U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(X) QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30,1997
( ) TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________TO__________
Commission File Number 0-22533
MERCURY WASTE SOLUTIONS, INC.
(Exact name of small business issuer as specified in its charter)
MINNESOTA 41-1827776
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
302 North Riverfront Drive, Suite 100A
MANKATO, MINNESOTA 56001
(Address of principal executive offices)
(507) 345-0522
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 ____
The number of shares outstanding of each of the Issuer's Common Stock, $.01 Par
Value, as of June 30, 1997 was 3,464,097.
Transitional small business disclosure format:
Yes_____ No __X__
<PAGE>
PART 1-FINANCIAL INFORMATION
Item 1. Financial Statements
MERCURY WASTE SOLUTIONS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1997 1996
---------- -----------
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $1,892,360 $ 0
Accounts receivable, less allowance for doubtful accounts of $15,000 752,623 381,064
at June 30, 1997 and $10,000 at December 31, 1996
Prepaid expenses 198,785 34,119
---------- -----------
TOTAL CURRENT ASSETS 2,843,768 415,183
---------- -----------
Property and Equipment, at cost
Leasehold improvements 106,233 95,860
Furniture, fixtures, and equipment 216,586 150,430
Plant equipment 881,462 663,792
Construction in progress 46,229 0
---------- -----------
TOTAL PROPERTY AND EQUIPMENT 1,250,510 910,082
Less accumulated depreciation 192,327 103,032
---------- -----------
NET PROPERTY AND EQUIPMENT 1,058,183 807,050
---------- -----------
Other Assets
Deferred offering costs 0 118,908
Cash restricted for closure 112,988 74,132
Deferred Tax Assets 43,000 0
Acquired equipment and facility rights, net of accumulated amortization
of $60,000 at June 30, 1997 and $40,000 at December 31, 1996 340,000 360,000
Goodwill, net of accumulated amortization of $138,135 at June 30, 1997
and $87,924 at December 31, 1996 991,101 791,312
---------- -----------
TOTAL OTHER ASSETS 1,487,089 1,344,352
---------- -----------
TOTAL ASSETS $5,389,040 $ 2,566,585
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Related party demand note $ 67,000 $ 45,000
Current portion of long-term debt 102,418 0
Accounts payable 67,265 113,922
Accrued expenses 53,025 59,102
---------- -----------
TOTAL CURRENT LIABILITIES 289,708 218,024
---------- -----------
Long-Term Liabilities
Long-term debt, net of current portion 305,451 1,919,567
Closure fund 10,300 10,300
Subordinated Debt 0 135,000
---------- -----------
TOTAL LONG-TERM LIABILITIES 315,751 2,064,867
---------- -----------
TOTAL LIABILITIES 605,459 2,282,891
---------- -----------
Shareholders' Equity
Common stock, $0.01 par value; shares issued and outstanding of
3,464,097 at June 30, 1997 and 2,249,097 at December 31, 1996 34,641 22,491
Additional paid-in capital 4,718,804 1,246,649
Retained Earnings(Accumulated deficit) 30,136 (985,446)
---------- -----------
TOTAL SHAREHOLDERS' EQUITY 4,783,581 283,694
---------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,389,040 $ 2,566,585
========== ===========
</TABLE>
See Notes to Financial Statements
<PAGE>
MERCURY WASTE SOLUTIONS, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30,1997 JUNE 30,1996 JUNE 30,1997 JUNE 30,1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total Revenues $ 821,040 $ 230,635 $ 1,320,472 $ 496,967
Total Cost of Revenues 287,443 132,059 493,027 256,928
----------- ----------- ----------- -----------
Gross Profit 533,597 98,576 827,445 240,039
----------- ----------- ----------- -----------
Operating Expenses
Research & Development 32,268 23,034 56,644 293,089
Sales & Marketing 174,768 84,678 354,094 156,552
General & Administrative 288,633 200,277 489,400 410,674
----------- ----------- ----------- -----------
495,669 307,989 900,138 860,315
----------- ----------- ----------- -----------
Operating Income(Loss) 37,928 (209,413) (72,693) (620,276)
Interest Income 25,416 0 35,070 0
Interest Expense (12,177) (44,590) (52,761) (80,611)
----------- ----------- ----------- -----------
Net Income(Loss) before Income Taxes 51,167 (254,003) (90,384) (700,887)
Income tax expense(benefit) 0 0 (43,000) 0
----------- ----------- ----------- -----------
Net Income (Loss) $ 51,167 ($ 254,003) ($ 47,384) ($ 700,887)
=========== =========== =========== ===========
Income(Loss) per share $ 0.01 ($ 0.23) ($ 0.01) ($ 0.64)
Weighted average number of common and 3,567,672 1,088,949 3,532,928 1,088,949
common equivalent shares outstanding
</TABLE>
See Notes to Financial Statements
<PAGE>
MERCURY WASTE SOLUTIONS, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
Period from December 31, 1996 to June 30, 1997
<TABLE>
<CAPTION>
Retained
Common Common Additional Earnings Total
Stock Stock Paid-In (Accumulated Shareholders'
Shares Amount Capital Deficit) Equity
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 2,249,097 $ 22,491 $ 1,246,649 ($ 985,446) $ 283,694
Initial Public Offering of common stock, net of
commissions and offering costs of $1,065,062 1,095,000 10,950 4,398,988 4,409,938
Exercise of warrant 120,000 1,200 133,800 135,000
Reclassification of "S" corporation accumulated
deficit to additional paid-in capital pursuant to
termination of "S" corporation status (1,062,966) 1,062,966 0
Compensation expense on stock option grants 2,333 2,333
Net loss (47,384) (47,384)
----------- ----------- ----------- ----------- -----------
Balance, June 30, 1997 3,464,097 $ 34,641 $ 4,718,804 $ 30,136 $ 4,783,581
=========== =========== =========== =========== ===========
See Notes to Financial Statements
</TABLE>
<PAGE>
MERCURY WASTE SOLUTIONS, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, 1997 JUNE 30,1996
------------- ------------
<S> <C> <C>
Cash Flows From Operating Acitivities
Net Income(Loss) ($ 47,384) ($ 700,887)
Adjustments to reconcile net income(loss) to net cash (used in) operating activities:
Depreciation 89,295 46,364
Amortization 70,211 63,962
Deferred income tax (43,000) 0
Non cash compensation 2,333 0
Purchased research and development 0 200,000
Provision for doubtful accounts 5,000 10,000
Changes in assets and liabilities, net of effects of business acquisition
(Increase)decrease in:
Accounts receivable (376,559) (119,958)
Prepaid expenses (164,666) 0
Increase(decrease) in:
Accounts payable (46,657) 38,742
Accrued expenses (6,077) 53,088
----------- -----------
NET CASH (USED IN) OPERATING ACTIVITIES (517,504) (408,689)
----------- -----------
Cash Flows from Investing Activities
Purchase of furniture, fixtures, and equipment (340,428) (325,039)
Settlement of contingent consideration (75,000) 0
Increase in restricted cash (38,856) (28,190)
Acquisition of business 0 (977,125)
----------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES (454,284) (1,330,354)
----------- -----------
Cash Flows From Financing Activities
Proceeds from related party long-term debt 0 1,457,793
Payments on long-term debt (1,686,697) 0
Net proceeds from related party demand note 22,000 0
Net proceeds from issuance of common stock 4,528,845 281,250
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,864,148 1,739,043
----------- -----------
INCREASE IN CASH & CASH EQUIVALENTS 1,892,360 0
Cash and cash equivalents
Beginning 0 0
----------- -----------
Ending $ 1,892,360 $ 0
=========== ===========
Supplemental Disclosures of Cash Flow Information
Cash payments for interest $ 63,126 $ 76,751
=========== ===========
</TABLE>
See Notes to Financial Statements
<PAGE>
MERCURY WASTE SOLUTIONS, INC.
Notes to Financial Statements
June 30, 1997
Note 1. - Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-QSB. 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 and six month periods ended June 30, 1997 are not necessarily indicative
of the results that may be expected for the year ended December 31, 1997, or any
other period. For further information, refer to the audited financial statements
and footnotes thereto for the year ended December 31, 1996 contained in the
Company's Registration Statement on Form SB-2 (File No. 333-17399.)
Note 2. - Initial Public Offering
On March 5, 1997, the Company sold 1,000,000 shares at $5.00 per share in an
initial public offering, realizing net proceeds of $4,012,017. In April 1997,
the Company closed on the over-allotment for the offering by selling an
additional 95,000 shares at $5.00, realizing net proceeds of approximately
$397,921. In conjunction with the offering, the underwriter was issued a warrant
to purchase 100,000 shares of common stock at $6.00 per share.
Upon closing of the offering, the Company's S corporation election was
terminated. As a result, the accumulated deficit balance at March 5, 1997,
totaling $1,062,966, representing losses on which income tax deductions have
been taken at the shareholder level, was reclassified to paid-in-capital.
Note 3. - Income(Loss) Per Share
Net income(loss) per common and common equivalent share is based upon the
weighted average number of common and common equivalent shares outstanding
during each period. Pursuant to SEC Staff Accounting Bulletin No. 83, common
stock issued and stock options and warrants granted with exercise prices below
the initial public offering price for the period from January 2, 1996 (date of
inception) through the effective date of the offering (through March 31, 1997)
have been included in the calculations as if they were outstanding for all
periods presented. In periods subsequent to March 31, 1997, common equivalent
shares are included in the calculation if their effect is dilutive using the
treasury stock method.
Note 4. - Pro Forma Information
Pro forma income tax and loss per share data for the periods when the Company
was an S corporation is not presented as it does not differ from the information
in the accompanying statement of operations.
Note 5. - Settlement with U.S. Environmental, Incorporated
As part of the acquisition of U.S. Environmental, Incorporated (USE) on January
2, 1996, the Company was obligated to make payments to USE for each Model 2000
(or 2000B) sold by the Company, with total payments not to exceed $460,000. In
March 1997, the Company settled this obligation for $250,000 by paying $75,000
in cash and the balance of $175,000 in a note. This amount, together with the
amounts already owing the related party ($259,567), are payable pursuant to
notes bearing interest at 10% and payable in installments totaling $11,550 a
month through December 1, 2000. This settlement was an adjustment of the
original purchase price of USE and has been allocated to goodwill.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
11 - Amended Statement re: computation of per share earnings
27 - Amended Financial Data Schedule
(B) Reports on Form 8-K - no reports on Form 8-K were filed during the
fiscal quarter ended June 30, 1997
<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
Mercury Waste Solutions, Inc.
(registrant)
Dated: August 15, 1997. /s/ Brad J. Buscher
Brad J. Buscher
Chairman of the Board, Chief Executive
Officer, & Chief Financial Officer
Dated: August 15, 1997. /s/ Mark G. Edlund
Mark G. Edlund
President
EXHIBIT 11
MERCURY WASTE SOLUTIONS, INC.
COMPUTATION OF LOSS PER COMMON
AND COMMON EQUIVALENT SHARE
Six Six
Months Months
Ended Ended
June 30, June 30,
1997 1996
---- ----
Computation of weighted average number of common
shares outstanding and common stock equivalent
shares:
Common shares outstanding at the beginning of
the period 2,249,097 1,000,000
Weighted average number of shares issued during
the period 763,893 --
Common equivalent shares attributed to stock
options and warrant granted (A) 68,831 88,949
Common stock issued (B) 451,107 --
Weighted average number of common and common
equivalent shares 3,532,928 1,088,949
========== ==========
Net Income (loss) $ (47,384) $ (700,887)
========== ==========
Income (loss) per common and equivalent shares $ (0.01) $ (0.64)
========== ==========
(A) All stock options and warrants are anti-dilutive, however, pursuant to
the Securities and Exchange Commission Staff Accounting Bulletin No. 83
(SAB 83), stock options and warrants granted with the exercise price
below the assumed initial offering price during the twelve-month
period preceding the date of the initial filing of the Registration
Statement have been included in the calculation of common stock
equivalent shares as if they were outstanding for all periods
presented, using the treasury stock method.
(B) Pursuant to the Securities and Exchange Commission SAB 83, all stock
issued at a price below the assumed initial offering price issued
during the twelve-month period preceding the date of the initial filing
of the Registration Statement has been included in the calculation of
common stock as if it was outstanding for all periods presented.
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> JUN-30-1997 JUN-30-1996
<CASH> 1,892,360 (2,571)
<SECURITIES> 0 0
<RECEIVABLES> 767,623 194,451
<ALLOWANCES> 15,000 10,000
<INVENTORY> 0 0
<CURRENT-ASSETS> 2,843,768 181,880
<PP&E> 1,250,510 670,991
<DEPRECIATION> 192,327 46,364
<TOTAL-ASSETS> 5,389,040 1,601,096
<CURRENT-LIABILITIES> 289,708 1,578,074
<BONDS> 315,751 432,359
0 0
0 0
<COMMON> 34,641 10,000
<OTHER-SE> 4,748,940 (429,638)
<TOTAL-LIABILITY-AND-EQUITY> 5,389,040 1,601,096
<SALES> 0 0
<TOTAL-REVENUES> 1,320,472 496,967
<CGS> 0 0
<TOTAL-COSTS> 493,027 256,928
<OTHER-EXPENSES> 895,138 850,315
<LOSS-PROVISION> 5,000 10,000
<INTEREST-EXPENSE> 52,761 80,611
<INCOME-PRETAX> (90,384) (700,887)
<INCOME-TAX> (43,000) 0
<INCOME-CONTINUING> (47,384) (700,887)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (47,384) (700,887)
<EPS-PRIMARY> (0.01) (0.64)
<EPS-DILUTED> (0.01) (0.64)
</TABLE>
