<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the Quarterly Period Ended: June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 000-21953
ENVIRONMENTAL SAFEGUARDS, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0429198
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2600 West Loop South, Suite 645
Houston, Texas 77054
(Address of principal executive offices, including zip code)
(713) 641-3838
(Registrant's telephone number, including area code)
-----------------
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
At July 28, 1998, 9,526,444 shares of common stock, $.001 par value,
were outstanding.
Transitional Small Business Disclosure Format (check one);
Yes [ ] No [x]
<PAGE> 2
ENVIRONMENTAL SAFEGUARDS, INC.
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1998
and December 31, 1997
Consolidated Condensed Statements of Operations for the three
months and six months ended June 30, 1998 and 1997
Consolidated Condensed Statements of Cash Flows for the six months
ended June 30, 1998 and 1997
Selected Notes to Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
<PAGE> 3
Item 1. Financial Statements
The information required by this Item 1 is included in this report as
set forth in the "Contents" page.
<PAGE> 4
ENVIRONMENTAL SAFEGUARDS, INC.
CONSOLIDATED BALANCE SHEETS
-----------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
ASSETS (UNAUDITED) (NOTE)
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,357 $ 6,686
Accounts receivable 2,872 1,554
Prepaid expenses 640 206
ITD Units and equipment held for sale 1,008 --
Deferred taxes 85 85
------------ ------------
Total current assets 11,962 8,531
Property and equipment, net 7,498 6,286
Acquired engineering design and
technology, net 3,038 3,242
Other assets 239 239
------------ ------------
Total assets $ 22,737 $ 18,298
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 2,311 $ 844
Current portion of capital lease
obligation 737 1,039
Accounts payable 1,137 480
Accrued liabilities 266 366
Income taxes payable 699 525
------------ ------------
Total current liabilities 5,150 3,254
Long-term debt 7,294 4,117
Capital lease obligation 1,093 1,093
Minority interest 553 628
Commitments and contingencies
Stockholders' equity:
Preferred stock; Series B convertible; voting,
$.001 par value (aggregate liquidation
value - $3,998,000); 5,000,000 shares
authorized; 3,771,422 shares issued and
outstanding 4 4
Preferred stock; Series C non-convertible,
non-voting, cumulative; $.001 par
value (aggregate liquidation value -
$4,000,000); 400,000 shares authorized,
issued and outstanding 1 1
Common stock; $.001 par value; 50,000,000
shares authorized; 9,526,444 and
9,282,265 shares issued and outstanding
at June 30, 1998 and December 31, 1997,
respectively 10 9
Unissued common stock -- 56
Additional paid-in capital 14,638 14,459
Accumulated deficit (6,006) (5,323)
------------ ------------
Total stockholders' equity 8,647 9,206
------------ ------------
Total liabilities and stockholders'
equity $ 22,737 $ 18,298
============ ============
</TABLE>
Note: The consolidated balance sheet at December 31, 1997 has been derived from
the audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. See accompanying notes.
F-1
<PAGE> 5
ENVIRONMENTAL SAFEGUARDS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
-----------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- --------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Service revenue $ 2,297 $ 2,039 $ 4,866 $ 2,744
Cost of providing services 1,122 1,030 2,303 1,354
------- ------- ------- -------
Gross margin 1,175 1,009 2,563 1,390
Selling, general and administrative
expenses (841) (397) (1,720) (736)
Amortization of acquired engineering
design and technology (102) -- (204) --
------- ------- ------- -------
Income from operations 232 612 639 654
Other income (expenses):
Interest income 44 31 133 71
Interest expense (293) (49) (615) (129)
Foreign currency transaction losses -- 15 -- 9
Other 9 2 18 4
------- ------- ------- -------
Income (loss) before provision for
income taxes, minority interest,
elimination of pre-acquisition
earnings of subsidiary and
extraordinary item (8) 611 175 609
Provision for income taxes 162 384 435 464
------- ------- ------- -------
Income (loss) before minority interest
and elimination of pre-acquisition
earnings of subsidiary (170) 227 (260) 145
Minority interest and elimination
of pre-acquisition earnings of
subsidiary (54) (215) (225) (292)
------- ------- ------- -------
Net income (loss) $ (224) $ 12 $ (485) $ (147)
======= ======= ======= =======
Net income (loss) available to
common stockholders $ (417) $ 12 $ (871) $ (147)
======= ======= ======= =======
Basic and dilutive net income (loss)
per common share $ (0.04) $ 0.00 $ (0.09) $ (0.02)
======= ======= ======= =======
Weighted average shares outstanding 9,329 9,282 9,326 8,778
======= ======= ======= =======
</TABLE>
See accompanying notes.
F-2
<PAGE> 6
ENVIRONMENTAL SAFEGUARDS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
-----------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
--------------------
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (485) $ (147)
Adjustment to reconcile net loss to net
cash provided by operating activities (923) 977
------- -------
Net cash provided (used) by operating
activities (1,408) 830
------- -------
Cash flows from investing activities:
Purchase of property and equipment (2,230) (1,471)
------- -------
Cash flows from financing activities:
Proceeds from long-term debt 5,000 --
Proceeds from capital lease -- 950
Payments on long-term debt (513) --
Payments on capital leases (302) (88)
Net proceeds from sale of common stock 124 195
------- -------
Net cash provided by financing
activities 4,309 1,057
------- -------
Net increase in cash and cash equivalents 671 416
Cash and cash equivalents, beginning of
period 6,686 3,363
------- -------
Cash and cash equivalents, end of
period $ 7,357 $ 3,779
======= =======
Supplemental disclosure of cash flow information:
Cash paid for interest $ 371 $ 18
======= =======
Cash paid for income taxes $ 261 $ 280
======= =======
</TABLE>
See accompanying notes.
F-3
<PAGE> 7
ENVIRONMENTAL SAFEGUARDS, INC.
SELECTED NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
-----------------
1. INTERIM FINANCIAL STATEMENTS:
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three-month and six-month periods ended June
30, 1998 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-KSB for the year
ended December 31, 1997.
2. IMPACT OF THE ACQUISITION OF ONSITE TECHNOLOGY, L.L.C. ON THE FINANCIAL
STATEMENTS:
On December 17, 1997, the Company acquired Parker Drilling Company's 50%
interest in OnSite Technology, L.L.C. ("OnSite") and, accordingly,
OnSite became a wholly-owned consolidated subsidiary of the Company.
Prior to this transaction, the Company accounted for its 50% ownership
interest in OnSite on the equity method. This acquisition has been
accounted for using the purchase method of accounting and the results of
operations and cash flows of OnSite for the three months and six months
ended June 30, 1997 have been presented on a consolidated basis with a
deduction in the consolidated statement of operations for preacquisition
earnings attributable to Parker's interest prior to December 17, 1997.
3. ITD UNITS AND EQUIPMENT HELD FOR SALE:
ITD Units and equipment held for sale at June 30, 1998 consisting of
finished goods (one refurbished ITD Unit and four new pumps) are stated
at the lower of cost or market value. Cost is determined using the
specific identification method.
Continued
F-4
<PAGE> 8
ENVIRONMENTAL SAFEGUARDS, INC.
SELECTED NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
-----------------
4. LONG-TERM DEBT:
The Company exercised its option to obtain an additional $5 million
working capital loan from the holders of the Investor Notes (see Note 5
of the Company's consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-KSB for the year
ended December 31, 1997). The additional loan results in an increase in
the required quarterly principal payment from $300,000 to $577,000, plus
interest. The Investor Notes, including the additional $5 million
working capital loan, bear interest at a stated annual rate of prime
plus 1.5% through December 2002.
5. INCOME TAXES:
The Company consolidates its 50% owned subsidiary, OnSite Colombia,
Inc., a Cayman Islands company that conducts operations in Colombia. The
Cayman Islands impose no income tax on such operations. However, the
operations in Colombia are subject to Colombian federal and local taxes.
Accordingly, the Company has included in its financial statements the
Colombian income tax expense related to such operations. The difference
between the Federal statutory income tax rate and the Company's
effective income tax rate is primarily attributable to Colombian income
taxes and increases in valuation allowances for deferred tax assets
relating to U.S. net operating losses.
6. EARNINGS PER SHARE:
For the three months and six months ended June 30, 1998 and 1997, due to
the fact that the Company incurred net losses, all common stock
equivalents have been excluded from the calculation of earnings per
share because their effect is anti-dilutive. In future periods, the
calculation of diluted earnings per share may require that the common
stock equivalents (totaling 9,268,969 shares at June 30, 1998) be
included in the calculation of the weighted average shares outstanding
for periods in which net income is reported, using the treasury stock
method. Following is the reconciliation of net loss to the net loss
available to common stockholders.
Continued
F-5
<PAGE> 9
ENVIRONMENTAL SAFEGUARDS, INC.
SELECTED NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
-----------------
6. EARNINGS PER SHARE, CONTINUED:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1998 1997 1998 1997
----- ----- ----- -----
(IN THOUSANDS) IN THOUSANDS)
<S> <C> <C> <C> <C>
Net income (loss) $(224) $ 12 $(485) $(147)
Less: Series C Preferred
stock dividends (99) -- (198) --
Accretion of discount
on Class C preferred
stock (94) -- (188) --
----- ----- ----- -----
Net income (loss) available
to common stockholders $(417) $ 12 $(871) $(147)
===== ===== ===== =====
</TABLE>
F-6
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
Company's unaudited consolidated financial statements and related notes thereto
included in this quarterly report and in the audited consolidated Financial
Statements and Managements Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") contained in the Company's 10KSB for the year
ended December 31, 1997. Certain statements in the following MD&A are forward
looking statements. Words such as "expects", "anticipates", "estimates" and
similar expressions are intended to identify forward looking statements. Such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. Such risks and uncertainties
are set forth below and under "Information Regarding and Factors Affecting
Forward Looking Statements".
OVERVIEW
The Company is engaged in the development, production and sale of
environmental reclamation and recycling technologies and services. The Company
currently offers these services to companies engaged in land-based oil and gas
exploration, and to offshore applications where drill cuttings are barged to an
accessible land based facility for remediation and recycling. Oil and gas
exploration often produces significant quantities of petroleum-contaminated
drill cuttings, from which the Company's Indirect Thermal Desorption ("ITD")
process can extract and recover the hydrocarbons as re-useable liquids, and
produce recycled soil compliant with environmental regulations.
The Company currently generates a substantial portion of its revenues
from major oil and gas industry participants operating in the U.S.A and in the
Republic of Colombia. The Company anticipates that its most likely future
geographic markets will be Venezuela, Mexico, Canada, other Western Hemisphere
countries, the Middle East and the North Sea. In addition, the Company intends
to expand the activities of OnSite to include use of ITD technology to address
hydrocarbon contamination problems and hydrocarbon recycling and reclamation
opportunities at heavy industrial, refining and petrochemical sites, as well as
at Superfund, Department of Defense and Department of Energy sites.
The Company's present operating fleet of six ITD Units consists of four
units owned directly by the Company, plus two units owned by a consolidated
affiliate of the Company, OnSite Colombia, in which the Company holds a 50%
interest. Of the six unit operating fleet, one unit has been refurbished after
completing contract operations in Wyoming and is held in inventory for sale to
potential third-party buyers in non-core geographic market areas, and one unit
is undergoing routine maintenance following termination of contract operations
in Louisiana. The Company has placed orders for four additional units for
expected delivery in the early August to late September timeframe, which would
bring the fleet to ten units at that time. There can be no assurance, however,
that these units will be delivered in the timeframe indicated.
QUARTERLY FLUCTUATIONS
The Company's revenues may be affected by the timing and deployment of
ITD Units to customer drilling sites under existing contracts, and by the timing
of obtaining new contracts. Accordingly, the Company's quarterly results may
fluctuate and the results of one fiscal quarter should not be deemed to be
indicative of the results of any other quarter, or for the full fiscal year.
<PAGE> 11
RESULTS OF OPERATIONS
The Company's consolidated operating results have been significantly
affected by the acquisition of the remaining 50% interest in OnSite. In order to
provide a more meaningful period-to-period comparison of the Company's
operations, the results for the comparative periods of 1997 have been presented
on a consolidated basis, with a deduction in the consolidated statement of
operations for pre-acquisition earnings attributed to Parker Drilling Company's
interest prior to December 17, 1997. This change from the equity method to the
consolidated method of accounting for the Company's investment in OnSite did not
have an effect on net income.
For the three months ended June 30, 1998, the Company reported a loss
of $224,000 as compared to net income of $12,000 for the corresponding quarter
in 1997. The net loss increase was primarily due to higher interest expense of
$244,000 and additional amortization expense of $102,000 associated with the
acquisition of Onsite. These factors were partially offset by the positive
effects on operating income of two additional ITD Units in service as compared
to 1997.
For the six months ended June 30, 1998, the Company reported a net loss
of $485,000 versus a loss of $147,000 for the corresponding six months in 1997,
with the increase in net loss primarily due to higher interest expense of
$486,000 and additional amortization expense of $204,000 associated with the
acquisition of OnSite. These factors were partly offset by the favorable
operating income effect of two more ITD Units in service versus 1997.
Additional line-by-line analysis for the three months and six months ended June
30, 1998 and 1997 follows:
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED
JUNE 30, 1997
Revenues and Gross Margin. The increase in service revenue and gross
margin in the second quarter of 1998 is essentially the result of placing two
additional ITD Units in service over the same period in 1997. Service revenue of
$2.3 million for the second quarter of 1998 was generated by four ITD Units in
service (three in Colombia and one in Louisiana), and produced gross margin of
$1.2 million, or 51% of revenue. In the second quarter of 1997, the Company's
service revenue of $2.0 million was based on two units in service (both in
Colombia), which resulted in $1.0 million gross margin, at 50% of revenue.
Selling, General and Administrative ("SG&A") Expense. SG&A expense
increased during 1998 due to increased business activity in general, combined
with Corporate-level personnel additions in such key areas as international
operations, engineering design and procurement, regulatory matters, sales and
contract law. The number of management employees increased, on a quarter ending
basis, from six in 1997 to eleven in 1998.
Amortization of Engineering Design and Developed Technology ("AED/DT").
Reflects the amortization of Engineering Design and Developed Technology costs,
an intangible asset related to the December 1997 acquisition of the remaining
50% interest in OnSite from Parker Drilling. The intangible asset is being
amortized over an 8 year estimated economic life.
Interest Expense. In 1998, the Company incurred interest expense of
$293,000 (which included the amortization of debt issuance costs of $122,000),
compared to interest expense of $49,000 in the comparable quarter in 1997 which
related to the $3 million in debt retired in December 1997. Interest expense
increased as a result of increased borrowing to fund the purchase of Parker's
50% interest in OnSite. (See Note 2 to the Consolidated Condensed Financial
Statements).
Income Taxes. The Company's reported tax provision in 1998 and 1997
related to foreign income tax
<PAGE> 12
incurred by OnSite Colombia, a 50% owned consolidated subsidiary of OnSite. The
Company has incurred net operating losses ("NOLs") in the U.S. in recent years,
which may be used to offset taxable income reported in future periods. The NOLs
and certain foreign tax credits associated with the taxes paid in Colombia have
generated deferred tax assets, but due to uncertainties regarding the future
realization of these assets, a valuation allowance has been provided for the
full amount of the deferred tax assets. The Company is implementing tax planning
strategies, which if successful, may result in the Company recognizing these
deferred tax assets in future periods, which could significantly reduce the
Company's effective tax rate. There can be no assurances that the NOL and
foreign tax credits will be utilizable.
Elimination of Minority Interest. The minority interest for 1998 and
1997 reflects the 50% minority ownership's interest in the net income of OnSite
Colombia. In addition, in 1997, the pre-acquisition earnings representing 50% of
the results of OnSite operations are eliminated. (See Note 2 to the Consolidated
Condensed Financial Statements).
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30,
1997
Revenues and Gross Margin. During the six months ended June 30, 1998,
the Company produced $2.6 million gross margin on $4.9 million service revenue
based on four ITD Units in service (three in Colombia and one in Louisiana).
During the comparable period in 1997, the Company generated $1.4 million gross
margin on $2.7 million service revenue, with an average of two ITD Units in
service during the period (Colombia and Wyoming). The gross margin rate on
service revenue was 53% during 1998 and 51% during 1997.
SG&A, AED/DT, Income Taxes and Elimination of Minority Interest. Higher
1998 expense in each of these categories was due to the same explanations as for
the three month analysis above.
Interest Expense. The 1998 increase in interest expense was due to
increased borrowing to fund the Company's December 1997 purchase of Parker's 50%
interest in OnSite. During the six months ended June 1998, the Company incurred
$615,000 interest expense (including amortization of debt issuance costs of
$244,000). That compared to interest expense of $129,000 for the comparable six
months in 1997 which related to the $3 million in debt retired in December 1997.
(See Note 2 to the Consolidated Condensed Financial Statements).
LIQUIDITY AND CAPITAL RESOURCES
During 1997, the Company raised additional debt and equity capital to
fund current operations, support the construction of ITD Units necessary for its
future growth, and acquire the remaining 50% of OnSite from Parker. In December
1997, the Company raised $14 million in a private placement of Series B
Convertible Preferred Stock, non-convertible Series C Preferred Stock, senior
secured notes and warrants to purchase the Company's Common Stock. The proceeds
from this private placement were primarily used to fund the $8 million
acquisition of the remaining 50% of OnSite, repay $3 million of long-term debt
to a Parker subsidiary, and provide the company with capital resources to
continue funding current operations and planned capital expenditures.
In December 1997, the Company received $6 million in proceeds from
senior secured notes as part of the $14 million private placement package noted
above. In June 1998, the Company received supplemental proceeds of $5 million
from additional notes which carry the same interest rate and amortization
schedule as the $6 million notes. The most restrictive covenant of the senior
secured notes requires the Company to maintain positive working capital of at
least $2 million, and precludes the Company from paying common dividends.
Management believes the Company is in compliance with all debt covenants at June
30, 1998, but
<PAGE> 13
there can be no assurance that the Company will continue to be in compliance
with these covenants as of any subsequent date.
Prior to the $14 million in funding described above, in the first
quarter of 1997, the Company converted debt and related accrued interest
totaling $1,262,000 to equity and completed a Regulation D offering of its
Common stock. The proceeds from these transactions, along with the $3 million
long-term debt proceeds raised by the Company in December 1996, were used to
support operations throughout most of 1997.
During 1997 the Company entered into two sale-leaseback transactions
with third party lenders for two ITD Units operating in OnSite Colombia in order
to improve cash flows. The Company has and will continue to make capital
expenditures for ITD Units, and at December 31, 1997, had placed orders for four
additional units at an aggregate cost of approximately $4.6 million (of which
the Company incurred construction costs of approximately $2.2 million during the
first six months of 1998). The Company plans to finance these additional ITD
Units through a combination of surplus operating cash flows, additional third
party sale-leaseback transactions, bank term financing, the outright sale of
equipment to third parties in non-core geographic areas and/or additional sales
of equity. There can be no assurances that the Company will be able to obtain
this additional financing.
The functional currency of OnSite Colombia is the U.S. dollar because
customer invoicing, customer receivables, imported equipment and many of the
operating cost factors are denominated in U.S. dollars. The Company plans to
continue to implement the same approach as other foreign operations come on
stream in the course of conducting business abroad in an effort to minimize
risks associated with foreign exchange fluctuation and its affect on Company
profitability. However, there can be no assurance that the Company will be
successful in averting foreign exchange losses and associated risks in future
periods.
INFORMATION REGARDING AND FACTORS AFFECTING FORWARD LOOKING STATEMENTS
The Company is including the following cautionary statement in this
Quarterly Report on Form 10-Q to make applicable and take advantage of the safe
harbor provision of the Private Securities Litigation Reform act of 1995 for any
forward-looking statements made by, or on behalf of the Company. Forward-looking
statements include statements concerning plans, objectives, goals, strategies,
future events or performance and underlying assumptions and other statements
which are other than statements of historical facts. Certain statements
contained herein are forward-looking statements and, accordingly, involve risks
and uncertainties which could cause actual results or outcomes to differ
materially from those expressed in the forward-looking statements. The Company's
expectations, beliefs and projections are expressed in good faith and are
believed by the Company to have a reasonable basis, including without
limitations, management's examination of historical operating trends, data
contained in the Company's records and other data available from third parties,
but there can be no assurance that management's expectation, beliefs or
projections will result, or be achieved, or be accomplished.
In addition to other factors and matters discussed elsewhere herein,
the following are important factors that, in the view of the Company, could
cause material adverse affects on the Company's financial condition and results
of operations: the ability of the Company to attain widespread market acceptance
of its technology; the ability of the Company to obtain acceptable forms and
amounts of financing to fund planned expansion efforts; demand for, and price
level of, the Company's services; competitive factors; the actual useful life of
ITD Units; evolving industry and technological standards; ability to protect
proprietary technology; dependence on key personnel; the effect of business
interruption due to political unrest; foreign exchange fluctuation risk; and the
ability of the Company to maintain acceptable utilization rates on its
equipment. The company disclaims any obligation to update any forward-looking
statements to reflect events or circumstances after the date hereof.
<PAGE> 14
PART II
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation SB
(1) Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
On June 19, 1998, the Company filed Amendment No. 2 to Form 8-K for a
report dated December 17, 1997, reporting Item 7 Financial Statements. This
report contained financial statements of an acquired business and pro forma
financial information.
<PAGE> 15
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 hereunto duly authorized.
ENVIRONMENTAL SAFEGUARDS, INC.
Date: July 29, 1998 By: /s/ James S. Percell
-------------------------------------
James S. Percell, President
Date: July 29, 1998 By: /s/ Ronald L. Bianco
-------------------------------------
Ronald L. Bianco, Chief
Financial Officer
<PAGE> 16
INDEX TO EXHIBITS
(1) Exhibit 27. Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 7,357
<SECURITIES> 0
<RECEIVABLES> 2,872
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,962
<PP&E> 8,934
<DEPRECIATION> 1,436
<TOTAL-ASSETS> 22,737
<CURRENT-LIABILITIES> 5,150
<BONDS> 7,294
0
5
<COMMON> 10
<OTHER-SE> 8,632
<TOTAL-LIABILITY-AND-EQUITY> 22,737
<SALES> 4,866
<TOTAL-REVENUES> 4,866
<CGS> 2,303
<TOTAL-COSTS> 4,227
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 615
<INCOME-PRETAX> (50)
<INCOME-TAX> 435
<INCOME-CONTINUING> (485)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (485)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
