SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________
FORM 10-QSB/A
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION 12, 13, OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commision file number: 33-34021-NY
EV ENVIRONMENTAL, INC.
(Exact name of registrant as specified in charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Quarterly Report on Form 10-QSB
for the quarter ended June 30, 1997
Cover page has been amended for change in Registrant's address and
Part I, Item 1 Consolidated Balance Sheets as of June 30, 1997 and
December 31, 1996 have been amended to correct typographical errors
in certain captions.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
EV ENVIRONMENTAL, INC.
Date: October 3, 1997 By: /s/ Michael R. Cox
_______________________
Michael R. Cox
President
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________to ____________
Commission file number 33-34021-NY
EV ENVIRONMENTAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3555254
(State of Incorporation or Organization) (I.R.S.Employer Identification No.)
1900 Plantside Drive, Louisville, KY 40299
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 502-499-1600
1465 Post Road East,Westport, CT 06880
Former Name,Former Address and Former Fiscal Year,if Changed Since Last Report
Check whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the
Securities Exchange Act during the past 12 months (or for
such shorter period that was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days Yes__X__ No ________
Indicate the number of shares outstanding of each of
the issuers classes of Common Stock as of the latest
practicable date. 7,665,621
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EV ENVIRONMENTAL, INC.
Form 10-QSB
Index
Page
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
as of June 30, 1997 (unaudited)
and December 31, 1996 (audited) 3
Consolidated Statements of
Operations (unaudited) for the
quarters ended June 30, 1997
and 1996 4
Consolidated Statements of
Operations (unaudited) for the
six months ended June 30, 1997
and 1996 5
Consolidated Statements of
Cash Flows (unaudited) for the
six months ended June 30, 1997
and 1996 6
Consolidated Statements of
Changes in Stockholders' Equity
(unaudited) for the six months
ended June 30, 1997 7
Notes to Consolidated Financial
Statements 8
Item 2: Management's Discussion and
Analysis of Financial Condition
and Results of Operations 9
Part II:
Item 6. Exhibits and Reports on Form
8-K 12
Signatures 12
Index to Exhibits None
Page 2
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EV ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(June 30, 1997 is unaudited)
June 30, December 31,
1997 1996
ASSETS
Cash $171,000 $454,000
Accounts receivable, net 4,559,000 4,389,000
Inventory 240,000 205,000
Other current assets 440,000 388,000
Total current assets 5,410,000 5,436,000
Property and equipment, net 280,000 306,000
Other long-term assets 98,000 89,000
Cost in excess of net assets acquired, net 5,168,000 5,329,000
Total Assets $10,956,000 $11,160,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable - banks $ 340,000 $420,000
Current portion of long-term debt 291,000 291,000
Accounts payable 3,067,000 2,613,000
Accrued project costs 780,000 1,456,000
Accrued expenses 1,316,000 1,059,000
Total current liabilities 5,794,000 5,839,000
Long-term debt 1,890,000 2,396,000
Other noncurrent liabilities 200,000 200,000
Total long-term liabilities 2,090,000 2,596,000
Stockholders' Equity:
Common stock, $.01 par value: 20,000,000
shares authorized; 7,666,000 and 5,363,000
were issued and outstanding at June 30, 1997
and December 31, 1996, respectively 77,000 53,000
Paid in capital 8,008,000 7,581,000
Deficit (4,961,000) (4,832,000)
Cumulative translation adjustment (52,000) (77,000)
Total stockholders' equity 3,072,000 2,725,000
Total Liabilities and Stockholders' Equity $10,956,000 $11,160,000
See notes to consolidated financial statements
Page 3
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EV ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
1997 1996
Sales:
Treatment systems $ 1,250,000 $ 2,634,000
Engineering and management services 974,000 1,158,000
2,224,000 3,792,000
Cost of sales, exclusive of depreciation:
Treatment systems 904,000 1,950,000
Engineering and management services 588,000 725,000
1,492,000 2,675,000
Gross margin 732,000 1,117,000
Operating expenses:
General and administrative 625,000 896,000
Depreciation and amortization 102,000 102,000
727,000 998,000
Operating income (loss) 5,000 119,000
Interest expense 121,000 93,000
Net Income(loss) $ (116,000) $ 26,000
Net income(loss) per common share $ (.02) $ .01
Weighted average shares outstanding 7,090,000 2,187,000
See notes to consolidated of financial statements
Page 4
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EV ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
1997 1996
Sales:
Treatment systems $ 2,848,000 $ 5,359,000
Engineering and management services 1,928,000 2,336,000
4,776,000 7,695,000
Cost of sales, exclusive of depreciation:
Treatment systems 1,925,000 4,230,000
Engineering and management services 1,117,000 1,363,000
3,042,000 5,593,000
Gross margin 1,734,000 2,102,000
Operating expenses:
General and administrative 1,413,000 1,667,000
Depreciation and amortization 202,000 205,000
1,615,000 1,872,000
Operating income (loss) 119,000 230,000
Interest expense 248,000 228,000
Net income(loss) $(129,000) 2,000
Net loss per common share $ (.02) NIL
Weighted average shares outstanding 7,378,000 2,506,000
See notes to consolidated of financial statements
Page 5
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EV ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
1997 1996
Net cash flows provided by (used in) operating
activities $ (166,000) $(266,000)
Cash flows provided by (used in) investing activities:
(Additions to)/sale of property and equipment-net (7,000) (21,000)
Proceeds from sale of assets 300,000
Net cash from investing activities ( 7,000) (279,000)
Cash flows provided by (used in) financing activities:
Repayment of bank note (80,000) (359,000)
Issuance/(repayment) of notes (2,000)
Issuance/(repayment) of long term debt (506,000) (700,000)
Payment of other noncurrent liabilities (52,000)
Issuance of 9% convertible debentures-net 885,000
Issuance of stock on conversion of debt 451,000 30,000
Net cash provided by (used in) financing activities (135,000) (198,000)
Effect of translation of balance sheet not included in
other captions 25,000 (3,000)
Net decrease in cash (283,000) (188,000)
Cash, at beginning of period 454,000 477,000
Cash, at end period $ 171,000 $ 289,000
Supplemental Disclosures:
Income taxes paid NONE NONE
Interest paid $ 48,000 $ 48,000
See notes to consolidated financial statements
Page 6
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EV ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(in thousands, except shares)
(Unaudited)
CUMULATIVE
COMMON STOCK PAID IN TRANSLATION
SHARES AMOUNT CAPITAL (DEFICIT) ADJUSTMENT
Balance-December 31, 1996 5,362,679 $ 54 $ 7,581 $(4,832) $ (77)
Stock issued on conversion
of debt 2,302,942 23 427
Net loss (129)
Change in cumulative effect
of balance sheet translation
adjustments 25
Balance-March 31, 1996 7,665,621 $ 77 $ 8,008 $(4,961) $ (52)
See notes to consolidated financial statements
Page 7
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EV ENVIRONMENTAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 - There have been no material changes from the
disclosures included in the Notes to Consolidated Financial
Statements included with the Company's consolidated
financial statements filed in its annual report on Form 10-
KSB for the year ended December 31, 1997, except as
described in the following notes. The unaudited interim
consolidated financial statements for the periods ended June
30, 1997 and 1996 reflect all adjustments, consisting only
of normal recurring items, which are, in the opinion of
management, necessary for a fair presentation of the results
for the interim period.
Note 2 - Accounts Receivable
The consolidated balance sheets of the Company include the
following:
Costs and Estimated Earnings in Excess of June 31, December 31,
Billings: 1997 1996
Costs and estimated earnings $ 8,072,000 $ 7,098,000
Billings 6,132,000 5,639,000
Net $ 966,000 $ 2,433,000
The net amounts of costs and estimated earnings in excess of
billings are included in accounts receivable in the
accompanying consolidated balance sheets.
Billings in Excess of Costs and Estimated June 30, December 31,
Earnings: 1997 1996
Billings $ 2,584,000 $ 576,000
Costs and estimated earnings 2,148,000 265,000
Net $ 436,000 $ 311,000
The net amounts of billings in excess of costs and estimated
earnings are included in accrued expenses in the
accompanying consolidated balance sheets.
Accounts receivable are comprised of the following amounts:
June 30, December 31,
1997 1996
Billed $ 3,682,000 $ 2,045,000
Unbilled 966,000 2,433,000
Retention 41,000 41,000
Allowance for doubtful accounts (130,000) (130,000)
$ 4,559,000 $ 4,389,000
Note 3 - Net loss per share
The net loss per common share is calculated by dividing net
loss by the weighted average number of shares of common
stock outstanding during each period. In each of the
periods presented, no exercise of options or warrants have
been assumed because they were either non-dilutive or anti-
dilutive.
Page 8
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Part I Item 2 - Management's Discussion and Analysis of
Operations
Liquidity and Capital Resources
The Company has no material commitments for capital
expenditures, and does not anticipate any material
commitments in the coming year. The operations of the
Company do not require the Company to have significant
additional investments in long-term assets.
The Company had a deficiency in working capital at June 30,
1997 of $324,000, compared to a deficiency at December 31,
1996 of $353,000. This improvement was the result of
operations in the six months. Although working capital
improved in the period, the Company continues to experience
significant strains on its cash flow, and continues to
closely monitor expenditures and to seek additional means of
working capital financing. There can be no assurance that
such efforts will result in additional sources of working
capital, and the Company's operations will continue to be
impacted until working capital can be improved.
In January, 1997, the Company converted $500,000 face amount
of debentures into common stock. This conversion was the
remaining principal amount of $2.1 million sold in 1996 to
improve the Company's financial position.
The Company is pursuing additional actions to improve
liquidity. In July, 1997 the Company decided to cease
having direct operations in Canada and to reach that market
through independent commissioned representatives.
Consequently, the Company will liquidate its Canadian
subsidiary. The Company does not anticipate that this
action will have any material adverse impact on its
operations or financial position, as its investment and
goodwill relating to its Canadian operation was written off
in December, 1995.
Additionally, the Company is entertaining offers for the
purchase of its consulting engineering business and a
portion of its contract operations business. No definitive
agreements have been reached, and there is no assurance that
any such agreements will be consummated.
The Company's business cycle from the initiation of
expenditures on a systems project to the collection of all
outstanding receivables from the project is typically four
to six months, depending on the project. In many instances,
the Company receives deposits and progress payments in order
to reduce its working capital commitment to specific
projects.
A majority of the Company's sales are non-recurring capital
expenditures for its customers; therefore, the Company
cannot usually rely on repeat sales to meet its sales and
cash flow objectives. Additionally, the lead time required
to fulfill customers' requirements are not such that
equipment and systems that will be delivered by the Company
in the current year have been ordered by the end of the
second quarter. The Company cannot therefore predict with
certainty the customers or orders it will receive to sustain
its operations. Nevertheless, the Company's prior
experience causes management to believe that, when added to
the current backlog, sufficient orders will be received in
1997 to maintain the Company's operations.
Page 9
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Two of the Company's service subsidiaries have a $340,000
working capital loan from Key Bank of Indiana, secured by
their receivables. The Company is amortizing this loan at
$8,000 per month.
The Company does not intend to pay dividends in the foreseeable
future. The payment of dividends to the Company by its
subsidiaries is restricted by covenants of certain debt
agreements entered into by these subsidiaries.
Results of Operations
FOR THE QUARTER ENDED JUNE 30, 1997
The Company experienced a decline in sales in the first
quarter compared to the same period in the prior year.
The factors contributing to this were the expiration of a
$1.2 million annual contract to operate a sewage treatment
plant, client delays in the initiation of two major contracts
(totaling $3.5 million),and prolonged negotiations on a major
contract award.
In August, 1996, the Company and Parsons Engineering Sciences,
Inc. (Parsons) were selected to design, construct and
operate a major sludge handling facility by the Louisville
and Jefferson County Metropolitan Sewage District (MSD).
Contract finalization was scheduled for January, 1997. Due
to the complexity of the contract and the need for pilot
plant testing, the Company now anticipates that the final
contract will be completed in September, 1997. While
negotiations have continued, interim work contracts for
approximately $1 million have been performed for MSD. Once
initiated, the Company anticipates the design and
construction of the facility will take approximately two
years at a capital cost to MSD of approximately $50 million.
Once completed, the Company and Parsons will operate the
facility for twenty years under an operating contract. The
Company's agreement with Parsons is to divide the work
effort on the project as equally as possible (in line with
the capabilities of the companies), and to share resultant
profits, if any, equally. While the companies and MSD
continue to work toward completion of the necessary
contracts, there can be no assurance that final agreement
will be reached.
Gross margins experienced by the Company during the second
quarter of 1997 were 33% compared to 29% for the same period
in the prior year. This improvement is the result of a
higher percentage of revenues coming from the sale of
services (as opposed to equipment), where margins are
higher. General and administrative expenses decreased by
27% for the second quarter of 1997 compared to the second
quarter of 1996. The decrease in these expenses is the
result of reduced expenses due to centralization of
production capabilities in Louisville, and overall efforts
to reduce costs.
Page 10
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Depreciation and amortization did not change in the comparable
quarters.
Interest expense for the second quarter of 1997 ($121,000)
increased compared to the same period in 1996 ($93,000)due
to higher average borrowings.
FOR THE SIX MONTHS ENDED JUNE 30, 1997.
The Company experienced a decline in sales in the six months
compared to the same period in the prior year. The factors
contributing to this were those cited in the discussion of
the current quarter.
Gross margins experienced by the Company during the six months
of 1997 were 36% compared to 27% for the same period in the
prior year. This improvement is the result of a higher
percentage of revenues coming from the sale of services (as
opposed to equipment), where margins are higher, and to
higher margin jobs in treatment systems. General and
administrative expenses decreased by 15% for the first six
months of 1997 compared to the first six months of 1996 as a
result of the reasons cited for the current quarter
Depreciation and amortization decreased by 2% in the comparable
quarters due to some equipment becoming fully depreciated.
Interest expense for the first six months of 1997 ($248,000)
increased compared to the same period in 1996 ($228,000) due
to higher average borrowings.
The Company's strategy is to develop a full service solutions
oriented wastewater treatment company, both by internal
growth and through acquisition. To date four such
acquisitions have been made. Because the Company does not
have significant investments in plant and equipment, much of
the purchase price paid for the acquisition is recognized as
goodwill. This goodwill is being amortized over 20 years on
a straight line basis, which results in substantial charges
to earnings for which no cash outlay is required. The
Company believes the goodwill recorded from the acquisitions
will be recovered through operations; however, the Company
will continue to evaluate recoverability.
The Company had a backlog of approximately $5.1 million at June
30, 1997 as compared to approximately $6.9 million at June
30, 1996. The backlog is comprised of approximately 35%
representing the treatment business and 65% representing
engineering and management services at both periods. The
treatment business backlog represents firm purchase orders
and proposals accepted by customers for which purchase
orders will not be issued until engineering designs have
been accepted. This backlog is generally shipped within a
four to nine month period following receipt of order.
Approximately 50% of the engineering and management services
backlog will be realized subsequent to 1997. The Company's
backlog as of any particular date may not be indicative of
backlog as of any subsequent date and may vary considerably
from time to time depending upon the volume and size of
orders and changes in delivery schedule. The Company
anticipates that approximately 75% of the total backlog
amounts will be realized during the year ended December 31,
1997.
The Company has not experienced a significant change in price
levels of goods and services during 1997.
The Company does not engage in any currency hedging activities.
It does contract for exports in U.S. or Canadian currencies,
with customers' payment obligations secured by irrevocable
letters of credit.
No statements issued by the Financial Accounting Standards
Board in 1997 are expected to have a material effect on the
Company's consolidated financial statements.
Page 11
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EV ENVIRONMENTAL, INC.
PART II. OTHER INFORMATION
Part II:
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None.
b) Reports on Form 8-K.
None
EV ENVIRONMENTAL, INC.
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.
EV ENVIRONMENTAL, INC.
Date: August 18,1997 /S/ Michael R. Cox
Michael R. Cox
Chairman, President, duly
authorized officer
and Chief Financial Officer
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