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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, 1997
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 700, 100 West Bay Street
Jacksonville, FL 32202
(Address of principal executive offices)
(904) 353-5033
(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, 21,286,549 shares outstanding as of
August 8, 1997.
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<PAGE>
TABLE OF CONTENTS
Page
PART I: FINANCIAL INFORMATION
ITEM I: FINANCIAL STATEMENTS (Unaudited)
Consolidated Balance Sheets.............................................2-3
Consolidated Statements of Operations.....................................4
Consolidated Statements of Cash Flows.....................................5
Notes to Consolidated Financial Statements..............................6-9
ITEM 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations..........................10-12
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS...............................................13
ITEM 2: CHANGES IN SECURITIES...........................................13
ITEM 3: DEFAULTS UPON SENIOR SECURITIES.................................13
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............13
ITEM 5: OTHER INFORMATION...............................................13
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K................................13
Signatures................................................................14
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
Assets ----------------- -----------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 518,117 $ 3,058,067
Accounts receivable, net 2,444,006 2,214,061
Prepaid expenses 395,560 343,461
Prepaid income taxes 431,370 -
Deferred tax asset 220,488 221,000
----------- -----------
Total current assets 4,009,541 5,836,589
----------- -----------
Property and equipment:
Land, primarily disposal site 14,053,995 13,205,883
Buildings and improvements 576,791 433,025
Vehicles and equipment 10,872,064 8,830,438
----------- ------------
25,502,850 22,469,346
----------- ------------
Less: accumulated depreciation (10,302,291) (8,613,446)
----------- ------------
Net property and equipment 15,200,559 13,855,900
----------- ------------
Other Assets:
Cost in excess of net assets of
acquired businesses, net of
amortization 10,310,847 10,505,129
Funds held in escrow 318,000 318,000
Other 155,436 102,473
----------- -----------
Total other assets
10,784,283 10,925,602
----------- -----------
Total assets
$29,994,383 $30,618,091
============ ===========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
Liabilities and Stockholders' Equity ----------------- ------------------
(unaudited)
<S> <C> <C>
Current Liabilities:
Current maturities of long-term debt $ 4,641,775 $ 4,672,950
Accounts payable 1,561,960 1,573,707
Accounts payable to related party - 400,000
Accrued payroll 385,780 198,619
Accrued fees 80,263 145,008
Accrued income taxes - 700,000
Accrued other 214,707 46,929
Deferred revenue 584,405 876,624
------------ ------------
Total current liabilities 7,468,890 8,613,837
------------ ------------
Long-term obligations, less current
maturities 3,118,654 2,522,311
Accrued Royalties 823,546 962,061
Closure and post closure obligations 1,922,565 1,787,136
Deferred tax liability 826,596 750,000
------------ -----------
Total liabilities 14,160,251 14,635,345
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
21,286,549 shares in 1997 and 21,028,634
shares in 1996 2,128,655 2,102,863
Additional paid-in capital 13,198,202 12,910,437
Retained earnings 507,275 969,446
------------ ------------
Total stockholders' equity 15,834,132 15,982,746
------------ ------------
Total Liabilities and Stockholders' Equity $29,994,383 $30,618,091
=========== ============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- -------------------
1997 1996 1997 1996
--------- ----------- --------- --------
<S> <C> <C> <C> <C>
Net revenues $4,844,636 $2,981,818 $9,722,192 $5,238,691
Cost and expenses:
Operating 3,517,325 1,566,077 6,724,452 2,677,776
Unusual charges - - 1,083,000 -
Selling, general and administrative 1,163,296 573,351 2,126,467 963,800
Income (loss) from operations 164,015 842,390 (211,727) 1,597,115
Other income (expense):
Other income 134,806 135,301 153,382 183,445
Interest expense ( 193,184) (107,661) (330,535) (198,443)
---------- ---------- ---------- ----------
Income (loss) from operations before
income taxes 105,637 870,030 (388,880) 1,582,117
Income tax provision 60,291 296,746 73,291 581,792
----------- ---------- ---------- ---------
Net income (loss) $45,346 $573,284 $(462,171) 1,000,325
========== ========== ========== ==========
Earnings (loss) per common and
common equivalent share $ 0.00 $ 0.03 $ (0.02) $ 0.05
========== ========== ========== ==========
Weighted average common
and common equivalent shares 23,471,394 21,116,053 21,206,351 20,725,484
========== ========== ========== ==========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------
1997 1996
----------- ----------
<S> <C> <C>
Cash Flows from operating activities:
Net (loss) income $ (462,171) $1,000,325
Adjustments to reconcile net
loss (income) to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,760,559 1,045,555
Goodwill writeoff 436,000 -
Impairment of property 201,000
Non cash closure costs 135,429 132,173
(Gain) Loss on sale of equipment (1,663) (1,179)
Deferred taxes 139,936 161,000
Gain on sale of business (124,639) -
Changes in assets and liabilities:
Accounts receivable (229,945) (160,906)
Prepaid expenses (483,469) 41,782
Accounts payable and accrued liabilities (1,132,639) 78,818
Deferred revenue (292,219) (67,703)
-------------- -----------
Net cash provided by (used in) (53,821) 2,229,865
-------------- -----------
operating activities
Cash flows from investing activities:
Additions to property and equipment (1,749,804) (1,439,089)
Proceeds from the sale of equipment 16,300 11,000
Funds held in escrow and other - 623,060
Purchase of business (271,921) -
Proceeds from the sale of business 204,761 -
Acquisition of business, net of cash acquired -- (411,522)
Net cash used in investing activities (1,800,664) (1,216,551)
-------------- -----------
Cash flows from financing activities:
Payment of debt and capital lease obligations (719,023) (376,485)
Proceeds from exercise of stock options 33,558 --
-------------- -----------
Net cash used in financing
activities (685,465) (376,485)
Increase in cash and cash equivalents (2,539,950) 636,829
Cash and cash equivalents, beginning of period 3,058,067 3,985,459
Cash and cash equivalents, end of period $518,117 $4,622,288
============= ===========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1) Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated
financial statements 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 results for interim periods are not necessarily indicative
of the results that can be expected for a full year. These financial statements
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
2) Significant Accounting Policies
Earnings Per Common Share
Net income and loss per common share for the three months and the six
months ended June 30, 1997 and 1996 is based on the weighted average number of
common and common equivalent shares (stock options and warrants) outstanding in
each period and is computed in accordance with APB Opinion No. 15.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share." Statement No. 128 will replace APB
Opinion No. 15 and is effective for periods ending after December 15, 1997.
Earlier application is not permitted. When effective, Statement No. 128 requires
restatement of all prior period earnings per share ("EPS") data presented.
Statement No. 128 replaces the current EPS presentation with a dual
presentation of basic and diluted EPS for entities with complex capital
structures, such as the Company. Basic EPS includes no dilution and is computed
by dividing income (loss) by the weighted average number of common shares
outstanding during the period. Diluted EPS reflects the potential dilution of
securities, such as stock options, that could share in the earnings of an
entity. If Statement No. 128 had been applied for the three and six month
periods ended June 30, 1997 and 1996, EPS and shares used in the computation
would have been the following pro forma amounts:
<TABLE>
<CAPTION>
Three Months Ended June 30,
1997 1996
<S> <C> <C>
Pro forma EPS:
Basic EPS
$ 0.00 $ 0.03
========= =========
Diluted EPS
$ 0.00 $ 0.03
========= =========
Pro forma shares:
Basic EPS - weighted average common shares outstanding
21,270,725 18,896,551
Dilutive effect of stock options, warrants and convertible
debentures
4,775,144 5,168,044
------------ ----------
Diluted EPS
26,045,869 24,064,595
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June
30,
1997 1996
<S> <C> <C>
Pro forma EPS:
Basic EPS
$ (0.02) $ 0.05
============ =========
Diluted EPS
$ (0.02) $ 0.04
============ =========
Pro forma shares:
Basic EPS - weighted average common shares outstanding 21,206,351 18,727,341
Dilutive effect of stock options, warrants and convertible
debentures
- 4,773,218
------------- ----------
Diluted EPS 21,206,351 23,500,559
</TABLE>
All options, warrants and convertible debentures outstanding for the
six months ended June 30, 1997 were not included in the computation of diluted
EPS because the options, warrants and convertible debentures are considered
antidilutive.
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 $729,000 and $265,000 for income taxes
and $330,000 and $198,000 for interest during the six months ended June 30, 1997
and June 30, 1996, respectively.
<TABLE>
<CAPTION>
Six Months Ended June
30,
Significant non-cash transactions 1997 1998
<S> <C> <C>
Purchase of equipment and vehicles
financed by notes payable. $ 1,233,408 $ -
Assumption of debt associated with
purchase of business 807,751 614,000
Capital expenditures included in
accounts payable but not yet paid 249,058 -
Conversion of debentures to stock 280,000
Expenditures related to purchase
of business included in accounts 76,982 -
payable but not yet paid
</TABLE>
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 utilized the feature
of issuing additional Debentures in payment of interest for each quarter since
the issuance of the Debentures up to and including the quarter ended March 31,
1995. Beginning with the second quarter of 1995, the Company chose to pay
interest of $83,000 per quarter rather than issue additional Debentures. Total
interest paid this year through June 30, 1997 on the Debentures amounts to
$160,000. The Debentures are convertible into shares of the Company's common
stock at a conversion rate of $1.40 per share. In March 1997, the Company and
the holder of the Debentures agreed to extend the due date of the Debentures to
September 30, 1997 and the holder converted $280,000 of convertible debt.
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.
4) Acquisition
On January 10, 1997, the Company acquired the waste related assets of
Air Sweep-A-Lot, Inc. ("ASAL") a solid waste collection and sweeping company
located in Valdosta, GA. The total purchase price of approximately $1,007,000
consisted of cash in the amount of $200,000, assumption of debt in the amount of
$485,000 and the issuance of a promissory note to the owners of ASAL with a
principal amount of $322,000 bearing interest at a rate of 8.0% per annum. This
acquisition was accounted for as a purchase. The value of the non-competition
agreement assigned to this transaction was $85,000 and is being amortized over 5
years. The excess of the purchase price over the net assets acquired of
approximately $348,000 is being amortized over 40 years. The operations of ASAL
are not material to the Company's consolidated operations and has been
integrated into the Company's collection business in Valdosta, Georgia.
Sale of Assets
On June 10, 1997, the Company sold its lawn care and certain of its
sweeping businesses in Florida to Sweeping Corp. of America. The assets sold
included selected lawn care and parking lot sweeping equipment together with
contracts obtained since April 1996 with the Florida Department of
Transportation for highway sweeping and lawn edging in Dade, Leon, Holmes,
Washington, Jackson, Bay, Gulf, Calhoon, Escambia and Santa Rosa counties. All
of these contracts involved work being performed in geographically dispersed
locations, which were remote to the Company's existing service areas of
South/Central Georgia, Northeast Florida and North Central Florida and which the
Company believed had limited market share growth opportunities in the near
future. The aggregate purchase price of the sale was $210,000 and resulted in a
gain of approximately $120,000.
6) Unusual Charges
On March 21, 1996 the Company acquired all of the capital stock of
North Florida Sweeping, Inc. ("NFS") a street sweeping and roll-off collection
company based in Jacksonville, Florida. On December 31, 1996, the Company filed
suit in the United States District Court for the Eastern District of Florida
against the former shareholders of NFS seeking recission of the transaction and
damages. The Company's suit alleges fraud in the inducement to purchase the
capital stock of NFS and breach of representations and warranties.
In the first quarter of 1997, the Company concluded a review of certain
operating practices of NFS and has determined that NFS: (i) had not fully
complied with the performance specifications of its highway and street sweeping
contracts; (ii) had not fully conformed with all applicable requirements in its
disposal of street sweepings; and (iii) is required to continue to perform under
the terms of the highway and street sweeping contracts until their expirations.
In response to these findings the Company implemented certain remedial actions
with respect to the operations of NFS, including additional, and in some
instances multiple, re-sweeps in order to meet the performance standards of the
contracts and rectification of NFS's waste disposal practices.
As a result of the remedial actions taken with respect to the
operations of NFS during the first quarter of 1997, the Company: (a) estimated
and accrued the losses on the sweeping contracts; and (b) in accordance with
Statement of Financial Accounting Standard No. 121 - "Accounting for The
Impairment of Long-Lived Assets And For Long-Lived Assets To Be Disposed Of",
concluded that the goodwill associated with the NFS acquisition is not
recoverable. Accordingly, the Company has taken a charge of $436,000 to
earnings. Any amounts recovered from the former NFS shareholders as a result of
litigation will be treated as income at that time.
Additionally, during the first quarter, the Company and the City of St.
Augustine, Florida mutually agreed to terminate the existing transfer,
transportation and disposal agreement. In connection with such termination the
Company has agreed to continue to transport and dispose of the solid waste
generated from the City of St. Augustine until October 31, 1997, and thereafter,
the City may extend the agreement on a month to month basis. The Company is no
longer required, however, to construct a permanent transfer station and
accordingly, wrote-off certain design and permitting costs which had been
previously deferred.
All of the above asset write-offs and expenses have been classified as
"Unusual Charges" in the Consolidated Statement of Operations, and are
summarized as follows:
Additional sweeping costs $ 68,000
incurred and paid in the
six months ended June 30, 1997
Legal and consulting expenses:
Incurred in the six months ended June 30, 1997 77,000
Accrued at June 30, 1997 205,000
Accrued Loss on sweeping
contracts 96,000
Write-off of NFS goodwill 436,000
Write-down of NFS real estate 110,000
Write-off of transfer station
development costs 91,000
--------
Total $ 1,083,000
<PAGE>
ITEM 2 GEOWASTE INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net revenues for the quarter ended June 30, 1997 consisted of collection
revenues of $2,914,000, disposal revenues of $834,000, transfer revenues of
$367,000, sweeping revenues of $397,000 and recycling revenues of $332,000.
Collection revenues increased 204%, disposal revenues decreased 34%, transfer
revenues increased 62%, and sweeping revenues decreased 24% as compared to
second quarter 1996 results. Prior to the acquisition of the Spectrum Group,
Inc. in August 1996, the Company was not engaged in the recycling business.
Accordingly, there were no related recycling revenues for the second quarter of
1996. Of the 204% increase in collection revenues, 169% is attributable to the
operations of the companies acquired in 1996, with the remainder primarily from
new collection contracts entered into during the first quarter of 1996 which had
a full effect in the first half of 1997. All of the increase in transfer revenue
is attributable to operations of the acquired companies. Even though tonnage at
the Pecan Row Landfill remained constant as compared to the second quarter of
1996, more competitive pricing resulted in decreased revenue. Net sales for the
six months ended June 30, 1997 consisted of collection revenues of $5,711,000,
disposal revenues of $1,682,000, transfer revenues of $747,000, sweeping
revenues of $862,000 and recycling revenues of $720,000. This compares with net
revenues for the six months ended June 30, 1996 of $1,779,000, $2,434,000, and
$581,000, for collection, disposal, transfer and sweeping revenues,
respectively. There were no recycling revenues in the first six months of 1996.
All intercompany activity has been eliminated.
Operating expenses related to the collection, disposal, transfer, sweeping
and recycling activities for the quarter ended June 30, 1997 consisted of
collection expenses of $1,836,000, disposal expenses of $720,000, transfer
expenses of $199,000, sweeping expenses of $465,000 and recycling expenses of
$297,000. Collection expenses increased 376%, disposal expenses decreased 1%,
transfer expenses increased 116% and sweeping expenses increased 28% as compared
to the second quarter of 1996. Of the 376% increase in collection expenses, 210%
was attributable to the operations of the companies acquired in 1996. Disposal
expenses remained constant during the second quarter of 1997 as compared to the
second quarter of 1996. Of the 116% increase in transfer expenses, all were
attributable to the acquired companies. In the second quarter of 1996, there
were no related recycling expenses. Operating expenses for the six months ended
June 30, 1997 consisted of collection expenses of $3,347,000, disposal expenses
of $1,491,000, transfer expenses of $378,000, sweeping expenses of $923,000 and
recycling expenses of $585,000. This compares with operating expenses for the
six months ended June 30, 1996 of $745,000, $1,344,000, $180,000 and $400,000
for collection, disposal, transfer and sweeping expenses respectively. There
were no recycling expenses in the first six months of 1996.
Unusual charges for the six months ended June 30, 1997 relate to
litigation and certain developments related to North Florida Sweeping, Inc.
("NFS") in the first quarter of 1997. The Company concluded a review of certain
operating practices of NFS and has determined that NFS: (1) had not fully
complied with the performance specifications of its highway and street sweeping
contracts; (2) had not conformed with all applicable requirements in its
disposal of street sweepings; and (3) is required to continue to perform under
the terms of the highway and street sweeping contracts until their expirations.
In the first quarter of 1997 the Company implemented certain remedial actions
with respect to the operations of NFS including additional, and in some
instances multiple, re-sweeps to meet the performance standards of the contracts
and rectification the waste disposal practices of NFS. As a result of such
remedial actions, the Company has (a) estimated and accrued the losses on the
sweeping contracts and (b) concluded that the goodwill associated with the NFS
acquisition is not recoverable and the land and building of NFS is not
recoverable above its appraised value. Additionally, during the first quarter of
1997, the Company and the City of St. Augustine, Florida mutually agreed to
terminate the existing transfer, transportation and disposal agreement and,
accordingly, wrote off certain design and permitting costs which had been
previously deferred. As a result, the Company recorded $1,083,000 of unusual
charges for the six months ended June 30, 1997 which consisted of $282,000 of
legal and consulting fees, $68,000 additional sweeping costs incurred and paid
in the first quarter of 1997, $96,000 accrued losses on sweeping contracts,
$436,000 write off of goodwill, $110,000 write off of land and building and
$91,000 write off of transfer station development costs.
Selling, general and administrative expenses for collection, disposal,
transfer and sweeping activities in the second quarter ended June 30, 1997, were
$568,000, $75,000, $17,000, and $110,000, respectively, as compared to $119,000,
$84,000, $5,000 and $74,000 for the second quarter of 1996. Recycling
administrative expenses for the second quarter of 1997 were $48,000. Corporate
overhead for the second quarter of 1997 was $345,000 as compared to $291,000 in
the second quarter of 1996. Selling, general and administration expenses for
collection, disposal, transfer and sweeping for the six months ended June 30,
1997 were $1,037,000, $147,000, $35,000, $217,000 respectively, as compared to
$207,000, $163,000, $2,000 and $83,000 for the six months ended June 30, 1996.
Recycling administrative charges for the six months ended June 30, 1997, were
$97,000 with no related charges for the six months ended June 30, 1996.
Corporate overhead for the six months ended June 30, 1997 and June 30, 1996 were
$593,000 and $509,000 respectively.
Net income for the quarter ended June 30, 1997 was $45,000 as compared
to net income of $573,000 in the second quarter of 1996. The decrease was due
primarily to increases in operating expenses of divisions acquired during 1996.
Due mainly to the unusual charges and increased expenses of acquired companies,
there is a net loss for the six month period ending June 30, 1997 of $462,000 as
compared with net income of $1,000,000 for the same period in 1996.
Liquidity and Capital Resources
The Company is in a service industry and has neither significant
inventory nor seasonal variations in receivables. At June 30, 1997, the Company
had negative working capital of $3,459,349 as compared with a negative
$2,777,248 at December 31, 1996. The decrease in working capital resulted
primarily from payment of construction costs associated with the Company's
Pecan Row Landfill coupled with accruals required for the Company's Florida
operations.
The Company's operating performance is expected to be sufficient to
support normal corporate overhead and other expenses for the next 12 months.
Management believes that acquisition capital and short term debt redemption
needs should be raised from external sources to maximize the flexibility of the
Company's financial resources and to allow for the continued growth and
expansion of the Company.
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 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.
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 $4,425,000 in 1997, almost half of which will be used
for the construction of a new 4 acre disposal cell and construction costs
associated with the expected receipt of a permit modification which will
increase the footprint of the Pecan Row Landfill in 1997. 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. The Company expects that it will
fund such estimated and future capital expenditures from existing cash, cash
generated from operations, equipment lease financing, and other financing.
The Company's business strategy includes the acquisition, on
financially attractive terms, of additional solid waste management companies as
well as related sanitation and infrastructure maintenance businesses. Such
acquisitions may be accomplished through the issuance of the Company's common
stock, cash on hand, or may require cash in excess of the Company's current cash
available. Although the Company's operating results and financial performance
are expected to provide access to any financing which may be necessary to
acquire such businesses, there can be no assurance that such additional
financing can be obtained on terms acceptable to the Company.
On January 10, 1997, the Company acquired the waste related assets of
ASAL, a solid waste collection and parking lot sweeping company in Valdosta,
Georgia. The total purchase price of approximately $1,007,000 consisted of cash
in the amount of $200,000, assumption of debt in the amount of $485,000 and the
issuance of a promissory note to the owners of ASAL with a principal amount of
$322,000 bearing interest at a rate of 8.0% per annum. This acquisition was
accounted for as a purchase. The value of the non-competition agreement assigned
to this transaction was $85,000 and is being amortized over 5 years. The excess
of the purchase price over the net assets acquired of approximately $348,000 is
being amortized over 40 years. The operations of ASAL are not material to the
Company's consolidated operations and have been integrated into the Company's
collection business in Valdosta, Georgia.
On June 10, 1997, the Company sold its lawn care and certain of its
sweeping businesses in Florida to Sweeping Corp. of America. The assets sold
included selected lawn care and parking lot sweeping equipment together with
contracts obtained since April 1996 with the Florida Department of
Transportation for highway sweeping and lawn edging in Dade, Leon, Holmes,
Washington, Jackson, Bay, Gulf, Calhoon, Escambia and Santa Rosa counties. All
of these contracts involved work being performed in geographically dispersed
locations, which were remote to the Company's existing service areas of
South/Central Georgia, Northeast Florida and North Central Florida and which the
Company believed had limited market share growth opportunities in the near
future. The aggregate purchase price of the sale was $210,000 and resulted in a
gain of approximately $120,000.
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income," and Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Both statements are
effective for fiscal years beginning December 15, 1997. The Company has not yet
determined the effect, if any, of these statements on its financial statements.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995
With the exception of historical information (information relating to the
Company's financial condition and results of operations at historical dates or
for historical periods), the matters discussed in this Management's Discussion
and Analysis of Financial condition and Results of Operations are
forward-looking statements that necessarily are based on certain assumptions and
are subject to certain risks and uncertainties. These forward-looking statements
are based on management's expectations as of the date hereof, and the Company
does not undertake any responsibility to update any of these statements in the
future. Actual future performance and results could differ from that contained
in or suggested by these forward-looking statements as a result of the factors
set forth in this Management's Discussion and Analysis of Financial Condition
and Results of Operations, the Business Risks described in the Company's Report
on Form 10-K for the year ended December 31, 1996 and elsewhere in the Company's
filings with the Securities and Exchange Commission.
<PAGE>
PART II: OTHER INFORMATION
ITEM 1. Legal Proceedings:
On March 21, 1996, the Company acquired all of the
capital stock of North Florida Sweeping, Inc. ("NFS"), a
street sweeping and roll-off collection company based in
Jacksonville, Florida. On December 31, 1996, the Company filed
suit in the United States District Court for the Eastern
District of Florida against the former shareholders of NFS
seeking rescission of the transaction and damages. The
Company's suit alleges fraud in the inducement to purchase the
capital stock of NFS and breach of representations and
warranties. The case is in discovery and trial is
currently scheduled for November 1997.
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, 1997 - Exhibit 11.1
Six month period ended June 30, 1997 - Exhibit 11.2
Financial Data Schedule - Exhibit 27
(b) Reports on Form 8-K:
None
<PAGE>
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)
By: /s/ John W. Ballentine
John W. Ballentine
Vice President and Chief
Financial Officer
Dated: August 14, 1997
<PAGE>
Exhibit Index
11.1 Computation of Net Earnings Per Share
for the three months ended June 30, 1997
11.2 Computation of Net Loss Per Share
for the six months ended June 30, 1997
27 Financial Data Schedule
EXHIBIT 11.1
GEOWASTE INCORPORATED AND SUBSIDIARIES
COMPUTATION OF NET EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Fully
Primary Diluted
<S> <C> <C>
Weighted Average Common Shares
outstanding............................................................. 21,270,725 21,270,725
Convertible debt......................................................... - 2,574,475
Stock options and warrants outstanding................................... 2,200,669 2,200,669
Weighted average shares of common shares
outstanding.............................................................. 23,471,394 26,045,869
=========== ==========
Net income .............................................................. $ 45,346 $ 99,296
============ ===========
Earnings per share....................................................... $ 0.00 $ 0.00
============ ===========
</TABLE>
EXHIBIT 11.2
GEOWASTE INCORPORATED AND SUBSIDIARIES
COMPUTATION OF NET LOSS PER SHARE
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Fully
Primary Diluted
<S> <C> <C>
Weighted Average Common Shares
outstanding............................................................. 21,206,351 21,206,351
Convertible debt........................................................ -- --
Stock options and warrants outstanding.................................. -- --
---------- ----------
Weighted average shares of common shares
outstanding............................................................. 21,206,351 21,206,351
=========== ==========
Net loss ............................................................... $ (462,171) $ (462,171)
========== ===========
Loss per share.......................................................... $ (0.02) $ (0.02)
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 518,117
<SECURITIES> 0
<RECEIVABLES> 2,444,006
<ALLOWANCES> 234,571
<INVENTORY> 0
<CURRENT-ASSETS> 4,009,541
<PP&E> 25,502,850
<DEPRECIATION> 10,302,291
<TOTAL-ASSETS> 29,994,383
<CURRENT-LIABILITIES> 7,468,890
<BONDS> 0
0
0
<COMMON> 2,128,655
<OTHER-SE> 13,705,477
<TOTAL-LIABILITY-AND-EQUITY> 29,994,383
<SALES> 9,722,192
<TOTAL-REVENUES> 9,722,192
<CGS> 6,724,452
<TOTAL-COSTS> 7,807,452
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 330,535
<INCOME-PRETAX> (388,880)
<INCOME-TAX> 73,291
<INCOME-CONTINUING> (462,171)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (462,171)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
