Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
RTBC > SEC Filings for RTBC > Form 10-Q on 14-Aug-2013All Recent SEC Filings

Show all filings for ROTOBLOCK CORP | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for ROTOBLOCK CORP


14-Aug-2013

Quarterly Report


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

This quarterly report of Form 10-Q for the second quarter, including the following management's discussion and analysis, and other reports filed by the registrant from time to time with the securities and exchange commission (collectively the "filings") contain forward-looking statements which are intended to convey our expectations or predictions regarding the occurrence of possible future events or the existence of trends and factors that may impact our future plans and operating results. these forward-looking statements are derived, in part, from various assumptions and analyses we have made in the context of our current business plan and information currently available to us and in light of our experience and perceptions of historical trends, current conditions and expected future developments and other factors we believe to be appropriate in the circumstances. you can generally identify forward-looking statements through words and phrases such as "seek", "anticipate", "believe", "estimate", "expect", "intend", "plan", "budget", "project", "may be", "may continue", "may likely result", and similar expressions. when reading any forward-looking statement you should remain mindful that all forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of our company, and are subject to risks, uncertainties, assumptions and other factors relating to our industry and results of operations, including but not limited to the following factors:

our limited operating history, particularly of Rotoblock and Daifu on a consolidated basis;

our ability to protect the patents on our proprietary technology;

our ability to fund our short-term and long-term financing needs;

changes in our business plan and corporate strategies; and
Other risks and uncertainties discussed in greater detail in various sections of this report, or set forth in part I, Item 1A of our Form 10-K under the heading "Risk Factors".

Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Each forward-looking statement should be read in context with, and with an understanding of, the various other disclosures concerning our company and our business made in our filings. You should not place undue reliance on any forward-looking statement as a prediction of actual results or developments. We are not obligated to update or revise any forward-looking statement contained in this report to reflect new events or circumstances unless and to the extent required by applicable law.

In this quarterly report on Form 10-Q the term Rotoblock refers to Rotoblock, the term Daifu refers to daifuWaste Management Holdings , Ltd . Rotoblock acquired daifu Waste Management as a wholly owned subsidiary on November 18, 2011 on a consolidated basis, and "we," "us" and "our" refer to Rotoblock or the Company, as the context indicates.

Results of Operations

The following table sets forth, as a percentage of net sales, certain items
included in the Company Statements of Operations (see Financial Statements and
Notes) for the periods indicated:


                             Three Months ended June 30     Six Months ended June 30
                                 2013           2012          2013          2012
Statement of Operations
Data:

Net sales                              100%         100%          100%           100%
Cost of sales                        (68.6)       (66.2)        (62.9)         (66.2)
Operating expenses                   (57.7)       (73.6)        (41.8)        (155.2)
Loss from operations                 (26.3)       (39.9)         (4.9)        (121.4)
Net loss                            (178.1)       (40.1)        (63.7)        (125.5)

Quarter Ended June 30, 2013 Compared to Quarter Ended June 30, 2012

Sales decreased by $229,756 from $615,096 for the quarter ended June 30, 2012 to $385,340 for the quarter ended June 30, 2013. The decrease was due to only one low capacity equipment sale recognized in current quarter, compared with two equipment sales in the quarter ended June 30, 2012.

Cost of Goods Sold decreased by $143,042 from $407,419 for the quarter ended June 30, 2012 to $264,377 for the quarter ended June 30, 2013. The decrease was due to lower sales in the current quarter. As a percentage of sales, the cost of goods sold was 66% and 69% for the quarter ended June 30, 2012 and for the quarter ended June 30, 2013 respectively.

Gross profit decreased by $86,714 from $207,677 for the quarter ended June 30, 2012 to $120,963 for the quarter ended June 30, 2013 since the profit margin is less for low capacity equipment. The sales margins also decreased from 34% to 31% for the quarter ended June 30, 2012 and for the quarter ended June 30, 2013 respectively.

Selling and distribution expenses increased by $13,692 from $102,320 for the quarter ended June 30, 2012 to $116,012 for the quarter ended June 30, 2013. The reason for the increase was due to higher warranty expenses incurred by technicians for existing equipment sales.

Administrative and other operating costs decreased by $243,849 from $344,591 for the quarter ended June 30, 2012 to $100,742 for the period ended June 30, 2013. The decrease was primarily due to reductions in staff cost and professional fees.

Depreciation decreased by $398 from $6,115 for the quarter ended June 30, 2012 to $5,717 for the quarter ended June 30,2013. The reason for the decrease was due to some assets fully depreciated with no additional expense recorded.

Other income decreased by $9,601 from $19,542 for the quarter ended June 30, 2012 to $9,941 for the quarter ended June 30, 2013. The decrease was primarily due to less service and maintenance income for the medical waste equipment.

Impairment in Fair Value of Available-For-Sale Investments of $555,142 represents in decline experienced in the market value of the stock of Samyang Optics Co. Ltd. which is being held by the Company.

Financial expense increased by $259 from $39,035 for the quarter ended June 30, 2012 to $39,294 for the period ended June 30, 2013. The increase was due to additional related party loans.

Interest Income decreased slightly by $175 from $210 for the quarter ended June 30, 2012 to $35 for the quarter ended June 30, 2013. The decrease was due to less overall average Company balances in bank savings accounts.

Net Loss for the quarter ended June 30, 2013 was $685,959 compared to net loss of $264,632 for the quarter ended June 30, 2012.

Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012

Sales increased by $431,422 from $615,096 for the six months ended June 30, 2012 to $1,046,518 for the six months ended June 30, 2013. The increase was due to two equipment, one of which was with high capacity with a greater sales price recognized for the six months ended June 30, 2013. However only two low capacity equipment were recognized for the six months ended June 30, 2012.

Cost of Goods Sold increased by $251,036 from $407,419 for the six months ended June 30, 2012 to $658,455 for the six months ended June 30, 2013. The increase was due to one high capacity equipment being recognized for the six months ended June 30, 2013 as mentioned above. As a percentage of sales, the cost of good sold was 66% and 63% for the six months ended June 30, 2012 and for the six months ended June 30, 2013 respectively.

Gross profit increased by $180,386 from $207,677 for the six months ended June 30, 2012 to $388,063 for the six months ended June 30, 2013. The increase was due to improvement in cost control and higher profit margin for high capacity equipment. As a percentage, the sales margins increased from 34% to 37% for the six months ended June 30, 2012 and for the six months ended June 30, 2013 respectively.

Selling and distribution expenses decreased by $4,775 from $193,346 for the six months ended June 30, 2012 to $188,571 for the six months ended June 30, 2013. The reason for the decrease was due to some reduction in personnel in sales and marketing department.

Administrative and other operating costs decreased by $509,598 from $749,091 for the six months ended June 30, 2012 to $239,493 for the six months ended June 30, 2013. The decrease was primarily due to reductions in staff cost and professional fees.

Depreciation decreased by $864 from $12,234 for the six months ended quarter ended June 30, 2012 to $11,370 for six months ended quarter ended June 30, 2013. The reason for the decrease was due to some assets fully depreciated with no additional expense recorded.

Other income decreased by $32,438 from $51,586 for the six months ended June 30, 2012 to $19,148 for the six months ended June 30, 2013. The decrease was primarily due to less service income and maintenance income for medical waste equipment.

Impairment in Fair Value of Available-for-sale Investments of $555,142 represents in decline in market value of the stock of Samyang Optics Co. Ltd. held by the Company.

Financial expense increased by $2,397 from $76,708 for the six months ended June 30, 2012 to $79,105 for the six months ended June 30, 2013. The increase was due to additional related party loans.

Interest Income decreased slightly by $257 from $382 for the six months ended June 30, 2012 to $125 for the six months ended June 30, 2013. The decrease was due to less overall average Company balances in bank savings accounts.

Net Loss for the six months ended June 30, 2013 was $666,335 compared to net loss of $771,730 for the six months ended June 30, 2012.

Liquidity and Capital Resources

In assessing our liquidity, we monitor and analyze our cash on-hand, liquidation value of our investment in securities, and our operating and capital expenditure commitments. Our principal liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations.

Our principal sources of liquidity consist of our existing cash on hand, loans from related parties and our investment in securities with Samyang Optics, Ltd of $459,522.

We will require additional capital to expand our current operations. In particular, we require additional capital to expand our customer base by the addition of qualified sales and professional staff to execute on our business plan and pursue our efforts in the research and development.

We intend to fund our long-term liquidity needs related to operations through the incurrence of indebtedness, equity financing or a combination of both. Although we believe that these sources will provide sufficient liquidity for us to meet our future liquidity and capital obligations, our ability to fund these needs will depend on our future performance, which will be subject in part to general economic, financial, regulatory and other factors beyond our control, including trends in our industry and technological developments. However, we may not be able to obtain this additional financing on terms acceptable to us or at all.

We used cash in operations of $234,004 and of $332,340 during the six months ended June 30, 2013 and 2012 respectively.

Cash used in operations during the first six months ended June 30, 2013 was the result of the net loss incurred for the periods of $666,335, offset by non-cash expenses of $664,286. In the first six months of 2013, non-cash expenses were due to depreciation and amortization, non-cash interest, non-controlling interest, stocks issued for consulting fees and the impairment of available for sale investments.

Cash used in operations during the first six months ended June 30, 2012 was the result of the net loss incurred for the periods of $771,730, offset by non-cash expenses of $274,619. In the first six months of 2012, non-cash expenses were due to depreciation and amortization, non-cash interest, non-controlling interest, stocks/warrants issued for compensation and consulting fees.

For the first six months ended June 30, 2013, the net change in operating assets and liabilities resulted in a cash decrease of $231,955. The change was primarily due to the following: a decrease of $329,728 in deferred revenue, an increase of $51,917 in other payables and accrued liabilities mainly for staff pay and audit fee, an increase of $341,064 in accounts receivable, a decrease of $286,127 and of $100,793 in inventory and payment to suppliers respectively.

For the first six months ended June 30, 2012, the net change in operating assets and liabilities resulted in a cash increase of $164,771. The change was primarily due to the following: an increase of $501,987 in deferred revenue, an increase of $200,983 in other payables and accrued liabilities as a result of $212,623 for executive pay, legal and accounting fee with offset a decrease in VAT Taxes of $11,640, an increase of $324,960 in accounts receivable and an increase of $275,856 in inventory, offset by an decrease of $62,617 in prepayment.

Financing activities provided cash of $283,011 for the first six months ended June 30, 2013 and provided cash of $295,619 for the first six months ended June 30, 2012. In the first six months ended June 30, 2013 we received cash advances from related parties. In the first six months ended June 30, 2012, we received cash of $17,000 through the issuance of convertible debt and used $64,022 of cash to deposit in a restricted cash account to ensure certain project performances. Also we received $342,641 from two related parties of daifuWaste Group for operating use.

We had cash and cash equivalents of $89,905 at June 30, 2013 as compared to $49,568 at December 31, 2012. We had working capital deficits of $3.7 and $3.6 million at June 30, 2013 and December 31, 2012, respectively.

We will need additional funding to sustain our operations at our current levels through the next twelve months. Our working capital deficit of $3.7 million at June 30, 2013 may affect the Company's ability to continue its operation as a going concern. The Company's shareholder has agreed to provide sufficient financial support to the Company so as to enable the Company to meet its liabilities as and when they fall due and to enable the Company to continue its business at least for the next twelve months. The execution of such financial support, in case of necessity, depends on the ability and capability of the shareholder in the next twelve months. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Critical Accounting Policies and Use of Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements which have been prepared in conformity with U.S. generally accepted accounting principles which requires our management to make estimates and assumptions affecting the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as revenues and expenses during the reporting period. The amounts estimated could differ from actual results.

Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The more significant estimates relate to revenue recognition, contractual allowances and uncollectible accounts, intangible assets, accrued liabilities, income taxes, litigation and contingencies. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for judgments about results and the carrying values of assets and liabilities. Actual results and values may differ significantly from these estimates.

Stock Based Compensation

The Company accounts for stock-based compensation under the provisions of FASB ASC Topic 718, Compensation-Stock Compensation ("ASC 718"), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option pricing model (the "Black-Scholes model"). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. We estimate forfeitures at the time of grant and revise our estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards and warrants granted to non-employees in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees ("ASC 505-50"). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is complete.

Allowance for Doubtful Accounts

The Company provides an allowance for doubtful accounts when management estimates collectability to be uncertain. Accounts receivable are continually reviewed to determine which, if any, accounts are doubtful of collection. In making the determination of the appropriate allowance amount, the Company considers current economic and industry conditions, relationships with each significant customer, overall customer credit-worthiness and historical experience. The Company determined that no allowance was needed at June 30, 2013 and December 31, 2012.

Inventories

Inventories consist primarily of raw materials and are valued at the lower of cost or market value with cost determined on a specific identification basis. In assessing the ultimate realization of inventories, management makes judgments as to future demand requirements compared to current or committed inventory levels. The Company's reserve requirements generally increase/decrease due to management's projected demand requirements, market conditions and product life cycle changes. During the first three months ended June 30, 2013 and December 31, 2012, the Company did not make any allowance for slow-moving or defective inventories.

Off-Balance Sheet Arrangements

None.

  Add RTBC to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for RTBC - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial Sign Up Now


Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.