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, 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 July 31, 1998
Common stock, 3,975,383
par value $0.01
Transitional Small Business Disclosure Format (Check one) Yes_____ No__X__
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited financial statements for the quarter ended June 30, 1998 are
provided on the five following pages.
<PAGE>
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, 1998
<S> <C>
Current Assets:
Cash $ 131,524
Accounts Receivable 116,078
Other Current Assets 13,400
_________
Total Current Assets 261,002
Property, Plant, & Equipment 374,882
_________
$ 635,884
=========
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities:
Notes Payable $ 55,000
Accounts Payable 31,746
Accrued Expenses 21,610
_________
Total Current Liabilities 108,356
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 (1,309,867)
__________
724,455
Less: Cost of Treasury Stock - 2,168,617
shares held on June 30, 1998 (196,927)
__________
Total Shareholders' Equity 527,528
__________
$ 635,884
==========
</TABLE>
See Accompanying Notes
<PAGE>
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
Three Months Ended June 30, Nine Months Ended June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Contract Revenue $ 175,392 $ 53,545 $ 620,705 $ 179,384
__________ __________ __________ __________
Cost and Expenses:
Direct Contract Cost 78,993 20,613 262,659 72,610
Indirect Contract Cost 40,149 35,746 101,828 132,985
Selling, General, and
Administrative 55,022 47,654 169,274 187,988
Depreciation 9,018 13,499 25,212 55,260
(Gain) Loss on Sale of
Property and Equipment (11,250) (77,411) (11,550) (140,873)
__________ __________ __________ __________
Total Cost and Expenses 171,932 40,101 547,423 307,970
__________ __________ __________ __________
Icome (Loss) from
Operations 3,460 13,444 73,282 (128,586)
__________ __________ __________ __________
Other Income (Expenses:
Settlement of
Litigation 0 (131,803) 0 (131,803)
Interest Income 1,241 2,174 2,774 5,537
Other, Net 121 15,544 1,299 24,405
__________ __________ __________ __________
Total Other Income
(Expenses) 1,362 (114,085) 4,073 (101,861)
__________ __________ __________ __________
Net Income (Loss) 4,822 (100,641) 77,355 (230,447)
========== ========== ========== ==========
Retained Deficit,
Beginning of Period (1,314,689) (1,245,226) (1,387,222) (1,115,420)
__________ __________ __________ __________
Retained Deficit,
End of Period $(1,309,867) $(1,345,867) $(1,309,867) $(1,345,867)
========== ========== ========== ==========
Earnings (Loss) per
Common Share $ 0.00 $ (0.03) $ 0.02 $ (0.06)
========== ========== ========== ==========
</TABLE>
See Accompanying Notes
<PAGE>
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
Nine Months Ended June 30,
1998 1997
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ 77,355 $ (230,447)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation 25,212 55,260
(Gain) on Sale of Property & Equipment (11,550) (140,873)
Changes in Certain Assets and Liabilities:
Accounts Receivable (28,571) 149,991
Other Current Assets (5,200) 15,124
Accounts Payable 9,708 8,170
Other Current Liabilities 4,814 (11,305)
__________ __________
Net Cash Provided by (used in)
Operating Activities 71,768 (154,080)
__________ __________
Cash Flows from Investing Activities:
Sale of Machinery & Equipment 17,300 246,699
Purchase of Machinery & Equipment (55,300) ---
__________ __________
Net Cash Provided by (used in)
Investing Activities (38,000) 246,699
__________ __________
Cash Flows from Financing Activities:
Principal Payments for Borrowings --- ---
Proceeds from Borrowings 55,000 ---
__________ __________
Net Cash Provided by (used in)
Financing Activities 55,000 ---
__________ __________
Net Increase in Cash and Cash Equivalents 88,768 92,619
Cash and Cash Equivalents, beginning of period 42,756 39,795
__________ __________
Cash and Cash Equivalents, end of period $ 131,524 $ 132,414
========== ==========
Supplemental Disclosure of Cash Flow
Information:
Cash Paid for Interest $ 0 $ 0
Sale of Assets through
Accounts Receivable 3,000 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, 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 88 percent and 79 percent of its revenue in
the nine months ended June 30, 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.
<TABLE>
Three Months Ended June 30, Nine Months Ended June 30,
1998 1997 1998 1997
<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 June 30 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 $152,646 and shareholders equity
of $527,528 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.
<PAGE>
Item 2. Management's Discussion and Analysis
Nine months ended June 30, 1998 vs. 1997
Contract revenue for the nine months ended June 30, 1998 increased 346% 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
was hired to solicit additional drilling services offered by the Company. Direct
contract costs have remained at 41% to 42% of revenues because of improved cost
controls.
Indirect contract costs have decreased from 74% to 16% 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 of a reduction
in expenses during the current fiscal period.
Depreciation expense was reduced because of some equipment becoming fully
depreciated and as a result of the sale of four drill rigs during 1997 resulting
in a gain of $140,873. In June 1998 an additional auger drill rig was purchased
for $55,000 because of an increased demand in services using this type of drill
rig.
Three months ended June 30, 1998 vs. 1997
Contract revenues for the three months ended June 30, 1998 increased 327% 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 four drill rigs in 1997.
Liquidity and Capital Resources
During the nine month period ended June 30, 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 June 30, 1998 the Company had
working capital of $152,646 and shareholders' equity was $527,528.
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 and June 1998 the
Company realized a gain on the sale of three 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. On June 12, 1998 Mr. Bergus resigned as a director, officer, and
employee of the Company. Mr. George J. Georges assumed the position of President
and the Board seat remains unfilled.
Item 6. Exhibits and Reports on Form 8-K.
None during the quarter ended June 30, 1998.
<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 31, 1998 By /s/ George J. Georges
George J. Georges, President, Chairman of the Board
and CEO
(Principal Executive Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 131,524
<SECURITIES> 0
<RECEIVABLES> 116,078
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 261,002
<PP&E> 824,289
<DEPRECIATION> 449,407
<TOTAL-ASSETS> 635,884
<CURRENT-LIABILITIES> 108,356
<BONDS> 0
0
0
<COMMON> 1,837,395
<OTHER-SE> (1,309,867)
<TOTAL-LIABILITY-AND-EQUITY> 635,884
<SALES> 620,705
<TOTAL-REVENUES> 620,705
<CGS> 547,423
<TOTAL-COSTS> 547,423
<OTHER-EXPENSES> (4,073)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 77,355
<INCOME-TAX> 0
<INCOME-CONTINUING> 77,355
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,355
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
