U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 01-8929
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
________________________________________________________
(Exact name of small business issuer as specified in its charter)
Nevada 13-3432594
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1408 Pawnee Drive, Las Vegas, Nevada 89102
(Address of principal executive offices)
(888) 355-8805
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered under Section 12(b) of the Exchange Act:
Name of Each Exchange
Title of Each Class on Which Registered
Securities registered under Section 12(g) of the Exchange Act:
Common Stock
-------------------------
(Title of Class)
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 for the past 90 days. Yes __ No X
The aggregate number of shares outstanding of the Issuer's Common
Stock, its sole class of common equity, was 10,149,088 as of
March 31, 1997.
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
FORM 10-QSB
for the quarter ended March 31, 1997
TABLE OF CONTENTS
Part I. Financial Information
-------
Item 1. Financial Statements (unaudited)
Item 2. Managements Discussion and Analysis or Plan of
Operation
Part II. Other Information
--------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security holders
Item 5. Other Information
Item 6. Exhibits and reports on form 8-K
SIGNATURES
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(A Development Stage Company)
UNAUDITED
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
ASSETS
March 31, December 31,
1997 1996
Current Assets
Cash $ 207 207
Accounts Receivable 19,630 19,630
Other Receivable 15,325 29,869
Inventories 15,000 15,000
Pre-paid expenses 0 1,990
Total Current Assets $ 50,162 66,696
Fixed Assets 1,700,466 1,699,745
Less Accumulated Depreciation ( 402,700) (387,352)
Total Fixed Assets 1,297,766 1,312,393
Total Assets 1,347,928 $ 1,379,089
<PAGE>
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(A Development Stage Company)
UNAUDITED
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
LIABILITIES AND STOCKHOLDERS' DEFICIT
March 31, December 31,
1997 1996
Current Liabilities
Accounts Payable $ 55,600 $ 88,601
Suppliers 98,650 184,272
Short-term credit from banks 611,424 611,424
Short-term loans (other) 200,000 100,000
------- --------
Total Current Liabilities $965,674 984,297
Long-Term Liabilities
Long-term loans 1,675,988 1,675,988
Accrued Expenses (Tweed) 394,274 389,274
Liability for Severance pay 0 76,049
--------- ---------
Total Long-Term Liabilities 2,070,262 2,141,311
Stockholders' Deficit
Common Stock, $.001 par value,
authorized 26,000,000 shares,
issued and outstanding
9,723,333 shares and 10,149,088 10,149 9,723
Additional Paid-In Capital 7,382,024 7,232,450
Accumulated Deficit During
The Development Stage (9,104,342)(8,988,692)
--------- ---------
Total Liabilities and Equity (1,347,928)(1,379,089)
========= =========
<PAGE>
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(A Development Stage Company)
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND FOR THE ANNUAL PERIOD
ENDING DECEMBER 31, 1996
3 Months
Ended Annual to
March December
31, 1997 31, 1996
Revenues
Sales $ 0 $ 21,906
Expenses
Start-up Expenses 0 0
Research and Development 0 133,540
Marketing Expenses 0 301,604
General and Administrative 70,833 835,256
Financing Expenses 44,817 101,356
Loss from Sale of Subsidiary 0 0
-------- ---------
Total Expenses 115,650 1,371,756
-------- ---------
Extraordinary Items:
Loss on Conversion of Debt 0 (1,922,027)
Income from disposed operation 0 0
Estimated gain on disposal 0 0
(loss)/income before
extraordinary items 0 (3,271,877)
Gain on extinguishment
of debt (Tweed) 0 0
Net Income (Loss) ( 115,650) (3,271,877)
Accumulated Deficit, Beginning (8,988,692) (5,716,815)
-------- ---------
Accumulated Deficit, Ending (9,104,342) (8,988,692)
========= =========
<PAGE>
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1997
NOTE 1 - ADJUSTMENTS
The accompanying unaudited interim financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information
and with the instructions to Form 10-Q and 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 adjustments
(consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE COMPANY
Background. Israel Semiconductor Corporation, as of March 31,
1997, was in arrears to all then-existing creditors, and had
already approved an orderly plan of liquidation for its only
subsidiary, GAD Semiconductors, Ltd.
Business Development. In September 1993, the Company committed
to invest in shares of a newly founded Israeli development stage
company, GAD Semiconductors, Ltd. ("GAD"), specializing in
gallium arsenide applications, initially in the specialty diodes
area. The Company committed to invest an amount up to $1,000,000
($900,000 in cash and $100,000 in loans) and undertook to raise
additional funds by means of commercial banking loans, grants and
government loans which GAD is qualified to receive as a
recognized Approved Enterprise under the Israeli Encouragement of
Capital Investment- 1959 Law. Together with the initial
investment, this has aggregated to approximately $3,400,000,
which is $400,000 in excess of the originally agreed upon amount.
In return for the initial commitment, GAD issued to the Company
60% of its common stock, par value $2,033. The subsequent
investment of $400,000 was converted into additional common stock
of GAD for which GAD issued 1000 shares (approximately 10% of the
common stock then outstanding) to the Company in September, 1995.
The major part of the investment, up to the amount which the
Company has undertaken to invest in GAD's shares, has been
considered as premium on the shares. As of September 30, 1996,
the Company was well past its initial commitment for investment,
and has exceeded the original program by approximately $700,000,
most of which has been converted to additional equity in GAD.
All subsequent advances were in the form of loans, which total
approximately $400,000 at the end of the third quarter. Under
the approved capital investment program, GAD received, during the
second and third quarters of 1996, no funds from State guaranteed
loans, although amounts are accruing which may be realized during
the fourth quarter of this year.
Capital Resources and Liquidity. The Company, as of March 31,
1997, has sustained a negative cash flow since the beginning of
1994. The Company raised $1,538,125 during 1995 in various
private placements, and in 1996, raised additional equity of
$939,786 by the sale of 1,308,667 shares in private placements
and an S-8 registration.
During the fourth quarter of 1996, and the first quarter, 1997,
the Company borrowed $399,273.94 from Tweed Investments, Ltd.,
which was in the form of a convertible note, with a conversion
rate at market during the succeeding 12 months, and $100,000 from
Karlin Investments, convertible at 75% of then-existing market
prices on date of conversion. Tweed converted the sum of all of
its loans into equity during the fourth quarter of 1997, in
exchange for 11,300,000 shares. This was accounted for as a
payment of $110,625 in the then-current value of the stock and an
extraordinary gain of $323,466 on the amount of debt, in excess
of stock value, cancelled by the Company.
During the first quarter of 1997, Karlin Investments converted
$100,000 of its credit into 334,846 shares of common stock of the
Company and loaned the Company an additional $100,000 on February
20, 1997. Subsequent loans and conversions occurred between the
Company and Karlin such that an additional $200,000 in advances
was converted into a total of 4,424,026 shares of stock issued to
Karlin Investments, primarily during the second quarter, 1997.
An additional $50,000 of equity share sales occurred on January
21, 1997, when 90,909 shares were sold to Eli Ahron in a private
subscription.
Manufacturing. GAD commenced, during the first quarter of 1996,
limited production activities to fill orders existing from
outside third-party purchasers. During the second quarter,
delivery of these early production diodes commenced. GAD has
subcontracted packaging jobs to contractors, which have been
successful in the areas of axial, plastic and metal glass
packages. During the third quarter, GAD entered into a marketing
and production agreement with Advanced Power Technology, Inc.
("APT"), pursuant to which APT would package GAD GaAs chips in 3
industry-standard configurations, market these specific devices
to existing APT customers, and then undertake exclusive
representation on a world-wide basis for the TO-3 and TO-247
diodes, so long as annual sales equal or exceed minimums
established in the contract. GAD retained the right to be a
"second source" for these completed diodes, but cannot sell more
than 50% of APT's annual volume.
Insufficient funding was received to activate deliveries as
necessary, and a plan of liquidation was adopted by the Company
at the close of 1996. During the period from January 1, 1997
through May 15, 1997 (actual date of final shutdown), no revenues
were received. On May 15, 1997, the Company formally adopted a
plan to discontinue its operations in Israel (the GAD
activities), and surrendered all assets, which consisted
primarily of property and equipment, to creditors. Based on the
Company's estimates, the gain on the disposal of GAD was
$975,019, measured as the balance of outstanding liabilities
removed in excess of asset values carried on the Company's books.
This accounting treatment was recognized during the second
quarter.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT 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
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(Registrant)
Dated: November 6, 2000 By: /s/ Robert M. Terry
Robert M. Terry,
Chairman
