<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1998 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 NUMBER 0-13667
PDG ENVIRONMENTAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2677298
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
300 OXFORD DRIVE, MONROEVILLE, PENNSYLVANIA 15146
(Address of principal executive offices) (Zip Code)
412-856-2200
(Registrant's telephone number, including area code)
Indicate by check mark 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 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
----- -----
As of June 8, 1998, there were 7,260,072 shares of the registrant's common stock
outstanding.
<PAGE> 2
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Consolidated Financial Statements and Notes to Consolidated
Financial Statements
(a) Condensed Consolidated Balance Sheets as of April 30, 1998
(unaudited) and January 31, 1998 3
(b) Consolidated Statements of Operations for the Three Months Ended
April 30, 1998 and 1997 (unaudited) 4
(c) Consolidated Statements of Cash Flows for the Three Months Ended
April 30, 1998 and 1997 (unaudited) 5
(d) Notes to Consolidated Financial Statements (unaudited) 6
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 3. Defaults Upon Senior Securities 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
1998 1998*
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term investments $ 569,000 $ 892,000
Accounts receivable - net 9,822,000 6,751,000
Costs and estimated earnings in excess of billings on
uncompleted contracts 650,000 725,000
Inventory 201,000 202,000
Other current assets 541,000 426,000
----------- -----------
TOTAL CURRENT ASSETS 11,783,000 8,996,000
PROPERTY, PLANT AND EQUIPMENT 4,620,000 4,527,000
Less: accumulated depreciation (3,632,000) (3,558,000)
----------- -----------
988,000 969,000
OTHER ASSETS 476,000 372,000
----------- -----------
TOTAL ASSETS $13,247,000 $10,337,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,043,000 $ 3,746,000
Billings in excess of costs and estimated earnings
on uncompleted contracts 1,390,000 842,000
Current portion of long-term debt 194,000 198,000
Accrued liabilities 1,855,000 1,416,000
----------- -----------
TOTAL CURRENT LIABILITIES 8,482,000 6,202,000
OTHER LONG-TERM LIABILITIES 140,000 140,000
LONG-TERM DEBT 1,137,000 1,628,000
MINORITY INTEREST 441,000 102,000
Stockholders' Equity
Cumulative convertible 2% preferred stock 400,000 400,000
Common stock 132,000 130,000
Additional paid-in capital 4,790,000 4,571,000
(Deficit) retained earnings (2,275,000) (2,836,000)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 3,047,000 2,265,000
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $13,247,000 $10,337,000
=========== ===========
</TABLE>
*Derived from audited financial statements.
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED APRIL 30,
---------------------------------
1998 1997
----------- -----------
<S> <C> <C>
CONTRACT REVENUES $13,351,000 $ 4,489,000
CONTRACT COSTS 11,602,000 3,660,000
----------- -----------
Gross margin 1,749,000 829,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 774,000 627,000
----------- -----------
Income from operations 975,000 202,000
OTHER INCOME (EXPENSE):
Interest expense (57,000) (53,000)
Interest income 2,000 3,000
Other income - 11,000
----------- -----------
(55,000) (39,000)
----------- -----------
Income before income taxes and minority interest 920,000 163,000
INCOME TAX PROVISION (20,000) (5,000)
MINORITY INTEREST (339,000) -
----------- -----------
NET INCOME $ 561,000 $ 158,000
=========== ===========
PER SHARE OF COMMON STOCK:
BASIC $ 0.09 $ 0.03
=========== ===========
DILUTIVE $ 0.07 $ 0.02
=========== ===========
AVERAGE COMMON SHARES EQUIVALENTS OUTSTANDING 6,497,000 5,924,000
AVERAGE DILUTIVE COMMON STOCK EQUIVALENTS
OUTSTANDING 1,948,000 1,025,000
----------- -----------
AVERAGE COMMON SHARES AND DILUTIVE COMMON
EQUIVALENTS OUTSTANDING FOR EARNINGS PER
SHARE CALCULATION 8,445,000 6,949,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED APRIL 30,
---------------------------------
1998 1997
----------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 561,000 $ 158,000
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO CASH:
Depreciation and amortization 162,000 93,000
Minority Interest 339,000 -
Other (1,000) -
CHANGES IN ASSETS AND LIABILITIES
OTHER THAN CASH:
Accounts receivable (3,071,000) 344,000
Costs and estimated earnings in excess of billings
on uncompleted contracts 75,000 (67,000)
Inventory 1,000 7,000
Prepaid income taxes 7,000 1,000
Other current assets 84,000 73,000
Accounts payable 1,085,000 (249,000)
Billings in excess of costs and estimated earnings
on uncompleted contracts 548,000 22,000
Accrued liabilities 439,000 87,000
----------- ---------
(832,000) 218,000
----------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 229,000 469,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (109,000) (112,000)
----------- ---------
NET CASH USED BY INVESTING ACTIVITIES (109,000) (112,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt - 25,000
Principal payments on debt (495,000) (45,000)
Proceeds from Exercise of Stock Options & Warrants 52,000 -
----------- ---------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (443,000) (20,000)
----------- ---------
Net Increase (Decrease) in Cash and Short-Term Investments (323,000) 337,000
Cash and Short-Term Investments, Beginning of Period 892,000 429,000
----------- ---------
CASH AND SHORT-TERM INVESTMENTS, END OF PERIOD $ 569,000 $ 766,000
=========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 1998
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The consolidated financial statements include PDG Environmental, Inc.'s (the
"Corporation") and its wholly-owned subsidiaries. Additionally, the results of
PDG/Philip, LP (the "Venture"), in which the Corporation holds a 60% interest,
are consolidated since the Corporation is the majority owner of the Venture and
exercises day-to-day operating control.
The accompanying consolidated financial statements of the Corporation are
unaudited. However, in the opinion of management, they include all adjustments
necessary for a fair presentation of financial position, results of operations
and cash flows. All adjustments made during the three months ended April 30,
1998 were of a normal, recurring nature. The amounts presented for the three
months ended April 30, 1998 are not necessarily indicative of results of
operations for a full year. Additional information is contained in the Annual
Report on Form 10-KSB of the Corporation for the year ended January 31, 1998,
which should be read in conjunction with this quarterly report.
NOTE 2 - FEDERAL INCOME TAXES
No federal income tax has been provided for the three months ended April 30,
1998 due to the existence of unused net operating loss carryforwards. The
Corporation has recorded a $20,000 provision for state income taxes.
Income taxes paid by the Corporation for the three months ended April 30, 1998
and 1997 totaled approximately $13,000 and $6,000, respectively.
NOTE 3 - LINE OF CREDIT
On May 27, 1997, the Corporation closed on a $375,000 loan from a financial
institution to refinance a $289,000 term loan payable to Drummond Financial
Corporation ("Drummond") maturing on August 1, 1997. The loan is for a
seven-year term at a 9.5% interest rate fixed for the first four years of the
loan. The interest will then be readjusted to the current five year treasury
bill rate plus 3.25% for the remaining three years of the loan. The loan
requires monthly debt service payments of approximately $6,100 which is a
reduction of approximately $10,000 from the debt service on the Drummond term
loan. The remaining proceeds from the loan were utilized to reduce the
outstanding balance on the line of credit with Drummond.
On August 25, 1997, the Corporation closed on a new $2 million credit facility
consisting of a 5-year $0.5 million equipment note and a 3-year revolving line
of credit with a maximum advance of $1.5 million. Both the equipment note and
the line of credit have an interest rate of prime plus 3.5%.
The proceeds of the new financing fully satisfied the remaining outstanding
balance on the Drummond line of credit and provided working capital for the
Corporation. As of April 30, 1998, the outstanding balance on the new revolving
line of credit was $473,000.
During fiscal 1996, the registrant entered into two agreements guaranteeing
ICHOR Corporation's ("ICHOR") accounts receivable financed by Sirrom
Environmental Funding, LLC ("Sirrom"). At April 30, 1998, the balance guaranteed
by the Corporation under the two agreements was approximately $300,000. It is
expected that the remaining outstanding receivables covered by the guarantee
will be paid by ICHOR's customer during the first half of Fiscal 1999,
eliminating the registrant's remaining guarantee.
The Corporation paid interest costs totaling approximately $36,000 and $54,000
during the three months ended April 30, 1998 and 1997, respectively.
6
<PAGE> 7
NOTE 4 - PREFERRED STOCK
Cumulative dividends in arrears on the Corporation's 2% Series A Preferred Stock
were approximately $157,000 at April 30, 1998. At April 30, 1998, there were
167,338 shares of Series A Preferred Stock outstanding. Each share of Series A
Preferred Stock is convertible into four shares of the Corporation's common
stock at the option of the preferred stockholder.
The conversion rate on the Series A Preferred Stock is also subject to
adjustment as a result of certain changes in the Corporation's capital structure
or distributions to common stockholders (except for cash dividends permissible
under law).
NOTE 5 - NET EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED APRIL 30,
1998 1997
----------------------------------
<S> <C> <C>
NUMERATOR:
Net Income $ 561,000 $ 158,000
Preferred stock dividends (8,000) (9,000)
---------- ----------
Numerator for basic earnings per share--income available
to common stockholders 553,000 149,000
Effect of dilutive securities:
Preferred stock dividends 8,000 9,000
---------- ----------
Numerator for diluted earnings per share--income available to
common stock after assumed conversions 561,000 158,000
---------- ----------
DENOMINATOR:
Denominator for basic earnings per share--weighted average shares 6,497,000 5,924,000
Effect of dilutive securities:
Employee stock options 860,000 173,000
Warrants 356,000 58,000
Convertible preferred stock 732,000 794,000
---------- ----------
Dilutive potential common shares 1,948,000 1,025,000
---------- ----------
Denominator for diluted earnings per share--adjusted
weighted-average shares and assumed conversions 8,445,000 6,949,000
========== ==========
BASIC EARNINGS PER SHARE $ 0.09 $ 0.03
========== ==========
DILUTED EARNINGS PER SHARE $ 0.07 $ 0.02
========== ==========
</TABLE>
7
<PAGE> 8
NOTE 6 - COMMITMENTS AND CONTINGENCIES
As discussed in further detail in Item 3. Legal Proceedings contained in the
Corporation's Annual Report on Form 10-KSB for the year ended January 31, 1998,
the Corporation, PDGR, certain of PDGR's officers and directors and the
underwriters of PDGR's initial public offering have been named as defendants in
a purported class action lawsuit involving the purchase by all persons and
entities of PDGR's common stock from February 9, 1995, through May 23, 1995. The
action alleges that the defendants violated certain federal securities laws.
On June 8, 1998 an agreement in principle to settle out of court was reached
with the plaintiffs' attorneys in the class action lawsuit. Approval by both the
Court and members of the class is still required. If approved, the Defendants,
PDG Environmental and ICHOR (formerly PDG Remediation), will pay a total of
$432,500 to settle the lawsuit. PDG Environmental's share of the settlement will
be $173,000.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 30, 1998 AND 1997
During the three months ended April 30, 1998 ("Fiscal 1999"), the Corporation's
contract revenues increased to $13.4 million compared to $4.5 million in the
three months ended April 30, 1997 ("Fiscal 1998"). The increase was due to the
Corporation entering the current fiscal year with a greater backlog of contracts
and the significant contribution to revenue that the $12 million Keystone
contract made in the current quarter.
The Corporation's gross margin increased to $1.7 million in the first quarter of
fiscal 1999 compared to $0.8 million in the first quarter of fiscal 1998. The
increase in gross margin in total is due to increased levels of revenues. The
contract margin as a percentage of revenue decreased as, traditionally, larger
contracts are bid at lower margins.
Selling, general and administrative expenses increased to $0.78 million in the
three months ended April 30, 1998 compared to $0.63 million in the same quarter
of the previous fiscal year. During the current fiscal quarter, the Corporation
had two additional branch offices, and more costs were incurred to support a
higher level of operations.
The Corporation reported income from operations of $1.0 million for the three
months ended April 30, 1998 compared to income from operations of $0.2 million
for the three months ended April 30, 1997 as a direct result of the factors
discussed above.
Interest expense remained constant in the current quarter as compared to the
same quarter of a year ago.
During the quarter ended April 30, 1998, the Corporation made no provision for
federal income taxes due to the utilization of net operating loss carryforwards
for financial reporting purposes. A state income tax provision of $20,000 was
made in the current fiscal quarter while a provision of $5,000 was made in the
prior fiscal quarter.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended April 30, 1998, the Corporation's cash decreased
by $0.32 million to $0.57 million compared to an increase in cash and short-term
investments of $0.34 million in the three months ended April 30, 1997.
Cash generated from operating activities totaled $0.2 million in the three
months ended April 30, 1998. Cash inflows included $0.6 million related to net
income generated during the current three months, $0.1 million due to a decrease
in other current assets, a $1.1 million increase in accounts payable, primarily
associated with the Keystone project, a $0.5 million increase in billings in
excess of costs and estimated earnings on uncompleted contracts, a $0.4 million
increase in accrued liabilities related to the timing of payments, $0.2 million
of depreciation and amortization and a $0.3 million increase in minority
interest relating to the Keystone contract. These cash inflows were partially
offset by cash outflows of $3.1 million due to an increase in accounts
receivable related primarily to the Keystone project.
The decrease in cash and short term investments during the first quarter of
fiscal 1999 is attributable to cash inflows from operations of $0.2 million,
offset by cash outflows of $0.1 million for the purchase of property, plant and
equipment, and $0.4 million for the repayment of debt partially offset by the
proceeds from the exercise of stock options and warrants.
During the three months ended April 30, 1997, the Corporation's cash increased
by $0.34 million to $0.77 million.
9
<PAGE> 10
Cash flows from operating activities totaled $0.5 million in the three months
ended April 30, 1997. Cash inflows included $0.2 million related to net income
generated during the current three months, a $0.3 million decrease in accounts
receivables, $0.1 million due to a decrease in other current assets, a $0.1
million increase in accrued liabilities related to the timing of payments and
$0.1 million of depreciation and amortization. These cash inflows were offset by
cash outflows which principally included a $0.1 million increase in costs and
estimated earnings in excess of billings on uncompleted contracts related to the
timing of certain contract activity and a $0.2 million decrease in accounts
payable related to the timing of vendor payments.
The increase in cash and short term investments during the first quarter of
fiscal 1998 is attributable to cash inflows from operations of $0.5 million.
These inflows were offset by outflows used to fund financing activities of $0.02
million and cash outflows to fund investing activities of $0.11 million. The
cash outflows relative to investing activities were for the purchase of
property, plant and equipment, and the cash outflows relating to financing
activities were for the repayment of debt net of proceeds from the financing of
a vehicle.
At April 30, 1998, the Corporation's backlog associated with its asbestos
abatement business totaled $20.6 million ($11.0 million on fixed fee contracts
and $9.6 million on time and materials or unit price contracts).
10
<PAGE> 11
PART II-- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
With respect to the action captioned Klein v. PDG Remediation, Inc., described
in the Corporation's Form 10-K for the year ended January 31, 1998.
On June 8, 1998 an agreement in principle to settle out of court was reached
with the plaintiffs' attorneys in the class action lawsuit. Approval by both the
Court and members of the class is still required. If approved, the Defendants,
PDG Environmental and ICHOR (formerly PDG Remediation), will pay a total of
$432,500 to settle the lawsuit. PDG Environmental's share of the settlement will
be $173,000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The registrant is currently in arrears with respect to the payment of dividends
on its Series A Preferred Stock. At April 30, 1998, the cumulative dividends in
arrears on the Series A Preferred Stock were approximately $157,000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT INDEX
EXHIBIT NO. AND DESCRIPTION
<TABLE>
<CAPTION>
PAGES OF SEQUENTIAL
NUMBERING SYSTEM
<S> <C>
10(a) Professional Consulting Agreement dated April 24, 1998 between Len Turano
and PDG Environmental, Inc.
27. Financial data schedule
(b) Reports on Form 8-K
</TABLE>
The registrant did not file any current reports on Form 8-K during the three
months ended April 30, 1998.
11
<PAGE> 12
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.
PDG ENVIRONMENTAL, INC.
By /s/John C. Regan
---------------------------------------
John C. Regan
Chairman and Chief Executive Officer
Date: June 12, 1998
12
<PAGE> 1
Exhibit 10(a)
[TKO INTERNATIONAL LETTERHEAD]
PROFESSIONAL CONSULTING AGREEMENT
THIS PROFESSIONAL CONSULTING AGREEMENT is made this 24th day of April,
1998, by and between LEN TURANO at 5650 Greenwood Blvd., Suite 201, Englewood,
Colorado and PDG ENVIRONMENTAL, INC., ("Client"), a Delaware corporation, with
its principal offices located at 300 Oxford Drive, Monroeville, Pennsylvania.
WHEREAS, Consultants operate and sell marketing services designed to
heighten public awareness of the business conducted and performance results
achieved by specified companies which consist primarily of researching,
organizing and disseminating such information; and
WHEREAS, PDG Environmental, Inc., (PDGE), is a public company that is at
this time trading it's common stock through the (Over the Counter Bulletin
Board) stock market; and
WHEREAS, Client desires to retain the services of the Consultants in a
public relations and promotional capacity to inform the general public, the
brokerage community and other individuals pursuant to the terms hereof; and
WHEREAS, Client wishes to formalize in a written agreement the terms and
conditions under which Consultants will provide such services to Client.
NOW, THEREFORE, for the mutual promises and other consideration described
herein, the parties hereto agree as follows:
1. ENGAGEMENT: The Client hereby retains the Consultants and the
Consultants hereby accept the engagement to act as a public relations
and promotional consultant to the Client. It is the intention of the
parties to this agreement that the Consultants will gather all
publicly-available information on the Client and will confer with
officers and directors of the Client in an effort to consolidate the
information obtained into summary form for dissemination to interested
parties. The Consultants will then disseminate such information about
the Client to individuals and registered representatives of
broker/dealers whom the Consultants, in its sole discretion, believe
can effectively disseminate such information to the general public.
Consultants shall at all times act as an independent contractor in the
transaction of their business and shall conduct their activities in
accordance with the rules and regulations of the Securities and
Exchange Commission, and the long standing practices of the industry.
<PAGE> 2
2. SERVICES: Consultants shall provide through April 14, 1999, investor
relations services to the Client as requested by the Client in
consideration of the compensation provided under this Agreement.
(a) Consultants shall exercise their best efforts to identify
and establish appropriate information channels capable of
maximizing dissemination of Client information to the licensed
broker/dealers.
(b) Consultants shall exercise their best efforts to assemble and
organize Client Information in a format and medium which best
facilitates such dissemination.
(c) This Agreement shall commence on April 15, 1998 and end on April
14, 1999.
(d) TKO will perform all the services outlined on a monthly basis
for the duration of this agreement.
(e) Specific goals of the Investor Relations Program is attached as
Appendix A.
(1) RE: NEWS DISSEMINATION/MARKETING
Present to the Client six "For Free" marketing strategies
that will ride in investment community communication.
(2) RE: ANALYST COVERAGE
Gain commitment at two "Not For Fee" analyst/newsletter
editors.
3. INFORMATION: Client shall furnish Consultants with current public
information about Client, including any and all statements and reports
filed by Client with the United States Securities and Exchange
Commission, its most recent Annual Report to Shareholders, and any
other information reasonably requested by Consultants to assist
Consultants in providing business opportunity services to Client
("Client Information"). It is understood and agreed by all parties
hereto that the Consultants cannot undertake to independently verify
facts previously supplied to it or to be supplied in the future by the
Company, including but not limited to, factual matters included in
material prepared by the Company or oral representations by
representatives of the Company. All information disseminated by
Consultants will be provided solely and exclusively by the Client and
the Client warranties and guarantees the accuracy and completeness of
all documents, information and material furnished or to be furnished
to the Consultants. The Company agrees to defend, indemnify and hold
the Consultants harmless against any claims made against the
Consultants arising out of representations made by it in reliance upon
information furnished to it by the Company and to pay any attorney's
fees incurred by the Consultants with respect thereto. Except as set
forth herein, the Company represents that there exists no impediment
to completion of the transaction. The company agrees to notify
Consultants before issuing any shares of common stock. The Company
agrees to notify Consultants before filing to sell any 144 stock to
the
<PAGE> 3
extent Company is aware of such transactions. Consultant shall notify
Client before selling any shares of PDG Environmental that are held by
Consultant of Affiliates of Consultant.
4. COMPENSATION: In consideration for the services to be provided to
the Client by the Consultants under this Agreement, the Client hereby
agrees to the payment schedule to the Consultant as follows:
(a) The Client hereby agrees to pay the Consultants a fee of Four
Thousand Dollars ($4,000) due and payable upon the execution of
this agreement and on the fifteenth (15) of every month for the
length of the contract. The April 15, 1998 payment has been made.
(b) PDGE will issue to Len Turano options to purchase free trading
stock according to the following schedule:
Five Thousand (5,000) options per month to purchase the equal
amount of free trading stock all exercisable at Two Dollars and
Fifty Cents ($2.50). Options to expire April 15, 2000.
5. TERM: This Agreement shall become effective as of April 15, 1998 and
shall remain in effect through April 14, 1999. It is also mutually
agreed upon that a minimum of three (3) months is guaranteed to the
Consultants, after which the Agreement can be terminated by either
party with thirty (30) days notice.
6. REIMBURSEMENT: Any services or hard costs not outlined will be
reimbursed to Consultants only upon prior approval of management of
PDGE. Consultants shall be responsible for the payment of all expenses
and taxes or other liabilities which Consultants incur due to the
receipt of any compensation as a result of this Agreement.
7. REPRESENTATIONS AND WARRANTIES: Consultants represent and warrant
that services to be provided and the system to be produced or
developed by Consultants under this Agreement will be preformed,
produced or developed by competent, trained professionals in a
workman-like manner. Consultants shall comply with all applicable
statutes, rules and regulations governing all aspects of the services
to be performed under this Agreement provided that, as described in
paragraph 3 of this Agreement, Client shall be fully responsible to
assure all Client Information is accurate and complete. Client
understands and acknowledges that Consultants cannot guarantee that
the services provided hereunder will achieve any particular objective
or fulfill any specific goals.
OTHER THAN THE FOREGOING EXPRESS WARRANTIES, CONSULTANTS MAKE NO
WARRANTIES WITH RESPECT TO THE QUALITY OF THE GOODS AND SERVICES TO BE
PROVIDED
<PAGE> 4
HEREUNDER OR ANY RESULTS TO BE ACHIEVED, AND HEREBY EXPRESSLY DISCLAIM
THE EXISTENCE OF ANY SUCH REPRESENTATIONS AND WARRANTIES INCLUDING
WITHOUT LIMITATIONS AND IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. CONSULTANTS SHALL HAVE NO LIABILITY
TO ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED BY
CLIENT AS A RESULT OF ANY FAILURE ON THE PART OF CONSULTANTS IN THE
PERFORMANCE OF THEIR DUTIES HEREUNDER.
8. ON GOING BUSINESS: PDGE shall be free to exercise its own judgement
as to time, place and manner of the actual marketing and public
relations. PDGE acknowledges the Consultants are engaged in other
business activities and that it will continue in such activities
during the term of this Agreement. Consultants shall not be restricted
from engaging in other business activities during the term of this
Agreement.
9. PROPRIETARY INFORMATION: The Consultants acknowledge and agree that
specified segments of information received from the Client under this
Agreement are exclusive proprietary information and the same shall not
be divulged, published, or distributed in any manner or form to any
third party without any express right or written consent of their
Client.
10. MISCELLANEOUS: This Agreement shall be interpreted and construed in
accordance with the laws of the State of Pennsylvania. The parties
agree that the jurisdiction and venue of any dispute arising hereunder
shall be Pittsburgh, Pennsylvania.
11. ENTIRE UNDERSTANDING: This Agreement contains the entire
understanding of the parties with respect to the subject matter
hereof. The terms of this Agreement may be altered only by written
agreement between parties. The failure of either party to object to or
take affirmative action with respect to any conduct of the other is in
violation of the terms of this Agreement and shall not be construed as
a waiver of the violation or breach of any future similar violation or
breach.
12. NOTICES: Any notice to be given by Consultant as required by this
Agreement shall be sent to the Company and its principal executive
officers. Any notice from the Company to Consultant shall be sent to
the Consultant at its address as it appears on this Agreement or on
the Company's books and records. Either party may change the address
to which notices are to be sent by informing the other party in
writing of the new address.
<PAGE> 5
IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be executed by its duly authorized officer, or as to an individual party,
has executed this Agreement in his own hand, as of the date first written above.
PDG ENVIRONMENTAL, INC.
BY: /s/ JOHN REGAN DATE: 5/2/98
--------------------------------- ------------------------
JOHN REGAN, PRESIDENT/CEO
BY: /s/ LEN TURANO DATE: 5/1/98
--------------------------------- ------------------------
LEN TURANO, PRESIDENT
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF APRIL 30, 1998 AND THE CONSOLIDATED STATEMENTS
OF OPERATION FOR THE QUARTER ENDED APRIL 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<CASH> 569,000
<SECURITIES> 0
<RECEIVABLES> 9,822,000
<ALLOWANCES> 0
<INVENTORY> 201,000
<CURRENT-ASSETS> 11,783,000
<PP&E> 4,620,000
<DEPRECIATION> 3,632,000
<TOTAL-ASSETS> 13,247,000
<CURRENT-LIABILITIES> 8,482,000
<BONDS> 1,137,000
0
400,000
<COMMON> 132,000
<OTHER-SE> 2,515,000
<TOTAL-LIABILITY-AND-EQUITY> 13,247,000
<SALES> 13,351,000
<TOTAL-REVENUES> 13,351,000
<CGS> 11,602,000
<TOTAL-COSTS> 11,602,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57,000
<INCOME-PRETAX> 581,000
<INCOME-TAX> 20,000
<INCOME-CONTINUING> 561,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 561,000
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.07
</TABLE>
