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Previous: FIRST UNITED CORP/MD/, 10-Q/A, 1996-05-14 |
Next: CAPITAL BUILDERS DEVELOPMENT PROPERTIES /CA/, 10-Q, 1996-05-14 |
<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON 25, D.C. 20549
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarterly Period Ended March 31, 1996 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 Ave.
Glendale, California 91201
(Address of Principal Executive Offices)
(818) 247-7601
(Registrant's Telephone Number, Including Area Code)
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 May 13, 1996 is 7,199,562.
<PAGE> 2
Form 10-QSB
May 13, 1996
POLLUTION RESEARCH AND CONTROL CORP.
FORM 10-QSB
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Part I Financial Information Page
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
<PAGE> 3
Form 10-QSB
May 13, 1996
POLLUTION RESEARCH AND CONTROL CORP.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
As of
March 31, 1996
<S> <C>
CURRENT ASSETS:
Cash $ 327,291
Marketable securities 100,000
Accounts receivable trade, net 1,111,483
Inventory (Note 3) 1,620,656
Other current assets 16,856
--------
TOTAL CURRENT ASSETS 3,176,286
PROPERTY, AND LEASEHOLD
IMPROVEMENTS, NET 156,750
OTHER ASSETS 5,913
--------
TOTAL ASSETS $3,338,949
==========
</TABLE>
See notes to the financial statements. 3
<PAGE> 4
Form 10-QSB
May 13, 1996
POLLUTION RESEARCH AND CONTROL CORP.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1996
<S> <C>
CURRENT LIABILITIES:
Accounts payable, Trade $ 413,244
Note payable, bank 200,000
Accrued liabilities 175,514
Current portion of deferred rent 23,012
-----------
TOTAL CURRENT LIABILITIES 811,770
-----------
DEFERRED RENT (LESS CURRENT PORTION) 98,104
-----------
TOTAL LIABILITIES 909,874
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, 7,199,562 issued and 5,591,763
outstanding
Less notes receivable (86,857)
Unrealized gain on marketable securities 100,000
Accumulated deficit (3,175,831)
Total Shareholders' Equity 2,429,075
-----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 3,338,949
===========
</TABLE>
See notes to the financial statements. 4
<PAGE> 5
Form 10-QSB
May 13, 1996
POLLUTION RESEARCH AND CONTROL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTH PERIOD
ENDED MARCH 31,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
Net revenues $ 1,629,046 $1,469,042
Cost of goods sold 929,056 872,350
----------- ----------
Gross profit 699,990 596,692
----------- ----------
Operating expenses:
Selling, general and
administrative expenses 403,614 407,127
Research and development 38,022 54,095
----------- ----------
Total operating expenses 441,636 461,222
----------- ----------
Income from operations 258,354 135,470
Interest expense (3,837) 0
Interest and other income 4,638 521
Net income $ 259,155 $ 135,991
=========== ==========
Earnings per share:
Net income $ .04 $ .01
=========== ==========
Weighted average number of common
and common equivalent shares 6,941,557 6,935,627
=========== ==========
</TABLE>
See notes to the financial statements. 5
<PAGE> 6
Form 10-QSB
May 13, 1996
POLLUTION RESEARCH AND CONTROL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTH PERIOD
ENDED MARCH 31,
---------------
1996 1995
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 259,155 $ 135,991
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 8,004 24,200
Changes in operating assets and liabilities:
Accounts receivable (723,118) 91,065
Inventories 0 (31,000)
Other current assets (3,112) (1,083)
Accounts payable (26,664) (55,558)
Accrued liabilities (31,416) (147,668)
Deferred rent (3,634) 20,589
--------- ---------
Net cash (used for) provided by operating activities (520,785) 36,536
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and leasehold improvements (3,759) (10,000)
Other assets 0 (29,917)
--------- ---------
Net cash used for investing activities (3,759) (39,917)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank borrowings 50,000 0
Proceeds from issuance of common stock 160,140 0
--------- ---------
Net cash provided by (used for) financing activities 210,140 0
--------- ---------
NET DECREASE IN CASH (314,404) (3,381)
CASH AT BEGINNING OF PERIOD 641,695 464,821
--------- ---------
CASH AT END OF PERIOD $ 327,291 $ 461,440
========= =========
</TABLE>
See notes to the financial statement 6
<PAGE> 7
Form 10-QSB
May 13, 1996
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, 1995.
2. NET INCOME PER SHARE:
For the three months ended March 31, 1995, fully diluted earnings per share
have been omitted as the net aggregate effect is anti-dilative.
For the three months ended March 31, 1996, fully diluted earnings per share
has been omitted because the company has no common stock equivalents whose
exercise price was less than the market price of the common stock for
substantially all of three consecutive months.
3. INVENTORY:
<TABLE>
<CAPTION>
Inventory consists of:
03/31/96
<S> <C>
Raw Materials $ 824,702
Work-in-Process 298,265
Finished Goods 497,689
-------
$ 1,620,656
===========
</TABLE>
4. BANK DEBT:
In February 1994, the Company entered into a credit agreement
with a bank, which provides for borrowing up to $200,000 through June 1, 1996.
Borrowing under this agreement bear interest at
7
<PAGE> 8
Form 10-QSB
May 13, 1996
POLLUTION RESEARCH AND CONTROL CORP.
2% above the bank's prime rate and are collateralized by substantially all of
the Company's assets. As of March 31, 1996, the Company has borrowed $200,000.
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.
RESULTS OF OPERATIONS
THREE-MONTH PERIOD ENDED MARCH 31, 1996 VS. THREE-MONTH PERIOD ENDED MARCH 31,
1995
Net revenues increased 11% from $1,469,042 during the three-month
period ended March 31, 1995 to $1,629,046 during the three-month period ended
March 31, 1996, primarily as a result of increased unit shipments in January
and February due to improved demand for products.
Cost of sales increased 6% from $872,350 during the three-month period
ended March 31, 1996, to $929,056 during the three-month period ended March
31, 1996, primarily as a result of increased sales, discussed above. Gross
margin increased slightly from 41% in the quarter ending March 31, 1995 to 43%
in the quarter ending March 31, 1996.
Selling, general and administrative expenses decreased from $407,127
in the quarter ended March 31, 1995 to $403,614 in the quarter ended March 31,
1996.
In the first quarter of 1995 and 1996 the Company has no provision for
income taxes due to the utilization of net operating loss carryforwards.
As a result of the foregoing factors, net income increased from
$135,991 during the three-month period ended March 31, 1995 to $259,155 during
the three-month period ended March 31, 1996.
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 that regard, the Company realized $160,140 on March 29, 1996
from the exercise of outstanding warrants to purchase Common Stock.
In February 1994, the Company entered into a credit agreement
with a bank, which provides for borrowings up to $200,000 through June 1, 1996.
As of March 31, 1996, the Company has borrowed the full $200,000 under the
agreement.
8
<PAGE> 9
Form 10-QSB
May 13, 1996
POLLUTION RESEARCH AND CONTROL CORP.
Working capital increased from $ 1,944,610 at December 31, 1996 to
$2,354,516 at March 31, 1996.
The Company has no material commitments for capital expenditures as of
March 31, 1996. 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.
RISK FACTORS
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 pressure on gross
margins as a percentage of net sales.
9
<PAGE> 10
Form 10-QSB
POLLUTION RESEARCH AND CONTROL CORP.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Not applicable.
(b) The Company did not file any Reports on Form 8-K
during the period ended March 31, 1996.
10
<PAGE> 11
Form 10-QSB
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: May 13, 1996
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 327
<SECURITIES> 1
<RECEIVABLES> 1,111
<ALLOWANCES> 0
<INVENTORY> 1,620
<CURRENT-ASSETS> 3,176
<PP&E> 258
<DEPRECIATION> 101
<TOTAL-ASSETS> 3,338
<CURRENT-LIABILITIES> 811
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,338
<SALES> 1,629
<TOTAL-REVENUES> 0
<CGS> 929
<TOTAL-COSTS> 929
<OTHER-EXPENSES> 442
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 258
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 258
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
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