SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 14, 1999
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Consumat Environmental Systems, Inc.
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(Exact name of registrant as specified in its charter)
Virginia
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(State or other jurisdiction of incorporation)
0-9253 54-0720128
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(Commission file number) (IRS Employer Identification No.)
8407 Erle Road, Mechanicsville, Virginia 23116
and
Post Office Box 9379, Richmond, Virginia 23227
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 746-4120
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Item 5. Other Events
On May 13, 1999, the Company issued a press release informing the
public that it had been notified by Finova Mezzanine Capital (formerly Sirrom
Capital), its Senior Lender, that it was in default under its loan agreements,
due to the Company's inability to make its May1, 1999 interest payment when due.
Finova gave the Company 10 days to cure the default. It is unlikely that the
Company will be able to cure the default within this period. A copy of the Press
Release dated May 13, 1999 is filed as Exhibit 28(a) to this Current Report on
Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c.) Exhibits:
Exhibit Number Description
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28(a) Press release dated May 13, 1999
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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.
Consumat Environmental Systems, Inc.
(Registrant)
Date: May 14, 1999 /s/ ROBERT L. MASSEY
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Robert L. Massey
Chief Executive Officer
Date: May 14, 1999 /s/ MARK E. HILLS
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Mark E. Hills
Chief Accounting Officer
Exhibit 28(a)
FOR IMMEDIATE RELEASE May 13, 1999
Richmond, Virginia Contact: Robert L. Massey
804/559-1310
Consumat Environmental Systems, Inc. (OTC Bulletin Board: CSMT),
announced today its unaudited financial results for the quarter ended March 31,
1999. The Company reported a net loss for the quarter of $320,728 or $0.26 per
share on revenues of $220,643. This compares to a net loss of $286,265 or $0.23
per share on revenues of $603,486 for the same quarter of 1998. The first
quarter loss followed a net loss of $1,738,086 for the year ended December 31,
1998. As reported in its Annual Report on Form 10-KSB dated March 30, 1999, the
Company's revenues were adversely affected by the prolonged uncertainty
involving new U.S. E.P.A. regulations and the continuing financial crises in
much of Asia. As previously reported, the Company had spent significant
resources in recent years marketing its products in Asia. Because of the
depressed revenues, the Company has continued to suffer losses resulting in a
significant working capital deficit.
As a result of the Company's weak financial condition, it was unable to
make its March 1 and April 1 interest payments on its Senior Debt to Finova
Mezzanine Capital (formerly Sirrom Capital Corporation) when due. Finova
notified the Company of the default which the Company was able to cure. The
Company and Finova have been involved in ongoing negotiations regarding the
Company's working capital deficit and the possible restructuring of its Senior
Debt. On May 12, 1999 the Company received a default notice from Finova
regarding the non-payment of the May 1, 1999 interest payment and giving the
Company 10 days to cure the default. At this time, it is unlikely that the
Company will be able to cure the default in this period. Moreover, it is
unlikely that the value of the assets of the Company will be sufficient to
satisfy the Company's repayment obligations under its secured credit facilities.
In addition, as reported on a Form 8-K, on April 20, 1999 the Company
received notice from Peter T. Socha, Director and Chairman of the Board, of his
intent to resign as a director as of the earlier of June 15, 1999 or the next
annual meeting of the Company. Subsequent to that date, the Company received
notices from Charles E. Horner and D. Randolph Graham that they have chosen not
to stand for reelection as directors at the next annual meeting.
Also, as reported on a Form 8-K dated May 5, 1999, the Company was
notified by KPMG LLP that they were resigning as the Company's independent
public accountants effective immediately.
