UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM l0-QSB
(Mark One)
(X) QUARTERLY REPORT UNDER SECTlON 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from______ to_____
Commission File Number 33-18582
ITRONICS INC.
- -----------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
TEXAS 75-2198369
------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
6490 S. McCarran Blvd., Bldg C-23, Reno, Nevada 89509
- -----------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number, including area code: (702)689-7696
-------------
NO CHANGE
- -----------------------------------------------------------------------------
Former name, former address and former fiscal, if changes since last report.
Check whether the issuer (1) 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 during the
past 90 days. Yes (x) No ( ).
1
<PAGE>
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of April 30, 1998, 44,284,600 shares of common stock were
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes ( ) No (X)
2
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - March 31, 1998
and December 31, 1997 4
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1998 and 1997. 6
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1998 and 1997. 8
Notes to Condensed Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis or Plan of
Operation 10
PART II- OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 15
Item 6. Exhibits and Reports on Form 8-K 15
3
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PART I - FINANCIAL INFORMATIONON
Item 1. Financial Statements
- ----------------------------
ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
March 31, 1998 Dec. 31, 1997
-------------- -------------
CURRENT ASSETS
Cash $ 13,697 $ 29,213
Accounts receivable 31,858 52,272
Notes receivable, stockholders 44,257 37,337
Inventories 45,375 47,973
Prepaid expenses 14,985 22,462
--------- ---------
Total Current Assets 150,172 189,257
--------- ---------
PROPERTY AND EQUIPMENT
Plant lease/option acquisition costs 17,063 3,546
Leasehold improvements 14,212 14,212
Equipment and furniture 336,614 327,635
Vehicles 32,858 32,858
Equipment under capital lease 32,012 32,012
--------- ---------
432,759 410,263
Less: Accumulated depreciation and amortization 255,269 247,073
--------- ---------
177,490 163,190
--------- ---------
OTHER ASSETS
Intangibles 9,300 7,121
Note receivable, stockholder 72,765 82,663
Deposits 2,823 2,823
--------- ---------
84,888 92,607
--------- ---------
$ 412,550 $ 445,054
========= =========
See Notes to Condensed Consolidated Financial Statements
4
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS'(DEFICIT)
March 31, 1998 Dec. 31, 1997
-------------- -------------
CURRENT LIABILITIES
Accounts payable $ 154,153 $ 92,654
Accrued expenses 178,623 150,512
Contracts payable 8,347 15,394
Current maturities of long-term debt - 5,000
Due to stockholders 93,400 60,085
Capital lease obligations due stockholders 25,000 24,419
Interest payable 18,930 17,314
Other 6,326 6,326
--------- ---------
Total Current Liabilities 484,779 371,704
--------- ---------
LONG-TERM LIABILITIES
Due to stockholders, less current maturities 67,364 70,946
Accrued salary due officer/stockholder 20,000 140,000
Capital lease obligations due stockholders, less
current maturities 2,034 2,803
Deferred gain, less current maturities 18,748 19,627
--------- ---------
Total Long-Term Liabilities 108,146 233,376
--------- ---------
592,925 605,080
--------- ---------
STOCKHOLDERS' (DEFICIT)
Preferred stock (-0- shares outstanding) - -
Common stock ( 43,747,600 shares outstanding at
March 31, 1998 and 43,050,532 outstanding at
December 31, 1997) 43,748 43,051
Additional paid-in capital 3,108,990 3,039,981
Accumulated deficit (3,554,669) (3,350,421)
Common stock to be issued 221,556 107,363
--------- ---------
( 180,375) ( 160,026)
--------- ---------
$ 412,550 $ 445,054
========= =========
See Notes to Condensed Consolidated Financial Statements
5
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ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,1998 AND 1997
(UNAUDITED)
Three Months Ended March 31,
----------------------------
1998 1997
---------- ----------
REVENUES
Mining technical services $ 82,712 $ 51,444
Photobyproduct recycling 31,897 25,685
Silver 53,454 24,259
Fertilizer 10,083 -
-------- --------
Total Revenues 178,146 101,388
COST OF SALES 217,526 132,930
-------- --------
Gross Profit (39,380) (31,542)
-------- --------
OPERATING EXPENSES
Depreciation and amort. 7,638 5,481
Research and development 15,511 13,543
Sales and marketing 40,812 16,921
General and administration 90,234 56,536
-------- --------
154,195 92,481
-------- --------
Operating Income (Loss) (193,575) (124,023)
-------- --------
OTHER INCOME (EXPENSE)
Forgiveness of debt - -
Interest expense (10,844) (16,134)
Other, net 170 -
-------- --------
Total Other Income
(Expense) (10,674) (16,134)
-------- --------
Income (Loss) before provision
for income taxes (204,249) (140,157)
Provision for income taxes - -
-------- --------
Net income (loss) before cumulative effect
of a change in accounting principle (204,249) (140,157)
Cumulative effect on prior years (to
December 31, 1996) of changing the accrual
of audit and annual meeting costs - (31,500)
-------- --------
Net Income (loss) $(204,249) $(171,657)
======== ========
Weighted average number of
shares outstanding (1,000's) 43,366 29,943
======== ========
6
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ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,1998 AND 1997
(UNAUDITED)
Three Months Ended March 31,
----------------------------
1998 1997
---------- ----------
Earnings (loss) per share before
cumulative effect of a change in
accounting principle $(0.0047) $(0.0050)
Cumulative effect on prior years (to
December 31, 1996) of changing the
accrual of audit and annual meeting
costs (0.0000) (0.0011)
-------- --------
Earnings (loss) per share $(0.0047) $(0.0061)
======== ========
See Notes to Condensed Consolidated Financial Statements
7
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ITRONICS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,1998 AND 1997
(UNAUDITED)
Three Months Ended March 31,
1998 1997
---------- ----------
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES
Net income (loss) $(204,249) $(171,657)
Adjustments to reconcile net income (loss)
to cash used by operations
Depreciation and amortization 7,638 5,481
Forgiveness of debt - -
Expenses paid with stock 25,638 12,736
(Increase) decrease:
Trade receivables 20,414 18,818
Inventories 2,598 (2,028)
Prepaids and other assets 7,477 3,885
Increase (decrease):
Accounts payable 61,499 4,816
Accrued expenses 21,826 76,831
Accrued interest 1,616 6,907
-------- --------
Net Cash Used by Operating Activities (55,543) (44,211)
-------- --------
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES
Acquisition of property and equipment
and intangibles (22,496) -
-------- --------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES
Proceeds from sale of common stock 37,978 29,550
Proceeds from debt, stockholders 35,000 44,500
Payments on debt (10,455) (9,177)
-------- --------
Net Cash Provided by Financing Activities 62,523 64,873
-------- --------
Net Increase (Decrease) in Cash (15,516) 20,662
Cash, beginning of period 29,213 1,091
-------- --------
Cash, end of period $ 13,697 $ 21,753
======== ========
See Notes to Condensed Consolidated Financial Statements
8
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ITRONICS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
1. The unaudited condensed consolidated financial statements printed
herein have been prepared in accordance with the instructions to Form 10-QSB
and do not include all of the information and disclosures required by
generally accepted accounting principles. Therefore, these financial
statements should be read in conjunction with the consolidated financial
statements and related footnotes included in the Company's Form 1O-KSB for
the year ended December 31, 1997. These financial statements reflect all
adjustments that are, in the opinion of management, necessary to fairly
state the results for the interim periods reported.
2. The results of operations for the three months ended March 31, 1998
are not necessarily indicative of the results to be expected for the full
year.
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Item 2. Management's Discussion and Analysis or Plan of Operations
I. Results of Operations
The Company reported a net loss of $204,249 or $(0.0047) per share for
the quarter ended March 31, 1998, compared to a net loss of $171,657 or
$(0.0061) per share for the comparable 1997 period. Several factors
contributed to the decline in earnings for the first quarter of 1998. First,
sales increased by approximately $76,800 while cost of sales increased by
$84,600, resulting in an increase in gross loss of $7,800. Second, sales and
marketing expense increased by $23,900, reflecting the costs of negotiating
a contract with Western Farm Service, Inc. (WFS), the establishment of the
photobyproduct service and equipment sales division, and corporate marketing
efforts. Third, general and administrative expenses increased by $33,700.
This includes $19,900 in legal fees for the preparation of the 1998 Private
Placement Memorandum and $10,000 for a part-time financial management
position. These increases were partially offset by decreases of $5,300 in
interest expense and $31,500 in the cumulative effect of changing the method
of accruing audit and annual meeting costs.
To provide a more complete understanding of the factors contributing
to the changes in sales, operating expenses and the resultant operating loss,
the discussion presented below is separated into the Company's two operating
segments.
MINING TECHNICAL SERVICES
This segment, known as Whitney & Whitney, Inc., provides mining and
materials management, geology, engineering and economics consulting, and
publishes specialized mineral economics and materials financial reports.
It employs technical specialists with expertise in the areas of mining,
geology, mining engineering, mineral economics, materials processing and
technology development. Technical services have been provided to many of the
leading U.S. and foreign mining companies, several public utilities with
mineral interests, to various state agencies, the U.S. and foreign
governments, and the United Nations and the World Bank.
- -----------------------------------------------------------------------------
Three Months Ended March 31,
----------------------------
1998 1997
---------- ----------
Sales revenue $ 82,712 $ 51,444
Operating income (loss) $(58,102) $(33,906)
- -----------------------------------------------------------------------------
Mining technical services revenue was approximately $82,700 for the
quarter ended March 31, 1998, compared to $51,400 for the comparable quarter
of 1997, an increase of $31,300, or 60.8%. Cost of sales increased by $34,900,
due to an increase in pass-through costs of $16,900 and increased payroll and
consulting costs of $15,800. The increase in payroll costs reflects greater
utilization of outside technical specialists. These factors resulted in a
10
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gross loss for the segment of $3,000, compared to a gross profit of $600 for
the prior year first quarter.
Segment operating expenses increased by $20,600 due to the legal,
marketing, and management costs discussed above.
The combination of these factors resulted in a 1998 first quarter
segment operating loss of $58,100, compared to an operating loss of $33,900
for the first quarter of 1997, an increased operating loss of $24,200.
PHOTOBYPRODUCT FERTILIZER
This segment, known as Itronics Metallurgical, Inc., operates a semi-
works photobyproduct recycling plant, which includes related silver recovery.
As part of the recycling process, the Company is manufacturing and marketing
a line of liquid turf fertilizer products. Revenues are generated from
photobyproduct management services and silver sales. Fertilizer sales are in
the start-up phase and are expected to expand once the plant is relocated to
the new facility which is being acquired.
- -----------------------------------------------------------------------------
Three Months Ended March 31,
----------------------------
1998 1997
---------- ----------
Sales revenue $ 95,434 $ 49,944
Operating income (loss) $(135,473) $(90,117)
- -----------------------------------------------------------------------------
Total segment sales for the first quarter of 1998 were approximately
$95,400, compared to $49,900 for the comparable quarter of 1997, an increase
of $45,500, or 91.1%. Photobyproduct recycling revenue for the quarter
increased by $6,200 compared to the first quarter of 1997, due to the
processing of distilled concentrated photobyproducts received in 1997.
Photobyproduct volume for the quarter decreased by 2.3% compared to the prior
year quarter. Silver sales increased $29,200 from the first quarter of 1997.
Silver ounces sold increased 99.7% and the average silver price increased
20.0% for the quarter. Fertilizer sales for the quarter were approximately
$10,100, compared to no sales for the 1997 first quarter. The current quarter
sales include test marketing orders of Gold'n Gro Iron and Gold'n Gro 20-1-7
placed by WFS. The progress of developments with WFS are described under "New
Developments" on page 13 of this report. Cost of sales for the first quarter
of 1998 increased $49,700 over the 1997 first quarter. The increase includes
$25,500 in direct costs resulting from increased sales, $20,400 in payroll
costs due to higher hourly pay rates and to an additional plant position,
and $1,800 in rental of additional plant storage space. These factors
resulted in a gross loss of $36,400 for the first quarter of 1998, compared
to a gross loss of $32,200 for the first quarter of 1997.
Segment operating expenses increased approximately $41,100 over the
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first quarter of 1997, due to the fertilizer marketing, corporate marketing,
legal, and management expenses discussed above.
These factors resulted in a 1998 first quarter segment operating loss
of $135,500, compared to a loss of $90,100 for the first quarter of 1997, an
increased operating loss of $45,400.
SUMMARY
On a consolidated basis, the various changes in revenues and
operating expenses resulted in a first quarter 1998 operating loss of
$193,600, compared to an operating loss of $124,000 for the first quarter of
1997, an increased loss of $69,600.
II. Changes in Financial Condition; Capitalization
Cash amounted to $13,697 as of March 31, 1998, compared to $21,753 as
of March 31, 1997. Net cash used for operating activities was approximately
$55,500 for the first three months of 1998. The cash used for operating
activities during the period was financed primarily by stockholders, which
included $38,000 in proceeds from the private placement of common shares and
$35,000 in debt proceeds.
Total assets decreased during the three months ended March 31, 1998
by approximately $32,500 to $412,600. Current assets decreased approximately
$39,100 due to a decrease in cash of $15,500, a decrease in accounts
receivable of $20,400 and a decrease in prepaid expenses of $7,500. Current
liabilities increased by approximately $113,100 and total liabilities
decreased by $12,200. Increases in liabilities, including accounts payable of
$61,500, stockholder loans totaling $35,000 and accrual of management salaries
totaling $17,400, were offset by loan payments to stockholders and unrelated
parties totaling approximately $10,500 and by accrued management salaries
totaling $120,800 having been converted into the Company's restricted common
stock.
On March 31, 1998 the Company began a Private Placement Offering to
raise $2,000,000 in equity capital. The Offering is being made in four
$500,000 tranches, with the stock price of each tranche dependent on market
conditions. The first tranche is presently being offered in units consisting
of two shares and one warrant at a price of $0.50 per unit, with a minimum
investment of $10,000.
III. Working Capital/Liquidity
During the three months ended March 31, 1998, the working capital
deficit increased by approximately $152,200 to a deficiency of $334,600.
Management has continued the Company's ongoing program of improving working
capital and liquidity through private placements of common shares, conversion
of debt to common shares, and payment of consulting and other labor services
with common shares. During the three months ended March 31, 1998, a total of
$38,000 was received from the private placement of common shares, $120,800
in accrued salary was converted to common shares, and approximately $25,600
in various expenses were paid with common shares.
12
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IV. New Developments
Since the fall of 1996, the Company has been in discussions with
Western Farm Service, Inc. (WFS) regarding marketing the Company's Gold'n Gro
fertilizer products. WFS is a wholly owned subsidiary of Agrium, Inc., the
largest nitrogen fertilizer producer in North America and the second largest
retailer of agricultural fertilizer products. In April 1997 WFS initiated a
test marketing program for the Company's Gold'n Gro Iron fertilizer. To date,
WFS field tests of the product have been successful. Test marketing is
ongoing, with the products being tried on a variety of agricultural products,
including wine grapes. Test marketing of a turf application program which
includes Gold'n Gro Iron and Gold'n Gro 20-1-7 has been initiated.
In March 1998 the Company's subsidiary, Itronics Metallurgical, Inc.
(IMI), signed a definitive manufacturing and distribution agreement with WFS.
The agreement gives WFS the exclusive license and right to manufacture and
market the Gold'n Gro line of fertilizer products in the states of Arizona,
California, Hawaii, Idaho, Oregon and Washington. The agreement is for five
years, with five year renewal options.
During the first quarter of 1998, IMI completed development of eleven
new Gold'n Gro fertilizer products, bringing the total to 15 commercial
fertilizer products. These products cover most of the applications being
targeted in the Turf, Ornamental, and Professional Grower markets in the
Western U.S.
In April 1998 IMI established a fertilizer sales department with the
hiring of a fertilizer salesman. The primary responsibility of the department
will be to provide field support to WFS in the introduction of the Gold'n Gro
fertilizers and nutrition programs to the WFS sales organization and to WFS
customers.
In April 1998 IMI began the introduction of the Gold'n Gro line of
fertilizer products to WFS store managers and sales staff. WFS has 45 stores
in California, with one to three sales people each. Most of these people will
need to be briefed about the product line, so the introduction process is
expected to continue through the third quarter. Initial orders are now being
placed, but IMI cannot significantly increase its fertilizer production until
the plant is relocated to the new facility.
WFS has a manufacturing plant in south central California. The other
project related to implementing the manufacturing and sales agreement with
WFS is establishing the logistics for movement of materials between Reno and
the WFS manufacturing plant. The logistics and warehousing locations for
delivery of manufactured goods from both the IMI Reno manufacturing plant
and the WFS manufacturing plant are also being established. WFS is in the
process of designating locations that will be used to make customer
deliveries. Once these arrangements are in place, it will be possible for
product to flow from the two manufacturing plants to customer locations as
customer demand requires.
In April 1998 IMI entered into an exclusive sales agreement with
Calfran International of Springfield, Massachusetts. The contract grants IMI
the exclusive right to sell "Cold Vaporization" Vacuum Distillation equipment
to its photowaste customers. The sales territory is the United States, Canada
and Mexico, with an option to expand to other territories as demand justifies.
This equipment is designed to remove the water from used liquid photo-
chemicals, producing two products, a commercial chemical concentrate and
clean distilled water. Removal of the water from the photochemicals produces
13
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a relatively high value concentrate product that can be shipped cost
effectively over long distances.
During the quarter, IMI entered into a lease/option agreement to
acquire a 35,000 square foot manufacturing facility on three acres of land in
the Reno-Stead, Nevada area. On March 14, 1998 the Special Use Permit for
the facility became effective. The lease and occupancy are now dependent on
obtaining the necessary Environmental Control Permit, which will require
completion of engineering drawings for specified improvements, receipt of
necessary building permits, inspection/approval by the City of Reno
Environmental Control Department, and obtaining of funding to support the
move. The move to the new facility was scheduled for mid to late June 1998,
but delays in acquisition of necessary financing and the time required to
make site improvements have pushed the move into August 1998. Exact timing
is still dependent upon acquisition of necessary financing, which as of this
date has not been acquired.
V. Forward-Looking Statements
The statements in this Form 10-QSB that are not historical facts or
statements of current status are forward-looking statements (as defined in
the Private Securities Litigation Reform Act of 1995) that involve risks and
uncertainties. Actual results may differ materially.
PART II- OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
1. The former president of Seahawk, Inc. (Seahawk) filed suit on June
30, 1995 in the Superior Court of California, County of Orange, against the
Company, W&W, and several W&W employees, alleging libel and slander resulting
from consulting work W&W had done for Seahawk. The suit sought unspecified
damages to be proven at trial, plus punitive or exemplary damages. W&W's
liability insurance carrier defended against the suit, and in March 1997, the
suit was dismissed. The individual has filed an appeal of the dismissal. In
February 1997, this individual served a second suit that includes the Company,
W&W, and a key employee as codefendants, along with several unrelated parties.
The suit alleges breach of contract and other causes of action and seeks in
excess of $5 million plus punitive damages. The Company's liability insurance
carrier has agreed to assume the defense of this action with a reservation of
rights, including the right to disclaim insurance coverage. Management
believes the allegations are without merit and is vigorously defending against
the suit.
Subsequent to March 31, 1998, the plaintiff in the above cases
proposed a settlement of the second suit wherein he will drop the second suit
if he is unsuccessful in his appeal of the dismissal of the first suit and if
the Company will drop its counterclaim against him. The Company has agreed
to, and signed, this proposal and is awaiting his signature to finalize the
settlement.
Item 2. Changes in Securities and Use of Proceeds
- -------------------------------------------------
(c) Recent Sales of Unregistered Securities:
14
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Following is a summary of sales of unregistered securities for the
three months ended March 31, 1998. All securities were issued as restricted
common shares which are subject to Rule 144 of the Securities and Exchange
Commission. Generally, Rule 144 requires shareholders to hold the shares for
a minimum of one year before sale. In addition, officers, directors and more
than 10% shareholders are further restricted in their ability to sell such
shares. There have been no underwriters of these securities and no commissions
or underwriting discounts have been paid.
Shares Value
Issued Received
-------- --------
Private placement for cash 140,000 $ 14,000
Conversion of accounts payable, notes
payable and accrued interest 436,630 43,663
Interest on deferred salaries to
management and professional employees 34,297 3,430
Current labor services of officers,
directors and professional employees 78,842 7,884
Acquisition of office equipment 7,299 730
-------- --------
697,068 $ 69,707
======== ========
The above transactions qualified for exemption from registration
under Sections 3(b) or 4(2) of the Securities Act of 1933. Private placements
for cash were non-public transactions. The Company believes that all such
investors are either accredited or, either alone or with their purchaser
representative, have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks of the
prospective investment.
Item 3. Defaults Upon Senior Securities
- ---------------------------------------
(a) As of March 31, 1998, the Company and its subsidiaries were in
default on various promissory notes and secured leases with stockholders
totaling $76,034. Details of these notes are more fully described in Note 3
to the Consolidated Financial Statements included in the Company's Form 10-KSB
for the year ended December 31, 1997. No collection action has been taken by
the note and lease holders.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibit 11, "Computation of Loss Per Share ", is presented on
page 17 of this report.
Exhibit 27, "Financial Data Schedule", is presented on page 18 of
this report.
(b) A report on Form 8-K, dated March 31, 1998, was filed by the
Company. The purpose of the Form 8-K was the announcement of a proposed
offering of securities not registered under the Securities Act of 1933, as
amended. No financial statements were filed with the Form 8-K.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ITRONICS INC.
DATED: May 13, 1998 By: JOHN W. WHITNEY
---------------- ---------------------------------
John W. Whitney
President, Treasurer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated
DATED: May 13, 1998 By: JOHN W. WHITNEY
----------------- ---------------------------------
John W. Whitney
President, Treasurer and Director
(Principal Executive Officer)
DATED: May 13, 1998 By: MICHAEL C. HORSLEY
----------------- ---------------------------------
Michael C. Horsley
Controller
(Principal Accounting Officer)
16
<PAGE>
ITRONICS INC. AND SUBSIDIARIES
COMPUTATION OF LOSS PER SHARE
FOR THE THREE MONTHS ENDED MARCH 31,1998 AND 1997
EXHIBIT 11
Three Months Ended March 31,
----------------------------
1998 1997
---------- ----------
Common and common
equivalent shares used in
determining net loss per
share
Weighted average number of
common shares outstanding
during the period(1,000's) 43,366 29,943
Common equivalent shares - -
---------- ----------
43,366 29,943
========== ==========
Net Income (loss) $ (204,249) $ (171,657)
Cumulative preferred dividends
for the period - ( 9,880)
---------- ----------
Net income (loss) less
cumulative preferred
dividends for the period $ (204,249) $ (181,537)
========= =========
Earnings (Loss) per share $ ( 0.0047) $ ( 0.0061)
========= =========
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-QSB FOR THE PERIOD MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 13,697
<SECURITIES> 0
<RECEIVABLES> 33,264
<ALLOWANCES> 1,406
<INVENTORY> 45,375
<CURRENT-ASSETS> 150,172
<PP&E> 432,759
<DEPRECIATION> 255,269
<TOTAL-ASSETS> 412,550
<CURRENT-LIABILITIES> 484,779
<BONDS> 108,146
0
0
<COMMON> 43,748
<OTHER-SE> (224,123)
<TOTAL-LIABILITY-AND-EQUITY> 412,550
<SALES> 95,434
<TOTAL-REVENUES> 178,146
<CGS> 131,841
<TOTAL-COSTS> 217,526
<OTHER-EXPENSES> 23,149
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,844
<INCOME-PRETAX> (204,249)
<INCOME-TAX> 0
<INCOME-CONTINUING> (204,249)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (204,249)
<EPS-PRIMARY> (.005)
<EPS-DILUTED> (.005)
</TABLE>
