SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 0-16322
-------
ECOS GROUP, INC.
(Name of small business issuer as specified in its charter)
Colorado 84-1061207
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
99 SE Fifth Street, Fourth Floor
Miami, Florida 33131
-------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (305) 374-8300
--------------
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 December 31, 1997, the Company had a total of 22,156,493 common stock,
$.012 par value, outstanding.
Transitional Small Business Disclosure format (check one): Yes No X
-- --
1
<PAGE>
ECOS GROUP, INC.
INDEX
Page
Part I. Financial information
Item 1. Financial statements:
Consolidated balance sheets
- December 31, 1997 and March 31, 1997 3
Consolidated statements of operations
- Three & Nine months Ended December 31, 1997 and 1996 4
Consolidated statements of cash flows
- Nine months Ended December 31, 1997 and 1996 5
Notes to financial statements 6-10
Item 2. Management's Discussion and Analysis or
Plan of Operation 10-12
II: Other Information 12
Signatures
2
<PAGE>
ECOS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
December 31, 1997 March 31, 1997
----------------- --------------
<S> <C> <C>
Current Assets
Cash and equivalents $ 119,113 $ 45,778
Restricted cash 10,039 9,080
Marketable securities 140,000 140,000
Accounts receivable net of allowance of $324,711 and $320,106 777,176 814,772
Note receivable 93,878 250,000
Net assets of discontinued operations - 1,433,606
Prepaid expenses & other 81,408 131,911
------------------- ---------------
Total current assets 1,221,614 2,825,147
Amounts due under state reimbursement program 580,419 650,158
Property and equipment, net 331,871 587,304
Goodwill, net of amortization of $1,571,754 and $869,295 358,211 6,509,328
Other assets 21,350 22,477
------------------- ---------------
Total assets $ 2,513,465 $ 10,594,414
=================== ===============
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities:
Accounts payable $ 1,125,787 $ 876,818
Accrued expenses 361,742 477,614
Related party notes payable and advances 216,664 1,075,000
Current portion of capital lease obligation & notes payable 40,961 262,929
------------------- ---------------
Deferred revenues - -
Total current liabilities 1,745,154 2,692,361
Notes payable, net of current portion 1,021,983 605,680
Commitments and contingencies
Stockholders equity:
Preferred stock:
Series A $.001 par value, 5,000,000 authorized,
none issued and outstanding
Series B convertible, $.01 par value, 1,000,000 authorized,
issued and outstanding
Common stock, $.012 par value, 75,000,000 authorized,
22,156,493 and 17,597,626 issued and outstanding; respectively 265,878 211,172
Additional paid - in - capital 16,951,017 16,125,228
Net unrealized loss on marketable securities (10,000) (10,000)
Accumulated deficit (17,460,567) (9,030,027)
Total stockholders equity (253,672) 7,296,373
------------------- ---------------
Total liabilities & stockholders equity $ 2,513,465 $ 10,594,414
=================== ===============
</TABLE>
3
<PAGE>
ECOS GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Three and Nine Months Ended December 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
Environmental Consulting $ 1,193,070 $2,063,071 $ 3,679,843 $4,590,606
Cost of Environmental Services
Direct labor and employee benefits 329,755 598,805 1,179,418 1,600,692
Other direct costs and expenses 383,157 513,395 951,708 1,002,028
------------ ------------ ------------- ------------
Total direct costs and expenses 712,912 1,112,200 2,131,126 2,602,720
Gross profit 480,158 950,871 1,548,717 1,987,886
------------ ------------ ------------- ------------
General, adminstrative and other operating costs 1,191,430 848,429 2,751,405 2,412,999
Reserve for restructuring - - - 350,000
Total other costs and expenses 1,191,430 848,429 2,751,405 2,762,999
------------ ------------ ------------- ------------
Operating Income (Loss) (711,272) 102,442 (1,202,688) (775,113)
------------ ------------ ------------- ------------
Other income (expense)
Interest, net (28,172) - (97,968) (23,049)
Other income, net (86,419) 4,376 (56,858) 18,507
------------ ------------ ------------- ------------
(114,591) 4,376 (154,826) (4,542)
Net Income (loss) before taxes (825,863) 106,818 (1,357,514) (779,655)
Provision for income taxes - - - -
------------ ------------ ------------- ------------
Loss from continuing operations (825,863) 106,818 (1,357,514) (779,655)
------------ ------------ ------------- ------------
Discontinued operations
Loss - discontinued operations - (397,240) (666,240) (644,443)
Gain (loss) on disposal - - (6,406,786) 509,037
------------ ------------ ------------- ------------
Income (loss) before extraordinary items (825,863) (290,422) (8,430,540) (915,061)
------------ ------------ ------------- ------------
Loss before extraordinary items
Net gain on vendor settlements - - - 280,981
Net gain on payroll tax settlement - - - 934,091
------------ ------------ ------------- ------------
Net income (loss) $ (825,863) $ (290,422) $ (8,430,540) $ 300,011
============ ============ ============= ============
Income (loss) per share from:
Continuing operations (0.04) (0.02) (0.07) (0.04)
Discontinued operations - (0.43) 0.03
Extraordinary items - 0.07
</TABLE>
4
<PAGE>
ECOS GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended December 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Operating Activities
Net income (loss) $ (8,430,540) $ 300,011
-------------- ------------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 413,741 449,858
Gain on sale of equipment - (1,000)
Loss on write down of equipment 138,787 -
Other - 22,875
Discontinued operations - (509,036)
Write down of goodwill 5,862,777 -
Extraordinary items - (1,228,203)
Write down of net assets of discontinued operations 1,433,606 -
Changes in operating assets and liabilities:
Increase (decrease) in accounts receivable 37,596 (192,472)
Increase (decrease) in prepaid expenses and other assets 206,625 (69,361)
Increase (decrease) in amounts due from state reimbursement program 69,739 (71,065)
Increase (decrease) in other non-current assets 1,127 219,164
Increase (decrease) in accounts payable 248,969 (567,231)
Increase (decrease) in accrued liabilities (115,871) 76,421
Increase (decrease) in payroll taxes - (446,547)
--------------- ------------
8,297,096 (2,316,597)
Net cash provided by (used in) continuing operations (133,444) (2,016,586)
--------------- ------------
Investing activities:
Restricted cash (959) 136,901
Payment for purchase of American Remedial Technologies, Inc.
net of cash acquired - (5,968,827)
Proceeds from disposal of discontinued
operations, net of expenses - 1,047,007
Purchases of equipment (8,756) (130,426)
Proceeds from disposal of equipment - 1,000
--------------- ------------
Net cash provided by (used in) investing activities (9,715) (4,914,345)
--------------- ------------
Financing activities:
Proceeds from original issuance of stock 879,798 8,100,000
Proceeds from warrant exercise 696 337,500
Costs associated with issuance of stock (805,758)
Proceeds from notes payable 185,125 562,800
Proceeds from related party notes payable 1,158,048
Payments on capital lease obligations (1,271,943)
and notes payable (360,125) (328,780)
Payments on related party notes payable (489,000) -
Net cash provided by (used in ) financing activities 216,494 7,751,867
--------------- ------------
Net increase (decrease) in cash 73,335 820,936
Cash, beginning of period 45,778 178,121
--------------- ------------
Cash, end of period $ 119,113 $ 999,057
=============== ============
Cash paid during the period for interest $ 20,453 $ 135,805
=============== ============
</TABLE>
5
<PAGE>
ECOS GROUP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. BUSINESS AND ORGANIZATION
The Company is a holding company whose sole subsidiary provides
environmental consulting services.
2. SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements: The accompanying unaudited financial
statements have been prepared in accordance with the instructions to
Form 10-QSB and do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. The consolidated balance sheet as of March 31,
1997 has been derived from the audited financial statements as of the
period ended March 31, 1997, but does not include all disclosures
required by generally accepted accounting principles. These balances are
reclassified to show the effect of the discontinued operations. In the
opinion of management, these statements reflect all adjustments,
consisting of normal recurring adjustments, considered necessary for a
fair presentation for the periods presented. Operating results for the
nine months ended December 31, 1997 are not necessarily indicative of
the results that may be expected for the year ended March 31, 1998.
These 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 period ended March 31, 1997.
Principles of Consolidation: The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries.
All intercompany balances and transactions have been eliminated.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Revenue Recognition: Consulting revenue is recognized as services are
performed.
Per share data: Per share data is based on the weighted average number
of shares of common stock, 22,156,493 and 19,138,718 for the quarters
ended December 31, 1997 and December 31, 1996, respectively. For the
period ended December 31, 1997, common stock equivalents have not been
included in the weighted average number of shares as they are
anti-dilutive. For the quarter ended December 31, 1996, 4,085,101 common
stock options and warrants which are common stock equivalents were
assumed to be exercised for computation of earnings per share.
6
<PAGE>
ECOS GROUP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Discontinued Operations: In October 1997, the Company entered into a
settlement of a default of a $500,000 loan to its subsidiary, American
Remedial Technologies Inc. ("ART"). The Company conveyed all the common
stock of ART to the holder of the loan as part of this settlement. The
Company has treated ART as discontinued operations for all periods
presented.
Costs of Closing Corporate Offices: In December 1997 the Company closed
it's corporate offices in West Palm Beach and consolidated it's
operations with Evans Environmental and Geological Sciences and
Management, Inc. in Miami, Florida. The Company wrote off $146,543 in
leasehold improvements and software development costs as a result of
this closure.
Evaluation of Goodwill: The Company evaluated the goodwill associated
with the acquisition of Enviropact Consultants, Inc. and other goodwill.
The analysis determined that the goodwill associated with the
acquisition of Enviropact Consultants, Inc. could not be supported by
the cash flow from the sole surviving operation in Clearwater, Florida.
The Company has chosen to write off this goodwill in the quarter ended
December 31, 1997. In addition, goodwill from the acquisition of the
Company in 1992 remained. Present operating performance and cash flow
analysis showed that this goodwill was not supported by the operating
cash flow. This goodwill is also written off in the quarter ended
December 31, 1997. After these evaluations the total amount of goodwill
written off is $414,120.
Accounts Receivable Allowance: The Company performed an evaluation of
the reserves for bad debt. The evaluation determined that the Company
needed to increase it's allowance for questionable accounts receivable.
The amount of the increase was $67,230. The increase is attributable to
the accounts receivables from the Florida Inland Protection Trust
Program.
3. COMMITMENTS AND CONTINGENCIES
Contingent Liability: The Company has been involved in various
discussions with a former private senior lender to the Company. The
purpose of these discussions has been to settle all outstanding
differences between the former lender and the Company regarding a
variety of matters, including, without limitation, the exercise price of
the former lender's outstanding warrants, amounts claimed to be owed to
the former lender for legal and financial advisory fees, shares claimed
to be owed to the former lender for the loan of funds and services
rendered, and claimed rights to additional shares of the Company's
stock. Although all cash amounts owed to the former lender for principal
and interest were paid in full in July 1996, the former lender has
continued to make further demands on the Company as well as asserting
enforceability of claimed agreements. Although the Company has rejected
the validity of all such claims it has agreed to reach an accommodation
with the former lender on some of these claims solely for the purpose of
reaching a definitive settlement of all outstanding differences. To date
7
<PAGE>
ECOS GROUP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
the former lender has not agreed to any settlement. The Company is
unable to foresee the ultimate outcome of this matter.
4. RELATED PARTY DEBT
In June 1995, the Company borrowed $85,000 from Lisa Robbins, the
spouse of Dr. Charles Evans, the Chairman of the Board of Directors.
The note is due upon demand and bears interest at 12% per annum.
Dr. Evans disclaims any beneficial interest in the loan. The present
balance of this note is $50,000.
On December 31, 1996 the Company borrowed $1,000,000 from Mr. Michael
Klein, a shareholder and director of the Company pursuant to a one year
promissory note bearing interest at 14% per annum. For the first three
months of the note, while the Company sought alternative long-term
financing, the note was unsecured with interest only payable monthly.
Commencing March 1997, monthly payments of principal and interest were
required until maturity in December 1997, and the note was secured with
all trade accounts receivable of the Company. This note was repaid on
May 5, 1997 from proceeds of a $1,000,000 loan received from Mr. Sam
Klein, the father of Michael Klein. This latter was modified to a three
month promissory note maturing on August 5, 1997, with monthly interest
only payable at 12% per annum. The note was secured by all trade
receivables of the Company. On September 23, 1997, the Company received
a notice of its default on this note for nonpayment of principal and
interest. The Company settled its default by delivering a $608,000
promissory note dated October 29, 1997 in favor of Mr. Sam Klein,
bearing interest at 12% per annum with quarterly principal and interest
payments, and issuing 2,666,667 shares of the Company's Common Stock to
Mr. Klein. The new note and issuance of stock extinguishes the
$1,000,000 promissory note dated May 5, 1997.
5. GOING CONCERN CONSIDERATION
The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. The Company has
suffered significant net losses for the years ended March 31, 1997 and
1996. At December 31, 1997 its current liabilities exceed its current
assets. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management is instituting the
following measures to improve this situation:
1. Continue cost reduction measures at all operating divisions.
2. Engage various parties to raise capital for the company.
Management is implementing its plans. These measures, if successful are
expected to result in positive working capital for the year ended March
31, 1998; however,
8
<PAGE>
ECOS GROUP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
actual results may differ and there can be no assurance that such plans
will be effective.
In the absence of profitable operations or obtaining additional debt or
equity financing, the Company may not have sufficient funds to continue
operations through the fiscal year ended March 31, 1998.
6. CHANGE IN ACCOUNTING STANDARDS
In February, 1997, the Financial Accounting Standards Board (the FASB)
issued Statement of Financial Accounting Standards No. 128, Earnings
Per Share (FAS 128). FAS 128 specifies new standards designed to
improve the EPS information provided in financial statements by
simplifying the existing computational guidelines, revising the
disclosure requirements, and increasing the comparability of EPS data
on an international basis. Some of the changes made to simplify the EPS
computations include: (a) eliminating the presentation of primary EPS
and replacing it with basic EPS, with the principal difference being
that common stock equivalents (CSEs) are not considered in computing
basic EPS, (b) eliminating the modified treasury stock method and the
three percent materiality provision, and ( c) revising the contingent
share provisions and the supplemental EPS data requirements. FAS 128
also makes a number of changes to existing disclosure requirements. FAS
128 is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods. The Company does
not believe that the impact from the implementation of FAS 128 to be
significant on EPS presentation for the periods presented herein.
Forward Looking Statements: From time to time, the Company may publish
forward-looking statements relating to such matters as anticipated
financial performance, business prospects, technological developments,
new products, research and development activities and similar matters.
With respect to this Quarterly report, statements included in
Management's Discussion and Analysis or Plan of Operation and in the
Notes to the Consolidated Financial Statements, which are not historical
in nature, are intended to be and are hereby identified as "forward
looking statements" for purposes of the safe harbor by the Private
Securities Litigation Reform Act of 1995. In order to comply with the
terms of the safe harbor, the Company notes that a variety of factors
could cause the Company's actual results and experience to differ
materially from the anticipated results or other expectations expressed
in the Company's forward-looking statements. The risks and uncertainties
that may affect the operations, performance, development and results of
the Company's business include the following: (I) changes in legislative
enforcement and direction, (II) unusually bad weather conditions, (III)
unanticipated delays in contract execution, (IV) sudden loss of key
personnel, (V) abrupt changes in competition, and (VI) decisions by the
Company's lenders to demand the Company's indebtedness.
9
<PAGE>
ECOS GROUP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Results of Operations: Total comparable revenues for environmental
consulting decreased $910,763 or 19.8% from $4,590,606 to $3,679,843 for
the nine months ended December 31, 1996 and 1997, respectively. For the
quarter ended December 31, 1996 and 1997, comparable revenues dropped
from $2,063,071 to $1,193,070 respectively. This 42.2% decrease in
revenues represents an $870,001 change. This decrease is a result of
environmental consulting revenue provided in the quarter ending December
31, 1996 related to Hurricane Fran, this revenue totaled $900,000.
Direct costs decreased $471,594 or 18.1 % from $2,602,720 to $2,131,126
for the nine months ended December 31, 1996 and 1997, respectively. For
the quarter ended December 31, 1996 and 1997, direct costs decreased
over 35.9% from $1,112,200 to $712,912, respectively. This decrease in
direct costs amounts $399,288. Direct costs consist of all professional
and technical labor, employee benefits, subcontractor, supplies and
other revenue generating expenses. The decreases in direct costs for the
nine months ended as well as for the quarter ended December 31, 1997,
compared to December 31, 1996, are attributable to decreased labor and
operating costs related to the restructuring undertaken in August 1996.
Gross profit decreased $439,169 or 22.1% from $1,987,886 to $1,548,717
for the nine months period ended December 31, 1996 and 1997,
respectively. Gross profit as a percentage of revenue decreased from 43%
to 42% for the nine month period ended December 31, 1996 and 1997,
respectively. This decrease is worthwhile to note as the 1996 numbers
contain revenues from Hurricane Fran. Gross profit fell $470,713 or
49.5% from $950,871 to $480,158 for the quarter ended December 31, 1996
and 1997, respectively. Gross profit as a percentage of revenue
decreased from just over 46% to 40% for the quarter ended December 31,
1996 and 1997, respectively. The decrease in gross profit for the
quarter is attributable to the project work related to Hurricane Fran
and it's $900,000 impact on revenues in the same quarter of 1996.
Comparable general administrative and other operating costs increased
$338,406 or 14% from $2,412,999 to $2,751,405 for the nine months ended
December 31, 1996 and 1997, respectively. This increase is attributable
to the write off of goodwill and assets in the parent company. These
write offs totaled $560,663. The comparable quarter adjusted for these
impacts would provide for a decrease of $222,257 or 9% from $2,412,999
to $2,190,742. For the quarter ended December 31, 1997, general,
administrative and other operating costs rose $343,001 or 40.4% to
$1,191,430 as compared to $848,429 for the quarter ended December 31,
1996. The comparable quarter adjusted for the impacts of goodwill and
corporate office closing reflects general and administrative expense
declining by $217,662 from $848,429 to $630,767 for the quarter ended
December 31, 1996 and 1997, respectively. This reflects a 25% decrease
in general and administrative expense.
10
<PAGE>
ECOS GROUP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
The nine months ended December 31, 1996 includes several non-recurring
operating transactions and extraordinary items totaling a net gain of
approximately $865,000. One of these non-recurring transactions was a
charge to earnings of $350,000 for the Company's restructuring plans
initiated in the First Quarter ended June 30, 1996, for the streamlining
of functions and integration with ART. During the 96 Quarter, the
Company settled with certain creditors who accepted a payout of $.20 for
each $1.00 of their allowed claim. This settlement resulted in a net
gain of $280,981. In addition, on June 28, 1996, the Consulting Division
completed an Offer in Compromise Agreement with the IRS settling all
disputes related to delinquent payroll taxes. As a result of this
settlement, the Company reported a gain of $934,091, net of professional
fees and costs.
The net loss of $8,430,540 for the nine months ended December 31, 1997
is a $8,730,551 increase from the net income of $300,011 reported for
the same period at December 31, 1996. The loss from discontinued
operations of $666,240 combined with the loss on disposal of $6,406,786
which is attributable to the disposition of ART, reported in the nine
months ended December 31, 1997 accounts for $7,073,026 of the net loss
for the period and for over 81 % of the change from December 31, 1996 to
December 31, 1997. The net loss increased $535,441 from a loss of
$290,422 to a loss of $825,863 for the quarter ended December 31, 1996
and 1997, respectively. The loss for the quarter taking into account the
write off of goodwill, assets and increasing the accounts receivable
reserves would be $197,170 or a decrease in net loss of $92,452. The
quarter ending December 31, 1996 had project revenues related to
Hurricane Fran of $900,000.
Liquidity and Capital Resources: The Company had a working capital
deficit of $523,541 at December 31, 1997 compared to a working capital
deficit of $132,786 at March 31, 1997. This reflects a working capital
decrease of $390,755. Historically the Company has experienced capital
and liquidity problems and no assurances can be given that for the
future the Company will not continue to have these shortages.
Cash flow used in operating activities was $133,444.
Net cash used in investing activities of $9,715 consisted mainly of
purchases of equipment of $8,795. The net cash provided by financing
activities of $216,494, includes $879,798 from the conversion of the
promissory note of Mr. Sam Klein. into 2,666,667 shares of ECOS Group,
Inc. Common Stock. The cash and equivalents at December 31, 1997 was
$119,113.
The Company has no material commitments for capital expenditures.
11
<PAGE>
ECOS GROUP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
The Company intends to fund its current operations from the combination
of cash on hand, cash generated from operations, potential sale of
equity and/or assets, as well as costs savings generated from its
continued cost reduction measures. These sources of capital are expected
to largely fund the Company's current operations through March 31, 1998.
Management expects a return to profitability in Fiscal 1999; however, if
the Company does not return to profitability, and absent alternative
sources of financing, there would be a material adverse effect on the
financial condition, operations and business prospects of the Company.
The Company has no arrangements in place for alternative sources of
financing, and there can be no assurance that any such financing will be
available at all or on terms acceptable to the Company.
Part II: Other Information
The Company has negotiated the default of the May 5, 1997, note for
$1,000,000 to a five year promissory note for $608,000 and the balance
converted to shares of Common Stock of ECOS Group, Inc. (see related
party debt for further details.)
This settles all instances of default for ECOS Group, Inc.
NASDAQ Delisting: The Company shares were delisted from the NASDAQ Small
Cap Market effective January 2, 1998. The Company did not meet NASDAQ
requirements for total capital and surplus of $2,000,000. The Company's
plan for maintaining compliance with NASDAQ listing requirements was
rejected and the Company received notification of delisting December 17,
1997.
ITEM 6. REPORTS ON FORM 8-K
One report was filed on Form 8-K reporting the sale of the Company's
subsidiary American Remedial Technologies, Inc..
SIGNATURES
/s/ Michael Baker
Chief Financial Officer
ECOS Group, Inc.
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ECOS Group, Inc.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 119,113
<SECURITIES> 140,000
<RECEIVABLES> 777,176
<ALLOWANCES> 324,711
<INVENTORY> 0
<CURRENT-ASSETS> 1,221,614
<PP&E> 331,871
<DEPRECIATION> 819,023
<TOTAL-ASSETS> 2,513,465
<CURRENT-LIABILITIES> 1,745,154
<BONDS> 0
0
1,000,000
<COMMON> 22,156,493
<OTHER-SE> (253,672)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 1,193,070
<TOTAL-REVENUES> 1,193,070
<CGS> 712,912
<TOTAL-COSTS> 1,904,342
<OTHER-EXPENSES> 86,419
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,172
<INCOME-PRETAX> (825,863)
<INCOME-TAX> 0
<INCOME-CONTINUING> (825,863)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (825,863)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.02)
</TABLE>
