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: December 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 January 31, 1998
Common stock, 3,975,383
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 December 31, 1997 are
provided on the four 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
ENVIRONMENTAL MONITORING & TESTING CORPORATION
BALANCE SHEET
(UNAUDITED)
ASSETS December 31,
1997
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Current Assets:
Cash $ 39,553
Accounts Receivable 176,313
Inventories 3,400
Other Current Assets 2,400
Total Current Assets 221,666
Property, Plant, & Equipment 345,447
$ 567,113
LIABILITIES & STOCKHOLDERS
EQUITY
Current Liabilities:
Accounts Payable $ 29,711
Accrued Expenses 21,906
Total Current Liabilities 51,617
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 1,972,883
Retained Earnings (1,321,900)
712,423
Less: Cost of Treasury Stock-2,318,617
shares held on December 31, 1996 (196,927)
Total Shareholders' Equity 515,496
$ 567,113
</TABLE>
See Accompanying Notes
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended
December 31,
1997 1996
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Contract Revenue $ 265,578 $ 83,589
Cost and Expenses:
Direct Contract Cost 106,599 32,465
Indirect Contract Cost 28,855 51,894
Selling, General, and
Administrative 58,163 78,035
Depreciation 8,097 24,397
(Gain) Loss on Sale of
Property and Equipment (300) (63,462)
Total Cost and Expenses 201,414 123,329
Income (Loss) from Operations 64,164 (39,740)
Other Income (Expenses):
Interest Income Net 611 1,535
Other, Net 546 325
Total Other Income 1,157 1,860
Net Income (Loss) 65,321 (37,880)
Retained Deficit,
Beginning of Period (1,387,221) (1,115,420)
Retained Deficit,
End of Period $ (1,321,900) $ (1,153,300)
Earnings (Loss) per
Common Share $ 0.02 $ (0.01)
</TABLE>
See Accompanying Notes
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended December 31,
1997 1996
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Cash Flows from Operating Activities:
Net Income (Loss) $ 65,321 $ (37,880)
Adjustments to Reconcile
Net Income to Net Cash
Provided by Operating Activities:
Depreciation 8,097 24,397
(Gain) on Sale of
Property & Equipment (300) (63,462)
Changes in Certain Assets
and Liabilities:
Accounts Receivable (88,806) 154,714
Other Current Assets (600) 12,502
Accounts Payable 7,673 (24,792)
Other Current Liabilities 5,112 (24,992)
Net Cash Provided by (used in)
Operating Activities (3,503) 40,487
Cash Flows from Investing Activities:
Sale of Machinery & Equipment 300 135,600
Net Cash Provided by (used in)
Investing Activities 300 135,600
Cash Flows from Financing Activities:
Principal Payments for Borrowings 0 0
Net Cash Provided by (used in)
Financing Activities 0 0
Net Increase (Decrease) in
Cash and Cash Equivalents (3,203) 176,087
Cash and Cash Equivalents,
Beginning of period 42,756 39,795
Cash and Cash Equivalents,
End of period $ 39,553 $ 215,882
Supplemental Disclosure of
Cash Paid:
Interest $ 0 $ 0
</TABLE>
See Accompanying Notes
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 three month period ended December 31, 1997, are not
necessarily indicative of the results that may be expected for the year ended
September 30, 1998. 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, 1997.
2. Sales to Major Customer
The Company derived approximately 95 percent and 92 percent of its revenue in
the three months ended December 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. Earnings Per Share
The Company has adopted Financial Accounting Standards No. 128, Earnings per
Share, effective October 1, 1997. FASB 128 requires presentation of the
earnings per share on a basic and diluted earnings per share. Since the
Company does not have any potentially dilutive securities outstanding, only
basic earnings per share is presented. Earnings per share are computed by
dividing net income by the weighted average number of shares outstanding
during the period. Restatement of the prior period for this pronouncement did
not have any effect on the earnings per share amount.
Three Months Ended December 31,
1997 1996
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Average shares outstanding 3,975,383 3,825,383
4. Going Concern Considerations and Management's Plans
The accompanying financial statements have been presented in accordance with
generally accepted accounting principles, which assume the continuity of the
Company as a going concern. However, as disclosed in the financial
statements, the Company had incurred a net loss of approximately $272,000 in
fiscal year 1997. The 1997 loss from operations was $164,364 and sales were
$274,000. Over the last few years sales, working capital, and shareholders'
equity have declined due to a weakness in the demand for services provided by
the Company. The Company has been able to survive by selling excess
equipment. In 1997 it had tooling and equipment sales of $255,000.
As of December 31, 1997, the Company does not have significant excess
equipment to sell in the future in order to generate adequate working
capital. Although the Company has positive working capital of $170,049 and
shareholders equity of $515,496 and has been able to meet its obligations in
the normal course of business, if the Company does not continue to obtain
sufficient sales to achieve profitable operating results, the Company may not
be able to meet its obligations in the future. These factors raise
substantial doubt as to the ability of the Company to continue as a going
concern.
The company's ability to continue as a going concern depends upon success-
fully achieving profitable operations and raising sufficient working capital.
Due to periodic weakness in the demand for services the Company provides, it
must diversify and pursue profitable acquisitions or mergers.
Item 2. Management's Discussion and Analysis
Three months ended December 31, 1997 vs. 1996
Contract revenue for the three months ended December 31, 1997 increased
approximately 318% over the same period of the prior fiscal year. The
increase is a result of an increase in drilling services at its major
customer, Westinghouse Savannah River Company. Management, in an effort to
continue profitability, has reduced non-productive personnel. Indirect costs
and selling, general and administrative costs decreased in relation to sales
due to the significant increase in revenues. The Company had realized gains
on sales or property and equipment of $63,462 in the same period of the prior
year. The net income for the three months ended December 31, 1997 was $65,321 as
compared to a net loss of $37,880 incurred in the same period of the previous
year.
The Company has adopted FASB 109 Accounting for Income Taxes, and conse-
quently is not required to record any tax expense due to its utilization of
its net operating loss carry forwards. Therefore, no income tax expense or
benefit is recorded in the three month period ending December 31, 1997 and 1996.
Liquidity and Capital Resources
During the three month period ended December 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
December 31, 1997 the Company had working capital of $170,049, acurrent ratio
of 4.29:1, a debt to equity ratio of .1:1, and shareholders' equity of $515,496.
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.
Several factors raise substantial doubt as to the ability of the Company to
continue as a going concern. The Company's ability to continue as a going
concern depends upon successfully achieving continued profitable operations
and raising sufficient working capital. See Item 1. "Financial Statements,
Notes to Financial Statement Note 4."
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
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 it 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. The
Company and other parties have assigned their rights to the majority
shareholder and will share in any awards less legal and other expenses, on a
pro rata basis. There can be no assurances that this litigation will result
in any recovery and as such no recovery has been recorded by the Company.
Item 5. Other Information
On December 3, 1997 Mr. Stephen A. Lassak, President and CFO, resigned as an
officer and director of the Company. He submitted his resignation in a letter to
the Board of Directors on December 15, 1997. Mr. Georges assumed the respon-
sibilities of President and a replacement director has not been elected to
the Board of Directors of the Company as of this filing.
On February 9, 1998 the Registrant dismissed the firm of Sweeney, Gates & Co.
as its independent auditor replacing them with Margolies, Fink and Wichrowski. A
Form 8-K will be filed with the Securities and Exchange Commission relative to
this change.
Item 6. Exhibits and Reports on Form 8-K.
None during the quarter ended December 31, 1997.
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,hereunto duly authorized.
Environmental Monitoring
& Testing Corporation
(Registrant)
Date: February 7, 1998 By /s/ George J. Georges
George J. Georges, President and CEO
(Principal Executive Officer)
</TABLE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 39,553
<SECURITIES> 0
<RECEIVABLES> 176,313
<ALLOWANCES> 0
<INVENTORY> 3,400
<CURRENT-ASSETS> 221,666
<PP&E> 831,341
<DEPRECIATION> (485,894)
<TOTAL-ASSETS> 567,113
<CURRENT-LIABILITIES> 51,617
<BONDS> 0
0
0
<COMMON> 61,440
<OTHER-SE> 454,056
<TOTAL-LIABILITY-AND-EQUITY> 567,113
<SALES> 265,578
<TOTAL-REVENUES> 265,578
<CGS> 135,454
<TOTAL-COSTS> 201,414
<OTHER-EXPENSES> (1,157)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 65,321
<INCOME-TAX> 0
<INCOME-CONTINUING> 65,321
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65,321
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
