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 NOVEMBER 30, 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 (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
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(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 (Unaudited)
November 30, 1997 and August 31, 1997
<TABLE>
<CAPTION>
November 30, August 31,
1997 1997
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<S> <C> <C>
ASSETS
CURRENT
Cash $ 2,556 $ 19,226
Accounts receivable - trade 19,578 12,880
Note receivable 29,412 55,210
Inventory 53,375 53,128
Other 5,835 9,495
--------- --------
Total current assets 110,756 149,939
NOTE RECEIVABLE 179,455 195,184
PROPERTY, PLANT AND EQUIPMENT - NET 132,847 136,059
OTHER
Goodwill and organization costs- net -- --
--------- ---------
$ 423,058 $ 481,182
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 47,527 71,083
Accrued expenses 4,870 5,605
Line of credit and term notes 57,902 60,240
Notes payable and due to related parties 18,487 37,809
--------- ---------
Total Current Liabilities $ 128,786 $ 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, 40,329,136
shares issued and outstanding) 40,328 40,328
Paid-in Capital 644,084 644,084
Accumulated deficit (856,740) (844,567)
--------- ---------
Total Stockholders' Equity 294,272 306,445
--------- ---------
$ 423,058 481,182
========= =========
</TABLE>
<PAGE>
ENVIRONMENTAL PLUS, INCORPORATED
AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three months ended November 30, 1997 1996
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<S> <C> <C>
REVENUES:
Sales $ 17,703 $ 221,753
Interest 8,568 7,500
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Total 26,271 229,253
COST OF SALES 10,522 210,476
GENERAL AND ADMINISTRATIVE
Depreciation and amortization 3,213 4,484
Payroll taxes 338 --
Interest and bank charges 2,822 1,023
Supplies 187 604
Professional fees 3,560 900
Taxes and licenses 530 237
Utilities and telephone 1,192 1,375
Salaries and benefits 10,806 37,500
Travel 650 683
Insurance 3,855 --
Other Administrative Expenses 769 900
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Total General and Administrative 27,922 47,706
NET INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (12,173) (28,929)
INCOME TAXES -- --
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (12,173) (28,929)
EXTRAORDINARY ITEM - FORGIVENESS OF DEBT -- --
NET INCOME (LOSS) (12,173) (28,929)
PER SHARE DATA:
Net income (loss) per share -- --
Weighted Average shares outstanding 40,329,136 40,329,136
</TABLE>
<PAGE>
ENVIRONMENTAL PLUS, INCORPORATED
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months ended November 30, 1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from operations $ (12,173) $ (28,929)
Adjustments to reconcile income (loss)
from operations to cash provided by
(used in) operating activities:
Depreciation and amortization 3,213 4,484
Imputed officers' salaries -- 37,500
Change in assets and liabilities:
Increase in accounts receivable - trade (6,698) (198,865)
(Increase) decrease in inventory 247 43,256
Decrease in other assets 3,660 2,500
Increase (Decrease) in accounts payable
and accrued expenses (24,291) 139,932
--------- ---------
Net cash flows used in operating activities (36,536) (123)
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 (21,660) --
Collection of note receivable 41,526 --
Loan on note receivable -- --
Net cash flows provided by financing activities 19,866 --
Increase (Decrease) in Cash (16,670) (123)
Cash, beginning of period 19,226 10,561
--------- ---------
Cash, end of period $ 2,556 $ 10,438
</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 November 30, 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, 1997 Annual Report on Form 10-K.
NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION
During the three months ended November 30, 1997, the Company used cash
to pay interest expense in the amount of $794. No cash was paid for
income taxes.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS:
GENERAL
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The Company's results of operations for the quarter ended
November 30, 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. ("GCCST"), a company
engaged in the industrial cooling tower services business.
Virtually all of the Company's revenues for the quarter ended
November 30, 1997 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 has 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
ended November 30, 1997 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 November 30, 1997
was $(18,030) compared to a working capital deficit of $(24,798)
at August 31, 1997. Cash and cash equivalent decreased to
$2,556 at November 30, 1997, compared to $19,226 at August 31,
1997. The decrease in cash and cash equivalents was the result
of the decrease in revenues and a reduction in trade accounts
payable during the quarter ended November 30, 1997. During the
quarter ended November 30, 1997, cash was used to fund normal
working capital requirements, including efforts to market GCCT
business. The trade accounts receivable at November 30, 1997
was $19,578 compared to $12,880 at August 31, 1997.
The Company's inventory levels remained relatively constant
at $53,375 and $53,128 as of November 30, 1997 and August 31,
1997, respectively.
Trade accounts payable at November 30, 1997 decreased to
$47,527 from $71,083 at August 31, 1997 as a result of decreased
sales and payments made during the quarter.
The Company made no capital acquisitions or improvement
expenditures during the three month period ended November 30,
1997. While the Company is not anticipating any capital
expenditures over the next three 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
three month period ended November 30, 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.
<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 November 30, 1997 pursuant to
the maintenance contract with a Texas public utility company.
As discussed above, the maintenance contract continued through
December 31, 1997.
FZI experienced some activity in the quarter ended November
30, 1997, but contributed virtually no income towards the
Company's revenues for the quarter.
Revenue from sales and other sources for the quarter ended
November 30, 1997 was $17,703 and $8,568 respectively, compared
to $221,753 and $7,500 in the first quarter of fiscal 1997. The
decrease in sales revenue reflects a decline in the business
operations of GCCT.
The costs of sales for the quarter ended November 30, 1997
was $10,522 as compared to $210,476 during the first quarter of
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 November 30, 1997
was $10,806 as compared to an imputed $37,500 for the three
months ended November 30, 1996. 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 November 30, 1997.
General and Administrative expenses, which includes
salaries and benefits discussed above, decreased during the
quarter ended November 30, 1997 to $27,922 from $47,706
during the quarter ended November 30, 1996. This decrease is
attributable to decreased sales activities during such periods.
The Company has no material commitments for capital
expenditures as of the end of its latest fiscal period. As
further discussed below, the Company intends to change the
focus of its operations.
<PAGE>
SUBSEQUENT EVENT
- ----------------
The Company has incurred operating losses over the last
two years which raises substantial doubt about the Company's
ability to continue as a going concern. Effective January 15,
1998, and as part of management's plan to have the Company
continue to operate in the foreseeable future, a Stock Purchase
Agreement was entered into among Terminator Technologies, Inc.
("TTI"), a Texas corporation, the Company and various shareholders
of the Company (the "Agreement"). According to the Agreement,
TTI or its designee will become the new controlling shareholder(s)
and control group of the Company, through the purchase of the
majority shares of the Company from certain shareholders,
including present management shareholders. The Agreement is
subject to completion and satisfaction of several covenants and
conditions as more fully set out in the Agreement. As part of
the conditions, among other things, the Company will be required
to consummate a reverse stock split of its shares on the bases of
1-for-10. The Company currently has 40,433,549 ($.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>
"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
March 10, 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
NOVEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 2,556
<SECURITIES> 0
<RECEIVABLES> 19,578
<ALLOWANCES> 0
<INVENTORY> 53,375
<CURRENT-ASSETS> 110,756
<PP&E> 132,847
<DEPRECIATION> 3,213
<TOTAL-ASSETS> 423,058
<CURRENT-LIABILITIES> 128,786
<BONDS> 0
0
466,600
<COMMON> 40,328
<OTHER-SE> (212,656)
<TOTAL-LIABILITY-AND-EQUITY> 423,058
<SALES> 17,703
<TOTAL-REVENUES> 26,271
<CGS> 10,522
<TOTAL-COSTS> 10,522
<OTHER-EXPENSES> 27,922
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,822
<INCOME-PRETAX> (12,173)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,173)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,173)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
