U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
{X} Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the Quarterly Period ended September 30,1998
{ } Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act
For the Transition Period from __________ to __________
Commission file Number 0-14266
POLLUTION RESEARCH AND CONTROL CORP.
------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
California 95-2746949
---------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
506 Paula Avenue, Glendale, California 91201
--------------------------------------------
(Address of Principal Executive Offices)
(818) 247-7601
--------------
(Issuer's telephone number, including area code)
Check whether the Small Business Issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12
months (or such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements of the past 90
days.
Yes X No _
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Date No. of Shares Outstanding
------ ----- -------------------------
Common October 30, 1998 2,399,689
Traditional Small Business Disclosure Format (check one):
YES X No ___
1
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP.
Form 10-QSB
For the Nine-Month Period Ended September 30, 1998
TABLE OF CONTENTS
Page
----
Part I Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheet 3
Consolidated Statements of Operations 5
Consolidated Statements of Shareholders' Equity 7
Consolidated Statements of Cash Flows 8
Notes to Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Part II Other Information 14
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of 14
Security Holders
Item 6(b) Reports on Form 8-K 14
2
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
ASSETS
(Unaudited)
As Of
09/30/98
--------
CURRENT ASSETS
Cash $ 365,389
Marketable securities 3,250
Accounts receivable, trade, less allowance for doubtful 533,055
accounts of $ 6,381
Inventories 1,612,981
Other current assets 6,600
----------
TOTAL CURRENT ASSETS 2,521,275
----------
PROPERTY, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS, less accumulated depreciation of $177,213 918,261
----------
OTHER ASSETS
Advances to joint venture 187,854
Other intangible assets 23,509
Other assets 1,682
----------
TOTAL OTHER ASSETS 213,045
----------
TOTAL ASSETS $3,652,581
==========
See notes to financial statements
3
<PAGE>
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
As of
CURRENT LIABILITIES 9/30/98
- ------------------- -------
Notes payable $ 358,125
Accounts payable 224,936
Accrued liabilities 255,416
Net liabilities of discontinued operations 449,398
-----------
TOTAL CURRENT LIABILITIES 1,287,875
DEFERRED RENT 61,769
SHAREHOLDERS' EQUITY :
Preferred Stock, 5,000,000 shares authorized:
Series A Preferred Stock, .01 par value,
220,000,000 shares issued and outstanding 110,000
Series B Preferred Stock, .01 par value,
450,000 shares issued and outstanding 800,000
Common Stock, no par value; 7,500,000 shares
authorized, 2,399,689 shares issued and outstanding 6,815,843
Less notes due from sale of stock (86,857)
Other paid in capital 145,764
Accumulated deficit (5,485,063)
Unrealized gain on marketable securities 3,250
-----------
TOTAL SHAREHOLDERS' EQUITY 2,302,937
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,652,581
===========
See notes to financial statements
4
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months
Ended September 30,
--------------------------
1998 1997
----------- ------------
<S> <C> <C>
Net Revenues $ 944,754 $ 393,233
Cost of goods sold 493,412 347,236
----------- -----------
Gross profit 451,342 45,997
----------- -----------
Operating expenses:
Selling, general and administrative expenses 513,687 499,432
Research and development 3,780 9,309
----------- -----------
Total operating expenses 517,467 508,741
----------- -----------
Loss from operations (66,125) (462,744)
----------- -----------
Other Income (Expense)
Other income (expense) (2,500) 76,880
Interest Income 5,990 1,152
Interest expense (7,935) (4,787)
----------- -----------
Total Other Income (Expense) (4,445) 73,245
----------- -----------
Income (Loss) Before Income Taxes (70,570) (389,499)
----------- -----------
Provision (Benefit) For Income Taxes:
Current -- --
Deferred -- --
Total Provision (Benefit) for Income Taxes -- --
----------- -----------
Income (loss) from continuing operations $ (70,570) $ (389,499)
Discontinued operations
Income (Loss) from discontinued operations (2,712) (94,037)
Gain on disposal of discontinued operations (503,997) --
----------- -----------
(501,285) (94,037)
----------- -----------
Net Income (Loss) $ (571,855) $ (483,536)
=========== ===========
Earnings per share
Net Income (loss) per share - basic and diluted
Continuing operations $ (.03) $ (.18)
=========== ===========
Discontinued operations $ (.21) $ (.04)
=========== ===========
Weighted average number of common
and common equivalent shares outstanding 2,399,689 2,168,433
=========== ===========
See notes to financial statements
5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months
Ended September 30,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Net Revenues $ 2,174,672 $ 2,474,282
Cost of goods sold 1,288,094 1,972,022
----------- -----------
Gross profit 886,578 502,260
Operating expenses:
Selling, general and administrative expenses 1,189,877 1,386,762
Research and development 12,908 32,532
----------- -----------
Total operating expenses 1,202,785 1,419,294
----------- -----------
Loss from operations (316,207) (917,034)
Other Income (Expense)
Other income (expense) (2,500) 76,880
Interest Income 6,029 3,268
Interest expense (19,879) (11,854)
----------- -----------
Total Other Income (Expense) (16,350) 68,294
----------- -----------
Income (Loss) Before Income Taxes (332,557) (848,740)
Provision (Benefit) For Income Taxes:
Current -- --
Deferred -- --
----------- -----------
Total Provision (Benefit) for Income Taxes -- --
----------- -----------
Income (loss) from continuing operations $ (332,557) $ (848,740)
Discontinued operations
Loss from discontinued operations (108,550) (256,780)
Loss on disposal of discontinued operations (1,018,411) --
----------- -----------
(1,126,961) (256,780)
----------- -----------
Net Income (Loss) ($1,459,518) ($1,105,520)
=========== ===========
Earnings per share
Net Income (loss) per share - basic and diluted
Continuing operations $ (.15) $ (.39)
=========== ===========
Discontinued operations $ (.50) $ (.12)
=========== ===========
Weighted average number of common
and common equivalent shares outstanding 2,245,518 2,168,433
=========== ===========
See notes to financial statements
6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Nine Months Ended September 30, 1998
Series A Preferred Stock Series B Preferred Stock Common Stock
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
BALANCE
01/01/98 -- $ -- -- $ -- 2,168,433 $ 6,588,980
Issuance of
stock in
private
placements,
net of
offering
costs 880,000 110,000 231,256 226,863
Issuance of
common stock
for
building 450,000 800,000 -- --
Change in trans-
lation gain -- -- -- -- -- --
Net loss for
the nine
months -- -- -- -- -- --
Balance
9/30/98 880,000 $ 110,000 450,000 $ 800,000 2,399,689 $ 6,815,843
=========== =========== =========== =========== =========== ===========
Continued
Notes Due Other Gain on Currency Total
From Sale Paid In Accumulated Marketable Translation Shareholders'
of Stock Capital Deficit Securities Gain Equity
-------- ------- ------- ---------- ---- ------
BALANCE
01/01/98 $ (86,857) $ 145,764 $(4,025,545) $ 3,250 $ 24,587 $ 2,650,179
Issuance of
stock in
private
placements,
net of
offering
costs -- -- -- -- -- 336,863
Issuance of
common stock
for
building -- -- -- -- -- 800,000
Change in trans-
lation gain -- -- -- -- (24,587) (24,587)
Net loss for
the nine
months -- -- (1,459,518) -- -- (1,459,518)
----------- ----------- ----------- ----------- ----------- -----------
Balance
9/30/98 $ (86,857) $ 145,764 $(5,485,063) $ 3,250 $ -- $ 2,302,937
=========== =========== =========== =========== =========== ===========
7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months
Ended September 30
--------------------------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $(1,459,518) $(1,105,520)
Adjustments to reconcile net income to net cash
used for operating activities:
Loss on disposal of subsidiary 1,018,411 --
Losses on disposed subsidiary 26,418 --
Depreciation and amortization 82,775 172,578
Deferred income taxes -- (10,000)
Deferred rent 15,112 27,112
Inventory reserves -- 200,000
Changes in operating assets and liabilities:
Accounts receivable, trade, net 44,545 388,710
Inventories 143,723 158,056
Other current assets 8,177 11,940
Other assets 987 634
Accounts payable (60,326) (390,884)
Accrued liabilities (12,620) (28,926)
Unearned revenue (143,695) (50,820)
----------- -----------
Net cash used for operating activities (336,011) (627,120)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (1,919) (12,491)
Proceeds from auction of equipment 165,064 --
----------- -----------
Net cash used for investing activities 163,145 (12,491)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from private placements of stock 362,070 --
Short-term borrowings 101,000 --
Bank line of credit - advances 117,125 18,450
Net increase (decrease) in Nutek line of credit (389,123) 133,182
Repayments of long-term debt (167,712) (53,752)
Additional borrowing under long-term debt -- 100,000
----------- -----------
Net cash provided by financing activities 23,360 197,880
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH -- (1,524)
----------- -----------
NET INCREASE (DECREASE) IN CASH (149,506) (443,255)
CASH AT BEGINNING OF PERIOD 514,895 723,170
----------- -----------
CASH AT END OF PERIOD $ 365,389 $ 279,915
=========== ===========
Supplemental Disclosure:
Cash paid for:
Interest $ 19,879 $ 204,697
Taxes $ -- $ --
8
</TABLE>
<PAGE>
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 financial statements for the period 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, 1997.
2. Recent Developments:
Purchase of Building
- --------------------
On June 24, 1998 the Company purchased a building in Macau (a foreign country
located outside of China) in exchange for 450,000 shares of the Company's Series
B Preferred Stock. The Series B Preferred Stock has voting rights, no dividend
rights and is convertible into 450,000 shares of the Company's common stock on
October 30, 1998. The building was valued at $800,000.
The building was purchased from PIC Computers, Ltd., a Macau Corporation.
Subsequent to this purchase, the building was leased back to PIC Computers, Ltd.
under a five year lease requiring monthly payments of $8,000. The lease may be
cancelled after one year if the China jobs are completed (See China Contract).
China Contract
- --------------
During the second quarter, the Company's subsidiary, Dasibi Environmental Corp.,
was awarded a $5.2 million contract with China to install an eleven city air
monitoring network in China. As a result, the Company entered into an agreement
with PIC Computers, Ltd., to provide and supervise three engineers to perform
work on the Company's behalf under the China contract for $9,000 per month, the
"PIC Agreement".
The "PIC Agreement" is expected to commence with the first China shipment
expected to be in the first quarter of 1999.
Private Placements
- ------------------
On June 30, 1998, the Company issued 231,256 restricted shares of the Company's
common stock under a private placement, receiving net proceeds of $226,863 after
paying a finders fee of $25,207 plus warrants to purchase 23,125 shares of the
Company's common stock at $2.20 per share.
On May 8, 1998, the Company issued 880,000 shares of the Company's Series A
Preferred Stock for a purchase price of $.125 per share, resulting in proceeds
to the Company of $110,000. This stock is convertible into 220,000 shares of
common stock after July 30, 1998. The Series A Preferred Stock has voting rights
but no dividend rights. The Preferred Stock, as of this date, has not been
converted.
Options Issued
- --------------
In May, 1998 the Company entered into a cancelable agreement with a public
relations firm to provide related services to the Company for $2,500 per month
plus options to purchase 50,000 shares of the Company's stock at $2.20 per
share. These options expire May 15, 2001.
9
<PAGE>
Reverse Stock Split
- -------------------
During the nine months ended September 30, 1998, the Company declared a 4 to 1
reverse stock split. All shares within these financial statements have been
adjusted to reflect this reverse stock split.
Short-Term Borrowing
- --------------------
During the quarter ended September 30, 1998, the Company borrowed $101,000 at
the rate of 8% per annum due October 30, 1998 from Turbodyne Technologies, Inc.
for the China project expenses.
3. Inventories:
Inventories at September 30, 1998 consisted of the following:
Raw Materials $ 853,603
Work-in-Progress 132,511
Finished Goods 626,867
----------
$1,612,981
==========
4. Commitments and Contingencies:
In October 1996, the Company terminated its agreement with a public relations
firm and cancelled 1,300,000 options held by the public relations firm. The
matter is still presently in dispute. The probability or amount of any loss to
the Company cannot be determined at this time.
The Company has provided approximately $450,000 of net liabilities from
discontinued operations (See "Discontinued Operations") with respect to the
disposition of Nutek.
5. Shareholders' Equity:
Options and Warrants
- --------------------
As of September 30, 1998, the Company had 1,090,209 options and warrants
outstanding at exercise prices ranging from $2.20 to $8.00 which, if exercised,
would generate proceeds to the Company of $4,602,832.
6. Discontinued Operations:
Nutek, Inc. filed for protection under Chapter 11 of the Federal Bankruptcy Code
in April, 1998 and continued to operate as Debtor in Possession. In July, 1998,
the Bankruptcy Court ruled that Nutek, Inc. was not a going concern. As a
result, Nutek, Inc. ceased operations and all the operating assets were
auctioned in late July to satisfy the secured lender. Included in the financial
statements is an estimate of the anticipated loss from the disposal of the
assets and repayment of the obligations of this operation of $1,018,411,an
increase of $349,422 over the prior quarter as a result of lesser proceeds than
anticipated from the auction of operating assets and an increase in estimated
costs of the disposal. This subsidiary accounted for 48% of the 1997
consolidated revenues of the Company.
Effective February 28, 1998, the Company disposed of one of its subsidiaries,
Logan Research, Ltd. a private United Kingdom company engaged in the design,
manufacture and marketing of medical instrumentation. This subsidiary accounted
10
<PAGE>
for 7% of the 1997 consolidated revenues of the Company. The disposal was
accomplished through a return of 100% of LRL's stock to the original owner in
exchange for release from a $300,000 note payable, as well as related accrued
interest of $47,250. As a result, the Company realized a gain on disposal of
this operation of $154,575. Prior to the disposal, the Company advanced funds to
this subsidiary. These advances are expected to be repaid from a joint venture
relationship between the Company and LRL..
7. Subsequent Events:
a. Chapter 11
Attempts to sell Nutek, Inc. as a going business failed. Management then decided
that every effort should be made to maximize the liquidated value of fabrication
equipment and that the "printed circuit board" portion of Nutek, Inc. had
operating value as a vehicle to eventually pay off deficiency sums, if any, and
unsecured creditors. Nutek was therefore placed into Chapter 11 reorganization.
The major secured lender has opposed this filing and at a June 19, 1998 hearing
before the Bankruptcy Court, prevailed against Nutek, Inc. in having the
Bankruptcy Code's automatic stay, imposed when the case was filed, vacated, to
permit a secured lender sale of the mortgaged property based principally upon
the secured lender's assertion that the assets of Nutek, Inc. were insufficient
to cover the amount of the secured loans. The assertion was supported by a "new"
appraisal which management of Nutek, Inc. had not seen until the proceedings
were commenced by the secured lender to vacate the automatic stay. From an
original 1996 appraisal which disclosed a forced liquidation value for the
mortgaged property of $1,200,000, the new appraisal indicated an apparent value
of approximately $341,000. Management believes that there is the possibility of
questionable activities in the original 1996 purchase of Nutek, Inc. and the
financing with the secured lender and appraisal obtained and utilized and is
investigating the role of all parties involved in the acquisition and financing.
An auction sale was held by the secured lender on July 28, 1998. On July 1,
1998, the Company received by United States Mail, a copy of a Default Judgment
against the Company entered in the Texas state court in the sum of $766,708.77.
The Company has retained Texas counsel, filed a Notice of Removal of the Texas
state court case to the United States District Court Northern District of Texas,
Dallas Division, and has filed a Motion to dismiss and/or quash service of
process and to set aside the Default Judgment. The matter is presently pending
and has not been determined, however the Default Judgment described above has
been decreased to approximately $400,000. The Company has established a reserve
of $450,000 for this matter.
b. Negotiations regarding sale of Dasibi and LMD.
In March 1998 the Company began negotiating an agreement to sell 100% of the
stock of Dasibi and LMD to Turbodyne Technologies, Inc. A definitive agreement
was exercised in August and subsequently repudiated by Turbodyne. As a result,
the Company has instituted suit against Turbodyne Technologies, Inc.
8. Supplemental Disclosure of Noncash Investing and Financing Activity:
During the nine months ended September 30, 1998, the Company purchased a
building for $800,000 by issuing 450,000 shares of Series B Preferred Stock.
11
<PAGE>
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.("Dasibi"). The Company
currently derives the majority of its revenue for sales of Dasibi's instruments
and their replacement parts, referred to as the "core business".
Until the second quarter of 1998, the Company realized revenue from two other
wholly owned subsidiaries, Nutek Inc. ("Nutek") and Logan Research Ltd.
("Logan"). Due to declining sales and operating problems the Logan subsidiary
was sold back to the original owner and Nutek operations were discontinued.
These actions were part of a reorganization of the Company intended to limit
cash drain.
As of this date, the financial condition and results primarily reflect the
initial disposition of assets described above while the Dasibi operation has
remained intact in a downsized, on-going, highly competitive price pressure
environment. The reorganization plan has been expanded to attempt to raise
operating and expansion capital in the amount of $1,000,000 to $2,000,000.
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; the
Company's ability to effectively manage expense growth relative to revenue
growth in anticipation of continued pressure on gross margins, and whether or
not a sale of its Dasibi subsidiary can be successfully concluded.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 1998, versus Nine Months Ended September 30,
1997
Net revenues decreased 12% from $2,474,282 in 1997 to $2,174,672 during 1998.
The decrease was primarily due to a decrease of Dasibi revenue, resulting from a
continuation of price pressure levels realized in the third and fourth quarters
of 1997.
Gross margin was 41% in 1998 versus 20% for 1997, because the Company
experienced an easing of competitive pressures in the instrument market.
Selling, general and administrative expenses decreased $196,885, or 14% during
the nine month period ended September 30, 1998, over the same period in 1997,
principally due to the downsizing discussed above.
As a result of the foregoing factors, net operating loss decreased from a net
operating loss of ($848,740) during 1997 to a net operating loss of ($332,557)
for the same period of 1998.
12
<PAGE>
Three Months Ended September 30, 1998, versus Three Months Ended September 30,
1997
Net revenues increased 140% from $393,233 during the third quarter of 1997 to
$944, 754 during the third quarter of 1998. The increase was primarily due to an
apparent easing of competitive price pressures in the pollution monitoring
instrument market. It is too early to expect this easing to continue.
Gross margin was 48% for the third quarter of 1998 versus 12% for the third
quarter of 1997, due to the apparent easing of competitive price pressures
indicated above.
Selling, general and administrative expenses increased $14,255, or 3%, during
the third quarter of 1998, over the same period in 1997, in anticipation of
shipments under the China Contract. See Note 2 to Financial Statements - China
Contract.
As a result of the foregoing factors, net operating loss decreased from a net
operating loss of ($389,499) during the third quarter of 1997 to a net operating
loss of ($70,570) during the third quarter of 1998.
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.
During the nine months ended September 30, 1998, operations depleted cash by
$336,011 which was partially offset by two private placements totalling
$362,000. During the same period the Nutek working capital line was reduced by
$389,123, the Dasibi line of credit was increased to $117,125 due to the
factoring of receivables, and long-term debt was paid down by $167,712 resulting
in a net cash decrease of $149,506.
Working capital at September 30, 1998 was $1,233,400, a decrease from September
30, 1997 of $715,809, due to the disposition of the Nutek subsidiary.
Dasibi was unable to renew its line of credit with a bank and the existing line
has been paid off. Instead, Dasibi obtained a new credit facility which involves
factoring receivables. The new line is $500,000 where there is a 1% fee for each
factored receivable, and a monthly fee of 2.25% of the amount advanced still
outstanding.
Management believes that it will be able to meet its current and contingent
obligations with funds generated from operations connected with the China
Contract provided the Company is successful in obtaining financing for such
Contract.
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.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In August 1998, the Company executed an agreement with Turbodyne Technologies,
Inc. which was subsequently repudiated by Turbodyne. On October 2, 1998, the
Company filed suit in the Superior Court of the State of California, which case
is entitled Pollution Research and Control Corp., Dasibi Environmental Corp. and
Logan Medical Devices v. Turbodyne Technologies, Inc. and Does 1 through 100,
inclusive, Case No. BC 198 521. The complaint alleges that Turbodyne breached an
agreement to purchase the Company's two subsidiaries, Dasibi Environmental Corp.
and Logan Medical Devices when Turbodyne willfully repudiated its contract with
the Company shortly after signing and delivering it. The Complaint alleges that
Turbodyne's actions constituted breach of contract, a breach of the covenant of
good faith and fair dealing, intentional interference with prospective business
advantage and negligent interference with prospective business advantage. The
Complaint seeks compensatory damages, punitive damages and declaratory relief.
See Note 7a "Subsequent Events" concerning legal proceedings regarding closure
of the Nutek subsidiary.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On October 15, 1998 the Company's Annual Meeting of Shareholders was
held. The following members of the Board of Directors were re-elected
with the following vote:
Name Vote For Withheld
---- -------- --------
Albert E. Gosselin 1,617,689 36,591
Gary L. Dudley 1,618,399 35,881
Craig E. Gosselin 1,615,398 38,882
Barbara L. Gosselin 1,617,023 37,257
Marcia Smith 1,618,399 35,881
Barry Soltani 1,618,399 35,881
The one-for-four reverse stock split pursuant to which every four
shares of common stock of the Company outstanding on May 15, 1998 was
converted into one share of Common Stock, was ratified and approved
with the following vote:
For 1,588,397
Against 55,736
Abstain 10,147
Additionally, the firm of AJ. Robbins, P.C. was elected as the
Company's auditors for the fiscal year ending December 31, 1998 with
the following vote:
For 1,537,058
Against 107,673
Abstain 9,549
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Not applicable
(b) The Company filed one report on Form 8-K during the three months ended
September 30, 1998 which described the repudiation of the Turbodyne
Agreement. See "Note 7 to the Financial Statements - Negotiations
regarding sale of Dasibi and LMD."
14
<PAGE>
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
POLLUTION RESEARCH AND CONTROL CORP.
------------------------------------
(Registrant)
Date: October 30, 1998 By: /s/ Albert E. Gosselin
---------------- -----------------------
Albert E. Gosselin, Jr., President
and Chief Executive Officer
Date: October 30, 1998 By: /s/ Donald Ford
---------------- ---------------
Donald Ford, Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 365
<SECURITIES> 3
<RECEIVABLES> 539
<ALLOWANCES> (6)
<INVENTORY> 1,613
<CURRENT-ASSETS> 2,521
<PP&E> 1,096
<DEPRECIATION> (177)
<TOTAL-ASSETS> 3,653
<CURRENT-LIABILITIES> 1,288
<BONDS> 0
0
910
<COMMON> 6,816
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,652
<SALES> 2,175
<TOTAL-REVENUES> 0
<CGS> 1,288
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,203
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