<PAGE>
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 December 31, 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 of principal executive offices) (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)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
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State the number of shares outstanding of each of the issuer's classes of
common equity, as of the close of the period covered by this report.
Class Number of Shares Outstanding
--------------------- ----------------------------
Common Stock 16,395,487
Transitional Small Business Discount Format Yes _____ No X
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
INFRACORPS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1999 March 31, 1999
----------------- --------------
ASSETS (unaudited) (audited)
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<S> <C> <C>
Current assets:
Cash and cash equivalents $ 911,602 $ 272,259
Accounts receivable:
Trade (net of allowance of $50,000 at December 31, 1999 and
March 31, 1999) 4,126,339 3,389,342
Other 0 12,917
Costs and estimated earnings in excess of billings
on uncompleted contracts 883,569 868,061
Notes receivable 23,085 23,085
Inventory 886,918 599,451
Prepaid expenses 138,050 47,612
----------- ----------
Total current assets 5,548,641 5,212,727
Property, plant and equipment:
Furniture and fixtures 369,236 346,236
Machinery, tools and equipment 4,304,856 3,766,096
Vehicles 1,880,442 1,567,493
Leasehold improvements 306,240 301,370
----------- ----------
6,860,774 5,999,195
Less accumulated depreciation 4,287,164 3,829,184
----------- ----------
Total property, plant and equipment, net 2,573,610 2,170,011
Other assets:
Restricted cash 600,000 600,000
Notes receivable 300,361 321,454
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 53,444 52,636
----------- ----------
Total other assets 1,167,424 1,187,709
Total assets $10,710,597 $8,570,447
=========== ==========
</TABLE>
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, 1999 March 31, 1999
----------------- --------------
(unaudited) (audited)
<S> <C> <C>
Current liabilities:
Bank overdraft $ 0 $ 241,931
Notes payable to bank - line of credit 1,000,000 -
Notes payable to affiliates 517,400 609,900
Current portion of long-term debt 476,748 364,248
Accounts payable 3,457,504 3,574,837
Accrued expenses and other current liabilities 182,240 382,229
----------- -----------
Total current liabilities 5,633,892 5,173,145
Long-term liabilities:
Long-term debt 935,224 682,046
Liabilities of business transferred under contractual
arrangements 140,339 140,339
----------- -----------
Total liabilities 6,709,455 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 December 31, 1999 and 1,750,000 shares
outstanding at March 31, 1999 (liquidation value of $1,850,000
and $1,750,000 respectively) 884,270 730,311
8% Series B, 15,421 shares outstanding at December 31, 1999
and March 31, 1999 (liquidation value of $1,042,100) 1,542,100 1,042,100
6% Series C, 750 shares outstanding at December 31, 1999 and
0 at March 31, 1999 (liquidation value of $750,000) 750,000 0
Common stock, no par value; authorized 30,000,000
shares; issued and outstanding 16,395,487 and
16,492,043 shares at December 31, 1999 and March 31, 1999,
respectively 5,933,226 6,126,338
Retained earnings (accumulated deficit) (5,108,454) (5,130,720)
Less notes receivable from officers 0 (193,112)
----------- -----------
Total stockholders' equity 4,001,142 2,574,917
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Total liabilities and stockholders' equity $10,710,597 $ 8,570,447
=========== ===========
</TABLE>
<PAGE>
INFRACORPS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31 December 31 December 31 December 31
1999 1998 1999 1998
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Contract Revenues - Commercial $ 7,244,918 $ 4,868,142 $17,445,743 $14,201,403
Cost of goods and services 6,435,774 4,252,017 15,178,070 12,433,155
----------- ----------- ----------- -----------
Gross Profits (losses) 809,144 616,125 2,267,673 1,768,248
Selling, general and administrative expenses 663,576 452,578 1,931,367 1,731,822
----------- ----------- ----------- -----------
145,568 163,547 336,306 36,426
Interest income 5,342 11,914 22,385 32,280
Interest expense (80,572) (42,235) (216,434) (268,933)
Gain on sale of equipment 1,000 2,218 1,695 331,696
----------- ----------- ----------- -----------
Income (Loss) from continuing operations $ 71,338 $ 135,444 $ 143,952 $ 131,468
Loss from discontinued operations 0 0 0 (342,328)
Extraordinary gain 0 600,000 0 2,550,000
----------- ----------- ----------- -----------
Net income (loss) $ 71,338 $ 735,444 $ 143,952 $ 2,339,141
=========== =========== =========== ===========
Earnings (Loss) from continuing operations per
common share:
Basic $0.01 $0.01 $ 0.02 $ 0.00
Diluted $0.01 $0.01 $ 0.02 $ 0.00
Earnings (Loss) per common share:
Basic $0.00 $0.04 $ 0.01 $ 0.14
Diluted $0.00 $0.04 $ 0.01 $ 0.13
Average shares of common stock used for
above computation:
Basic 16,395,487 16,492,043 16,395,487 16,492,043
Diluted 18,245,487 19,742,043 18,277,672 18,658,710
</TABLE>
<PAGE>
INFRACORPS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Preferred Stock Preferred Stock Preferred Stock
Series A Series B Series C Common Stock
Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances March 31, 1999 1,750,000 $730,311 10,421 $1,042,100 0 $ 0 16,492,043 $6,126,338
Net income
Dividends Series A 18,403
Dividends Series B
Issuance of preferred shares 100,000 100,000
Repayment of debt (96,556) (193,112)
-------------------------------------------------------------------------------------------------------
Balances June 30, 1999 1,850,000 $848,714 10,421 $1,042,100 0 $ 0 16,395,487 $5,933,226
Net income
Dividends Series A 17,987
Dividends Series B
-----------------------------------------------------------------------------------------------
Balances September 30, 1999 1,850,000 $866,701 10,421 $1,042,100 0 $ 0 16,395,487 $5,933,226
Net income
Dividends Series A 17,569
Dividends Series B
Issuance of Series B preferred 5,000 500,000
Issuance of Series C preferred 750 750,000
Federal income tax paid
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Balances December 31, 1999 1,850,000 $884,270 15,421 $1,542,100 750 $750,000 16,395,487 $5,933,226
</TABLE>
<TABLE>
<CAPTION>
Notes
Receivable
Accumulated from
Deficit Officers Total
-----------------------------------------
<S> <C> <C> <C>
Balances March 31, 1999 $(5,130,720) $(193,112) $2,574,917
Net income 34,243 34,243
Dividends Series A (18,403) 0
Dividends Series B (20,841) (20,841)
Issuance of preferred shares 100,000
Repayment of debt 193,112 0
------------------------------------------------------
Balances June 30, 1999 $(5,135,723) $ 0 $2,688,317
Net income 38,371 38,371
Dividends Series A (17,987) 0
Dividends Series B (20,841) (20,841)
------------------------------------------------------
Balances September 30, 1999 $(5,136,179) $ 0 $2,705,848
Net income 71,338 71,338
Dividends Series A (17,569) 0
Dividends Series B (20,841) (20,841)
Issuance of Series B preferred 500,000
Issuance of Series C preferred 750,000
Federal income tax paid (5,203) (5,203)
------------------------------------------------------
Balances December 31, 1999 $(5,108,454) $ 0 $4,001,142
</TABLE>
<PAGE>
INFRACORPS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Nine months ended
December 31, 1999 December 31, 1998
------------------ ------------------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 143,952 $ 2,339,141
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization 464,055 390,403
Amortization of deferred gain on sale/leaseback 0 (228,231)
Gain on disposal of equipment (1,695) (317,364)
Reserve on discontinued operations 0 9,608
Extraordinary gain 0 (2,550,000)
Income tax payment (5,203) 0
Increase/decrease in operating assets and liabilities:
Accounts receivable (724,080) (967,098)
Costs and estimated earnings in excess of billings on uncompleted contracts (15,508) 28,374
Inventories (287,467) 338,105
Prepaid expenses (90,438) 96,507
Accounts payable (117,333) 93,993
Accrued expenses and other liabilities (199,989) (43,748)
Other Assets (6,883) (613,724)
---------- -----------
Net cash used in operating activities (840,589) (1,424,034)
Cash flow from investing activities:
Purchase of property, plant and equipment (861,579) (529,400)
Proceeds from sale of Service Division 0 390,000
Notes Receivable decrease 21,093 200,497
Decrease in assets of business transferred under contractual agreement 0 69,228
---------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Net cash used in investing activities (840,486) 130,325
INFRACORPS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (continued)
Nine months ended
December 31, 1999 December 31, 1998
------------------ -----------------
(unaudited) (unaudited)
Cash flows from financing activities:
Bank overdraft (241,931) 1,360,369
Proceeds from line of credit 1,000,000 0
Notes payable increase (decrease) (112,500) (4,655,902)
Issuance of preferred stock 1,350,000 4,250,000
Dividends paid (62,523) 0
Principal payments on long-term debt (218,012) (355,877)
Preferred stock redemption 0 (1,250,000)
Proceeds from notes payable 605,384 0
Proceeds from notes payable to stockholder 0 2,291,700
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Net cash provided by financing activities 2,320,418 1,640,290
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Increase (decrease) in cash and cash equivalents 639,343 346,581
Cash and cash equivalents at beginning of year 272,259 206,750
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Cash and cash equivalents at end of period $ 911,602 $ 553,331
========== ===========
</TABLE>
Supplemental disclosures of cash flow information and noncash investing
activities: Interest paid on notes payable and long-term debt was $216,434 and
$268,934 for the nine months ended December 31, 1999 and December 31, 1998
respectively. There were no capital lease obligations for the periods
represented. Preferred dividends of $53,959 and $54,384 were accrued for the
nine months ended December 31, 1999 and December 31, 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 nine months
ended December 31, 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. The 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 December 31, 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 negotiations with China Steel Corporation are on-going, there can be no
assurance that such negotiations will be
<PAGE>
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 nine month period ended
December 31, 1998 were $0 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 nine months ended December 31, 1999 compared to three months
and nine months ended December 31, 1998
All of the revenues and expenses for the Florida operations have been
removed from continuing operations for the period ended December 31, 1998.
Revenues for the three month period ended December 31, 1999 ("third quarter of
fiscal 2000") were $7,244,918 compared to $4,868,142 for the three month period
ended December 31, 1998 ("third quarter of fiscal 1999"). This increase is due
to increased billings on contracts performed during the quarter. This quarter
included a large contract being billed for worked performed by InfraCorps
Technologies, Inc. Revenues for the nine month period ended December 31, 1999
("year to date fiscal 2000") were $17,445,743 compared to $14,201,403 for the
nine month period ended December 31, 1998 ("year to date fiscal 1999") resulting
in a 22.8% increase in revenues. This increase reflects the increased backlog of
work being completed.
Cost of goods and services for the third quarter of fiscal 2000 were
$6,435,774 or 88.8% of sales compared to $4,252,017 or 87.3% of sales for the
third quarter of fiscal 1999. Gross profits (losses) for the third quarter of
fiscal 2000 were $809,144 or 11.2% of sales compared to $616,125 or 12.7% of
sales for the third quarter of fiscal 1999. Cost of goods and services for the
year to date fiscal 2000 were $15,178,070 or 87% of sales compared to
$12,433,155 or 87.6% of sales for the year to date fiscal 1999. Gross profits
(losses) for the year to date fiscal 2000 were $2,267,673 or 13% of sales
compared to $1,768,248 or 12.5% 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 $663,576 for the third
quarter of fiscal 2000 or 9.2% of net sales compared to $452,578 or 9.3% of net
sales for the three month period ended December 31, 1998. Selling, general and
administrative expenses were $1,931,367 for the year to date fiscal 2000 or 11%
of net sales compared to $1,731,822 or 12.2% 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 general
increase in these expenses reflects a general increase in fixed costs of
insurance and employee benefits as well as a additional expenses incurred as
necessary to perform the increased workload.
Gain on sale of assets was $1,695 for the year to date fiscal 2000 compared
to $331,696 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 third quarter of fiscal 2000 was $80,572 compared to $42,235 for
the third quarter of fiscal 1999. Interest expense for the year to date fiscal
2000 was $216,434 compared to $268,933 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 third quarter of fiscal 2000 from continuing operations was
$71,338 compared to $135,444 for the third quarter of fiscal 1999. Profit for
the year to date fiscal 2000 from continuing operations was $143,952 compared to
$131,468 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 $0 and $342,328 for the third quarter of
fiscal 1999 and year to date fiscal 1999, respectively. Florida operations had
revenues of $0 and $769,249 for the third quarter of fiscal 1999 and year to
date fiscal 1999, respectively.
There was an extraodinary gain of $600,000 for the third quarter of fiscal
1999 and $2,550,000 for the year to date fiscal 1999. This was a gain on
conversion of debt to preferred stock. Net profit for the third quarter of
fiscal 2000 was $71,338 compared to net profit of $735,444 for the third quarter
of fiscal 1999. Net profit for the year to date fiscal 2000 was $143,952
compared to net profit of $2,339,140 for the year to date fiscal 1999.
Liquidity And Capital Resources As Of December 31, 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 December 31, 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.
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
<PAGE>
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.
On December 28, 1999, a venture capital firm purchased 751 shares of Series
C preferred stock with a par value of $1,000. Series C Preferred Stock pays a 6%
dividend and will elect one director to the Board of Directors. As part of the
deal, a warrant to purchase 300,400 shares of Common Stock at $0.16 per share
was issued.
Major components of cash flows used in operating activities include a
decrease in accrued expenses of $199,989 and an increase in accounts receivable
of $724,080. Other uses of cash flows include an increase in inventories of
$287,467 and a decrease of accounts payable of $117,333. Adjustments to net cash
flows include depreciation and amortization of $464,055.
Net cash used in investing activities of $840,486 consisted mainly of
purchase of property, plant and equipment in the amount of $861,579. The net
cash from financing activities of $2,320,418 include in part proceeds from line
of credit of $1,000,000, proceeds from notes payable of $605,384, issuance of
preferred stock of $1,350,000 and repayment of bank overdraft of $241,931. The
cash and cash equivalents at December 31, 1999 was $911,602 which excludes the
$600,000 of restricted cash guaranteeing the bond for the China Steel contract.
New orders received for the third quarter of fiscal 2000 were $3,528,918
compared to $1,985,730 for the third quarter of fiscal 1999. New orders received
for the year to date fiscal 2000 are $23,354,988 compared to $21,116,034 for
year to date fiscal 1999. Backlog at December 31, 1999 was $18,211,000 compared
to $11,800,000 at December 31, 1998. The decrease in the backlog is due to work
on backlog being performed. Backlog has increased over prior year due to
increased work available and aging of infrastructure systems.
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.
ICII 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.
<PAGE>
ICII is currently working on a project for Baltimore Gas and Electric. The
market for ICII will be worldwide.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK.
Not Applicable.
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.
None
Item 5. OTHER INFORMATION.
None
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibits
27 Financial Data Schedule
(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 February 11, 2000 BY: s/James B. Quarles
----------------- ------------------------------
James B. Quarles
Chairman and President
DATE February 11, 2000 BY: s/Warren E. Beam, Jr.
----------------- ------------------------------
Warren E. Beam, Jr.
Secretary and Controller
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE NINE MONTH PERIOD ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 911,602
<SECURITIES> 0
<RECEIVABLES> 4,126,339
<ALLOWANCES> 0
<INVENTORY> 886,918
<CURRENT-ASSETS> 6,969,561
<PP&E> 6,860,774
<DEPRECIATION> (4,287,164)
<TOTAL-ASSETS> 10,710,595
<CURRENT-LIABILITIES> 5,633,892
<BONDS> 935,224
0
3,176,370
<COMMON> 5,933,226
<OTHER-SE> (5,108,454)
<TOTAL-LIABILITY-AND-EQUITY> 10,710,597
<SALES> 0
<TOTAL-REVENUES> 17,445,743
<CGS> 0
<TOTAL-COSTS> 15,178,070
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (216,434)
<INCOME-PRETAX> 143,952
<INCOME-TAX> 0
<INCOME-CONTINUING> 143,952
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 143,952
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
