UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1999 Commission File No. 00019678
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INFRACORPS INC.
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(Exact name of registrant as specified in its charter)
Virginia 54-1414643
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State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
7400 Beaufont Springs Drive, Suite 415, Richmond, VA 23225
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(Address) (Zip Code)
Registrant's telephone number, including area code (804) 272-6600
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(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 and (2) has been subject to the filing
requirements for the past 90 days.
Yes x No
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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 16,395,487
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFRACORPS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, 1999 March 31, 1999
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ASSETS (unaudited) (audited)
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<S> <C>
Current assets:
Cash and cash equivalents $ 122,541 $ 272,259
Accounts receivable:
Trade (net of allowance of $50,000 at September 30, 1999 and
March 31, 1999) 3,830,964 3,389,342
Other 0 12,917
Costs and estimated earnings in excess of billings
on uncompleted contracts 709,478 868,061
Notes receivable 23,085 23,085
Inventory 740,547 599,451
Prepaid expenses 122,024 47,612
------------ -------------
Total current assets 5,548,639 5,212,727
Property, plant and equipment:
Furniture and fixtures 369,236 346,236
Machinery, tools and equipment 4,237,163 3,766,096
Vehicles 1,875,553 1,567,493
Leasehold improvements 305,265 301,370
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6,787,217 5,999,195
Less accumulated depreciation 4,098,874 3,829,184
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Total property, plant and equipment, net 2,688,343 2,170,011
Other assets:
Restricted cash 600,000 600,000
Notes receivable 314,627 321,454
Cash value of life insurance 22,879 22,879
Assets under contractual arrangements (net of
valuation allowance of $858,000) 190,740 190,740
Other assets 55,069 52,636
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Total other assets 1,183,315 1,187,709
Total assets $ 9,420,297 $ 8,570,447
============ =============
</TABLE>
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, 1999 March 31, 1999
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(unaudited) (audited)
<S> <C>
Current liabilities:
Bank overdraft $ 0 $ 241,931
Notes payable to bank - line of credit 1,000,000 -
Notes payable to affiliates 622,400 609,900
Current portion of long-term debt 476,748 364,248
Accounts payable 3,582,809 3,574,837
Accrued expenses and other current liabilities 25,014 382,229
-------------- ---------------
Total current liabilities 5,706,971 5,173,145
Long-term liabilities:
Long-term debt 867,139 682,046
Liabilities of business transferred under contractual arrangements 140,339 140,339
-------------- ---------------
Total liabilities 6,714,449 5,995,530
Stockholders' equity:
Preferred stock, no par value, authorized 5,000,000 shares: 4% cumulative
Series A, $1 convertible, 1,850,000 shares outstanding September 30, 1999
and 1,750,000 shares outstanding at March 31, 1999 (liquidation value of
$1,850,000 and $1,750,000 respectively) 866,701 730,311
8% Series B, 10,421 shares outstanding at September 30, 1999
and March 31, 1999 (liquidation value of $1,042,100) 1,042,100 1,042,100
Common stock, no par value; authorized 30,000,000 shares; issued and
outstanding 16,395,487 and 16,492,043 shares at September 30, 1999 and
March 31, 1999, respectively 5,933,226 6,126,338
Retained earnings (accumulated deficit) (5,136,179) (5,130,720)
Less notes receivable from officers 0 (193,112)
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Total stockholders' equity 2,705,848 2,574,917
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Total liabilities and stockholders' equity $ 9,420,297 $ 8,570,447
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</TABLE>
<PAGE>
INFRACORPS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
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(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C>
Contract Revenues - Commercial $ 5,266,816 $ 5,423,100 $ 10,200,825 $ 9,333,261
Cost of goods and services 4,471,628 4,951,794 8,742,296 8,181,138
----------- ----------- ------------ ------------
Gross Profits (losses) 795,188 471,306 1,458,529 1,152,123
Selling, general and administrative expenses 683,941 630,181 1,267,791 1,279,241
----------- ----------- ------------ ------------
111,247 (158,875) 190,738 (127,118)
Interest income 6,891 9,324 17,043 20,366
Interest expense (79,767) (90,818) (135,862) (226,699)
Gain on sale of equipment 0 0 695 329,478
----------- ----------- ------------ ------------
Income (Loss) from continuing operations $ 38,371 $ (240,369) $ 72,614 $ (3,973)
Loss from discontinued operations 0 (132,287) 0 (342,330)
Extraordinary Gain 0 1,950,000 0 1,950,000
----------- ----------- ------------ ------------
Net income (loss) $ 38,371 $ 1,577,344 $ 72,614 $ 1,603,697
============ =========== ============ ============
Earnings (Loss) from continuing operations per common share:
Basic $ 0.01 $ (.01) $ 0.01 $ (.01)
Diluted $ 0.01 $ (.01) $ 0.01 $ (.01)
Earnings (Loss) per common share:
Basic $ 0.00 $ 0.10 $ 0.00 $ 0.10
Diluted $ 0.00 $ 0.08 $ 0.00 $ 0.09
Average shares of common stock used for above computation:
Basic 16,395,487 16,492,043 16,492,043 16,492,043
Diluted 18,547,172 19,742,043 18,666,929 18,117,043
</TABLE>
<PAGE>
INFRACORPS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Preferred Stock Preferred Stock Notes
Series A Series B Common Stock Receivable
---------------------------------------------------------------------- Accumulated from
Shares Amount Shares Amount Shares Amount Deficit Officers Total
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<S> <C>
Balances at
March 31, 1999 1,750,000 $ 730,311 10,421 $1,042,100 16,492,043 $ 6,126,338 $ (5,130,720) $ (193,112) $ 2,574,917
Net income 34,243 34,243
Dividends Series A 18,403 (18,403) 0
Dividends Series B (20,841) (20,841)
Issuance of preferred
shares 100,000 100,000 100,000
Repayment of debt (96,556) (193,112) 193,112 0
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Balances at
June 30, 1999 1,850,000 $ 848,714 10,421 $1,042,100 16,395,487 $ 5,933,226 $ (5,135,723) $ 0 $ 2,688,317
Net income 38,371 38,371
Dividends Series A 17,987 (17,987) 0
Dividends Series B (20,841) (20,841)
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Balances at
September 30, 1999 1,850,000 $866,701 10,421 $1,042,100 16,395,487 $5,933,226 $ (5,136,179) $ 0 $ 2,705,848
</TABLE>
<PAGE>
INFRACORPS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Six months ended
September 30, 1998 September 30, 1998
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(unaudited) (unaudited)
<S> <C>
Cash flows from operating activities:
Net income (loss) $ 72,614 $ 1,603,697
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization 269,690 276,628
Amortization of deferred gain on sale/leaseback 0 (152,154)
Gain on disposal of equipment (695) (329,478)
Reserve on discontinued operations 0 500,000
Extraordinary gain 0 (1,950,000)
Increase/decrease in operating assets and liabilities:
Accounts receivable (428,705) (1,289,166)
Costs and estimated earnings in excess of billings on uncompleted contracts 158,583 54,919
Inventories (141,096) 247,971
Prepaid expenses (74,412) 22,277
Accounts payable 7,972 82,192
Accrued expenses and other liabilities (357,215) 465,825
Other Assets (2,433) (485,140)
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Net cash used in operating activities (495,697) (952,429)
Cash flow from investing activities:
Purchase of property, plant and equipment (788,022) (372,332)
Proceeds from sale of Service Division 0 350,000
Notes Receivable decrease 6,527 200,307
Decrease in assets of business transferred under contractual agreement 0 46,134
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Net cash used in investing activities (781,195) 224,109
</TABLE>
<PAGE>
INFRACORPS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (continued)
<TABLE>
<CAPTION>
Six months ended
September 30, 1998 September 30, 1998
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(unaudited) (unaudited)
<S> <C>
Cash flows from financing activities:
Bank overdraft (241,931) 598,568
Proceeds from line of credit 1,000,000 0
Notes payable increase (decrease) 0 (3,817,211)
Issuance of preferred stock 100,000 3,250,000
Dividends paid (41,682) 0
Principal payments on long-term debt (160,403) (259,764)
Proceeds from notes payable 471,190 0
Proceeds from notes payable to stockholder 0 850,000
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Net cash provided by financing activities 1,127,174 621,593
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Increase (decrease) in cash and cash equivalents (149,718) (106,727)
Cash and cash equivalents at beginning of year 272,259 206,750
--------------- ------------
Cash and cash equivalents at end of period $ 122,541 $ 100,023
=============== ============
</TABLE>
Supplemental disclosures of cash flow information and noncash investing
activities: Interest paid on notes payable and long-term debt was $135,862 and
$226,699 for the six months ended September 30, 1999 and September 30, 1998,
respectively. There were no capital lease obligations for the periods
represented. Preferred dividends of $43,337 and $21,667 were accrued for the six
months ended September 30, 1999 and September 30, 1998, respectively.
<PAGE>
INFRACORPS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited financial statements 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
September 30, 1999 are not necessarily indicative of the results that may be
expected for the fiscal year ending March 31, 2000.
NOTE B--PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of INFRACORPS, Inc.
and its wholly-owned subsidiaries, IC Subsidiary, Inc. (formerly ETS, Inc.), ETS
Analytical Services, Inc., InfraCorps of Virginia, Inc. (formerly ETS Water And
Waste Management, Inc.) and its subsidiary InfraCorps of Florida, Inc. (formerly
ETS Liner, Inc.), InfraCorps Technology, Inc. and InfraCorps International, 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. At September 30,
1999, 925,000 stock options and 300,000 warrants were included. The remaining
options and warrants were not included as they would be antidilutive.
NOTE D--CASH AND CASH EQUIVALENTS
Restricted cash of $600,000 is not included in cash and cash equivalents as it
is restricted for a performance bond relating to the Company's contract with
China Steel Corporation (the "China Steel Contract"). Potential issues have been
brought to current management's attention regarding the budget to meet certain
of the performance specifications of the China Steel Contract and the overall
viability of the LEC technology for wide-scale commercialization. If the LEC
technology does not meet contract specifications, China Steel Corporation may
seek to impose financial penalties or attempt to recover damages or obtain other
relief under the contract, including drawing down on the $600,000 performance
bond posted by the Company. See note E of Notes to Consolidated Financial
Statements for additional information.
<PAGE>
NOTE E--DISPOSAL OF ENVIRONMENTAL OPERATIONS SEGMENT
On October 31, 1997, ETS Analytical Services, Inc. ("ETSAS"), a wholly owned
subsidiary of the Company, sold substantially all of its assets in return for a
ten-year 8.5% promissory note in the amount of $1,000,000, which exceeded the
net book value of the assets and liabilities sold. Also, since the risks of
ownership were not transferred to the purchaser, no sale was recognized for
accounting purposes. Accordingly, the assets and liabilities transferred to the
purchaser remain in the noncurrent sections of the balance sheet and are
designated as "assets under contractual arrangements" and "liabilities of
business transferred under contractual arrangements." At September 30, 1999,
"assets under contractual arrangements" was stated net of a valuation allowance
of $858,000.
On March 12, 1998, substantially all of the assets and certain liabilities of
ETS, Inc. ("ETS"), a wholly owned subsidiary of the Company, were sold to ETS
Acquisition, Inc., a newly formed firm based in Roanoke, Virginia. In connection
with this sale, the Company sold a portion of its assets and business relating
to the LEC technology, including patents and licenses, to Christel Clear
Technologies, Inc. ("CCTI"), a newly formed firm based in Roanoke, Virginia.
Also, the Company will receive 50% of all royalties received by CCTI in
connection with the license of the LEC technology. While there is no indication
that the LEC will be resold by CCTI, the agreement further provides that the
Company will receive 50% of the net sales price from a resale of the LEC
technology on or before March 12, 1999, and 25% of the net sales price from a
resale after March 12, 1999 but on or before March 12, 2000.
In connection with the foregoing transaction, the Company entered into a
Management Agreement with Air Technologies, Inc. ("ATI"), a newly formed firm
based in Roanoke, Virginia, to provide management services with respect to the
Company's China Steel Contract. ATI and CCTI agreed to accept responsibility for
any potential liabilities associated with the China Steel Contract and to
provide its best effort to have the contract transferred from the Company to
ATI. ETS Acquisition, Inc., CCTI and ATI are owned by three former executive
officers of the Company or ETS and former members of the Company's Board of
Directors.
If the LEC technology does not meet contract specifications China Steel
Corporation may seek to impose financial penalties or attempt to recover damages
or obtain other relief under the contract, including drawing down on the
$600,000 performance bond posted by the Company. See note D and note F of Notes
to Consolidated Financial Statements for additional information.
NOTE F--CONTINGENT LIABILITIES AND OTHER MATTERS
Management believes that the existing potential liabilities under the China
Steel Contract make obtaining significant outside financing difficult. However,
Management negotiated a line of credit from BB&T for $1,000,000 effective April
16, 1999. The interest rate is prime plus one percent payable monthly.
Additional equity or credit is being sought. Management's success in this regard
will, to a large extent, depend upon whether InfraCorps is able to accomplish
the assignment without recourse of the China Steel contract to ATI. While
<PAGE>
negotiations with China Steel Corporation are on-going, there can be no
assurance that such negotiations will be successful. See notes D and E of Notes
to Consolidated Financial Statements for additional information.
NOTE G--DISPOSAL OF FLORIDA OPERATIONS
On November 30, 1998, the Florida operations were discontinued. All assets were
sold, transferred to Virginia or abandoned. Current operations should be
completed by September 1999. Due to the unique licensed construction techniques
employed, Management believes that its Florida operations constitute a separate
line of business. Revenues for the three month and six month period ended
September 30, 1998 were $388,488 and 769,249, respectively.
NOTE H--OFFICER LOANS
On June 30, 1999, the Company accepted 96,556 shares of stock in repayment of
the loans to officers in the amount of $193,112. These funds were used to buy
these shares of stock during the merger in 1994.
<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 could significantly
affect the operations, performance, development and results of the Company's
business include, but are not limited to, the following: (i) changes in
legislative enforcement and direction, (ii) unusually bad or extreme weather
conditions, (iii) unanticipated delays in contract execution, (iv) project
delays or changes in project costs, (v) unanticipated changes in operating
expenses and capital expenditures, (vi) sudden loss of key personnel, (vii)
abrupt changes in competition or the political or economic climate, and (vi)
abrupt changes in market opportunities.
Results of operations
Three months and six months ended September 30, 1999 compared to three months
and six months ended September 30, 1998
All of the revenues and expenses for the Florida operations have been
removed from continuing operations for the period ended September 30, 1998.
Revenues for the three month period ended September 30, 1999 ("second quarter of
fiscal 2000") were $5,266,816 compared to $5,423,100 for the three month period
ended September 30, 1998 ("second quarter of fiscal 1999") resulting in a 3%
decrease in revenues. This decrease is due to timing of billings on contracts
performed during the quarter. Revenues for the six month period ended September
30, 1999 ("year to date fiscal 2000") were $10,200,825 compared to $9,333,261
for the six month period ended September 30, 1998 ("year to date fiscal 1999")
resulting in a 9% increase in revenues. This increase reflects the increased
backlog of work being completed.
Cost of goods and services for the second quarter of fiscal 2000 were
$4,471,628 or 84.9% of sales compared to $4,951,794 or 91.3% of sales for the
second quarter of fiscal 1999. Gross profits (losses) for the second quarter of
fiscal 2000 were $ 795,188 or 14.1% of sales compared to $471,306 or 8.7% of
sales for the second quarter of fiscal 1999. Cost of goods and services for the
year to date fiscal 2000 were $8,742,296 or 85.7% of sales compared to
$8,181,138 or 87.7% of sales for the year to date fiscal 1999. Gross profits
(losses) for the year to date fiscal 2000 were $ 1,458,529 or 15.1% of sales
compared to $1,152,123 or 12.3% of sales for the year to date fiscal 1999. These
increases in gross profits are due to more smaller contracts being completed
that have a better gross margin as well as controlling costs of work being
performed.
<PAGE>
Selling, general and administrative expenses were $683,941 for the
second quarter of fiscal 2000 or 13% of net sales compared to $630,181 or 11.6%
of net sales for the three month period ended September 30, 1998. Selling,
general and administrative expenses were $1,267,791 for the year to date fiscal
2000 or 12.4% of net sales compared to $1,279,241 or 13.7% of net sales for the
year to date fiscal 1999. The general and administrative expense continues to
decrease due to cost savings associated with the management reorganization. The
increase in the second quarter reflects timing differences and a general
increase in fixed costs of insurance and employee benefits.
Gain on sale of assets was $695 for the year to date fiscal 2000
compared to $329,478 for the year to date fiscal 1999 which reflected the sale
of the Service Division of InfraCorps of Virginia, Inc. in fiscal 1999. Interest
expense for the second quarter of fiscal 2000 was $79,767 compared to $90,818
for the second quarter of fiscal 1999. Interest expense for the year to date
fiscal 2000 was $135,862 compared to $226,699 for the year to date fiscal 1999.
Interest expense reflects interest paid on notes payable and long-term debt,
including credit lines and capital leases. This decrease reflects the conversion
of the high interest debt to preferred stock and the new line of credit that is
currently being paid at a lower rate.
Profit for the second quarter of fiscal 2000 from continuing operations
was $38,371 compared to a loss of $240,369 for the second quarter of fiscal
1999. Profit for the year to date fiscal 2000 from continuing operations was
$72,614 compared to a loss of $3,973 for year to date fiscal 1999. Discontinued
operations is the Florida operations which were closed prior to the beginning of
fiscal 2000. These operations accounted for a loss of $132,287 and $342,330 for
the second quarter of fiscal 1999 and year to date fiscal 1999, respectively.
Florida operations had revenues of $388,488 and $769,249 for the second quarter
of fiscal 1999 and year to date fiscal 1999, respectively.
There was an extraodinary gain of $1,950,000 for the second quarter of
fiscal 1999. This was a gain on conversion of debt to preferred stock. Net
profit for the second quarter of fiscal 2000 was $38,371 compared to net profit
of $1,577,344 for the second quarter of fiscal 1999. Net profit for the year to
date fiscal 2000 was $72,614 compared to net profit of $1,603,697 for the year
to date fiscal 1999.
Liquidity And Capital Resources As Of September 30, 1999
In April 1999, a secured credit line of up to $1,000,000 was obtained.
The note that established the line calls for a monthly interest of prime plus 1%
over a three year term. At September 30, 1999, the balance owed under this line
was $1,000,000. The credit line is provided by BB&T.
On April 30, 1999, the Company issued 100,000 shares of preferred stock
for an investment of $100,000 which was used to start InfraCorps Technology,
Inc.("ICTI"). These funds were used to acquire the equipment for the business.
<PAGE>
ICTI is negotiating to acquire the license to manufacture and install
FirstlinerUSA pipe. Firstliner USA pipe is a cured-in-place-process ("CIPP")
pipe. This product is different from the other products offered by ICVA. It can
be manufactured in diameters up to 120 inches. The market for the license would
be Virginia and Maryland along with any other unlicensed market. ICTI would have
right of first refusal for the states of North Carolina, South Carolina,
Pennsylvania, New Jersey and Delaware.
On June 30, 1999, the Company accepted 96,556 shares of stock in
payment of the loans to officers in the amount of $193,112. These loans were
used to buy these shares of stock during the merger in 1994.
Major components of cash flows used in operating activities include a
decrease in accrued expenses of $357,215 and an increase in accounts receivable
of $428,705. Adjustments to net cash flows include depreciation and amortization
of $269,690.
Net cash used in investing activities of $781,195 consisted mainly of
purchase of property, plant and equipment in the amount of $788,022. The net
cash from financing activities of $1,127,174 include in part proceeds from line
of credit of $1,000,000, proceeds from notes payable of $471,190 and repayment
of bank overdraft of $241,931. The cash and cash equivalents at September 30,
1999 was $122,541 which excludes the $600,000 of restricted cash guaranteeing
the bond for the China Steel contract.
New orders received for the second quarter of fiscal 2000 were
$10,998,906 compared to $7,587,469 for the second quarter of fiscal 1999. New
orders received for the year to date fiscal 2000 are $19,376,070 compared to
$19,938,103 for year to date fiscal 1999. Backlog at September 30, 1999 was
$21,732,000 compared to $14,500,000 at September 30, 1998. New orders are being
received to keep pace with work being performed and maintain a backlog.
Year 2000
Many currently installed computer systems and software products are
programmed to assume that the century portion of a date as "19" to conserve the
use of storage and memory. This assumption resulted in the use of two digits
(rather than four) to define an applicable year.
Accordingly, computer systems that rely on two digits to define an
applicable year may recognize a date using "00" as the year 1900, rather than
the year 2000. This could result in a system failure to miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process or transmit data or engage in normal business activities. The
Company's ability to operate is, to a large extent, dependent upon the proper
operation of its computer system and those of its customers. To the extent that
Year 2000 issues result in the long-term inoperability of Company's computer
systems or those of its customers, the Company's results of operation and
financial condition will be materially and adversely affected.
The Company believes that it has fully assessed its Year 2000
readiness. This assessment included a review of the Company's internal
<PAGE>
information technology systems and non-information technology systems. Based on
this review, the Company does not anticipate any disruption of its internal
technology systems.
The Company is currently in the process of initiating formal
communications with all of its customers to determine the extent to which the
company is vulnerable to those third parties' failures to remediate their own
Year 2000 issues. The Company expects to complete this process by December 31,
1999. Although the cost of the Company's Year 2000 remediation program has not
yet been finalized, the Company estimates that these costs will not exceed
$30,000 and, in any event, believes that such costs will not have a material,
adverse effect upon the Company's results of operation or financial condition.
New Businesses
The Company started up two new businesses during the first quarter.
These businesses are ICTI and InfraCorps International, Inc. ("ICII"). ICTI is a
trenchless technology company that uses CIPP pipe for installation and
rehabilitation of water, sewer and gas lines. ICTI is in negotiation to acquire
the FirstlinerUSA license for the CIPP pipe. The market would include Virginia
and Maryland along with any other unlicensed market. ICTI would have right of
first refusal to be licensed for the states of North Carolina, South Carolina,
Pennsylvania, New Jersey and Delaware. The license would include a royalty
payment for each foot installed. ICTI will be headed by Richard Herrick who has
30 years experience in the industry.
The second business started during the quarter is ICII. This is an
engineering consulting company that specializes in design and management support
for projects involving the utilization of trenchless technologies. It is headed
by Michael Kirby, P.E. who is an engineer with 20 years experience in the
trenchless technology industry. ICII is currently working on a project for
Baltimore Gas and Electric. The market for ICII will be worldwide.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
None
Item 2. CHANGES IN SECURITIES.
None
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
On July 26, 1999, the annual shareholders meeting was
held. As there was not a quorum, the meeting was adjourned.
Subsequent attempts to gain a quorum proved unsuccessful.
The Company postponed the meeting until 2000.
Item 5. OTHER INFORMATION.
None
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibits
27 Financial Data Schedule - attached as an exhibit hereto
(B) Reports on Form 8-K
None
<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.
INFRACORPS INC.
DATE November 13, 1999 BY: s/James B. Quarles
----------------- ---------------------------
James B. Quarles
Chairman and President
DATE November 13, 1999 BY: s/Warren E. Beam, Jr.
----------------- ---------------------------
Warren E. Beam, Jr.
Secretary and Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTIANS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BE REFERENCE TO SUCH FINANCIAL STATEMETNS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> SEP-30-1999
<CASH> 122,541
<SECURITIES> 0
<RECEIVABLES> 3,830,964
<ALLOWANCES> 0
<INVENTORY> 740,547
<CURRENT-ASSETS> 5,548,639
<PP&E> 6,787,217
<DEPRECIATION> (4,098,874)
<TOTAL-ASSETS> 9,420,297
<CURRENT-LIABILITIES> 5,706,971
<BONDS> 867,139
0
1,908,801
<COMMON> 5,933,226
<OTHER-SE> (5,136,179)
<TOTAL-LIABILITY-AND-EQUITY> 9,420,297
<SALES> 0
<TOTAL-REVENUES> 10,200,825
<CGS> 0
<TOTAL-COSTS> 8,742,296
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (135,862)
<INCOME-PRETAX> 72,614
<INCOME-TAX> 0
<INCOME-CONTINUING> 72,614
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,614
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
