<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
For the 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 number 0-1857
RYAN-MURPHY INCORPORATED
(Exact name of registrant as specified in its charter)
COLORADO 84-0998860
(State or other jurisdiction of (I.R.S. Employer
of incorporation or organization) Identification No.)
8774 YATES DRIVE, SUITE 100, DENVER, COLORADO 80030
(Address of principal executive offices)
(303) 427-4567
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
SHARES OF COMMON STOCK OUTSTANDING WERE 2,502,104 AT MARCH 31, 1996.
This document is comprised of 14 pages.
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RYAN-MURPHY INCORPORATED
INDEX
PART I FINANCIAL INFORMATION PAGE
----
Item 1. Condensed consolidated balance sheets,
March 31, 1996 and December 31, 1995 3
Condensed consolidated statements of operations, the three
months period ended March 31, 1996 and March 31, 1995 4
Condensed consolidated statements of cash flows, three months
period ended March 31, 1996 and March 31, 1995 5
Item 2. Management's discussion and analysis of financial condition
and results of operations 9
PART II OTHER INFORMATION 11
Signatures 13
Exhibit 27 14
2
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RYAN-MURPHY INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1996 1995
----------- -----------
ASSETS
Cash $ 45,961 $ 152,027
----------- -----------
Contracts and notes receivable 223,341 494,205
Less: Allowance for bad debts (12,444) (5,694)
----------- -----------
210,897 488,511
----------- -----------
Inventories 88,705 93,011
Prepaid expenses 38,336 41,875
----------- -----------
Total current assets 383,899 775,424
----------- -----------
Investment in affiliated company 2,500 2,500
----------- -----------
Indebtedness of related parties, not current 31,500 31,500
----------- -----------
Property and equipment 3,033,336 3,033,336
Less: Accumulated depreciation (1,370,410) (1,357,087)
----------- -----------
1,662,927 1,676,249
----------- -----------
Intangible Assets 1,968,805 1,959,233
Less: Accumulated amortization (413,849) (388,886)
----------- -----------
1,554,956 1,570,347
----------- -----------
Other assets 45,741 49,296
----------- -----------
$ 3,681,523 $ 4,105,316
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts and notes payable $ 1,839,869 $ 1,865,613
Indebtedness to related parties 21,000 21,000
Other current liabilities 224,033 202,767
----------- -----------
Total current liabilities 2,084,901 2,089,380
Long-term debt, net of current portion 110,896 139,306
Common stock 5,029 5,029
Other shareholders' equity 1,480,696 1,871,601
----------- -----------
$ 3,681,523 $ 4,105,316
----------- -----------
----------- -----------
See Accompanying notes to condensed consolidated financial statements.
3
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RYAN-MURPHY INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS
ENDED MARCH 31,
------------------------
1996 1995
--------- -----------
Contract and other revenue $ 163,781 $1,925,358
Costs of revenue earned 209,192 1,508,842
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Gross profit (45,410) 416,516
Costs and expenses:
General and administrative expense 340,345 443,307
Provision for bad debts 6,750 7,500
--------- ----------
Income (loss) from operations (392,505) (34,291)
Non-operating income (expense) 2,341 22,807
Interest expense (848) (19,098)
--------- ----------
Income before income taxes (391,012) (30,582)
Income taxes 107 (1,585)
Loss from discontinued operations (net
of income taxes) -0- (121,385)
--------- ----------
Net income (loss) $(390,905) $ (153,552)
--------- ----------
--------- ----------
Net income (loss) per common share (0.156) (0.009)
--------- ----------
--------- ----------
Weighted average common shares outstanding 2,502,104 17,424,299
--------- ----------
--------- ----------
See accompanying notes to condensed consolidated financial statements
4
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RYAN-MURPHY INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS
ENDED MARCH 31,
----------------------
1996 1995
--------- ---------
Net cash provided by (used in) operating
activities $ (17,781) $ 98,538
--------- ---------
Cash flows from investing activities:
Cash proceeds from long term lease
receivable -0- 41,335
--------- ---------
-0- 41,335
--------- ---------
Cash flows from financing activities:
Cash proceeds from debt issuance 46,862 1,010,232
Debt service payments (135,148) (900,212)
Debt service payments to related parties -0- (200,000)
--------- ---------
(88,286) 89,980
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Net increase (decrease) in cash and cash
equivalents (106,067) 49,893
Cash and cash equivalents, beginning 152,027 158,363
--------- ---------
Cash and cash equivalents, ending 45,960 208,256
--------- ---------
--------- ---------
See accompanying notes to condensed consolidated financial statements
5
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RYAN-MURPHY INCORPORATED
Notes to Condensed Consolidated Financial Statements
March 31, 1996
Note A. CONDENSED FINANCIAL STATEMENTS
The condensed consolidated balance sheets as of March 31, 1996 and
December 31, 1995, the condensed consolidated statements of operations
for the three months periods ended March 31, 1996 and March 31, 1995,
and the condensed consolidated cash flows for the three month periods
ended March 31, 1996 and March 31, 1995 have been prepared by the
Company without audit. The Condensed Consolidated Financial
Statements and Notes include the wholly owned subsidiary RMI Americas,
C.A. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the
financial position as of March 31, 1996 and for all periods presented,
have been made. The financial statements for the prior years and/or
periods have been reclassified to conform with the current year's
presentation.
Note B: RELATED PARTY TRANSACTIONS
As of March 31, 1996 the indebtedness to the related parties was
$31,500.
Note C: RESTRICTED CASH
The Company had restricted cash certificates of deposits totalling
$42,880 as of March 31, 1996. These certificates were collateral for
payment and performance bonds.
Note D: INVENTORIES
Inventories consisted of the following at March 31, 1996:
Costs in excess of billings on uncompleted contracts $14,460
Supplies 74,245
-------
Total $88,705
-------
-------
Note E: BILLINGS IN EXCESS OF COSTS ON UNCOMPLETED CONTRACTS
Included in other current liabilities in the accompanying financial
statements at March 31, 1996 are billings in excess of costs on
uncompleted contracts totalling $7,045.
Note F: PREFERRED STOCK
The Company's Articles of Incorporation authorize up to 5,000,000
Preferred Shares, to have such classes, par value, and preferences as
the Company's Board of Directors may determine from time to time. As
of March 31, 1996, no Preferred Shares are issued or outstanding.
6
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RYAN-MURPHY INCORPORATED
Notes to Condensed Consolidated Financial Statements
March 31, 1996
Note G: COMMON STOCK
There were 500,000,000 shares of $0.000067 par value common stock
authorized and 2,502,104 shares issued and outstanding at March 31,
1996. Effective February 12, 1996, the Company implemented a one-for-
thirty reverse split of the Company's common shares. This reverse
split had been approved and ratified by the Company's shareholders at
the shareholders' meeting on October 5, 1995, subject to Board
implementation.
Note H: STOCK OPTIONS
The Company has issued incentive stock options to employees and
officers for 59,168 shares of stock at various exercise prices from
$3.00 - $18.90 per share. Of the 59,168 stock options that were
outstanding at December 31, 1995, 56,668 were issued to two vice
presidents and are exercisable at $3.00 per share.
Note I: GOING CONCERN AND SUBSEQUENT EVENTS
The financial statements have been prepared on the assumption that the
Company will continue as a going concern. The Company has not been
profitable since the year ended January 31, 1992. Its current
liabilities exceed its current assets by $1,746,002 at March 31, 1996
and $1,313,956 at December 31, 1995. Management has addressed the
viability of the Company very aggressively.
As part of resolving the viability of the Company, Management brought
in Mr. Bruce Hissom as President, CEO and Treasurer during the last
quarter of 1995. Mr. Hissom brought in his Venezuelan project and
assets and new technologies. As the result of the new assets,
technology and management, the Company accepted a financing engagement
on March 21, 1996, which provided an initial $250,000 bridge loan.
The financing engagement provides for advising and assisting the
Company with short-term financing, engaging market makers, seeking
additional investment houses, and other financing options which may
include additional public offerings. The investment advisor is
prepared to assist the Company in raising $3,000,000 or more. The
financing engagement states the financing company anticipates
assisting the Company in the scheduling and preparation of
presentations to qualified institutional investors in preparation for
a $3,000,000 to $6,000,000 public offering of the Company's
securities. The financing company also anticipates managing, or
engaging a manager for such an offering within twelve months to
provide the Company with long-term financing. The Company plans to
use the $250,000 bridge loan financing to pay some past due debts, and
for current working capital. The Company anticipates needing
additional bridge capital within 120 days. The finance company has
asked the Company to acquire one or more contracts for additional
7
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financing. The Company is in negotiation with several companies and
governmental entities, although no definitive agreement has been
signed as of the date hereof.
The Company is also negotiating a separate fund for the Land division,
and expects to have a definitive agreement within 90 days.
On April 10, 1996, the Company's wholly owned subsidiary, RMI
Americas, C.A. received a Certificate of Occupancy permit from the
Municipality of Caroni, Venezuela to commence treatability studies and
present design parameters for a thermal treatment facility at the new
location. In addition, the Company received a Certificate of
Occupancy to present design parameters for a 3,100 acre security
landfill to be located on the outskirts of the Municipality of Caroni,
Venezuela. The Company currently has an option to purchase the land
subject to the permits.
8
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RYAN-MURPHY INCORPORATED
Part I. Item II.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Environmental Construction Management division had revenue of $148,478
and gross profit (loss) from operations of ($35,078) for the three months
ended March 31, 1996 compared to revenue of $1,239,951 and gross profit from
operations of $166,080 for the three months ended March 31, 1995. The
decrease in revenues and gross profit was due to decreased volume from the
Company's core customer, decreased volume and profits in the California
office and an overall change in operations of the entire Company. The
California office was officially closed as of March 31, 1996.
The Good Earth Machine division had revenue of $15,303 and gross profit
(loss) from operations of ($10,331) for the three months ended March 31, 1996
compared to revenue of $685,407 and gross profit from operations of $62,443
for the three months ended March 31, 1995. The only revenue for the current
three month period was the sale of parts. The Company currently has a number
of prospective machine sales and/or joint ventures for work.
The new Technologies division, which was organized after Mr. Bruce Hissom
became President of the Company, has not entered into any contracts. The
Company currently is negotiating several contracts, however, none have been
signed as of this date.
The new Land division, which was organized after Mr. Bruce Hissom became
President of the Company, has submitted several proposals, and is in the
investigative stage for several projects.
The Company had a net profit (loss) after taxes of ($390,905) for the three
months ended March 31, 1996 compared to ($153,552) for the three months ended
March 31, 1995. The increase in net loss was caused by the closing down of
the California office and the change in emphasis from underground storage
tank removals to new remediation technologies in the new Technologies
division and the acquisition, remediation and subsequent disposal of
environmentally impaired properties in the new Land division. The business
and profits from the two new divisions is expected to start in the third
quarter of 1996.
Net cash flows from (used in) operations was ($17,781) for the three months
ended March 31, 1996 compared to $98,538 for the three months ended March 31,
1995. Major sources of operating cash were Accounts Receivable, Accounts
Payable, Deferred Payrolls, and non cash charges of depreciation and
amortization. Major use of operating cash was an increase in Billings In
Excess Of Costs. Financing activities provided $46,862 compared to $41,335
during the first three months of last year. Financing activities used
$135,148 compared to $1,100,212 during the first three months of last year.
Debt issuance accounts for the provision and debt service accounts for the
usage in both periods.
Additional consolidation and restructuring of Administrative and General
expenses are being considered which should decrease losses and increase cash
flow.
9
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The Company has not been profitable since the year ended January 31, 1992,
and has a net capital deficiency at March 31, 1996 that raises a substantial
doubt about its ability to continue as a going concern. Management has
addressed this issue very aggressively.
As part of resolving the viability of the Company, Management brought in Mr.
Bruce Hissom as President, CEO and Treasurer during the last quarter of 1995.
Mr. Hissom brought in his Venezuelan project and assets and new technologies.
As the result of the new assets, technology and management, the Company
accepted a financing engagement on March 21, 1996, which provided an initial
$250,000 bridge loan. The financing engagement provides for advising and
assisting the Company with short-term financing, engaging market makers,
seeking additional investment houses, and other financing options which may
include additional public offerings. The investment advisor is prepared to
assist the Company in raising $3,000,000 or more. The financing engagement
states the financing company anticipates assisting the Company in the
scheduling and preparation of presentations to qualified institutional
investors in preparation for a $3,000,000 to $6,000,000 public offering of
the Company's securities. The financing company also anticipates managing,
or engaging a manager for such an offering within twelve months to provide
the Company with long-term financing. The Company plans to use the $250,000
bridge loan financing to pay some past due debts, and for current working
capital. The Company anticipates needing additional bridge capital within
120 days. The finance company has asked the Company to acquire one or more
contracts for additional financing. The Company is in negotiation with
several companies and governmental entities, although no definitive agreement
has been signed as of the date hereof.
The Company is also negotiating a separate fund for the Land division, and
expects to have a definitive agreement within 90 days.
On April 10, 1996, the Company's wholly owned subsidiary, RMI Americas, C.A.
received a Certificate of Occupancy permit from the Municipality of Caroni,
Venezuela to commence treatability studies and present design parameters for
a thermal treatment facility at the new location. In addition, the Company
received a Certificate of Occupancy to present design parameters for a 3,100
acre security landfill to be located on the outskirts of the Municipality of
Caroni, Venezuela. The Company currently has an option to purchase the land
subject to the permits.
10
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RYAN-MURPHY INCORPORATED
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is a defendant in a lawsuit brought by Key Bank of
Colorado in the Colorado State District Court for the City and County
of Denver. The bank alleges the Company owes the bank approximately
$155,571 on a revolving line of credit negotiated with the bank in
1992. The bank did not renew the line of credit in 1995 and declared
the note in default. The Company was current on all payments at
renewal date. The Company asserted certain counterclaims as a set-off
to amounts which may be owed to the bank. The Court granted the
Plaintiff's Motion for Summary Judgment on the issue of the Company's
default of the note and the right to foreclose on the Company's
security agreement. The Court also granted a Motion for Summary
Judgment regarding certain defenses and one claim of relief which the
Company raised, but denied a Motion for Summary Judgment and let stand
the remaining affirmative defenses and claims for relief and the
Company's remaining counterclaims. The Company has been negotiating
with the bank for a final settlement, and believes a final settlement
will be agreed to, however, there can be no guarantee of a
satisfactory payment schedule.
The Company is a defendant in a lawsuit brought by Price Property and
Investments LLC in Colorado State District Court, Adams County,
Colorado. The Company borrowed $315,000 from the Plaintiff in 1990 on
a lease purchase/finance agreement. The Plaintiff renewed this
original agreement with a note in the amount of $320,000. The Company
has paid the Plaintiff approximately $566,570 in payments against the
original agreement and subsequent note. The Plaintiff alleges a
default of the note for an approximate amount of $298,752. The
Company has asserted, as a defense against the Plaintiff, that the
note has been paid in full. The Court granted the Plaintiff's Motion
for Summary Judgment on April 18, 1996 regarding the replevin and the
foreclosure upon the security interest in the property at issue. The
Company has been in contact with the Plaintiff and believes a
satisfactory payment schedule can be arranged, however, there can be
no guarantee of a satisfactory payment schedule.
The Company is also a defendant in several other legal proceedings in
the ordinary course of business.
Item 2. CHANGES IN SECURITIES
not applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
not applicable
11
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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
not applicable
Item 5. OTHER INFORMATION
not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
none
Item 7. FORM S-3
none
12
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RYAN-MURPHY INCORPORATED
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RYAN-MURPHY INCORPORATED
(Registrant)
Date: 5-13-96 /s/ BRUCE T. HISSOM
------------------------------------
Bruce T. Hissom
President
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATION FOUND
ON PAGES 3 - 5 OF THE COMPANY'S FORM 10Q FOR THE QUARTER ENDED MARCH 31, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<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> 46
<SECURITIES> 0
<RECEIVABLES> 223
<ALLOWANCES> 12
<INVENTORY> 89
<CURRENT-ASSETS> 339
<PP&E> 1663
<DEPRECIATION> 38
<TOTAL-ASSETS> 3682
<CURRENT-LIABILITIES> 2085
<BONDS> 0
0
0
<COMMON> 5
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3682
<SALES> 164
<TOTAL-REVENUES> 164
<CGS> 209
<TOTAL-COSTS> 209
<OTHER-EXPENSES> 340
<LOSS-PROVISION> 7
<INTEREST-EXPENSE> (1)
<INCOME-PRETAX> (391)
<INCOME-TAX> 0
<INCOME-CONTINUING> (391)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (391)
<EPS-PRIMARY> (0.156)
<EPS-DILUTED> (0.156)
</TABLE>
