasize its sales and marketing efforts. There are
currently several near-term sales opportunities that are in the final stages of
closure, and these sales, in addition to the three implemented distributorship
agreements, would add significantly to a positive cash flow.
There is no assurance that financing will be available when needed or that
management will be able to obtain financing on terms acceptable to the Company
and whether the Company will be able to turn into a profitable position and
generate positive operating cash flow. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Note 1a. Inventories
- --------------------
Inventories consist of raw materials and work in process, and are stated at
lower of cost or market. Cost is determined by the first-in, first-out method.
Inventory consists of the following at April 30, 2005 and October 31, 2004:
April 30, 2005 Oct. 31, 2004
-------------- -------------
Raw materials .......................... $324,766 $324,766
Work in process ........................ 0 259,460
-------- --------
Total inventory ........................ $324,766 $584,226
======== ========
The work in process inventory was reclassified to construction in progress
during January 2005.
6
STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1b. Notes Receivable
- -------------------------
On March 2, 2005 a promissory note was executed with Ercole Marelli HiTech Srt,
of Italy for $200,000 in connection with the sale of a distributor agreement.
The first payment of $100,000 would be made on May 1, 2005 and the remaining
$100,000 payment would be made on June 30, 2005. The $100,000 was received in
May 2005. We are awaiting the June 30, 2005 payment.
On April 7, 2005 a promissory note was executed with Materiales Renovados
Corporation of Madrid, Spain for $250,000 in connection with the sale of a
distributor agreement. The entire principal was paid on June 6, 2005.
Note 2. Capital Lease Obligation
- --------------------------------
The Company has entered into capital lease obligations for computer equipment.
The term of the leases range from 36 to 48 months, with principal and interest
due in aggregate monthly installments of $860 at interest rates ranging from
13.75% to 16.98%. The equipment was capitalized at $19,503 and is being
depreciated over five years. Depreciation expense for the six months and the
three months ended April 30, 2005 was $1,950 and $975 respectively.
Note 3. Equity Transactions
- ---------------------------
Loss per Share
Diluted earnings per share is computed using the weighted average number of
shares of common stock outstanding during the period, plus the dilutive effect
of potential future issuances of common stock relating to stock option programs
and other potentially dilutive securities. In calculating diluted earnings per
share, the dilutive effect of stock options is computed using the average market
price for the period. Shares related to the Company's outstanding stock options
and warrants were excluded because they were not dilutive; however, these shares
could be dilutive in the future.
At April 30, 2005, there were approximately 4.5 million shares of common stock
potentially issuable with respect to stock options and warrants, which could
dilute basic earnings per share in the future.
Stock Options
At April 30, 2005, we had two stock-based employee compensation plans, which are
described more fully in Note 7. We have adopted the disclosure provisions
allowed by Statement of Financial Accounting Standards ("SFAS") No. 148,
"Accounting for Stock-Based Compensation -- Transition and Disclosure -- An
Amendment of FASB Statement No. 123." In addition, we have elected to continue
using the intrinsic value method to measure the compensation costs of
stock-based awards granted to employees in accordance with Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees"; as a
result, we recognize compensation expense for employee stock options granted at
a price less than the market value of our common stock on the date of grant. The
following table illustrates the effect on net loss and net loss per share had
stock-based employee compensation been recorded based on the fair value method
under SFAS No. 123.
7
STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 3. Equity Transactions (Cont'd)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
April 30, 2005 April 30, 2004 April 30, 2005 April 30, 2004
-------------- -------------- -------------- --------------
Net loss $ (965,415) $ 109,024 $(1,953,998) $ (758,391)
Stock-based proforma (48,900) (31,200) (48,900) (40,404)
----------- ----------- ----------- -----------
Pro forma net loss (1,014,315) 77,824 (2,002,898) (798,795)
=========== =========== =========== ===========
Basic and Diluted net loss per share $ (.06) $ .01 $ (.11) $ (.05)
=========== =========== =========== ===========
Pro forma Basic and Diluted net loss per
share $ (.06) $ .01 $ (.11) $ (.05)
=========== =========== =========== ===========
Option valuation models require highly subjective assumptions, including the
expected stock price volatility, which may be significantly different from those
of traded options. Because changes in subjective assumptions can materially
affect the fair value estimate, it is the opinion of management that the
existing models do not necessarily provide a reliable single measure of the fair
value of stock-based awards. The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options, which have no
vesting restrictions and are fully transferable. The pro forma stock-based
employee compensation was estimated using the Black-Scholes option pricing model
with the following weighted average assumptions for each year:
2005 2004
---- ----
Risk-free interest rate 4.60% 1.41%
Expected life of options - years 10.00 10.00
Expected stock price volatility 52% 79%
Expected dividend yield N/A N/A
Warrants
There were no warrants issued in the first quarter of 2005. There were 10,577
shares exercised during the 2nd quarter of 2005, with gross proceeds from the
exercise of warrants at $3.34 per share totaling $35,327.
Private Placement
There were 275,708 shares issued for the first quarter of 2005, with gross
proceeds for the private placements totaling $844,000, including costs of
$14,640. Additionally there were 70,930 warrants issued that will expire on
December 8, 2007. One third of the warrants were priced at $5.95, one third of
the warrants were priced at $7.95 and one third of the warrants were priced at
$9.95.
Options
For the three months ended April 30, 2005, no options were exercised. For the
six months ended April 30, 2005, 15,000 options were exercised for gross
proceeds of $22,050.
8
STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 4. Cash Flow
- -----------------
During the six months ended April 30, 2005 and 2004, the Company had non-cash
transactions. The following is a listing of these transactions and the dollar
value of these transactions.
Six months ended: April 30, 2005 April 30, 2004
- ----------------- -------------- --------------
Non-cash financing activity;
Series "A" convertible preferred stock
converted to common stock $ 0 $ 26,453
401(k) plan match 33,849 27,200
Non-cash Investing activity;
Reclassification of inventory
to property & equipment 259,460 0
Common stock issued for services 0 24,000
Note 5. Revenue Recognition
- ---------------------------
The Company recognizes revenue on the sale of its manufactured products at the
date of shipment. Revenues earned from consulting and design services are
recognized when the services are completed. For distributorship agreements,
revenue is recognized for services and training upon completion and the
distribution rights are amortized over a reasonable period of time. During the
six months and the three months ended April 30, 2005, revenues totaling $65,970
and $32,985, respectively, were recognized representing two separate
distributorship agreements. Revenue for the six months and the three months
ended April 30, 2004 were from the sale of parts to one customer.
Note 6. Employee Benefits Plan
- ------------------------------
Contributions for the three months ended April 30, 2005 were $19,427, which
represents the issuance of approximately 4,926 shares of our common stock.
Contributions for the six months ended April 30, 2005 were $33,849, which
represents the issuance of approximately 7,580 shares of our common stock.
Note 7. Stockholders' Equity
- ----------------------------
Stock Options
1995 Stock Option Plan
In November 1995, the Company registered with the Securities and Exchange
Commission 2,000,000 shares of common stock, issuable upon exercise of stock
options granted by the Company under its 1995 Non-qualifying Stock Option Plan
(the "1995 Plan") to employees, directors and other persons associated with the
Company whose services have benefited the Company. The options must be issued
within 10 years from November 20, 1995. Determination of the option price per
share and exercise date is at the sole discretion of the compensation committee
of the Company's board of directors.
9
STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 7. Stockholders Equity (Cont'd)
During the fiscal years ended October 31, 2004, 2003 and 2002, the Company
granted 0, 0 and 10,000 stock options, respectively. The options have an
exercise price of $3.38 per share. On the grant dates, the market value was the
same as the exercise price; therefore, no compensation expense was recorded. As
of April 30, 2005, 8,089 options were available to be granted under the 1995
Plan. As of April 30, 2005 there were 1,207,500 options outstanding, all of
which were exercisable and vested.
Options outstanding - 1995 Plan
Fiscal Year Ended October 31, Six Months
Ended
- -----------------------------------------------------------------------------------------------------
2001 2002 2003 2004 4/30/05
---- ---- ---- ---- -------
Options granted -- 10,000 0 0 0
Options cancelled -- 0 0 0 0
Options exercised -- 0 0 0 0
- ------------------------------------------------------------------------------------------------------
Total outstanding 1,197,500 1,207,500 1,207,500 1,207,500 1,207,500
========= ========= ========= ========= =========
2000 Stock Option Plan
The Company's 2000 Stock Option Plan (the "2000 Plan") was adopted by the board
of directors in January 2000 and was approved by the stockholders in February
2000. The 2000 Plan authorizes the issuance of up to 1,000,000 shares of the
Company's common stock. The 2000 Plan provides for the grant of incentive stock
options intended to qualify under Section 422 of the Internal Revenue Code and
non-statutory stock options. Officers, directors, employees and consultants, and
employees and consultants of the Company's majority-owned affiliated companies,
are eligible to receive awards under the 2000 Plan.
The options may be granted at an exercise price greater than or equal to the
fair market value of the Company's common stock on the date of grant or not less
than 110% of the fair market value in the case of incentive stock options
granted to persons holding more than 10% of the voting power of the Company.
Fair market value for purposes of the 2000 Plan is the closing market price of
the Company's common stock on the relevant date.
During the six months ended April 30, 2005, there were 30,000 options granted
under the 2000 Plan at an average exercise price of $3.30 per share and 5,000
options were exercised at an average exercise price of $2.03 per share. During
the fiscal year ended October 31, 2004, 130,000 options were granted at an
average exercise price of $3.98 per share and no options were cancelled. During
the fiscal year ended October 31, 2004, 152,000 options were exercised at an
average price of $1.81. On the issuance dates, the market value was the same as
the exercise price; therefore, no compensation expense was recorded. As of April
30, 2005, 290,000 options were available to be granted. A total of 537,000
options under the 2000 Plan have been granted at an average exercise price of
$3.77 per share.
Options outstanding - 2000 Plan
Fiscal Year Ended October 31, Six months
Ended
- ----------------------------------------------------------------------------------------------------
2001 2002 2003 2004 4/30/05
---- ---- ---- ---- -------
Options granted -- 277,000 100,000 130,000 30,000
Options cancelled -- 0 (20,000) 0 0
Options exercised -- 0 0 (152,000) (15,000)
- ----------------------------------------------------------------------------------------------------
Total outstanding 0 277,000 357,000 335,000 350,000
==== ======= ======= ======= =======
10
STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 7. Stockholders Equity (Cont'd)
- ------------------------------------
2000 Compensation Plan
At April 30, 2005, there were 491,089 shares of common stock reserved for
issuance upon the exercise of outstanding options and 483,000 shares available
for grant of options under the 2000 Compensation Plan. For the six months ended
April 30, 2005 we granted a total of 30,000 options to directors under the 2000
Compensation Plan.
The 2000 Compensation Plan is administered by the Compensation Committee of our
board of directors. The Compensation Committee has the authority to adopt, amend
and repeal the administrative rules, guidelines and practices relating to the
2000 Compensation Plan and to interpret its provisions. The Compensation
Committee selects the recipients of awards and determines the number of shares
of common stock covered by the options and the dates upon which the options
become exercisable and terminate, subject to provisions of the 2000 Compensation
Plan. Incentive stock options must terminate within ten years of the grant.
Non-statutory options must terminate within fifteen years of the date of grant.
The Compensation Committee has the right to alter the terms of any option when
granted or while outstanding, pursuant to the terms of the 2000 Compensation
Plan, except the option price.
All options automatically become exercisable in full in the event of a change in
control, as defined in the 2000 Compensation Plan, death or disability of the
option holder or as decided by the Compensation Committee. Upon retirement,
options held for at least one year prior thereto become exercisable in full. If
an option holder's employment with us is terminated for any reason, except upon
death, disability or retirement, the option holder has three months in which to
exercise an option, but only to the extent exercisable immediately after
termination, unless the option by its terms expires earlier. Termination or
other changes in employment status may affect the exercise period.
Note 8. Commitments
- -------------------
License Agreement
Startech has a licensing agreement for the development, hardware manufacture and
technology exploitation within the waste and non-waste industry application for
Hydrogen Selective Membranes. This agreement provides for the exclusive right to
utilize this Hydrogen Selective Membrane technology for all applications in the
principles of plasma arc technology. This agreement was effective 7/8/01 and
extends for a period of 20 years.
DOE Grant
Startech has received a grant from the Department of Energy ("DOE") for the
development of a Startech Hydrogen Production Project which includes the
evaluation of the viability of integrated hydrogen production from waste
materials. (Specifically, provide equipment upgrades and modifications to the
Plasma Converter System). The modifications are to support the analytical
testing of varied waste stream to include comparative analysis, constituent
contamination analysis, membrane temperature and pressure which the delivery of
a final technical test report for utilization by DOE in their completion of
technical goals. This program was initiated in October 2004 and is scheduled to
be completed by September 2005. The grant is a reimbursement of expenses
incurred in connection with the project and is recorded as other income in the
statement of operations when received. For the six months and three months ended
April 30, 2005 the Company received $ 221,881 and $172,085 respectively.
11
STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 9. Recently Issued Accounting Standards
- --------------------------------------------
In January 2003, Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
This interpretation of Accounting Research Bulletin No. 51, "Consolidated
Financial Statements," provides guidance for identifying a controlling interest
in a variable interest entity ("VIE") established by means other than voting
interest. FIN 46 also required consolidation of a VIE by an enterprise that
holds such controlling interest. In December 2003, the FASB completed its
deliberations regarding the proposed modifications to FIN 46 and issued
Interpretation Number 46R, "Consolidation of Variable Interest Entities - an
Interpretation of ARB 51" ("FIN 46 R"). The decisions reached included a
deferral of the effective date and provisions for additional scope exceptions
for certain types of variable interests. Application of FIN 46R is required in
financial statements of public entities that have interests in VIEs or potential
VIEs commonly referred to as special-purpose entities for periods ending after
March 2004. Adoption did not have a material impact on our consolidated
financial statements.
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment
of ARB No. 43, Chapter 4," which adopts wording from the IASB IAS No. 2
"Inventories" in an effort to improve the comparability of cross-border
financial reporting. The FASB and IASB both believe the standards have the same
intent; however, an amendment to the wording was adopted to avoid inconsistent
application. The new standard indicates that abnormal freight, handling costs,
and wasted materials (spoilage) are required to be treated as current period
charges rather than as a portion of inventory cost. Additionally, the standard
clarifies that fixed production overhead should be allocated based on the normal
capacity of a production facility. The statement is effective for the Company
beginning in fiscal year 2007. Adoption is not expected to have a material
impact on our consolidated earnings.
In December 2004, the FASB issued SFAS No. 123R "Share Based Payment". This
statement is a revision of SFAS Statement No. 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees, and its related implementation guidance. SFAS 123R addresses all
forms of share based payment ("SBP") awards including shares issued under
employee stock purchase plans, stock options, restricted stock and stock
appreciation rights. Under SFAS 123R, SBP awards result in a cost that will be
measured at fair value on the awards' grant date, based on the estimated number
of awards that are expected to vest. This statement is effective for public
entities as of the beginning of the Company's interim reporting period that
begins on July 1, 2005. The transitional provisions of SFAS No. 123R will not
have a material effect on the Company's consolidated financial position or
results of operations as substantially all outstanding equity instruments vest
on or prior to June 30, 2005. The Company will utilize the fair value method for
any future instruments after the implementation date.
In December 2004, the FASB issued SFAS No. 153 "Exchanges of Nonmonetary
Assets". This Statement amends Opinion 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. The provisions of this Statement are effective for nonmonetary
asset exchanges occurring in fiscal periods beginning after June 15, 2005.
Earlier application is permitted for nonmonetary asset exchanges occurring in
fiscal periods beginning after December 16, 2004. The provisions of this
Statement should be applied prospectively. The adoption of this pronouncement is
not expected to have material effect on the Company's financial statements.
12
STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 10. Subsequent Event
- -------------------------
On March 21, 2005, the Company executed a Securities Purchase and Registration
Rights Agreement (the "Purchase Agreement") with Intercapital Group, LLC, a
California limited liability company ("ICG"). Pursuant to the terms of the
Purchase Agreement, ICG had agreed to purchase in a private placement, at one or
more closings to take place on or before March 31, 2005, a total of $11,000,000
of shares of common stock of the Company. On May 23, 2005, the Company announced
that while ICG was continuing efforts to complete the investment, that the
Company was unable to determine when, and if, such investment would be
completed. The Company has been actively engaged in an effort to secure
financing from other investment sources.
On May 26, 2005 the Company received $200,000 from Financial Alchemy, LLC a
Texas limited liability company for which we issued 101,010 shares of common
stock, and an equivalent number of three year warrants. The warrants are
exercisable as follows: one-third at $2.00 above the average closing price;
one-third at $4.00 above the average closing price; and one-third at $6.00 above
the average closing price. The average closing price is the price of the common
stock for the ten (10) consecutive trading days immediately preceding May 26,
2005 or $2.51.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This quarterly report on Form 10-Q contains a number of "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Specifically, all statements other
than statements of historical facts included in this quarterly report regarding
our financial position, business strategy and plans and objectives of management
for future operations are forward-looking statements. These forward-looking
statements are based on the beliefs of management, as well as assumptions made
by and information currently available to management. When used in this
quarterly report, the words "anticipate," "believe," "estimate," "expect,"
"may," "will," "continue" and "intend," and words or phrases of similar import,
as they relate to our financial position, business strategy and plans, or
objectives of management, are intended to identify forward-looking statements.
These statements reflect our current view with respect to future events and are
subject to risks, uncertainties and assumptions related to various factors
including, without limitation, those described below the heading "Overview" and
in our registration statements and periodic reports filed with the SEC under the
Securities Act and the Exchange Act.
Although we believe that our expectations are reasonable, we cannot assure you
that our expectations will prove to be correct. Should any one or more of these
risks or uncertainties materialize, or should any underlying assumptions prove
incorrect, actual results may vary materially from those described in this
Quarterly Report as anticipated, believed, estimated, expected or intended.
In this Item 2, references to the "Company," "Startech", "we," or "us" means
Startech Environmental Corporation and its wholly-owned subsidiary.
Overview
Startech Environmental Corporation is an environmental technology company
commercializing its proprietary plasma processing technology known as the Plasma
Converter(TM) that achieves closed-loop elemental recycling that irreversibly
destroys hazardous and non-hazardous waste and industrial by-products while
converting them into useful commercial products. These products include a rich
synthesis gas called PCG (Plasma Converted Gas)(TM) surplus energy for power,
hydrogen, metals and silicates for use and for sale.
Our core Plasma Converter Technology addresses waste and resource issues by
offering remediation solutions that are integrated with a range of equipment
solutions and services. Our products add value to our customers' business so
they can now realize revenue streams from tipping fees, as well as from the sale
of resulting commodity products and services.
The Company's activities during the four fiscal years beginning November 1, 1992
and ending October 31, 1995 consisted primarily of the research and development
of the Plasma Converter. On November 17, 1995, Kapalua Acquisitions, Inc., a
Colorado corporation, completed the acquisition of all of the issued and
outstanding shares of the common stock of Startech Corporation, a Connecticut
corporation, and then changed its name to Startech Environmental Corporation.
On November 18, 1995, the board of directors of the Company unanimously approved
a change of the business purpose of Kapalua Acquisitions Inc. from one seeking
an acquisition candidate to one engaged in the business of manufacturing and
selling the Plasma Converter system to recover, recycle, reduce and remediate
hazardous and nonhazardous waste materials. From that time to the date of this
filing, the Company has maintained this as its principal focus.
Since 1995, we have been actively educating the marketplace on the superiority
of plasma over other waste remediation technologies. This ongoing education of
the public and government is continuing today. Similar to other new technologies
we have been met with varying degrees of resistance. In 2001, recognizing the
increasing importance of alternative energy and power sources in general, and
hydrogen in particular, we expanded our product line to include a StarCell (TM)
hydrogen separation technology. Working in conjunction with our core product,
the Plasma Converter(TM), StarCell(TM) will provide a green and renewable source
of hydrogen for power and processing applications. In 2003, this brought
14
significant change and, due to the factors mentioned above, as well as the
rising comfort level with plasma based technologies through our educational and
informational effort we are now being greeted by a much more receptive
marketplace. We have taken steps to transform our business model from being
solely a seller of equipment to a total solutions provider, including waste
facility ownership or management. This change was dictated by the needs of our
customers and the demands of the marketplace. This change began in January 2002
and continues to be integrated.
Startech is an environmental technology corporation that manufactures, markets
and sells a recycling system called the Plasma Converter for the global
marketplace. Until January 2002, we were solely engaged in the manufacture and
sale of equipment for use by others. Thereafter, we have attempted to broaden
the scope of our available revenue opportunities. This change was brought about
by management's decision to expand its market penetration strategies and
opportunities. Rather than only market and sell our products for use by others,
we are now seeking opportunities to become directly involved in the operation
and use of our products. We reconsidered our stated philosophy of not engaging
in the processing of feedstock materials and/or waste and decided that it was
timely to seek out and include all possible market penetration strategies,
including build own operate, build own transfer of ownership, and joint
development projects.
By concentrating on re-positioning the Company for long-term growth, we did not
achieve the sales goals we had anticipated would occur in the 2003 and 2004
fiscal years. However, we believe this new way of approaching the market over
time will help achieve maximum penetration in the shortest timeframe.
We believe specific events are driving demand for our Plasma Converter. They
include:
o Increases in waste, and in particular hazardous wastes, due to rising
consumer/industrial consumption and population growth in most nations;
o Current waste disposal and remediation techniques such as landfills
and incineration are becoming regulatory, socially and environmentally
unacceptable;
o A need for critical resources such as power and water to sustain local
economies; and
o The emphasis being placed upon the production of distributed power and
the need to provide alternatives to fossil fuels.
Our core plasma technology addresses these waste and resource issues by offering
remediation solutions that are integrated with a range of equipment solutions
and services. We believe these products will add value to our customers'
business' so they can realize revenue streams from disposal or processing fees,
a reduction in material disposal costs, as well as from the sale of resulting
commodity products and services. Alternatively, this will allow our customers to
generate a valuable product while at the same time using a zero cost basis, or
revenue generating source of raw material (waste). The costs of hazardous waste
treatment and disposal methods continue to rise, and now range from
approximately $900 to more than $2,000 per ton. This does not include the
additional processing, handling, packaging, insurance and management costs
sustained by the hazardous waste generator within its facility prior to final
disposal.
Since 1995, we have been actively educating and promoting to our customers the
benefits of the plasma converter over other forms of waste remediation
technologies. Ongoing education of the public and government is continuing. Like
most new technologies we have been met with varying degrees of resistance. A
rising comfort level with our plasma converter technology resulting in part from
our educational and informational efforts has created additional awareness in
the marketplace. We have taken steps to transform our business model from being
solely a seller of equipment to a total solutions provider, including facility
ownership or management.
15
Our business model and its market development strategies arise from our mission,
which is to change the way the world views and employs discarded materials; what
many would now call waste we view as a feedstock. We expect to achieve this
objective by strategically marketing a series of products and services emanating
from the core Plasma Converter (TM) technology, resulting in saleable fossil
fuel alternatives while providing a safer and healthier environment. This
strategy will be implemented through Plasma Converter sales with after sales
support and service, build own operate/build own transfer of ownership
facilities, joint development projects and engineering services.
Recent Developments
The following provides updates to certain projects and other events that have
transpired since those announced in the Company's report on form 10Q for the
quarter ended January 31, 2005 and current report on Form 8K as filed with the
SEC on April 14, 2005.
The Mihama Plasma Converter(TM) in Japan
The system, now owned by Mihama, has been disassembled and moved to Mihama's new
facility near Kobe, Japan where it will be used to safely and irreversibly
destroy PCBs (polychlorinated biphenyls) commercially. Mihama is completing the
facility in Kobe, Japan and Startech has initiated the continued support for
installation and start-up. Currently, we are preparing for shipment the
additional support equipment from our Bristol, CT to the Japanese site location.
Discussion is on-going for in-country support to Mihama. As the Company's Japan
distributor, Mihama will also use the system to support its Startech sales and
marketing operations and be able to demonstrate a Plasma Converter System in a
commercial operation to its customers.
Italy
On March 7, 2005, the Company appointed Ercole Marelli HiTech Srl of Milan,
Italy, as its exclusive distributor for Italy. The Agreement requires Ercole
Marelli to purchase its first 10 ton-per-day Plasma Converter System (PCS), or
larger, by July 1, 2005. The Agreement also requires Ercole Marelli to purchase
more than $300 million worth of Startech Plasma Converter Systems uniformly
during the next ten years as a minimum to maintain the Distributorship.
On May 24, 2005, Ercole Marelli HiTech Srl of Milan, Italy, reported that it
signed contracts for more than $40 million for multiple mobile and stationary
Startech Plasma Converter Systems. Delivery of the Plasma Converter Systems is
scheduled for late 2006.
Spain
On May 19, 2005, the Company announced the appointment of Materiales Renovados,
S.L. of Madrid, Spain as its exclusive distributor for Spain and Portugal, and
the Company receipt from it of $250,000 for that Distributorship. The
Distributorship Agreement requires Materiales Renovados to purchase its first 10
ton-per-day Plasma Converter System (PCS), or larger, by February 28, 2006. The
Agreement also requires Materiales Renovados to purchase $300 million worth of
Startech Plasma Converter Systems uniformly during the next ten years as a
minimum to maintain the Distributorship.
Poland
Financing of the projects continues to be the immediate focus. All projects are
being considered under the leasing program previously announced.
Australia
The Company expects to receive the balance of the down payment from Plastech,
its distributor in Australia, which funds will, as anticipated, permit the
commencement of the manufacturing for the first PCS in Australia beginning in
July 2005.
16
South Africa
Activities in South Africa are focused around the securing of long-term waste
projects in order to anchor the investment, so as to raise the necessary
financing. A number of waste contracts are currently being targeted to form the
basis of the project. They include pesticides, mercury contaminated waste,
military stockpiles and others. Contact, and introduction of the technology has
been made with all clients. Most of the contracts are going through a tender and
appraisal process and are awaiting a final call for proposals which is expected
soon. The specific opportunities include the following:
- African Stockpile Project: An initiative driven by the World Bank to
destroy pesticides dumped in Africa during the 70's and 80's.
- Thor Chemicals: Clean up of mercury waste and contaminated soils
- Stockpiled munitions: Dismantling and destruction of stockpiled
expired munitions
Rhode Island
An entity has been formed to manage the 50 TPD Plasma Converter System destined
for this prime location. Significant state and local cooperation has been
assured and the formal processing of permits are underway. Recent discussions
with Rhode Island are continuing in the finalization of equipment configuration,
permitting and financing. Effort is continuing.
DOE Contract
Demonstration preparations and equipment acquisition has been initiated.
Demonstration is scheduled during the last quarter of the calendar year.
Additional effort has been authorized to continue the development of materials
evaluation for the movement forward for hydrogen production. Startech has
completed the required system modification to support the DOE demonstration and
is currently finalizing the demonstration plan and protocols. The demonstration
schedule is on track and we expect to complete Phase I demonstration on
schedule. Startech is currently in discussion with DOE for Phase II
demonstration implementation in FY06.
17
Results of Operations
Comparison of three months ended April 30, 2005 and 2004
Revenues. Total revenues were $32,985 for the three months ended April 30, 2005,
as compared to $1,517,240 for the same period in 2004, a decrease of $1,484,255.
For the three months ending April 30, 2005 a portion of the distributorship
agreements were recognized as revenue. These distributorship agreements were
signed with Plasteck Solutions Limited, representing Australia and New Zealand,
and Plasmatech Caribbean Corporation representing Puerto Rico. The revenue for
the three months ending April 30, 2004 was related to upgrades and spare parts
that were shipped to Mihama, located in Japan. Such aspect of the Company's
business has not reoccurred in fiscal 2005.
Gross Profit. Gross profit was $32,985 for the three months ended April 30,
2005, compared to a gross profit of $970,484 in the same period in 2004, or a
decrease of $937,499 from the same period in 2004 or 96.6%. Gross margins were
directly impacted due to the signing of the distributorship agreements.
Selling Expenses. Selling expenses for the three months ended April 30, 2005
were $199,702, a decrease of $51,136, or 20.4%, for the same period in 2004.
Selling expenses decreased as a result of less customer related travel and
reduced printing materials expense.
Research and Development Expenses. Research and development expenses for the
three months ended April 30, 2005 were $84,980, an increase $2,365 or 2.9%, for
the same period in 2004. This increase was related to continuing efforts to
further enhance our currents products.
General and Administrative Expenses. General and administrative expenses for the
three months ended April 30, 2005 were $867,989, compared to $536,003 for the
same period in 2004, an increase of $331,986 or 61.9%, from the same period in
2004. This increase was related to higher auditing and accounting related
expenses, increased outside legal expenses, annual meeting expenses, and higher
public relations expenses.
Interest Income. Interest income for the three months ended April 31, 2005 was
$5,054, compared to $8,809 in the same period in 2004, a decrease of 42.6%. The
decrease is due to lower average cash balances.
Income Taxes. During the three months ended April 30, 2005, corporate income
taxes were $4,919, as compared to $361 in the same period 2004. We have minimal
tax obligations due to the fact that we have not yet been profitable. These
taxes represent the state tax on capital.
18
Results of Operations
Comparison of six months ended April 30, 2005 and 2004
Revenues. Total revenues were $65,970 for the six months ended April 30, 2005,
as compared to $1,560,620 for the same period in 2004, a decrease of $1,494,650.
For the six months ending April 30, 2005 a portion of the distributorship
agreements were recognized as revenue. These distributorship agreements were
signed with Plasteck Solutions Limited, representing Australia and New Zealand,
and Plasmatech Caribbean Corporation representing Puerto Rico. The revenue for
the six months ending April 30, 2004 was related to upgrades and spare parts
that were shipped to Mihama, located in Japan. Such aspect of the Company's
business has not reoccurred in 2005.
Gross Profit. Gross profit was $65,970 for the six months ended April 30, 2005,
compared to a gross profit of $987,364 in the same period in 2004, or a decrease
of $921,394 from the same period in 2004 or 93.3%. Gross margins were directly
impacted due to the signing of the distributorship agreements.
Selling Expenses. Selling expenses for the six months ended April 30, 2005 were
$437,154, a decrease of $2,480, or .5%, for the same period in 2004. Selling
expenses decreased as a result of lower expenses related to customer travel and
reduced printing expenses.
Research and Development Expenses. Research and development expenses for the six
months ended April 30, 2005 were $170,190, an increase $10,724 or 6.7%, for the
same period in 2004. This increase was related to analysis of DOE test programs.
General and Administrative Expenses. General and administrative expenses for the
six months ended April 30, 2005 were $1,612,798, compared to $1,157,223 for the
same period in 2004, an increase of $455,575 or 39.3%, from the same period in
2004. This increase was related to higher auditing and accounting related
expenses, increased outside legal expenses, annual meeting expenses, and higher
public relations expenses.
Interest Income. Interest income for the six months ended April 30, 2005 was
$11,366, compared to $14,522 in the same period in 2004, a decrease of 21.7%.
The decrease is due to lower average cash balances.
Income Taxes. During the six months ended April 30, 2005, corporate income taxes
were $14,995, as compared to $2,778 in the same period 2004. We have minimal tax
obligations due to the fact that we have not yet been profitable. These taxes
represent the state tax on capital.
19
Liquidity and Capital Resources
- -------------------------------
As of April 30, 2005, we had cash and cash equivalents of $1,152,977 and working
capital of $311,674. During the six months ended April 30, 2005, our cash
decreased by $1,248,084. The decrease in cash resulted primarily from the
operations of the Company.
The Company has historically satisfied its capital needs primarily by the sale
of equity securities. We are currently in discussions with several funding
sources to raise additional capital through the issuance of additional equity
securities. On March 21, 2005, the Company entered into a Securities Purchase
and Registration Rights Agreement (the "Purchase Agreement") with Intercapital
Group, LLC, a California limited liability company ("ICG"). Pursuant to the
terms of the Purchase Agreement, ICG had agreed to purchase in a private
placement, at one or more closings to take place on or before March 31, 2005, a
total of $11,000,000 of shares of common stock of the Company. On May 23, 2005,
the Company announced that while ICG was continuing efforts to complete the
investment, that the Company was unable to determine when, and if, such
investment would be completed. The Company has been actively engaged in an
effort to secure financing from other investment sources. If we are unable to
secure financing we may not be able to maintain operations as presently
conducted and may cease operating as a going concern.
Our investing activities have consisted primarily of short-term, high quality
liquid investments, with maturities of three months or less when purchased,
which are considered cash equivalents. The primary investments are high quality
commercial paper, U.S. treasury notes and Treasury-bills. Unrealized gains and
losses were not material during the quarter ended April 30, 2005 and 2004. No
realized gains or losses were recorded during the quarter ended April 30, 2005
or 2004.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is primarily exposed to foreign currency risk, interest rate risk
and credit risk.
Foreign Currency Risk - We develop products in the United States and market our
products in North America, Japan, Europe, Asia, Africa, Middle East, South
America as well as other parts of the world. As a result, our financial results
could be affected by factors such as changes in foreign currency exchange rates
or weak economic conditions in foreign markets. Because a significant portion of
our revenues are currently denominated in U.S. dollars, a strengthening of the
dollar could make our products less competitive in foreign markets.
Interest Rate Risk - Interest rate risk refers to fluctuations in the value of a
security resulting from changes in the general level of interest rates.
Investments that are classified as cash and cash equivalents have original
maturities of three months or less. Our interest income is sensitive to changes
in the general level of U.S. interest rates, particularly since the majority of
our investments are in short - term instruments. Due to the short-term nature of
our investments, we believe that there is not a material risk exposure.
Credit Risk - Our accounts receivables are subject, in the normal course of
business, to collection risks. We regularly assess these risks and have
established policies and business practices to protect against the adverse
effects of collection risks. As a result we do not anticipate any material
losses in this area.
20
ITEM 4. CONTROLS AND PROCEDURES
The Company's principal executive officer and principal financial officer have
evaluated the effectiveness of the Company's "disclosure controls and
procedures," as such term is defined in Rule 13a-15(e) of the Securities
Exchange Act of 1934, as amended, as of the end of the period covered by this
Quarterly Report on Form 10-Q. The evaluation process, including the inherent
limitations on the effectiveness of such controls and procedures is more fully
discussed in the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 2004. Based upon their evaluation, the principal executive officer
and principal financial officer concluded that the Company's disclosure controls
and procedures contained a material weakness.
This material weakness is the lack of the necessary corporate accounting
resources. This has led to a dependence on our Chief Financial Officer, the loss
of whom could impair our ability to ensure consistently complete and accurate
financial reporting, as well as disclosure controls and procedures. In order to
correct this deficiency, we are seeking to hire additional competent personnel
to assist in the segregation of duties with respect to financial reporting, and
with Section 404 of the Sarbanes-Oxley Act of 2002.
We believe that for the reasons described above we will be able to improve our
financial reporting and disclosure controls and procedures and remedy the
material weakness identified above. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, will be or have been
detected.
There were no significant changes in our internal controls over financial
reporting that occurred during the quarter ended April 30, 2005 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
21
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING.
None.
ITEM 2. CHANGES IN SECURITES AND USE OF PROCEEDS.
There were 10,577 shares issued during the second quarter of 2005, with gross
proceeds for the exercise of warrants totaling $35,327. Also, 5,000 shares of
common stock were issued upon the exercise of the options during the second
quarter of 2005 for proceeds of $10,150 and 4,926 shares were issued for the
401(k) Plan.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The 2004 Annual Meeting of Shareholders of the Company was held on April
13, 2005.
(b) The following persons were elected as directors pursuant to the votes
indicated:
- ---------------------------- ------------------------ ---------------------
Name For Against
- ---------------------------- ------------------------ ---------------------
- ---------------------------- ------------------------ ---------------------
L.Scott Barnard 9,960,265 35,567
- ---------------------------- ------------------------ ---------------------
Joseph A. Equale 9,967,765 28,067
- ---------------------------- ------------------------ ---------------------
Joseph F. Longo 9,849,983 145,849
- ---------------------------- ------------------------ ---------------------
Nicholas S. Perna 9,959,517 36,315
- ---------------------------- ------------------------ ---------------------
John J. Fitzpatrick 9,959,740 36,092
- ---------------------------- ------------------------ ---------------------
(c) The only other matter to be voted upon was the ratification of the
appointment of Marcum & Kleigman, LLC as the Company's independent public
accountants for the fiscal year ending October 31, 2005 as follows:
- ------------------------ -------------------- -------------------
For Against Abstain
- ------------------------ -------------------- -------------------
9,964,154 20,593 11,085
- ------------------------ -------------------- -------------------
ITEM 5. OTHER INFORMATION.
None.
22
ITEM 6. EXHIBITS .
The following exhibits are attached to this report or are incorporated by
reference herein.
31.1 Certificate of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 *
31.2 Certificate of the Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 *
32.1 Certification of the Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 *
32.2 Certification of the Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 *
- ----------
* Filed herewith
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 20th day of
June 2005.
STARTECH ENVIRONMENTAL CORPORATION
(Registrant)
BY: /S/ Joseph F. Longo
--------------------------------------
Joseph F. Longo
Chief Executive Officer, President
BY: /S/ Peter J. Scanlon
--------------------------------------
Chief Financial Officer, Vice President
(Principal Financial Officer)
24