<PAGE> 1
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 JUNE 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD TO
-------------------- --------------------
COMMISSION FILE NUMBER 0-9278
--------------------------
GEOWASTE INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------------------
STATE OF INCORPORATION: DELAWARE I.R.S. EMPLOYER ID. NO. 36-2751684
SUITE 208, 24 CATHEDRAL PLACE
ST. AUGUSTINE, FL 32084
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(904) 824-0201
(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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $0.10 Par Value, 18,662,605 shares outstanding as of
August 7, 1995.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
PART I: FINANCIAL INFORMATION
<S> <C>
ITEM I: FINANCIAL STATEMENTS (Unaudited)
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6
ITEM 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-9
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ITEM 2: CHANGES IN SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ITEM 3: DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ITEM 5: OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,
1995 December 31,
Assets (unaudited) 1994
------------ -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,185,838 $ 1,633,398
Accounts receivable, net 936,060 1,013,228
Prepaid expenses 135,613 119,894
Deferred tax asset 79,757 525,000
----------- -----------
Total current assets 3,337,268 3,291,520
----------- -----------
Property and equipment:
Land, primarily disposal site 11,269,642 10,663,213
Building and improvements 150,793 149,372
Vehicles and equipment 2,978,310 2,551,785
----------- -----------
14,398,745 13,364,370
Less: accumulated depreciation (5,136,399) (3,914,197)
----------- -----------
Net property and equipment 9,262,346 9,450,173
----------- -----------
Other assets:
Cost in excess of net assets of
acquired businesses, net of
amortization 1,123,315 1,138,881
Funds held in escrow 612,010 588,971
Other 53,246 58,412
----------- -----------
Total other assets 1,788,571 1,786,264
----------- -----------
Total assets $14,388,185 $14,527,957
=========== ===========
<CAPTION>
June 30,
1995 December 31,
Liabilities and stockholders' equity (unaudited) 1994
------------ --------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term obligations $ 165,450 $ 167,971
Accounts payable 120,665 849,104
Accrued payroll 120,870 80,700
Accrued fees 108,113 154,459
Acrrued taxes 49,728 90,000
Accrued other 38,201 49,772
Deferred revenue 329,473 564,212
----------- -----------
Total current liabilities 932,500 1,956,218
Long-term obligations, less current
maturities 5,497,058 5,539,195
Closure obligations 1,218,178 891,175
Deferred tax liability 229,000 229,000
Minority interest 62,611 63,547
----------- -----------
Total liabilities 7,939,347 8,679,135
----------- -----------
Stockholders' equity:
Preferred stock, authorized 5,000,000
shares, $.01 par value; none issued
or outstanding
Common stock, authorized 50,000,000 shares,
$.10 par value; issued and outstanding
18,662,605 shares in 1995 and 1994 1,866,260 1,866,260
Additional paid-in capital 6,191,110 6,191,110
Change in unrealized value 8,969 (8,179)
Accumulated deficit (1,617,501) (2,200,369)
----------- -----------
Total stockholders' equity 6,448,838 5,848,822
----------- -----------
Total liabilities & stockholders' equity $14,388,185 $14,527,957
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE> 4
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues $ 2,334,093 $ 1,711,459 $ 4,669,017 $ 2,989,281
Cost and expenses:
Operating 1,379,049 989,493 2,716,488 1,723,191
Selling, general & administrative 372,705 380,789 725,763 762,938
----------- ----------- ----------- -----------
Income (loss) from operations 582,339 341,177 1,226,766 503,152
Other income (expense):
Other income, primarily interest 68,764 16,087 84,344 26,014
Interest expense (92,047) (93,880) (184,199) (183,069)
----------- ----------- ----------- -----------
Income (loss) from operations
before income taxes 559,056 263,384 1,126,911 346,097
Income tax provision 277,386 34,313 544,043 52,575
----------- ----------- ----------- -----------
Net income (loss) $ 281,670 $ 229,071 $ 582,868 $ 293,522
=========== =========== =========== ===========
Earnings (loss) per common
and common equivalent share $ 0.01 $ 0.01 $ 0.03 $ 0.02
=========== =========== =========== ===========
Weighted average common and
common equivalent shares 19,115,801 18,778,799 19,004,310 18,778,799
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 5
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
---------------------------
June 30, June 30,
1995 1994
---------- ----------
<S> <C> <C>
Cash Flows from operating activities:
Net income $ 582,868 $ 293,522
Adjustments to reconcile net income to net cash
provided
by operating activities:
Depreciation and amortization 1,274,883 819,250
Non cash interest expense 80,823 150,185
Non cash closure costs 327,003 203,821
Gain on sale of equipment (2,709) (2,246)
Deferred taxes 445,243 -
Changes in assets and liabilities:
Accounts receivable 309,894 (55,392)
Prepaid expenses (15,719) (128,308)
Accounts payable & accrued liabilities (220,622) (50,557)
Deferred revenue (467,464) 248,081
---------- ----------
Net cash provided by operating activities 2,314,200 1,478,356
---------- ----------
Cash flows from investing activities:
Additions to property and equipment (1,643,656) (1,173,750)
Proceeds from the sale of equipment 12,420 90,484
Funds held in escrow and other (5,043) 2,094
---------- ----------
Net cash used in investing activities (1,636,279) (1,081,172)
---------- ----------
Cash flows from financing activities:
Proceeds from issuances of debt, net of conversions 104,118 140,010
Payment of debt and capital lease obligations (229,599) (177,833)
---------- ----------
Net cash used in financing activities (125,481) (37,823)
---------- ----------
Increase in cash and cash equivalents 552,440 359,361
Cash and cash equivalents, beginning of period 1,633,398 1,209,259
---------- ----------
Cash and cash equivalents, end of period $2,185,838 $1,568,620
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 6
GEOWASTE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) BASIS OF PRESENTATION
In the opinion of management, the unaudited consolidated financial
statements for the interim periods ended June 30, 1995 and June 30, 1994
reflect all adjustments, including normally recurring accruals, necessary to
present fairly the financial condition and results of operations of the Company
for and as of the periods and dates indicated. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted in accordance with the rules of the Securities and Exchange Commission.
Operating reports for interim periods are not necessarily indicative of the
results that can be effected for a full year. These statements should be read
in conjunction with the Company's Annual Report for 1994 on Form 10-K dated
March 30, 1995.
2) SIGNIFICANT ACCOUNTING POLICIES
Earnings Per Common Share
Earnings per common and common equivalent share is computed using the
weighted average number of common and common equivalent shares (stock options,
warrants and conversion of subordinated notes) outstanding during each period.
Consolidated Statements of Cash Flows
For purposes of reporting cash flows, the Company considers all
certificates of deposit and time deposits with original maturities of three
months or less to be cash equivalents.
The Company paid approximately $140,000 and $3,000 for income taxes
and $101,000 and $22,000 for interest during the six months ended June 30, 1995
and June 30, 1994, respectively.
Income Taxes
The income tax provision of $544,000 for the period ended June 30,
1995 consisted of $445,200 representing the decrease in the deferred tax asset
for the recognition of net operating loss carryforwards and $98,800 for state
income taxes. The income tax provision of $52,600 for the period ended June
30, 1994 is for estimated state income taxes. The federal income tax liability
for June 30, 1994 of approximately $189,000 was offset by the Company's net
operating loss carryforward.
The difference between the actual income tax provision and the tax
provision computed by applying the statutory federal income tax rate to income
before taxes is attributable to the following:
<TABLE>
<CAPTION>
AMOUNT PERCENTAGE
------ ----------
<S> <C> <C>
Tax computed using Federal Statutory rate $394,000 34%
Closure reserves 111,000 10%
State income taxes net of Federal income benefit 39,000 4%
-------- ----------
$544,000 48%
======== ==========
</TABLE>
5
<PAGE> 7
3) ISSUANCE OF DEBT
On March 5, 1992, the Company completed a private placement of $3
million in Convertible Subordinated Debentures due March 31, 1997 (the
"Debentures"). The Debentures have a term of five years and bear interest at
the rate of 8.5% per annum, payable quarterly. Interest is payable in either
cash or additional Debentures at the Company's option. The Company has
utilized this feature for each quarter since the issuance of the Debentures, up
to and including the quarter ended March 31, 1995. For the current quarter
ending June 30, 1995 the Company chose to pay interest of $82,500 rather than
obtaining additional Debentures. The Debentures are convertible into the
Company's common stock at a conversion rate of $1.40 per share. Pursuant to
the terms of the Debentures, the Company is obligated to subordinate certain
subsequent issuances of debt to the rights of the holders of the Debentures.
The Debentures subject the Company to certain covenants, certain prepayment and
conversion obligations and certain restrictions with respect to the declaration
and payment of dividends.
6
<PAGE> 8
ITEM 2 GEOWASTE INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the quarter ended June 30, 1995 consisted of collection
revenues of $712,000, disposal revenues of $1,415,000 and transfer revenues of
$207,000. Collection revenues increased 17% and disposal revenues increased
28% over second quarter 1994 results. There were no related transfer revenues
for the second quarter of 1994. Transfer operations commenced in the fourth
quarter of 1994. Net sales for the six months ended June 30, 1995 consisted of
collection revenues of $1,407,000, disposal revenues of $2,848,000 and transfer
revenues of $414,000. Collection revenues increased 21% and disposal revenues
increased 56% over 1994 results. The increase in collection revenues is
primarily attributed to higher levels of commercial and municipal services.
Higher disposal revenues principally reflect the increased volumes at the Pecan
Row Landfill and excludes all intercompany activity.
Operating expenses related to the collection, disposal and transfer
activities for the quarter ended June 30, 1995, consisted of collection
expenses of $300,000, disposal expenses of $999,000 and transfer expenses of
$80,000. Costs and expenses for collection operations increased 17% over the
second quarter of 1994. Disposal operating costs increased 36% over the second
quarter of 1994. The increase in collection costs is principally related to
higher operating levels in 1995. The increase in disposal costs resulted from
the costs associated with increased disposal volumes.
Selling, general and administrative expenses for collection and
disposal activities in the second quarter ended June 30, 1995, were $76,000 and
$83,000, respectively, as compared to $71,000 and $61,000 for the second
quarter of 1994. Transfer administration expenses for the second quarter of
1995 were $2,000 with no comparable expenses in 1994. Corporate overhead for
the most recent three months was $212,000 as compared to $249,000 in the second
quarter of 1994. The reduction in corporate overhead resulted primarily from a
reimbursement from the Georgia Environmental Protection Division for legal
expenses incurred by the Company. These expenses were for litigation which
overturned the State of Georgia's restrictions on the acceptance of solid waste
generated from outside Georgia and disposed at the Company's Pecan Row
Landfill.
Net income for the quarter ended June 30, 1995 was $282,000 and for
the six months ended June 30, 1995 was $583,000. Higher operating levels and
decreased corporate charges during this second quarter of 1995 resulted in a
$53,000 and $289,000 improvement for the quarter and six month period
respectively, over comparable 1994 results.
SELECTED FINANCIAL DATA OF THE REGISTRANT'S OPERATIONS
The table below sets forth certain financial data of the Company's collection,
transfer and disposal operations in Georgia and Florida. These operating
results do not include the corporate overhead expenses of the parent, which are
associated with the operation of the Company as a public entity and the pursuit
of the Company's business strategy of acquiring additional disposal and
collection operations. The Company believes that the operating information set
forth below is an accurate
7
<PAGE> 9
representation of the operating results of the Georgia and Florida operations
on a stand-alone basis.
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 1995 JUNE 30, 1994
------------- -------------
<S> <C> <C>
Revenues:
Disposal $1,414,853 $1,104,009
Collection 712,165 607,450
Transfer 207,075 --
---------- ----------
Total 2,334,093 1,711,459
Operating Expenses (1) 590,629 394,340
---------- ----------
Gross Margin 1,743,464 1,317,119
Selling, General and Administrative (2) $161,088 124,132
---------- ----------
Operating Cash Flow $1,582,376 $1,192,987
========== ==========
</TABLE>
- ----------------------------
1. Excludes depreciation and non-cash closure costs of $788,420 and
$595,153 for period ending June 30, 1995 and 1994, respectively.
2. Excludes amortization expense of $7,782. No corporate overhead has
been allocated, $203,835 and $248,875 for the period ending June 30,
1995 and 1994, respectively.
3. Capital expenditures were $240,690 and $530,348 for the period ending
June 30, 1995 and 1994, respectively which resulted in free cash flow
of $1,341,686 and $662,639 in the related quarters.
Liquidity and Capital Resources
The Company is in a service industry and has neither significant
inventory nor seasonal variations in receivables. At June 30, 1995, the
Company had positive working capital of $2,404,768 as compared with $1,335,302
at December 31, 1994. The increase in working capital resulted primarily from
the increased revenues and improved operating efficiencies of the Company's
operating entities.
The Company's improved operating performance is expected to be
sufficient to support corporate overhead and other expenses. Management
believes that current working capital and internally generated funds will be
sufficient to meet the Company's working capital requirements for the
foreseeable future.
Ongoing Capital Requirements and Expansion
Historically, the Company has relied primarily on the private
placement of debt and equity securities in order to provide it with the cash
required for capital expenditures, acquisitions, and to partially fund
operating activities. Set forth below is a discussion of the Company's primary
ongoing cash requirements and the means by which it expects to meet these
requirements in the future.
Operating Activities
The Company anticipates that the cash generated from operating
activities will be sufficient to provide the cash required for these
activities.
8
<PAGE> 10
Capital Expenditures
The Company expects to make capital expenditures on an ongoing basis
for improvements to, and expansion of, its landfill and for equipment
purchases. The Company estimates that the capital expenditures required for
its existing operations will amount to $1,900,000 in 1995. The Company expects
that it will fund such estimated capital expenditures from existing cash, cash
generated from operations and equipment lease financing.
The development and permitting of new disposal facilities requires
significant capital expenditures over an extended period. Any growth of the
Company through the permitting of new disposal facilities or the lateral
expansion of its existing disposal facility would require substantial capital
expenditures.
Acquisitions
The Company's business strategy includes the acquisition of, or
combination with, solid waste management companies on financially attractive
terms. The Company competes with other solid waste disposal and collection
companies, some of which have significantly greater resources than the Company,
with respect to potential acquisitions and business combinations. Therefore,
there can be no assurance that the Company will be able to consummate
acquisitions or combinations on terms acceptable to the Company.
9
<PAGE> 11
PART II: OTHER INFORMATION
Item 1. Legal Proceedings:
Not applicable.
Item 2. Changes in Securities:
Not applicable.
Item 3. Defaults upon Senior Securities:
Not applicable.
Item 4. Submission of matters to a Vote of Security Holders:
Not applicable.
Item 5. Other Information:
Not applicable
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
Computation of Net Earnings and Net Loss Per Share:
Three month period ended June 30, 1995 - Exhibit 11.1
Six month period ended June 30, 1995 - Exhibit 11.2
Financial Data Schedule (for SEC use only) - Exhibit 27
(b) Reports on Form 8-K:
None
10
<PAGE> 12
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.
GEOWASTE INCORPORATED
---------------------
(Registrant)
/s/ Raymond F. Chase
------------------------------------------
Raymond F. Chase
Vice President and Chief Financial Officer
August 12, 1995
11
<PAGE> 13
Exhibit Index
Exhibit
<TABLE>
<S> <C>
11.1 Computation of Net Earnings Per Share
for the three month period ended June 30, 1995
11.2 Computation of Net Earnings Per Share
for the six month period ended June 30, 1995
27 Financial Data Schedule (for SEC purposes only)
</TABLE>
12
<PAGE> 1
EXHIBIT 11.1
GEOWASTE INCORPORATED AND SUBSIDIARIES
COMPUTATION OF NET EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
Fully
Primary Diluted
------- -------
<S> <C> <C>
Weighted Average Common Shares
outstanding . . . . . . . . . . . . . . . . . . . . . . . 18,662,605 18,662,605
Convertible debt . . . . . . . . . . . . . . . . . . . . . -- 2,774,475
Stock options and warrants outstanding . . . . . . . . . . 453,196 828,478
----------- ------------
Weighted average shares of common shares outstanding . . .
19,115,801 22,265,558
=========== ============
Net income . . . . . . . . . . . . . . . . . . . . . . . .
$ 281,670 $ 364,209
=========== ============
Earnings per share . . . . . . . . . . . . . . . . . . . .
$ .01 $ .02
=========== ============
</TABLE>
13
<PAGE> 1
EXHIBIT 11.2
GEOWASTE INCORPORATED AND SUBSIDIARIES
COMPUTATION OF NET EARNINGS PER SHARE
FOR THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
Fully
Primary Diluted
------- -------
<S> <C> <C>
Weighted Average Common Shares
outstanding . . . . . . . . . . . . . . . . . . . . . . . 18,662,605 18,662,605
Convertible debt . . . . . . . . . . . . . . . . . . . . . -- 2,774,475
Stock options and warrants
outstanding . . . . . . . . . . . . . . . . . . . . . . . . 341,705 828,478
----------- -----------
Weighted average shares of common shares outstanding . . .
19,004,310 22,265,558
=========== ===========
Net income . . . . . . . . . . . . . . . . . . . . . . . .
$ 582,868 $ 746,230
=========== ===========
Earnings per share . . . . . . . . . . . . . . . . . . . .
$ .03 $ .03
=========== ===========
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,185,838
<SECURITIES> 0
<RECEIVABLES> 936,060
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,337,268
<PP&E> 14,398,745
<DEPRECIATION> 5,136,399
<TOTAL-ASSETS> 14,388,185
<CURRENT-LIABILITIES> 932,500
<BONDS> 0
<COMMON> 1,866,260
0
0
<OTHER-SE> 4,582,578
<TOTAL-LIABILITY-AND-EQUITY> 14,388,185
<SALES> 4,669,017
<TOTAL-REVENUES> 4,669,017
<CGS> 2,716,488
<TOTAL-COSTS> 2,716,488
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 184,199
<INCOME-PRETAX> 1,126,911
<INCOME-TAX> 544,043
<INCOME-CONTINUING> 582,868
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 582,868
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
