UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended NOVEMBER 30, 1997 Commission File No.00019678
- --------------------------------------------------------------------------------
ETS INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 54-1414643
- --------------------------------------------------------------------------------
State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1401 Municipal Road, NW, Roanoke, Virginia 24012
- --------------------------------------------------------------------------------
(Address) (Zip Code)
Registrant's telephone number, including area code (540) 265-0004
- --------------------------------------------------------------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year if changed since last
report)
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 subject to the filing requirements for at
least the past 90 days.
Yes x No
--------- ---------
Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the close of the period covered by this report.
Class Number of Shares Outstanding
Common Stock 15,588,871
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ETS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
NOVEMBER 30,1997 MAY 31, 1997
---------------- ------------
ASSETS (unaudited) (audited)
Current assets:
Cash and cash equivalents $ 885,402 $ 94,734
Accounts receivable:
Trade (net of allowance of $62,099
in 1998 and $119,424 in 1997 3,884,576 4,809,128
U.S. Government agencies 1,216 79,661
Other 347,183 151,341
----------- -----------
4,232,975 5,040,130
Costs and estimated earnings in excess of
billings on uncompleted contracts 1,394,479 1,325,954
Notes receivable from officers 0 64,694
Inventory 1,003,780 771,788
Prepaid expenses 402,959 516,974
----------- -----------
Total current assets 7,919,595 7,814,274
Property, plant and equipment:
Furniture and fixtures 744,973 984,463
Laboratory equipment 833,406 2,829,277
Machinery, tools and equipment 3,720,108 3,138,372
Vehicles 1,800,364 1,845,518
Leasehold improvements 508,841 788,051
----------- -----------
7,607,692 9,585,681
Less accumulated depreciation 4,954,706 6,505,254
----------- -----------
Property, plant and
equipment, net 2,652,986 3,080,427
Other assets:
Goodwill (net of accumulated amortization
of $36,571 in 1998 and $28,091 in 1997) 218,647 227,155
Notes receivable from officers 354,554 344,152
Prepublication costs (net of accumulated
amortization of $335,965 in 1998 and
$322,646 in 1997) 196,296 208,890
Patents granted (net of accumulated
amortization of $36,582 in 1998 and
$33,190 in 1997) 74,155 77,546
Patents pending 62,173 65,905
Cash value of life insurance 33,477 142,728
Other assets 228,980 343,472
----------- -----------
1,168,282 1,409,848
Assets of business transferred under
contractual arrangements 1,345,146 0
----------- -----------
$13,086,009 ` $12,304,549
=========== ===========
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
NOVEMBER 30,1997 MAY 31, 1997
---------------- ------------
(unaudited) (audited)
Current liabilities:
Bank overdraft $ 0 $ 44,560
Notes payable to bank 89,837 89,837
Notes payable to stockholders 3,200,000 2,000,000
Notes payable to affiliates 584,159 289,159
Current portion of long-term debt 373,967 493,012
Accounts payable 2,795,722 3,198,194
Accrued expenses and other liabilities 660,844 431,467
Common stock to be repurchased (including
interest of $38,750), 269,565 shares;
issued and outstanding 0 409,642
---------- ----------
Total current liabilities 7,704,529 6,955,871
Long-term debt 931,258 861,673
Notes payable to affiliates 0 201,458
Deferred gain on sale/leaseback 583,257 735,412
Liabilities of business transferred under
contractual arrangements 149,165 0
---------- ----------
Total liabilities 9,368,209 8,754,414
Common stock subject to repurchase
agreement, 269,565 shares 0 387,500
Stockholders' equity:
Common stock, no par value; authorized
30,000,000 shares; issued and outstanding
15,588,871 and 14,215,823 at November 30,
1997 and May 31, 1997, respectively 5,836,846 5,002,129
Preferred stock, no par value; authorized
5,000,000 shares, none issued and
outstanding 0 0
Retained earnings (accumulated deficit) (2,119,046) (1,839,494)
---------- ----------
Total stockholders' equity 3,717,800 3,162,635
$13,086,009 $12,304,549
=========== ===========
<PAGE>
<TABLE>
ETS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30 NOVEMBER 30 NOVEMBER 30 NOVEMBER 30
1997 1996 1997 1996
----------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C>
Contract revenues:
U.S. Government agencies $ 0 $ 0 $ 0 $ 0
Commercial 5,057,523 5,055,469 10,649,744 10,508,173
----------- ---------- ---------- ----------
5,057,523 5,055,469 10,649,744 10,508,173
Cost of goods and services 4,084,885 4,195,892 8,368,634 8,692,304
----------- ---------- ---------- ----------
Gross profits 972,638 859,577 2,281,110 1,815,869
Selling, general and
administrative expenses 798,942 554,266 1,508,980 1,331,377
----------- ---------- ---------- ----------
Net operating income 173,696 305,311 772,130 484,492
Miscellaneous income 15,218 5,779 25,360 13,353
Interest expense ( 221,339) ( 57,750) ( 467,350) ( 118,502)
----------- ----------- ----------- -----------
Income (loss) from
continuing operations ( 32,425) 253,340 $ 330,140 $ 379,343
Loss from discontinued
operations ( 316,941) ( 83,882) ( 609,692) ( 108,764)
----------- ----------- ---------- ----------
Net income (loss) ($ 349,366) $ 169,458 ($ 279,552) $ 270,579
=========== =========== ========== ==========
Net Income (loss) per common share:
Primary $ (.02) $ .01 $ (.02) $ .02
Fully debuted $ (.02) $ .01 $ (.02) $ .02
Average shares of common stock used for the above calculation:
Primary 15,960,641 13,006,357 15,882,911 12,926,304
Fully diluted 15,960,641 13,006,357 15,882,911 12,926,304
</TABLE>
<PAGE>
ETS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
QUARTER ENDED NOVEMBER 30, 1997
Retained
Earnings
Common Stock Accumulated
Shares Amount (Deficit)
---------- ----------- ------------
(unaudited) (unaudited) (unaudited)
Balances at May 31, 1997 14,215,823 $ 5,002,129 ($ 1,839,494)
Conversion of convertible debentures 724,818 257,018
Proceeds from exercise of employee
Stock options 20,000 10,000
Cancellation of previous agreement to
repurchase stock issued pursuant to
an asset purchase 269,565 387,500
Net Income 69,814
---------- ----------- ------------
Balances at August 31, 1997 15,230,206 $5,656,647 ($ 1,769,680)
Conversion of convertible debentures 299,948 104,795
Exchange for goods and services 58,717 36,405
Discount on issuance of 225,000 warrants 38,999
Net Income (loss) ( 349,366)
---------- ----------- ------------
Balances at November 30, 1997 15,588,871 $5,836,846 ($ 2,119,046)
<PAGE>
<TABLE>
ETS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>
<S> <C>
SIX MONTHS ENDED
NOVEMBER 30,1997 NOVEMBER 30,1996
---------------- ----------------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income (loss) from continuing
operations 330,140 $ 270,579
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 301,190 420,237
Amortization of deferred gain on
sale/leaseback ( 152,155) ( 152,154)
Amortization of convertible debentures
discount 336,429 0
Increase or decrease in operating assets
and liabilities:
Accounts receivable 309,361 ( 345,256)
Costs and estimated earnings in excess of
billings on uncompleted contracts ( 309,600) 6,723
Inventories ( 231,662) ( 155,353)
Prepaid expenses 49,135 ( 51,145)
Accounts payable ( 366,067) 271,940
Accrued expenses and other liabilities ( 229,380) ( 49,494)
Cash surrender value of life insurance, net 109,251 ( 10,297)
Other Assets 98,876 24,024
--------- ---------
Net cash provided by (used in)
operating activities 245,518 229,804
Cash flows from investing activities:
Purchase of property, plant and equipment ( 662,591) ( 353,397)
Patent Cost Incurred 3,732 ( 11,990)
----------- -----------
Net cash provided by (used in) investing
activities ( 658,859) ( 365,387)
Cash flows from financing activities:
Bank overdraft ( 44,560) ( 8,746)
Notes receivable from officers
(increase) decrease ( 10,402) 12,195
Notes payable increase (decrease) 0 185,295
Proceeds from long-term debt 442,232 53,000
Principal payments on long-term debt ( 262,011) ( 140,002)
Proceeds from issuance of common stock 10,000 0
Notes payable to affiliates increase(decrease) 295,000 76,365
Proceeds from notes payable to stockholder 1,200,000 0
Repurchase of common stock ( 426,250) 0
---------- ----------
Net cash provided by (used in)
financing activities 1,204,009 178,107
Increase in cash and cash equivalents 790,668 42,524
Cash and cash equivalents at beginning of year 94,734 121,713
---------- ----------
Cash and cash equivalents at end of period $ 885,402 $ 164,237
========== ==========
</TABLE>
Supplemental disclosures of cash flow information and noncash investing
activities: Interest paid on notes payable and long-term debt was $223,592 and
$118,502 for the six months ended November 30, 1997 and 1996 respectively. There
were no capital lease obligations for the periods represented.
<PAGE>
ETS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
as set forth in Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
necessary adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
six months ended November 30, 1997 are not necessarily indicative of the results
that may be expected for the year ending May 31, 1998.
NOTE B--PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of ETS International,
Inc. and its wholly-owned subsidiaries, ETS, Inc., ETS Analytical Services, Inc.
and ETS Water And Waste Management, Inc. Significant intercompany accounts and
transactions have been eliminated in consolidation.
NOTE C--EARNINGS PER SHARE
Earnings per share have been computed on the basis of the weighted average
number of shares outstanding, after giving appropriate effect for common stock
issued. Stock options and warrants have been included as common stock
equivalents when they result in dilution of earnings per share.
NOTE D--BUSINESS COMBINATION
(None)
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. 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 directions,
(ii) unusually bad weather conditions, (iii) unanticipated delays in contract
execution, (iv) sudden loss of key personnel, (v) abrupt changes in competition,
and (vi) abrupt changes in market opportunities.
Results of Operations
Introduction
A few relatively large contracts in any one business segment in any fiscal
year can make any segment generate relatively large revenues in that year.
Because disproportionate generation of income has occurred periodically
throughout the existence of ETSI, the Company's strategy has been to offer a
variety of services and maintain a flexible staff capable of executing different
tasks. Services are tied to different markets, such as new pollution control
equipment expenditures by industry, government funding or legislative
enforcement. In addition, ETSI continually markets its services through
brochures, seminars and attendance at trade shows and conferences and by
telemarketing. ETSI attempts to increase its business in the aggregate. As the
United States experiences economic and legislative cycles, the demand for each
of the Company's services fluctuates accordingly. Likewise, economic cycles in
countries such as Taiwan and Korea can influence the foreign demand for ETSI's
products and services.
ETSI has divided its revenues into four meaningful categories: (a)services
- -encompassing field and analytical testing, regulatory assistance and
monitoring; (b) consulting /engineering - encompassing consulting and
engineering services and educational areas; (c) products; and (d) construction.
Second Quarter Fiscal 1998 Compared to Second Quarter Fiscal 1997
On October 31, 1997, substantially all the assets of ETS Analytical
Services, Inc., a wholly owned subsidiary of ETS International, Inc., were sold
and the revenues have been removed from the continuing operations.
<PAGE>
Revenues for continuing operations from the second quarter of fiscal 1998
were $5,075,523 compared to $5,055,469 for the second quarter of fiscal 1997.
Revenues for the six month period ended November 30, 1997 were $10,649,744
compared to $10,508,173 for the same six months period in fiscal 1997. Second
quarter activities resulted in revenues that were lower than budgeted for the
pollution control company with a resulting operating loss for the quarter while
the construction companies had close to the same level of revenues as the prior
year second quarter.
Total testing service revenues for the second quarter of fiscal 1998 were
$482,777 compared to $547,319 for the second quarter of fiscal 1997 for a 12%
decrease. Field testing revenues were $356,008 for the current quarter compared
to $493,525 for the preceding first quarter. Field testing services were down
from the prior year services by 28% mainly due to lost of previous years'
clients brought on by the companies being merged with other companies, closed
down or acquired by other companies. Source testing revenues were close to
budget and are expected to be stronger than normal for the winter quarter. Major
clients for the quarter included a waste incinerator plant, an electric power
utility plant, a municipal waste incinerator plant, a glass manufacturer and a
specialty metals manufacturer.
Regulatory assistance revenue for the quarter were $89,113 compared to
$33,994 for the second quarter of fiscal 1997 for a 162% increase. Revenues for
regulatory assistance were approximately as forecasted for the quarter and are
operating strongly; however, there are indications that it may begin to soften
during the latter part of the third quarter. Three major customers accounting
for 50% of the revenues were a a railroad company, a steel manufacturer and a
tire manufacturer. Revenues for the second quarter of fiscal 1998 for monitoring
were $37,600 compared to $19,800 for the second quarter of fiscal 1997 for a 90%
increase with its clients being a chemical plant and a sanitation plant.
Due to heavy losses incurred by the analytical laboratories and the lack of
success in turning it around, ETSI sold substantially all the assets of ETS
Analytical Services, Inc. ("ETSAS") on October 31, 1997 to Q Enterprises, Inc.,
a newly formed Virginia corporation, in consideration of a promissory note in
the principal amount of $1,380,000. The note is secured by a pledge of all of
the outstanding shares of Q Enterprises, Inc. and provides for monthly payments
of principal and interest (at the rate of 8.5% per annum). The note payments are
amortized over 30 years with a balloon payment after 10 years. The purchase
price was based upon the book value of ETSAS's assets sold plus goodwill. Q
Enterprises, Inc. has agreed to assume certain equipment lease obligations of
$180,000 and certain operating agreements of ETSAS. Q Enterprises, Inc. is owned
by James B. Quarles, a former employee and Senior Vice President of ETS
International, Inc.
The net operations of the laboratories are presented as discontinued
operations on the income statement. As a result of this sale, ETSI now operates
through three affiliates, ETS, Inc. ("ETS"), ETS Water and Waste Management,
Inc. ("ETSW") and ETS Liner, Inc., a subsidiary of ETSW.
<PAGE>
Revenues for the second quarter of fiscal 1998 for consulting/engineering
and seminar services were $82,240 compared to $183,068 for the second quarter of
fiscal 1997 for 55% decrease. Consulting service revenues were $8,850 compared
to $3,907 for the second quarter of fiscal 1997. Engineering services were down
significantly at $58,379 for the quarter compared to $155,577 for the second
quarter of fiscal 1997. This decrease was mainly due to unexpected cancellation
of an engineering program for a steel manufacturing client. The engineering
revenues are expected to improve in the third quarter due to increased proposal
activity during the second quarter. Major clients for the quarter included a
iron foundry and an environmental engineering firm. Seminar revenues for the
quarter were $14,756 compared to $18,582 for the second quarter of fiscal 1997
and revenues for sale of books were $255 for the current quarter compared to
$5,002 for the prior years' second quarter.
Revenues for the sale of product for the quarter were $214,084 compared to
$52,347 for the second quarter of fiscal 1997. There were no sales for the
quarter for the Baghouse Performance Monitoring (BPM) hardware and software
compared to $12,347 for the same quarter of fiscal. Revenues for the LEC project
in Taiwan were $214,084 for the quarter. A kick-off meeting to formally begin
the project was held in Roanoke during September. ETS participated with E & C
Engineering Services to finalize the design details in preparation for on-site
construction which started in December.
Total construction service revenues which includes ETS Liner, Inc., a
subsidiary of ETSW, were $4,278,422 for the second quarter of fiscal 1998
compared to $4,272,735 for the second quarter of fiscal 1997. Overall
construction activities for the quarter were normal for the Company.
Construction sales and completion of work for the quarter were at the same level
as the second quarter of fiscal 1997. The third quarter activities for the
Richmond, Virginia office are expected to be slower due to the winter weather.
Management feels very optimistic that the year over all should be a very
profitable year. ETS Liner had a strong second quarter and should have strong
third and fourth quarters.
Cost of goods and services for the second quarter were $4,084,885
representing 81% of the revenues compared to $4,195,892 or 83% of revenues for
the second quarter of fiscal 1997. Gross profit for the second quarter of fiscal
1998 was $1,000,433 or 20% of the revenues compared to $859,577 or 17% of
revenues for the second quarter of fiscal 1997. This improvement in costs and
profit is the result of an effort to improve the efficiency and profitability of
the operating companies. Selling, general and administrative expenses were
$798,942 for the current quarter compared to $554,266 for the second quarter of
fiscal l997. This increase in G & A expenses were largely due to the expense
incurred by ETS Liner, Inc. in moving to a new location in Florida and expense
involved with the expansion of the "pipe bursting" division of their business.
Miscellaneous income for the second quarter of fiscal 1998 was $50,968
compared to $5,770 for the second quarter of fiscal 1997 representing earned
interest from savings on deposit and sale of miscellaneous equipment and scrap.
Interest expense for the quarter was $221,339 compared to $80,034 for the second
quarter of fiscal l997 representing the interest expense on notes, leases and
loans, and interest and amortization associated with the convertible debentures
financing.
<PAGE>
For the continuing operations, the second quarter of fiscal 1998 had a net
loss of $30,425 and net income of $330,140 for the six month period of fiscal
1998 compared with the second quarter of fiscal 1997 with a net income of
$253,340 and net income of $379,343 for the six months of fiscal 1997. The
discontinued operations of the analytical laboratory had a loss for the second
quarter of fiscal 1998 of $316,941 compared to a loss of $83,882 for the same
quarter of fiscal 1997, and a loss of $609,692 for the six month period of
fiscal 1998 compared to $108,764 for fiscal 1997.
Liquidity And Capital Resources As Of The End Of The Second Quarter of Fiscal
Year 1998
During the second quarter of fiscal 1998, 299,948 shares of ETSI common
stock were issued in connection with the conversion of convertible debentures
with an equity book value of $104,795. These debentures were issued in
connection with a Regulation S Convertible Debentures Purchase Agreement dated
as of February 28, 1997. Stock was also issued to a vendor for 58,717 shares
with a equity book value of $36,405 in exchange for goods and services.
ETSI maintains a note with Thomas Marmon, a member of the Board of
Directors, which replaced the bank's line of credit during the third quarter of
fiscal 1997 in the amount of $2,500,000. The current advance under the note is
in the amount of $2,000,000. The note calls for fixed monthly interest of
$25,000 over a two-year term, subject to call by the holder upon 60 days notice
and is secured by the assets of the Company and it subsidiaries. The Company may
repay the note at any time without penalty.
Management currently believes that for the third quarter the pollution
control company will have a strong level of activity despite the normal
significant seasonal turn-down while the construction division is expected to be
slower due to the winter weather.
At November 30, 1997, net cash provided by operating activities of $245,518
included the net income of $330,140, depreciation expense of $301,190,
amortization of convertible debentures discount of $336,429, decrease in
accounts receivable of $309,361 and other assets of $257,262. These were offset
by increase in accounts payable of 366,067, increases in cost and estimated
earnings in excess of billings on uncompleted contracts for $309,361,
inventories of $231,662, other accrued expenses of $229,380 and amortization of
deferred gain on sale/leaseback of $155,155.
Net cash of $658,859 used in investing activities was for purchases of
capital equipment. Major components of net cash provided by financing activities
amounting to $1,204,009 included the proceeds of $442,232 received for long-term
debt for capital equipment purchased, increases in notes payable to affiliates
of $295,000 and proceeds of $1,200,000 received from stockholders, less
principal payments made on long-term debt of $262,011 and the repurchase of
common stock in the amount of $387,500 pursuant to an asset purchase agreement.
<PAGE>
The net cash and cash equivalents at November 30, 1997 was $885,402
compared to $164,237 at November 30, 1996.
New orders received for the three months ended November 30, 1997 were
$2,871,684 compared to the new orders received of $8,039,212 for the same three
month period a year ago. Commercial construction bidding seems to be very strong
in the third quarter which will result in a strong fourth quarter. Backlog at
November 30, 1997 was $12,201,196 compared to $7,685,243 at November 30, 19965
for a 58% increase. ETSI held open task orders from various clients, principally
government agencies. If all of the work under these open orders is authorized,
the Company estimates that its backlog would increase by $903,264 to a total of
$13,104,460 compared to $8,766,614 for the same period a year ago.
Most of ETSI's contracts are of short-term duration and are completed
within a few months of the order or award. Certain contracts such as those from
utilities are annual and are completed in stages against task orders. Government
agencies often issue open orders for which subsequent task orders are issued.
There are no conditions precedent to the issuance of task orders and they are
issued pursuant to the specific orders of the client for the service. Experience
shows that substantially all open orders ultimately result in task orders and at
times have exceeded the amount of the open order. There can be no assurance that
existing contracts or future orders containing open orders will result in task
orders covering the entire contractual amounts. ETSI is not aware of any
significant unrecognized cost to complete any open contract.
(PART II - OTHER INFORMATION)
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities
During the second quarter of fiscal 1998, 299,948 shares of ETSI common
stock were issued in connection with the conversion of convertible debentures
with an equity book value of $104,795. These debentures were issued in
connection with a Regulation S Convertible Debentures Purchase Agreement dated
as of February 28, 1997. Stock was also issued to a vendor for 58,717 shares
with a equity book value of $36,405 in exchange for goods and services.
Item 3. Defaults upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security-Holders.
None
<PAGE>
Item 5. Other Information.
The Company's common stock has traded on the AMEX-ECM since July 1992. As a
result of significant losses in fiscal year 1996, the Company fell out of
compliance with certain AMEX-ECM eligibility requirements, including
profitability, net asset value and stock price and therefore, the Company is
under review by AMEX. The Company has worked diligently to improve these areas.
As a result, profitability in fiscal year 1997 improved and net asset value
increased. While the Company is pleased with its progress to date, additional
progress is needed to bring the Company into full compliance with the AMEX-ECM
continued eligibility requirements.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
(a) Reports on Form 8-k
(i) Report on Form 8-k dated November 18, 1997, relating to expression
of interest in merger
(ii) Report on Form 8-k dated October 31, 1997, relating to the sale
of substantially all of the assets of ETS Analytical Services, Inc. To
Q Enterprises
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibits 2 - Asset Purchase Agreement by and among ETS Analytical
Services, Inc. and Q Enterprises, Inc. dated October
31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this registrations statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
ETS INTERNATIONAL, INC .
Registrant
DATE January 14, 1998 BY: s/John D. McKenna
----------------- ---------------------
John D. McKenna
President And
Principal Executive Officer
DATE January 14, 1998 BY: s/John C. Mycock
----------------- --------------------
John C. Mycock
Secretary/Treasurer and
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from financial
statements for the six month period ended November 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-END> NOV-30-1998
<CASH> 885
<SECURITIES> 0
<RECEIVABLES> 4,233
<ALLOWANCES> 62
<INVENTORY> 1,004
<CURRENT-ASSETS> 7,920
<PP&E> 7,608
<DEPRECIATION> (4,955)
<TOTAL-ASSETS> 13,086
<CURRENT-LIABILITIES> 7,705
<BONDS> 732
0
0
<COMMON> 5,837
<OTHER-SE> (2,119)
<TOTAL-LIABILITY-AND-EQUITY> 13,084
<SALES> 0
<TOTAL-REVENUES> 10,650
<CGS> 0
<TOTAL-COSTS> 9,913
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 467
<INCOME-PRETAX> 330
<INCOME-TAX> 0
<INCOME-CONTINUING> 330
<DISCONTINUED> (610)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (280)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
