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 FEBRUARY 28, 1998.
[ ] 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
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-1939021
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(State or other jurisdiction (IRS Employer
of 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:
40,371,873 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. Financial Statements:
ENVIRONMENTAL PLUS, INCORPORATED
AND SUBSIDIARIES
Consolidated Balance Sheets
February 28, 1998 (Unaudited) and August 31, 1997
<TABLE>
<CAPTION>
February 28, August 31,
1998 1997
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<S> <C> <C>
ASSETS
CURRENT
Cash $ 7,388 $ 19,226
Accounts receivable - trade 3,718 12,880
Note receivable 29,412 55,210
Inventory 53,375 53,128
Other 24,810 9,495
--------- --------
Total current assets 118,703 149,939
NOTE RECEIVABLE 156,343 195,184
PROPERTY, PLANT AND EQUIPMENT - NET 129,634 136,059
OTHER
Goodwill and organization costs- net -- --
--------- ---------
$ 404,680 $ 481,182
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 90,719 71,083
Accrued expenses 1,643 5,605
Line of credit and term notes 57,234 60,240
Notes payable and due to related parties 1,030 37,809
--------- ---------
Total Current Liabilities $ 150,626 $ 174,737
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, (100,000,000 authorized;
$1.00 par, 1,024,000 shares issued and
outstanding, respectively) 466,600 466,600
Common stock (100,000,000 shares
authorized, $.001 par, 40,371,873
shares issued and outstanding) 40,328 40,328
Paid-in Capital 644,084 644,084
Accumulated deficit (896,958) (844,567)
--------- ---------
Total Stockholders' Equity 254,054 306,445
--------- ---------
$ 404,680 481,182
========= =========
</TABLE>
<PAGE>
ENVIRONMENTAL PLUS, INCORPORATED
AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION> Three months ended Six months ended
February 1998 February 1997 February 1998 February 1997
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<S> <C> <C> <C> <C>
REVENUES:
Sales $ 569 $ 20,054 $ 18,272 $ 241,807
Interest 7,507 8,611 16,075 16,111
---------- ---------- --------- ---------
Total 8,076 28,665 34,347 257,918
COST OF SALES - (4,616) 10,522 205,860
GENERAL AND ADMINISTRATIVE
Depreciation and amortization 3,212 4,670 6,425 9,154
Payroll taxes - - 338 -
Interest and bank charges 1,745 2,120 4,567 3,143
Supplies 512 80 699 684
Professional fees 41,422 53,943 44,982 54,843
Taxes and licenses - 9 530 -
Utilities and telephone 151 465 1,343 1,840
Salaries and benefits - 37,500 10,806 75,000
Travel - - 650 683
Insurance 1,252 - 5,107 -
Other Administrative
Expenses - - 769 1,146
---------- --------- ---------- ---------
Total General and
Administrative 48,294 98,767 76,216 146,493
NET INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY ITEM (40,218) (65,506) (52,391) (94,435)
INCOME TAXES - - - -
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (40,218) (65,506) (52,391) (94,435)
EXTRAORDINARY ITEM -
FORGIVENESS OF DEBT - - - -
NET INCOME (LOSS) (40,218) (65,506) (52,391) (94,435)
PER SHARE DATA:
Net income (loss)
per share - - - -
Weighted Average shares
outstanding 40,371,873 40,371,873 40,329,136 40,329,136
</TABLE>
<PAGE>
ENVIRONMENTAL PLUS, INCORPORATED
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months ended Six Months ended
February 1997 February 1996 February 1998 February 1997
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<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from operations $ (40,218) $ (65,506) $ (52,391) $ (94,435)
Adjustments to reconcile income (loss)
from operations to cash provided by
(used in) operating activities:
Depreciation and amortization 3,212 4,669 6,425 9,153
Imputed officers' salaries - 19,162 - 56,662
Change in assets and liabilities:
Increase in accounts receivable - trade 15,860 204,416 9,162 5,550
(Increase) decrease in inventory - (21,777) (247) 21,479
Decrease in other assets (18,875) 11,872 (15,315) 14,372
Increase (Decrease) in accounts payable
and accrued expenses 39,965 (138,472) 15,674 1,460
--------- --------- --------- --------
Net cash flows used in operating activities (156) 14,364 (36,692) 14,241
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of capital assets - - - -
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit and
notes payable - - - -
Retirement of debt (18,125) - (39,785) -
Collection of note receivable 23,113 2,433 64,639 2,433
Loan on note receivable - (10,000) - (10,000)
Net cash flows provided by financing activities 4,988 (7,567) 24,854 (7,567)
Increase (Decrease) in Cash 4,832 6,797 (11,838) 6,674
Cash, beginning of period 2,556 10,438 19,226 10,561
--------- --------- --------- ---------
Cash, end of period $ 7,388 $ 17,235 $ 7,388 $ 17,235
</TABLE>
<PAGE>
ENVIRONMENTAL PLUS, INCORPORATED
AND SUBSIDIARIES
Notes to Financial Statements
November 30, 1997
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NOTE 1 - STATEMENT BY MANAGEMENT CONCERNING INTERIM FINANCIAL
INFORMATION
The financial information for February 28, 1998, 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, 1997 Annual Report on Form 10-K.
NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION
During the six months ended February 28, 1998, the Company used
cash to pay interest expense in the amount of $5,766. 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
February 28, 1998 and the six months ended February 28, 1998
were significantly affected by the Company's acquisition in
July, 1996 of substantially all of the assets of Gulf Coast
Cooling Tower Services, Inc. ("GCCST"), a company engaged in
the industrial cooling tower services business. Virtually all
of the Company's revenues for the quarter and six months ended
February 28, 1998 were derived from operations resulting from
the GCCST acquisition.
Gulf Coast Cooling Towers, Inc., a wholly owned subsidiary
of the Company ("GCCT"), undertakes the Company's business of
construction and repair of industrial cooling towers, primarily
in Texas, Louisiana and Arkansas. GCCT entered into a
maintenance contract with a Texas public utility company which
contract continued through December 31, 1997. This contract
did not provide sufficient revenue to GCCT during the quarter
or six months ended February 28, 1998 to service all debt and
pay all expenses related to GCCT's business. GCCT is engaged
in active bidding for similar contracts with other utility and
petro chemical companies.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's working capital deficit at February 28, 1998
was $<31,923> compared to $207,878 at February 28, 1997 and
$(24,798) at August 31, 1997. Cash and cash equivalent decreased
to $7,338 at February 28, 1998 as compared to $17,235 at February
28, 1997 and $19,226 at August 31, 1997. The decrease in cash
and cash equivalents for the quarter ended February 28, 1998 was
primarily the result of reduced revenue. The decrease in cash and
cash equivalent for the six months ended February 28, 1998 was
the result of the decrease in revenues and a reduction in trade
accounts payable during that period. During the quarter ended
February 28, 1998, cash was used to fund normal working capital
requirements, including efforts to market GCCT business. The
trade accounts receivable at February 28, 1998 was $3,718 compared
to $41,700 at February 28, 1997 and $12,880 at August 31, 1997.
The Company's inventory levels were at $53,375 at February
28, 1998 an increase from $21,777 at February 28, 1997 and $53,128
at August 31, 1997, respectively.
Trade accounts payable at February 28, 1998 increased to
$90,719 compared to $ 31,615 at February 28, 1997 and $71,083
at August 31, 1997 as a result of decreased sales and payments
made during the quarter and the six-month period.
The Company made no capital acquisitions or improvement
expenditures during the six-month period ended February 28,
1998. While the Company is not anticipating any capital
expenditures over the next two quarters with respect to its
present operations, any funding for unexpected capital
expenditures or improvements will be paid from cash flows
generated through operating activities or additional sources
of financing, if available. See "Subsequent Event."
No significant disposition of equipment occurred during
the six-month period ended February 28, 1998. The Company
plans to sell substantially all of it assets during the next
three months. See "Subsequent Event."
Based upon current operations and internally generated cash
flows, management believes that adequate resources will be
available to meet current and future requirements.
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
As discussed above, GCCT has utilized the assets acquired
from GCCST to continue the Company's business. GCCT generated
revenues during the quarter ended February 28, 1998 pursuant to
the maintenance contract with a Texas public utility company.
As discussed above, the maintenance contract continued through
December 31, 1997.
FZI experienced virtually no activity in the quarter and six
month period ended February 28, 1998, and contributed virtually
no income towards the Company's revenues for the quarter.
Revenue from sales and other sources for the quarter ended
February 29, 1998 was $569 and $7,507, respectively compared to
$20,054 and $8,611 in the same period of fiscal 1997. Revenues
from sales and other sources for the six-months ended February
28, 1998 was $18,272 and $16,075, respectively, compared to
$241,807 and $16,111, respectively for the six months ended
February 28, 1997. The decrease in sales revenue reflects a
decline in the business operations of GCCT.
The costs of sales for the quarter ended February 28, 1998
was -0- as compared to $(4,616) during the same period of fiscal
1997. The costs of sales for the six months ended February 28,
1998 was $10,522 as compared to $205,860 for the same period in
fiscal 1997. The decrease in costs of sales is attributable to
the decrease in revenues during such periods.
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 officers $50,000.
Salaries and benefits for the quarter ended February 28, 1998
was -0- as compared to an imputed $37,500 for the three
months ended February 28, 1997. The SEC staff has determined
that the historical statement of operations should reflect all
costs of doing business. Accordingly, officers' salaries for
1996 were imputed based on the actual number of months in
operation in 1996. No officers' salaries were paid during the
quarter ended February 28, 1998.
General and Administrative expenses, which includes
salaries and benefits discussed above, decreased during the
quarter ended February 28, 1998 to $48,294 from $98,787
during the quarter ended February 28, 1997. This decrease is
attributable to decreased sales activities during such periods.
The Company has no material commitments for capital
expenditures as of the end of its latest fiscal period. As
further discussed below, the Company intends to change the
focus of its operations.
<PAGE>
SUBSEQUENT EVENT
- ----------------
The Company has incurred operating losses over the last
two years which raised substantial doubt about the Company's
ability to continue as a going concern. Effective January 15,
1998, and as part of management's plan to have the Company
continue to operate in the foreseeable future, a Stock Purchase
Agreement was entered into among Terminator Technologies, Inc.
("TTI"), a Texas corporation, the Company and various shareholders
of the Company (the "Agreement"). According to the Agreement,
TTI or its designee will become the new controlling shareholder(s)
and control group of the Company, through the purchase of the
majority shares of the Company from certain shareholders,
including present management shareholders. The Agreement is
subject to completion and satisfaction of several covenants and
conditions as more fully set out in the Agreement. As part of
the conditions, among other things, the Company will be required
to consummate a reverse stock split of its shares on the bases of
1-for-10. The Company currently has 40,433,549 ($.001 par value)
shares of common stock and 749,000 ($1.00 par value) shares of
preferred stock issued and outstanding. After the reverse stock
split and as part of the Agreement, the Company will have zero
(0) issued and outstanding shares of preferred stock and 4,043,354
($.01 par value) shares of common stock issued and outstanding.
TTI or its designee will own approximately 2,362,282 shares (58%)
of the issued and outstanding common stock. The selling
shareholders and the Company will receive $105,003 and $20,000,
respectively, in proceeds from the sale of shares and a
warrant to TTI.
In addition, pursuant to the Agreement, and subject to
shareholder approval, the Company will sell substantially all
of its assets to Mr. George Davis in exchange for Mr. Davis'
transfer to the Company of 599,000 shares of preferred ($1.00
par value) stock presently owned by Mr. Davis. Additionally,
TTI will purchase from the Company a warrant to purchase up to
1,500,000 additional common shares at $.04445 per share.
TTI, a Texas corporation, has virtually no business
operations. TTI plans to operate as a holding company and
through subsidiaries, none of which have yet been formed,
acquire rights to develop and market inventions, none of which
have yet been acquired.
While TTI or its designees would become controlling
shareholders of the Company upon completion and closing of
the Agreement with the Company, and while it is not obligated
by the Agreement to do so, the Company believes that TTI
intends to conduct its own ongoing operations through the
Company.
A copy of the Agreement between TTI, the Company and
certain of its shareholders has been filed with the Company's
Annual Report on Form 10-KSB and is specifically incorporated
herein by reference.
<PAGE>
The transaction which is the subject of the Agreement
between TTI, the Company and certain of its shareholders is
scheduled to close between April 30, 1998 and May 5, 1998.
At a duly noticed and conducted special meeting of the
shareholders of the Company held on April 17, 1998, the
shareholders approved the following proposals by an
affirmative vote of 33,842,837 and 32,701,991, respectively:
1. A proposal to approve and adopt amendments to the
Articles of Incorporation of the Company to effect
a reverse stock split in which each share of common
stock of the Company currently issued and outstanding
or held in the treasury would be reclassified and
exchanged into one-tenth (1/10) of a share of new
Common Stock of the Company thereby reducing the
number of issued and outstanding shares of Common
Stock of the Company from 40,433,459 to 4,043,354
(adjusted for the rounding of any fractional shares
up to the nearest whole share), and the par value of
each share of the Company's Common Stock would be
increased from $0.001 to $0.01 per share, and (ii)
change the name of the Company to "TTI Industries,
Incorporated."; and
2. A proposal to approve the Company's sale of
substantially all of its assets resulting from the
sale of the capital stock of (a) Gulf Coast Towers,
Inc., a wholly owned subsidiary of the Company, to
George Davis, Chairman of the Board of the Company,
in exchange for all of his outstanding shares (599,000)
of the Company's Series A convertible preferred stock,
$1.00 par value per share, which were issued in
connection with the Company's acquisition of the assets
currently operated by GCT from Mr. Davis, and
(b) FireZap, Inc., a wholly owned subsidiary of the
Company, to H. Wayne Franklin in exchange for all of
his outstanding shares (150,000) of Company Preferred
Stock which were issued in connection with the Company's
acquisition of FZI from Mr. Franklin.
On April 30, 1998, the Company completed the transactions regarding
FZI and GCT as referenced in Proposal 2 adopted by the shareholders
on April 17, 1998. Effective May 1, 1998 the Company changed its
name to TTI Industries, Incorporated, effected the 10 to 1 reverse
stock split, and changed its trading symbol to TTIA.
<PAGE>
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.
- ----------------------------------------------------
Forward-looking statements in this report, including
without limitation, statements relating to the adequacy of the
Company's resources and any anticipated changes on the Company's
business following the consummation (if any) of the Stock
Purchase Agreement, are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that such forward-looking
statements involve risks and uncertainties, including without
limitation, potential quarterly fluctuation in sales; risks
associated with acquisitions and expansion, and other risks
and uncertainties indicated from time to time in the Company's
filings with the Securities and Exchange Commission.
YEAR 2000 COMPLIANCE
- --------------------
The Company is aware of the issues associated with the
programming code in existing computer systems and software as
the millennium (year 2000) approaches. The Company intends
to address problems with the "year 2000" issue during the
fiscal year ending August 31, 1998. Management has not yet
assessed the "year 2000" compliance expense and related
potential effect on the Company's earnings.
<PAGE>
PART II
Items 1. - 5.
No "other" information required.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27.1 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K.
No Reports on Form 8-K were filed by the Company during
the quarter ended November 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.
ENVIRONMENTAL PLUS, INCORPORATED
April 28, 1998 /s/ GEORGE DAVIS
------------------------------------
George Davis, Chairman of the Board
of Directors
<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
FEBRUARY 28, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 7,388
<SECURITIES> 0
<RECEIVABLES> 3,718
<ALLOWANCES> 0
<INVENTORY> 53,375
<CURRENT-ASSETS> 118,703
<PP&E> 129,634
<DEPRECIATION> 3,212
<TOTAL-ASSETS> 404,680
<CURRENT-LIABILITIES> 150,626
<BONDS> 0
0
466,600
<COMMON> 40,328
<OTHER-SE> (254,054)
<TOTAL-LIABILITY-AND-EQUITY> 404,680
<SALES> 569
<TOTAL-REVENUES> 8,076
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 48,294
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,766
<INCOME-PRETAX> (40,218)
<INCOME-TAX> 0
<INCOME-CONTINUING> (40,218)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (40,218)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
