U.S. 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 quarterly period ended: March 31, 1997
Commission File Number 0-18296
(Exact name of registrant as specified in its charter)
ENVIRONMENTAL MONITORING & TESTING CORPORATION
Delaware 62-1265486
---------------------- ------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
825 Main Street South, New Ellenton, SC 29809
(Address of principal executive offices)
Registrant's telephone number, including area code: (803) 652-2718
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 preceding 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__X__ No_____
Title of each class Outstanding at April 30, 1997
Common stock, 3,825,383
par value $0.01
Transitional Small Business Disclosure Format (Check one) Yes_____ No__X__
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited financial statements for the quarter ended March 31, 1997 are
provided on the five following pages.
INDEX
Balance Sheet Page 3
Statements of Operations and Retained Earnings Page 4
Statements of Cash Flows Page 5
Notes to Financial Statements Page 6
<PAGE>
ENVIRONMENTAL MONITORING & TESTING CORPORATION
BALANCE SHEET (UNAUDITED)
<TABLE>
ASSETS March 31, 1997
<S> <C>
Current Assets:
Cash $ 163,685
Accounts Receivable 23,023
Other Current Assets 10,283
_________
Total Current Assets 196,991
Property, Plant, & Equipment 409,774
_________
$ 606,765
=========
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable $ 14,491
Accrued Expenses 9,479
_________
Total Current Liabilities 23,970
Stockholders' Equity
Preferred Stock - $.01 Par Value -
1,000,000 shares authorized, and none
issued 0
Common Stock - $.01 Par Value -
30,000,000 and 10,000,000 shares
authorized and 6,144,000 shares issued 61,440
Capital-In-Excess of Par 1,963,508
Retained Deficit (1,245,226)
__________
779,722
Less: Cost of Treasury Stock - 2,318,617
shares held on March 31, 1997 (196,927)
Total Shareholders' Equity 582,795
__________
$ 606,765
==========
</TABLE>
See Accompanying Notes
<PAGE>
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
Three Months Ended March 31, Six Months Ended March 31,
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Contract Revenue $ 42,250 $ 72,369 $ 125,839 $ 171,764
_________ ________ ________ _______
Cost and Expenses:
Direct Contract Cost 19,534 44,003 51,998 96,345
Indirect Contract Cost 45,345 26,638 97,239 47,662
Selling, General, and
Administrative 62,439 23,634 140,474 106,324
Depreciation 17,223 31,422 41,621 60,489
(Gain) Loss on Sale of
Property and Equipment --- --- (63,462) ---
_________ ________ ________ _________
Total Cost and Expenses 144,541 125,697 267,870 310,820
_________ _________ ________ _________
Income (Loss) from
Operations (102,291) (53,328) (142,031) (139,056)
_________ _________ ________ _________
Other Income (Expenses):
Loss on Advances
to Jansko, Inc. --- (385,841) --- (385,841)
Interest Income 1,828 1,528 3,364 4,045
Other, Net 8,537 116 8,861 116
_________ _________ _________ _________
Total Other Income
(Expenses) 10,365 (384,197) 12,225 (381,680)
_________ _________ _________ _________
Net Loss (91,926) (437,525) (129,806) (520,736)
========= ========= ========= =========
Retained Deficit,
Beginning of Period (1,153,300) (676,983) (1,115,420) (593,772)
_________ _________ ________ _________
Retained Deficit,
End of Period $(1,245,226)$(1,114,508) $(1,245,226) $ (1,114,508)
========= ========= ========= =========
Earnings (Loss) per
Common Share $ (0.02) $ (0.12) $ (0.03) $ (0.14)
========= ========= ========= =========
</TABLE>
See Accompanying Notes
<PAGE>
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
Six Months Ended March 31,
1997 1996
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ (129,806) $ (520,736)
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 41,621 60,489
(Gain) on Sale of Property & Equipment (63,462) ---
Loss on Advances Receivable from Jansko, Inc. --- 385,841
Changes in Certain Assets and Liabilities:
Accounts Receivable 162,625 (6,658)
Other Current Assets 18,272 (18,293)
Accounts Payable (18,975) 10,319
Other Current Liabilities (21,985) 885
________ _______
Net Cash Provided by (used in)
Operating Activities (11,710) (88,153)
________ _______
Cash Flows from Investing Activities:
Sale of Machinery & Equipment 135,600 ---
Advances made to Jansko, Inc. --- (35,841)
________ _______
Net Cash Provided by (used in)
Investing Activities 135,600 (35,841)
________ ________
Cash Flows from Financing Activities:
Principal Payments for Borrowings --- ---
________ ________
Net Cash Provided by (used in)
Financing Activities --- ---
________ ________
Net Increase in Cash and Cash Equivalents 123,890 (123,994)
Cash and Cash Equivalents, beginning of period 39,795 206,014
________ ________
Cash and Cash Equivalents, end of period $ 163,685 $ 82,020
======== ========
Supplemental Disclosure of Cash Paid:
Interest $ 0 $ 0
</TABLE>
See Accompanying Notes
<PAGE>
ENVIRONMENTAL MONITORING & TESTING CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the six
month period ended March 31, 1997, are not necessarily indicative of the
results that may be expected for the year ended September 30, 1997. For
further information, refer to the financial statements and footnotes thereto
included in the Company's annual report on Form 10-KSB for the year ended
September 30, 1996.
2. Sales to Major Customer
The Company derived approximately 71 percent and 99 percent of its revenue in
the six months ended March 31, 1997 and 1996, respectively, from a single
customer, the Savannah River Site, a material processing facility operated
for the United States Department of Energy by the Westinghouse Savannah River
Company.
3. Net Income Per Common Share
The Company has common stock equivalents and has used the treasury stock method
to calculate the number of equivalent shares. The number of common shares
outstanding used in calculating earnings per share were based on the
weighted average method, as follows:
<TABLE>
Six Months Ended Three Months Ended
March 31, March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Average shares Outstanding 3,825,383 3,825,383 3,825,383 3,825,383
</TABLE>
4. Commitments & Contingencies
On August 7, 1996 the Company and an officer of the Company were named as
defendants in a sexual harassment and defamation suit filed by a former
female employee in the United States District Court for the District of South
Carolina. The suit seeks unspecified actual and punitive damages.
The Company is aggressively defending this action and alleges that this action
is malicious and without merit.
<PAGE>
ENVIRONMENTAL MONITORING & TESTING CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
5. Loss on Advances to Jansko, Inc.
During 1995 the Company signed a letter of intent to merge with Jansko, Inc.
Jansko, Inc. was engaged in designing, manufacturing and marketing office
furniture including seating products, desks, tables, and credenzas. Since
the signing of the letter of intent the Company advanced $385,841 to Jansko,
Inc. in conjunction with the proposed merger of the two Companies.
The Company did not merge with Jansko, Inc., and on May 1, 1996 Mr. George J.
Georges, the Company's President and CEO, filed a petition in the Federal
District Court of Fort Lauderdale, Florida to move Jansko, Inc., into Chapter
7 Liquidation of the Bankruptcy Act and its Amendments. On May 23, 1996 an
Order For Relief was entered by the United States Bankruptcy Court, Southern
District of Florida in Fort Lauderdale, Florida. As a result of these events
and uncertainty of any recovery, the Company recorded a loss during the quarter
ended March 31, 1996 on all advances and loans to Jansko, Inc.
A majority shareholder of the Company has filed various lawsuits against
certain officers and directors of Jansko, Inc. and related parties on behalf of
the Company and other parties seeking restitution of funds advanced. There
can be no assurances that this litigation will result in any recovery, as
such no recovery has been recorded by the Company.
<PAGE>
Item 2. Management's Discussion and Analysis
Six months ended March 31, 1997 vs. 1996
Contract revenue for the six months ended March 31, 1997 decreased 27% over the
same period of the prior fiscal year. The decrease is primarily the result of a
reduction in releases of work from the Company's largest customer, Westinghouse
Savannah River Company. Efforts have been made to perform drilling services for
other customers, but these efforts have been thwarted by a general decline in
the needs for the drilling services offered by the Company. Direct contract
costs have been reduced from 56% to 41% of revenues because of improved cost
controls and a change in the composition of services performed.
Indirect contract costs have increased from 28% to 77% of revenues because of
the relatively fixed nature of these expenses. In addition, an investment of
approximately $36,000 in repairs and maintenance on equipment, including
repainting several drill rigs and trucks, was made.
Selling, general and administrative expenses increased because of the addition
of a Chief Operating Officer/CFO. This also resulted in reduced accounting
expenses. There was also an increase in legal fees toward the defense of the
Company in the previously mentioned sexual harassment and defamation suit.
Depreciation expense was reduced because of some equipment becoming fully
depreciated and as a result of the sale of two drill rigs in November 1996
resulting in a gain of $63,462.
In the second quarter ended March 31, 1996 the Company recorded a loss on funds
advanced to Jansko, Inc. which were made in conjunction with a proposed merger.
See Footnote 5 of Notes to Financial Statements.
Three months ended March 31, 1997 vs. 1996
Contract revenues for the three months ended March 31, 1997 decreased 58% over
the same period of the prior fiscal year. The decrease is the result in
reduction of releases of work from Westinghouse Savannah River Company. This
has been partially offset by an increase in revenues from other customers. As
previously mentioned, there has been a decline in the need for the drilling
services offered by the Company. Management has reduced non-productive
personnel and as previously mentioned has upgraded the operating capabilities
of the Company's equipment.
Indirect costs and Selling, general and administrative expenses increased in
relation to sales because of their relatively fixed nature. As previously
mentioned, the Company recorded a loss on funds advanced to Jansko, Inc.
which were made in conjunction with a proposed merger. See Footnote 5 of Notes
to Financial Statements.
<PAGE>
Liquidity and Capital Resources
During the six month period ended March 31, 1997 the Company generated its
working capital requirements through operating activities. The Company's
capital expenditures are generally for the replacement of equipment and are
being kept to a minimum. The Company continues to perform repairs and
maintenance on equipment and therefore does not anticipate any replacement of
equipment in the current fiscal year. Although no assurances can be given,
management is of the opinion that the working capital is sufficient to meet
the Company's anticipated needs during the ensuing twelve months. At March 31,
1997 the Company had working capital of $173,021 and shareholders' equity was
$582,795.
The Company has drilling assets that have been fully depreciated or have been
depreciated below estimated market value. During the last two years the
Company has realized gains on the sale of fixed assets through the disposition
of unproductive assets. Although no assurances can be given, management
anticipates that this trend will continue. During April and May 1997 the
Company realized a gain on the sale of two drill rigs and equipment.
Although no assurances can be given, management believes that the Company
has sufficient equipment with which to perform drilling services.
The Company has instituted ongoing programs to minimize any short term
shortages of working capital, generate revenue, reduce operating costs and to
increase accounts receivable turnover to generate positive cash flow. These
programs include the implementation of controls to reduce indirect labor
costs, the reduction of management, and the implementation of strict
controls over the acquisition of capital assets. All non-productive assets
are being identified and evaluated and are being sold when feasible. The
Company believes that these actions will result in adequate liquidity for the
fiscal year. In addition the Company may seek other sources of capital,
however the unfavorable operating results may impede the Company's ability to
obtain bank financing to meet its working capital needs in the future.
Part II. OTHER INFORMATION
Item 5. Other Information
Loss on Advances to Jansko, Inc.
During 1995 the Company signed a letter of intent to merge with Jansko, Inc.
Jansko, Inc. was engaged in designing, manufacturing and marketing office
furniture including seating products, desks, tables, and credenzas. Since
the signing of the letter of intent the Company advanced $385,841 to Jansko,
Inc. in conjunction with the proposed merger of the two Companies.
The Company did not merge with Jansko, Inc., and on May 1, 1996 Mr. George J.
Georges, the Company's President and CEO, filed a petition in the Federal
District Court of Fort Lauderdale, Florida to move Jansko, Inc., into Chapter
7 Liquidation of the Bankruptcy Act and its Amendments. On May 23, 1996 an
Order For Relief was entered by the United States Bankruptcy Court, Southern
District of Florida in Fort Lauderdale, Florida. As a result of these events and
uncertainty of any recovery, the Company recorded a loss during the quarter
ended March 31, 1996 on all advances and loans to Jansko, Inc.
A majority shareholder of the Company has filed various lawsuits against
certain officers and directors of Jansko, Inc. and related parties on behalf
of the Company and other parties seeking restitution of funds advanced. There
can be no assurances that this litigation will result in any recovery, as
such no recovery has been recorded by the Company.
Resignation of Registrant's Director
In a letter dated March 5, 1997 Ms. Rebecca DelMedico resigned as a director of
the Company. The Board of Directors accepted Ms. DelMedico's resignation on
March 7, 1997 and is currently reviewing prospective directors to fill the
term vacated by Ms. DelMedico. This term will expire with the election of
directors at the 1997 Annual Shareholders' Meeting in December 1997 or January
1998. Every effort is being made to fill this vacancy by June 30, 1997.
Item 6. Exhibits and Reports on Form 8-K.
None during the quarter ended March 31, 1997.
<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.
Environmental Monitoring
& Testing Corporation
(Registrant)
Date: May 7, 1997 By /s/ George J. Georges
George J. Georges, President and CEO
(Principal Executive Officer)
By /s/ Stephen A. Lassak
Stephen A. Lassak, Vice President and CFO
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 163,685
<SECURITIES> 0
<RECEIVABLES> 23,023
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 196,991
<PP&E> 1,090,702
<DEPRECIATION> 680,928
<TOTAL-ASSETS> 606,765
<CURRENT-LIABILITIES> 23,970
<BONDS> 0
0
0
<COMMON> 1,828,021
<OTHER-SE> (1,245,226)
<TOTAL-LIABILITY-AND-EQUITY> 606,765
<SALES> 125,839
<TOTAL-REVENUES> 125,839
<CGS> 267,870
<TOTAL-COSTS> 267,870
<OTHER-EXPENSES> (12,225)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (129,806)
<INCOME-TAX> 0
<INCOME-CONTINUING> (129,806)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (129,806)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
