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Previous: FIRST UNITED CORP/MD/, 10-Q/A, 1995-11-07 |
Next: INSTITUTIONAL FIDUCIARY TRUST, 497, 1995-11-07 |
<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarterly Period Ended September 30, 1995 or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period from _______ to _______
Commission File No. 0-14266
POLLUTION RESEARCH AND CONTROL CORP.
(Exact name of registrant as specified in its charter)
California
(State of or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer I.D. No.) 95-2746949
506 Paula Avenue
Glendale, California 91201
(Address of Principal Executive Offices)
(818) 247-7601
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year,
if changed since Last Report)
Indicate by checkmark 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 such shorter period that the Registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes X No
----- -----
The number of shares of Common Stock outstanding at November 7, 1995 is
6,932,662.
<PAGE> 2
Form 10-QSB
September 30, 1995
POLLUTION RESEARCH AND CONTROL CORP.
FORM 10-QSB
FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Part I Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1. Financial Statements
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . 7
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . 9
Part II Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
Form 10-QSB
September 30, 1995
POLLUTION RESEARCH AND CONTROL CORP.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1995
------------------
<S> <C>
CURRENT ASSETS:
Cash $ 407,680
Accounts receivable, trade, net 772,622
Inventories (Note 3) 1,711,546
Other current assets 11,906
----------
TOTAL CURRENT ASSETS 2,903,754
PROPERTY AND LEASEHOLD
IMPROVEMENTS, NET 186,884
NOTE RECEIVABLE 100,000
OTHER ASSETS 107,507
----------
TOTAL ASSETS $3,298,145
==========
</TABLE>
See notes to the financial statements.
3
<PAGE> 4
Form 10-QSB
September 30, 1995
POLLUTION RESEARCH AND CONTROL CORP.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1995
------------------
<S> <C>
CURRENT LIABILITIES:
Accounts payable $ 356,360
Note payable, bank 95,000
Current portion of deferred rent 14,532
Accrued liabilities 138,552
-----------
TOTAL CURRENT LIABILITIES 604,444
-----------
DEFERRED RENT (LESS CURRENT PORTION) 113,851
SHAREHOLDERS' EQUITY:
Preferred Stock, no par value; 20,000,000 shares authorized,
no shares issued and outstanding
Common Stock, no par value; 30,000,000 shares authorized,
6,978,815 issued and outstanding 5,431,623
Less notes receivable (86,857)
Accumulated deficit (2,764,916)
-----------
Total Shareholders' Equity 2,579,850
-----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 3,298,145
===========
</TABLE>
See notes to the financial statements.
4
<PAGE> 5
Form 10-QSB
September 30, 1995
POLLUTION RESEARCH AND CONTROL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTH PERIOD
ENDED SEPTEMBER 30,
-------------------
1995 1994
---- ----
<S> <C> <C>
Net revenues $1,376,286 $ 913,440
Cost of goods sold 895,057 653,660
---------- ---------
Gross profit 481,229 259,780
---------- ---------
Operating expenses:
Selling, general and
administrative expenses 493,720 486,035
Research and development 69,370 60,865
---------- ---------
Total operating expenses 563,090 546,900
---------- ---------
Loss from operations (81,861) (287,120)
Interest expense (2,008) (2,129)
Other income 1,111 749
---------- ---------
Net loss $ (82,758) $(288,500)
========== =========
Earnings per share (Note 2):
Net <loss> income $ (.01) $ (.04)
========== =========
Weighted average number of common
and common equivalent shares 6,932,662 6,946,206
========== =========
</TABLE>
See notes to the financial statements.
5
<PAGE> 6
Form 10-QSB
September 30, 1995
POLLUTION RESEARCH AND CONTROL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE-MONTH PERIOD
ENDED SEPTEMBER 30,
--------------------------------
1995 1994
---- ----
<S> <C> <C>
Net revenues $4,279,630 $3,648,270
Cost of goods sold 2,614,674 2,297,661
---------- ----------
Gross profit 1,664,956 1,350,609
---------- ----------
Operating expenses:
Selling, general and
administrative expenses 1,404,970 1,384,294
Research and development 187,353 199,092
---------- ----------
Total operating expenses 1,592,323 1,583,386
---------- ----------
Income <loss> from operations 72,633 (232,777)
Interest expense (2,008) (4,548)
Other income 2,127 2,575
---------- ----------
Net income <loss> 72,752 $ (234,750)
========== ==========
Earnings per share (Note 2):
Net income <loss> $ .01 $ (.03)
========== ==========
Weighted average number of common
and common equivalent shares 6,932,662 6,901,526
========== ==========
</TABLE>
See notes to the financial statements.
6
<PAGE> 7
Form 10-QSB
September 30, 1995
POLLUTION RESEARCH AND CONTROL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE-MONTH PERIOD
ENDED SEPTEMBER 30
------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ 72,752 $(234,750)
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 74,004 66,192
Loss on disposal of assets 17,493
Changes in operating assets and liabilities:
Accounts receivable, trade, net 130,192 391,870
Inventories (17,805) (339,699)
Other current assets (6,739) 738
Accounts payable (70,503) (106,550)
Accrued liabilities (201,933) (292,772)
Deferred rent 13,323
-------- ---------
Net cash (used for) operating activities (6,709) (497,478)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase of Note Receivable (100,000)
Acquisition of property and leasehold improvements (38,432) (124,123)
Other assets (7,000) (190,143)
-------- ---------
Net cash used for investing activities (145,432) (314,266)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of line of credit borrowings (5,000) (20,000)
Bank borrowings 100,000 100,000
Proceeds from issuance of Common Stock 75,000
---------
Net cash provided by financing activities 95,000 155,000
-------- ---------
NET DECREASE IN CASH (57,141) (656,744)
CASH AT BEGINNING OF PERIOD 464,821 1,072,000
-------- ---------
CASH AT END OF PERIOD $407,680 $415,256
======== =========
</TABLE>
See notes to the financial statements.
7
<PAGE> 8
Form 10-QSB
September 30, 1995
POLLUTION RESEARCH AND CONTROL CORP.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The information furnished herein reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary to a fair presentation of the results of operations for the periods
presented. Interim results are not necessarily indicative of results for a
full year.
The financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's annual report
on Form 10-KSB for the year ended December 31, 1994.
2. NET INCOME PER SHARE:
The Company uses the modified treasury stock method of computing
earnings per share. Under generally accepted accounting principles, there is a
computational difference between the treasury stock method and the modified
treasury stock method which is based on the number of shares obtainable upon
the exercise of options and warrants. If the number of Common Stock obtainable
upon the exercise of outstanding options and warrants exceeds 20% of the number
of Common Stock outstanding at the end of the period, the modified treasury
stock method is used. For the nine months ended September 30, 1995 and 1994,
computations under the modified treasury stock method have been excluded as the
net aggregate effect is anti-dilutive.
3. INVENTORIES:
Inventories consists of:
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1995
------------------
<S> <C>
Raw Materials $ 937,463
Work-in-Process 255,947
Finished Goods 518,136
----------
$1,711,546
==========
</TABLE>
8
<PAGE> 9
Form 10-QSB
September 30, 1995
POLLUTION RESEARCH AND CONTROL CORP.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULT OF OPERATIONS
GENERAL
The Company designs, manufactures and markets automated continuous
monitoring instruments used to detect and measure various types of air
pollution through its wholly-owned subsidiary, Dasibi Environmental Corp. The
Company currently derives essentially all of its revenue from sales of its
instruments and their replacement parts.
The Company's future operating results may be affected by a number of
factors, including: uncertainties relative to global economic conditions;
industry factors; the availability and cost of components; the Company's
ability to develop, manufacture and sell its products profitably; the Company's
ability to successfully increase its market share in its core business while
expanding its product base into other markets; the strength of its distribution
channels; and the Company's ability to effectively manage expense growth
relative to revenue growth in anticipation of continued competitive price
pressure on gross margins as a percentage of net sales.
RESULTS OF OPERATIONS
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1995 VS. NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1994
Net revenues increased 15% from $3,648,270 during the nine-month
period ended September 30, 1994 to $4,279,630 during the nine-month period
ended September 30, 1995, primarily due to increased job awards resulting from
the Company's program to lower prices in response to competition.
Cost of sales increased 12% from $2,297,661 during the nine-month
period ended September 30, 1994, to $2,614,674 during the nine-month period
ended September 30, 1995, primarily due to the increase in sales discussed
above. The Company's gross profit margin on its instruments remained stable on
an period-to-period basis.
Selling, general and administrative expenses increased 1%, from
$1,384,294 during the nine-month period ended September 30, 1994 to $1,404,970
in the nine-month period ended September 30, 1995, primarily due to an increase
in fixed expenses resulting from the Company's new manufacturing facility,
which were not completely offset by reduced legal fees.
As a result of the foregoing factors, net income increased $307,502
from a net loss of $234,750 during the nine-month period ended September 30,
1994 to a net income of $72,752 during the nine-month period ended September
30, 1995.
9
<PAGE> 10
Form 10-QSB
September 30, 1995
POLLUTION RESEARCH AND CONTROL CORP.
THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1995 VS. THREE-MONTH PERIOD ENDED
SEPTEMBER 30, 1994
Net revenues increased 51% from $913,440 during the three-month period
ended September 30, 1994 to $1,376,286 during the three-month period ended
September 30, 1995, because the Company was able to adjust prices to
successfully meet competitive price pressures and increase its job-awards.
Cost of sales increased 37% from $653,660 during the three-month
period ended September 30, 1994, to $895,057 during the three-month period
ended September 30, 1995, primarily as a result of the higher level of sales
discussed above.
Selling, general and administrative expenses increased approximately
1%, from $486,035 during the three-month period ended September 30, 1994 to
$493,720 during the three-month period ended September 30, 1995, primarily due
to an increase in fixed expenses resulting from the Company's new manufacturing
facility, which were not completely offset by the reduced legal fees.
As a result of the foregoing factors, net income increased $205,742
from a net loss of $288,500 during the three-month period ended September 30,
1994, to a net loss of $82,758 during the three-month period ended September
30, 1995.
LIQUIDITY AND CAPITAL RESOURCES.
The Company has historically financed its growth and cash needs
primarily through borrowings, and the public and private sales of its
securities.
In June 1995, the Company entered into a credit agreement with a bank,
which provides for an unsecured line of credit up to $100,000 through June 1,
1996. As of September 30, 1995, the Company had borrowed $95,000 under this
agreement. The line was increased to $200,000 in October 1995.
Working capital increased from $2,285,000 at December 31, 1994 to
$2,299,310 at September 30, 1995.
The Company has no material commitments for capital expenditures as of
September 30, 1995. The Company believes it will be able to meet its current
obligations with funds generated from its own operations.
INFLATION
The Company believes that inflation has not had a material impact on
its business.
SEASONALITY
The Company does not believe that its business is seasonal.
10
<PAGE> 11
Form 10-QSB
September 30, 1995
POLLUTION RESEARCH AND CONTROL CORP.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
In July 1995 the Company entered into a joint venture agreement with
Logan Medical Research Ltd. ("Logan") to manufacture Logan's nitric
oxide monitor for U.S. Applications. A condition of the agreement was
funding from any source for Logan, which is a start-up company. The
Company agreed to fund Logan with working capital in exchange for a
world-wide manufacturing agreement. The funding consists of $175,000
cash, a commitment for $200,000 in instrument inventory and 200,000
shares of the Atlanta Technology common stock owned by the Company.
The Atlanta Technology stock was being carried on the Company's
balance sheet at no value. Funding of $100,000 was advanced prior to
September 30, 1995. In exchange for its contributions the Company
received a two year $1,300,000 promissory note from Logan which will
be assigned a carring value of $375,000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
(a) Not applicable.
Reports on Form 8-K
(b) The Company did not file any Reports on Form 8-K during the
nine-month period ended September 30, 1994.
11
<PAGE> 12
Form 10-QSB
September 30, 1995
POLLUTION RESEARCH AND CONTROL CORP.
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.
POLLUTION RESEARCH AND CONTROL CORP.
(Registrant)
By: /s/ Albert E. Gosselin Jr.
----------------------------------------------------------
Albert E. Gosselin, Jr., President and Chief Executive Officer
By: /s/ Cynthia L. Gosselin
-----------------------------------------------------------
Cynthia L. Gosselin, Chief Financial Officer
(Principal Accounting and Financial Officer)
Dated: November 7, 1995
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AT SEPTEMBER 30, 1995
(UNAUDITED) AND THE CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 407
<SECURITIES> 0
<RECEIVABLES> 772
<ALLOWANCES> 0
<INVENTORY> 1,711
<CURRENT-ASSETS> 2,903
<PP&E> 306
<DEPRECIATION> 119
<TOTAL-ASSETS> 3,298
<CURRENT-LIABILITIES> 604
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,298
<SALES> 4,279
<TOTAL-REVENUES> 0
<CGS> 2,613
<TOTAL-COSTS> 2,613
<OTHER-EXPENSES> 1,594
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 72
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
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