U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For The Quarterly Period Ended: Commission File Number:
September 30, 1998 0-17776
LEAK-X ENVIRONMENTAL CORPORATION
(Exact name of Small Business Issuer as specified in Its Charter)
Delaware 23-2823596
(State or other jurisdiction of (IRS Employer Identi-
Incorporation or Organization) fication Number)
790 East Market Street, Suite 270, West Chester, PA 19382
(Address of Principal Executive Offices) (Zip Code)
(610) 344-3380
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to filing requirements for the past 90 days.
Yes X No
The number of shares of Common Stock, par value $.001 per share, outstanding
as of November 13, 1998 is 988,876 shares.
Transitional Small Business Disclosure Format: Yes No X
<TABLE>
CONSOLIDATED BALANCE SHEET
LEAK-X ENVIRONMENTAL CORPORATION AND SUBSIDIARIES
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited)
</CAPTION>
<S> <C> <C>
ASSETS:
CURRENT ASSETS
Cash and cash equivalents $ 224,799 $ 240,769
Accounts receivable, net 1,323,572 2,111,682
Estimated earnings in
excess of billings 93,708 117,749
Inventory ---------- 267,733
Other current assets 88,018 78,454
Net assets of discontinued operations 499,234 499,234
TOTAL CURRENT ASSETS 2,229,331 3,315,621
PROPERTY AND EQUIPMENT, NET 90,635 158,024
OTHER ASSETS - Deposits 122,123 82,488
TOTAL ASSETS $ 2,442,089 $ 3,556,133
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,019,790 $ 2,292,012
Unearned revenue 9,460 307,041
Line of credit 457,000 422,000
Note payable to directors ---------- 100,000
Current portion of long term debt ---------- 50,809
Net liabilities of discontinued operations 412,532 440,114
TOTAL CURRENT LIABILITIES $ 2,898,782 3,611,976
LONG-TERM DEBT 150,000 ---------
STOCKHOLDERS' EQUITY
Common stock $.001 par value:
5,000,000 shares authorized, 988,876
and 1,219,645 issued and outstanding
in 1998 and 1997, respectively 989 1,220
Additional paid-in capital 8,308,246 8,308,015
Accumulated deficit (8,915,928) (8,365,078)
TOTAL STOCKHOLDERS' EQUITY (606,693) (55,843)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,442,089 $ 3,556,133
</TABLE>
See notes for consolidated balance sheets.
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
LEAK-X ENVIRONMENTAL CORPORATION AND SUBSIDIARIES
(Unaudited)
<CAPTION>
Three Months Ended September 30,
1998 1997
</CAPTION>
<S> <C> <C>
Revenues $ 1,578,994 $ 2,237,358
Cost of revenues 1,109,138 1,813,663
Gross profit 469,856 423,695
Selling, general and
administrative expenses 440,411 441,101
Operating income (loss) 29,445 (17,406)
Other (income) expense 455 (3,343)
Interest expense 3,176 3,704
Net income (loss) before taxes and 25,814 (17,767)
discontinued operations
Income tax expense 821 1,018
Net income (loss) before 24,993 (18,785)
discontinued operations
Discontinued Operations:
Operating Income (Loss) (142,472) 22,937
Loss on Sale of Discontinued Operations (441,665) -------
(584,137) 22,937
Net Income (loss) $ (559,144) $ 4,152
Weighted average number of shares of common
stock outstanding
Basic 1,217,137 1,219,645
Diluted 1,217,137 1,219,645
Net income (loss) per share:
Basic: Continuing operations 0.02 (0.02)
Discontinued operations (0.12) 0.02
Loss on sale of discontinued ops (0.36) 0.00
Total Basic (0.46) 0.00
Diluted: Continuing operations 0.02 (0.02)
Discontinued operations (0.12) 0.02
Loss on sale of discontinued ops (0.36) 0.00
Total Diluted (0.46) 0.00
</TABLE>
See notes for consolidated balance sheets.
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
LEAK-X ENVIRONMENTAL CORPORATION AND SUBSIDIARIES
(Unaudited)
<CAPTION>
Nine Months Ended September 30,
1998 1997
</CAPTION>
<S> <C> <C>
Revenues $ 4,966,581 $ 5,524,477
Cost of revenues 3,585,322 4,325,862
Gross profit 1,381,259 1,198,615
Selling, general and administrative expense s 1,293,019 1,235,216
Operating income (loss) 88,240 (36,601)
Other income (3,733) (8,348)
Interest expense 10,184 12,877
Net income (loss) before taxes and 81,789 (41,130)
discontinued operations
Income tax expense 2,463 2,698
Net income (loss) before 79,326 (43,828)
discontinued operations
Discontinued Operations:
Operating Income (Loss) (188,511) 5,655
Loss on Sale of Discontinued Operation (441,665) ------
(630,176) 5,655
Net Loss $ (550,850) $ (38,174)
Weighted average number of shares of common
stock outstanding
Basic 1,218,800 1,219,645
Diluted 1,291,674 1,219,645
Net income (loss) per share:
Basic: Continuing operations 0.07 (0.04)
Discontinued operations (0.16) 0.00
Loss on sale of discontinued ops (0.36) 0.00
Total Basic (0.45) (0.04)
Diluted: Continuing operations 0.06 (0.04)
Discontinued operations (0.16) 0.00
Loss on sale of discontinued ops (0.36) 0.00
Total Diluted (0.46) (0.04)
</TABLE>
See notes for consolidated balance sheet.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
LEAK-X ENVIRONMENTAL CORPORATION AND SUBSIDIARIES
(Unaudited)
<CAPTION>
Nine Months Ended September 30,
1998 1997
</CAPTION>
<S> <C> <C>
CASH FLOW FROM
OPERATING ACTIVITIES:
Net loss $ (550,850) $ (38,174)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation 46,766 52,202
Goodwill amortization ---------- 45,000
(Gain) loss on sale of assets 1,794 (4,831)
Loss on sale of GRS (See Note 4) 441,665 ----------
(Increase) decrease in accounts receivable 314,168 (813,631)
(Increase) decrease in estimated
earnings in excess of billings 24,041 (42,437)
Decrease in inventories 63,545 176,832
Increase in other current assets (45,510) (51,664)
Increase (decrease) in accounts payable (128,019) 694,655
Decrease in unearned revenue (272,751) (101,233)
Increase (decrease) in accrued expenses
and other liabilities 55,671 (7,340)
Change in net assets of discontinued operations (27,582) (43,666)
NET CASH USED BY OPERATIONS (77,062) (134,287)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (17,012) (23,224)
Sale of asset 2,593 14,079
Sale of GRS (See Note 4) 127,781 ----------
Increase in other assets, net (49,862) (25,242)
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 63,500 (34,387)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line of credit 185,000 200,000
Repayments on line of credit (150,000) ----------
Payments on long-term debt (37,408) (40,957)
Payments on notes payable to directors 0 (61,770)
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES (2,408) 97,273
NET INCREASE DECREASE IN CASH (15,970) (71,401)
CASH, beginning of the period 240,769 156,617
CASH, end of the period 224,799 85,216
SUPPLEMENTAL CASH FLOW INFORMATION:
Sale of Groundwater Recovery Systems, Inc.
(Note 4)
Non-cash (assets) liabilities
Accounts receivable, net (473,942) -----------
Inventory (204,188) -----------
Other current assets (35,946) -----------
Property, plant & equipment (33,247) -----------
Other assets (10,227) -----------
Accounts payable, accrued expenses and
other current liabilities 388,104 -----------
Forgiveness of Note Payable 100,000 -----------
Deferred payout (300,000) -----------
Net liabilities assumed (569,446) -----------
</TABLE>
See notes to consolidated balance sheets.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
LEAK-X ENVIRONMENTAL CORPORATION AND SUBSIDIARIES
(UNAUDITED)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Note 1. Basis of Presentation
General
The accompanying unaudited consolidated financial statements of Leak-X
Environmental Corporation (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB 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
considered necessary for a fair presentation (consisting of normal recurring
accruals) have been included. The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. Operating results for the nine month period ended September 30,
1998 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1997.
Per share data for the periods are based upon the weighted average number
of shares of common stock outstanding during such periods, plus net additional
shares issued upon exercise of options and warrants. Outstanding options and
warrants have not been included in the computation of per share data in the
three month period ended September 30, 1998 or the three and nine month
periods ended September 30, 1997 as they would be immaterial or anti-dilutive,
respectively.
Note 2. Financial Matters
Total interest expense for the nine months ended September 30, 1998 and
September 30, 1997 was $52,263 and $52,893, respectively.
Note 3. Discontinued Operations
Net assets and net liabilities of discontinued operations refer to the
accounts of Gaservice Maintenance Corporation, a wholly-owned subsidiary of
the Company, which was discontinued as of March 31, 1995. Net assets of
discontinued operations at September 30, 1998 consist of accounts receivable
of $499,234. Net liabilities of discontinued operations at September 30, 1998
include accounts payable and accrued expenses of $346,314 and $66,218,
respectively.
Note 4. Sale of Groundwater Recovery Systems, Inc.
On September 30, 1998, the Company entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with George A. Nolan and James G.
Warburton (the "Purchasers") and Groundwater Recovery Systems, Inc. ("GRS").
Under the Stock Purchase Agreement, the Purchasers acquired all the
outstanding stock of GRS, a wholly-owned subsidiary of the Company. GRS is
involved in the manufacture of groundwater remediation equipment.
Pursuant to the Stock Purchase Agreement, the Company received from the
Purchasers: (i) $150,000 which was paid to First Union National Bank ("First
Union") to reduce the Company's obligation under the Company's $750,000
Promissory Note and Loan Agreement with First Union dated July 9, 1998 (the
"Loan Documents"), (ii) $9,268.55 which was paid to First Union for the
balance of the Company's obligation under a promissory note made by GRS to
First Union (the "GRS Note"), (iii) certificates representing an aggregate of
230,768 shares of the Company's Common Stock issued in the names of the
Purchasers which were canceled, (iv) promissory notes payable to the
Purchasers with balances as of September 30, 1998 of $100,000 in the aggregate
which were canceled and (v) outstanding stock option agreements issued in the
names of the Purchasers to acquire 30,000 shares of the Company's common stock
which were canceled.
In return, the Purchasers received from the Company: (i) all of the
outstanding stock of GRS and (ii) a consent executed by First Union indicating
(a) the removal of GRS as a co-borrower under the Company's Loan Documents
and (b) the removal of GRS as a borrower under the GRS Note. The Purchasers
will also receive a monthly payment of $6,250 each for a period of 24 months
commencing November 1, 1998 which represents reduced severance payments under
the Purchasers' employment agreements which were terminated in connection with
the sale of GRS.
The operations of GRS have been reclassified to discontinued operations
on the consolidated statements of operations for the three months and nine
months ended September 30, 1998 and September 30, 1997.
The loss on the sale of GRS consists of the following:
Net liabilities sold 215,335
Forgiveness of notes payable 100,000
Cash received 150,000
Line of credit assumed ($607,000)
Post-closing payments ($300,000)
Net loss on sale of GRS ($441,665)
Note 5. Line of Credit
On July 8, 1998, the Company renewed its Revolving Credit Agreement (the
"Credit Agreement") with First Union National Bank. The Agreement extended
the Company's Credit Agreement to December 31, 1998. All other terms of the
existing Credit Agreement remained unchanged. The Company had $293,000 of
available borrowing at September 30, 1998.
Note 6. Income from Continuing Operations per Share
The following is a reconciliation of the numerator and denominator
underlying the income from continuing operations per share calculations:
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1998
</CAPTION>
<S> <C> <C> <C>
Income Shares Per Share
(Numerator) (Denominator) Amount
Income from continuing
operations available to
common stockholders $79,326 1,218,800 $0.07
Effect of dilutive securities:
Incremental shares of assumed
conversions of options 72,874
Diluted income from continuing
operations available to common
stockholders and assumed
conversions $79,326 1,291,674 $0.06
</TABLE>
The reconciliations for the three month period ended September 30, 1998 and
the three and nine month periods ended September 30, 1997 have not been
presented since any incremental shares converted would be immaterial or
anti-dilutive, respectively.
Note 7. Stockholders' Equity
In connection with the sale of GRS, the Company canceled 230,768 shares
of common stock as described in Note 4 above.
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
For purposes of comparability, the results of operations of GRS have been
reclassified to discontinued operations for the three months and the nine
months ended September 30, 1997.
Quarter ended September 30, 1998 compared to the Quarter ended September 30,
1997
The Company reported income from continuing operations of $24,993, or
$0.02 per share for the quarter ended September 30, 1998 (the "1998 Quarter"),
as compared to a loss from continuing operations of $18,785, or ($0.02) per
share for the quarter ended September 30, 1997 (the "1997 Quarter"). This
improvement is primarily a result of an increase in gross margins. The
Company's gross margin improved to 30% for the 1998 Quarter as compared to a
gross margin of 19% in the 1997 Quarter due to the greater percentage of
professional services revenue which has a higher gross margin than
construction management services.
Net revenue decreased 29% to $1,578,994 for the 1998 Quarter compared to
$2,237,358 for the 1997 Quarter. The decrease in revenues is attributable to
a $767,987 decrease in construction management service revenues in the 1998
Quarter, partially offset by an increase of $109,623 in more profitable
professional service revenues. The Company anticipated the decrease in
construction management services which result from the culmination of a
ten-year period in December 1998 for compliance with certain environmental
regulations. However, the Company expects there will be continuing compliance
work related to these regulations over the next two years. As fewer of the
Company's revenues are derived from construction management services, the
Company is seeking to expand its more profitable professional service revenues
in the traditional environmental assessment and innovative monitoring services
areas.
Selling, general and administrative expenses ("SG&A expenses") remained
consistent at $440,411 for the 1998 Quarter, as compared to $441,101 in the
1997 Quarter. SG&A expenses increased 4%, or $12,881 at the Company's
environmental consulting business due to the investment in a new line of
services, which were partly offset by the elimination of expenses associated
with the closing of an office located in New Hampshire. Corporate overhead
decreased $13,571 due to the initiation of a cost containment program to
reduce or eliminate unnecessary corporate expenses.
The Company incurred lower interest expense of $3,176 in the 1998
Quarter, as compared to $3,704 in the 1997 Quarter due to lower interest rates
in the 1998 Quarter. The 1998 Quarter also includes a loss on discontinued
operations of $142,472 and a loss on the sale of discontinued operations of
$441,665 due to the sale of GRS on September 30, 1998. The loss on
discontinued operations represents the operating loss incurred by GRS for the
1998 Quarter. The loss on the sale of GRS consists of the assumption of a
line of credit balance and post-closing payments to be made, which were partly
offset by cash received, forgiveness of notes payable and the sale of the net
liabilities of GRS.
Nine Months ended September 30, 1998 compared to the Nine Months ended
September 30, 1997
The Company reported income from continuing operations of $79,326, or
$0.07 per share for the nine months ended September 30, 1998
(the "1998 Period"), as compared to a loss from continuing operations of
$43,828, or ($0.04) per share for the nine months ended September 30, 1997 (the
"1997 Period"). This improvement is primarily a result of an increase in gross
margins. The Company's gross margin increased to 28% for the 1998 Period as
compared to a gross margin of 22% in the 1997 Period. The improvement in the
gross margin is primarily a result of a greater percentage of professional
services revenue which has a higher gross margin than construction management
services.
Net revenue decreased 10% to $4,966,581 for 1998 Period compared to
$5,524,477 for the 1997 Period. The decrease in revenues is attributable to a
$1,002,529 decrease in construction management services revenues, offset by a
$444,633 increase in more profitable professional services revenue. The
Company anticipated the decrease in construction management services which
result from the culmination of a ten-year period in December 1998 for
compliance with certain environmental regulations. However, the Company
expects there will be continuing compliance work related to these regulations
over the next two years. As fewer of the Company's revenues are derived from
construction management services, the Company is seeking to expand its more
profitable professional service revenues in the traditional environmental
assessment and innovative monitoring services areas.
SG&A expenses increased $57,803 to $1,293,019 in the 1998 Period, as
compared to $1,235,216 in the 1997 Period. SG&A expenses increased $99,316 at
the Company's environmental consulting business primarily as a result of an
investment in a new environmental monitoring program. Corporate overhead
decreased $41,513 as a result of the elimination of goodwill amortization in
the 1998 Period.
The Company incurred lower interest expense of $10,184 in the 1998
Period, as compared to $12,877 in the 1997 Period due to lower average
outstanding debt at lower interest rates in the 1998 Period. The 1998 Period
also includes a loss on discontinued operations of $188,511 and a loss on the
sale of discontinued operations of $441,665 due to the sale of GRS on
September 30, 1998. The loss on discontinued operations represents the
operating loss incurred by GRS for the 1998 Period. The loss on the sale of
GRS consists of the assumption of a line of credit balance, post-closing
payments to be made, which were partly offset by cash received, forgiveness of
notes payable and the sale of the net liabilities of GRS.
Liquidity and Capital Resources
The Company used $77,062 of cash in operating activities during the 1998
Period as compared to using $134,287 in the 1997 Period. The primary
difference in the utilization of cash from operating activities was a $314,168
decrease in accounts receivable in the 1998 Period as compared to a $813,631
increase in the 1997 Period and a $128,019 decrease in accounts payable in the
1998 Period as compared to a $694,655 increase in the 1997 Period. In
addition, the Company incurred a higher loss of $550,850 in the 1998 Period
due to the discontinued operations as compared to a loss of $38,174 in the
1997 Period.
Net cash provided by investing activities in the 1998 Period was $63,500
as compared to net cash used by investing activities of $34,387 in the 1997
Period. Capital expenditures, which were primarily for computer equipment,
were lower at $17,012 in the 1998 Period as compared to $23,224 in the 1997
Period. The 1998 Period includes $127,780 of cash received from the sale of
GRS. This includes proceeds of $150,000 received less $22,220 of cash on hand
at GRS when it was sold. The 1998 Period includes a $49,862 increase in other
assets, as compared to a $25,242 increase in the 1997 Period.
Net cash used by financing activities was $2,408 in the 1998 Period as
compared to net cash provided by financing of $97,273 in the 1997 Period.
During the 1998 Period, the Company borrowed $185,000 on its line of credit to
support ongoing operations and used $150,000 of cash received from the sale of
GRS to pay down this debt. During the 1997 Period, the Company borrowed
$200,000 in order to support a period of investment in materials for
increasing sales and ongoing operations. The Company paid $61,770 on the
notes payable to directors in the 1997 Period and continued to make scheduled
payments on its debt in the 1998 Period and 1997 Period.
The Company's working capital decreased to ($669,451) at September 30,
1998 as compared to ($296,355) at December 31, 1997. The decrease in working
capital was primarily the result of the sale of GRS which resulted in a
$1,086,290 reduction in the current assets including $788,110 in accounts
receivable and $267,733 in inventory. This was offset by a $713,194 decrease
in current liabilities primarily the result of a $272,222 decrease in accounts
payable, the forgiveness of the $100,000 notes payable and payment of the
$50,809 outstanding balance on a GRS term, which was offset by a $150,000
increase in accrued expenses for post-closing payments to be paid out over the
next twelve months. The Company utilizes working capital to manage accounts
payable, fund ongoing operations and make scheduled payments on its long-term
debt.
Backlog at September 30, 1998 of $3.9 million was lower than the level
at December 31, 1997 of $5.8 million, primarily as a result of a higher
percent of completion of construction management work. The Company believes
that approximately 50% of the current backlog will be completed in 1998,
although, no assurance of this can be given. Much of the Company's backlog is
subject to termination at will and rescheduling without significant penalty.
On July 7, 1998, the Company renewed its Credit Agreement with First
Union National Bank. The Agreement extended the Company's Credit Agreement to
December 31, 1998. All other terms of the existing Credit Agreement remained
unchanged.
On September 30, 1998, the Company entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with George A. Nolan and James G.
Warburton (the "Purchasers") and GRS. Under the Stock Purchase Agreement, the
Purchasers acquired all the outstanding stock of GRS, a wholly-owned
subsidiary of the Company. GRS is involved in the manufacture of groundwater
remediation equipment.
Pursuant to the Stock Purchase Agreement, the Company received from the
Purchasers: (i) $150,000 which was paid to First Union National Bank ("First
Union") to reduce the Company's obligation under the Company's $750,000
Promissory Note and Loan Agreement with First Union dated July 9, 1998 (the
"Loan Documents"), (ii) $9,268.55 which was paid to First Union for the
balance of the Company's obligation under a promissory note made by GRS to
First Union (the "GRS Note"), (iii) certificates representing an aggregate of
230,768 shares of the Company's Common Stock issued in the names of the
Purchasers which were canceled, (iv) promissory notes payable to the
Purchasers with balances as of September 30, 1998 of $100,000 in the aggregate
which were canceled and (v) outstanding stock option agreements issued in the
names of the Purchasers to acquire 30,000 shares of the Company's common stock
which were canceled.
In return, the Purchasers received from the Company: (i) all of the
outstanding stock of GRS and (ii) a consent executed by First Union indicating
(a) the removal of GRS as a co-borrower under the Company's Loan Documents
and (b) the removal of GRS as a borrower under the GRS Note. The Purchasers
will also receive a monthly payment of $6,250 each for a period of 24 months
commencing November 1, 1998 which represents reduced severance payments under
the Purchasers' employment agreements which were terminated in connection with
the sale of GRS.
Computers, software and other equipment utilizing microprocessors that
use only two digits to identify a year in a date field may be unable to process
accurately certain date-based information after the year 2000. This is commonly
referred to as the "Y2K" problem. The Company is utilizing internal resources
to address the potential impact of the Y2K problem. Key areas of the Company's
operations that are being addressed include external customers and suppliers and
internal computers and software.
Y2K considerations may have an effect on some of the Company's customers
and suppliers, and thus indirectly on the Company. The Company is assessing
the potential effect on the Company with respect to customers and suppliers
with Y2K issues and does not expect a material affect on the Company's financial
condition or results of operation at this time. However, the potential does
exist that if customers of the Company are not Y2K compliant, payments to the
Company in the first quarter of the Year 2000 could be delayed until the
customers are able to correct their Y2K compliance deficiencies.
The Company has upgraded its internal computerized information systems to
ensure that it is able to process information that may be date sensitive and
to be Y2K compliant. No related software or hardware costs are expected.
A contingency plan is being formulated to address unavoidable Y2K risks with
customers, vendors and other third parties.
The Company deems its present facilities and equipment adequate for its
immediate needs and it has no material commitments for capital expenditures.
The Company believes its present liquidity and cash flow are adequate for its
current needs. There can be no assurance, however, that additional financing,
whether from debt or equity, will be available to the Company when needed on
commercially reasonable terms, or at all.
The Company's management believes that inflation has not had a
significant impact on its business during the past three years.
The statements contained herein include forward looking statements that
involve a number of risks and uncertainties. In addition to the facts
discussed, among the other factors that could cause actual results to differ
materially are the following: enforcement of environmental regulations,
business conditions and growth in the industry and general economy;
competitive factors; changes in sales mix; renewal of credit facility;
dependence on construction management services; and the risk factors listed
from time to time in the Company's SEC reports.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K:
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: January 21, 1999
LEAK-X ENVIRONMENTAL CORPORATION
by: /s/ Joyce A. Rizzo
Joyce A. Rizzo
Chief Executive Officer
by: /s/ Eileen E. Bartoli
Eileen E. Bartoli
Chief Financial Officer
and Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE LEAK-X
ENVIRONMENTAL CORPORATION CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1998,
AND THE RELATED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998, AND THE ACCOMPANYING NOTES, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 224799
<SECURITIES> 0
<RECEIVABLES> 1323572
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2229331
<PP&E> 269128
<DEPRECIATION> (178493)
<TOTAL-ASSETS> 2442089
<CURRENT-LIABILITIES> 2898782
<BONDS> 150000
0
0
<COMMON> 989
<OTHER-SE> (607682)
<TOTAL-LIABILITY-AND-EQUITY> 2442089
<SALES> 4966581
<TOTAL-REVENUES> 4966581
<CGS> 3585322
<TOTAL-COSTS> 3581322
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