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 March 31, 2014; 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.)

 

4835 Monaco St, 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 May 15, 2015, Vista International Technologies, Inc. had outstanding 29,030,914 shares of common stock, par value $0.001 per share. 

  

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VISTA INTERNATIONAL TECHNOLOGIES, INC.

 

TABLE OF CONTENTS

 

 

	PART I – FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements - Unaudited
	Consolidated Balance Sheets at March 31, 2015 (unaudited) and December 31, 2014		F-1
	Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014 (unaudited)		F-2
	Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014 (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		11

 

F-5

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Vista International Technologies Inc.
Condensed Consolidated Balance Sheets
As of March 31, 2015 and December 31, 2014
			March 31, 2015		December 31, 2014
ASSETS			(Unaudited)
Current assets:
	Cash		$ 24,845		$ 10,748
	Accounts receivable, net		6,469		30,341
	Prepaid Insurance		4,008		-
	Advance to Supplier		4,397		18,698
Total current assets			39,719		59,787
	Environmental deposit		170,000		170,000
	Deposits		1,896		1,896
	Property and equipment, net		319,323		336,634
	Deferred expenses		159,246		139,627
	Intangibles, net		14,975		15,959
Total assets			$ 705,160		$ 723,903
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities			$ 1,719,473		$ 1,673,714
Accrued compensation and payroll liabilities			509,953		502,859
Accrued interest			37,502		35,473
Accrued interest- related parties			151,358		135,040
Accrued interest- stockholder			357,333		307,470
Deferred Revenue			175,000		175,000
Notes payables - related parties			847,780		784,725
Notes payable - stockholder			1,108,000		1,108,000
Notes payable and capital leases, current portion			127,210		101,946
Total current liabilities			5,033,610		4,824,227
Other long-term liabilities
Notes payable and capital leases, less current portion			18,014		18,639
Total liabilities			5,051,624		4,842,866
Commitments and contingencies			-		-
Stockholder's deficit:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding at March 31, 2015 and December 31, 2014			-		-
Common stock, $0.001 par value; 200,000,000 shares authorized;  29,030,914  shares and 25,360,914 issued outstanding at March 31,2015 and December 31, 2014, respectively			29,031		29,031
Additional paid-in capital			64,020,058		64,020,058
Common stock subscription			5,000		5,000
Accumulated deficit			(68,400,553)		(68,173,053)
Total stockholder's deficit			(4,346,464)		(4,118,964)
Total liabilities and stockholders' deficit			$ 705,160		$ 723,903
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

F-5

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Vista International Technologies Inc.
Condensed  Consolidated Statements of Operations
(unaudited)
		For the Three Months Ended
		March 31, 2015		March 31, 2014
	Revenue			\
	Tipping Fee Revenue	$ 98,639		$ 87,230
	Processed Tire Revenue	31,165		115,610
	Pilot Project Revenue	-		51,500
	Total Revenue	129,804		254,339
	Cost of revenue
	Tire Operation	150,670		158,613
	WTE Operations	-		39,364
	Total Cost of Revenue	150,670		197,977
	Environmental expense (income)	24,136		(59,087)
	Gross (loss) profit	(45,002)		115,450
	Operating expenses:
	Depreciation and amortization	1,122		2,354
	Selling, general and administrative expenses	71,062		76,369
	Total operating expenses	72,183		78,723
	(Loss) Gain from operations	(117,185)		36,727
	Other income (expense):
	Interest expense, net	(110,315)		(93,975)
	Loss before income taxes	(227,500)		(57,248)
	Income tax expenses	-		-
	Net loss	$ (227,500)		$ (57,248)
	Net loss per share, basic and diluted	$ (0.01)		$ (0.00)
	Weighted average common shares outstanding, basic & diluted	29,030,914		25,977,581
	The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

F-5

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Vista International Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
	For the Three Months Ended
	March 31, 2015		March 31, 2014
Cash flows from operating activities:
Net loss	$ (227,500)		$ (57,249)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization	27,567		28,773
Common stock issued for services provided	-		28,500
Environmental remediation expense (income)	24,136		(59,087)
Operating expenses incurred by related party note holder on behalf of the Company	25,554		-
Changes in operating assets and liabilities:
Accounts receivable, net	23,872		(936)
Prepaid expenses	(4,008)		-
Advance to supplier	14,301		-
Deferred revenue	-		88,500
Deferred expenses	(19,619)		(74,523)
Accounts payable and accrued expenses	96,928		97,342
Net cash (used in) provided by operating activities	(38,769)		51,320
Cash flows from investing activities:
Purchase of fixed assets	(9,272)		-
Net cash used in investing activities	(9,272)		-
Cash flows from financing activities:
Repayments on related party notes payable	-		(26,616)
Proceeds from (repayment of) notes payable and capital lease	24,640		(4,752)
Proceeds from related party notes	37,500		-
Net cash provided by (used in) financing activities	62,140		(31,368)
Net increase in cash and cash equivalents	14,099		19,952
Cash and cash equivalents at beginning of period	10,748		7,248
Cash and cash equivalents at end of period	$ 24,847		$ 27,200
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	-		-
Cash paid during the period for taxes	-		-
Non-cash investing and financing activities	$ -		$ -
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 months ended March 31, 2015 and 2014

(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, 2014. 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 three months ended March 31, 2015 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 – This facility is under a contract of sale, which is expected to close in the second quarter of 2015
●	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 $227,500 and net cash used in operating activities of approximately $38,800 for the three months ended March 31, 2015, has a working capital deficiency of approximately $5.0 million and an accumulated deficit of approximately $68.4 million at March 31, 2015.  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 three months ended March 31, 2015, the Company received roughly $63,000 in loans from a related party, and it is expected that the Company will have to rely on loans, including those from related parties and issuances of shares in private placements to meet its working capital needs for the foreseeable future.

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

 

●

Thermal Gasifier™ engineering design and deployment

 

●

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

●

Development of project based opportunities, and

·

Attracting strategic investment

F-5

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Vista International Technologies, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three months ended March 31, 2015 and 2014

(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 had also been 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.  To maximize the increased value of the facility due to improved operations, the company recently agreed to a sale of the facility for $3,000,000.

 

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 but does not have any commitments 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, scaling back or discontinuing 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 March 31, 2015, the company recorded no deferred revenue and $19,600 in deferred expenses for this project.

 

Concentration of Credit Risk

 

Our three largest customers comprised approximately 12%, 11% and 11% of revenues for the three months ended March 31, 2015.  Our two largest customers comprised approximately 35% and 20% of revenues for the three months ended March 31, 2014.

F-5

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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 unaudited condensed consolidated financial statements.

Recent Accounting Pronouncements

 

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments are effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The amendments are to be applied on a retrospective basis, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance. We do not expect the adoption of ASU 2015-03 to have a material effect on our financial position, results of operations or cash flows.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of ASU 2015-02 to have a material effect on our financial position, results of operations or cash flows. 

 

In January 2015, the FASB issued ASU No. 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This ASU eliminates from U.S. GAAP the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. We do not expect the adoption of ASU 2015-01 to have a material effect on our financial position, results of operations or cash flows.

In November 2014, the FASB issued ASU No. 2014-17, “Business Combinations (Topic 805): Pushdown Accounting.” This ASU provides an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. An acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable. ASU 2014-17 was effective on November 18, 2014. The adoption of ASU 2014-17 did not have any effect on our financial position, results of operations or cash flows.

In November 2014, the FASB issued ASU 2014-16, “Derivatives and Hedging (Topic 815).” ASU 2014-16 addresses whether the host contract in a hybrid financial instrument issued in the form of a share should be accounted for as debt or equity. ASU 2014-16 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not currently have issued, nor are we investors in, hybrid financial instruments. Accordingly, we do not expect the adoption of ASU 2014-16 to have any effect on our financial position, results of operations or cash flows.

In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40)". ASU 2014-15 provides guidance related to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosure. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for interim and annual periods thereafter. Early application is permitted. We do not expect the adoption of ASU 2014-15 to have a material effect on our financial position, results of operations or cash flows.

In June 2014, the FASB issued ASU No. 2014-12, “Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not expect the adoption of ASU 2014-12 to have a material effect on our financial position, results of operations or cash flows.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 affects

 

9

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any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). ASU 2014-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We are still evaluating the effect of the adoption of ASU 2014-09. On April 1, 2015, the FASB voted to propose to defer the effective date of the new revenue recognition standard by one year.

In April 2014, the FASB issued ASU No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) and Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." ASU 2014-08 amends the definition for what types of asset disposals are to be considered discontinued operations, as well as amending the required disclosures for discontinued operations and assets held for sale. ASU 2014-08 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2014. The adoption of ASU 2014-08 did not have any effect on our financial position, results of operations or cash flows.

Recent accounting pronouncements issued by the FASB and the SEC did not or are not believed by management to have a material impact on the Company's present or future unaudited condensed consolidated financial statements.

 Reclassifications

 

Certain reclassifications to the 2014 statements of operations and cash flows have been made in order to conform it to the 2015 presentation.  

2. Notes Payable and Capital Lease

At March 31, 2015 and December 31, 2014, the Company had the following promissory notes outstanding:

		March 31, 2015		December 31, 2014
12% Line of credit payable, secured by assets of the Company, due on demand after June 30, 2013		77,241		77,241
12% Line of credit payable, secured by assets of the Company, due on demand after June 30, 2013		5,000		5,000
13.7%  instalment note, secured by property, due January 18, 2023		18,014		18,593
15% promissory note payable to individual, due on demand, in default		17,000		17,000
29.49% Dell business credit note for purchase of computer		2,472		2,830
26% unsecured note, due September 27, 2015		10,500		-
29.99% line of credit, due September 30, 2015		15,000		-
Total notes payable, capital lease and convertible note payable		145,227		121,376
Less: current maturities		(127,213)		(102,071)
Notes payable and capital lease – Long-term		$ 18,014		$ 18,593

 

Maturities of notes payable and capital lease at March 31, 2015 are as follows:

 

Year ending March 31,
2015		$ 127,213
2016 and Beyond		18,014
		$ 145,227

Vista International Technologies, Inc.

F-8

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three months ended March 31, 2015and 2014

 (unaudited)

2. Notes Payable and Capital Lease (Continued)

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 this line of credit as of March 31, 2015.     

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 $77,214 against this line of credit as of March 31, 2015.  

On March 27, 2015 the company was issued an unsecured line of credit for $15,000 at a rate of 29.99%.  The line will be repaid in 26 equal weekly payments, with the final payment being due September 30, 2015.

Issuance of Unsecured Loans

On March 27, 2015 the company entered into an unsecured short term loan for $10,500 at a rate of 26%.  The loan will be repaid in monthly installments over the following six months, with the final payment due on September 27, 2015.

3. Related Party Transactions

At March 31, 2015 and December 31, 2014 notes payable - stockholder and notes payable – related parties consisted of the following:

		March 31 2015		December 31, 2014
9% Promissory note payable Richard Strain – stockholder, due June 30, 2013, secured by a first priority security interest in Company assets- in default		$ 1,108,000		$ 1,108,000
Notes payable- stockholder		$ 1,108,000		$ 1,108,000
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		$ 797,780		$ 734,725
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		$ 847,780		$ 784,725

Notes payable – stockholders

On March 29, 2013, the Company consolidated all of Mr. Strain’s debt into a single consolidated $1,108,000 note and mortgage 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  

F-8

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matured on June 30, 2013.  At the time of 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. $222,941 accrued interest was converted at $0.10 per share. The Company recorded a gain of $3,930 on consolidation into one single note of $1,108,000. As of March 31, 2015, this note is currently in default, and the Company is working with the shareholder to extend the note.

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

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

As of March 31, 2015 and December 31, 2014, accrued interest outstanding on the loans was approximately $357,300 and $307,500, respectively.

 

Interest expense on the loans for the three months ended March 31, 2015 and 2014 was approximately $49,900 and $49,900, respectively.

Notes payable – related parties

 

On August 3, 2009, the Company entered into a loan agreement with Mr. Timothy D. Ruddy, a Director of the Company.

 

The agreement formalized the terms related to working capital funding provided by Mr. Ruddy beginning in the fourth quarter of 2008.  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; or

 

(c)

any combination of cash and stock as described in (a) and (b).

 

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 unsecured loan was paid off by Mr. Ruddy in May of 2012.

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 March 31, 2015 and December 31, 2014, accrued interest outstanding on the loan with Mr. Ruddy was approximately $123,700 and $108,800, respectively.

 

Interest expense on the loans for the three months ended March 31, 2015 and 2014 was approximately $14,900 and $14,900, respectively. 

Notes payable – related party family

 

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

  

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March 31, 2015.

As of March 31, 2015, no interest payments have been made on these notes. Default has been waived.

As of March 31, 2015 and December 31, 2014 accrued interest on the loan was approximately $27,700 and $26,200, respectively.

Interest expense on the loans for the three months ended March 31, 2015 and 2014 was approximately $1,500.

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. Accounts Payable and Accrued Expenses.

 Accounts payable and accrued expenses at March 31, 2015 and December 31, 2014 consisted of the following:

 

		March 31, 2015		December 31, 2014
Accounts payable		$ 789,623		$ 762,922
Accrued liabilities		456,937		444,776
Accrued Federal and State tax liabilities		472,913		466,016
Accrued compensation and payroll liabilities		509,953		502,859
Accrued interest- other		37,502		35,473
Accrued interest-related party		151,358		135,040
Accrued interest- stockholder		357,333		307,470
Total		$ 2,775,619		$ 2,654,556

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Vista International Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

Three Months ended March 31, 2015 and 2014

The Company disputes the amount of $482,209 of accrued compensation due to prior officer compensation which is  included in the Accrued compensation and payroll liabilities of $509,953 and $502,859 as of March 31, 2015 and  December 31, 2014 respectively.  It is the position of the Company that the officers in question had no formal contracts in place, and further, were negligent in their fiduciary responsibility to the company, causing additional problems with creditors and the Internal Revenue Service.

The Company has accrued liabilities related to environmental remediation expense at the Hutchins tire facility of $204,468 and $180,333 for the three monthsended March 31, 2015, and the fiscal year ended December 31, 2014 respectively.  The Company believes that as tire derived fuel (TDF) operations continue, this amount will decrease as tires on site will be shredded and sold as TDF.

The Company has accrued liabilities of $472,912 as of March 31, 2015 and $466,016as of December 31, 2014 related to amounts accrued to state and federal revenue agencies, due to unfiled tax returns relating to the sale of company assets in 2005 and 2006.  During that timeframe the company sold a helium plant and some related assets, but did not correctly file tax returns.  Certain tax returns were subsequently filed, and the subsidiary that owned the assets was dissolved in 2009. The company has not been approached by any taxing authority regarding these amounts.

The Company plans to use revenues from its tire derived fuel operations to begin to pay down these expenses, but significant repayment of such  will more than likely not  occur until  one of the following occurs:

·

Sale of the Hutchins tire facility

·

Full scale deployment of multiple projects in the Waste to Energy division.

5. Property and Equipment

 

Following is a summary of property and equipment at March 31, 2015 and December 31, 2014:

 

		March 31, 2015		December 31, 2014
Machinery and equipment		$ 816,304		$ 807,033
Buildings		95,578		95,578
Vehicles		18,985		18,985
Land		51,085		51,085
Furniture, fixtures and equipment		62,322		62,322
Land Improvements		232,269		232,269
Totals		1,276,543		1,267,272
Less accumulated depreciation		(957,220)		(930,638)
Property and equipment, net		$ 319,323		$ 336,634

Depreciation expense was $26, 583 for the three months ended March 31, 2015 and $27,789 for the three months ended March 31, 2014.

6. Intangible Assets

 

The Company owns one U.S. patent and one European patent and has two pending U.S. patent applications and one pending European patent application which cover its Thermal Gasifier™ technology.  These patents and patent applications are for utility patents directed to devices and methods of uses. The US patent expires on August 21, 2018.  The European patent was granted January 5, 2011 expires in August 2019.

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At March 31, 2015 and December 31, 2014 intangible assets are as follows:

		March 31, 2015		December 31, 2014
Patents		$ 63,720		$ 63,720
Less accumulated amortization		(48,745)		(47,761)
Intangible assets, net		$ 14,975		$ 15,959

 

Amortization expense for each of the three months ended March 31, 2015 and 2014 was $984 and $984 respectively.

Estimated Future Amortization Expense as of March 31, 2015:

 

Years Ended December 31,			Amount
2015			$ 2,952
2016			3,936
2017			3,936
2018			2,541
There after			1,610
Total			$ 14,975

7. Stockholders’ Equity

 

Preferred Stock

 

The Company has 10,000,000 shares of preferred stock, $0.001 par value, authorized for issuance. Our board of directors is vested with the authority to provide for the issuance of and terms of the preferred shares. No preferred shares have been issued and no terms have been provided at March 31, 2015 and December 31, 2014.

 

Common Stock

 

The Company has 200,000,000 shares of common stock, $0.001 par value, authorized for issuance. As of March 31, 2015 and December 31, 2014, there were 29,030,914 and 29,030,914 respectively shares of common stock issued and outstanding.

8. Commitments and Contingencies

 

Litigation and Claims

 

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

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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.

Encumbrances on Company Assets

 

The following encumbrances exist on the Company’s assets as of March 31, 2015:

 

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

Environmental Liability

 

Our tire operations in Texas are subject to regulation by the TCEQ.  At March 31, 2015, the Company had approximately  7,560 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 $204,500 at March 31, 2015.  This amount has been included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets, and reflects an increase of approximately $24,100 compared to December 31, 2014.  This amount has been recorded as environmental remediation expense 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 March 31, 2015) 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. 

9. Disposal Groups and Non-current Assets Held for Sale

In the first quarter of 2015, Vista management committed to a disposal plan for its Hutchins Tire Processing Facility.  This disposal plan involved the sale of the land, the tire processing business and associated business assets at a price based on recent sales of industrial land in the area, and an analysis of the current business operations of the facility.  

Prior to the implementation of this plan, the Company had been evaluating a number of other options for the facility, including a sale leaseback transaction, a sale of the tire processing business by itself, and a conversion of the facility to a Waste-to-Energy facility by way of debt financing or equity investment into the Company.

On March 16, 2015, the Company entered into a Purchase and Sale Agreement with Phoenix Renewable Technologies, Inc. (PRTI)pursuant to which Vista will sell the 26.9 acre industrial site, the tire processing business, and all associated business assets to PRTI for $3,000,000 in cash.  

The sale is subject to various closing conditions and deliveries, including deposit of earnest money, PRTI’s review of the physical and environmental condition of the property, and satisfactory completion of customary due diligence. The sale is expected to close prior to June 30, 2015

With respect to this transaction, the following assets and liabilities were reclassified from “held and used” to “held for sale” during the Company’s fiscal first quarter ending March 31, 2015:

	March 31, 2015	December 31, 2014
Assets
Advance to Supplier	$ 4,397	$ 18,698
Environmental Deposit	170,000	170,000
Property and Equipment, Net	316,640	333,813
Total Assets	491,037	522,511
Liabilities
Environmental Remediation Liability	204,468	180,333
Total Liabilities	204,468	180,333
Net Assets	$ 286,569	$ 342,178

10. Subsequent Events

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

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 March 31, 2015, compared with the operating results for the period ended March 31, 2014.

 

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 the next generation of 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.  This facility is under a pending contract of sale.
●	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 the past 5 years.  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

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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.   

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.  The company has applied for an extension to this permit in order to complete the sale of the facility

 

At March 31, 2015, the Company had approximately 7,560 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 $204,500 at March 31, 2015.

 

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, 2014, 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 $227,500 and net cash used in operating activities of approximately $38,800 for the three months ended March 31, 2014, has a working capital deficiency of approximately $5.0 million and an accumulated deficit of approximately $68.4 million at March 31, 2015  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 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 obtain equity investment or additional financing to meet obligations on a timely basis and ultimately achieve profitable operations.

 

Management’s Plan

 

During the three months ended March 31, 2015, the Company received loan proceeds of $63,000 from related parties, and expects 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 until a significant investment into the company is recognized.

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

 

●

Thermal Gasifier™ engineering design and deployment

 

●

Maximizing value from the sale of the Hutchins, Texas tire processing and storage 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 of processed tire products to increase revenue and cash flow.  In February 2012, the Company began operation of the shredding equipment for its TDF production line.  The Hutchins facility is currently under contract for sale, with an expected close in the second quarter of 2015.

 

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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, but does not have any firm commitments for funding.

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

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 _

Results of Operations

Overview:

The following table summarizes our results of operations for the three months ended March 31, 2015 and 2014

	Vista International Technologies Inc.
	Unaudited Condensed Consolidated Statements of Operations
	For the Three Months Ended March 31, 2015 and 2014
					March 31, 2015				March 31, 2014				2015 vs 2014				% Change
Revenue									\
Tipping Fee Revenue					$                     98,639				$                  87,230				$         11,409				13.1%
Processed Tire Revenue					31,165				115,610				(84,445)				-73.0%
Pilot Project Revenue					0				51,500				(51,500)				-100.0%
Total Revenue					129,804				254,339				(124,536)				-49.0%
Cost of revenue
Tire Operation					150,670				158,613				(7,943)				-5.0%
WTE Operations					-				39,364				(39,364)				-100.0%
Total Cost of Revenue					150,670				197,977				(47,307)				-23.9%
Environmental expense (income)					24,136				(59,087)				83,223				-140.8%
Gross (loss) profit					(45,002)				115,450				(160,452)				-139.0%
Operating expenses:
Depreciation and amortization					1,122				2,354				(1,232)				-52.3%
Selling, general and administrative expenses					71,062				76,369				(5,308)				-6.9%
Total operating expenses					72,183				78,723				(6,540)				-8.3%
(Loss) Gain from operations					(117,185)				36,727				(153,912)				-419.1%
Other income (expense):
Interest expense, net					(110,315)				(93,975)				(16,340)				17.4%
Loss before income taxes					(227,500)				(57,248)				(170,252)				297.4%
Income tax expenses					-				-
Net loss					$                 (227,500)				$                (57,248)				$      (170,252)				297.4%
Net loss per share, basic and diluted					$                       (0.01)				$                    (0.00)				$                -				255.6%
Weighted average common shares outstanding, basic & diluted					29,030,914				25,977,581				3,053,333				11.8%
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

  

Results of Operations for the Three Months Ended March 31, 2015 and 2014.

  

Revenue

  

Revenue, which consists primarily of tipping fees received for acceptance of whole passenger and truck tires, revenue from sales of TDF (tire derived fuel) and other processed tire material, and revenue from the construction of the Company’s WTE project declined 49%, or roughly $124,500  as compared with the three months ended March 31, 2015.  The decrease was mainly due to weak sales of processed tire material, as two of the Company’s major customers were inactive for maintenance/repair for much of the quarter.  In addition, due to the current stage of construction of the Company’s WTE pilot project, no WTE revenue was booked in the quarter.  The Company did see tipping fee income rise 13% in the quarter, due mainly to larger incoming tonnage at the facility.  The Company’s customer list in 2015 is roughly consistent with its customer list in 2014.

  

Three customers comprised roughly 12%, 11%, and 11% of revenues for the three months ended March 31, 2015.  Two customers comprised approximately 35% and 20% of revenues for the three months ended March 31, 2014.

Cost of Revenue

  

Cost of revenue for our tire processing operations decreased by 5%, or approximately $8,000 from the year earlier period due mainly to reduced hauling charges which stemmed from reduced shipments of processed tire material. Management expects the cost of revenue to remain roughly constant at this level until the closing of the sale of the facility.  Since no revenue was booked for the WTE segment, there was no cost of revenue for the first quarter.

Environmental remediation expense

Our tire operations in Texas are subject to regulation by the TCEQ.  At March 31, 2015, the Company had approximately         7,560  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 off take of material from the site.  Based on these new circumstances, the Company has estimated a disposal cost of approximately $204,500 at March 31, 2015, resulting in an expense of approximately $24,100 for the three months ended March 31, 2015, as compared to income of approximately $59,100 in the comparable prior period.  Management believes that the cost of disposal will decrease in the future 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 March 31, 2015) 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 $153,500 as of March 31, 2015.  Accordingly, our assurance is sufficient as of March 31, 2015.

  

Operating Expenses

  

Operating expenses decreasedby approximately $6,500, or 8% for the three months ended March 31, 2015 as compared to the year ago period.  The decrease was due to continued reductions in corporate overhead.

Interest Expense

  

Interest expense increased roughly 17%, or $16,300 in the three months ended March 31, 2015.  This increase was mainly due to accrued finance charges on some outstanding delinquent accounts

Liquidity and Capital Resources

 

The Company had a cash balance of approximately $24,800 as of March 31, 2015.  Our cash balance increased approximately $14,100as compared to December 31, 2014, due primarily to increase incoming tonnage at our tire facility, and loans received from a related party.

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. In the near future we are relying on funding from principal shareholders and related parties to provide

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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 March 31, 2015, we had a working capital deficiency of approximately $5.0 million, which includes notes payable to a stockholder of roughly $1.1 million (notes currently in default), notes payable to related parties of approximately $847,800, a liability of approximately $204,500 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 $500,000.

 

During the three months ended March 31, 2015, the Company received loan proceeds of $63,000 from related parties or shareholders to help with working capital.

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 March 31, 2015, 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 March 31, 2015. 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, 2014. As of March 31 2015, 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 March 31, 2015  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 is obligated

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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 are due through December 2013.  A final payment of approximately $5,200 will be due December 2013.  The Company has accrued this settlement. 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.

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

 

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

 

As of March 31, 2015, 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 March 31, 2015.

 

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 ∆
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*
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 ∆
10.8	Promissory Note dated April 4, 2007 by and between Nathaniel Energy Corporation and Richard Strain ∆
10.9	Security Agreement dated April 4, 2007 by and between Nathaniel Energy Corporation and Richard Strain ∆
10.10	Promissory Note dated April 16, 2007 by and between Nathaniel Energy Corporation and Richard Strain ∆
10.11	Security Agreement dated April 16, 2007 by and between Nathaniel Energy Corporation and Richard Strain ∆
10.12	Promissory Note dated May 31, 2007 by and between Nathaniel Energy Corporation and Richard Strain ∆
10.13	Security Agreement dated May 31, 2007 by and between Nathaniel Energy Corporation and Richard Strain ∆
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”) ∆
10.19	Continuation of Consulting and Services Agreement effective January 4, 2010 ∆
10.20 10.21	Exclusive Listing Agreement dated July 1, 2010 by and between Vista International Technologies, Inc. and CCBN Texas Limited Partnership d/b/a Colliers International ∆ Alternative Fuel Purchase Agreement, dated January 2nd, 2012, between Vista International Technologies, Inc, And Geocycle, LLC.
10.22 10.23 10.24 10.25 10.26 10.27 10.28 10.29 10.30 10.31 10.32	Release of Contract, dated January 18, 2012, between Vista International Technologies, Inc. and Brown-Lewisville Railroad Family First Limited Partnership Alternative Fuel Purchase Agreement, dated January 1, 2012, between Vista International Technologies, Inc. and Trident Environmental Resource Consulting, LLC Convertible Note dated December 7, 2011 between Vista International Technologies, Inc. and Asher Enterprises, Inc. Lease Agreement dated March 1, 2012 between Vista International Technologies, Inc, and Electric Power Equipment Company. Equipment Financing Agreement, dated February 15, 2012, between Vista International Technologies, Inc (Timothy Ruddy) and REO Holdings. Amended, Restated and Consolidated Note, dated March 29, 2013 between Vista International Technologies, Inc and Richard Strain. Consulting Agreement dated April 1, 2013 between Vista International Technologies, Inc and Daniel Chasse (with subsequent addenda) Consulting Agreement, dated November 15, 2013 between Vista International Technologies, Inc and John Massa. Carbon Credit Project Development and Consultancy Agreement, dated April 23, 2014 between Green Giant Ventures and Vista International Technologies, Inc Alternative Fuel Purchase Agreement, dated December 9, 2014, between Vista International Technologies, Inc and Geocycle, LLC. Contract of Sale for Hutchins Tire Processing Facility, dated March 16, 2015, between Vista International Technologies, Inc and Phoenix Renewable Technologies, Inc.
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.

_

* 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.

  

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** 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.

  

∆ 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.

  

+++ 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.

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		VISTA INTERNATIONAL TECHNOLOGIES, INC.
Date: May 15, 2015		By:	/s/ Timothy D Ruddy
			Timothy D Ruddy
			Interim Chief Executive Officer  and Principal Accounting Officer

  

Date: May 15, 2015		By:	/s/ Thomas P. Pfisterer
			Thomas P. Pfisterer
			Chief Financial Officer

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