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Previous: DUKE ENDOWMENT /NC/, 13F-HR, 2000-05-11 |
Next: VIRTUAL ACADEMICS COM INC, 10QSB, 2000-05-11 |
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 No X
Title of each class Outstanding at May 1, 2000
Common stock, 3,810,183
par value $0.01
Transitional Small Business Disclosure Format (Check one)
Item 1. Financial Statements
Unaudited financial statements for the quarter ended March 31, 2000 are provided on the 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
(UNAUDITED)
| ASSETS | March 31, 2000 | |
| Current Assets: | ||
| Cash | $ | 5,180 |
| Restricted cash, current portion | 22,103 | |
| Accounts Receivable | 78,908 | |
| Inventories | 7,900 | |
| Other Current Assets | 5,050 | |
| Total Current Assets | 119,141 | |
| Property, Plant, & Equipment, net | 337,547 | |
| Restricted cash, long-term portion | 156,792 | |
| Note receivable from shareholder | 171,774 | |
| $ | 785,254 | |
|
LIABILITIES & STOCKHOLDERS EQUITY |
||
| Current Liabilities: | ||
| Note payable, current portion | $ | 13,854 |
| Accounts Payable | 80,071 | |
| Accrued Expenses | 19,164 | |
| Advances from officers and directors | 24,458 | |
| Total Current Liabilities | 137,547 | |
| Note payable, long-term portion | 156,792 | |
| 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 | 1,978,482 | |
| Retained Earnings (Deficit) | (1,333,144) | |
| 707,178 | ||
| Less: Cost of Treasury Stock - 2,373,817 shares held on March 31, 2000 | (216,263) | |
| Total Shareholders' Equity | 490,915 | |
| $ | 785,254 | |
See Accompanying Notes
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
| Three Months Ended
March 31, |
Six Months Ended
March 31, | |||
| 2000 | 1999 | 2000 | 1999 | |
| Contract revenue | $ 98,522 | $ 152,717 | $ 211,578 | $ 526,235 |
| Contract costs and expenses: | ||||
| Direct contract cost | 53,617 | 82,775 | 114,926 | 267,135 |
| Indirect contract cost | 38,249 | 44,296 | 82,147 | 82,361 |
| Selling, general and administrative expenses | 52,945 | 61,253 | 108,102 | 104,974 |
| Depreciation | 5,967 | 5,967 | 11,933 | 13,199 |
| Total contract costs and expenses | 150,778 | 194,291 | 317,108 | 467,669 |
| Income (Loss) from operations | (52,256) | (41,574) | (105,530) | 58,566 |
| Other income (expenses): | ||||
| Interest income (expense), net | 1,992 | 3,265 | 3,032 | 5,370 |
| Other, net | 131 | 84 | 270 | 181 |
| Total other income | 2,123 | 3,349 | 3,302 | 5,551 |
| Net income (loss) | $ (50,133) | $ (38,225) | $ (102,228) | $ 64,117 |
| Retained Deficit, Beginning of Period | (1,283,011) | (1,043,966) | (1,230,916) | (1,146,308) |
| Retained Deficit, End of Period | $ (1,333,144) | $ ( 1,082,191) | $ (1,333,144) | $ (1,082,191) |
| Net income per share information: (Note 3) | ||||
| Basic: | ||||
| Net income (loss) per share | $ (0.01) | $ (0.01) | $ (0.03) | $ 0.02 |
| Weighted average number of common shares | 3,810,183 | 3,799,072 | 3,810,183 | 3,823,574 |
| Diluted: | ||||
| Net income (loss) per share | $ (0.01) | $ (0.01) | $ (0.03) | $ 0.02 |
| Weighted average number of common shares | 3,810,183 | 3,799,072 | 3,810,183 | 3,823,574 |
See Accompanying Notes
ENVIRONMENTAL MONITORING & TESTING CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Six Months Ended March 31, | ||||
| 2000 | 1999 | |||
| Cash Flows from Operating Activities: | ||||
| Net Income (Loss) | $ | (102,228) | $ | 64,117 |
| Adjustments to Reconcile Net Income (loss) to Net Cash | ||||
| Provided by Operating Activities: | ||||
| Depreciation | 11,933 | 13,199 | ||
| Issuance of Common Stock for Services | --- | 6,000 | ||
| Changes in Certain Assets and Liabilities: | ||||
| Accounts Receivable | (13,629) | 178,752 | ||
| Accounts Receivable- Settlement | --- | 115,086 | ||
| Other Current Assets | 3,326 | 9,502 | ||
| Accounts Payable | 72,488 | (60,229) | ||
| Other Current Liabilities | (11,432) | (18,726) | ||
| Net Cash Provided by (used in) Operating Activities | (39,542) | 307,701 | ||
| Cash Flows from Investing Activities: | ||||
| Purchase of Equipment | --- | (4,094) | ||
| Net Cash Provided by (used in ) Investing Activities | --- | (4,094) | ||
| Cash Flows from Financing Activities: | ||||
| Increase in restricted cash | (178,895) | --- | ||
| Proceeds from borrowing of long-term debt | 175,000 | --- | ||
| Repayment of long-term debt | (4,354) | --- | ||
| Note receivable from shareholder | (171,774) | --- | ||
| Repayments of amounts due from related parties | 30,957 | --- | ||
| Proceeds from borrowing of current debt | 15,000 | --- | ||
| Repayment of current debt | (15,000) | --- | ||
| Purchase of Treasury Stock | --- | (19,336) | ||
| Net Cash Provided by (used in) Financing Activities | (149,066) | (19,336) | ||
| Net Increase (Decrease) in Cash and Cash Equivalents | (188,608) | 284,271 | ||
| Cash and Cash Equivalents, Beginning of period | 193,788 | 68,819 | ||
| Cash and Cash Equivalents, End of period | $ | 5,180 | $ | 353,090 |
| Supplemental Disclosure of Cash Paid: | ||||
| Interest | $ | 6,813 | $ | 0 |
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, 2000 are not necessarily indicative of the results that may be expected for the year ending September 30, 2000. 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, 1999.
2. Sales to Major Customer
The Company derived approximately 85 percent and 91 percent of its revenue in the six months ended March 31, 2000 and 1999, 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.
4. Commitments and Contingencies
On November 12, 1999 the Company was named as a defendant in a breach of contract suit filed in the South Carolina Court of Common Pleas in Aiken County by a former officer and employee. The suit seeks actual, consequential, and incidental damages. The Company is aggressively defending this action and believes that this action is without merit.
5. Restricted Cash and Notes Receivable and Payable
On November 3, 1999 the majority shareholder of the Company sold a portion of his controlling interest in the Company to a then-unrelated third party to which he also transferred substantially all of his voting rights. In conjunction with this transaction the Company borrowed $175,000 from a bank and secured the loan by a certificate of deposit in the amount of $175,000. The proceeds of this loan were then loaned to the acquiring shareholder and used to purchase the stock from the former majority shareholder. The shareholder's loan is payable on the same basis as the Company's bank loan. The note receivable is collateralized by 1,000,000 shares of common stock of the Company.
Item 2. Management's Discussion and Analysis
Three months ended March 31, 2000 vs. 1999
Contract revenue for the three months ended March 31, 2000 decreased approximately 35% over the same period of the prior fiscal year. The decrease is a result of a decrease in drilling services at its major customer, Westinghouse Savannah River Company. Management, in an effort to continue profitability, has reduced non-productive personnel and concentrated on marketing to other engineering firms. Indirect costs and selling, general and administrative costs increased in relation to sales due to the significant decrease in revenues and relatively fixed nature of these expenses. The net loss for the three months ended March 31, 2000 was $50,133 as compared to a net loss of $38,225 incurred in the same period of the previous year.
Six months ended March 31, 2000 vs. 1999
Contract revenue for the six months ended March 31, 2000 decreased approximately 60% over the same period of the prior fiscal year. The decrease is a result of a decrease in drilling services at its major customer, Westinghouse Savannah River Company. Management, in an effort to continue profitability, has reduced non-productive personnel and concentrated on marketing to other engineering firms. Indirect costs and selling, general and administrative costs increased in relation to sales due to the significant decrease in revenues and relatively fixed nature of these expenses. The net loss for the six months ended March 31, 2000 was $102,228 as compared to a net income of $64,117 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 March 31, 2000 and 1999.
Liquidity and Capital Resources
During the six month period ended March 31, 2000 the Company generated its working capital requirements through operating activities and loans from officers, directors, and other short-term borrowings. On November 3, 1999 the majority shareholder of the Company sold a portion of his controlling interest in the Company together with substantially all of his voting rights to an unrelated third party. In conjunction with this transaction the Company borrowed $175,000 from a bank and secured the loan by a certificate of deposit in the amount of $175,000. The proceeds of this loan were then loaned to the acquiring shareholder and used to purchase the stock from the former majority shareholder. This transaction resulted in a reduction of the working capital of the Company. The acquiring shareholder is a partnership and the general partners have and will make payments to the Company on behalf of the partnership to reduce the loan from the Company to the partnership.
At March 31, 2000 the Company had insufficient working capital to meet its ongoing working capital requirements. The Company met certain of its working capital requirements during the six months ended March 31, 2000 from loans made to it by its officers and directors, who have continued to make working capital loans to the Company in fiscal year 2000. However, there can be no assurance that the officers and directors will continue to make working capital loans to the Company; that the Company will be able to meet its working capital requirements from operations; or that working capital will be available to the Company from third-party lenders or equity investors.
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. At March 31, 2000 the Company had negative working capital of $18,406, a current ratio of .87:1; a debt to equity ratio of .60:1; and shareholders' equity of $490,915.
The Company has instituted ongoing programs to minimize any short term shortages of working capital, generate revenue, and to reduce operating costs to generate positive cash flow. These programs include the implementation of controls to reduce labor costs, 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. 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
On November 12, 1999 the Company was named as a defendant in a breach of contract suit filed in the South Carolina Court of Common Pleas in Aiken County by a former officer and employee. The suit seeks actual, consequential, and incidental damages. The Company is aggressively defending this action and believes that this action is without merit.
On March 1, 2000 the Company sued Sidney Pump, a former officer and director of the Company, in Broward County, Florida Circuit Court. The suit seeks the return of Company documents which the Company believes are in Mr. Pump's possession and control. The Company believes that it will be successful in obtaining the return of all of the documents for which it has sued.
Item 2. Changes in Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Pursuant to a Stock Purchase Agreement dated August 1, 1999, on November 3, 1999, WFD Partnership (the "Partnership") purchased 1,000,000 shares of the Company's common stock, $.01 par value, from George J. Georges, who was then an officer, director and the principal shareholder of the Company. On August 1, 1999, the Partnership entered into a Stock Purchase and Voting Rights Agreement with Mr. Georges pursuant to which he agreed to sell, and the Partnership agreed to buy, an additional 900,000 shares of Mr. Georges' common stock on or before December 3, 2000. At closing of the stock purchase, Vincent Ferri and Martin Jacoby, who are both general partners of the Partnership, and Sidney Pump, whose wife, Juleen Pump, is also a general partner, were elected directors of the Company and the Company's previous officers and directors then resigned. Mr. Ferri was subsequently elected president of the Company, Mr. Jacoby was elected treasurer, and Mr. Pump was elected secretary. Mr. Pump resigned as an officer and director by resignation letter dated January 10, 2000, and received by the Registrant January 18, 2000.
Of the purchase price of $277,500 paid by the Partnership to Mr. Georges to acquire 1,000,000 shares of his common stock, $175,000 was borrowed by the Partnership from the Company, $100,000 was borrowed by the Partnership from Dennis Jacoby, a general partner of the Partnership, and the balance of $2,500 was contributed by Sidney Pump. Subsequent to the funding of the loan from the Company to the Partnership, the Company and the Partnership executed a loan agreement dated January 21, 2000, to evidence the November 3, 1999, loan transaction.
Item 6. Exhibits and Reports on Form 8-K.
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.
Date: May 11, 2000 By /s/ Vincent A Ferri
Vincent A. Ferri, President and CEO
(Principal Executive Officer)
By /s/ Martin Jacoby
Martin Jacoby, Treasurer
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