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: June 30, 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 July 20, 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 June 30, 1997
<S> <C>
Current Assets:
Cash $ 132,414
Accounts Receivable 35,658
Other Current Assets 9,431
_________
Total Current Assets 177,503
Property, Plant, & Equipment 362,446
_________
$ 539,949
=========
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable $ 37,636
Accrued Expenses 20,159
_________
Total Current Liabilities 57,795
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 (1,345,867)
__________
679,081
Less: Cost of Treasury Stock - 2,318,617
shares held on March 31, 1997 (196,927)
__________
Total Shareholders' Equity 482,154
__________
$ 539,949
==========
</TABLE>
See Accompanying Notes
<PAGE>
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
Six Months Ended March 31, Nine Months Ended June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Contract Revenue $ 53,545 $ 57,057 $ 179,384 $ 228,821
_________ ________ ________ _______
Cost and Expenses:
Direct Contract Cost 20,612 27,402 72,610 123,746
Indirect Contract Cost 35,746 26,550 132,985 74,213
Selling, General, and
Administrative 47,654 61,368 187,988 167,692
Depreciation 13,499 28,234 55,260 88,723
(Gain) Loss on Sale of
Property and Equipment (77,411) (61,189) (140,873) (61,189)
_________ ________ ________ _________
Total Cost and Expenses 40,100 82,365 307,970 393,185
_________ _________ ________ _________
Income (Loss) from
Operations 13,444 (25,308) (128,586) (164,364)
_________ _________ ________ _________
Other Income (Expenses):
Loss on Advances
to Jansko, Inc. 0 0 0 (385,841)
Settlement of
Litigation (131,803) 0 (131,803) 0
Interest Income 2,174 686 5,537 4,731
Other, Net 15,554 6,172 24,405 6,288
_________ _________ _________ _________
Total Other Income
(Expenses) (114,085) 6,858 (101,861) (374,822)
_________ _________ _________ _________
Net Loss (100,641) (18,450) (230,447) (539,186)
========= ========= ========= =========
Retained Deficit,
Beginning of Period (1,245,226) (1,114,508) (1,115,420) (593,772)
_________ _________ _________ __________
Retained Deficit,
End of Period $(1,345,867) $(1,132,958) $(1,345,867) $(1,132,958)
========= ========= ========= =========
Earnings (Loss) per
Common Share $ (0.03) $ (0.00) $ (0.06) $ (0.14)
========== ========= ========= =========
</TABLE>
See Accompanying Notes
<PAGE>
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
Nine Months Ended June 30,
1997 1996
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ (230,447) $ (539,186)
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 55,260 88,723
(Gain) on Sale of Property & Equipment (140,873) (61,189)
Loss on Advances Receivable from Jansko, Inc. 0 385,841
Changes in Certain Assets and Liabilities:
Accounts Receivable 149,991 9,382
Other Current Assets 15,124 (7,614)
Accounts Payable 8,170 (5,242)
Other Current Liabilities (11,305) 707
________ _______
Net Cash Provided by (used in)
Operating Activities (154,080) (128,578)
________ _______
Cash Flows from Investing Activities:
Sale of Machinery & Equipment 246,699 61,250
Advances made to Jansko, Inc. 0 (35,841)
________ _______
Net Cash Provided by (used in)
Investing Activities 246,699 25,409
________ ________
Cash Flows from Financing Activities:
Principal Payments for Borrowings 0 0
________ ________
Net Cash Provided by (used in)
Financing Activities 0 0
________ ________
Net Increase in Cash and Cash Equivalents 92,619 (103,169)
Cash and Cash Equivalents, beginning of period 39,795 206,014
________ ________
Cash and Cash Equivalents, end of period $ 132,414 $ 102,845
======== ========
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 nine
month period ended June 30, 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 79 percent and 99 percent of its revenue in
the nine months ended June 30, 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>
Three Months Ended Nine Months Ended
June 30, June 30,
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.
In June 1997, the Company agreed to settle this legal action with prejudice for
$94,000 in order to minimize the exorbitant costs of litigating these types of
claims and to avoid diverting the attentions of the Company's officers from the
operations of the Company. The Company did not admit liability and maintains
that this action was 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
Nine months ended June 30, 1997 vs. 1996
Contract revenue for the nine months ended June 30, 1997 decreased 21% 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 54% to 40% of revenues because of improved cost
controls and a change in the composition of services performed.
Indirect contract costs have increased from 72% to 74% of revenues because of
the relatively fixed nature of these expenses. In addition, an investment of
approximately $50,000 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.
Depreciation expense was reduced because of some equipment becoming fully
depreciated and as a result of the sale of four drill rigs and equipment
during 1997 resulting in a gain of $140,873.
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 June 30, 1997 vs. 1996
Contract revenues for the three months ended June 30, 1997 decreased 6% 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, the reduction of
expenses, and the reclassification of legal expenses associated with the sex
discrimination and harassment litigation to Other Expense. 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.
In June 1997, the Company agreed to settle, with prejudice, the legal actions
brought by a former employee, for $94,000 in order to minimize the exorbitant
costs of litigating these types of claims and to avoid diverting the attentions
of the Company's officers from the operations of the Company.
<PAGE>
Liquidity and Capital Resources
During the nine month period ended June 30, 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 June 30,
1997 the Company had working capital of $119,708 and shareholders' equity was
$482,154.
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. Although no assurances can be
given, management believes that the Company has sufficient equipment with
which to perform drilling services, and additional equipment is readily
available on the open market.
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. Although no
assurances can be given, 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 1. Legal Proceedings
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 Districe Court for the District of South Carolina.
The suit sought unspecified actual and punitive damages.
In June 1997, the Company agreed to settle this legal action with prejudice for
$94,000 in order to minimize the exorbitant costs of litigating these types of
claims and to avoid diverting the attentions of the Company's officers from the
operations of the Company. The Company did not admit liability and maintains
that this action was without merit.
<PAGE>
Item 2. Changes in Securities
During June 1997 the Company agreed to issue a stock grant of 150,000 shares of
restricted common stock to Mr. Stephen A. Lassak for rejoining the Company in
1996 and becoming President and Chief Operating Officer as of June 13, 1997. The
expense associated with the grant was recorded in the quarter ended June 30,
1997, and the shares will be issued in August 1997.
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 at the time, 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.
Election 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. On June 13, 1997 Mr. Michael Camino, DDS was elected to the Board
of Directors to fill the seat vacated by Ms. DelMedico. Dr. Camino's term will
expire with the election of directors at the 1997 Annual Shareholders' Meeting
in December 1997 or January 1998.
Future Planning
There currently is a general slowdown in the need for drilling services and lack
of the work available at the Savannah River Site. The Company is aggressively
investigating relationships with and investments in other companies that will
enhance shareholders' value. There can be no assurances that these efforts will
be successful.
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: July 21, 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> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 132,414
<SECURITIES> 0
<RECEIVABLES> 35,658
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 177,503
<PP&E> 834,638
<DEPRECIATION> 472,192
<TOTAL-ASSETS> 539,949
<CURRENT-LIABILITIES> 57,795
<BONDS> 0
0
0
<COMMON> 1,828,021
<OTHER-SE> (1,345,867)
<TOTAL-LIABILITY-AND-EQUITY> 539,949
<SALES> 179,384
<TOTAL-REVENUES> 179,384
<CGS> 307,970
<TOTAL-COSTS> 307,970
<OTHER-EXPENSES> 101,861
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (230,447)
<INCOME-TAX> 0
<INCOME-CONTINUING> (230,447)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (230,447)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
