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, 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 January 15, 1999
Common stock, 3,770,183
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 December 31, 1998 are
provided on the four following pages.
INDEX
Balance Sheet Page 3
Statements of Operations and Retained Earnings (Deficit) Page 4
Statements of Cash Flows Page 5
Notes to Financial Statements Page 6
ENVIRONMENTAL MONITORING & TESTING CORPORATION
BALANCE SHEET
(UNAUDITED)
<TABLE>
ASSETS December 31, 1998
<S> <C> <C>
Current Assets:
Cash $ 255,477
Accounts Receivable 238,763
Inventories 11,800
Other Current Assets 3,500
_______
Total Current Assets 509,540
Property, Plant, & Equipment 363,289
_______
$ 872,829
=======
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable $ 61,715
Accrued Expenses 37,020
_______
Total Current Liabilities 98,735
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 (Deficit) (1,043,966)
__________
990,357
Less: Cost of Treasury Stock - 2,373,817
shares held on December 31, 1998 (216,263)
_______
Total Shareholders' Equity 774,094
_______
$ 872,829
=======
</TABLE>
See Accompanying Notes
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended
December 31,
1998 1997
<TABLE>
<S> <C> <C> <C> <C>
Contract revenue $ 373,518 $ 265,578
_______ _______
Contract costs and expenses:
Direct contract cost 184,360 106,599
Indirect contract cost 38,065 28,855
Selling, general and administrative expenses 43,720 58,163
Depreciation 7,232 8,097
(Gain) on sale of machinery and equipment 0 (300)
_______ _______
Total contract costs and expenses 273,377 201,414
_______ _______
Loss from operations 100,141 64,164
Other income (expenses):
Interest income 2,104 611
Other, net 97 546
_______ _______
Total other income 2,201 1,157
_______ _______
Net income $ 102,342 $ 65,321
======= =======
Retained Deficit, Beginning of Period (1,146,308) (1,387,221)
_________ _________
Retained Deficit, End of Period $ (1,043,966) $ (1,321,900)
========= =========
Net income per share information: (Note 3)
Basic:
Net income per share $ 0.03 $ 0.02
========= =========
Weighted average number of common shares 3,847,544 3,975,383
========= =========
Diluted:
Net income per share $ 0.03 $ 0.02
========= =========
Weighted average number of common shares 3,847,544 3,975,383
========= =========
</TABLE>
See Accompanying Notes
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended December 31,
1998 1997
<TABLE>
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities: _______ _______
Net Income $ 102,342 $ 65,321
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 7,232 8,097
(Gain) on Sale of Property & Equipment 0 (300)
Changes in Certain Assets and Liabilities:
Accounts Receivable 116,535 (88,806)
Other Current Assets 4,402 (600)
Accounts Payable (19,214) 7,673
Other Current Liabilities (5,303) 5,112
_______ _______
Net Cash Provided by (used in) Operating Activities 205,994 (3,503)
_______ _______
Cash Flows from Investing Activities
Sale of Machinery & Equipment 0 300
_______ _______
Net Cash Provided by (used in) Investing Activities 0 300
_______ _______
Cash Flows used in Financing Activities:
Purchase of Treasury Stock (19,336) 0
_______ _______
Net Cash Provided by (used in) Financing Activities (19,336) 0
_______ _______
Net Increase (Decrease) in Cash and Cash Equivalents 186,658 (3,203)
Cash and Cash Equivalents, Beginning of period 68,819 42,756
_______ _______
Cash and Cash Equivalents, End of period $ 255,477 $ 39,553
======= =======
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, 1998, 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 95 percent of its revenue in
the three months ended December 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 (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 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
Three months ended December 31, 1998 vs. 1997 Contract revenue for the three
months ended December 31, 1998 increased approximately 41% 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 net income
for the three months ended December 31, 1998 was $102,342 as compared to a net
income of $65,321 incurred in the same period of the previous year.
The Company has adopted FASB 109 Accounting for Income Taxes, and consequently
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, 1998 and 1997.
Liquidity and Capital Resources
During the three month period ended December 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 December 31, 1998 the Company had
working capital of $410,805, a current ratio of 5.16:1, a debt to equity ratio
of .1:1, and shareholders' equity of $774,094.
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 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.
Item 4. Submission of Matters to a Vote of Security Holders
The Company has 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.
Item 5. Other Information
On October 1, 1998 Ms. Rebecca DelMedico was appointed to the Company's Board
of Directors to serve until the 1998 Annual Shareholders Meeting.
Item 6. Exhibits and Reports on Form 8-K.
None during the quarter ended December 31, 1998.
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: January 27, 1998 By /s/ George J. Georges
George J. Georges, President and CEO
(Principal Executive Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 255,477
<SECURITIES> 0
<RECEIVABLES> 238,763
<ALLOWANCES> 0
<INVENTORY> 11,800
<CURRENT-ASSETS> 509,540
<PP&E> 828,539
<DEPRECIATION> 465,251
<TOTAL-ASSETS> 872,829
<CURRENT-LIABILITIES> 98,735
<BONDS> 0
0
0
<COMMON> 61,440
<OTHER-SE> 712,654
<TOTAL-LIABILITY-AND-EQUITY> 872,829
<SALES> 373,518
<TOTAL-REVENUES> 373,518
<CGS> 273,377
<TOTAL-COSTS> 273,377
<OTHER-EXPENSES> (2,201)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 102,342
<INCOME-TAX> 0
<INCOME-CONTINUING> 102,342
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 102,342
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
