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, 1999
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, 1999
Common stock, 3,810,183
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, 1999 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, 1999
<S> <C>
Current Assets:
Cash $ 353,090
Accounts Receivable 61,461
Other Current Assets 10,200
________
Total Current Assets 424,751
Property, Plant, & Equipment 361,415
________
$ 786,166
========
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable $ 20,700
Accrued Expenses 23,597
________
Total Current Liabilities 44,297
Stockholders' Equity
Preferred Stock - $.01 Par Value -
1,000,000 shares authorized, and none
issued
Common Stock - $.01 Par Value -
30,000,000 and 10,000,000 shares
authorized and 6,184,000 shares issued 61,840
Capital-In-Excess of Par 1,978,483
Retained Deficit (1,082,191)
_________
958,132
Less: Cost of Treasury Stock - 2,373,817
shares held on March 31, 1999 (216,263)
_________
Total Shareholders' Equity 741,869
=========
$ 786,166
</TABLE>
See Accompanying Notes
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Contract revenue $ 152,717 $ 179,735 $ 526,235 $ 445,313
__________ __________ __________ __________
Contract costs and expenses:
Direct contract cost 82,775 77,068 267,135 183,667
Indirect contract cost 44,296 32,823 82,361 61,678
Selling, general and
administrative expenses 61,253 56,089 104,974 114,252
Depreciation 5,967 8,097 13,199 16,193
(Gain) on sale of machinery
and equipment ---- ---- ---- (300)
__________ __________ __________ __________
Total contract costs
and expenses 194,291 174,077 467,669 375,490
__________ __________ __________ __________
Income (Loss) from operations (41,574) 5,658 58,566 69,823
__________ __________ __________ __________
Other income (expenses):
Interest income 3,265 922 5,370 1,533
Other, net 84 631 181 1,177
__________ __________ __________ __________
Total other income 3,349 1,553 5,551 2,710
__________ __________ __________ __________
Net income (loss) $ (38,225) $ 7,211 $ 64,117 $ 72,533
========== ========== ========== ==========
Retained Deficit,
Beginning of Period (1,043,966) (1,321,900) (1,146,308) (1,387,222)
__________ __________ __________ __________
Retained Deficit,
End of Period $(1,082,191) $(1,314,689) $(1,082,191) $(1,314,689)
=========== =========== =========== ===========
Net income per share
information: (Note 3)
Basic:
Net income (loss)
per share $ (0.01) $ 0.00 $ 0.02 $ 0.02
=========== =========== =========== ===========
Weighted average number
of common shares 3,799,072 3,975,383 3,823,574 3,975,383
=========== =========== =========== ===========
Diluted:
Net income (loss)
per share $ (0.01) $ 0.00 $ 0.02 $ 0.02
=========== =========== =========== ===========
Weighted average number
of common shares 3,799,072 3,975,383 3,823,574 3,975,383
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
Six Months Ended March 31,
1999 1998
<S> <C> <C>
Cash Flows from Operating Activities: ___________ ___________
Net Income (Loss) $ 64,117 $ 72,533
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 13,199 16,193
(Gain) on Sale of Property & Equipment (300)
Issuance of Common Stock for Services 6,000
Changes in Certain Assets and Liabilities:
Accounts Receivable 178,752 (36,094)
Accounts Receivable--Settlement 115,086
Other Current Assets 9,502 (4,800)
Accounts Payable (60,229) (15,113)
Other Current Liabilities (18,726) 4,904
___________ ___________
Net Cash Provided by (used in) Operating Activities 307,701 37,323
___________ ___________
Cash Flows from Investing Activities:
Sale of Machinery & Equipment 300
Purchase of Equipment (4,094)
___________ ____________
Net Cash Provided by (used in) Investing Activities (4,094) 300
___________ ___________
Cash Flows from Financing Activities:
Purchase of Treasury Stock (19,336) ---
___________ ___________
Net Cash Provided by (used in) Financing Activities (19,336) ---
___________ ___________
Net Increase in Cash and Cash Equivalents 284,271 37,623
Cash and Cash Equivalents, beginning of period 68,819 42,756
___________ ___________
Cash and Cash Equivalents, end of period $ 353,090 $ 80,379
=========== ===========
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, 1999, are not necessarily
indicative of the results that may be expected for the year ended September 30,
1999. 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, 1998.
2. Sales to Major Customer
The Company derived approximately 99 percent and 91 percent of its revenue in
the six months ended March 31, 1999 and 1998, 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 (Loss) Per Share
In 1998, the Company adopted SFAS No. 128, ("Earnings Per Share"), which
requires the reporting of both basic and diluted earnings per share. Basic
net loss per share is determined by dividing loss available to common
shareholders by the weighted average number of common shares outstanding for
the period. Diluted loss per sharereflects the potential dilution that could
occur if options or other contracts to issue common stock were exercised
or converted into common stock, as long as the effect of their inclusion is
not anti-dilutive.
Item 2. Management's Discussion and Analysis
Six months ended March 31, 1999 vs. 1998
Contract revenue for the six months ended March 31, 1999 increased 18% 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. Direct contract costs have increased 10% of revenues because of
an increase in sales of pumps which have a low gross margin.
Indirect contract costs have increased from 14% to 16% of revenues because of
the relatively fixed nature of these expenses and the shortfall in revenues
during the second quarter fiscal 1999.
Selling, general and administrative expenses decreased as a result of expense
controls.
Depreciation expense was reduced because of some equipment becoming fully
depreciated.
Three months ended March 31, 1999 vs. 1998
Contract revenues for the three months ended March 31, 1999 decreased 15% over
the same period of the prior fiscal year. The decrease is the result of a
decrease in releases of work from Westinghouse Savannah River Company.
Management has reduced non-productive personnel and non-productive hours
until revenues increase.
Indirect costs and Selling, general and administrative expenses increased in
relation to sales because of their relatively fixed nature.
Depreciation expense was reduced because of some equipment becoming fully
depreciated.
Liquidity and Capital Resources
During the six month period ended March 31, 1999 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, 1999
the Company had working capital of $380,454, a debt to equity ratio of .06:1
and shareholders' equity was $741,869.
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 1. Legal Proceedings
None
Item 2. Changes in Securities
The Company's Board of Directors has authorized the purchase of Treasury shares
from time to time from the open market when the market price of such shares is
below the net book value of said shares. Since September 30, 1998 the Company
has repurchased 205,200 of its shares from the open market. The Company's Board
issued 20,000 shares of common stock to employees and 20,000 shares of common
stock to a director in January 1999.
Item 4. Submission of Matters to a Vote of Security Holders
The Company had set the record date of the 1998 Annual Shareholders Meeting to
be February 12, 1999 with the meeting to be held on March 5, 1999. This has been
revised to a record date of April 9, 1999 with the meeting to be held on
May 14, 1999.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
None during the quarter ended March 31, 1999.
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 14, 1999 By /s/ George J. Georges
George J. Georges
Chairman of the Board and CEO
(Principal Executive Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 353,090
<SECURITIES> 0
<RECEIVABLES> 61,461
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 424,757
<PP&E> 832,633
<DEPRECIATION> 471,218
<TOTAL-ASSETS> 786,166
<CURRENT-LIABILITIES> 44,297
<BONDS> 0
0
0
<COMMON> 61,840
<OTHER-SE> 680,029
<TOTAL-LIABILITY-AND-EQUITY> 786,166
<SALES> 526,235
<TOTAL-REVENUES> 526,235
<CGS> 467,669
<TOTAL-COSTS> 467,669
<OTHER-EXPENSES> (5,551)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 64,117
<INCOME-TAX> 0
<INCOME-CONTINUING> 64,117
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,117
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
