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, 1998
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 March 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 March 31, 1998
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
ENVIRONMENTAL MONITORING & TESTING CORPORATION
BALANCE SHEET
(UNAUDITED)
<TABLE>
ASSETS March 31, 1998
<S> <C>
Current Assets:
Cash $ 80,379
Accounts Receivable 123,601
Other Current Assets 10,000
Total Current Assets 213,980
Property, Plant, & Equipment 337,351
_________
$ 551,331
=========
LIABILITIES & STOCKHOLDERS
EQUITY
Current Liabilities:
Accounts Payable $ 6,925
Accrued Expenses 21,700
_________
Total Current Liabilities 28,625
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 1,972,882
Retained Deficit (1,314,689)
__________
719,633
Less: Cost of Treasury
Stock - 2,168,617 shares
held on March 31, 1998 (196,927)
__________
Total Shareholders' Equity 522,706
__________
$ 551,331
==========
</TABLE>
See Accompanying Notes
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
Three Months Ended March 31, Six Months Ended March 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Contract Revenue $ 179,735 $ 42,250 $ 445,313 $ 125,839
___________ ___________ ___________ ___________
Cost and Expenses:
Direct Contract Cost 77,068 19,534 183,667 51,998
Indirect Contract Cost 32,823 45,345 61,678 97,239
Selling, General, and
Administrative 56,089 62,439 114,252 140,474
Depreciation 8,097 17,223 16,193 41,621
(Gain) Loss on Sale of
Property and Equipment --- --- (300) (63,462)
___________ ___________ ___________ ___________
Total Cost
and Expenses 174,077 144,541 375,490 267,870
___________ ___________ ___________ ___________
Income (Loss) from
Operations 5,658 (102,291) 69,823 (142,031)
___________ ___________ ___________ ___________
Other Income (Expenses):
Interest Income 922 1,828 1,533 3,364
Other, Net 631 8,537 1,177 8,861
___________ ___________ ___________ ___________
Total Other Income 1,553 10,365 2,710 12,225
___________ ___________ ___________ ___________
Net Income (Loss) 7,211 (91,926) 72,533 (129,806)
=========== =========== =========== ===========
Retained Deficit,
Beginning of Period (1,321,900) (1,153,300) (1,387,222) (1,115,420)
___________ ___________ ___________ ___________
Retained Deficit,
End of Period $(1,314,689) $(1,245,226) $(1,314,689 $(1,245,226)
=========== =========== =========== ===========
Earnings (Loss) per
Common Share $ 0.00 $ (0.02) $ 0.02 $ (0.03)
</TABLE>
See Accompanying Notes
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended March 31,
1998 1997
<TABLE>
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ 72,533 $ (129,806)
Adjustments to Reconcile Net Income to
Net Cash
Provided by Operating Activities:
Depreciation 16,193 41,621
(Gain) on Sale of Property & Equipment (300) (63,462)
Changes in Certain Assets and Liabilities:
Accounts Receivable (36,094) 162,625
Other Current Assets (4,800) 18,272
Accounts Payable (15,113) (18,975)
Other Current Liabilities 4,904 (21,985)
___________ ___________
Net Cash Provided by (used in)
Operating Activities 37,323 (11,710)
___________ ___________
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:
Princicipal Payments for Borrowings --- ---
___________ ___________
Net Cash Provided by (used in) Financing
Activities --- ---
___________ ___________
Net Increase in Cash and Cash Equivalents 37,623 123,890
Cash and Cash Equivalents, beginning of
period 42,756 39,795
___________ ___________
Cash and Cash Equivalents, end of period $ 80,379 $ 163,685
=========== ===========
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 six month period ended March 31, 1998, 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 91 percent and 71 percent of its revenue in
the six months ended March 31, 1998 and 1997, 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 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.
Six Months Ended March 31, Three Months Ended March 31,
1998 1997 1998 1997
<TABLE>
<S> <C> <C> <C> <C>
Average shares
Outstanding 3,975,383 3,825,383 3,975,383 3,825,383
</TABLE>
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 March 31, 1998, 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 $185,355
and shareholders equity of $522,706 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
successfully 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
Six months ended March 31, 1998 vs. 1997
Contract revenue for the six months ended March 31, 1998 increased 354% over
the same period of the prior fiscal year. The increase is primarily the
result of an increase 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, and a marketing/sales
representative has been hired to solicit additional drilling services offered by
the Company. Direct contract costs have remained at 41% of revenues because
of improved cost controls.
Indirect contract costs have decreased from 77% to 14% of revenues because of
the relatively fixed nature of these expenses and the significant increase in
revenues. In addition, an investment of approximately $36,000 in repairs and
maintenance on equipment, including repainting several drill rigs and trucks,
was made during the previous fiscal period.
Selling, general and administrative expenses decreased because no legal fees
were expended during the current fiscal period toward the defense of the
Company in the sexual harassment and defamation suit which was settled in
June 1997.
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.
Three months ended March 31, 1998 vs. 1997
Contract revenues for the three months ended March 31, 1998 increased 425%
over the same period of the prior fiscal year. The increase is the result of
an increase in releases of work from Westinghouse Savannah River Company. As
previously mentioned, a marketing/sales representative has been hired to
solicit 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 decreased in
relation to sales because of their relatively fixed nature and because of
implemented cost controls.
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.
Liquidity and Capital Resources
During the six month period ended March 31, 1998 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, 1998 the Company had working capital of $185,355 and shareholders'
equity was $522,706.
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 4. Submission Matters to a Vote of Security Holders.
The board of directors set a record date of February 27, 1998 for an annual
stockholders' meeting that was held on April 8, 1998 at 10:00 a.m. EST at the
corporate offices of the Company. The proxies and financial information were
mailed on or about March 3, 1998.
The following actions were acted upon at the meeting of the stockholders:
I. The following were elected to serve on the board of directors of the
Company until the Company's next annual meeting:
George J. Georges votes: for 2,794,702; against 2,800; withheld 471,850
Michael Camino votes: for 2,795,702; against 3,000; withheld 470,650
II. Ratify the appointment of Margolies, Fink and Wichrowski as independent
auditors for the fiscal year ending September 30, 1998.
Votes: for 3,238,752; against 25,600; withheld 5,000
III. No other matters were acted upon.
Item 5. Other Information
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.
On April 8, 1998 Larry W. Bergus was elected by the Board of Directors of the
Company to fill a vacant Board seat and was appointed President and Secretary of
the Company.
Item 6. Exhibits and Reports on Form 8-K.
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 was filed with the Securities and Exchange Commission relative to
this change.
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, 1998 By /s/ George J. Georges
George J. Georges, Chairman of the Board and CEO
(Principal Executive Officer)
By /s/ Larry W. Bergus
Larry W. Bergus, President and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-30-1998
<CASH> 80,379
<SECURITIES> 0
<RECEIVABLES> 123,601
<ALLOWANCES> 0
<INVENTORY> 6,000
<CURRENT-ASSETS> 213,980
<PP&E> 831,341
<DEPRECIATION> 493,990
<TOTAL-ASSETS> 551,331
<CURRENT-LIABILITIES> 28,625
<BONDS> 0
0
0
<COMMON> 61,440
<OTHER-SE> 461,266
<TOTAL-LIABILITY-AND-EQUITY> 551,331
<SALES> 445,313
<TOTAL-REVENUES> 445,313
<CGS> 261,538
<TOTAL-COSTS> 375,490
<OTHER-EXPENSES> (2,710)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 72,533
<INCOME-TAX> 0
<INCOME-CONTINUING> 72,533
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,533
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
