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Previous: EGLOBE INC, 4, 1999-08-11 |
Next: EQUUS CAPITAL PARTNERS LP, 10-Q, 1999-08-11 |
Washington, D.C. 20549
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, 1999
Common stock, 3,810,183
par value $0.01
Transitional Small Business Disclosure Format (Check one)
Yes_____ No__X__
Item 1. Financial Statements
Unaudited financial statements for the quarter ended June 30, 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
(UNAUDITED)
| ASSETS | June 30, 1999 | |
| Current Assets: | ||
| Cash | $ | 308,767 |
| Accounts Receivable | 22,905 | |
| Other Current Assets | 8,300 | |
| Total Current Assets | 339,972 | |
| Property, Plant, & Equipment | 355,448 | |
| $ | 695,420 | |
| LIABILITIES & STOCKHOLDERS EQUITY | ||
| Current Liabilities: | ||
| Accounts Payable | $ | 11,860 |
| Accrued Expenses | 32,787 | |
| Total Current Liabilities | 44,647 | |
| 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 6,184,000 shares issued |
61,840 | |
| Capital-In-Excess of Par | 1,978,483 | |
| Retained Deficit | (1,173,287) | |
| 867,036 | ||
| Less: Cost of Treasury Stock - 2,373,817 shares held on June 30, 1999 |
(216,263) | |
| Total Shareholders' Equity | 650,773 | |
| $ | 695,420 |
| Three Months Ended
June 30, |
Nine Months Ended
June 30, | |||
| 1999 | 1998 | 1999 | 1998 | |
| Contract revenue | $ 38,089 | $ 175,392 | $ 564,323 | $ 620,705 |
| Contract costs and expenses: | ||||
| Direct contract cost | 50,574 | 78,993 | 317,709 | 262,659 |
| Indirect contract cost | 34,832 | 40,149 | 117,193 | 101,828 |
| Selling, general and administrative expenses | 41,612 | 55,022 | 146,586 | 169,274 |
| Depreciation | 5,967 | 9,018 | 19,166 | 25,212 |
| (Gain) on sale of machinery and equipment | ---- | (11,250) | ---- | (11,550) |
| Total contract costs and expenses | 132,985 | 171,932 | 600,654 | 547,423 |
| Income (Loss) from operations | (94,896) | 3,460 | (36,331) | 73,282 |
| Other income (expenses): | ||||
| Interest income | 3,761 | 1,241 | 9,131 | 2,774 |
| Other, net | 39 | 121 | 221 | 1,299 |
| Total other income | 3,800 | 1,362 | 9,352 | 4,073 |
| Net income (loss) | $ (91,096) | $ 4,822 | $ (26,979) | $ 77,355 |
| Retained Deficit, Beginning of Period | (1,082,191) | (1,314,689) | (1,146,308) | (1,387,222) |
| Retained Deficit, End of Period | $(1,173,287) | $(1,309,867) | $ (1,173,287) | $ (1,309,867) |
| Net income per share information: (Note 3) | ||||
| Basic: | ||||
| Net income (loss) per share | $ (.02) | $ 0.00 | $ (.01) | $ .02 |
| Weighted average number of common shares | 3,810,183 | 3,975,383 | 3,819,110 | 3,975,383 |
| Diluted: | ||||
| Net income (loss) per share | $ (.02) | $ 0.00 | $ (.01) | $ .02 |
| Weighted average number of common shares | 3,810,183 | 3,975,383 | 3,819,110 | 3,975,383 |
| Nine Months Ended June 30, | ||||
| 1999 | 1998 | |||
| Cash Flows from Operating Activities: | ||||
| Net Income (Loss) | $ | (26,979) | $ | 77,355 |
| Adjustments to Reconcile Net Income to Net Cash | ||||
| Provided by Operating Activities: | ||||
| Depreciation | 19,166 | 25,212 | ||
| (Gain) on Sale of Property & Equipment | ---- | (11,550) | ||
| Issuance of common stock for services | 6,000 | ---- | ||
| Changes in Certain Assets and Liabilities: | ||||
| Accounts Receivable | 217,308 | (28,571) | ||
| Accounts Receivable Settlement | 115,086 | ---- | ||
| Other Current Assets | 11,402 | (5,200) | ||
| Accounts Payable | (69,069) | 9,708 | ||
| Other Current Liabilities | (9,536) | 4,814 | ||
| Net Cash Provided by (used in) Operating Activities | 263,378 | 71,768 | ||
| Cash Flows from Investing Activities: | ||||
| Sale of Machinery & Equipment | ---- | 17,300 | ||
| Purchase of Machinery & Equipment | (4,094) | (55,300) | ||
| Net Cash Provided by (used in) Investing Activities | (4,094) | (38,000) | ||
| Cash Flows from Financing Activities: | ||||
| Principal Payments for Borrowings | ---- | ---- | ||
| Proceeds from Borrowings | ---- | 55,000 | ||
| Purchase of Treasury stock | (19,336) | ---- | ||
| Net Cash Provided by (used in) Financing Activities | (19,336) | 55,000 | ||
| Net Increase in Cash and Cash Equivalents | 239,948 | 88,768 | ||
| Cash and Cash Equivalents, beginning of period | 68,819 | 42,756 | ||
| Cash and Cash Equivalents, end of period | $ | 308,767 | $ | 131,524 |
| Supplemental Disclosure of Cash Flow Information: | ||||
| Cash Paid for Interest | $ | 0 | $ | 0 |
| Sale of Assets through Accounts Receivable | 0 | 3,000 | ||
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, 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 95 percent and 88 percent of its revenue in the nine months ended June 30, 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.
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 share reflects 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
Nine months ended June 30, 1999 vs. 1998
Contract revenue for the nine months ended June 30, 1999 decreased 9% over the same period of the prior fiscal year. The decrease is primarily the result of a decrease 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 14% of revenues because of an increase in sales of pumps and performance of work which has a low gross margin.
Indirect contract costs have increased from 16% to 21% 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 and as a result of the sale of four drill rigs during 1997. In June 1998 an additional auger drill rig was purchased because of an increased demand in services using this type of drill rig.
Three months ended June 30, 1999 vs. 1998
Contract revenues for the three months ended June 30, 1999 decreased 78% 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 nine month period ended June 30, 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 June 30, 1999 the Company had working capital of $295,325, a debt equity ration of .07:1, and shareholders' equity was $650,773.
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 Matters to a Vote of Security Holders.
The board of directors set a record date of February 12, 1999 for an annual stockholders' meeting that was held on March 5, 1999 at 10:00 a.m. EST at the corporate offices of the Company. This was revised to a record date of April 9, 1999 with the meeting held on May 14, 1999. The proxies and financial information were mailed on or about April 13, 1999.
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 2,744,713 against 16,350 withheld 361,200
Michael Camino votes: for 2,744,713 against 16,350 withheld 361,200
Rebecca J. DelMedico votes: for 2,746,513 against 15,750 withheld 360,000
II. Ratify the appointment of Margolies, Fink and Wichrowski as independent auditors for the fiscal year ending September 30, 1999.
Votes: for 2,807,463 against 10,800 withheld 304,000
III. No other matters were acted upon.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
None during the quarter ended June 30, 1999.
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.
Date: August 13, 1999 By /s/ George J. Georges
George J. Georges, President, Chairman of the Board and CEO
(Principal Executive Officer)
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