SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED MAY 31, 1997.
[ ] TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM ________________ TO _________________.
Commission File Number: 0-13041
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ENVIRONMENTAL PLUS, INCORPORATED
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(Exact name of registrant as specified in its charter)
Texas 75-1939021
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(State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
Route 1, Box 41, Overton, Texas 75684
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(Address of principal executive offices) (Zip Code)
(903) 834-6965
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to
be filed by Sections 13 or 15(d) of the Securities Exchange Act
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
40,329,136 shares of Common Stock, no par value
- -----------------------------------------------------------------
(The number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date)
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Balance Sheets
<TABLE>
<CAPTION>
Nine Months Ended
May 31, 1997 August 31, 1996
----------------- ---------------
<S> <C> <C>
ASSETS
CURRENT
Cash $ 22,177 $ 10,561
Accounts receivable - trade 216,430 47,250
Note receivable 191,485 201,369
Inventory 25,166 43,256
Other 3,997 16,833
--------- ---------
Total current assets 459,255 319,269
NOTE RECEIVABLE 76,000 76,000
PROPERTY, PLANT AND EQUIPMENT 135,459 144,586
Other
Goodwill and organization costs- net 52,940 57,168
--------- ---------
$ 723,654 $ 597,023
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ -- $ 31,771
Accrued expenses 8,064 ---
Line of Credit 30,000 33,000
Notes payable 171,000 18,000
--------- ---------
Total current liabilities $ 209,064 $ 82,771
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, (100,000,000 authorized;
$1.00 par value, 1,049,000 shares issued
and outstanding) 466,600 466,600
Common stock (100,000,000 shares authorized,
$.001 par value, 40,329,136 AND 37,735,285
shares issued and outstanding respectively) 40,328 40,328
Paid in capital 702,566 610,224
Deficit (694,904) (602,900)
--------- ---------
Total Stockholders' Equity $ 514,590 $ 514,252
--------- ---------
$ 723,654 $ 597,023
</TABLE>
<PAGE>
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
May 31, May 31, May 31, May 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUE
Sales $ 240,574 $ --- $ 482,381 $ ---
Interest 9,717 --- 25,828 ---
Total 250,291 508,209 ---
COST OF SALES 183,436 389,296 ---
GENERAL AND ADMINISTRATIVE
Depreciation and Amortization 4,578 --- 13,732 ---
Advertisement 175 --- 1,075 ---
Interest and bank charges 3,621 --- 6,764 ---
Supplies 241 --- 925 ---
Accounting and auditing 9,040 --- 32,540 ---
Legal 2,244 --- 33,587 ---
Utilities and Telephone 1,318 --- 3,158 ---
Salaries - officers 37,500 --- 112,500 ---
Travel 1,007 --- 1,690 ---
Sales Tax 980 --- 1,226 ---
Other administrative expenses 3,720 $ --- 3,720 4,000
---------- ---------- ---------- ----------
TOTAL GENERAL AND ADMINISTRATIVE $ 64,424 $ --- $ 210,917 $ 4,000
NET INCOME (LOSS) BEFORE INCOME 2,431 --- (92,004) (4,000)
TAXES AND EXTRAORDINARY ITEM
INCOME TAXES --- --- --- ---
NET INCOME (LOSS) BEFORE 2,431 --- (92,004) (4,000)
EXTRAORDINARY ITEM
EXTRAORDINARY ITEM - FORGIVENESS --- --- --- 4,603
OF DEBT
NET INCOME (LOSS) 2,431 --- (92,004) 603
PER SHARE DATA
Net income (loss) per share --- --- --- ---
Weighted average shares
outstanding 40,329,136 38,247,785 40,329,136 38,247,785
</TABLE>
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
May 31, May 31, May 31, May 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash Flows from Operating
Activities:
Income (Loss) from operations $ 2,431 $ --- $ (92,004) $ 603
Adjustments to reconcile income
(loss) from operations to cash
used in operating activities:
Depreciation and
amortization 4,578 --- 13,732 ---
Imputed Officers' Salaries 35,679 --- 92,342 ---
Change in assets and
liabilities:
Increase in accounts
receivable - trade (174,730) --- (169,180) ---
Decrease (Increase) in
inventory (3,389) --- 18,088 ---
Decrease (Increase) in
other assets (1,536) --- 12,836 ---
Increase (Decrease) in
accounts payable and
accrued expenses (25,167) --- (23,707) (8,524)
---------- ---------- ---------- ----------
Net Cash Flows used in
Operating Activities $ (162,134) $ --- $ (147,893) $ (7,921)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Capital Assets (375) (375) ---
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds for use of credit
and notes payable 150,000 150,000
Sale of common shares --- --- --- 7,500
Collection of note receivable 17,451 --- 19,884 ---
Loan on note receivable --- --- (10,000) ---
Net Cash Flows Provided by Financing
Activities 167,451 --- 159,884 7,500
INCREASE (DECREASE) IN CASH 4,942 --- 11,616 (421)
Cash at beginning of period 17,235 --- 10,561 421
CASH AT END OF PERIOD $ 22,177 $ --- $ 22,177 $ ---
</TABLE>
<PAGE>
ENVIRONMENTAL PLUS, INC.
Notes to Financial Statements
May 31, 1997
NOTE 1 - STATEMENT BY MANAGEMENT CONCERNING INTERIM FINANCIAL INFORMATION
The financial information for May 31, 1997, included herein is unaudited
and does not include all information and footnotes required by generally
accepted accounting principles for complete financial statements;
however, such information reflects all adjustments (consisting solely of
normal recurring adjustments), which are, in the opinion of management,
necessary to a fair statement of the results for the interim period. It
is suggested, however, that the accompanying financial statements be read
in conjunction with the financial statements and notes thereto incorporated
by reference in the Company's August 31, 1996 Annual Report on Form 10-K.
NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION
During the nine months ended May 31, 1997, the Company used cash to pay
interest expense in the amount of $3,207. No cash was paid for income
taxes.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS:
GENERAL
The Company's results of operations for the quarter ended
May 31, 1997 and the nine-month period ended May 31, 1997 were
significantly affected by the Company's acquisition in July 1996
of substantially all of the assets of Gulf Coast Cooling Tower
Services, Inc. ("GCCTS"), a company engaged in the industrial
cooling tower services business and to a lesser degree, the
acquisition on or about June 1, 1996 of all of the issued and
outstanding shares of common stock of Fire Zap, Inc. ("FZI"),
a company engaged in the business of developing and marketing
fire retardant products. Virtually all of the Company's
revenues for the quarter ended May 31, 1997 or the nine-month
period ended May 31, 1997 were derived from operations resulting
from the GCCTS acquisition. Because Kinlaw Oil Corporation
("KOC"), the main source of Company revenue during fiscal 1995,
ceased operations in June 1995, the Company had no revenue
during the quarter ended May 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at May 31, 1997 was $250,191 compared to
$16,835 at May 31, 1996. Cash and cash equivalent had increased
to $22,177.00 during the nine months ended May 31, 1997,
reflecting the new course of the Company's business. Cash and
cash equivalent for the six month period ended May 31, 1996 were
- -0-. During the quarter ended May 31, 1997, cash was used to
fund normal working capital requirements, including efforts to
market FZI products and GCCTS activities. The trade accounts
receivable for the period ended May 31, 1997 were $216,430
compared to $0 for the quarter ended May 31, 1996. The Company
had $25,166 in inventory during the quarter ended May 31, 1997
compared to $0 for the quarter ended May 31, 1996. Trade
accounts payable for the periods ended May 31, 1997 and May 31, 1996
was -0-.
The Company made minimal capital acquisitions or improvement
expenditures during the three month period ended May 31, 1997.
While the Company is not anticipating any capital expenditures
over the next quarter, any funding for unexpected capital
expenditures or improvements will be paid from cash flows generated
through operating activities. No significant disposition of
equipment occurred during the three month period ended May 31, 1997
and none is planned during the next three month period.
Based upon current operations and internally generated cash
flows, management believes that adequate resources will be
available to meet current and future requirements.
RESULTS OF OPERATIONS
Gulf Coast Towers, Inc., a wholly owned subsidiary of the
Company ("GCT"), has utilized the assets from GCCTS to continue
with its business. GCT is currently generating revenues pursuant
to a maintenance contract it entered into with a Texas public
utility company which continues through December 30, 1997. FZI
experienced some activity in the nine months ending May 31, 1997
and contributed $20,690 in sales toward the Company's revenue
for the quarter.
Revenue and sales from other sources for the quarter ended
May 31, 1997 was $240,574 and $9,717 respectively and $482,381
and $25,828, respectively for the nine-month period ended
May 31, 1997 respectively compared to $0 for the same periods of
the last fiscal year.
<PAGE>
The Company received no revenue from management fees during
the third quarter of fiscal 1996 or the third quarter of fiscal
1995. The sales revenue for the quarter ended May 31, 1997 as
well as the nine-month period ended May 31, 1997 reflects the
Company's acquisition of the assets of GCCTS and FZI.
The cost of sales for the quarter ended May 31, 1997 was
$183,436, as compared to $0 for the third quarter of fiscal 1996.
The cost of sales for the nine-month period ended May 31, 1997
was $389,296 as compared to $0 during the first nine months of
fiscal 1996.
During 1996 the officers of the Company determined that they
would not take a salary until cash flow from operations permitted
them to pay each of the three (3) officers $50,000. Therefore no
salaries were paid in 1996 and none have been paid in 1997.
Salaries and benefits for the quarter ended May 31, 1997 were an
imputed $37,500 compared to $0 in the same quarter of the last
fiscal year, and for the nine-month period ended May 31, 1997 they
are an imputed $112,500 as compared to $0 for the same nine-month
period for the last fiscal year. The SEC staff has determined
that the historical statement of operations should reflect all
costs of doing business. Accordingly, officers' salaries were
imputed based upon the actual months in operation in fiscal 1997.
The Company has no material commitments for capital expenditures
as of the end of its latest fiscal period. The Company intends to
continue its efforts to engage in a merger or acquisition with
another company.
PART II
No "other" information required.
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, this
9th day of July, 1997.
ENVIRONMENTAL PLUS, INCORPORATED
/s/ GEORGE DAVIS
--------------------------------
George Davis
Secretary, Treasurer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ENVIRONMENTAL PLUS, INCORPORATED FOR THE QUARTER ENDED
MAY 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> AUG-31-1996
<PERIOD-END> MAY-31-1997
<CASH> 22,177
<SECURITIES> 0
<RECEIVABLES> 216,430
<ALLOWANCES> 0
<INVENTORY> 25,166
<CURRENT-ASSETS> 459,255
<PP&E> 135,459
<DEPRECIATION> 13,732
<TOTAL-ASSETS> 723,654
<CURRENT-LIABILITIES> 209,064
<BONDS> 0
0
466,600
<COMMON> 40,328
<OTHER-SE> 7,662
<TOTAL-LIABILITY-AND-EQUITY> 723,654
<SALES> 482,381
<TOTAL-REVENUES> 508,209
<CGS> 389,296
<TOTAL-COSTS> 389,296
<OTHER-EXPENSES> 210,917
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (92,004)
<INCOME-TAX> 0
<INCOME-CONTINUING> (92,004)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (92,004)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
