<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act
of 1934
For The Quarter Ended March 31, 1997
Commission File Number 0-14881
WASTE RECOVERY, INC.
(Exact Name of Registrant as Specified in its Charter)
TEXAS 75-1833498
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
309 S. PEARL EXPRESSWAY, DALLAS, TX 75201
(Address of Principal Executive Offices) (Zip Code)
(214) 741-3865
(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, at the latest practicable date. Common stock, no par value
17,442,621, April 30, 1997.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
WASTE RECOVERY, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Assets March 31, 1997 December 31, 1996
------- -------------- -----------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 341,942 $ 1,892,427
Accounts receivable, less allowance for
doubtful accounts of $76,197 and $51,017,
respectively 2,421,186 2,736,388
Other receivables (note 2) 753,754 1,061,958
Inventories (note 3) 982,436 1,239,483
Other current assets 454,005 355,958
-------------- -----------------
Total current assets 4,953,323 7,286,214
-------------- -----------------
Property, plant and equipment 25,157,931 24,226,392
Less accumulated depreciation (8,549,237) (7,923,939)
-------------- -----------------
Net property, plant and equipment 16,608,694 16,302,453
-------------- -----------------
Restricted cash and cash equivalents 2,119,842 1,914,795
Bond and debt issuance costs, less accumulated
amortization of $185,351 and $181,275,
respectively 142,983 147,059
Deferred income taxes 447,543 447,543
Goodwill, less accumulated amortization of
$136,720 and $102,787, respectively 1,861,745 1,895,678
Other assets 305,107 398,058
-------------- -----------------
$26,439,237 $28,391,800
-------------- -----------------
-------------- -----------------
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
WASTE RECOVERY, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity March 31, 1997 December 31, 1996
------------------------------------ -------------- -----------------
(unaudited)
<S> <C> <C>
Current Liabilities:
Current installments of bonds payable $ 935,799 $ 883,024
Notes payable 284,861 632,003
Current installments of long-term debt (note 4) 928,836 998,719
Current installments of capital lease obligations 117,421 111,982
Accounts payable 3,217,104 3,269,300
Bond interest payable 78,867 219,781
Accrued wages and payroll taxes 400,925 247,576
Other accrued liabilities 695,172 637,836
Deferred revenue 313,011 313,011
-------------- -----------------
Total current liabilities 6,971,996 7,313,232
-------------- -----------------
Bonds payable, noncurrent 6,689,982 7,567,795
Long-term debt, excluding current installments
(note 4) 4,046,167 4,069,498
Obligations under capital leases, excluding
current installments 77,993 104,017
Deferred grant revenue, noncurrent 599,345 696,050
Notes payable 316,588 312,085
-------------- -----------------
Total liabilities 18,702,071 20,062,677
-------------- -----------------
Stockholders' Equity (note 5):
Cumulative preferred stock, $1.00 par value, 250,000
shares authorized, 203,580 issued and outstanding
in 1997 and 1996 (liquidating preference $14.78 per
share, aggregating $3,009,663, and $14.61 per share,
aggregating $2,974,525, in 1997 and 1996, respectively) 203,580 203,580
Preferred stock, $1.00 par value, authorized
and unissued 9,750,000 shares in 1997 and 1996 - -
Common stock, no par value, authorized 30,000,000
shares, 17,442,621 and 17,322,121 shares issued
and outstanding in 1997 and 1996, respectively 407,800 407,800
Additional paid-in capital 18,530,332 18,467,427
Accumulated deficit (11,330,666) (10,675,804)
-------------- -----------------
7,811,046 8,403,003
Treasury stock, at cost, 103,760 common shares (73,880) (73,880)
-------------- -----------------
Total stockholders' equity 7,737,166 8,329,123
-------------- -----------------
Commitments and contingencies
$26,439,237 $28,391,800
-------------- -----------------
-------------- -----------------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
WASTE RECOVERY, INC.
Consolidated Statements Of Operations
Three Months Ended March 31,
----------------------------
1997 1996
----------- -----------
(unaudited) (unaudited)
Revenues:
Tire-derived fuel sales $ 810,165 $ 340,193
Wire sales 125,621 30,329
Disposal fees, hauling and other revenue 4,918,672 2,808,448
----------- -----------
Total revenues 5,854,458 3,178,970
Operating expenses 4,625,077 2,319,237
----------- -----------
1,229,381 859,733
General and administrative expenses 1,304,942 709,880
Depreciation and amortization 671,583 425,489
----------- -----------
(747,144) (275,636)
----------- -----------
Other income (expense):
Interest income 38,478 12,110
Interest expense (232,678) (128,417)
Other income 226,482 44,612
Gains on sales of property and equipment - 5,057
Gain on involuntary conversion of assets 60,000 -
Equity in loss from partnership operations - (242,136)
----------- -----------
92,282 (308,774)
----------- -----------
Net loss (654,862) (584,410)
Undeclared cumulative preferred stock dividends
(note 5) 35,138 35,529
----------- -----------
Net loss available to common shareholders $ (690,000) $ (619,939)
----------- -----------
----------- -----------
Net loss per share $ (.04) $ (.06)
----------- -----------
----------- -----------
Weighted average number of common and dilutive
common equivalent shares outstanding 17,270,650 10,955,070
----------- -----------
----------- -----------
See accompanying notes to consolidated financial statements.
4
<PAGE>
WASTE RECOVERY, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1997 1996
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (654,862) $ (584,410)
Adjustments to reconcile net loss to net
cash provid by operating activities:
Depreciation andmortization 637,650 249,413
Provision for losses on accounts receivables 24,000 -
Gain on sale of property, plant and equipment - (5,057)
Amortization of goodwill 33,933 13,722
Interest imputed on discounted note payable 4,503 4,502
Amortization of bond premium (20,038) -
Equity in loss from partnership operations - 242,136
Stock issued to Directors - 13,995
Changes in assets and liabilities:
Accounts receivable 291,202 346,900
Note and other receivables 288,204 (5,145)
Receivable from affiliate - (77,483)
Inventories 277,047 (93,395)
Other current assets (98,047) (63,616)
Other assets 92,951 (19,265)
Accounts payable (52,196) 21,788
Accrued liabilities 210,685 48,775
Bond interest payable (140,914) -
Deferred revenue (96,705) (10,868)
Other (8,276) -
----------- -----------
Net cash provided by operating activities 789,137 81,992
----------- -----------
Cash flows from investing activities:
Proceeds received on sale of property,
plant and equipment - 6,000
Purchases of property, plant and equipment (931,539) (407,048)
Cash placed in restricted accounts (1,273,869) (9,600)
Cash payments out of restricted accounts 1,068,822 -
----------- -----------
Net cash used by investing activities (1,136,586) (410,648)
----------- -----------
Cash flows from financing activities:
Payment of bonds payable (805,000) -
Proceeds from issuance of notes payable - 32,953
Payment of notes payable (347,142) (25,456)
Proceeds from issuance of convertible
subordinated debtures - 85,000
Payment upon maturity of convertible
subordinated debentures - (85,000)
Repayment of long-term debt (93,214) (67,216)
Repayment of capital lease obligations (20,585) (41,680)
Proceeds from issuance of common stock 62,905 17,186
----------- -----------
Net cash used by financing activities (1,203,036) (84,213)
----------- -----------
Net decrease in cash and cash equivalents (1,550,485) (412,869)
Cash and cash equivalents at beginning of period 1,892,427 726,562
----------- -----------
Cash and cash equivalents at end of period $ 341,942 $ 313,693
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
WASTE RECOVERY, INC.
Notes to Consolidated Financial Statements
March 31, 1997
Note 1: ADJUSTMENTS
The financial information presented as of any date other than December 31
has been prepared from the books and records without audit. Financial
information as of December 31 has been derived from the audited financial
statements of the Company, but does not include all disclosures required by
generally accepted accounting principles. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial information for the periods indicated, have
been included. The results of operations for the three months ended March 31,
1997, are not necessarily indicative of operating results for the entire year.
For further information regarding the Company's accounting policies, refer to
the consolidated financial statements and related notes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Note 2: OTHER RECEIVABLES
Other receivables includes approximately $645,000 due from an insurance
company for property damage and business interruption insurance related to the
Atlanta fire (see note 8). The Company received $300,000 of this amount in
April 1997. Final payment is expected to be received within the second quarter
of 1997.
Note 3: INVENTORIES
The components of inventories are as follows:
March 31, 1997 December 31, 1996
-------------- -----------------
Manufactured fuel inventory $ 172,216 $ 281,938
Manufactured wire inventory 23,831 27,761
Work-in-process 149,333 293,070
Parts inventory 637,056 636,714
-------------- -----------------
$ 982,436 $1,239,483
-------------- -----------------
-------------- -----------------
Note 4: LONG-TERM DEBT
As of March 31, 1997, the Company was out of technical compliance with its
current ratio calculation which is required by the 10.5% industrial development
revenue bond debt covenants. The debt agreement allows for a grace period of
sixty days within which this noncompliance may be cured before default can
occur. If the covenant is not satisfied within the sixty day period, then
$1,480,000 of long-term debt on the Atlanta bonds must be reclassified to
current debt; no other debt would be affected.
Note 5: PREFERRED STOCK DIVIDENDS
Cumulative preferred stock dividends in arrears were $973,864 at March 31,
1997. Net income or loss is adjusted by the effect of undeclared dividends on
preferred stock of $35,138 and $35,529 for the three months ended March 31, 1997
and 1996, respectively. The effect was to increase net loss per common share by
$.002 and by $.003 for the three months ended March 31, 1997 and 1996,
respectively. Primary and fully diluted earnings per share are the same in 1997
and 1996.
Note 6: ACQUISITIONS
In December 1996, the Company acquired from Riverside Caloric Company (RCC)
its 55% interest in the Waste Recovery-Illinois general partnership, in which
the Company owned the remaining 45% interest. The Company also acquired in
December 1996, all of the partnership interests in U.S. Tire Recycling Partners,
L.P. (U.S. Tire), which collects and processes scrap tires, and operates a scrap
tire monofill in Charlotte, North Carolina.
The acquisitions were accounted for as a purchase and, accordingly, the
purchase price has been allocated to the assets acquired and liabilities assumed
based on estimated fair values at the date of acquisition.
6
<PAGE>
The following unaudited pro forma summary presents the consolidated results
of the Company's operations as if the acquisitions had occurred at the beginning
of the periods presented. The information does not purport to be indicative of
the results that actually would have been obtained if the operations were
combined during the periods presented and is not intended to be a projection of
future results or trends.
For the three months
ended March 31, 1996
--------------------
Revenues $ 4,659,205
--------------------
--------------------
Net loss $ (821,212)
--------------------
--------------------
Earnings per share $ (.07)
--------------------
--------------------
Note 7: EARNINGS PER SHARE
In February 1997, the FASB issued FAS No. 128, Earnings per Share ("FAS
128"), which is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods. Effective December 31,
1997, the Company will adopt FAS 128, which establishes standards for computing
and presenting earnings per share (EPS). The statement requires dual
presentation of basic and diluted EPS on the face of the income statement for
entities with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation, to the numerator and
denominator of the diluted EPS computation. Basic EPS excludes the effect of
potentially dillutive securities while diluted EPS reflects the potential
dilution that would occur if securities or other contracts to issue common stock
were exercised, converted into, or resulted in the issuance of common stock that
then shared in the earnings of the entity. For the three months ended March 31,
1997 and 1996, the proforma basic and diluted EPS amounts calculated assuming
adoption of this statement would be the same as EPS presented on the
consolidated statement of operations.
Note 8: INVOLUNTARY CONVERSION OF ASSETS
On November 26, 1996 the Atlanta plant sustained damage due to a mechanical
fire. As a result, TDF and wire production ceased. The shredding machinery and
equipment was not damaged, thus allowing the plant to continue accepting scrap
tires for disposal which were then shredded and disposed of. As of March 31,
1997 the plant was in the final stages of being rebuilt. The rebuild was
completed in early May 1997, at which time the plant became fully operational.
This involuntary conversion of assets was estimated and recognized in the year
ending December 31, 1996. An additional $60,000 gain for property damage was
recognized in the three months ended March 31, 1997 in connection with this
involuntary conversion of assets, as well as $249,999 in estimated insurance
proceeds from business interruption insurance.
Note 9: STATEMENT OF CASHFLOWS
The Company paid $336,436 and $89,477 for interest for the three months
ended March 31, 1997 and 1996, respectively. No income taxes were paid during
the three months ended March 31, 1997 and 1996.
Note 10: LITIGATION
The registrant has no material pending legal proceedings.
Other notes have been omitted pursuant to Rule 10-01 (a)(5) of Regulation S-X.
[End of Page]
7
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q under "Item 2. Management's Discussion
and Analysis of Financial Condition and Results of Operations", constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve known and unknown risks, uncertainties, and other factors
which may cause the actual results, performance or achievements of Waste
Recovery, Inc. (the "Company" or "Registrant") to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: general economic and business conditions; competition; success of
operating initiatives; development and operating costs; adverse publicity;
changes in business strategy or development plans; quality of management;
availability, terms and deployment of capital; business abilities and
judgment of personnel; availability of qualified personnel; labor and
employee benefit costs; changes in, or failure to comply with, government
regulations; and other factors referenced in this Form 10-Q.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company owns and operates plants in or geographically near Houston,
Texas, Atlanta, Georgia, Portland, Oregon, Philadelphia, Pennsylvania, St.
Louis, Missouri, Chicago, Illinois, and Charlotte, North Carolina. Until
December 1996, the St. Louis and Chicago plants were owned by a partnership
(Waste Recovery-Illinois) in which the Company held a 45% partnership
interest. In December 1996, the Company acquired the remaining 55%
partnership interest at which time Waste Recovery-Illinois (WR-Illinois)
became a wholly-owned subsidiary. Prior to the acquisition, the Company did
not consolidate WR-Illinois' financial statements; the investment in
WR-Illinois was accounted for under the equity method of accounting. The
Company also acquired U.S. Tire Recycling Partners, L.P. (U.S. Tire) in
December 1996. U.S. Tire owns and operates a scrap tire processing facility
and shredded tire monofill in Charlotte, North Carolina.
Regional services are coordinated from the operating bases mentioned above.
Operations encompass full-service scrap tire disposal and the recycling of tires
into a supplemental fuel form. The Company generates revenues from scrap tire
disposal fees, from the hauling of scrap tires, from the sale of processed
rubber product for civil engineering purposes, from the sale of shredded tires
as tire-derived fuel ("TDF"), and from the sale of bead wire removed from the
tires.
To date, the effects of inflation on the Company's operations have been
negligible.
GENERAL COMMENTS
The Company suffered a net loss of $654,862 on revenues of $5,854,458 in the
first quarter of 1997, compared to a net loss of $584,410 on revenues of
$3,178,970 during the same period in 1996. Although a substantial portion of
this loss reflects normal seasonality in scrap tire generation, the Company
was disappointed with its financial performance and is in the process of
developing and implementing a strategic plan in order to improve its future
performance. This plan includes an expansion of its retail tire collection
activities and a restructuring of management responsibilities.
The increase in total revenues from the prior period was primarily due to the
acquisition of the 55% partnership interest in WRI-Illinois not owned by the
Company and the resulting consolidation of its financial results and the
acquisition of U.S. Tire Recycling. Similarly, the increase in TDF sales to
$810,165 for the first quarter of 1997 from $340,193 for the same period in
1996, and the increase in scrap tire flow to 61,500 tons for the first quarter
of 1997 from 32,135 tons for the same period in 1996, were also attributable to
these acquisitions.
Although the Portland plant continues to maintain its dominant position in the
scrap tire market in the Northwest, the Company's ability to sell all of the TDF
produced at this facility has been limited by a weak TDF market. Consequently,
the Company has restricted its tire inflow to mitigate costly landfill costs.
The facility began a 5 million PTE tire remediation project located in the State
of Washington in April 1996 that is expected to be competed in the fourth
quarter of this year.
8
<PAGE>
The Houston facility showed improvement in TDF sales and disposal fees and an
increased tire flow for the first quarter of 1997 compared to the same period in
1996. As a result of the elimination of the State of Texas' allocation program,
the Company is now allowed to collect as many scrap tires as can be processed
and sold. As the Houston facility completed its fourth full quarter of wire
production as of March 31, 1997, wire sales continue to be strong as the
response from the scrap steel industry for the Company's wire product has been
very favorable in this region. The Company maintains its position of being the
only processor in the State of Texas to completely recycle all scrap tires
received under the Texas program. It appears that this facility is well
positioned for the future as Texas legislation beginning in 1997 requires all
scrap tire collectors to have end-use markets for the scrap tire material they
generate.
Due to damage from the mechanical fire in November, 1996, operations at the
Atlanta facility were limited to producing 6 inch tire chips during the first
quarter of 1997. These were transported to the Company's U.S. Tire facility
where a portion were further processed and sold as drain fill material, and the
balance landfilled there. The Atlanta facility was rebuilt with insurance
proceeds and recommenced full operation in May. The Company recorded
approximately $250,000 of income from business interruption insurance during the
first quarter of 1997 in connection with the Atlanta fire insurance claim.
Although TDF sales at Philadelphia improved, limitations on the ability to sell
TDF in the Northeast limited production during the first quarter. Since a large
percentage of a processing facility's expenses are fixed, financial performance
suffers at low processing volumes. The Company is actively pursuing several
potential TDF customers and believes that additional TDF markets will develop
this summer. Until that occurs, this facility's performance will be hampered.
The Illinois facilities continue to show improvement as the plants further
establish themselves in the scrap tire disposal market. Tire flow was
significantly improved in the first quarter of 1997 compared to the same period
in 1996 primarily due to legislative changes in the State of Illinois in May
1996 which made it unprofitable for some Illinois competitors to collect and
process scrap tires. TDF sales were also higher due to the increased tire flow,
as well as the addition of a significant TDF customer in January 1997. The
Company believes that the TDF market in the Midwest is strong, as evidenced by
the addition of this new customer. The Company's primary focus at these
facilities is to increase tire flow. Continued growth in tire flow at the
Illinois plants should provide these facilities with the ability to take
advantage of the growing TDF market throughout the remainder of 1997 and
following years.
U.S. Tire which was acquired in December 1996, is a scrap tire processor located
in Charlotte, North Carolina, and operates a scrap tire collection network
throughout the state and surrounding Eastern corridor as well as a scrap tire
monofill. The U.S. Tire facility also generates revenues through tire grading
activities where collected tires are sold in used tire markets, and the sale of
processed scrap tires as tire-derived product for civil engineering purposes.
With a tire flow of over 5 million PTE's annually and historically strong
operating results, the U.S. Tire facility should significantly contribute to the
operating results of the Company. Operating results of the U.S. Tire plant were
positive in the first quarter of 1997 resulting from a strong tire flow and
sales of graded tires and tire-derived product.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED
WITH THREE MONTHS ENDED MARCH 31, 1996
Total revenues of $5,854,458 for the first quarter of 1997 were 84% higher than
the $3,178,970 earned for the same period in 1996. The increase is due
primarily to the acquisitions of WR-Illinois and U.S. Tire. The two WR-Illinois
facilities and U.S. Tire contributed significantly to the increase in the first
quarter of 1997 over the same period in 1996. TDF sales were down at the
Atlanta plant which was not operational during the first quarter due to the
rebuilding efforts resulting from the November 1996 fire. TDF sales were down
in Portland due to a softening in the TDF market in that region. Wire sales
were up due to the production of wire from the wire systems installed in 1996.
All of the wire systems installed in 1996 were functioning throughout the first
quarter of 1997, with the exception of the Atlanta facility, which was being
rebuilt as noted previously.
9
<PAGE>
Operating expenses for the first quarter of 1997 were $4,625,077 or 79% of
revenues, up from $2,319,237 or 73% of revenues for the first quarter of 1996.
Operating expenses increased primarily due to the acquisitions of WR-Illinois
and U.S. Tire. Operating costs as a percentage of revenues were up at the
Portland facility in response to decreased tire flow and TDF sales. The Houston
plant experienced an increase in operating costs as this plant experienced
further expansion as a result of the elimination of the Texas allocation
program, the establishment of a scrap tire collection site in Southern Texas,
and increased hauling costs.
General and administrative expenses of $1,304,942 for the first quarter of 1997
were higher when compared to $709,880 for the same period in 1996. The increase
is primarily due to the acquisitions of WR-Illinois and U.S. Tire, as well as
increases in corporate management, staff, personnel costs, and other
administrative costs resulting from higher levels of operating activities.
However, as a percentage of revenues, general and administrative expenses were
the same at 22% for the three month periods ending March 31, 1997 and 1996.
Depreciation and amortization expense increased 58% to $671,583 from $425,489 in
the first quarter of 1997 compared to the same period in 1996. The increase is
primarily the result of the acquisitions of WR-Illinois and U.S. Tire, as well
as the additions of the new wire recycling systems installed in the Houston,
Atlanta, and Portland plants.
Other income increased in the first quarter of 1997 compared to the same period
in 1996 due to the sale of a metering unit to an electric power utility. Other
income also increased due to the amortization of grant income as a result of the
acquisition of WR-Illinois.
Interest expense increased 81% to $232,678 in the first quarter of 1997 compared
to $128,417 in the first quarter of 1996 primarily due to the bonds payable
assumed by the Company in connection with the WR-Illinois acquisition, as well
as the increased debt resulting from the U.S. Tire acquisition.
Equity from partnership operations is not reflected in the first quarter of 1997
since this partnership, WR-Illinois, was acquired in December 1996, and as a
wholly-owned subsidiary was consolidated in the financial statements of the
Company for the three month period ending March 31, 1997.
FINANCIAL CONDITION AS OF MARCH 31, 1997
The Company's working capital balance at March 31, 1997 was a deficit amount of
$2,018,673. This deficit is in part the result of the assumption of bonds
payable and deferred revenue in connection with the acquisition of WR-Illinois,
as well as higher accounts payable and accrued liabilities. As discussed in
note 4 in the accompanying financial statements, the Company was out of
technical compliance with its current ratio calculation which is required by the
Atlanta bonds debt covenants.
Management continues to remain sensitive to the risk that the Company will not
have the financial strength to take advantage of the opportunities that are
developing. It is anticipated that with operating results beginning to improve,
the Company will be able to adequately fund its working capital requirements and
capital expenditures for at least the next twelve months. However, the Company
is aware that each facility must remain closely monitored and costs must be
controlled. More importantly, additional revenues must be generated to cover
the fixed costs and allow the Company a chance to improve its profit margin with
its existing capabilities.
Significant capital expenditures for the remainder of 1997 should be limited to
the rebuild of the Atlanta plant, which was completed in early May 1997.
10
<PAGE>
PART II
OTHER INFORMATION
Form 10-Q
Part II
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.1 Form of Convertible Debenture Agreement as of March 15, 1996
(b) REPORTS ON FORM 8-K
None
Item 27. FINANCIAL DATA SCHEDULE
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WASTE RECOVERY, INC.
DATE: May 15, 1997 /s/ THOMAS L. EARNSHAW
------------------------------------------
By: THOMAS L. EARNSHAW
President and Chief Executive Officer
(Principal Executive Officer, and
Principal Financial and Accounting
Officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S MARCH 31, 1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 341,942
<SECURITIES> 0
<RECEIVABLES> 3,251,137
<ALLOWANCES> (76,197)
<INVENTORY> 982,436
<CURRENT-ASSETS> 4,953,323
<PP&E> 25,157,931
<DEPRECIATION> (8,549,257)
<TOTAL-ASSETS> 26,439,237
<CURRENT-LIABILITIES> 6,971,996
<BONDS> 6,689,982
0
203,580
<COMMON> 407,900
<OTHER-SE> 7,125,786
<TOTAL-LIABILITY-AND-EQUITY> 26,439,237
<SALES> 5,854,458
<TOTAL-REVENUES> 6,179,418
<CGS> 4,625,077
<TOTAL-COSTS> 6,601,602
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 24,000
<INTEREST-EXPENSE> (232,678)
<INCOME-PRETAX> (654,862)
<INCOME-TAX> 0
<INCOME-CONTINUING> (654,862)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (654,862)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
